The Paradox of Shareholder Value

Our Clandestine Corporate Lair

Today is our annual shareholder meeting, here at our clandestine corporate lair. The board of directors will be meeting in the morning, followed by a presentation to shareholders of our company stock. Typically, the crowd is made up of 30-40 elderly, former employees who live in the area and have nothing better to do in their retirement. It is essentially a rah, rah presentation by my Dark Corporate Overlords, for the handful of loyal retirees that choose to show up.

So, in honor of this annual event, I would like to take a few minutes to explain what it is that I think is wrong with the concept of the shareholder owned corporation. Please forgive the long, dry rant that follows…

In large public corporations such as our Sinister Cabal, the company is “owned” by thousands of different shareholders. As such, it would be impractical for each owner to participate in the decision making of the corporation. Therefore, the shareholders of our stock have an elected board of directors to oversee the management team, and the operation of the company on behalf of all owners (ie. shareholders). The ownership of one share of company stock entitles the shareholder to one vote in the election of the board of directors. Therefore, effective control over the board of directors rests with the majority shareholder, or groups of shareholders acting in concert.

In the case of our fine corporation, employees are given the opportunity to own shares in the company stock through their retirement funds, or through outright purchase of company stock using pretax dollars. In addition to the employee stock holders, wholesale institutional investors, like large mutual funds, will typically buy and sell shares of our company stock as part of their investment portfolios.

In theory, this seems like an excellent example of the principle of economic subsidiarity, whereby the workers share in ownership of the capital. The theory of economic subsidiarity, as described by Pope John Paul II in his encyclical Centisimus Annus, proposes that “Each person is fully entitled to consider himself a part owner of the workbench where he is working with everyone else”. By having the employees participate as shareholders of the corporation, the employees become part owners of the corporation’s capital, and also share in the profits of the business through the payment of stock dividends. Also, in theory, the corporate management team can be held responsible by a legal fiduciary responsibility to the employee shareholders. This is what is commonly known as principal-agent theory, where the management team acts as an agent in the interests of the principal, or shareholders.

However, somewhere between theory and practice there is a disconnect. While workers share in the ownership of company as stockholders, and retain the voting rights of all shareholders, they do not have a direct say in the management decision making. Their say in management decision making is via proxy through the elected board of directors. Shareholders have a percentage of votes equal to the percentage of shares they own, so if the majority of shareholders agree that the management are performing poorly they can elect a new board of directors, which can then hire a new management team. In practice, however, genuinely contested board elections are rare. Board candidates are usually nominated by insiders on the management team, and by the board of the directors themselves, and a considerable amount of stock is held and voted by both the board members and the management team. The employee shareholder’s voting rights often represent such a small percentage of the total that they can be considered negligible.

Ultimately, those who most influence the direction of a company are the management team, the board of directors, and the large institutional investors that hold and manage the employee shares in mutual funds. Each of these three constituencies have different motivations, and incentives.

The Management Team

The management team of any large corporation is tasked with both short term and long-term decision making to support the mission of the business and deliver the financial results demanded by the investors so that they may realize a financial return on their investment. Unlike a Democratically elected government, the management team is not a group elected by the vote of equals. In addition, unlike a family owned business, the management team is not selected based on class, or family connections. Instead, the management team is a group of leaders that have risen to positions of management through their promotion by higher-ranking managers within the organization. The focus of the professional manager as an agent for the shareholder is improving efficiency. The motivation is to maintain continued investment through the increase in share price. The management teams of most large corporations have a significant amount of their financial compensation in the form of stock option grants. Therefore, an increase in share price will directly affect the material wealth of the management team.

