The Cotter Christmas Letter 2010

Have you noticed that the years seemed to be getting shorter? Well, you will notice this letter is also shorter.

First a report on Activities For Learning. Besides buying a fork truck we have an official board. Al appointed himself chair, Kathleen is secretary, Constance, Andrew and Joan tells us all what to do. Sales were good and Joan and Kathleen fly Elite (First Class) due to miles traveled. For additional info go tohttp://www.alabacus.com/.

Connie, Andy and Irene? Check out this web site taken on Andy and Irene’s farm:http://www.youtube.com/watch?v=kESFoVyLHX0

Connie also has taken over some management duties at AFL, temporely she says.

Irene is going in the gardening business and teaches Yoga. Andy helps with the gardening after his General Mills chores.

Kathleen is just overworked with two kids in college (NDSU) and two in high school plus AFL.

Joan does TRTW. (Travel, Research, Talk at meetings and conventions, and Writes). Also took a very enjoyable trip to visit her mother on her 96th birthday.

Al , who is phasing himself out of day to day activities for AFL spends the rest of his time monitoring activities on NETFLIX web site http://www.netflix.com/MemberHome and Al’s blog. http://alcotter.blogspot.com/. If you have a tendency toward high blood pressure do not read below this post.

Merry Christmas and Happy New Year

Joan and Al

The Path to Good Government

"Someone once said in a democracy, the job of the public is often to make it safe for politicians to do the right thing" In other words, Washington won't grow up until America does.

The above statement was taken from the November 22 edition of "Blomberg Businessweek"

So is America immature as implied? My opinion its fifty-fifty.

First, look at the transitional era we live in. This morning I have been up for two hours and have received twenty-seven e mails. Before the day is over this number will easily double. Then I look at a list of my peers (seventy years plus) about ten percent use e mail. Looking at the beginning of the other half is my grandkids.

This spring, Megan sixteen flipped her car seven or eight times into a gully a couple miles from home. Because she was wearing her seat belt, she escaped with miner cuts and abrasions. She crawled out of the car and made it up to the roadway and started walking toward home. She was meet on the road by her fourteen old brother, who was out checking on cattle with a pickup truck. Taking her home her, father immediately rushed her to the hospital where she was met with a dozen or more of her friends. This happened in North Dakota were some of her friend had to travel over twenty miles. How did this happen? Texting!

So what does this all this mean? Tell Megan a lie and she will check it out in minutes. Tell many of my peers and they will take months and maybe just accept it as truth. A perfect place for the development of anarchy. The Megan age group, not so much!

So what is the Tea Party? It is a mixture of people some with anarchist tendency. The smallest form of government is the family. And every parent who raised children knows the rebellion teenager go through. Megan is no exception I'm sure, but I am sure she will always remember "the government official(her dad)" who drove her to the hospital.

Politics is about who controls government. Anarchy is a way to get control by overthrow.

I have great confidence in Megan and her peers with the tools of modern technology to sort out fact and fiction. I don't have the same confidence of my generation and many of those in between.

The other day I received two e mails saying President Obama was spending two hundred million dollars per day on a foreign trip. In no time this was exposed as a lie by a reporter on a "main stream media" outlet, but not before it was repeated many times by the three college dropout talk show hosts, several internet outlets and Fox News. Many people today still believe the original lie.

A fact is verified by reliable sources who study and analyze it. Fox news, radio hosts Limbaugh, Hannity and Beck don't fall in that category, they only repeat the lie.

Facts and verification of facts will defeat anarchy and make good government.

The Tea Party Movement

Someone sent me this web site: http://www.foxnews.com/politics/2010/11/05/school-employee-sends-anti-tea-party-e-mail/

What was the possible messages and what was the intended message?

The intended message was you should not send out or have a political opinion if you work for a public institution such as a school, but it is okay for a public licensed institution to have a biased opinion, like Fox News.

But we all have biased opinions, but first a disclaimer!

It is bad for a small business to disclose a political opinion as it could hurt sales. Therefore I will always oppose political opinions expressed by a company I represent.

But in this blog I represent me. By my friends I have been called a extreme liberal, extreme conservative, a libertarian and a pragmatist. I like the last one the best!

