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Thursday, January 21, 2010
No Mas on the Nova

In yesterday's WSJ editorial page, I read someone again making the point that Chevy's Nova did not sell well in Spanish speaking countries because no va means "No go" in Spanish.

Once and for all, it's a myth people. It didn't happen. Snopes lays out all of the salient points.

The whole idea is so damn stupid it's annoying. They are two different words entirely. One is a proper noun, the other a negated conjugation of the infinitive ir (to go).

Yup, them Spanish speakin' peoples were soooo DUMB that they couldn't tell the difference between Nova and no va and therefore didn't buy the Chevy.

What makes the repeating of this falsehood even worse is the fact that it is often used as an example of Stupid American Parochialism that we should all try to avoid.

Please immediately punch anyone you catch repeating this nonsense in the el estomago (little Spanish lingo for you) immediamente if not sooner.


Tuesday, January 12, 2010
Mind If We Watch?

Last month, I noted that the CEO of the company that I work for was becoming more and more publicly outspoken about the dangers in the looming health care reform bill. Today, he has another op-ed that appeared on our internal website and I imagine will soon be published in the St. Louis Business Journal. Here's an excerpt:

Simply, the changes being proposed will have the negative effect of discouraging U.S. employers from hiring as the economy recovers, and will force them to pass on increased costs to employees and/or drop their health insurance benefits to let employees shop elsewhere or move to a government-based plan.

We have an opportunity to create real healthcare reform and make a difference now with smart, targeted, incremental programs, such as: giving small businesses and individuals access to interstate insurance pools; implementing medical malpractice reforms; requiring medical price transparency; and supporting community-based health centers that serve the uninsured, to name several.

Healthcare reform is a complex issue and there is room for honest disagreement on the best way it can be achieved. However, the Senate bill and the House companion fail to solve problems and instead increase government debt, decrease U.S. competitiveness and create one more reason for investment from around the world, as well as jobs, to go elsewhere. This is not the legacy any of us want for our nation.

I must add that equally as troubling is that Congressional leaders now want to slam the door on open debate at this critical point in the process of considering legislation that completely changes the nature of U.S. national health care policy. We can only hope that the Senate and House will do what Americans expect of them, and thats play by the same rules of fairness and openness they set for others and that are established by law. Negotiations and discussions to resolve issues going forward should be conducted in a transparent manner in Conference Committee. I completely agree with Senator Claire McCaskills position stated so clearly last week on this: let the C-Span cameras in.

Saint Paul may have just found a new business hero.

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Monday, December 07, 2009
When Worlds Collide

It's not every day that I read a memo posted on our company's intranet from the CEO and then see that same memo appear at Power Line, but today that's exactly what happened. The memo is based on an op-ed penned by David Farr and Scott Johnson has posted it in its entirety.

Major manufacturers today must compete in global markets if they want to survive, prosper, and grow. Emerson is no exception. We compete head-to-head with Asian and European companies here at home and in virtually every market of the world. The ability to manage quality, innovation, logistics, customer support, manufacturing cost and many other factors determines which companies survive or don't.

Emerson has expanded globally to diversify and ensure that we can continue to win against intense global competition. We are well positioned to grow profitably in the USA and in international markets, like China and India.

At a recent Chicago investment conference, I stated in strong terms that excessive federal spending and costly legislation are destroying the ability of U.S. manufacturers to compete globally, and to successfully invest in the U.S. Yes, Emerson is a St. Louis headquartered company with 30,000 U.S. jobs, but we must compete around the world.

I spoke in very strong terms to underscore the issues I believe our nation is facing. I understand that some don't share my concerns. However, I believe our great country is threatened as the global economic leader if we don't change our government's course. The issues we face are not Democratic or Republican issues, or just business issues. They are real and impact every American, today and in the future.

Farr then lays how the burgeoning Federal debt, pending health care legislation, and US tax policy are hurting American manufacturers and their ability to compete. If President Obama is truly concerned about "creating" and "saving" jobs for Americans he would do well to listen to people like Farr who run the companies that truly drive economic growth. Companies that want to invest in grow in the US, but won't hesitate to go elsewhere if that's what they need to do to survive.

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Thursday, November 12, 2009
Can't Hardly Wait

I've never been very good at waiting. Actually, that should be amended slightly: I've never been very good at unplanned waiting. If I know that I'm going to have to wait in advance--for a plane, during an auto repair, etc.--I can prepare for it by having a book or my laptop along to pass the time. It's the unforeseen, unexpected waits that really try my patience.

This can drive my wife crazy at times. When we're shopping and I see a long line to checkout, I'm inclined to say forget it no matter how good the deal is. I'd rather pay more at a later time when I don't have to wait.

My real pet peeve though is waiting at restaurants. If I'm told that we're going to have to wait more than twenty minutes to be seated, my immediate instinct is to turn and bolt. This also causes some consternation for my wife, who quite logically will argue that by the time we leave one place and get to another it will have taken longer than waiting where we are. And there's no guarantee that we won't face a wait at the next place either.

While both of those points are valid, I don't care. Even if it takes longer to go elsewhere and we may have to wait there as well, I'd rather act than passively sit and wait. Now, if there's a bar available where the two of us can lounge and knock back a pre-dinner drink I can handle a wait. But since we're usually dining with our childrens these days, it's not a situation that we run into a lot.

Which brings me to Sunday night. I spent most of Sunday afternoon splitting logs with my dad. This task was made easier (and a hell of a lot more fun) by virtue of him renting a motorized splitter, but it was still a lot of work lugging, lifting, and stacking. By the time we (my parents, my wife and three kids) headed out to grab a bite, I was hungry and tired.

We decided to patronize Famous Dave's, a barbeque joint with a chain of locations in the Upper Midwest that we've enjoyed often in the past (both dine in and take out). It's not exactly fine dining, but the food's good, the prices are reasonable, and it has an atmosphere conducive for young children (noisy and casual). Plus there's a huge moose head on the wall at the one we usually hit. What more could you want?

When we walked in the door a bit after 5:30pm, we could see it was busy. I inquired about a table for four adults and three kids and was told that the wait would be 35-40 minutes. My first thought was to leave immediately, but I was convinced that our best bet would be waiting it out. My dad even volunteered "A lot of times the wait isn't as long as they say." My personal experience has been that the opposite is more often the case, but what the heck, a little waiting is not going to kill us, right?

So we waited in a small area off the entrance. With three boys who were intent on getting their paws on every piece of northwoods cabin memorabilia hanging on the walls within reach. The phrase "Don't touch that" was used early and often. And we waited.

Half-hour and still waiting. Forty minutes and still waiting. Parties who had come in after us were being seated. Even parties with five adults. Fifty minutes and still waiting. We approached the host a couple of times and were told that we would be seated soon. An hour and we were still waiting. By this time the boys were becoming more and more difficult to control. And I wasn't as interested in stopping their attempts to pry snow shoes and fishing rods off the wall.

Finally, after an hour and fifteen minutes (or approximately TWICE as long as had been promised) we were seated. A manager came over and apologized for the wait. He had a couple of appetizers brought out on the house. It was a nice gesture, but since the kids aren't big on catfish tenders and buffalo chicken wings, it didn't do that much to ease the pain. A round of free drinks would have been better appreciated. At least by me.

The waitress did take our order right away and the food arrived much faster than usual. And it was good as it normally is. But the damage had been done and I couldn't really enjoy the dining experience, especially since I kept seeing parties who had arrived well after us leaving the restaurant before we even had our food. I couldn't wait to get done and get home.

The next day, I was still stewing about the incident. Rather than letting it fester, I decided that I would feel much better if I aired my feelings. So I surfed up Famous Dave's web page and submitted a feedback form detailing my frustration. The focus of my frustration centered on the lack of communications from the staff while we were waiting and the apparent unwillingness of the staff to undertake additional thought or action to solve our problem. You can't tell me that they couldn't have figured out how to push a couple of tables together to seat four adults and three kids instead of making us wait until one of the few larger tables was available.

To their credit, Famous Dave's made this process easy and efficient. Some people might rather make a phone call to register a complaint. I much prefer using e-mail. Having both options readily available and easy to use is smart customer service.

Within hours of submitting my complaint, I received a form e-mail noting that it had been received and was being reviewed. So far, so good. Within a day, I received a personal e-mail from the manager of the particular restaurant. She offered no excuses and no equivocations. She expressed empathy and understanding. Even though she was not in the restaurant that night, she personally apologized. She assured me that what happened was an anomaly that we would not experience at Famous Dave's again. And she offered to send us a gift card in hopes that we would give her restaurant another chance in the future. Now that's customer service.

Turning a potential disaster into an opportunity to increase customer loyalty is not always easy, but her prompt and personal response did just that in this case. We will definitely be giving Famous Dave's another chance and I expect us to visit regularly in the future. Just as long as there's not much of a wait.

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Friday, October 02, 2009
Someone Flu Over The Cuckoo's Nest

Don't know if you've heard the news, but apparently there's some sort of special strain of influenza making the rounds this season. Goes by the innocuous name "H1N1" which sounds more like one of Luke Skywalker's droids than a deadly pandemic. It doesn't exactly convey the sense of fear and dread that the "Black Death" did.