The Institutional Investor

In the United States at the end of 1992, institutional investors held at least 50 percent of the share capital of large corporations. I believe that figure has grown in the last 17 years. As the owner of the capital the institutional investor is free to purchase, hold, or sell the stock of any given publicly traded company in the interest of creating profit for the shareholders of the mutual fund. Institutional investment firms employ professional fund managers to manage the stock portfolios in line with the investment strategy (long-term growth, international growth, moderate growth, or securities).  While Institutional investors are legally the principal “owners” of the capital they invest, in reality the fund manager is acting as a trustee of the money belonging to the mutual fund shareholders. The mutual fund manager is not a principal, but merely an agent for the shareholders of the mutual fund corporation. Mutual fund companies earn their profit by selling individual shares in their funds, and charging fees to their customers for the management of the stock funds. The typical investor in mutual fund stocks, are individuals who purchase the stock either using their own money, or through company supported 401k and retirement pension funds. As the market value of a mutual fund stock is directly related to the performance of the fund, the institutional investor is highly incentivized to maximize his return on investment by buying stock in companies that show growth in earnings. To the institutional investor, the only thing that matters is the near term financial performance of the company in which he invests.

Our Board of Directors

The Board of Directors

The third constituency is the board of directors of the corporation. The boards of directors are professional managers from other organizations that have been elected to sit on the board, and protect the interests of all shareholders. Board members are elected by shareholders to represent their interests. In this role, the board members serve as the acting principals for the shareholders. In practice, most board members are chosen from among the peer group of the corporate management team, and boards are typically composed of either large shareholders, or professional managers from other corporations. The result is that the board of directors, and corporate management team become a self-perpetuating group of elite insiders. Both are financially compensated by the performance of the company stock, which is positively impacted by attracting the investment of large institutional investors. As described above, the best way to attract institutional investment is to deliver continuous growth in corporate financial earnings.

The irony in this ownership system is that the mutual fund stocks making up the largest percentage of a corporation’s shareholders are typically owned by many employee shareholders. These employee shareholders are employed by many different companies, and acquire their mutual fund stock through employee 401k retirement and pension funds. While financial returns are important to the individual shareholder, other concerns such as job security, working conditions, environmental impact, and long-term health benefits have an immediate impact on both their subjective and material well-being. The illusion is that making employees into shareholders through stock ownership & pension funds gives them a voice.

The rise of the mutual fund, and pension fund as the primary owner of financial capital has created demand for continuous growth and increasing profit to increase short term earnings per share.  The result is a paradox where the jobs held by employee stockholders in developed nations are eliminated in an effort to reduce operational costs related to salary and benefit expenses. By moving these skilled, and unskilled, jobs to developing countries the cost of producing goods is reduced, in pursuit of increasing the financial performance of the stock price, and creating profits for both the management team, the board of directors, and ultimately the retirement pension funds of the very employees whose jobs were eliminated. The new employees in the developing countries are not typically given access to employee stock ownership, or pension funds.

The result is a paradox where jobs are eliminated to secure the future retirement income of the employees holding them. This reminds me of the Vietnam era quote “We must destroy the village in order to save it”. Obviously, the current state of corporate governance under shareholder theory only holds management accountable for short term financial results. Clearly the gap between long term and short term incentives for corporate management teams do not serve the interests of all shareholders, particularly the employee shareholders.

Employee Shareholders hard at work in the Lair

Does this mean that all corporations are governed only for short term stock price gains? No, I am not cynical enough to suggest that. Yet. However, it is clear that the management team is only given short term incentives, and that any view to the long term stewardship of the corporation on their part is purely of a personal initiative and desire, and will not be rewarded by the corporate governance system. Is it any wonder we continue to see fraud, and ethical violations at publicly held corporations?

How can this system be changed? Well, currently the corporate governance laws are written such that unless a gross fraud is being committed on the part of management, or accounting laws are being violated, there is no recourse for shareholders to hold management accountable for the long term operation of a corporation. The only business models that I have seen have success in this, do not fall into the category of stockholder owned corporations. They are usually privately held, family owned business, or cooperatives owned solely by the coop members.

