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10 Thoughts on The Iron Range’s Current Challenges (and One Idea)

Here are some things I think I understand about the iron industry and its impact on Minnesota’s economy.

And, here is where this post is going: I’m all for providing government assistance to people going through tough times, but I really want to see viable long term outcomes.

So, below is my take on what I know based on what I’ve read about the challenges facing the Iron Range. It’s rather bleak. But, I do include an example near the end of one program that appears to be helping people find comparable wages in a growing and less dangerous industry.

1. International iron prices are low. That hasn’t happened overnight:

Iron Prices

2. It looks like they’ll likely stay low for a long time.

Global iron ore demand will contract over the 2020s as steel consumption growth in China peaks, according to Citigroup Inc., which reduced its long-run price forecast for the raw material by 32 percent.

The long-run estimate was cut to $55 a metric ton from $81 as the world’s major mining companies added more cheap supply, analysts including Ivan Szpakowski wrote in a report on Wednesday. From 2016 to 2018, prices may average $40, it said.

3. Aaron Brown has reported on his blog that the cost of iron production in Minnesota’s mines is in the $40-50/ton range. If that’s the case, it’s tough justify running a mine if you can’t sell what you’ve mined profitably now or possibly for years in the future.

4. Large iron mines in other parts of the world are capable of mining iron at half the cost of Minnesota’s mines. Differences in the iron that’s mined, proximity to large manufacturing countries, and huge investments in automation (replacing workers) all play a role in the cost differences.

Australia: The Low Cost Leader

The cost of producing iron ore in Australia is substantially lower than the global average due to the abundance of high-grade hematite ores (iron content of 62.5% and above) and extensive infrastructure facilities. Hematite ores (also known as ‘direct shipping ores’) can be fed directly into iron-making blast furnaces and require relatively little beneficiation. As such, production from these deposits tends to place miners at the lower quartile of the cost curve. We believe mining giants such as Rio Tinto, BHP Billiton and Fortescue Metals will continue to enjoy the lowest cost of operations and remain the largest players in the global seaborne market. While the escalation in operating cost will be a major drag on miners’ profits over the coming years, the high quality ores and geographical location of Australia will keep a lid on cash costs and places the country as one of the best places for iron ore investment.

5. Each generation of mining brings technological improvements. For example, haul trucks have gotten bigger over time, which leads to fewer drivers. I found a history of haul truck sizes on a truck manufacturer’s website in Belarus (BELAZ) and used their milestones to chart out the changes:

image (9)

6. Trucks can now drive themselves. This is from Rio Tinto’s website:

Autonomous haulage systems (AHS): We are the world’s largest owner and operator of autonomous haulage system trucks. We have 69 autonomous trucks in operation at our Pilbara sites moving high grade ore and the number of trucks is set to grow in coming years. Implementing autonomous haulage means more material can be moved efficiently and safely, creating a direct increase in productivity.

7. Drilling is becoming automated:

Automated drilling system (ADS): In 2008, our automated drilling system was successfully trialled at our West Angelas mine in preparation for deployment across our Pilbara operations over the next few years.

8. Rail hauling is becoming automated:

AutoHaul®: AutoHaul® is the world’s first fully-autonomous heavy haul, long distance railway system, a key part of our Mine of the Future™ programme. We have invested US$518 million in autonomous trains for our Pilbara rail network.

They have a 1,000+ mile rail network.

9. There are accusations that Minnesota’s mining industry is being hurt by illegal dumping (charging lower prices on international markets than domestically for iron). Rep Melin made this accusation on Twitter:

Screen Shot 2015-11-25 at 11.19.01 AM

I asked her if what’s happening is truly illegal:

Screen Shot 2015-11-25 at 11.19.54 AM

I never heard back. I don’t know if the legal definition of dumping is really happening, but assumed someone from the Iron Range making that accusation might. Dayton has asked congressional legislators to look into this, but I haven’t found statements from anyone saying, definitively, that the reason prices are low in the USA is due to foreign countries selling iron at deflated prices to the USA.

It seems like market realities of the first eight points on this list would hurt Minnesota’s mining industry with or without illegal dumping. If we can’t produce iron below market rates, we can’t produce iron. That seems to be supported by the head of the IRRRB, who told the StarTribune last week:

Mark Phillips, commissioner of the Iron Range Resources and Rehabilitation Resources, said this is the worst downturn to hit Minnesota’s taconite industry since the 1980s.

