’tis the season

I hope you all had a Happy Thanksgiving. This 4 day respite from posting has been wonderful. It was a thoroughly restful Thanksgiving weekend spent with family, honoring traditions, and getting into the post Thanksgiving mood.

The potica has been baked. And I must confess we did cut into it, and it was delicious. It is a tradition of Mrs. 20 Prospect’s family to bake Potica for the holidays and serve it for Christmas dinner with Ham. In my family, we used to call it Nutroll and it came in a sweet nutty version and a version with poppyseed filling. I have done some research on Potica and it seems to be a common tradition across the Balkans and Eastern Europe. There are different version in Poland, Croatia, Slovenia and the Ukraine. Potica is the Slovenian name for it, and Mrs. 20 P’s version appears to have come down from her Slovenian roots.

I have gladly adopted this Christmas tradition. Baking the bread is an all day event, and requires extra hands when the time comes to roll out the dough on the kitchen table, spread the filling, and roll the bread. It takes 3-4 people to stand shoulder to shoulder rolling the dough to ensure a tight loaf with no air pockets. There is always much teasing come Christmas about whose loaf is whose.

Potica - as sold by a small bakery up on the Iron Range - Order yours today!

I also spent time hanging up the Christmas lights, and setting up the Christmas display. None of those tasteful, classy, white holiday lights for 20 Prospect. No sir, we ain’t no reserved Lutherans. We go for the full on multi-color lights and giant molded plastic figures in our yard. I must say, one of the great things about being Catholic is the way we can assimilate anything into some niche of tradition. For instance, Piglet and Eyeore make a fine addition to the manger scene. As do the reindeer. Throw in some polar bears, and a penguin and I am considering building a light up ark next year. I have a special name for the style of holiday decorations I put up around 20 Prospect. I call it “Vegas-Baroque”. Carbon footprint be damned, it’s Christmas!

Nothing says "North Pole" like a penguin

and the Pengiun would be lonely with out some Polar Bears to keep him company

But the biggest event of the week is the delivery of our kitchen appliances today, after 6 weeks of living in the basement, cooking outside on a Coleman stove, as we remodel the kitchen. The only thing left is to put up the tile on the backsplash, and then I will reveal “The Great Kitchen Remodel of 2009” to the world on this very blog. Stay tuned.

In the mean time, enjoy the holiday light display, and meditate on this season of darkness as we prepare ourselves for the coming of Christmas. Peace.

My Burl Ives display...

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Over the river and through the woods…

I’m back from our whirlwind tour of the great State of Wisconsin.  A place very near and dear to my heart, as it is the ancestral home of Mrs. 20 Prospect. From the moment I first entered the state in August of 1989 and saw a billboard advertising “Beer, Cheese, Food” I knew I had found something special. Any place that elevates Beer and Cheese to the same level as Food is a place I want to be.

The impetus for this trip was a visit to hollowed ground, to pay our respects to the warriors that have come before, and sacrificed their all for the glory of Wisconsin. Yes, I am talking about Lambeau Field.

Not frozen yet

For me and the Mrs., this was our second pilgrimage to Lambeau. On our first visit 9 years ago we saw the Favre led Packers defeat the Manning led Colts. This time the Pack were playing the 49er’s, in weather more suited to the Bay Area, than Green Bay. It was a balmy 57 degrees at kickoff.

The North End

The stadium being sold out in perpetuity, tickets should be impossible to come by. And yet it seems like everyone in the state knows a guy, who knows a guy. In our case Mrs. 20 P’s little brother buys his tickets off of a nice little old lady who doesn’t want to go to the games and has no family to share them with. So we were blessed to be 4 rows up at the 15 yard line. So close you can hear the players grunt.

Go Pack Go

This was our first visit to the stadium since the big remodel. I have to say that very little about the place has changed. When Lambeau was first opened as City Stadium in 1957, it was just a small concrete bowl seating only 32,000. Over the years it has been expanded several times to it’s current 72,000 capacity, but it retains that small intimate feel. I have never been to a happier stadium to see a sporting event. The mood is just giddy on game day. I haven’t seen so many well behaved drunks in one place since the last meeting of the U.S. Conference of Catholic Bishops. Packer fans may be total rubes, but their attachment to this team is something unique in professional sports. The community really does act like they “own” the team, because in some sense they do. They are a publically owned non-profit corporation. Regular citizens have bought stock in the team to raise the capital to run them, but their articles of incorporation are set up for non-profit status.

How’s that for a Front Porch Model for sports? Some other nice touches, are the fact that the cheerleaders are “borrowed” from the University of Wisconsin Green Bay. No strippers clad in bikini’s pole dancing around the goal posts. We were also lucky to be at a game attended by the University of Wisconsin band. So we were treated to their fifth quarter show after the game.