In order to stop the spread of this flu flavor of the month, we're supposed to take the following precautions:

1. Wash and sanitize your hands often

2. Avoid touching your eyes, nose, and mouth with your hands

3. Cough and/or sneeze into the crook of your elbow (some call this maneuver the "Dracula cough," I think it's more like "prepare for impact")

4. If you do get sick, stay home so you don't infect others

How am I so wise in the ways of flu prevention you ask? Oh I don't know, perhaps because I've relentlessly hammered over the head with messages on it for the last month. You can't turn on a TV or open a newspaper without some health expert scolding you about washing your hands and proper coughing technique. It's even worse at work.

I'm not sure if my employer's behavior is unusual, but they're pretty much in full on flu panic mode. I can't even count how many memos we've received on flu prevention, the latest appearing in my inbox less than an hour ago. There are signs plastered all over the building reminding us how important it is to wash our hands and not come in if we get sick. You can't walk ten feet in our building without coming across a hand sanitizer dispensing station. If they had their way, I think they'd like to pump sanitizing fluid through the sprinkler system and douse us every hour or so just to make sure we're properly disinfected at all times.

This week they handed out laminated cards to attach to our security badges. One side contains "Daily Screening Questions" and asks:

"Do you have any of the following symptoms?"

Fever 100.5 F or above
Sore Throat
Difficulty breathing
Runny or Stuffy Nose
Joint & Muscle Aches
Chills & Sweats
Extreme Fatigue

It then says:

If YES to 2 or more symptoms, please see other side.

If NO, report to work.

When you flip the card it tells you NOT to come to work, contact your supervisor, and don't come in until you are symptom free for 24 hours.

First of all, that list of symptoms is awfully subjective. On any given day during flu season it's not hard to imagine a lot of people saying that they had two of those symptoms. Those of us with young kids have accumulated sleep debts that rival the US government's fiscal obligations. Am I extremely fatigued today or just normally fatigued? When a fifty-something coworker near me first saw the list he joked, "Great. I'm never coming to work again."

Second, and more importantly, exactly when was it that we became children and the company our Mommy? I understand why businesses are so concerned about H1N1 and appreciate how disruptive it could prove to be. But can't we manage our way through this without being treated as if we're incapable of determining whether we're healthy enough to work on our own? Do we really need laminated cards with DAILY screening questions and constant reminders about washing our hands, coughing in our sleeves, and wearing a jacket when we go outside? Okay, I made that last one up, but the way we appear to be headed I wouldn't be surprised to see it soon.

We're adults. We now know what to do. None of these precautions are rocket science and most of them are common sense practices that we would likely be following anyway. Now, just step back and let us get on with our work. I'm all for an ounce of prevention, but a healthy dose of prudence is also called for.

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Tuesday, August 25, 2009
Capping Trade

Good piece in yesterday's WSJ by David Schoenbrod and Richard B. Stewart on what they call the Cap-and-Trade Bait and Switch. While these gentlemen are both proponents of a true market driven cap-and-trade system to reduce carbon emissions, they say that the current bill is nothing but top-down regulation and giveaways to favored industries.

Waxman-Markey is largely top-down regulation dressed in cap-and-trade clothing. It purports to set a cap on greenhouse gases, but the cap is so loose in the early years that through the use of cheap offsets the U.S. need not significantly reduce its fossil-fuel emissions until about 2025. Then the bill would require a nosedive in fossil-fuel emissions. This balloon mortgage pledge of big cuts later is unlikely to be kept.

The top-down directives come in three forms. First, electric utilities, auto makers and states get free allowances on the condition that they comply with regulations requiring coal sequestration, alternative energy sources, energy conservation, advanced auto technology and more. Second, many other provisions of the 1,428 page bill mandate outright regulation on subjects ranging from how electricity is generated to off-road vehicles and household lighting. Third, still other provisions provide subsidies for government-chosen technology "winners" such as alternate energy sources, plug-in vehicles and weatherization of old buildings.

Progress on most or all such fronts will be needed, but when, where and how should be decided principally by a cap-driven market, not the "red tape" that candidate Obama deplored.

This government dictation of technology would undermine President Obama's March 19 pledge that, by addressing climate change, we would become "the world's leading exporter of renewable energy." That requires coming up with better, lower-cost technologies than the rest of the world. This won't happen if the government picks the technologies. Recall that, in the 1980s, government established the Synfuels Corporation that spent billions to produce energy alternatives and came up with nothing. More recently, government required refiners to put corn-based ethanol into gasoline on the theory that it's good for the environment. Yet we've learned that wide-scale ethanol production can do more harm than good in regard to air quality and climate change, turn wildlife habitat into corn fields, and raise food prices.

A true market-based cap-and-trade approach would have the government set the cap on carbon emissions and then allow firms to come up with the most effective approaches to meet those caps. That would lead to the innovation and global leadership in new energy sources that the supporters of the bill purportedly want to achieve. Instead, it's filled with political payoffs to particular industries and companies who have been able to bend the ear of their representatives in Congress.

Last month, I was catching up with one of my cousins who lives in California. He's working at a start-up company that's trying to develop better and more energy efficient street lights. They've received a lot of interest from venture capitalists and have a prototype that they're trying to get municipalities and commercial firms to accept for trials.

I asked him if there was anything in the either the stimulus or energy bills that might prove helpful to his company. He explained that they've largely been blocked from realizing any benefits because most of the legislation specifies exactly what technology must be used in government funded programs. It just so happens that said specified technology may not be the best choice, but it is the one that certain companies with good political connections just happen to manufacture. If the government was truly interested in having street lights that provided more light at less cost, they would specify what the end goal was not the technological path to get there.

This is just another example of how most corporations have no interest in promoting truly free market approaches. They're more than happy to work with the government and politicians to erect barriers to competition and ensure that they profit from further regulation. It's good to keep this in mind when you see companies supporting cap-and-trade in the interests of "protecting the environment" or government health care in the interests of "improving the system." The bottom line for why they favor these proposals is their bottom line.

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Friday, July 17, 2009
Feeding The Croc

Proving once again that the only politics that corporations care about is that which enriches their coffers, Wal-Mart goes from Democrat Demon to Darling (WSJ-sub req):

But as Wal-Mart proved it was serious-launching a high profile campaign to sell compact fluorescent bulbs, launching a solar power initiative in California -- some of its critics started to come around. Others claimed Wal-Mart was just picking low hanging fruit.

In a radical departure, Wal-Mart, which traditionally supported Republican political candidates, began donating money to Democrats as well. It formed a coalition with union leader Andy Stern, once one of Wal-Mart's harshest critics, to help explore solutions to the country's mounting health insurance crisis.

In the last month alone, Wal-Mart broke with business groups and a majority of other retailers in supporting a employer mandate for health insurance -- a centerpiece of President Barack Obama's health-care initiative.

Wal-Mart's not doing any of this out of a sudden and sincere concern for the fate of Gaia of course. And they didn't just wake up one day and say, "You know this Obama fellow might be on to something with his health care plans." No, it's all part of a carefully calculated decision that their bottom line is going to be better off with the company acting as allies rather than adversaries of the Democrats who now control the government. The problem with such an approach is trying to calibrate your compromises so as not to give up too much. Good luck with that Wal-Mart.

I also wonder whether companies like Wal-Mart who have embraced being "Green" in the interests of making green have gotten too far out in front of the public. For every consumer who falls for the "we're going Green" pitch, I have to think there's another (like me) who is increasingly turned off by the fool's Green that firms are so eager to tout.


Wednesday, July 15, 2009
Nails Done

Ever wondered what happened to former Major League baseball player Lenny Dykstra? Steven Malanga says that Dykstra's post-baseball career is yet another story that was too good to be true:

Back in April Comeau predicted that Dykstra would file for bankruptcy because of the long market slide and because, "I've never met a rich person that tried so hard to look rich." And indeed, Dykstra's bankruptcy filing suggests that most of his outsized lifestyle was financed by debt, not big market profits. He declared just $50,000 in assets while claims against him amount to more than $30million. He's lost his $18.5 million home to foreclosure and had his Gulfstream jet taken back for failing to pay some $228,000 for remodelings. In an article in GQ, a former Players Club employee claimed Dykstra used his credit card number to wrack up some $14,000 in charges to rent a private plane after Dykstra's financial woes started. He similarly stiffed his mother for $23,000 after using her card.

He's also left a string of unpaid bills for his business excursions. Doubledown is asking for $350,000, while a Minneapolis design firm says it's owed $250,000. He owes two law firms nearly $2 million (not a great move if you are filing for bankruptcy), while a California doctor, Festus Dada, claims Nails owes him $500,000 because he tried to change the terms of a deal to sell Dada one of his California properties then, when Dada balked, Dykstra kept the half million down payment and walked away.

Along the route to this train wreck there were plenty of signs that Nails might have not be the best of investing partners. He occasionally responded to critics or questioners with profanity-laced tirades that might have once sounded charming directed at a home plate umpire, not when aimed at people with legitimate concerns about the cost of buying into Nails' ideas. And those he hired to work with him told tales of his strange work habits which included an often distracted lack of focus on the task at hand.

I hadn't heard anything about what Dykstra was up to after he left baseball. His rise and fall as a financial guru demonstrates the extent that greed and willful blindness drove people who should have known better to make irrational decisions during the heyday of the housing bubble.