Until corporate governance laws are revisited in a meaningful way, the corporate overlords will continue their reign of darkness, and wage slaves like myself will continue to serve them in their nefarious deeds. Innocent people will continue to scratch, and claw out their living as a small part of a largely unjust machine, that seems to run on it’s own accord. Rare is the organization that is evil, or corrupt to the core. Such infamous folks as Madoff, Petters, Rigas, Skilling, and their ilk are thankfully rare.  When their pyramid shemes finally do collapse, their is always much hand wringing, and finger pointing, but seldom do we truly analyze the underlying structure of shareholder theory of the supposedly ethical corporations.

What is truly scandalous is the corporate governance system that we have created, which concentrates the power and wealth in elite circles. It is this system that encourages and rewards the self serving behavior of corporate management teams, and drains the wealth and capital from the communities in which we live. It is shareholder value which feeds the beast of globalization, and lines the pockets of the few, at the expense of the many. If only this kind of evil had a face, it would be so much easier to fight. Instead we are powerless against this faceless, formless, Leviathan of a corporate system. I fear that not even the power of government can control this transnational beast any longer. James Bond, where are you?

My Villianous Liege

The decline and fall of Western New York

The past week around 20 Prospect was a long one. Trips home to Batavia are always full of memories and mixed emotions. It is hard to see what Western New York has become. Just because it has been in such a long slow economic and social spiral for a long time, does not make it any easier to take. In the some ways, it makes it even harder to accept. Surely by now the local government and populace would have figured out that what they are doing isn’t working and tried a different course of action. Maybe they have, and maybe the results have just been inevitable. Surely there comes a point in any disaster, where the course of events have progressed too far for the outcome to be changed. Maybe that is the fate of Western New York. With declining population, and the 30 years long flight of industry from the Great Lakes states, the result is a dwindling tax base that only reduces the resources available to government to try to actively manage their way out. What they are left with is boosterism, empty slogans, and long shots. Perhaps that is why they seemingly have given up on initiatives to stimulate small, human scaled, economic growth, and spent their remaining money on “magic beans”. Casinos, sports stadiums, and other developer boondoggles. Everything but the proverbial monorail.

Greater Buffalo Niagara Monorail Project

I left not because of a desire to leave. I left in 1990 because I could not manage to land one of the relatively few engineering jobs available. I left out of a perceived necessity to get that high paying job in my field that was the sole focus of my college education. I don’t regret it. I needed the money, and there was no doubt that I preferred to leave home for an engineering job, than live there and be under employed. Academics and Front Porcher’s can complain about the siren’s call of the meritocracy that lures the educated youth of small towns to leave their homes behind, but they cannot deny the economic incentives that exist. Complaining about them is as effective as complaining that water flows down hill.

I am sympathetic to their arguments, but I am pragmatic as well. Until someone comes up with viable ways to offer economic opportunity in places like Western New York, the kids of Batavia, Tonawanda, Rochester, and Lyons will continue to leave. I wish I had a solution, but in the end I have little else to offer than some empty promise that staying behind and building something better is a worthy endeavor deserving of their lives. Pretty hypocritical for a guy that left it all behind and moved away. You’d think the least I could promise would be a job driving the new monorail.
Monorail, monorail, monorail...

Business Ethics is not an Oxymoron

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The true purpose of my trip to Western N.Y. is not to gorge myself on Pizza and Wings, but to participate in a conference. I will be presenting here in Niagara Falls. I will not be representing my Dark Corporate Overlords. Instead I am just there to embarrass myself in my capacity as a (former) Grad Student. Wish me luck as I expound upon the Dehumanizing Evils of Six Sigma and Scientific Management.

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Le Affair Belgique

The Stadhuis on the Grote Markt in Leuven

The Stadhuis on the Grote Markt in Leuven

This morning I am heading “across the channel” (I always wanted to say that. It sounds so impressive) to Belgium. Leuven Belgium is the European headquarters of my dark corporate overlords. From the control room of their Leuven lair, they pull the strings of our minions across Europe, the Middle East and North Africa. In my 12 years under the employ of my liege lords, I have made upwards of 20 trips to Leuven. I have become pretty fond of the place, and know it pretty well by now.