On Wisconsin...

Dancing the beer barrel polka in the stands, after a Packer victory is about as close to a second wedding reception as a couple can get. In fact, it was the first dance at our wedding reception back in 1995.

After a wonderful visit with their cousins, we surprised the kids with an overnight stay at a Waterpark hotel in the Wisconsin Dells. It was a welcome family vacation, and a nice break from living in our basement as we wait for the kitchen to be complete.

So after our 3 day circumnavigation of Wisconsin we are back in the Twin Cities for a short stay for the Mrs. to put in her required holiday shift at the hospital, before we head back over the river to the promised land for Thanksgiving.

So a happy Thanksgiving to you all! See you on the other side of the river.

Minnesota Hockey

M-I-N-N-E-S-O-T-A

As I have said before, Hockey is a Cult here in Minnesota. Let me explain, what I mean by cult. When I first moved to town the NorthStars were in their final days before relocating to Dallas. I was surprised and shocked to read the local papers and see Hockey relegated to page two status in the Sports section. I had always assumed that Minnesota was a hotbed of hockey, due to the long tradition of professional and amateur players and coaches. So it was shocking to see that Hockey’s popularity was not as widespread around the Metro area as it is in any Canadian city, or even a place like Boston, or Buffalo.

However, what I did discover is that those that do follow the sport, do so with a certain religiosity. They are an insular group that is intensely passionate about all levels of the sport. I think that this is what distinguishes the Hockey Cult here. People don’t just follow the NHL, they also follow the college game, the national team, and the high school game. A cult in the truest sense of the word.

Growing up in Western N.Y. in the 70’s, our family followed the great Sabres teams of the period. The French Connection of Perrault, Martin and Robert, and the heart throbs like Jim Scoenfield and Danny Gare were household names. We played street hockey dang near every day from November to May in the street in front of 20 Prospect. The youth game didn’t come to town until the 1980’s when Batavia finally built an ice arena,  far too late in my life for me to play the sport, but it never stopped me from loving it.

Going to college at Clarkson exposed me to the Division 1 college game. So when I arrived in St. Paul in January of 1993 I was happy to be back in Hockey Country. It was an eventful time in the history of Minnesota hockey. The evil Norm Green was moving the beloved NorthStars to Texas, and the University of Minnesota was getting ready to open a brand new hockey arena on their campus. In the High School ranks, the State was in the midst of transitioning to the divided large school / small school divisions at the State Tournament. Depending on who you talk to, this was either the beginning of the end of Old Time Hockey, or the dawn of a new day.

The first hockey game I attended in the state was on Friday March 12th, 1993 at the old Mariucci Arena. It was the first of a two game WCHA playoff series against the North Dakota Sioux. I returned the next night to take in the second game of the series, and the final game to be played in the old arena. Old Mariucci was in the other half of the Barn, housing Williams Arena, which is still the home of the basketball team. It had been converted from a field house into a Hockey Arena in 1949, and had an odd quirk in that one end of the rink protruded under the stands of the basketball arena, resulting in an odd, low ceiling, that had a habit of deflecting pucks back down into play.

The Old Mariucci Arena, in the process of it's conversion for Hockey

The next season the Gophers moved into the new hockey palace that they were building across the street. Named, oddly enough, the “new” Mariucci Arena. My friend Chris being a grad student at the time, we went in on a set of season tickets for the inaugural season. This past weekend, when he was in town, we paid another visit to Mariucci for the Gophers game against Bemidji State, and I brought along my camera to take some pictures. Mariucci is without a doubt, the finest building I have ever watched a hockey game in. There isn’t a bad seat in the place, and the facilities are first class. It holds just over 10,000 people, but feels so intimate that it seems much smaller.

Cathedral of St. Mariucci

While the Gophers dropped the game to the Beavers, and continue to flounder through another year of mediocrity, I couldn’t help but enjoy myself. Sitting 3 rows up behind the glass for all of $25, what’s not to love?

great seats, eh?

For more on Minnesota Hockey visit the amazing Vintage Minnesota Hockey site, which is the most comprehensive site on the intertubes for the Minnesota Hockey Catechism.

Nice place, but a bit of a rodent problem...

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

On writing

There are some days a guy just doesn’t feel like writing. And then there are some weeks that are a succession of such days strung together in a row. This is one of them.

So, I could take a day off, but my creative writing professor, or maybe someone I once read, said “Writer’s write”, and it is hard to argue with such simple and straightforward logic. So I will continue to persist in my delusion of being a writer by writing whether I feel like it or not. Which leaves me flailing about today for a subject. So rather than fall back on the old trusted blogging standby of saying “Look here! Someone somewhere else has something interesting to say!”, or the equally effective repetition of what I had for lunch today, I will address the subject of writing.

Today’s guilty confession: It was my dream to be a writer.