“There is just a glut of iron ore in the world,” he said. “It’s the first time in my memory where the U.S. economy is relatively healthy and that the steel and iron industry is in this bad a shape. Usually, we ride with the economy. That is the sad point about this.”

Basically, it sucks, but it’s not due to overseas evildoers but worldwide changes to both supply (increasing) and demand (decreasing).

10. Extending unemployment benefits for laid-off workers seem like a short term solution to a long term problem.

Senate Majority Leader Tom Bakk on Tuesday endorsed Dayton’s proposal, saying in a letter to the governor that he is “receptive to negotiating the parameters” to aid several hundred steelworkers who are expected to exhaust their unemployment benefits before lawmakers convene in March.

Dayton said in a news conference that “it’s a very severe situation up there,” and warned that without legislative action, several hundred steelworkers will “be subjected to that additional financial hardship, in addition to the emotional distress of not being employed.”

This is a very difficult situation. People were laid off. The reason they were laid off is due to world-wide depression in the price of the product they help product. The price of the product they produce doesn’t appear to be forecasted to rebound to anywhere near the levels needed to return the industry on the Iron Range to where it was for possibly half a decade if the analysts cited above are correct.

And, if prices actually do rebound, mines will likely return with a need for less workers per ton of iron mined than they needed in the past in order to compete with mines that are producing iron at half the cost due to higher quality mined iron and serious automation. There is simply no way that the people on unemployment will be returning to the jobs they’ve had in the past.

What can be done?

The inspiration for this post was an article I recently read about a similar situation for coal miners. “Canary in the Code Mine” is a story about a town in Kentucky that faced similar challenges to the Iron Range. In fact, their challenges may be worse for coal because iron likely has a better chance of rebounding at some point.

A guy in this community was insulted by comments by Michael Bloomberg, who funds programs to kill coal burning power plants (existing and planned). It wasn’t his opposition to coal burning power plants that really motivated the guy in Kentucky. It was a patronizing comment by Bloomberg where he said that coal miners couldn’t be retrained as coders. Long story short (it’s worth a read), the community launched coding classes to retrain miners in an industry with similar pay, but less risk of lung cancer or suffocation in a mine.

They paid people $15/hr to go through coding training. They vetted people to determine if people were logical thinkers and capable of sitting at a desk for 8 hours/day. They also trained them on how to communicate over chat with white collar nerds (their new peers). It turns out that blue collar nerds have some good ideas on programs to built that white collar nerds would never consider. Sure, an app for on-demand massages (yes, this exists) is likely a decent business, but there are some more practical things that could also be built if people with experience in blue collar industries had some coding experience to tie it all together.

This is a program that would be easily replicable anywhere. Their training was done by leveraging, for those who aren’t familiar with it, is a great website for people interested in learning just about any piece of software or programming language. Here is what it costs:

Screen Shot 2015-11-25 at 2.54.52 PM

This article is around 89% pessimistic about the future of the Iron Range based on the economic realities of the iron mining industry and the idea that emergency extensions of unemployment benefits can solve long term problems.

I’m also trying to be optimistic since there are real ways to create new skills for motivated people interested in changing industries and covering their mortgage while potentially working from home or at new startups that pop up to solve problems using the newly developed skills.

Coding as a new opportunity undersells the transferrable skills from mining jobs to IT. Project management is a universal skill. The article linked above mentions that errors in mining can blow up the wrong side of a mountain while errors in programming are more of a fail fast and fix situation. While that’s true in some cases, there are many industries where attention to detail is absolutely critical to a project’s success. People in project management roles don’t need to know how to code, but they need to understand what’s possible in what time frames (by asking questions). Instead, they need to know how to scope out a project, manage people, ask good questions, communicate well, and try to hit deadlines.

For some Rangers, the leaving the Iron Range is going to be a more rational choice. That was the same choice made by the people who moved to the Range 100 years ago. Perhaps some laid-off workers will see the writing on the wall and see the future for their families in growing communities elsewhere? They wouldn’t be the first to make that choice. And, based on what I’ve seen with Rangers in the Twin Cities, they never fully leave The Range behind since everyone in Minnesota is within two degrees of separation of a Ranger.