Wednesday, April 08, 2009
Feeding Frenzy

As the government prepares to dump billions of "stimulus" chum into the economy, the tech sharks are beginning to circle the water (WSJ sub req):

With the recession forcing corporations and institutions to cancel projects, technology suppliers are eyeing the economic-stimulus package as an elixir to keep revenue flowing. It earmarks more than $100 billion that could be spent on information technology, according to research company IDC.

The stimulus legislation doesn't provide checks directly to tech companies. Instead, it will parcel money out to needy health-care providers, school districts, governments and rural phone companies, among others. It is too soon to tell whether providing a grant-writer will produce a bonanza for any institution, but that hasn't stopped Cisco, Microsoft Corp., or Oracle Corp. from offering advice that could help customers land stimulus grants.

Might neighborly of them, isn't it? Offering advice to help customers out like that. Big business and big government working together to make things better for all of us.


Thursday, April 02, 2009
I Can't Quit You Babe

In the latest edition of National Review Jonah Goldberg shows that when it comes to politics, big business is more than happy to get into bed with anyone. Right now, their pillow mates are mostly Democrats. Goldberg does a nice job explaining how each partner in these sordid trysts have their needs met (sub req):

That's the key to the tawdry relationship between big business and big government. What big business likes about big government is that it clears the field of those pesky smaller, more nimble and entrepreneurial competitors--you know, the actual free marketeers. Government meddling takes much of the guesswork out of business. Think of big utilities. In exchange for letting the government set their rates, they never have to worry about rivals. Profit margins are guaranteed and predictable. History records no instance where the CEO of an electrical utility missed a tee time because a competitor suddenly unveiled an exciting new product.

Likewise, what big government likes about big business is that it's easier to deal with. When the economy is run by a few giant firms, you always know whom to get on the phone. If you've got a social or economic policy to implement--affirmative action, employer-provided healthcare, the Americans with Disabilities Act--it's much easier to work with giant companies that can afford to pass the costs of compliance on to their customers. It's particularly easy if you're on a first-name basis with the CEOs because you've sat on panels with them--and Bono and George Clooney--in Davos and Aspen every winter and summer. Remember when Hillary Clinton was warned that her health-care plan would destroy countless smaller businesses and she responded with a shrug: "I can't go out and save every undercapitalized entrepreneur in America"? Why should she bother? It's not like those people go to Renaissance Weekend.

He also captures the conundrum this creates for free market conservatives and libertarians:

Meanwhile, what about us conservatives (and libertarians)? We're constantly being denounced as right-wing apologists for big corporations, but in reality we're like the longsuffering wives who make excuses for our husbands, even though they let us down time and time again. At the same time, we're constantly hearing from strategists who insist that the answer is to loosen up, baby--become more socially liberal while staying fiscally conservative. The key problem is that fiscal conservatism, whatever its merits, isn't economic conservatism in the free-market tradition of Hayek, Friedman, Reagan, et al. As a generalization, when people say they are fiscal conservatives but social liberals, what they are really saying is that they are, simply, moderate liberals. Olympia Snowe, Susan Collins, Arlen Specter, and the rest aren't socially conservative, and they aren't economically conservative either.

The perverse irony here is that most social conservatives tend to be economic conservatives as well (though one could say George W. Bush was socially conservative and fiscally liberal). Reaganite, pro-life conservatives also tend to be Reaganite free-marketers. Phil Gramm, the greatest deregulator of the last 20 years: pro-life. Ron Paul, the libertarian crusader: pro-life. Christine Todd Whitman and Colin Powell: They're pro-choice and pro-activist-government.

The really odd part about it all is that full-spectrum conservatives greatly outnumber the socially liberal crowd--yet they're supposed to be the problem. They--heck, we--enter the party as cheap dates and in due course become battered spouses. We make apologies for CEOs who don't care what we think, and we never complain about the ingratitude of institutions we support. We fight for free-trade agreements and tax cuts, and they repay us time and again by jumping into bed with Barack Obama. And they don't even bother to wash off the smell of his cologne.

That sad thing is that conservatives end up defending big business not because we have any special fealty towards it but because we're defending the principles of the free market. Unfortunately, as has been pointed out time and time again, big business has no particular interest in these principles unless they happen to benefit their bottom line so they're more than happy to throw conservatives to the curb as soon as the government hussy shows them a little leg (profit). What's even sadder is they know we'll still be there for them when (if?) they wake up the next day and realize the how fatal the attraction that they've been chasing really is.

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Wednesday, March 18, 2009
Flight Risk

Tom e-mails to relate some personal experience regarding my post on the perverse impact of government attempts to plunder the golden geese:

As a native Detroiter, I am always amazed at how government at all levels fails to recognize the dangers of killing the golden goose that small and medium sized firms are. In the 60's various mayors and the city council in Detroit treated every business like they were GM with lots of cash in the vault and their only worry limited to keeping market share at or below 55%.

During the next couple of decades, when small and medium businesses headed for the exits (the suburbs, Mexico, Canada, other states, etc), tax revenues dropped. Costs didn't go down, so tax rates were increased. The firms that were left had their shoulder to the wheel that much more until those firms decided they had had enough and went out of business or moved.

When I returned to Detroit in the late-eighties as an adult to work for a unit of GM, the City of Detroit was a wasteland with abondoned, burned out (thanks to Devil's Night - a much beloved Detroit holiday), stripped-of-copper homes, factories and buildings. Honda had established a facility in Central Ohio and Toyota was moving into Central Kentucky. Both Ohio and Kentucky offered plenty of incentives to get those facilities, but mainly they offered cheap available land, a motivated/educated work force and governments that welcomed not only final assembly but all of the related members of the supply chain which are usually small and medium sized company's.

Around the same time, Chrysler got all kinds of incentives to build an assembly plant close to downtown Detroit near their Jefferson Ave plant (called Jefferson North, it was finished in 1993) which closed in 1990. The Chrysler president at the time, Gerald Greenwald, said that this would be the last time Chrysler would build a major assembly plant in a major city because major cities offer an uneducated work force and an unfriendly environment for their suppliers (again, small to medium sized businesses) who are crucial to the just-in-time assembly processes that are the key to plant success (he caught a lot of flack about his comments, which were called racist).

I left the business and Detroit in 1990, but I have seen this pattern of raiding the local employers for cash to support top heavy local and state governments then carping and moaning when the businesses decide that they are closing and moving the factory/office because the facility is in the wrong place and the local government treats them like a pimp treats a whore. The company I work for now did all it could to keep a manufacturing operation (with about 100 employees at peak) in a state in the Northeast. Most of the customers for the products made by that plant were in the Midwest and West so shipping wise, they were always an extra day or two a way from a delivery standpoint. We invested 100's of thousands dollars for environmental requirements, put up with all manner of union required work rules and high employer related taxes. It took two years to wind that facility down and the local government types did plenty of bad mouthing of our company when they realized we were leaving and they couldn't get us to stay or stop us. Some of the work this factory did was transferred to a plant in Canada and some went to other facilities in the US. More than half though is now coming out of a facility in China. Even with the added warehouse cost and inventory investment, it is less expensive than keeping that facility in the Northeast open.

Since coming to Minnesota five years ago, I'm constantly disappointed by the hubris many government officials exhibit when they state rather matter-of-factly that taxes will go up and if you don't like it, tough. At some point all businesses hit the point of diminishing returns like the apple that was bound to hit Newton's head.

Minnesota is a unique place with lots to offer. However, with energy as costly as it will get with yet more taxes on it, a winter like this one past will get people thinking - why don't I move to a place where my utilities aren't quite as high; where transportation to the growth areas of the South and West are less; where ocean ports aren't so far away. I hope that our business will stay here. It's likely to based on where customers for our products are located and the fact that we have a facility that will allow us to expand without having to acquire more buildings or land, at least during my career here. I hope that your dad's former employer also stays, but at the end of the day, a business is a living thing that has to go where the best prospects for growth are and where the owners believe they can get the best overall return (including profits, lifestyle and other non-profit & loss related items) for their investment.


Tuesday, March 17, 2009
Fair Or Fowl?

There seems to be an assumption implicit in the plans hatched to increase government revenues by raising taxes. It is that the individual or business who is going to be pinched is not going to change their behavior in any meaningful way in the face of being asked to pay more (usually described as "paying their fair share"). While those who propose increased taxation usually acknowledge that what they consider major changes to taxes levied would influence behavior, they seem to view the situation as far more static for what they consider smaller changes. The goose might not like it if they take a couple of more golden eggs, but it'll always be there to pluck.

Last Sunday, we had dinner with my parents. Before my dad retired, he worked for a local, family-owned manufacturing company. He's still good friends with one of the family members who runs the firm today.

The company's history is a classic American success story. It was literally started in a garage behind the founder's house over sixty years ago. Since then it has grown to become a highly regarded supplier with an impressive local headquarters/manufacturing facility and a global presence.

Some years ago, in order to be able to better supply and compete in the EU market, the company decided to open another manufacturing facility in Europe. After considering several options, they settled on Ireland. At the time, the Celtic Tiger had not yet begun to roar. But the Emerald Isle offered the company an educated workforce, a common language (for the most part), and a corporate tax rate of around 10%. So they set up shop there and the operation has been quite successful in the intervening years.

