Phil Hauck's TEC Blog

Sunday, January 25, 2015

Teaching Capitalism to Catholics

       Excellent column recently in the WSJ, trying to reconcile the practice of “free" markets with Catholic “social justice” principles … the accusation being that the two are incompatible.  Actually, quite the opposite.
The Catholic position posits that the following are  critical components of a “just” economic system:
    •  Protection of private property and human freedom;
    •  Concern for the common good (meaning, all people);
    •  Respect for human dignity;
    •  “Preferential option” for the poor.
Capitalism, properly formulated, does exactly this.  These are the Morals that must underly the practice of capitalism (which in a standalone form is amoral).  Indeed, even mediocre practices of capitalism have resulted in lifting more people from poverty than any other system ever tried.
The problem is that virtually every government corrupts capitalism.  Politicians listen to business advocates and pass rules and taxes that favor somebody over somebody else.  It’s plenty bad in the U.S. (witness the need to pass major tax reform that removes huge numbers of tax advantages for certain businesses), but much worse in other countries, especially Italy.  Lobbyists aren’t all bad, but their job is to advocate for regulations and tax changes that benefit their sponsors … to the detriment of someone else (whether other businesses or the general populace).
Yes, there need to be regulations and codes … but only the ones that provide the moral foundation desired by “the people” generally, and not specific interests.
The corruption of capitalism by politicians serving special interests (companies and business associations providing campaign dollars clearly want influence) is what is giving capitalism a bad name.  
So, decide what regulations and taxes we want to change … and the more tax breaks/deductions/credits we eliminate, the “purer” a capitalistic free market system we’ll have.  The trouble is that someone is benefiting from every one of those tax breaks/deductions/credits … and will be arguing and funding against the changes.
PS:  As far as the “preferential option” for the poor, we have that … in the form of Earned Income Tax Credits, housing allowances, what used to be called food stamps, training grants, unemployment comp and the like.  All are good, to the degree they benefit those while they are unable to fend for themselves.

Stimulus Spending and “Value Creation”

There is lots of justified criticism of the various stimulus spending efforts designed to pump spendable dollars into the economy.  There are too, too many examples where the dollars spent haven’t resulted in the gains predicted.
Recently, I read of using the metric of Projected Value Creation to analyze what would be the additional value in dollars that would result from spending on the project.  So, think “Value Creation.”
And projects should be separated into at least two categories:
1.  Infrastructure … like capital expenditures in private industry terms … investments.  What will be the dollar returns each year into the future, discounted to the present.  To what degree are these “gifts that keep on giving”?
2.  Direct payments to people (to buy “clunkers,” or just to give away $300/person, to cite prior examples) … which are effectively welfare.  They may be justified as a short term stimulus to let disadvantaged people buy some more, but should be characterized as such.  They are effectively one-time spends that don’t really create jobs.  If not, what is the dollar value of the “Value Created.”
Good metric.

James Kotecki, Madison Humorist/Observer

      Recently, at an NWTC-sponsored Business Success Conference, I heard one of the keynote speakers make some funny and insightful points on the topic of “Escaping Adulthood":
•  Adultitis is a terrible disease, with a major side effect of stress.  You’re in a “rut” rather than a “groove.”  One sign:  When your cellphone is a body part.
•  “I’m very excited to be a Dad.  It takes only 5 minutes a day, and qualifies me to be a We-man.”
•  Nothing beats being “original.”  In the Music Hall of Fame are NOT people who sing Beatles songs, but the Beatles themselves.  Figure out and BE your original!
•  See with New Eyes.  Keep asking Why so you get past the “we’ve always done it that way syndrome.”  Find out the real reason rules are created, and whether they still apply … because bypassing them may open new vistas and ways of thinking and seeing.

Book: Controller as Business Manager

        A Milwaukee friend of mine, Jim Lindell, with a great CPA background who works with CEOs and senior teams, has written this book to inform financial executives on their emerging and needed broader role in the organization … the necessity to see broader business issues, to be proactive in helping other senior managers know what’s working and what’s not, and what to do about it.
If you think your financial head could use this, forward this item to him/her.

For more information:
Controller as Business Manager, AICPA, $43.75

Tuesday, January 20, 2015

Green Bay Packers Mentor/Protege Program

I have the privilege of being on the board of this program, driven by Anna Steinfest of U.S. Bank and Aaron Popkey of the Packers (with John Hartman of Visonex as our Board Chair).  
               (You can learn more at:
Each Fall, we provide mentors and mentor companies to small business owners who desire such a relationship.  It lasts formally for a year, with the Protege required to develop a business plan with goals and to report on progress quarterly.  We create feedback sessions where the Mentors and Proteges report to their peers and the board on what they’re accomplishing (and their barriers) and get supportive feedback.
We usually create 5-8 such relationships … and it should be more.  We can find Mentors, but it’s hard to find Proteges … people with at last two years in business and desiring to grow faster.
I’ve been privileged to have several of my TEC members involved as Mentors (with the active support of their organizations).  Currently, Mark Radtke of Integrys is a mentor, and in the past, Patrick Gauthier of Amerilux, Ernie Remondini of Lindquist Machines, and Amy Kiefer of KI have been mentors.
If you run into small business owners who might have the interest, have them contact Anna Steinfest at

NWTC is an Important and Dynamic Example

My TEC III member, Jeff Rafn, who has headed Northeast Wisconsin Technical College since 1997, is a leading advocate explaining why technical education is a public investment “must,” which he did to a St. Norbert CEO Breakfast & Strategy audience earlier today.
He has several mission-based principles that he uses to motivate and guide his institution’s efforts, like …
•  “Every time a student leaves the college before finishing the Associates Degree is probably condemning him or her to a life in poverty.”  Corollary:  “It’s our objective to increase the likelihood that the person will complete the Degree.  We do that through delivering learning where they want it, when they want it, and how they want it."
•  “A high school diploma is no longer sufficient to assure a job that will support a family.”
•  “We watch very carefully to see how fast our graduates get jobs, in what fields, and what they pay.”  That’s so we make sure we are providing training where businesses need skills.