Leuven is the home to the largest University in the low countries (Belgium, Netherlands & Luxembourg). The “Katholieke Universiteit Leuven” was founded in 1425, and now has over 35,000 students spread among the many colleges that make up the University. The town is literally overrun with students. Most of the kids attend school during the week, and live in apartments in town, but head home to their folks on the weekend. In a country as small as Leuven, this just makes sense. So the busiest night in the bars of Leuven is typically Thursday. I have been awoken many Friday mornings at 4 am, by students singing on their way home. All in all, the city is pretty tolerant of them. They have been around for 600 years, so I guess that only makes sense.

The Oude Markt in Leuven in a rare quiet moment

The Oude Markt in Leuven in a rare quiet moment


Leuven is on the Dutch side of the Belgian language divide. Belgium, being a make believe country, is composed of two different cultural and ethnic groups. The Dutch speaking Flemish in the northern half of the country, and the French speaking Walloons in the Southern half. It was carved out of the Netherlands, following the Napoleonic wars, by the British in a classic move of British diplomacy. Create a country out of two disparate ethnic groups who hate each other, and rule them with a dowdy relative of the Queen. In this case, Leopold the First, the Duke of Saxony, uncle of Queen Victoria, and the first King of the Belgians.

Even after almost 200 years of statehood, the country is still on the verge of breaking apart. In fact, the language and culture wars became so bad in the 60’s and 70’s that the Federal government essentially gave each half it’s own government, and split the place down the middle. (The University was split in two as well, with the French speakers moving about 30 miles south and starting their own university, and the Leuven branch becoming a Dutch speaking Institution) Oh, I forgot to mention that Belgium also picked up a piece of Germany after one of the World Wars, so there’s a little sliver of German speakers, also with their own government. Brussels, being the capital, surrounded by Flemish speaking Flanders, was a sticking point for the Walloons. The French speakers being a ruling class minority for over 150 years, they refused to give up the prestige of the capital to the Flemish. So they made the city its own region, officially bi-lingual, and gave it a government of its own. So Belgium has 5 governments. Six if you count the Headquarters of the European Union. Hence the civic booster motto “Welcome to Belgium, the Capital of Europe”. Yes, more government is pretty much the answer to all their problems.

Ask any Belgian though, errr… I mean Flemish or Walloon, and you might get a different opinion. They all chafe at the heavy hand of government. Although, pragmatically, they realize every 10 years or so that all their efforts to break the place up become inextricably mired in quicksand, and then they give in, form a coalition government, and get things back to normal. Sounds like a great place to put a company, a country whose politics are so parochial and convoluted that a majority decision can seldom be reached without someone feeling victimized. Honestly, as many friends as I have here, if it were truly up to me I’d close the damn office and move it to Holland where the only thing anybody cares about is making a buck. The good ol’ Dutch, you have to admire their entrepreneurship.

As for the Belgian’s, the French sum things up in a way that only the French can do. When a problem is intractable the French refer to it as “le affair Belgique” (a Belgian Affair). After twelve years of beating my head against the rock that is Belgium, I could not agree more. The national sport of Belgium is “victimhood”. Seriously, no country on earth can possibly be more passive aggressive than the Belgians. I have a personal theory on this. For centuries, Belgium was the battle ground of Northern Europe. Whenever the French, the Germans, or the Dutch wanted to stir up trouble and strike out at each other, they had to go through Belgium first. Only Poland has probably had more wars fought out on its territory, and been subject to as many different masters as the Belgians. That’s why they are born with a chip on their shoulder. So as much as I work with them, and build relationships, I am always just another foreign carpet bagger, here to exploit them. Sigh… this gets tiresome.