Energy Policy Questions Too Hot for @LibertyTPP_MN to Handle

The Liberty Tea Party Patriots hosted a talk about energy at their monthly meeting last night. Energy is an important topic that’s certainly worthy of discussion by any group. Here’s how this group promoted their event:

Tea Party Patriots Energy Event

I’m not sure why renewables in is quotes. I suppose is someone doubted that the sun would keep shining or the wind blowing in Minnesota, that would make sense. However, there may be larger issues to discuss than our energy mix if that’s what our future looks like.

This event was hosted in Champlin, so close to the largest producer of both energy and pollution in the State of Minnesota. Xcel’s Sherco power plant. Xcel announced last month that they’re going to transition two of the three coal burning generators at the plant (the older, dirtier, of the three) to a new cleaner-burning natural gas powered generator. And add a large solar array. And, make up for some of the other energy differences with additional wind and solar.

I found the premise and setup of this event fascinating. When I hear the term “Freedom” followed by opposition to locally produced energy, I get confused. When I went through the process of researching solar panels for my home, I watched a lot of YouTube videos on DIY installations. One thing most of those videos had in common is they were done by right-wing Tea Party type individuals who consider themselves Preppers. The Survivalism crowd is full of people who prepare for doomsday scenarios. Prepper tactics include storing food, having a fall-out shelter, an arsenal, or off the grid power generation. To me, these vary in rationality, but something like solar panels can benefit a person whether or not a doomsday ever arrives, so there’s less downside than, say, having a ton of guns around the house.

Frankly, as long as a huge percentage of the state’s energy comes from a single location, we’re more susceptible to doomsday energy issues than if energy is generated in a highly distributed format (and closer to it’s end use). As a bonus, less energy is wasted in transmission. So you’d think freedom loving prepper types would be all over solar in general. However, that’s not necessarily the case. I get the impression the best ideas can suddenly become the worst if the perception is that there were Obama’s idea.

So, I thought it might be interesting to toss a few freedom-centric energy questions into the mix with the Liberty Tea Party Patriot crowd. I did this by posting to their Facebook event’s page last night (typos are all mine):

Questions for Liberty Tea Party Patriots

Since that was a public post, it started to pick up some views and likes from people I know and don’t know. I didn’t receive an immediate response from any members of the Liberty Tea Party Patriots group.

Then something odd happened.

Deleted Post on Liberty Tea Party Patriot's Event Page

Too hot to handle? It’s not like I brought up global warming. I tried to focus on the aspects of locally produced distributed energy generation that would appeal to people who claim to value freedom. The kind of stuff that right-wing Tea Party folks in Georgia used to lobby for more solar energy purchasing by their local utility.

In this case, I get the impression that any idea coming out of the Obama administration is automatically bad. And, that people living near the Sherco plant want government to protect the pollution importing, centralized power producing status quo since there are jobs in those communities tied to the that plant.

It’s a shame that people in that community don’t seem to be able to see a future where there are more energy industry related jobs installing and maintaining locally produced – distributed – micro power plants on houses, offices, and farms, but that’s where things are heading. And, as we go there. As we create a distributed power grid that’s less susceptible to catastrophic outages at huge power plants, with power produced within the communities it’s used (even on the same property in some cases) there will be no going back. We won’t one day say, “You know what, get Wyoming on the phone. Let’s go back to burning trainloads full of coal in Minnesota.” It’s the kind of thing that we already know is ridiculous, and will look only more ridiculous in hindsight.

@Twins on Pace to Set New Attendance Record

This tweet from Bob Collins reminded me to take a look at how attendance is looking at the Twins’ latest publicly financed ballpark:

Screenshot 2015-09-18 08.58.35

If we, generously, average out the first 72 home games to create a projection for the full season, things will shake out like this:

Twins Attendance by Year
*Projected by averaging first 72 games.

That puts 2015 on track for a new record by 9,939 tickets.

But, this isn’t a mathematical certainty. The Twins just need to find 10,200 more people per night than they found last night for each of the last 9 games of the 2015 regular season to avoid their continued streak of attendance declines.

Or, if the Twins sold out the next 7 games, fans could take the last two games of the year off knowing that it’s only the second worth year for attendance at the latest publicly financed ballpark. At this point, there is a mathematical lock on this being either the worst or second worst season for attendance yet.

Assuming attendance stays pretty much on track, here’s how the per ticket subsidies continue to grow.

image (55)
*Projected by averaging first 72 games.

Same costs. Fewer fans.