Culture, education and experience shape our beliefs. Or is it propaganda?

I would like to share a story I carefully tell because three of us still alive.

This story is about a very diverse group in a dorm room at the University of Wisconsin. The discussion was about propaganda that was then used by the Chinese communist Government.

The participants were a Catholic of mixed decent, A Methodist of Scandinavian decent, a Jew, a Hindu Chinese from ---- ---- and a to become Jet Pilot who thought he might be God.

The discussion was about the Christian religion as a product of propaganda with the the Jew leading that argument. The Jew challenged us to participate in a experiment. We each would spread a rumor that some disaster was going to occur on a specific date. We would spread this rumor at fraternities and other dorms where we had connections.

In three weeks this rumor was published in the Milwaukee Journal followed by followup story(s) in other Wisconsin newspapers. The rumor worked!

The followup to this true story is the Jewish students argument was how Hitler came to power in Germany with the use of rumors.

We in the US must be on guard on any limitation of free speech. And let me make it clear that I have not repeated this story because I always believed spreading false anonymous rumors is wrong. But a recent Supreme Court ruling has declared anonymous spending of any speech is O'K (Citizens United v. FEC). This has vindicated me.

Education or Experience

What is more important, education or experience? The answer is both.

Lets take a look at experience first. Does a person have thirty years experience or one year experience thirty times? In fact if one had the same job for thirty years this person experience will depend on the job or vocation they are in. A craftsman experience would depend on employment location and craft. A machinist gains experience slower than a tool and die maker. For example a machinist works from a engineering drawing. Experience is gained by new shapes and materials. In contrast a tool and die maker is given a drawing of a shape and from this drawing must take in consideration material characteristics to create a die that makes the part.

The difference is education of a machinist and tool and die maker.

Knowledge from a Mentor

Much, if not all of our knowledge is based on mentoring. A dictionary definition of mentoring is "an influential senior sponsor or supporter".

Our first mentor is our mother and father. From the next is the environment we grow up in. As we move to formal education and filed with facts and methods our teachers methods and their philosophical tidbits that determine our personalities.

Not all mentoring is done by a superior. As I have used Professor Harrison and Dean Bollinger as a example, they solicited me, a student with unique experience, as a mentor. I also believe their quizzing of me was not a unique experience for them.

Also the senior Professor Harrison was mentoring a future Dean Bollinger and a forever grateful undergrad student, me.

Innovation and Investing

Which comes first, innovation or investment? Unlike the chicken and egg question, their is a answer for the investment-inovation question. In a early post, I said innovation comes first. But the fuel for innovation is knowledge.

How do we obtain knowledge? By three methods: Mentoring, formal education and training and experience.

All start the mentoring the minute we are born. We eventually have several in our lifetime but our first mentors are our parents. Unless we become a hermit, mentoring is a life time experience. And mentoring can be either positive or negative.

I have been fortunate in my life that the most mentoring experience has been positive. But often the source of a mentoring person is both positive and negative. And example that comes to mind is my good friend Stan. We share experiences and often seek the other for advice. But also remember when we used to test our "Fords" on public highways. I have grounded my own children for doing similar testing.

When I was in college at University of Wisconsin in Madison my favorite professor was Harold Harrison. He was of course called "Harry Harry" or Harry to the second power. He also advisor to a PHD candidate by the name of John G Bollinger, who latter become Dean of the college of engineering at the U of W. I also took a class from ç in advanced vibrations analysis. One time when I was in Harry Harry's office Bollinger came in and as we ended our official business I was invited to join them at the Hasty Tasty for a glass of beer. Why? Because Professor Harrison and PHD candidate were academics and I had about 4 years experience at 3M. They were "picking" my brain about my 3M experiences and I recall the question how my studies related to my possible future employment at 3M.

All three principles was coming together at that social event; mentoring, formal education and experience.

In future blogs I will discuss each of these knowledge accruing methods.

Why The Stimulus Did Not Reduce Unemployment

The answer is easy, employment is not where the unemployed live or they don't have the job skills. You cannot hire a car parking valet for high voltage line work.