So back to our dinner conversation. My dad recently spoke with his friend and learned that his company is not happy with the way things are shaping up so far in the Age of Obama. I should add that this friend of my father's is not a man known for hyperbole or exaggeration. He's soft-spoken, unassuming type. If you met him on the street, you'd probably never guess that he runs a multinational company. Not a table-pounder or chair-thrower he.

Anyway, he told my dad that if the Obama administration lives up to their promise to end tax deferral on profits companies make overseas (essentially imposing a double tax on US companies and impacting their ability to compete) and if The Employee Free Choice Act a.k.a. card check becomes law, the family will pack up their corporate headquarters and move to another country. With them will go the jobs, the tax revenues, and all the other benefits that the local community, the state of Minnesota, and the country receive from having the company based here. Knowing my dad's friend as I do, this should not be considered an idle threat.

So to summarize, in the interests of "protecting American jobs," increasing tax revenues, and helping "working Americans," our government is planning to take actions that will in fact have exactly the opposite results (at least in this case, which I imagine is not unique). In today's globalized, connected world the danger that the government will kill the golden goose is probably not nearly a great as that its actions will cause the bird to migrate to more friendly climes. The geese do have wings.


Tuesday, March 10, 2009
Down To Business

Sometimes no matter how many times you repeat something, it seems like the message never gets through. This happens to parents with young children on a regular basis, but also occurs in the political sphere. Even though you think the message should be glaringly obvious to everyone by now, you really can't repeat it enough.

So even though I've done my level best to beat down the tireless trope that "big business is conservative," it's clearly one of those situations where there's no such thing as over communication.

Back in high school French class we would strap on enormous headphones to listen to audio tapes of Gallic phrases preceded by the instruction "ecoutez et repetez." So please indulge me and ecoutez et repetez the following:

Big business has no interest in advancing policies based on free market principles.

Big business' only interest in politics is supporting the party that can better advance their interests at the time.

Got it? Good. The latest evidence of this truth comes in an article by Kevin D. Williamson in the March 9th edition of National Review called Losing Gordon Gekko (sub req):

In 2006 and 2008, Wall Street poured money on Democrats. Big Wall Street firms that made major political contributions--including Citigroup, JPMorgan Chase, Morgan Stanley, UBS, and Lehman--gave the majority of their contributions to Democrats. The hedge funds followed suit, as they are inclined to do--they depend on the big Wall Street institutions to clear their trades. And it wasn't just Wall Street: Democrats led in six of the ten big-business sectors tracked by the Center for Responsive Politics: law, health care, defense contractors, communications/electronics, finance/insurance/real estate, and the catch-all category that includes chemical firms, retailers, manufacturers, food processors, and other industrial operators. Republicans held on to agriculture--which is, not coincidentally, the industry in which they are the least interested in practicing capitalism: It's not the philosophical commitment to free markets that opens up corporate checkbooks, but the promise of favorable exceptions to those principles.

So why is the bulls-and-bears set going donkey? Partly it's self-interest: Wall Street loves a tax break, but Big Money has over the years found a lot to love about Big Government. Those carbon-offset exchanges may be clearinghouses for products that are, in essence, imaginary, but they are going to make a real bundle for the bankers who set them up--and, since they'll inevitably have the support of government, there will be relatively little risk involved. And Democrats' anti-war talk hasn't spooked the defense contractors. For all the conspiracy-mongering about Halliburton Republicans, now that Democrats control defense appropriations it's no surprise to find the likes of Rep. Ike Skelton, the Democrat who chairs the House Armed Services Committee, enjoying the support of military providers such as Armor Holdings Inc. What is surprising is that Democrats now lead Republicans overall in financial support from defense firms.

Remember, big business isn't about politics or principles. It's about business. Red? Blue? Whichever brings more green.

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Tuesday, March 03, 2009
Pay The Man

We all know that the radio business, particular talk radio is not usually very lucrative. However, the skills one acquires can be put to use in other more gainful endeavours as a story in today's WSJ explains:

Sitting in a small lavender room next to her kitchen, 48-year-old Donna McCarthy leans toward a microphone and says something nobody wants to hear: "Your account is currently past due."

"This is an attempt to collect a debt," she continues, "and any information obtained will be used for that purpose."

Given her soft voice, the voice teacher and former radio talk-show host hardly seems suited to persuading people to pay up. These days, however, business is booming for Mrs. McCarthy and others who record telephone messages that bill collectors use to pursue delinquent customers.

"We need more of them," says Cris Bjelajac, who regularly hires Mrs. McCarthy by the hour for SoundBite Communications Inc., a Bedford, Mass., concern that provides recorded messages to banks, debt-collection companies and cellphone providers. It is now using about a dozen reliable voices to meet the demand, up from just one or two five years ago. The talent is usually paid $100 to $300 an hour for a job that usually can be done in an hour.

The first recorded message to a delinquent customer often comes from what sounds like a young woman who cheerily reminds that a payment is several days overdue. The messages become harsher as customers fall deeper into delinquency, with the bubbly sounding woman often being replaced by a stern male who speaks in short, declarative sentences that are aimed at creating a sense of urgency. Research shows that following up sweet talk with hard knocks is an effective formula, debt-collection executives say.

Sounds like good work. And it pays well. Where does one apply? I need to know. Now.


Monday, March 02, 2009
Coming Soon To A Conference Room Near You

Looking for the latest and greatest business buzzword for use in tough times? According to today's WSJ, the word du jour is "decremental" (sub req):

Every era on Wall Street has its buzzwords, terms that capture a prevailing mood or business theme. In today's era of economic decline, that term is "decremental."

It is showing up these days in analysts' research reports for companies ranging from Caterpillar and Baker Hughes, to Genuine Parts and Emerson Electric. In a recent report on Watts Water Technologies, J.P. Morgan Chase analyst Stephen Tusa noted that his 2009 estimates for the maker of water-control products reflects "a roughly 20% decremental margin in North America and Europe."

"I don't even know if it's a real word, because it's always underlined in red in my Word documents," Mr. Tusa says. "I've been writing [research reports] since 2004, and this is my first time using it. I think it might be a made-up word. But it fits, and it's in almost every report these days."

Decremental is a real word; it's a negative increment, or the linguistic inverse of incremental. And it has long been part of Wall Street's financial lexicon.

I've yet to hear the word employed in my daily corporate grind, but expect to come across it soon enough. Lord knows the number of times that the word "incremental" has been voiced over the years.

Usually in connection to marketing projections about the expected returns from investing a particular new design: "We won't make much on this particular order, but we expect significant incremental sales to result from it." Incremental in this case meaning almost impossible to quantify, measure, or verify.

Unfortunately, with the economy continuing to drift downward, the word decremental is sure to be become increasingly oft heard.


Monday, February 16, 2009
Taking It On The Street

The old saying is that in every crisis there's an opportunity. In that's definitely true for companies in down economic times. While some fight for their very survival, others are able to use the tough times to increase their market share and gain long term competitive advantages which pay rich rewards when the inevitable recovery takes place. This is what savvy firms are doing right now. If they are able to.

Thinking about just this sort of opportunity the other day, I realized how constrained most publicly held companies are in down times. When your overriding concern is about what Wall Street analysts think about your company's actions today, it can be difficult to envision, much less implement, strategies that are more focused on the long term. This is a challenge that public held firms must always face, but in tough economic times it becomes even more daunting.

While there might be a glowing opportunity to invest in new resources and enter new markets right now, it's going to be a tough sell for a public company to make. Wall Street wants to know what you're doing to cut costs, trim inventories, and cling to profits. They're not much interested in what could be a brilliant strategic move today that would allow you to dominate your markets in three to five years. So you see most of the publicly held companies making the same moves; across the board layoffs and cost-cutting, cutbacks in marketing campaigns, abandoning markets with potential but yet unrealized profits, shelving expansion and investment plans, and pulling back from acquisitions. These actions are easy to defend as necessary survival steps and they are what the Street is expecting companies to do.

Given those circumstances, I would imagine that the real opportunity to make hay during these down times lies with privately held firms. Assuming that they have the money (or financing) to suffer a couple of years of losses, this would seem like a chance for them to act more aggressively while their publicly held competitors are hunkering down. Introduce new products and services. Expand the scope and depth of your market penetration efforts. Hire the best and brightest talent out there (including plucking key people from your competitors). Make strategic acquisitions when the price is low.

These are just some the actions that could be taken today that could change the competitive dynamics for years to come. Actions that truly well-run companies are at least considering. Especially those that don't have to dance to the tune of the Street.


Friday, February 06, 2009
Lost Weekend At Bernie's

The release of the list of close personal friends who invested with Bernard Madoff (including their addresses) is creating a bit of a feeding frenzy (WSJ-sub req):

The document, released late Wednesday, consists of people who either were identified as customers in Mr. Madoff's records or who identified themselves as customers by contacting Irving Picard, the court-appointed trustee in charge of liquidating Mr. Madoff's assets, or the Securities Investor Protection Corp.

"It's as public as Paris Hilton porn movies," says Steven Salbe, 42 years old, a consultant who sets up corporate computer systems in Boca Raton, Fla., whose family lost much of its savings in the scandal. "It's the one list I prefer not to be on, but I'm on it."

The fact that it includes so much personal information, including home addresses, is sparking interest from the capitalist-minded. "This is the best prospecting list ever," says Ken Phillips, who runs RCG Capital Advisors, a Boulder, Colo., fund that invests in hedge funds. "You've got the names and addresses of a whole bunch of rich people who don't demand much accountability."

