The Antidote

The Book of the Week is “The Antidote” by Barry Werth, published in 2014. This suspenseful saga is about the public drug company, Vertex.

Vertex has created the core substances in drugs that treat niche diseases, such as hepatitis C and cystic fibrosis. It has partnered with various other drug companies to use their resources.

Unconventionally, in the 1990’s, Vertex’s employees were organized into teams working on protein targets rather than those working on different diseases. The company’s teams were demoralized when they failed month after month to come up with a successful molecule.

The cost of American drugs is so high not just because the drugmakers are greedy, but because their employees feel entitled to a large reward for creating an effective product that does minimal harm to patients. They take tremendous risks– acquire pricey, extensive educations in organic chemistry and such, working long daily hours, suffer loads of stress from dealing with grant applications, patent disputes, licensing issues, doctor-insurer issues, undergoing the rigorous process of seeking FDA approval after laboring months or years on a drug substance– possibly applying for approval at the same time as another company with a competing product, and face the possibility of being laid off anytime. This is why life-saving, life-prolonging medicines are astronomically expensive. However, the drugs would not exist, but for the necessary evil of a greed machine that raises the funds to pay for the price of creating them.

Vertex posted a “profit” of more than $2 million in the fourth quarter of 1993, even though it had yet to sell even one pill. Its financial arrangements with its partners allowed it to claim that its income exceeded its expenses. By the end of the 1990’s, however, there were still no actual drugs produced, and the company was likely many years and hundreds of millions of dollars from the market. It was thus a likely takeover target. Some of Vertex’s scientists and lawyers became avid day-traders of the company’s stock in the autumn of 2000, after a deal with Novartis.

Trading rumors fly all the time, and one influential analyst at a big-name investment bank might downgrade a drug company’s stock, causing a selloff. In the early 2000’s, there was an SEC accusation of insider trading against Vertex’s house counsel. Ironically, it is common practice for panel members of the FDA to receive financial support in research-funding from many pharmaceutical companies.

Those companies that are public must answer to Wall Street. Unsurprisingly, at numerous medical conferences, their executives spout cliches such as “…We believe it’s a matter of time before we break this disease wide open and make a really big difference for a lot of people.”

Read the book to learn about actions Vertex took in research, development and finance in order to stay in business twenty years while accumulating losses of more than $1.5 billion; the causes of its high turnover of executives; how it became more geared toward finding commercial applications with its research results, and how it had fared product-wise and financially by autumn 2013.

Siberia Bound

The Book of the Week is “Siberia Bound” by Alexander Blakely, published in 2002. This is the personal account of a recent college graduate who decided life in the United States was too easy.

In the early 1990’s, the author moved to Novosibirsk, Siberia to see, with a business partner, whether he, fluent in Russian, could help a region of the former Soviet Union make the transition from Communism to capitalism. He and his partner borrowed money to buy cocoa beans and sold them to chocolate factories on credit.

Blakely wrote about Siberian culture. One amusing passage told of the detergent brand “Barf” imported from Iran. “Things got dirty all the time: In summer, it was dust and car exhaust. In winter, it was coal soot and body odor trapped by layers of insulation.” The relationship between Blakely’s business partner’s wife and her mother-in-law was less than friendly. This was partly because the wife spoiled her young daughter, and the mother-in-law was strict with her– the opposite behavior of mothers and grandmothers in American culture.

Sadly, the moral of the author’s story became “Be careful what you wish for.” He realized that the major cultural, political and economic changes taking place in his community meant that Siberians had become like Americans. They started riding in cars instead of walking. They ate fatty foods for lunch and the men stopped exercising. The women started going to aerobics classes at the gym.

Blakely thought that bringing capitalism to them would be a good thing. However, they soon developed an insatiable appetite for consumer goods. Once they were made of aware of their severe deprivation by the media and increased their connections with the rest of the world, they became depressed. Previously, they had been happy due to their ignorance of how materially poor they were.

Read the book to learn of the sea changes taking place at the author’s business, which sold not just chocolate, but surgical gloves, potatoes and other products; and the formerly Communist community, over the next four years.

Webs of Power… – Bonus Post

This blogger “clicked” through the ebook, “Webs of Power: Notes from the Global Uprising” by Starhawk, published in 2002.

The ebook is the author’s description of what her activism is about. She explains that the way globalization is currently occurring is wrong because big corporations are favoring money over people. Greedy corporations (and governments) are destroying the earth and life on earth.

One specific way governments are allowing this, is through the World Trade Organization. The United States joined the Organization and signed the trade agreement called GATT. That agreement lets the Organization, whose member-countries’ representatives, appointed via cronyism, make laws whose disclosure is denied to the world. No hearings of their proceedings are permitted. The actions taken by this secret society affect workers and human rights worldwide and of course, the environment.

The negative consequences have included, for example, allowing poisons to permeate the world food supply, endangering species and keeping drug prices high, all to the benefit of global corporations. What is not a secret is that those companies have, in recent decades, increased their profitability by moving their production facilities to nations where they can get labor at minimal cost while avoiding pesky health, safety and environmental laws. The author argues that this has also resulted in significantly increased income inequality the world over.

Read the book to learn of additional ways greed and power hunger are wrecking the world, and the role the author has played, through planning and organizing protests, training protesters, protesting and writing in trying to prevent further harm; and of her various proposals for governance and allocating resources in ways that do the greatest good for the greatest number.

The Why Axis – Bonus Post

This blogger skimmed the ebook, “The Why Axis” by Uri Gneezy and John A. List, published in 2013. The co-authors discuss their experiments in behavioral economics– the decisions and actions people make and take when they must allocate limited resources in their professional and personal lives.