Today I read a editorial from a The New Times that compared Germany to the US in economic recovery. This comparison was made from staring out the window of his Manhattan office with a severe case of backyard-itis. First of Germany is a small country-state with a stable political environment. The US is a very large country with 50 states and a very confrontational political environment. I will make another comparison to Germany, and the state of North Dakota. In GDP the are not comparable but in many places they are alike . Let me enumerate.

1. North Dakota (ND) has lower unemployment than Germany.

2. ND is a state with many natural resources of which value is added and like Germany have many exports of value added work.

3. Germany has many socialistic tendencies, like health care. North Dakota has its own tendencies, with a state owned bank. Also it is a promoter of cooperatives where a one owner share has the same voting power of a neighbor with a thousand shares.

4. Germany has a highly developed infrastructure and by ND comparison does not. But ND infrastructure is very functional and is constantly being improved. A place where ND and Germany is familiar in broadband internet. ND like Germany is wired!

5. The area Germany and North Dakota is most alike in a functioning political system. Like the rest of the US they have a Republican and Democrats, but in ND they function as a team. The three major news papers are more about progress of ND rather than divisiveness. For example this Saturday the Minot ND paper has a headline about "Building Partnerships". The New York Times head line is "Tea Party Claims Dr. King’s Mantle", a very divisive headline. In Germany they debate policy, not personalities.

6. Germany and ND are most alike in the educational system focuses on skills development. To many colleges in the US do not provide graduates with work skills that add value. I even know of a college in Virginia that says it goal for graduates is to go into government.

The reasons for unemployment are many; lack of skiles , location and the biggest of all, lack of demand.

How are Jobs Created?

Why are jobs created? That may be the better question.

We compensate (pay) people for a service we want or a person is hired to make something which adds value to a some material that we grow or purchase. If no one wants or needs services, jobs will be eliminated. If people don't need or don't have money for more "stuff" workers are not needed.

But jobs are needed! We need to innovate! We need to invest!

Innovation comes first. I can think of several examples. Creative marketing is one of the quickest ways to create jobs. Books are written on this subject but the master is Steve Jobs, CEO of Apple. Just go on the Apple web sight and view a free marketing lesson. Its also a good lesson on web design. Another marketing genius, take a look at John Deere. More about John Deere latter.

Some politicians would have us believe small business is the economic engine that creates new jobs. This not true because startups employment is offset by failures. The successful one's grow into large companies and continue to research for business opportunities. A business to be successful must embrace change. These are the businesses who create jobs.

John Deere has not taken a straight line toward success. They have recovered from several misjudgments according to published literature. Two worthy of mention is the reluctance of senior management to go beyond the two cylinder tractor and and the slow adaption of the rotary combine. How did they recover? By a hiring strategy of the best people from the land grant colleges of the midwest. And from these minds came the philosophy of building agriculture production equipment for producers rather than farm machinery.

This is how jobs are created, by making investments in the best, well educated people.

I believe we are losing sight of the many investments needed in our education systems and need to refocus.

Job, jobs, jobs.

After listening to Sunday morning talking heads, I heard little deviation from the script. Key words were small business, regulation and tax cuts. Nobody seemed to have any specific facts or examples. Just shallow spin.

I cannot resist commenting on the Barbie and Ken clones travel network to network who travel talk show to talk show with the same recording. Someone rewinds them and send them on with a new blouse or new tie.

My own experience says we have a new economic model, or to say it different, we are in a reset economy and the "noise" of old economic models aren't valid.

Since the 1980, we have two economic models emerge. They are the service jobs and Dot.com jobs. Neither of which added value to something tangible.

In April of this year Joan and I were attending a sales convention at Rochester Minnesota. When we arrived at our Hotel we were greeted by a two valets, one to park our car, the other to take our bags. Another valet was needed because the first did not know how to drive my 2010 Prius. We now have three non productive workers employed doing nothing of value.

Now reset the economy! Reduce the amount of valet types needed at this hotel. Where do these people find jobs? Their skill sets are obviously limited.