New York trial lawyer Gary Pillersdorf adds that some lawyers (not including him) inevitably will use it to troll for clients. "Lawyers all went to law school; they're not dumb," he says. "That list connotes people who have a lot of money."

If it wasn't bad enough for these folks to get scammed by Madoff, now they're going to have sleazy investment managers and lawyers all over them like buzzards on road kill.

The Journal story notes that a number of local individuals--including sports writing legend Sid Hartman--were among those whose names were named. If you're curious to see other names you might recognize there's a Bernard L. Madoff Investor Search Engine now available. Just don't plan on using it as your cold-calling leads list.

UPDATE-- Speaking of leads:

These are the new leads. These are the Madoff leads. And to you they're gold, and you don't get them. Why? Because to give them to you would be throwing them away. They're for closers.

By the way, to alleviate any concerns we should note that none of your friendly neighborhood Fraters correspondents have their names on the list. What spare change we do have laying around has been broadly diversified.

Believing that Martinis are recession proof, Atomizer is heavy in olive futures. JB is not only a customer, he's loaded up on stock in the company. And Saint Paul has his life savings riding on Obama commemorative plates. All three pretty much guarantee high returns.


Monday, January 12, 2009
How Low Can They Go?

Brian e-mails on my post asking what's the matter with Belgium?:

Great post on what's wrong with Belgium! I have spent much time in-country (mostly Brussels and Mons) and can tell you that geez, I'd be depressed too -- not over a skirt though. Here are some better reasons to be depressed: the most popular name for new-borns in Brussels is Mohammed and the country has a perpetual self-identity crisis -- are we Flems, Walloons, or Belgians?? Can you imagine living in a country where they are too depressed to even replace themselves??? And what about those-few-and-far between days when you can actually see the sun? Tell you what though; to chase those blues away doesn't require the purchase of a hot car ... their Trappist Ales always make the glass look half full....even after its empty.

Yes, while the Flemoonians don't have much going for them, they do have some excellent beer to help them ease the existential pain. One of the things that I've noticed from several trips to the Netherlands is that no matter how difficult things get for the Dutch, they can always fall back on one thing: at least they don't live in Belgium.


Friday, January 09, 2009
What's The Matter With Belgium?

Front page article in today's WSJ looked at the problems that Belgium is having with workers taking time off for sick leave:

Belgians, like many Europeans, are entitled to extensive or even unlimited sick leave -- and they tend to stretch the definition of the word. One study showed government employees in droves were calling in sick to pack before vacations and to sleep off holiday hangovers. Some government departments were averaging 35 days of paid sick leave per employee each year, more than twice the national rate and seven times the U.S. average.

This story is priceless:

Mr. Lombard's method found a recent subject in Fabrice Vandervelpen, a 36-year-old manager at a frozen-vegetable packing plant in southern Belgium. In September, he called in sick. His girlfriend of six months had just left him, he says. A psychiatrist diagnosed him with depression and certified him for medical leave.

"I stopped by his house that evening," says Jean Dubuission, human-resources director at Hesbaye Frost SA, Mr. Vanderpleven's employer. Mr. Dubuission had recently listened to Mr. Lombard's presentation. He advised the younger man to "get out, play sports, meet other people."

Mr. Vandervelpen says he spent his first two weeks off writing poetry at his parents' home, where he lives. His mother, Marie-Jane, often took him shopping for new clothes, she says. He played soccer again with his local club, FC Burdinne, and volunteered as club treasurer. He visited a Catholic shrine in Banneux, Belgium, where the Virgin Mary is said to have appeared in 1933.

In November, Mr. Vandervelpen bought a bright red Alfa Romeo MiTo for $30,000. Zipping through the hills and sugar-beet fields in his new car made him feel better, he says. He visited his ex-girlfriend and went to parties. Mr. Dubuission visited a dozen times.

If the law didn't mandate paid sick leave, he would have gone back to work sooner, says Mr. Vandervelpen. Hesbaye Frost paid his full salary for the first month he was off. After that, a government-backed insurance company picked up 80% of his salary, which the law guarantees indefinitely. "The government keeps ?1,000 [about $1,357] a month in taxes off me, so why shouldn't I get help when I don't feel well?" he asks. He makes ?2,500 before taxes.

On Dec. 22, Mr. Vandervelpen did return to work. The visits of Mr. Dubuission and other bosses had impressed him. "They've showed they care," he says. He asked for a new, higher-ranking job -- and less interaction with workers -- at the same pay, in order to cut down on the stress. The company says it is considering the request.

Dude gets dumped by his girlfriend so he takes two months off from work (paid) to recover. During that time we writes poetry, get his parents to buy him clothes, buys a new car, and hits parties. Then, he returns to work and asks for a promotion (at the same pay) because he can't handle the stress. Hmmm...I wonder why international companies are reluctant to invest resources in Western Europe?

Couldn't have anything to do with this attitude, could it?

In the pension data-entry department where she works, "when you need a day off to see your kids or something, you call in sick," says Alessandro Scalzo, a colleague. "When I wake up tired, I usually take a sick day," says Evelyne Boux, another co-worker.

Yawn. I'm a little beat today too. I wonder how calling in "tired" would go over with my boss?


Monday, December 15, 2008
The Laid-Off Know Only One Thing: It's Better To Be Employed

Ready for the latest tale from the newest group of victims of the misery and woe wrought by the economic downturn? Who it this time you might ask? People who lost their homes? People who lost their jobs? People who lost their retirement savings? Try people who survived layoffs:

Organizational psychologists call it "layoff survivor syndrome," the collection of emotional, psychological and physical reactions long documented in workers who remain on the job. Being left behind, they say, can sometimes be as distressing as being let go.

Now I've been pretty lucky to have only been through a couple of layoffs during my career. However, one of them was quite serious as a number of co-workers received news that their days were numbered. The atmosphere at work on the day of the layoff was black and for some time afterward remained quite gloomy.

But at the end of the day whatever mental anguish us "survivors" went through was minimal compared with that suffered by those who actually lost their jobs. It's a bummer when the guy in the adjacent cube gets laid off. It's a trauma when you're the one suddenly out in the street.

"In fact, the survivors are also victims," said Harold G. Kaufman, a professor of management and director of the organizational behavior program at the Polytechnic University of New York.

Like people who escape harm when others are hurt in a natural disaster or terrible accident, employees who keep their jobs in downturn often feel guilty, said Mitchell Marks, an associate professor of management at the San Francisco State University College of business.

"It's exactly as when you lose a good friend or a sibling," he said. "You feel responsible in some way."

One of your co-workers loses their job and a good friend dies. Yeah, pretty much the same emotional impact there professor.

There are enough real victims of the recession out there who are actually really suffering the consequences. Can we stop inventing new ones?

UPDATE-- Tom e-mails with an explanation:

This reminds me of those reports that only in the U.S. are there such high rates of ADHD and Restless Leg Syndrome. We are becoming a nation of victims just aching for our chance to make our victimhood known. House payment to big? Victim. Can't fit in your airline seat? Victim. Can't get the fair trade coffee you prefer? Victim.

It is likely that the professor who claimed that having a fellow employee laid off is the same as losing a friend or sibling has neither lost a friend or sibling himself or for that matter been around a business during a layoff. How many times have you heard about a university having a layoff? Birth rates rise and fall, but the universities keep on chugging along and keep getting bigger with yet more larger facilities, dorm's and student centers.


Monday, November 24, 2008
Work Mates

Tom e-mails to comment on my post on the different cultural attitudes towards work, specifically how people in different countries regard after hour activities with co-workers:

Coincidentally, I'm just back from a two week tour of Australia. I noticed pretty much the same thing. Each night they feted the Yank (me) and most of the staff came out for dinner (not one Bloomin' Onion, and who knew grilled octopus could be so tasty?) and it appeared that they genuinely enjoyed being with each other. I didn't see any hidden agendas or one-ups-manship I have observed sometimes in North America. The staff that didn't attend offered up sincere apologies about not being able to make it.

Over the weekend, a director of our distributor and one of his sales managers gave up their weekend (they have families) to show me around Melbourne for a couple of days. In fact when I arrived on a Sunday morning, I changed my plans and did a self tour of Sydney (I had originally planned to crash after 24 hours of travel). When the director found I did this the next day, he apologized profusely for my having to walk about on my own and wondered why I didn't call him if I felt like going out.

When we plan to have a guest in here in MN and ask if anyone would like to go to dinner with them, the question is often, "Well am I getting paid for this or will there be some comp time?" Granted, by law Ozzies get 4-weeks of paid holiday each year plus nine federal holidays and get senior service awards that can build up lots of time towards a 3-month sabbatical or such, so may be they are taken care of in other ways that make them more amenable to the occasional night out or weekend showing a guest around. One issue though, the legal limit there is .05, so the fun valve gets shut off early.

Very similar to my experiences when traveling for work overseas. You have to fight to fend off offers to take you to dinner or show you about town. At times, I have struggled to convince my hosts that not only is it okay if I don't go out on a particular night, I'm actually happy to return to the hotel for an evening of room service and solitude.