That all said, I love the place. Well, the Flemish part anyway. The disdainful Walloons I could live without :-) I’ll stick with the hard working, humorless, beet farming, Flemish peasants. They are more honest about their lack of feeling for you and your kind, which I respect. Is that enough hurtful stereotypes for one post? I hope so. Thankfully, these pains in the arse brew the best beer, and cook the tastiest food in all the world. So that makes up for a lot of the head aches they cause.

See you in Belgium.

Mountain Biking with Friends in the Country

Mountain Biking with Friends in the Country

Cultural Mash-ups, English style

As you know, all work and no play makes Jack a dull boy. So one of the staples of any good sales meeting is the evening dinner, and entertainment. As you remember, in China this means going out to a seafood restaurant and eating bait. In England it means copious amounts of alcohol. I can attest to the fact that the English really do binge drink as much as the stereotypical 18 year old college student. Yee-gads, it ain’t healthy.

Anyway, this sales meeting has been planned and hosted by our team in Manchester. For the evening entertainment, they planned a Mexican Fiesta. It was oddly surreal to be in an English Countryside hotel, with people from Spain, Belgium, France, Germany, England, Denmark, and the U.S., dressed in Sombrero’s, Pancho’s and fake mustache’s. How is this not offensive to Mexican’s?1ac331_lg

Seriously, though. I cannot imagine doing this with any other culture. Would we dress up as Chinese? Or Africans? Indians? Arabs? Why is it acceptable to dress up in Mexican costumes?

I don’t have any answers, and I will be honest. I did not let it prevent me from wearing a sombrero, drinking Corona, and hitting the Pinata. It was not intended to be mean spirited, or disrespectful. Although, I am sure it would have been hurtful to certain people from our team in Mexico, or our financial analyst in Minnesota, who grew up in Aguascalientes. Cultural sensitivity is a slippery thing. It can be a fine line between fun, and disrespectful, so in my opinion it is best to stay clear of it entirely. Of course, this is obviously just an avoidance tactic. The best tactic is to get to know each and every one of us as individuals. But that takes time and effort.

Worsley Park 014

It is always fascinating to me when we get a global team together. Meeting each other, and getting to know each other as individuals can simultaneously reinforce, and contradict the stereotypes we have of other cultures. In this sense, the meeting, and the ridiculous costumes and behavior served to break down the walls between us. That is the real benefit of getting together. So it is not surprising when one of the Flemish production managers turns his fake mustache upside down, making himself look like Kaiser Wilhelm, and pretends to use the maraca as a hand grenade, and lob it towards the German salesman. They know each other, and have established the mutual trust and respect that allows him to lampoon the stereotype.

But I don’t kid myself. The things that make us different, still make us different. Even though we realize how much we share in common, there is much about us that we prize that makes us different. Pretending it doesn’t exist, is just as insensitive. It was an interesting group. The nationalities I mention, are only one label that can be placed on the people in the team. Even more important to each of them, is their cultural identity, which does not always fit the neat lines of national boundaries on a political map. The German is from Westhphalia. The English are from the North of England. The American’s were from the Carolina, and the Upper Midwest. The Belgian’s were both Walloons and Flemish. The Spaniard was a Catalan. The French, from Normandy and Paris. Each one of these cultural identities is important. It says much more to us than our national identity can. And deeper still is the personal history of each one of them. Religion, family, class, it all matters in making us who we are. There is much diversity within each label we place around our neck. The more time we spend in each other’s presence, the more we peel the labels back to see what other labels lie underneath.

I hope we never lose the value of these identities in our rush to globalization. The various combinations of who we are, where we come from, and what we value, are what make us unique. How sad it would be to all be the same. And besides, homogenity is too difficult of a costume to dress up in.

Remember September 12th!

I let an important date slip past last week, unmentioned and un-noticed. Not surprising, as you rarely will find this event mentioned outside of military histories these days. I wasn’t even aware of it myself until just a few years ago. I am referring to the Battle of Vienna, fought on September 11th-12th, 1683.