Recently on the online Wall Street Journal there was two front page articles, one about the increasing joblessness, the other about the inability to find skilled workers to hire. The Wall Street Journal could have reconciled these two stories into useful information but they too lack skill sets to do any meaningful analysis.

When there is a reset economy, there is worker displacement. This is very common in a dot.com industry where boom and bust is spaced by months not decades. Upon bust (bankruptcy) workers are displaced. If the only job they can find is one hundred miles away from their present residence they could have a problem. This would be compounded by having a home that loses its value. In this case we have a displaced worker must not only move their family for a new job, they may have to abandon a home. In this case the displaced worker has marketable skills but moving is a major endeavor. What is the solution?

Economic theory says labor is mobile. In fact government policy of promoting home ownership and its tax structure has promoted immobility. Eventually labor will move toward jobs by the young new workers.

But these young workers must have skill sets that are needed. The problem with the job market suffering on lack of skills and immobility will not be solved immediately. There are three solutions; attrition, education and retraining, and mobility. I don't believe these job issues have been fully addressed. We need good short term solutions. And we must realize that many low skill service jobs are gone forever.

Political Party? Culture or intelect?

Are political party affiliations determined culture or intelect. While my first reaction may be culture or intelect, is in fact both. Let me explore the paths that affect our political choices.

As we grow up in a family we take on the culture of our parents. This culture is based on the matching of two cultures and if the marriage is successful, a third culture emerges.

As a individual starts to separate themselves from the family, the intellectual pursuits again changes their political views.

For example as a student who would study the economic theories of Adam Smith on accumulated wealth, could alter ones political views.

One of the most interesting political changes is the South from a Democrat stronghold to a Republican stronghold while keeping most of the same philosophy.

Perhaps the more interesting question is why did these changes take place?

Governor of Minnesota

I am going to support Margaret Anderson Kelliher for Governor. To back up my decision I will make my first donation to her campaign of $100.

Why did I select her now over the other two fine DFL candidates? Issues and management! The issues are education and renewable energy. Her management is the appointment of John Gunyou as her choice as lieutenant governor. John Gunyou cannot be easily labeled politicly and has demonstrated he is a fiscal conservative.

One of the best demonstrations of good management is surrounding yourself with good people to compliment your skills. Margaret Anderson Kelliher clearly demonstrates this with her legislative record and the appointment of John.

HOW MUCH GOVERNMENT?

How much government do we need? Well, maybe more than Somalia and less than Iran. But the rant and rave crowd says we have to much government which interferes with our freedom. But why are we able to complain over many communication outlets. I would like to look back in history and look at our federal and some states involvement.

Just twenty six years after the signing of the constitution in 1787, we made the Louisiana purchase.

In 1847 California joined the Union following Texas.

The land grant college written by Morrill was first vedoed by President Buchanan (Democrat) and resubmitted and signed by President Lincoln (Republican).

A few years later the civil war started and the slaves were freed in 1865.

After the civil war Federal Government gave land grants to the railroad company's to go west.

In the late 40's we had the GI bill which gave a advanced education to returning soldiers from WWII.

In the 1950's it was the interstate hiway system funded by tax dollars.

In the 70's to present, the rewards of the land grant college system and its expansion are a full book of achievements.

To mention just three,(1) Internet, (2) GPS, (3)Hybrid corn

Where I grew up Wisconsin in 1950 a good crop of corn was 50 bushels per acre. The 2009 harvest yielded a average of 200 bushels. The engineers and scientist educated at land grant colleges are the primary authors of the three achievements. Look at the preceding blog as a affect on jobs today.

The rant and rave far right tea party group of today would do non of the above.

Is government action always good? NO! That what our democracy does, it is the control we all have.

The rant and rave far right tea party group to day say the stimulus program is ineffective. A part of the stimulus is a 30% grant for new wind generation is a job producer, income producer and tax revenue producer. More about this later.

Ethanol Economic Impact

The blue highlighted below is a report on the economic impact of ethanol on Minnesota economy. Jobs and economics would be suffering if a few of us farmers hadn't took on the task of bringing ethanol to the state of Minnesota. As a former State Director of Minnesota Corn Growers Association (MCGA) and one of the strong advocates of ethanol in Minnesota, I am very proud of this.