Tom also notes that our impressions of other countries are often skewed by what we see in the media:

By the way, I was in many different restaurants, pubs, domestic airliners (where beer and wine are FREE - at least on Quantas - take a note Northwest Delta),and hotel bars that serve beer in five different states in Australia. These ranged from a swank, expensive water front Mobil 3 star restaurant to a dusty dirty pub where I thought Donk, Mad Max and Crocodile Dundee would walk in next. Not once, not one time in maybe 15-20 places visited where beer was served did I see a Fosters Lager. Not on tap, not in bottles, not even in the oil can sized empties I used to find on my front lawn when I lived near a university. When I brought up the ad slogan used in the US "Foster's is Australian for beer", it got a big laugh. In fact, only one person of all the folks I met even know someone who drank Foster's but then they thought the fellow was a little off. So - it sounds like there might be a false advertising suit in the works. Don't you know some law talking guys?

It's like going to Amsterdam and trying to find an Amstel Light or a Beck's in Berlin or a Corona in Chihuahua (you can, but it's far from the leading brand). The beers that get imported into the United States and are advertised as representing countries, are often not the most popular ones in the particular country and in some cases are bit players in the local market. They are also usually not the best brews that the countries have to offer either.


Friday, November 21, 2008
The World That Works Together...

One of the fascinating aspects of working in an international business is seeing the different attitudes that people in various countries have toward work, the workplace, and their co-workers. The cultural distinctions are very evident and usually easy to observe.

This morning I was chatting with some folks from the Philippines. They explained how this weekend they would be going on a "team-building" trip. They would getting on a bus along with eighty to one-hundred coworkers and driving to a resort four hours outside of Manila. There they would spend the weekend "team-building," which in this case sounds more like an extended corporate-sponsored party.

No family members, no spouses, no significant others. And it wasn't mandatory either. Yet from the sound of it, attendance was expected to be very high.

Now, imagine a similar activity taking place in the United States. A non-mandatory, non-family weekend event like that would get what, 20% of your average American workforce to show up? We have a tough time getting people to commit to going to dinner for a night when we have visitors in town. A weekend would be out of the question.

Recently, at a facility in China a group of my fellow workers had a team building activity that involved going out to a "farm" and doing things like riding horses. This event occurred on a Friday and all employees were not only forced to attend, they had to use one of their VACATION days since they wouldn't actually be working that day. Now, try passing that one by a group of American workers and you'd have an instant mutiny on your hands.

Yes, the cultural attitudes towards work are often worlds apart. And the stereotypes about the different cultural norms are often not far off base.

Today, I went to lunch with a group in town from Latin America. We were supposed to meet people from another local facility at noon. We arrived at the restaurant at 12:25pm. And stayed until 2:15pm. A long lunch punctured with frequent conversation--maybe half actually concerning work--and then a departure process that required more public physical contact than a typical Minnesota family displays in years. Vive la difference.


Monday, March 31, 2008
BK Pimpin'

Our cringe-worthy corporate concept of the week comes courtesy of Saturday's Wall Street Journal in a story called, Burger King Whopper To Be Feted (sub req):

MIAMI -- Burger King Holdings Inc. plans to start building a new version of its restaurants this year called the Whopper Bar that will sell a wider variety of its signature hamburger in a hipper setting.

The menu and size of the Whopper Bars will be smaller than a typical Burger King, but they will sell Whoppers not typically available at all times in the chain's traditional restaurants. Executives say they haven't finalized the menu, though it could include as many as 10 types of Whoppers, such as the Western Whopper, the Texas Double Whopper and the Angry Whopper, a version topped with spicy onions. One menu sketch has a section called "Pimp Your Whopper," where patrons can chose from additional toppings like jalapeno peppers, bacon and barbecue sauce.

"Hey dad, can we go to Burger King for lunch? They have SpongeBob toys!"

"Sure son, it's been a while since I've pimped my Whopper."

"What does 'pimped' mean, dad?"

"Well son, a pimp is someone who brokers the sexual favors of women for profits. Pimps are sort of underclass heroes. And since our society glorifies anything--no matter how crass, vulgar, demeaning, and damaging--that claims to be 'real,' pimps and the hoes they hustle have become an acceptable part of of our common cultural conversation. In this case, 'pimped' means to be way tight and decked out in expensive stuff as only someone living the pimp lifestyle would expect to be."

"Wow dad, that sounds cool. Can I be a pimp when I grow up?"

"You can be anything you want to be son. Now let's find your mother and sister and get us some lunch. I wonder where them hoes at anyway? Ha ha ha..."


Thursday, March 27, 2008
Corporate Retreat

Yesterday, I attended an all-day off-site strategic plan review meeting. Which meant another chance to take in a wave of business metaphors. In the first forty-five minutes alone, we were treated to military, fitness, and sailing metaphors designed to explain the current state of the business and what our future plans were. Some were apt, many were not.

But the one that really stood out was perhaps the least appropriate business metaphor I've ever heard. It was also the second time in two weeks that I caught it being employed, which somehow made it even more cringe worthy. While I understand the message that it attempts to convey, I just don't think that the admonition...

"Don't carry the wounded."

...really has a place in the corporate world, especially if you reflect on what it actually means. This is a business we're talking about here, not Napoleon's retreat from Moscow. Better to stick to "treadmills," "trade winds," and "marathons" and leave the grisly military metaphors behind.


Monday, March 17, 2008
Pajama Marketing

Article in today's WSJ on small businesses who are reaching out to bloggers(sub req):

Businesses of all types and sizes are focusing on the power of bloggers as opinion shapers. But harnessing that power is particularly important for small-business owners who don't have the money to create name recognition with big marketing campaigns. By connecting with the right blogs, small businesses can generate buzz around their products and services and increase sales dramatically.

This was really the key graph in the piece:

Short of such a personalized approach, businesses should at least be sure to send their product to bloggers whenever possible, rather than simply sending a press release that describes the product, online-marketing experts say.

Can't stress that one enough people.

UPDATE: I almost forget another important tip from the article:

The first step for any business that wants to use the blogosphere as a marketing tool is to identify blogs read by members of its target market.

In order to make it easier for businesses (especially small ones) to determine if the readers of Fraters Libertas fall within the demographic sweet spot they're going after, our crack analytical staff has been pouring over reams of survey research data to come up with a composite profile of the typical Fraters reader. For purposes of simplicity, they've managed to convert this composite profile into a visual representation.

Start growing your business today.


Wednesday, December 26, 2007
It's a Wonderful Life

One of the bright new lights of the local blogosphere is Melinda Jacobs, the socialite daughter of financier Irwin Jacobs. Yes, she is another elitist liberal in a town full of elitist liberals with a journalistic megaphone. But I must say its refreshing to see one who's earned her position the old fashioned way (by inheriting a fortune) instead of relying on a shadowy cabal of agenda pushing puppet masters to front her.

Plus I don't think we've ever had a local blogger able to deliver lines like this, at least with a straight face:

I just received this Holiday card from Quincy Jones, and it inspired me to reflect on the fun memories I have growing up knowing such an incredible man.

And this ....

Without having to go far, I ran into Ted Mondale, whose sister Eleanor is one of my closest friends, and who is also responsible for making downtown St. Louis Park look super-hip.

Wait a minute, I thought Chad the Elder was responsible for that. When he's spotted cruising the Hwy 7 strip for a nine piece McNuggets and a style job at Super Cuts, there's a celebrity buzz around town and it was that way long before Ted Mondale showed up.

But I don't want to quibble. I want to praise Melinda Jacobs for, among other things, giving us insights in to common problems that afflict us all, like this:

Every year I have the same dilemma: What do I get Carl Pohlad for Christmas?

He is the man who literally has everything. Including a $500 million gift from the taxpayer's of Hennepin County. Not bad for a guy who already happens to be a multi-billionaire. Just how does that happen, anyway? Ms. Jacobs give us some insight. Cue the Ghost of Christmas past to guide us through this flashback of how Carl honed his craft as a young man, selling cars:

As soon as a customer was even close to buying a car ... here is how Carl would seal the deal: He would tell the customer(s) that he had to run the offer by the owner. (What they didn't know was that HE was the owner.) So, he would excuse himself, telling the customer he would be back shortly, and he would go to a corner and talk to HIMSELF. Then he would return and tell the customer that HE really had to work over HIS boss and would probably take a loss on his commission, but if the price was a deal breaker, he was willing to forego his sales commission. Little did the customer know that even in those days Carl Pohlad had a brilliant poker face and was already in the green. :)

I love this story, because I just can't picture Mr. Pohlad selling cars. But as he told me... He was HIS number one car dealer, and repeat customers only wanted to work with Mr. Pohlad because HIS commission was not as important as HIS relationship with his customers!

The "I'm giving up my personal commission to make this sale" line is a scam? I'm stunned. Disappointed. Confused.

True story, when I was in 10th grade I went shopping for basketball shoes at the Maplewood Mall with a friend. Looking over the beautiful new Air Jordan models for that year had us salivating. The triple digit price immediately burned off the drool, it far exceeded the budget our parents had provided.

But the guy in the fake referee's shirt trying to sell them would go easily into that good night. He slightly lowered the price. But was rebuffed. He then took it down another incremental notch. And was again rebuffed. (He had no idea how steely a negotiator a man with no money can be.)