Sobieski at Vienna by Juliusz Kossak

Sobieski at Vienna by Juliusz Kossak

So what was the battle of Vienna about? Why it was the salvation of the West, and all we know and hold dear as a civilization, against a siege by the Ottoman Turks. Vienna was the culmination of over 900 years of war between Christian Europe, and the Muslim East, beginning with the Byzantine Arab wars of the 7th century, and the Muslim invasion of Spain and France in the 8th century. As a battle of Macro-historical important it is one of the top 5. Had victory gone to the Ottoman Turks the world would be a vastly different place.

A full accounting of the battle is here if you are so interested. I am only focusing on the turning point of the battle though, the fulcrum of fate where the West was saved from Muslim domination. The point where the Great Polish King Jan Sobieski led his Winged Hussars into battle and broke the Turkish line.

From Wikipedia:
After twelve hours of fighting, the Poles held the high ground on the right. The Holy League cavalry waited on the hills, and watched the infantry battle for the whole day. Then at about 5 PM King of Poland ordered the attack, the cavalry attacked in four groups. One group was Austrian-German, and the other three were Polish. Over 20,000 men charged down the hills (the largest cavalry charge in history). The charge was planned and led by King of Poland Jan III Sobieski at the head of 3,000 Polish heavy lancers, the famed “Winged Hussars”. The charge broke the lines of the Ottomans, who were tired from the long fight on two sides. In the confusion, the cavalry headed straight for the Ottoman camps, while the remaining Vienna garrison sallied out of its defenses and joined in the assault.

The Ottoman troops were tired and dispirited following the failure of both the sapping attempt and the brute force assault on the city. The arrival of the cavalry turned the tide of battle against them, sending them into retreat to the south and east. In less than three hours after the cavalry attack, the Christian forces had won the battle and saved Vienna.

Winged Hussars

Winged Hussars

The Winged Hussars of Poland are perhaps one of the most striking cavalry brigades in history. They were heavy cavalry, lancers, riding atop giant horses. Their signature decoration were feathered wings on the back of their armor, that ruffled in the wind and was purported to strike fear into the hearts of infantry.
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So, the next time we mourn the attacks by radical Islamists on September 11th, remember September 12th, and realize that this is just another phase in a very long clash of civilizations.

And say a prayer of thanks for Jan Sobieski and his Polish Hussars.

It’s that day again…

ClearBlueSky

It has been eight years already. Hard to believe. I will forever remember it for the beauty of the sky that day. I don’t believe there was ever a more lovely morning, than September 11th, 2001. The sky was cerulean blue, and the air was so clear and crisp. It was close to 80 degrees that day, without a cloud, or drop of humidity. So achingly beautiful, that the tragedy unfolding before us on our televisions seemed all the more surreal.

May God Bless the victims, and their families, and grant them eternal rest.

Live United

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It is September. All across America it is time for football, autumn leaves, ripening apples, and the return of the annual United Way campaign. As the old Sesame Street jingle used to go “One of these things isn’t like the others, one of these things does not belong.”
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Here at 20 Prospect my Dark Corporate Overlords kicked off their annual appeal by feeding us breakfast, then reminding us that families in Minnesota are going hungry during these trying economic times. Working families. They need our support and contributions now more than ever. Subtle. They did have the decency to stop short of asking us to eat all the food on our plates because kids were starving in Africa. Frankly, I was amazed at their restraint.

I know, how can I possible find a reason to complain about charitable giving? I must have no heart. Well, let me clarify things. I believe in community. I do. I also believe that citizens and companies have a moral obligation to be charitable to those in need in their communities. In fact, it’s part of what I consider the definition of a “community” to be. So what’s the problem?

Hypocrisy. Plain and simple. It’s not that I don’t think that there are fine and charitable people in our corporation who participate and lead our annual United Way campaign out of an honest desire to help others. I know these people, and they are sincere. It’s that the whole appeal to “Help make a difference in our Community” is intellectually dishonest. We can make a difference in our community, much larger than just contributing a few dollars from each paycheck to a fine umbrella organization like the United Way. In fact, we are morally obligated to do so as members of our community. But we don’t, and the reasons we don’t are maddening to me at times.