Ethanol industry pumps $2.5 billion into state’s economy Minnesota's ethanol industry generated more than $2.5 billion in economic activity in 2009 and supported more than 6,800 jobs according to a new report from the Minnesota Department of Agriculture (MDA). Ethanol production in the state increased to 862 million gallons in 2009 from 550 million gallons five years ago. The MDA report estimates the industry is on tap to increase production to 1.1 billion gallons this year with a projected economic impact of $3.1 billion and approximately 1,500 additional jobs.

Minnesota Agriculture Commissioner Gene Hugoson says the rebound is good news for the state’s 21 ethanol plants, half of which remain farmer-owned cooperatives.

"The ethanol industry’s downturn in 2009 was felt on farms and in our rural communities,” said Hugoson. “This year is looking much better in terms of increased production, economic impact and employment.”

In 2009, Minnesota processed 308 million bushels of corn into ethanol or about 29 percent of the state's total corn crop. This year the industry is projected to process 400 million bushels of corn or about one-third of the state's crop.

Marketing

I have subscribed to Business Week for at least twenty years. I did not renew my subscription for several years, as it suffered in quality and after the 2008 Wall Street meltdown it seemed to loose more and more advertising revenue. In about 2009 Business Week was sold to Bloomberg Press. When Bloomberg Business Week appeared I subscribed.

In the gap between Business Week subscriptions I subscribed to the Economist. Bloomberg Business Week covers news of the United States. The Economist covers the world news! I have noticed many characteristics and styles from the Economist appear in Bloomberg Business Week.

But one thing did not change in Business Week, it was more anecdotal while the Economist was more quantitative. For example, the Economist has three to four pages of economic and business data. Business Week has none.

All this asks the question, how do you market to the readers of each magazine. This was no better illustrated than in this weeks (July 20, 2010) issues. There was a add in both magazines for the Ford Focus mid size car. The difference was the Economist featured the hybrid model stating in bold print that it gets 41MPG and runs on battery part of the time. In Bloomberg Business Week the ad said "We hold our value to a higher standard". Whatever that means.

The lesson in marketing is Ford places adds to the audience. It thinks the Economist readers are more analytical.

Tax Policy

Does tax policy have an affect on the economy? You bet it does, both positively and negatively. To clear all impressions, I don't like paying taxes. Thats one of the reasons why I drive a 50 MPG Prius. I pay about one third less gas tax than most people.

Just looking at the gasoline tax, we all benefit from good roads. My friend who drives a pickup truck averages 15 miles per gallon. He pays three times as much tax as I do per mile driven. At some point he will wise up and drive a vehicle that gets as good mileage as I do.

And the tax debate will start. How do we create highway infrastructure with sixty six percent less tax revenue if we all drive cars that get 50 MPG. We would have to raise taxes. (Actually my buying the 2010 Prius had another negative impact on tax revenues. It was designed and built in Japan, not by American engineers and auto workers who pay taxes.)

Cutting taxes can improve tax income to government. A case in point, as part of the stimulus a special tax credit was given for a lithium ion battery factory in Michigan. This factory will sell 80% of its production to power the new battery powered Volt car from GM. The employees will pay taxes and income spent in Michigan will raising the economy and will more than offset the reduced taxes.

We need to have a comprehensive discussion that goes beyond the present tax cut politics. We must talk about investment, like the battery factory in Michigan.

Fifteen Percent Ethanol

Recently the EPA stopped moving forward on approval of a fifteen percent Ethanol blend. This would be an increase in deficit spending. The increase in ethanol blend could increase deficit by 300 billion per year with the 50 cent blend credit paid to oil companies. For example, British Petroleum was paid a blend credit of 600 million dollars. If they would have blended 15%, they would have received 900 million dollars.

The question does payment of a blend credit create enough jobs and tax revenues from those jobs to offset the expenditure. I can find no published papers that would say this is a investment. It is only an expense to the taxpayer.

To make matters worse, a recent supreme court ruling allows BP to take the taxpayer money and buy legislators.

I think we should cease the blend credit, raise the blend of ethanol to 15% and corn growers and ethanol industry should launch a major promotion program with emphasis on clean air and jobs.