Persuasive Statistics
He has some persuasive 2013 statistics that support the technical/community college need:
•  Unemployment, which was in the 7% range nationally, was only 4% for people with community college Associate degrees, and 3.4% for people with college Bachelor’s degrees.
•  Starting salaries were actually significantly higher for Associate Degree graduates with specific skills that for students graduating from 4-year colleges … by a lot.  (Obviously, college graduates catch up over time.)

Get Them Interested In High School
“We are starting a program with the Green Bay high schools with the objective of having every high school graduate already having 15 technical college credits.  We work with high school instructors to help them meet our requirements.  As a student develops the credits, they are introduced to the value of getting the Associates Degree and specific skill training.  It’s an important way to capture students where there interests are, especially when traditional learning isn’t their thing.”
Why is this important?  Because with 10,000 Boomers turning 65 every day and beginning the process of leaving the workforce, there is a significant reduction in employable people occurring, especially in Wisconsin.  The current 65% of the population of working age will shrink to 55% in 20 years.  That’s fewer people to do the work that will support an aged population, so preparing people for the best paying jobs is critical.  Fortunately, Wisconsin ranks high in developing manufacturing jobs, largely supported by export purchases from other countries.

A Few Specifics
Among the novel approaches to creating successful learning that yields successful students:
•  Each student must take College 101, a course that preps them for learning success.
•  A coaching program for students who must improve their reading and writing, yielding significantly better results.
•  A “Bridge” program that puts at-risk students together in small groups to learn a specific skill, while also improving vocabulary.  One example I’ve heard of is an electrical skills class of 13 very diverse, poor background teens who under other situations would be competitive.  The instructor helps them with new words and collaborative “working together” as they focus on learning the electrical skills.  Result:  Over time, they’ve become a “tribe” supporting each other.
•  Reverse the traditional approach of teaching subject matter in class, and doing hands-on/workshop/review outside of class.  Instead, expose them to the content through assignments, and use class time to work together to imbed the learning.

The school’s mantra:  Dream!  Learn it!  Live it!”

Tuesday, January 13, 2015

Bill Malooly

        On January 11, I attended the funeral of Bill Malooly, 72, who was a great banker in the 1980s and 1990s here in Green Bay … the ideal kind, who invested in people whom he knew to have character, and bugged them until they were successful and returned the loan.  He impacted positively lots of business and employment growth in N.E.W. … and knew how to stay away from those that weren’t going to succeed (mostly!).
His brother, in his reflections, talked about three principles that drove Bill … which are strong ones for us all:

1.  Be READY … i.e., PREPARE, so you are ready when the opportunity you seek arrives.  Don’t wait for it to be there, and then hope.
2.  LEAP!  When that opportunity shows itself, grab it.
3.  Do it RIGHT!  Much of his guidance was in pressing people to stop doing things wrong or incompletely, and to begin doing them RIGHT.  Take care of your people and your customers and your suppliers.  (Taking care of yourself comes later.)

About "Becoming Generation Flux"

        I love it when local friends develop a book (a massive undertaking), and Miles Anthony Smith has just completed ANOTHER one (he did Why Leadership Sucks a few years back).
Generation Flux, he explains, is named by Fast Company writer Robert Safian as he explains that those who will thrive during the next two decades will be those who can adapt quickly to “fluidity” from one paradigm to the next.  Those without this capability will survive, but constantly struggle and it won’t be a pretty sight.  Most organizations are ill-suited for this “fluidity,” especially larger ones … so be prepared to watch and live within lots of organizational withering and splitting, and lots of re-birth.
He is very forceful on the point that government policies aren’t helping people at lower income levels to make this change.  Policies in many states actually dis-incent people to pursue a job or get training at all; welfare payments not infrequently total more than starting wages in many occupations.  
Political efforts to solve the “problem” are often, simply stupid.  One egregious example:  In 2011, politicians placed a high tariff on foreign tires to save tire-manufacturing jobs.  They saved 1200 jobs at most, at a cost of $900,000 per job saved. 
He makes the point that education is key to advancement (actually, continuing education), and goes over the “cost of education” tradeoff with “lifelong earnings gain”.  One quote:  When looking at a potential employer, the main thing to ask is “Is there a culture of learning?  If the answer is yes, then you are probably in a good place.   If no, then find a way to learn and grow, so you can find another army to march with.”  Concentrate on the people skills that machines can’t copy.
A proper role of government, Miles says, is to try to foster "equal economic opportunity … and stop trying to engineer equal economic results."
In other words, don’t look outside yourself for help in dealing with the fast-changing marketplace.  Have skills that are useful from job-to-job, and even industry-to-industry.
Other of his points:
•  Only 40 million Gen Xers are replacing 80 million Baby Boomers, so there is great opportunity for leadership positions!  Indeed, the following Gen Y cohort is also quite small, so there will be great opportunity for them … and even the huge Millenials right behind.
•  For first-job seekers, make sure you have the needed digital technology skills to perform it.
Much of the book is self-help, providing a context for the job-seeking and job-holding efforts, and pointers for being successful at them.