The authors concluded from their research that gender-related competitiveness is learned– taught by society, rather than inherited. They write that many studies have also shown that when men appoint a leader, they choose someone who resembles them.

Read the book to learn about other interesting findings, such as the risk factors for teenagers’ getting shot, the fastest way to: meet fundraising goals; modify behavior in marketing products; and increase factory-worker productivity by using incentives, punishment or a combination of both.

Antifragile

The Book of the Week is “Antifragile, Things That Gain From Disorder” by Nassim Nicholas Taleb, published in 2012. In this repetitive ebook, Taleb reiterates a few of the concepts from his earlier book “The Black Swan” and again appears to derive pleasure from pointing out human fallibility. He writes that “Uncertainty, incomplete understanding, disorder, and volatility are members of the same close family.” He shows how people generate inaccurate predictions and draw the wrong conclusions through spurious causality, or “epiphenomena.”

Taleb discusses a state of being he calls “antifragility” (or more often, a lack thereof) in the realms of politics, economics, science, academia and medicine, taking swipes at all of them as he goes along. He gives tips on how systems and individuals can make themselves more antifragile (the opposite of fragile), a good thing. The author also provides real-life and theoretical scenarios that perpetuate fragility.  Humans appear not to be learning from past scenarios, as they continue to make the same mistakes over and over. One example of a real-life scenario includes the economic bailout of certain big companies, by the United States government (and by extension, American taxpayers) in 2008.

Fragility is vulnerability to negative occurrences. Antifragility is the ability to withstand negative occurrences due to various measures taken to reduce risks; this state of being actually benefits from volatility and randomness.

Humans tend to overestimate their ability to predict shocks and rare events (like revolutions, crises or budget deficits), and when the worst happens, it is worse than the previous occasion. Taleb writes that after havoc strikes, blame incorrectly gets assigned to one factor of the big picture. “The focus is wrong even if the logic is comforting.” People need to study the system and its fragility, not events.

One general example Taleb provides of spurious causality includes the questionable, widely-held assumption that academic research is the generator of wealth because so much research comes out of countries that are wealthy. Taleb thinks it is actually the other way around. “We have no evidence that academia helps science and technology, which in turn help practice.” One narrow instance of this was the building of the atomic bomb, in which there was directed research. But in that, there was selection bias and confirmation bias.

Another example that Taleb provides– a theoretical one– is when an Ivy League university scientist lectures a bird on how to fly. The bird takes flight. The scientist hastily writes books, articles and reports stating that the bird listened to him. The university is now an authority on aerial transportation by the avian species. It will implement further studies with funding by the government. Unfortunately, birds do not write books and papers, so we cannot get their side of the story.

The author advocates interventionism in particular areas and not others. He thinks the government should impose restrictions on the size, concentration and speed of entities including itself (obviously idealistic of him) because bigness increases fragility and the probability of disasters. He thinks less is more (do nothing or implement minimal intervention unless a medical condition is life-threatening) when it comes to medicine.

Taleb says education is useful in that it helps a family retain wealth insofar as its descendants use their educations to enter professions that were more lucrative than those of their ancestors. Almost all projects take longer and cost more when an element of uncertainty is added. “We have never had more data than we have now, yet have less predictability than ever.”

Read the book to learn more about: a) errors in human reasoning that aggravate adverse situations;  b) why fragility is increased with fiscal deficits and awarding of prizes in the fields of literature, finance, and economics; c) which actions are helpful in promoting antifragility and d) an inopportune event caused by Taleb’s own fallibility and his reasoning in dealing with it.

In sum, “The problem with people who do not incur harm [suffer no punishment for their influential opinion-making that causes economic collapse or a war] is that they can cherry-pick from statements they’ve made in the past, many of them contradictory, and end up convincing themselves of their intellectual lucidity on the way to the World Economic Forum at Davos.”

The Black Swan

The Book of the Week is “The Black Swan” by Nassim Nicholas Taleb, published in 2010. In this book, the author explains his theory about rare, unexpected events, “Black Swans”– unexpected by those affected, because human traits and uncertain situations cause people to draw the wrong conclusions, formulate the wrong predictions, and make the wrong decisions. “Black Swan events are largely caused by people using measures way over their heads, instilling false confidence based on bogus results.” The author applies his ideas mostly to “experts” who manipulate the financial markets.

While Taleb makes some good points, this blogger suspects that very few readers of this book will come away fully understanding what a Black Swan is. Taleb tries to provide several examples; his illustrations are unclear as to why one event is a Black Swan and why another is not.

One example consists of five trading managers at a European-owned financial institution who wrote a five-year plan. Having neglected to consider all possible adverse future events, they were done in by “the Black Swan of the Russian financial default of 1998 and the accompanying meltdown of the values of Latin American debt markets.” Yet, Taleb writes that the 2008 financial crisis was not a Black Swan. He says such a cluster screw-up will happen again. A Black Swan is a negative or more rarely, a positive occurrence that in general, has never happened before.

One human trait people have is that they are reluctant to attribute events to randomness. But Taleb thinks randomness plays a part in all sorts of events, including long winning streaks of investors. He even generated a computer simulation showing how it would be impossible not to have money managers who beat the market year after year– he says they did so simply by luck alone. Another reason these investors are overrated is that people hear more often about winners rather than losers.

Taleb writes, “We want to be told stories, and there is nothing wrong with that– except that we should check more thoroughly whether the story provides consequential distortions of reality… Just consider that the newspapers try to get impeccable facts, but weave them into a narrative in such a way as to convey the impression of causality (and knowledge).”