How Minneapolis Makes Navigation Difficult for Outsiders

St Paul gets its share of criticism for being a tough to navigate town for outsiders due to the lack of pattern is their street naming and non grid conforming downtown. But, Minneapolis has its share of issues for outsiders too. Here are a seven examples:

1. The streets most likely to be encountered by outsiders don’t follow cardinal directions. A lot of visitors to Minneapolis come from places where terms like North, South, East, and West still mean something. If you’ve flown over the state, you’ll know that it’s largely a checkerboard with North-South and East-West roads drawing the lines. But, all of that changes when you get downtown. Take a frustrated pro sports fan (non-Lynx, obvs) at the end of another disappointing loss, and tell them you parked to the North. It turns out that can become more frustrated.

Tilted Downtown

2. Minneapolis bends major streets. Hennepin Ave is a common street an outsider may encounter in downtown or Uptown. But, they’ll most likely encounter a stretch that doesn’t follow cardinal directions and/or the grid.

Hennepin Ave

3. Minneapolis numbers streets, except those that count. Imagine you’re in Uptown at Lake Street and Hennepin and hear that there’s a Greek Fest worth checking out nearby. Someone tells you it’s at 35th St, so all you need to do is figure out whether to go North or South to get to 35th Street from Lake Street. But, we don’t call Lake St “30th Street”, or include any indications on signs that it’s 30th for navigational purposes.

Naming Streets

4. Numbering streets in both directions. Numbering streets is a great way to improve navigation, but it can go too far. For example, the East side of South Minneapolis numbers both the streets and the avenues (But, not Lake, Franklin, Minnehaha, Park, or Portland [See #2]). This forces outsiders to quickly get up to speed on which direction is for avenues vs streets. This can be a challenge for people driving on deadline to the Riverview Theater, who’ll end up near .7 miles away from their real-butter popcorn if they get it wrong:

Numbered Streets in Both Directions

5. Non-Euclidian Geometry. If we were paying attention in planar geometry, we learned that parallel lines don’t cross. But, don’t tell that to the street namers in Northeast Minneapolis where Avenues intersect with Avenues and Streets with Streets. For example, if it dawned on you that you’re far better off going to Anchor Fish & Chips than having a Filet-O-Fish, the two main routes take you on University Avenue to 13th Avenue or Broadway Street to 3rd Street.

Northeast Minneapolis Non-Euclidian Geometry

6. We bend interstates. If you want to mess with people’s navigational skills, bend the roads they take to enter your town. If they’re not sure whether they’re going West or North when exiting I-94, or North or Southeast when exiting I-35W, they’re directionally impaired even before they hit the local streets. The best solution to this problem is to do what great cities have already done: get rid of the highways in the city.

Screenshot 2015-09-15 09.49.16

7. (Retired). We let a publicly financed stadium be named after the private Mall of America – with the revenue going to a private company – in a location that’s nowhere near the Mall of America. I’ve helped people leaving downtown on the LRT understand that the MOA is quite a bit further down the tracks than the Wilf Family’s brand selling schemes would have you believe. I believe confusion caused by this map, which is supposed to help out-of-towners, was the culprit:

Downtown Minneapolis Map

The Downtown Improvement District did a good job tricking outsiders into not making it to Bloomington with that map.

A Year Later, Lyft Continues to Redline in Minneapolis

The StarTribune has an article today about Uber and Lyft drivers canceling a larger number of pickup requests among prospective passengers in North Minneapolis than in other parts of the city.

City business license manager Grant Wilson said city officials will pose as “secret shoppers” to test Uber and Lyft in underserved areas of the city.

Wilson made the decision after reviewing new information revealing that drivers for these ride-hailing services tend to prefer high-traffic and high-profit areas, like downtown, and are less likely to venture to north Minneapolis.

What’s particularly goofy about this is Minneapolis’ apparent willingness to allow Lyft to redline tens of thousands of North Minneapolis residents by not just reactively denying them service, but proactively doing so.

For example, here is what Lyft’s app looks like for people requesting a car from the 3400 block of Colfax Ave N:

2015-08-06 17.25.04

But, if I go to the 3700 block of Dupont (20 blocks south of the city’s border with Brooklyn Center) the cars disappear:

2015-08-06 17.24.57

That’s proactive refusal of service to city residents.

If this sounds familiar, perhaps it’s because I wrote about it last year in June. Nothing’s been done about it.

It doesn’t take secret shoppers to see this form of redlining. The problem is far larger than a particular driver denying a fare based on location. The entire service denies fares based on location.