Then with a hang dog expression, and anguish in his voice, he announced he really wanted us to have these shoes and, although he shouldn't do it, he was willing to forgo his personal commission, and drop the price a little more, to make the sale. It was still about $30 more than we had, so we again had to decline. We left the store, feeling lousy for both ourselves and true empathy for that salesman who did all he could for us, yet we couldn't come through for him.

And that salesman in the fake referee's shirt was . . . . Carl Pohlad. And now you know the rest of the story.

Actually, no. It was some punk kid not much older than us. But a sales prodigy, using those manipulative tricks at such a young age on such low potential marks as us. I'm sure he moved onward and upward to a series of more lucrative sales gigs. And now he's probably fighting off a series of lawsuits, indictments, and personal bankruptcy over his antics in the subprime mortgage lending market.

Or maybe he's a billionaire. These techniques can work over a lifetime. At one time Carl Pohlad was using them to hustle used cards. And approximately 94 years later he was doing it to hustle a transfer of tax money to his personal bank account. Remember back in 1997, when he launched one of his early drives for a new stadium, we were offered this deal:

The sharpest blow to Pohlad's public standing grew from the 1997 stadium plan. Officials initially said Pohlad would contribute $80 million of his own money, but it turned out that he had offered a loan, not a grant.

Former Republican governor Arne Carlson, a Pohlad supporter, spent considerable political capital unsuccessfully fighting for a stadium. "That $80 million that was really part of the deal all of the sudden became a loan that collapsed everything and it also collapsed the credibility, and from that time on it's become almost an impossible subject to deal with," Carlson said. The Pohlads say the whole thing was a misunderstanding; they didn't intend to mislead anyone.

Even the successful ballpark deal that was passed a year ago was pushed by the Twins and his media mouthpieces with the understanding of how much the Pohlad family had sacrificed for this community by owning the Twins and that he doesn't want anything for himself, it's really for the people.

For a lifetime of running this gambit, and including the taxpayer's in the latest variation, if Melinda Jacobs is still looking for that perfect Christmas gift for Carl, I'd suggest something like this.


Thursday, November 08, 2007
Was Ist Blog?

Earlier this week, I participated in a series of strategic planning meetings at work. One of the topics that came up was how we were going to serve our customers on the "Web 2.0" (just writing that horribly overused term makes me shudder). Among the possibilities were wikis, RSS feeds, and...

...blogs. Talking blogs in business meetings? Welcome to my wheelhouse.

Anyway, we chatted about blogs for a bit until a fellow from Germany cut in and asked, "What is this blog thing that you speak of?" (not verbatim by any means). His naivety and innocence on the matter were almost touching. I reached over, patted him on the back encouragingly, and began, "Well my friend, let me tell you about blogs...."


Friday, November 02, 2007
Macy's Charade

My wife is not as passionate about sports and politics as I and so you don't often find her going off on stem-winding rants on those subject. However, if you get in her wheelhouse--in this case shopping and shoes--you can expect her to swing away freely. And make contact:

You know when Marshall Fields was bought out by Macy's I, as well as probably most Minnesotans, wasn't very happy. The first time I saw their layout, I was again disappointed....the price checks gave it the feeling of being cheaper.

But as months passed, I thought I needed to embrace change and accept it. So, Saturday I was there and wanted a specific pair of shoes. When a shoe sales associate finally got to me, I asked for my size, after which he disappeared for about ten minutes. When he returned, I was advised that they didn't have my size in the color I wanted, but he said that, "You can try on the shoe in a different color in your size and we could see if we can get the correct color from a different store."

Well, I tried on the shoe and it was a perfect fit so I advised the sales associate, that "Yes, please find the shoe at a different store". Well he was on the phone with other stores for at least ten minutes and he finally said that he could take my information down and, when he finds the shoes, mail them to me. So I gave him my Macy's card number, my address and phone number, and a coupon for $20.00 off.

Today I received the shoes and they charged me $19.00 to deliver them. "Sh-T" I thought! I called Macy's and I explained that I was not aware that I would be charged for delivery and added that when they were Marshall Fields, a similar thing occurred and they mailed out the shoes to my house with no charge, so I had assumed their policy was the same. She said they don't have free delivery unless you have a certain color Macy's card, which I don't have (I am sure I have the base model). I added, that if I knew there was a delivery charge I would have had them just delivered to the store and I would have picked them up. She advised that they don't do that either....Yeah, great customer service!

Macy's S-CKS!

I don't know what Macy's demographic sweet spot is, but I'm pretty sure they don't want to be losing customers like my wife. Another example of the high cost of low service.


Tuesday, October 16, 2007
Number One Babe

We had a five minute discussion of this company during an all-day meeting with a couple of visitors from Europe at work today and no one laughed. No one. At least out loud.


Tuesday, October 02, 2007
Business As Politics

A couple of weeks back, I attended our division's three-day strategic planning meeting at a resort in Northern Minnesota. The weather was for the most part rotten--storms even knocked out the power for a better part of a day--and we were afforded little opportunity to enjoy the Northwoods environment or the fine facilities at our disposal (with the notable exception of the bar in the main lodge).

The lack of new business buzzwords was also a little disappointing. I was hoping to come away with a couple of beauts to throw JB's way, but other than a few old favorites--"fifty-thousand foot level" and "low-hanging fruit"--there just wasn't much in the way of corporate jargon that we've all come to know and loathe.

However, I did observe the striking similarities between what our group was trying to accomplish and the political process. In some ways, I suppose this is to be expected. Developing a strategic plan is essentially about setting priorities for how you are going to utilize limited resources (time, people, money) in the next year. Debating how to make best use of limited resources is at the heart of much of the politics as well.

This is the fifth or sixth year that I've participated in such planning meetings, but it's the first that I've made the connection to politics. Here are a few of the similarities that I noticed:

- The need to use your capital wisely: You can't get everything you want on the strat plan. If you try, you're going to end up failing and you very well may alienate potential allies. Therefore, early on in the process you need to identify a few key "must haves" and focus on them. If you get bogged down in discussions on every single issue, you're going to waste time and energy and try other people's patience. Knowing when to jump in and when to hold back is critical.

You also need to identify anything that you absolutely do not want included and again concentrate your efforts on shooting it down. You don't have to agree with everything, but it's not critical to your area it's often best to just let it go.

- The need to build coalitions: Our meeting included folks from the US, Latin America, Europe, Russia, and Asia. They work in groups such as engineering (design and manufacturing), operations, finance, procurement, planning, marketing, sales, quality, IT, and customer support. On any given issue, no single group has enough pull to carry it forward without getting buy in from others. Once you've identified your key issues, you have to figure out how to get people from these other groups on board and frame your arguments accordingly.

- While everyone has a voice, they're not all equal: At times, all the president of our division had to do to tip the scales was weigh in on an issue. What he actually said was immaterial, the fact that he had spoken was enough. Meanwhile, those of us lower on totem pole (is that still a culturally acceptable term?) had to present a compelling argument to move opinion. However, the president's power had its limits. If a large enough majority was either in favor or against something, the president's views could be (and were) overridden in a matter akin to a veto override.

- What you say isn't always as important as how you say it: The engineers I work with are some of the smartest people I know. But in this setting, their technical and analytical skill sets (their core strengths) were not particularly useful. Their arguments were usually grounded in logic and based on cold, hard facts. Often too cold and too hard. What they lacked was an ability to articulate a meaning that the broader audience could appreciate. The "vision thing" as the elder Bush once called it. This left the door open to more emotionally based appeals (relatively speaking of course).

The sales and marketing folks (who in fairness all have engineering backgrounds as well) were far more comfortable operating in such an environment and used their "soft skills" to successfully push their agenda. It's not as if they got everything they wanted either, but in this arena (as in politics) having a message and being able to stay on it is critical.

One way that our sessions most definitely did not mirror the political process (especially the way it works in bodies like the US Senate) was the lack of deference shown. With a few possible exceptions, if you said something inaccurate or made an unsupportable argument, you were going to get called on it. It wasn't personal of course. It was just business.


Monday, October 01, 2007
That's Amore!

A locally-based Italian restaurant chain settles up with the SEC for not reporting the fringe benefits enjoyed by some of their executives:

The SEC accused Buca of failing to disclose in its proxy statements and Forms 10-K for 2000 to 2003 that its former chief executive was improperly reimbursed for personal expenses totaling nearly $850,000. The expenses included family wedding expenses, dog kenneling, and home remodeling costs, the SEC said in a statement.

The government also alleged that Buca's former chief financial officer was improperly reimbursed of more than $111,000 for vacations and visits to strip clubs.

Working late again tonight honey.


Tuesday, September 18, 2007
Elevator Stories

Later today, I will be embarking on a three-day strategic planning meeting in Northern Minnesota ("up North"). I'll be joined by work colleagues from Brazil, Mexico, Holland, Russia, Britain, China, India, and Singapore. As JB pointed out some time ago, you never realize just how insidious American's penchant for corporate speak is until you hear some poor sap from another country (whose first language is not English) try to spout some of our meaningless business jargon. It's really quite pitifully and demonstrates how silly it is for America's corporate leaders to insist on using the latest buzzwords, acronyms, and inside-baseball babble rather than just speaking clear, simple English.

If I come across any new and particularly galling abuses of the language in the next few days, I shall report them accordingly.