Let me explain. Minnesota is the home of our headquarters, and has been our primary address for almost 100 years. We have grown from a small, family run outfit, into a global corporation with businesses in over 36 countries. We are citizens of Minnesota, as well as each and every one of those 36 countries. But we don’t act like it. We don’t “give back” to the community. We “give back” to shareholders.

I am a shareholder, and an employee. And it has been hard to be either one this past year as we have reduced our workforce by over 20% around the world. We have survived, but we have made some big sacrifices, and 20% of our employee “shareholders” are no longer employees. I am sure more than a few of them are relying on organizations like the United Way to help their families through these tough times. So again, what is my problem?

My problem is this. When we sit down as managers and leaders to build our plan and strategy for the future, no where do we consider “Making a difference in our community” to mean adding jobs, and supporting other local businesses through the work that we do. Instead we focus on the bottom line of profitability, and assume (and I stress assume) that the way to improve profitability is to move more production, engineering, and administrative functions to countries like China and India. Why do we do this? Out of a desire to improve the lives of the Chinese and Indians? No, out of greed. In fact, we do so only because we know that we can pay them less. In fact, we do not grant our new Chinese and Indian employees the same “rights” and benefits that we grant our Minnesota workers. Why? Because the law does not require it, and the market does not demand it. When those two reasons become the pillars of your ethics, you are on shaky ground.

Teenagers

So, from an economic perspective, how can I object? Doesn’t water flow downhill? Shouldn’t businesses always seek the least cost solution to improve efficiency? No, I would argue. What is flawed is the way we define our costs. We do so only by using the most superficial accounting of our finances that is possible under general accounting practices. There is a social cost to moving these jobs, that is only partly illuminated by the “needs” in our community, as expressed in the United Way campaign. These costs are manifest in the decline in wages in Minnesota, in the rising unemployment, in the rising health care costs, and increase in the ranks of the uninsured. It is manifest in the environmental degradation of developing countries, and in the increasing use and price of fossil fuels. These are costs that will not appear on this quarter’s balance sheet, and will not reduce the short term price of a share of our stock. But I believe in my heart that in the long term it will be these costs that destroy our community, and our company.

So my response to our corporate campaigners is that I want to “Live United”, but the company just won’t let me.

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Farewell to China

Today was a first for my business trips to China. A day not spent working, but sightseeing with my colleagues. Some background. I planned this meeting last winter as a chance to get our global team together. We’ve been lucky enough to meet each of the last two years in Minnesota. But unfortunately, only one of the team from China has been able to attend. I was hoping that by holding the meeting here, we could get the 2 engineers, and the 2 saleswomen (yes, sales WOMEN in China, I run a progressive group) to attend as well as the country manager. So we planned the meeting for an amazing resort hotel, that cost a princely $59/night, right near our main subcontract factory in Dongguan China. This is like planning a sales meeting in Pascagoula, Mississippi across from the fish rendering plant. Business/Adventure travel.

Anyhow, my colleagues here planned the last day of our meeting to be a group sightseeing expedition, to a UNESCO world heritage site about 3 hours drive away from here. The Kaiping Villages are very unique. They were home to many expatriate Chinese, who emmigrated to foreign countries from the Pearl River Delta area, during the 19th, and 20th century. Leaving behind their families, to a country that was unstable and lawless at the time, they sent home money and constructed what is best described as “castle towers” for their families to live in. Built in a western style using materials shipped back from the West, they look like little “keeps” from the Italian countryside, not like something you’d see in a rice paddy in Southern China. The windows and doors were heavily fortified to keep out theives and bandits. Most of these men had 2, 3 or even 4 wives living in China in these family compounds. What I find most amazing, is that they are still family owned. Many still belong to foreign Chinese who only visit on occasion. The ones we toured were donated to the Government by the families that owned them, to be preserved as museums.

Enough words, lets show some pictures!