Or, as Lyft puts it:

“If they are in our coverage area, we will do our best to supply rides,” said Danyelle Ludwig, a Lyft spokeswoman.

It’s not discrimination, you see. It’s a coverage area that just happens to not cover all Minneapolis residents. And, it’s not redlining, you see. They happen to use green lines:

Screenshot 2015-08-06 12.38.23

It doesn’t take secret shoppers to see how Lyft treats North Minneapolis residents. Their own coverage area map illustrates their discriminatory behavior.

Anther Justification for a Downtown Casino

Earlier this week, a guy from South Dakota escaped from prison, stole a car from a Pizza Hut delivery driver in Sioux Falls, pulled a gas & go in Lakeville, and robbed some banks in Minneapolis.

On the 13th, I made this comment via email to a friend about his crime pattern:

“He’s covering some ground. I’d check Mystic where he’s probably laundering the cash through slots.”

This morning, this happened:

A South Dakota prison escapee was caught early Wednesday at Mystic Lake Casino after piling up a slew of crimes since late Friday that included three bank jobs in the Twin Cities, an auto theft and other offenses, authorities said.

Why Mystic Lake? I don’t know about you, but when I land some cold cash of questionable origin, the first thing I want to do is launder it. And, what’s more convenient than anonymously bumping the questionable cash into slot machines, playing a few hands, then cashing out some fresh bills? You may even win something. Or, if not, you could count that as a laundering expense when you file taxes on your bank robbery earnings. (Disclosure: I’m not a CPA.)

We’ve heard this story before. Another high-profile example of this made the news last September:

Screenshot 2015-07-15 14.10.52

Thus the need for a downtown casino. Fugitives shouldn’t have to drive all the way to Shakopee to launder money1.. This causes wear and tear on our roads2., adds to congestion, air pollution, and ramps up the costs caused by multiple law enforcement departments getting pulled into investigations.

I don’t know if fugitives are better or worse drivers than average. Perhaps they’re extra attentive and law-abiding? Or, maybe they’re a bit distracted by the sudden lifestyle change? I just hope that they don’t draw attention to themselves by driving slow in the left lane.

Granted, fugitives aren’t your typical 9-5ers, so congestion alleviation may not be the biggest issue here. But, the downside of working odd hours is poor public transit options. It’s also a reverse commute (or the dreaded suburb to suburb commute), which are both difficult transit options. Uber’s obviously out of the question when you want your privacy respected.

The other upside is post-laundering entertainment. I’d rather see fugitives blowing some of their freshly laundered cash on highly taxed downtown entertainment. Put that laundered cash to work making up for the lack of fan support from Vikings and Timberwolves to cover infrastructure costs for their entertainment palaces.

Now, not every money launderer is a bank thief or murderer. Some are smaller time thieves who’d like to launder their money but don’t really want to make the drive all the way to Shakopee. Sure, they don’t get the same level of attention, but attention isn’t really what they’re seeking. Think about the benefits for these entrepreneurs. Less windshield time = more productivity.

Maximizing the full potential of our existing infrastructure is just good public policy.

1. Pro tip: Rob coins. Sure, they’re heavy, but are they marked? And, if you’re concerned about them being marked, Coinstar locations are a lot more convenient than casinos.

2. Fugitives really ought to consider hopping on Mystic Lake’s shuttle buses. Perhaps fugitives could form ad hoc mastermind groups to discuss laundering techniques while en route?

Longfellow Neighborhood Restaurants with WiFi Rankings

Food. Caffeine. Internet. The three tiers of sustainability and productivity. Today’s focus is on the third: internet.

Here’s my criteria.

If you’re a Longfellow business looking for a new customer who’s willing to put in some time at non-peak hours, here’s what I’m looking for. By the way, I’m not alone by any means. I often walk to Longfellow venues to meet up with other geeky neighbors with money to combine work with a little socializing.

I look for easy to access, fast, reliable internet. Making me fill out passwords and other authentication hoops hurts me without doing much to help you.

I look for reliability. Can I count on it actually working? If I’m at your venue and the WiFi drops, I can use my phone to create an internet connection, but that’s a switch from using a pipe you’ve already paid for to using ridiculously expensive bandwidth (and cell phone battery).