Friday, September 14, 2007
Walking Tall

It's not unexpected to find an opinion piece in the Wall Street Journal defending the pay packages that top-tier CEOs receive. However, it is not every day that you see such a piece penned by President Clinton's Secretary of Labor Robert Reich:

There's an economic case for the stratospheric level of CEO pay which suggests shareholders -- even if they had full say -- would not reduce it. In fact, they're likely to let CEO pay continue to soar. That's because of a fundamental shift in the structure of the economy over the last four decades, from oligopolistic capitalism to super-competitive capitalism. CEO pay has risen astronomically over the interval, but so have investor returns.

The CEO of a big corporation 40 years ago was mostly a bureaucrat in charge of a large, high-volume production system whose rules were standardized and whose competitors were docile. It was the era of stable oligopolies, big unions, predictable markets and lackluster share performance. The CEO of a modern company is in a different situation. Oligopolies are mostly gone and entry barriers are low. Rivals are impinging all the time -- threatening to lure away consumers all too willing to be lured away, and threatening to hijack investors eager to jump ship at the slightest hint of an upturn in a rival's share price.

Worse yet, any given company's rivals can plug into similar global supply and distribution chains. They have access to low-cost suppliers from all over the world and can outsource jobs abroad as readily as their competitors. They can streamline their operations with equally efficient software culled from many of the same vendors. They can get capital for new investment on much the same terms. And they can gain access to distribution channels that are no less efficient, some of them even identical.

So how does the modern corporation attract and keep consumers and investors (who also have better and better comparative information)? How does it distinguish itself? More and more, that depends on its CEO -- who has to be sufficiently clever, ruthless and driven to find and pull the levers that will deliver competitive advantage.

Reich does go on to say thet just because high CEO pay makes sense economically, it does not mean that it's justified socially or morally. Bit it's still a good sign to see someone like Reich ackowledge that there are fundamental economic reasons for it.


Wednesday, August 22, 2007
Home Sweet Home?

Holman Jenkins argues against the conventional wisdom of the universal good of home ownership in today's Wall Street Journal (sub req):

But a home financed by a mortgage is not just an asset. It's also a liability. We owe thanks to Carolina Katz Reid, then a graduate student at University of Washington, for a 2004 study of what she dubbed the "low income homeownership boom." She considered a simple question -- "whether or not low-income households benefit from owning a home." Her discoveries are bracing:

Of low-income households from a nationally representative sample who became homeowners between 1977 and 1993, fully 36% returned to renting in two years, and 53% in five years. Suggesting their sojourn among the homeowning was not a happy one, few returned to homeownership in later years.

Even among those who held on to their homes for 10 years, the average price-appreciation gain was 30% -- less than if their money had been invested in Treasury bills. This meager capital gain was about half that enjoyed by middle-income homeowners.

A typical low-income household might spend half the family income on mortgage costs, leaving less money for a rainy day or investing in education. Their less-marketable homes apparently also tended to tie them down, making them less likely to relocate for a job. Ms. Reid's counterintuitive discovery was that higher-income households were "twice as likely to move long distance if they're unemployed."

Almost needless to add, the great squarer of circles for middle-income homeowners, the mortgage-interest deduction, won't turn a house into a paying proposition for those with little income to shelter.

Bottom line: Homeownership likely has had an exceedingly poor payoff for millions of low-income purchasers, perhaps even blighting the prospects of what might otherwise be upwardly mobile families.

Might be time to rethink the notion that providing an easier path to home ownership for low-income people is a method to improve their circumstances.

Update: King has more on this matter.


Thursday, March 22, 2007
If You Offer It...

...they will come. After hockey this morning, I headed to a nearby Panera Bread to participate in a conference call. While downing eighteen, nineteen cups of coffee (free refills!), I noticed that about 60% of the crowd was on their laptops taking advantage of the free WiFi that Panera offers. The other 40% were senior citizen coffee klatches gabbing about their health problems.

I spent most of the morning there catching up on e-mail, before grabbing a sandwich to go and heading to the office. Free WiFi definitely appears to be helping Panera get customers in the door and encourages them to stay a while. And the longer you hang out in a Panera, the more likely you are to give in to temptation and sample their tasty menu. I'm far from the first to make note of this very savvy business move, but it's something that others would do well to emulate.


Tuesday, February 13, 2007
Missed That Train

Some years ago, my sister-in-law from Colorado was all atwitter about a new shoe that a local businessperson was selling in the Boulder area. She was telling everyone she knew about the shoes and sending them as gifts to family members.

My wife and I were very skeptical. Gaudy-colored plastic clogs? C'mon, there can't be much demand for something like that.

A few years and many millions of dollars later, I think it's safe to say that we were very very wrong. Today's WSJ reports that Crocs are now moving to the catwalk (sub req):

Crocs Inc., maker of the brightly hued plastic clogs that surged to popularity last summer, is quietly planning a surprising strategy aimed at avoiding fad status: a bold step into everything from women's fashion footwear to apparel.

Yet many on Wall Street aren't convinced Crocs can continue at its torrid pace, which has seen its sales rocket to an expected $338 million in 2006 from just $1.2 million in 2003 and its stock soar to more than $54 from its $21 offering price in its debut a year ago. As of last month, roughly 30% of its outstanding shares were held by short sellers looking to profit from a decline in the share price if Crocs ends up a one-hit wonder.

Even if Crocs is not able to continue its remarkable run, it still is incredible to me that these unusual shoes could go from kiosk carts at local malls to worldwide distribution in what essentially is the blink of an eye.


Wednesday, January 10, 2007
But I'm Just Back-dated, Yeah

Two counterweights to the prevailing hysteria over "backdating" of stock options are offered in the opinion pages of today's Wall Street Journal. The first, by Richard Mamaro and Ryan Weinstein, asks Should Steve Jobs Go To Jail? (sub req) and cautions about the need to separate accounting violations from criminal fraud:

The most basic element of fraud is deception or deceit, and a typical example is when a company misstates revenues or cash expenses. Yet there is no proof of deceit or concealment in alleged backdating cases. In fact, it is remarkable how much companies have disclosed about their option grants. Company 10-Ks, Form 4s, proxy statement and other filings were replete with information about options. Indeed, despite media accounts that suggest that executives were secretly lining their pockets, the economic value of options granted, whether to executives or to the rank-and-file, was no secret at all.

If the alleged backdating did not involve self-dealing or kickbacks, and options expenses were immaterial to investors, how were investors harmed? If the harm was only "mak[ing] a hash of the financial statements," as SEC Chairman Christopher Cox has suggested, shouldn't backdating cases be charged as books-and-records violations rather than securities fraud? Despite the media clamor and various colorful analogies to lightning, lotteries and pick-pocketing, most options backdating cases are not fraud, but books-and-records errors.

It is understandable, in an era when public concern is growing over rising executive compensation, that attention should be turned to stock options. Individual companies may want to reconsider how and at what volume they grant options. Yet a thoughtful look at the elements of securities fraud may help observers distinguish between accounting issues and criminal acts.

The second is by Holman W. Jenkins, who has been fighting the rush to judgment over backdating ever since the issue first surfaced. In today's Business World column (sub req) he continues his effort to stem the tide:

Much reporting has made it sound like backdating was the equivalent of executives taking erasers and white-out to their paychecks to add a couple of zeroes -- and public understanding still suffers from this bum steer. But all that backdating comes down to is a nonmaterial accounting irregularity (yes, readers, accounting rules should be obeyed!) involving a defective judgment about whether "in the money" options needed to undergo expensing.

We're still at the beginning of the so-called scandal, and many executives will likely end up paying a price for this poor decision. But in no way does it implicate theft of shareholder money or even substantive accounting fraud. Here, we propose to violate a cardinal newspaper ordinance that logic should never be discussed in a newspaper. The beginning of all error was the media's unwarranted assumption, to put a fine point on it, that backdating was somebody's way of paying an employee more than, um, er, that same somebody intended (er, sputter, gurgle).

You see the problem: Whether options are backdated or not, they must reflect the intentions of whoever designed them. If I'm designing the package, how can I intentionally design it to pay more than I intend?

He also addresses the Apple case and finds an unexpected ally in (gulp) Al Gore:

Against this (who would have thunk it) stands Mr. Gore, yelling stop to the lynch mob. In Apple's own backyard, the San Jose Mercury News delivered a critic's delectable complaint that the Gore investigation had "tried to preserve the company's No. 1 asset" in Mr. Jobs. Isn't that exactly what a shareholder wants from the Apple board right now? The Apple case is a marvelous example of why corporate governance reformers do shareholders no favor even as they expand their own bailiwicks by making governance reform a never-ending end in itself. Indeed, Mr. Gore deserves credit for putting himself in the line of fire at all. And worse is surely coming: Mr. Jobs is starting to face insinuations of insider trading for stock sales after the first backdating cases broke but before Apple was implicated.

Mr. Gore might have waved off the special committee assignment and sought to cover his own hindquarters from the lawsuits and criticism aimed at Apple. That's been the tendency of directors since Sarbanes-Oxley enacted greater individual liability for accounting scandals: head for the high grass and hire a lawyer to point fingers at somebody else.

It's no accident that in the last 25 years, the value of America's corporations rose 12-fold, and the corporate reform industry grew right in step to tell us how badly and corruptly our companies are governed. The more successful the stock market is at cultivating strong businesses, the more we're told the whole system is rotten, in need of reform.

We just wonder what Mr. Gore thinks about all this now.


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