Investing.

This week as I read my two news magazines, it occurred to me the absence of a word that has been important to me. The word is investment.

Bloomberg Newsweek had a article on unemployment and reported about factories that were being proposed to be built in Michigan and New York, but were finally built in China. Why? China offered incentives removing much of the risk to the investor(s). While the Obama administration has proposed significant incentives, it is being opposed by politicians who label it a socialist activity. Purpose, To defeat Obama and supporters of Obama.

My own experience with investment was when I was in college at the University of Wisconsin. I quickly learned that buying a book and taking a course in thermodynamics (4 credits of a 19 credit semester load) was a investment. Going to the Hasty Tasty and buying a 128 oz pitcher of beer was an expense.

Without doubt the greatest investment I have made was my education. And I believe it is with many people. But today we view education as a expense. It has been demonized because it is paid for by taxes. And public schools fall in the category as a example of socialism.

If the United States is to continue to be great we must encourage and make investments. And we should understand the difference between an investment and expense.

The two factories I started this blog with were growth industries. The one in Michigan was going to make Lithium Ion batteries. {Addition: I have learned this is reference to a second factory to make batteries. A factory is being built using stimulus funds. This factory has contracts with GM for the Volt.} The factory in New York would have made LED lights. Both of these are component for a growth industry. China and the anti investment, anti Obama people won.

Supply side economics

In early 90's there was surplus of corn. Some people thought we had to reduce supply to meet cost of production. Then some progressives got together and formed a coop to convert corn to sweetener. (A coop is a organization where each member has one vote regardless of investment made vrs a capitalist company where votes is based on value of ownership.) Soon that market was saturated and corn piled up and price dropped. I remember corn below one dollar at harvest.

Then some one remembered, Henry Ford built the Model T to run on ethanol. Corn made good ethanol. A few farmers (producers) got together and formed a organization to promote ethanol. This immediately raised the ire of the importers of energy and the shrinking gathers of domestic mobile energy and they turned loose the ranting crowd (publicist, talk radio and political lobbyist) trying to convince the consuming public that the use of ethanol would destroy their car. And what did this producer group do? They applied political pressure to the State of Minnesota to mandate ethanol in gasoline. They mandated demand. Corn growers got more for their corn and hired publicist and lobbyist to promote the use of ethanol. Other states saw the success in Minnesota and promoted ethanol in their states. Because of the surplus of corn in the 90's more research (read jobs) was done to improve the production of corn. The taxpayers of Minnesota even paid subsidies for producers to make ethanol. And because producers made more money and hired people to build and run ethanol plants who all paid taxes, for each penny invested by Minnesota taxpayers, at least three cents was paid by the new ethanol industry and its workers And even as less acres are planted more corn is produced. Today corn is selling at $3.70 CBOT.

So this story begs the question. Should we promote supply or demand side economics?

This is my second blog enterey. Originally I promised myself to enter some thing every day, and now am learning how to use as I watch and listen "Standing in the Shadows of Motown" Later today I will publish my political views which will change tomorrow.

First Blog

This is my first blog in 77 years. Actually its my second attempt this morning to publish but was distracted and it disappeared. What will I blog on? My opinion based on my experience and current activities. So I will start by my activities for to day, Sunday June 6.

I Made my first pot of coffee at 4AM. I use the morning to listen to news and read magazines. This sunday I didn't turn the The TV on till 5AM to listen to the Wall Street Journal report.

What did I learn, That the hotel business is coming back, but the convention resort business is in the "ditch".

I also read a very interesting article published in the "Blomberg Business Week" about how Duke Energy is involved in and supporting global warming legislation. It was interesting when the CEO of Duke testified in front of Congress, it was reported his enemies became his friends and friends became enemies. This reminded me of my corn grower days lobbying for ethanol when Senator Kit Bond of Missouri did not support Ethanol and Charlie Rangel, congressman from Harlem NY city supported ethanol. Go figure.

This is my new learn something new moment; a blog. So what will I blog about; anything that comes to mind. I will talk about travel, politics, economy, family events, Activities for Learning and just general comments on my seventy seven years of life.