Month: September 2020

Wikinomics / Courting Justice – BONUS POST

The First Bonus Book of the Week is “Wikinomics, How Mass Collaboration Changes Everything” by Don Tapscott and Anthony D. Williams, published in 2006.

This book’s authors slapped together a huge number of cliched, vast generalizations in pushing their overly idealistic scenarios of the future. They had high hopes for the open-source movement. Unfortunately, since the book’s writing, most of the open-source projects they mentioned have tapered off, because in the long run, few people can or would want to provide “sweat equity” without ever receiving any equity.

Nevertheless, cooperation and globalization– two other movements for which the authors had great enthusiasm– are still alive, well and prospering. It is debatable, however, how long these two can be implemented before their socialistic aspects reach critical mass, and fail.

The authors mentioned that crowdsourcing of strangers (competitors) who are offered a reward for submitting the best innovative solution for a specific problem- has been very successful. But once the problem has been solved, a corporate entity needs loyal employees to continue to implement the solution.

The authors also contended that cooperation among companies reminiscent of the way the Japanese conduct business, has also been successful. However, long-term, the Japanese way leads to groupthink and herd mentality– lack of new ideas and competition; an oligopoly or monopoly. Free-market economics– competition– forces a company to acknowledge its weaknesses and threats against it, of which it might not even be aware. This is why capitalist economics for most goods and services is the way to go– there is balance between cooperation and competition that allows workers to best fulfill their potential for their employer and themselves.

It might be recalled that pure socialism thrived for a short time when the State of Israel was born. That was an extremely special exception, for the following major reasons; the Kibbutzniks:

  • were forced to work together in order to survive in the desert, geographically surrounded by enemies;
  • were like-minded– oppressed for their religion– seeking a safe place in the world;
  • had a common goal bigger than themselves– building a country for themselves from the ground up– creating the political, social and cultural systems and infrastructure when everything was simple and their population was low;
  • had in common the shared, traumatic experience of WWII and/or the Holocaust; and
  • had substantial financial and military help from the United States.

In the United States, since the Depression Era, there has been heated political debate over how much socialism is too much. To be sure, specific socialistic entities have greatly enhanced the quality of life for Americans for decades: public libraries, the G.I. Bill, Social Security and Medicare.

Capitalistic free markets have also done the same, but when the gap between rich and poor people in a nation becomes too wide because the rich exploit vehicles to wealth through unethical political means, there occurs too much resentment among the poor.

Along these lines, the Second Bonus Book of Week, “Courting Justice, From New York Yankees v. Major League Baseball to Bush v. Gore, 1997-2000” by David Boies, published in 2004, described a few cases of how the author legally fought for underdogs (which were suing super-rich, politically entrenched entities). In antitrust and price-fixing cases, consumers have always been wronged– overcharged– and they are never fully compensated, even when the court rules against the offenders.

Born in 1941, the author (later) attended Northwestern law school in Illinois. He got a scholarship that paid his tuition, books and rent. He wrote, “I also discovered that I could borrow several thousand dollars from the government at no interest, which I did.”

Beginning in 1997, on behalf of the U.S. government, the author litigated an antitrust case against monopolist Microsoft. He helped win the portion of the case he worked on. Unfortunately, he was forced to withdraw from the case due to a conflict of interest. His role in the whole affair was meta-relevant– he represented Al Gore in the 2000 presidential election court fight. The pro-business bent of George W. Bush with his new antitrust department personnel (unethically, at best) changed the course of the Microsoft case.

The author asserted that, “The enforcement of our nation’s laws is supposed to be free from political influence, particularly when a case is ongoing [as was Microsoft’s]… [and in Gore’s case:] The rule of law means, first, that what a court (or other decision-maker) will do must be reasonably predictable, and second, that what a court does must be independent of the identity of the parties. The majority opinion [of the U.S. Supreme Court] failed both tests.”

Read the book to learn the details, as well as several other cases personally litigated by the author.

Pharma

The Book of the Week is “Pharma– Greed, Lies, and the Poisoning of America” by Gerald Posner, published in 2020.

In 2016, the “superbug” Enterobacteriaceae turned out to be resistant to 26 different antibiotics. About half of patients who contract it, die. There are a bunch of other similar bacteria in the world. The author warned that in the future, a bacterial pandemic was on the way, for which there would be no antibiotic cure. Apparently, there can be a viral pandemic, too– one that cannot be treated with antibiotics at all.