Here’s my current Top-10:

  1. Fireroast Cafe – Has a password but rarely changes it. Never lost a connection.
  2. Longfellow Grill – Not as fast as Fireroast Cafe, but reliable. If the owner didn’t actively campaign against minimum wages for their employees, that would help, but it still wouldn’t be as good as Fireroast Cafe.
  3. Merlin’s Rest – Easy to use. Reliable. No complaints.
  4. Rail Station – Requires a login, but it’s fairly simple after the first use. Not quite as simple as Peace Coffee, but the internet is really good since I tend to be the only person using it.
  5. Peace Coffee – Reliable. I have to login every time I go there on both my computer and phone.
  6. Dunn Bros – password changes every day. Total pain to login every day on both my computer and phone. So I don’t.
  7. Blue Door Pub – open network. But, it drops from time to time. I’ll take logging in from time to time over that.
  8. Zeke’s Unchained Animal – Easy to access. Not nearly as reliable as it should be. Perhaps a better WiFi router would solve that problem?
  9. Sonora Grill – Wifi is pretty good, but my phone won’t connect to it. That being said, there were some changes being done to the WiFi the last time I was in there, so this is the business – I’d predict – with the biggest opportunity for improvement.
  10. Dogwood – Same as Blue Door but more often.

Keep in mind that this is just looking at WiFi ease of access and reliability. If you measure these same 10 venues based on not using your computer or looking at your phone, the list changes dramatically.

If I’m missing places worthy of top-10 rankings, or you disagree with my analysis, please chime in. We’re on the same side of this issue.

How @patgarofalo, @jpetersburgmn, & @vjensensenate Blocked Decreased Asthma Rates

As I write this, it’s hot outside. It’s also sunny. I have solar panels on my house that are currently generating around 15X more energy than my house is consuming since my air conditioner isn’t running. I don’t always generate 15X. There are times when I generate nothing, like overnight. But, when demand is highest, my panels are cranking.

The excess electricity generated by the panels on my roof is contributed to the grid. Electricity flowing upstream from my house likely flows downstream to meet the nearest power needs, so it’s likely consumed by other residents of my block. It doesn’t have to route all the way back to a central location. It goes up through my meter and down through other power users’ meters.

This power is being consumed during peak demand. For people who choose time of day pricing, Xcel Energy charges them 18 cents per kilowatt hour for that energy. That’s 6X more than they charge in the middle of the night when demand is far lower. Supply and demand applies to energy production/consumption, so energy contributed to the grid during peak energy demand is worth a lot.

Here’s pollution industry ALEC chair, Rep. Pat Garofolo’s, latest take on why residential solar users are freeloaders:

“Under the current system, people who have distributed generation, solar panels on the roof or their own personal windmills, they’re able to use the grid without charge and this means higher rates for other consumers,” he said. “We fixed that so it will no longer be a problem moving forward.”

Think about this.

Energy generated within a neighborhood does not rely upon this to get power from one house’s roof to nearby homes:

High tension  Power lines heading east in the direction of the Twin Cities partially shroud the Monticello Nuclear Genedrating Plant, seen in background, 1/2 mile or so  east in rural Monticello Tuesday afternoon March 6, 2012.  (Pioneer Press: John Doman)

High tension Power lines heading east in the direction of the Twin Cities partially shroud the Monticello Nuclear Genedrating Plant, seen in background, 1/2 mile or so east in rural Monticello Tuesday afternoon March 6, 2012. (Pioneer Press: John Doman)

Or this:


Or this:


Or, more train cars of imported pollution from Montana:


Nor does it lead to more deaths from even more workers suffocating from inhaling VOCs in North Dakota so we can burn natural gas to meet peak demand.

But, Pat Garofalo says people who put solar panels on their homes are freeloaders. And, he got enough people to agree with him to change the state’s laws so power companies could charge residential solar users ridiculous fees to cover the costs of the grid their solar systems actually alleviate pressure from.

A pollution industry spokesperson, Kristi Robinson, who represents one of Minnesota’s polluting companies is apparently threatened by the one in 300 homes who have panels on their homes in Owatonna.

Robinson said another concern is that some generate far more energy than they need as a way to make money.

“They’re not offsetting anything,” she said. “They’re putting multiple small generation up side by side with no load to offset it. In the eyes of the utility, that wasn’t the intent of net metering.” With the law change, “we’re able to dial that back a little bit, where they will also be paying their fair share of the distribution system.”

This argument is insane since there is no net difference between one person with a huge roof putting a ton of panels on it compared to multiple people putting the same number of panels on their roofs in aggregate.