One of the many homes of Mr. Li (Lee)

One of the many homes of Mr. Li (Lee)

But that’s one of the more “normal” looking of the Dialou houses. Here’s a more typical example of some…

Dialou houses

Dialou houses

This shot is one of my favorites…

Zili Village

Zili Village

This one is taken from the upper porch of the home on the right…

artsy!

artsy!

There are even urban areas built in the Dialou style. This is a tidal river in the delta. Reminds me of Florence.

Hmm... OK, maybe the Arno was a little cleaner.

Hmm... OK, maybe the Arno was a little cleaner.

Did I mention it was hot? My god, I just about melted. Even my Chinese friends were complaining. Jeepers its hot here in August. Whose idea was it to hold a meeting here?

Oh yeah, right. Anyway, after sightseeing we left the clear air (yes, you heard me clear air!) and headed back to Dongguan. Within an hour my throat was burning again from the pollution. This was to be our last night together, and time for the traditional farewell dinner. They had planned a special location for dinner. A restaurant on stilts overlooking the Humen Bridge, and the Pearl River, in the city of Humen.

Pink is the new pink

Pink is the new pink

You will be surprised to know the specialty was seafood. But not just any seafood. Chinese seafood. Or as we call it in Minnesota, “Bait”.

Seafood or Bait?

Seafood or Bait?

OK, those white things in the tub were earthworms as thick as your thumb. The little back things were some type of swimming beetle about the size of a half dollar. And the other stuff was… well, does it really matter? After worms everything else is pretty much a let down. Suffice to say there was every imaginable crustacean, and squirmy thing that swims in the river delta.

And there was also alcohol thankfully. In fact, Mao Tai made an appearance. This time we were among friends, and there was much toasting, and picture taking. Laughter, and camraderie all around. And for one evening we were not 4 Hong Kong Chinese, 3 Americans, a Japanese, a Belgian, and a girl from Shanghai, but one team. It was enough to bring a tear to the eye of this sentimental old fool. Or maybe it was the Mao Tai. In any case, when we loaded back into the mini bus for the drive back to the Hotel, and good byes, I decided the time had come to pick up the karaoke mike, and serenade the team. (Yes, the mini-bus came with on board karakoe)

I sang John Denver a-Capella (that’s Latin for poorly) With a slight twist…

Almost heaven, Dongguan China

Kaiping Village, Pearl River Delta…

Life is old there, older than the trees,

older than the mountains, rolling like a breeze,

Country road, take me home, to the place, where I belong,

Dongguan, China, mountain-mama,

take me home country road…

It brought down the house.

What China looks like…

Not quite the China you see in on the Travel Channel, or the China you saw during TV coverage of the Beijing Olympics. This is the China of gritty Coastal cities, where millions come to earn their living, and send their money back home to the families they left behind in little villages in the West.

"Corner" Store

"Corner" Store

Welcome to Dongguan. Where a permacloud of pollution floats overhead. The streets are a free for all of buses, cars, motorcycles, and every concievable type of bicycle contraption you can imagine. I am always amazed at the amount of stuff they can pile onto a bicycle.

Pick 'em up truck

Pick 'em up truck

Store fronts are a row of garage doors. You rent a space, open the door and you are in business. Machine shop? Welding Shop? Grocery Store? Auto repair? Furniture Sales? No problem. Just put your stuff inside and you are open for business. Or if you can’t afford a garage, just spread your stuff on a blanket on the side of the road, sit on the curb and viola!

Machine Shop

Machine Shop

This is pretty common in developing nations all over the world. I would like to make some grand statement about human scaled economy, but I’ll pass. The fact is this is just how it is, and I don’t begin to understand it, or make a value judgment about its benefits and drawbacks. China is too big for me to wrap my little mind around. It can be a bit overwhelming, and intimidating. Only by making small, one on one connections with people can we begin to understand. With over 2 billion to choose from, it might take me a little while.

Dongguan

Dongguan