For, antibiotics kill only bacteria, if that. Yet, in the United States, for decades, antibiotics have been prescribed to treat (mild!) viral illnesses. That is one major reason that superbugs have become a trend. And there has been an epidemic of diabetes type II. And many other adverse consequences.

Anyway, the author recounted the history of big-name drug companies, which began selling morphine to soldiers during the American Civil War. In the second half of the 1800’s, Pfizer, Squibb, Wyeth, Parke-Davis, Eli Lilly, and Burroughs-Wellcome began mostly as family proprietorships that sold highly addictive, unregulated drugs. Bayer produced heroin in 1898. The twentieth century saw Merck put cocaine in its products; other companies jumped on the cocaine bandwagon.

In 1904, the head of the United States government’s Bureau of Chemistry, Harvey Wiley, was concerned about contaminants in the nation’s food supply. Consumers were being sickened by chemicals that were supposed to retard spoilage or enhance the appeal of foods. They included, but were far from limited to: borax, salicylic acid, formaldehyde, benzoate, copper sulfate and sulfites. Trendy patent medicines were also doing harm to consumers. The word “patent” gave the impression of approval or regulation of some kind, but actually meant nothing.

Through the first third of the twentieth century, the government continued categorizing, monitoring and taxing drugs, but the pharmaceutical companies continued using trade groups and legal strategists to protect their profits. The 1930’s saw the big drug companies start research laboratories. Finally in 1938, the government established the Food and Drug Administration, and began to require extensive product-testing and labeling, and factory inspections. That same year, the Wheeler-Lea Act prohibited false advertising of drugs, except for previously manufactured barbiturates and amphetamines.

After Pearl Harbor was attacked in December 1941, America sought to manufacture penicillin in volume. For, the newly introduced antibiotic would be very helpful to the war wounded. But the drug’s fermentation process required a rare ingredient. In spring 1942, one patient who had friends in high places was cured. That largely used up the penicillin supply in the entire country. Other kinds of antibiotics were produced in the next decade, but their profitability was hampered by the bureaucratic processes of patent applications and FDA approval applications.

In the late 1940’s, Arthur Sackler and his brothers founded a family drug-company dynasty. The author revealed excessive trivia from FBI files on them and other greedy characters whose tentacles pervaded all businesses that could help sell (translation: maximize profits of) the family’s healthcare goods and services. This meant consulting, advertising, publishing, charities, public relations, database services, etc. The parties failed to disclose countless conflicts of interest.

In the early 1950’s, drug companies successfully lobbied the U.S. Patent and Trademark Office to allow drugs with strikingly similar molecular structures to be deemed different so that they could be granted separate patents. A higher number of drugs could then be rushed to market sooner, and make the most money.

In 1952, farmers fed Pfizer’s antibiotics to their animals so that they grew bigger (both Pfizer and the animals). In the mid-1950’s, Pfizer, Lederle, Squibb, Bristol and Upjohn engaged in an illegal tetracycline price-fixing scheme. They reaped hundreds of millions of dollars in earnings. The FDA chief was in Sackler’s back pocket. So when violations came to light, the FTC and FDA gave the offenders a slap on the wrist. However, senator Estes Kefauver was a thorn in their side.

Kefauver led an investigation as to why America’s drug prices were so excessively high when compared with those in other nations. In fighting back, the drug industry smeared Kefauver as a liberal pinko, claiming he had designs on forcing socialized medicine on the United States. The nineteen drugmakers under the gun gave bogus excuses. The real reason is that America’s drug prices and patents are subjected to minimal or no regulation, unlike everywhere else.

In 1956, Americans were told they were stressed, but a wonder drug called “Miltown” would help calm them down. The mild tranquilizer became a best-seller, until it was counterfeited and appeared on the black market, and its adverse side effects gave it bad publicity. Oh, well.

Then in the 1960’s came the culture-changing birth control Pill, and Valium– also called “mother’s little helper” that was marketed as a weight-loss aid. The next game-changer was thalidomide. Kefauver used the worldwide backlash against this drug to push through some drug safety and effectiveness regulation in the United States in 1963. For a change. Even so, in 1972, when the U.S. Supreme Court confirmed certain regulatory powers conferred on the FDA, drugmakers merely sought additional markets for their products on other continents.