So, let’s assume that you live in Owatonna and are considering putting solar panels on your house. It’s about to get far more expensive for you to do it there. But, you have options. It’s time to consider moving out of Rep. Petersburg and Sen. Jensen’s house and senate districts. Move into Xcel Energy’s territory so you can generate your neighborhood’s peak electricity more affordably.

Shifting Retail Buying Patterns Doesn’t Create New Jobs

When a company worth $200 billion decides to build a warehouse on land owned by billionaires, you know there will be subsidies. Today’s example comes from Shakopee where Amazon is planning to build a distribution center on land owned by the Pohlad family.

Amazon’s very good at what they do. They know how to put stuff in boxes and get it to your door quickly and reliably better than anyone. It’s really behavior-changing for those who’ve become Prime members where you get free 2-day shipping on purchases for $99/yr.

Behavior-changing retail is great for people who appreciate the convenience. I sure do. But, let’s not pretend that it creates new jobs. When I buy paper towels on Amazon, I clearly didn’t buy them somewhere else. I still use the same amount of paper towels as I did before, so there was no net increase in sales. It’s just a shift from purchasing at one store to another.

Because of this, spending $5,000 per job to “create” 1,000 “new” jobs is really a case of spending tax dollars to accelerate a shift of Minnesota’s retail jobs to one company based in Seattle. It’s certainly good for Amazon, but I don’t see how there will be a net gain in jobs from shifting where people buy the same stuff they’re already buying from one retailer to another.

In fact, it seems possible that we’ll end up with fewer jobs in retail after this since Amazon is so efficient at what they do. For example, Target’s a very efficient company by retail standards, but Amazon has $20 billion more in sales than Target with nearly 200,000 less full time employees last year. Amazon doesn’t have many cashiers or people restocking shelves.

Here are the winners and losers from this type of subsidy.

Amazon, due to corporate welfare benefits.
The Pohlad Family, due to corporate welfare benefits.
People who live near Shakopee who can work in Shakopee rather than commuting elsewhere.
People who think the income and wealth gaps in America aren’t large enough already.

People around the state who get less hours at the retail store they work at today.
Taxpayers who subsidized the corporate welfare deal.
People who prefer jobs with benefits.

People who use Amazon, and would see the same benefits from having a local Amazon warehouse with or without corporate welfare expenditures.

We should be mature enough to not subsidize “economic development” projects in one city that have no net benefit for the state, but we’re probably not.

Math Only a Corporate #wilfare Queen Could Believe @mnunitedfc

I was hoping that MN United would somehow be different than every other professional sports franchise in our local market, but then I read stuff like this:

We will pay our fair share of tax. The entertainment/sales/food/beverage taxes the facility generates will be 5x current tax. @edkohler

If you’re a business or resident in Minneapolis and you buy a property and improve it, you’re expected to pay property taxes. That’s the deal. It’s really quite simple. But, MN United seems to think that they deserve to redefine “fairness” based on sales tax generation.

It’s as if pro sports are the only industry that competes for entertainment dollars and generates sales taxes. Why should they be subsidized while local restaurants aren’t? If we were going to subsidize an entertainment business, how about subsidizing ones that are open more than 17 days per year?

But, the bigger issue with MN United’s claims is the math. It’s the kind of math only people who mistakenly trust pro sports franchise owners can believe.

Here’s the problem with their sales tax math. It assumes that every single dollar of sales taxes generates at the soccer stadium would not have been generated anywhere else in the entire state of Minnesota if there wasn’t a publicly subsidized pro sports stadium.

It’s an utterly preposterous assumption. Put another way, they’re lying. And, people who mistakenly trust MN United’s statements are falling for it:

@edkohler @_NickRogers_ Ed, if you didn't pay property tax, would your provide 5x those taxes in sales tax? Your analogy seems flawed.

People blindly trust pro sports owners that are in the business of subsidizing their businesses rather than competing fairly for entertainment dollars in the private market.

But, what makes this situation particularly interesting is that even loyal MN United fans seem to be embarrassed by the requests to shift property tax burdens onto homeowners and local business in order to further enrich some of MN’s richest residents. This is my assumption based on the lack of response to questions like this:

@lockstockspock I noticed that you ignored this tweet, which makes me wonder why you're so concerned about handouts:

Let’s try being honest. MN United doesn’t need subsidies. The team will be here. A stadium will be built. And Minneapolis will benefit from hosting a new local business while expanding its property tax base. That’s what fairness looks like.

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