Yes, I wanted to be a writer. Not just any kind of writer, but one of those big important types that write books that people like to say they read, lest they be deemed light weight. You know, the kind of author that ends up in Contemporary American Literature syllabus’, not the kind who’s books  ends up in the checkout line at the Supermarket. There was just one problem with that plan. Talent, or the lack thereof.

Then there was this other consideration. Pragmatism. I have always been a guy who tries to get the most for the least amount of effort. Some call this efficiency. I call it laziness. In this particular instance, I started down a road to be a Mechanical Engineer in the hope of landing a job that would pay well, and become a career. Not out of any love for mechanical things, or desire to do whatever it is that engineers so. Purely out of the desire for the stability and security of a steady income.

Well, in a somewhat reverse Faustian bargain, I did eventually succeed to sell my soul for a relatively safe, steady, and unremarkable career in Engineering. Mission accomplished. Although along the way I realized, relatively quickly I might add, that I had no aptitude for it. Sitting in my engineering classes in my Senior year, I knew that I was lacking something that the other students had, a passion for the numbers, and science. Instead, I had a passion for literature, and psychology, and the human condition. If I had played to my strengths I would have gone into a liberal arts program, and pursued a doctorate in English Lit, or Philosophy. Instead, I made that fateful Faustian bargain, and saw the Mechanical Engineering degree through to it’s conclusion out of pragmatism. I also must admit it was out of fear of admitting failure, and having to start over. (I hates to lose.)

So I soldiered through, and tried to carve my little niche out of the engineering world, by being the practical project engineer. The guy that found a way to run a project and coordinate the work of others to get things done. I soon discovered that I had a talent for it, mostly because I could move in both the technical world of engineering, and the absurd world of management, and communicate with them both. So I made a career out of being an interpreter, and working in the middle. I also discovered a knack for quickly analyzing processes, and systems, and finding ways to circumvent them. This is a talent that is necessary if one is ever to accomplish anything in a corporate environment. Despite the best of intentions, all processes and systems exist to thwart the efforts of the organization to accomplish their goals.

It was this talent that led me straight into the ranks of middle management, where I have become comfortably ensconced as a willing vassal of my dark corporate overlords. Oddly enough, I am not fulfilled. So I dusted off my dream, and began writing. Well, if you can call this writing.  I have no idea where this blog is taking me, but so far I have enjoyed the ride. I hope you are too.

 

Hell’s Kitchen

The great kitchen remodel of 2009 is continuing apace at 20 Prospect. We are doing our part to single handedly re-invigorate the local economy, through our spending of 20 Prospect Stimulus Dollars on new cabinets, floors, fixtures, and appliances. So if you notice a bump in the economic figures for Minnesota, rest assured, we are behind it.

Actually, the main reason behind the remodel was to reduce our carbon footprint, by installing less energy intensive appliances, and replacing the garbage can with an indoor, self composting, disposal. Not really. Neither the local economy, nor the environment had anything to do with this project.

Our home was built in 1959, and came equipped with a very modern kitchen. It had a built in oven, and range top, in a classic 1950’s style, complete with pocket doors leading into the dining and living room, to shield the guests from the noise and splatter from the kitchen I guess. Perhaps in the 50’s housewives were still beheading the chickens right there in the kitchen, so the doors served as a way to keep the headless chickens from running through the house.

Mrs. 20 Prospect in the Kitchen - Sure wish she wouldn't smoke that corncob pipe in the house...

When we bought our home in 1995, we planned to remodel the kitchen, but one thing led into another, and the kitchen project kept getting bumped for other more urgent projects. It was functional enough to serve us well, but we were wanting for more. More cabinet, more counter top, more debt. Finally, after 14 years we decided it was now or never.

just kidding... here is the real Mrs. 20 Prospect hard at work.

So in October the project began by gutting the 1950’s era kitchen. For the past month the 20 prospect clan has been living in our basement family room, cooking outdoors on the grill, and Coleman stove, and eating around the card table just like the pioneers. Well, minus the Indian attacks.

After 4 weeks of work, it is finally coming together. If all goes well, we will have running water, and appliances by Thanksgiving. Just in time for Squanto and the tribe to come by for dinner. Actually, now that I think about it, this is Squanto’s year for hosting. So I guess we’ll be having the Turkey buffet at the Casino instead.

I love our little 50’s suburban Rambler. It is just so dang functional, that despite the house envy we get from time to time, it’s hard to imagine me and the Mrs. ever moving. It might get a bit tight at times, but to be honest, the chillun’ are half grown already, and it won’t be long and we will be sending them off to college, and watching them move out and start a life on their own (fingers crossed as I type this). And then the place will seem roomy again, for a couple of empty nesters. But what a fine kitchen we’ll have.

Oh Lucy! I'm home!