In 1976, there was a swine flu epidemic in America. Healthcare companies were reluctant to develop a vaccine for it, fearing an orgy of litigation from victims if any harm was done. So the government unwisely agreed to foot any legal bills. Sure enough, some vaccine recipients developed cases of Guillain Barre syndrome, and neurological complications. The (taxpayer-funded) Justice Department took the hit. Other parties piled on. “The CDC had exploited ‘Washington’s panic’ to ‘increase the size of its empire and multiply its budget.’ “

Moving on, the author told the whole sordid story of the “opioid crisis” in America. In a nutshell: in May 2002, Purdue Pharma, maker and unethical marketer of OxyContin, hired Rudy Giuliani’s firm to defend it against the firestorm from its host of illegal activities. The firm collected a $3 million fee per month. Purdue collected $30 million per week from OxyContin sales. To be fair, Purdue and the Sackler family were the poster-scapegoats of the crisis. Numerous other parties aided and abetted them: other pharmaceutical companies, doctors, FDA bureaucrats, and pain management “experts” and pharmacists. The far-reaching consequences have caused a lot of trouble for society as a whole in the areas of: increased healthcare costs, criminal justice, social services, drug rehabilitation services, lost productivity and earnings, etc.

Read the book to learn an additional wealth of details and the details of wealth of the healthcare industry’s evolution into a hegemonic legal behemoth / excessive profit center, in the form of a series of cautionary tales in various topic areas– drug advertising, blood donations, biotech, epidemics, pharmacy benefit managers– that wrought major good and bad (mostly bad) cultural and regulatory changes (including the Hatch-Waxman Act and the Orphan Drug Act); plus the family battles following the sudden death of Arthur Sackler.

Samsung Rising

The Book of the Week is “Samsung Rising, The Inside Story of the South Korean Giant That Set Out to Beat Apple and Conquer Tech” by Geoffrey Cain, published in 2020.

In 2009, the author, a Korean-speaking journalist moved to South Korea to find out all he could about the then-electronics company Samsung, the most famous company in the country. In the ensuing years, Samsung’s relationships with technology-products makers became incestuous because it decided to make its own products while simultaneously supplying its competitors with parts for their products.

The author personally visited the city of Daegu, hometown of Samsung’s founder. In March 1938, Samsung started as a produce stand. The founder followed the Japanese business model of building an empire owned by family members, that involved complicated, group-focused, loyalty-oriented arrangements. Sounds somewhat familiar.

Anyway, in the 1950’s, he branched out into different industries, such as wool clothing, sugar refining, insurance, banking, retailing etc. The corporate culture involves slogan-chanting, and a drill team. But different divisions of the company harbor petty jealousies. The company’s success as a whole is treated as a zero-sum game, so one division’s success is considered to come at the expense of another’s. Sounds somewhat familiar. In autumn 2011, when Samsung’s division in America successfully marketed its new phone and stole a significant amount of market share from Apple, Samsung’s marketing division in South Korea lost face.

The founder made valuable government contacts that invited the kind of corruption that used to be frowned upon in the United States twenty years ago. Ironically, the United States has always provided significant financial aid to South Korea beginning with the Cold War and thereafter.

In 1999, Samsung and Sprint cooperated in a venture to make and export cell phones to the United States. Pursuant to South Korean culture, “After the bonding over booze and karaoke, it’s an accepted practice to roll out bags of cash and other gifts for your partners [American telephone service companies].” However, Samsung had to learn that Americans don’t do business that way (at least not explicitly).

In April 2008, Samsung’s chairman was charged with stock manipulation and tax evasion. In August 2010, and again in July 2011, Apple and Samsung launched an orgy of patent litigation against each other. In October 2011, Samsung already supplied parts for Google’s Android phone, but decided to introduce a phone of its own, the Galaxy Note series. It was a cross between a phone and a tablet, that would compete with Apple’s iPhone. Samsung sought to steal Apple’s customers. Apple had a reputation for making only one version of an overpriced product that delivered exactly what customers desired, that made them feel they were in the “in” crowd. Samsung would offer a choice of different-sized screens. It came late to the market, but improved upon existing products.

In August 2016, Samsung launched a new Galaxy Note phone. In October 2016, Samsung compounded its problems by denying that its phone burst into flames without warning. Its employees who were native South Koreans were under pressure not to express any negative sentiments about anything associated with their employer. For they risked ruining their careers, as word would get around to the few other competing employers in the country, and they would never work anywhere in their homeland again. Sounds somewhat familiar.

Read the book to learn about a wealth of additional details on the culture of South Korea (which is the same as the corporate culture of Samsung), how Samsung came to focus solely on technology parts and products, and much more.