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The Strategy of No Strategy: Putting it together

N17 on Wall Street

This is the final part of my take on Karen Ho’s book, Liquidated- An Ethnography of Wall Street. I can’t do the book justice in a single blog post (it’s going to take at least four), I’m going to try to summarize some of what she is describing as the culture of Wall Street and how it is infiltrating our lives. I’m going to touch on four major themes in her book: “smartness”, “flexibility”, “shareholder value” and “the strategy of no strategy”. Check here Part1 on Smartness , Part2 on Flexibility and Part3 on Shareholder Value. I am going to try to tie Karen’s analysis of the culture of Wall Street to the pharmaceutical industry because having had a first person perspective, it is my belief that Big Pharma has felt the worst effects of Wall Street on its core business- discovering drugs.

This week, Bruce Booth of Forbes wrote an article about the culture of pharmaceutical R&D and how it has definitely taken a turn for the worse. Let me just say for the record that this is a culture that has developed over time and was forced on the labrats. We didn’t invent it in the lab because we know it would never work. (For more feedback and analysis from the labrats on this article, see this comment thread at In the Pipeline.) Over the years, I definitely got the feeling that our overlords thought of us as 1.)socially awkward nerds who 2.) didn’t know the value of a dollar and 3.) were completely unproductive if left to our own devices. But Booth sets the record straight in some respects. He takes on the ‘tyranny of the committee’ and risk aversion, which are related to one another and further exacerbated by, emphasis on shareholder value, FDA failure rate and class action lawsuits. Then he takes on what many first person labrats would say is the biggest problem with pharma today:

Organizational entropy’s negative impact. [entropy in this context means disorder] For most of Big Pharma, at least a few mega-mergers and their integrations have happened in the past decade. And for all of Big Pharma, there’s been the semi-annual reorganization around the latest fad in corporate design: matrix management, proliferating centers of excellence, end-to-end therapeutic area groups vs functional lines, disease area strategies rather than site strategies, etc… These cause constant organizational upheaval with levels of distraction that can’t be measured. Resumes fly through cyberspace as soon as a deal is announced. Organizations are frozen as these changes happen, fear of the unknown paralyzes entire project teams, and closures/layoffs happen without much regard to upgrading the talent and weeding out the deadwood. Drug R&D takes typically 10-15 years from start to approval; how can it stay on track with a cadence of change this fast? As I noted last summer, most new drugs approved today were discovered in the 1990s. Do you think those approvals would have happened faster if there weren’t so many mega-mergers and reorganizations in the meantime?

The answer to the last question is “yes, probably”. There’s no way to tell, really, but having survived multiple mergers over the past 2 decades, I can tell you that we vamped and put everything on hold for months and years on end while the executives had pissing matches and more local management engaged in political backstabbing. It was a horror show. Much valuable experimental time, money and talent was wasted in the aftermath of Wall Street engineered deals.

But Booth also makes the common mistake that presumes that if all of us just worked at smaller companies, we’ll be more innovative and save oodles of money! If that happens it would be the equivalent of putting a few dozen labrats on a desert island and telling them to build their own labs with the tools available. Yep, there will be some geniuses and amazingly well coordinated teams that will fashion robotics and gel electrophoresis devices from sand and seashells but it won’t necessarily be efficient nor will those labrats be able to purchase stuff they can’t find on the island. There’s a reason why medium sized corporate labs discovered all those drugs back in the 90s.

Nevertheless, this is the new model of drug discovery. You, the scientist are chucked out on your ass and some cocky asshole business class people just assume that you’re going to whip up the next Lipitor with some sleight of hand. We’re encouraged to become entrepreneurs but they seem to have forgotten that our severance packages didn’t consist of millions of dollars in stock options. For the most part, we have a lot of poor scientists with no place to practice their craft and a mountain of extremely hard work and expenses before a vulture capitalist signs on.

The Wall Street smarties never thought about any of this stuff when they made the M&A deals. Nor did they stop to reason out why so many labs were failing to produce new drugs in the wake of those deals. For the last decade, all we’ve heard is that it’s OUR fault. We’re lousy scientists or lazy or spendthrifts. And they probably won’t figure out that the small little islands they set us adrift on aren’t going to be as profitable as they had hoped. But it doesn’t really matter because as soon as they’ve extracted the last bit of wealth from the big pharmas for the shareholders, they’ll just abandon the industry and the American scientific infrastructure to its own fate and move on to some other industry where wealth can be extracted. That’s what they’re paid to do.

Likewise, they will continue to pressure governments to hand over every bit of wealth from their citizens, to adopt austerity measures and cause untold suffering because they are in the business of finance and making money and if you as a country took the loan, they will expect payment. They don’t need to reason out that they’d be better off structuring things so that economies would grow and so they would get a more reliable but unspectacular return over time. That’s your problem. Their problem is to make the biggest, fattest deals they can in the shortest amount of time with the maximum amount of profit. It’s an optimization problem, a Traveling Salesman problem, a Metropolis algorithm on a global scale with one optimization endpoint. How much money can you make? They are in it for the deals, making their numbers and retrieving the wealth and private property of the shareholders. They don’t have time or patience for whiners and losers. They don’t even have the time to worry about another Depression. All they care about is the deal.

Karen Ho describes the culmination of “smartness”, flexibility and shareholder value as a thing called The Strategy of No Strategy. This is where the normal world meets the weirdness of quantum finance. Regular people assume that there is a small evil group directing things for some specific purpose, some grand scheme, some particular worldview. But all that is mere icing on the cake if it happens. What the 1% are really into is how this moment in time is going to affect their bonuses. Their plot to take over the world doesn’t extend much further than that. That is the only cause and effect relationship that matters because other than the expectation of money at the end of the year, they have no other rights or expectations as employees. They’re valued only for their ability to make connections and extract money from other people, they expect to be laid off at any time and the working conditions are brutal. And all of the authoritarian, political crap that gets thrown in to the mix is simply to protect their right to that money. As a result, you, the target of their financial machinations, are expected to conform to their deals. You are expected to give up your job at a moment’s notice to satisfy shareholder value or work in less than optimal conditions because to complain is to be a loser. It even helps them if they don’t have too much contact with you because personal feelings might get in the way of doing what they need to do. If you get in the way of their bonuses, they will have a problem with you, nothing personal. If it ends up feeling very callous and cruel, well, better to decrease the surplus population.

Karen Ho describes how the Strategy of No Strategy drives and changes the world:

Given that the identities of investment banks are wrapped up in their ability to immediately induce change in their people via job insecurity and flexible compensation, it is not surprising that one of their primary strategies-their plans for the future based on their imaginings of “the world and the firm’s position in it”-is, simply, to have no long-term plans (Schoenberger 1997, 122). To actualize their central identity as being immediately responsive to their own changing relationships with the market (including employees, products, and so on), their strategy is, in a sense, to have no strategy. Ironically, having no long-term strategy is contradictory and potentially self-defeating in that investment banks often find themselves making drastic changes only to realize months or weeks later that those changes were unnecessary, premature, and extremely costly. For example, in chapter 5, I described how investment bankers, in part because of their access to “sensitive, proprietary information,” are not only fired in an instant, but must also leave the physical premises of the building within fifteen to thirty minutes. Given how crucial the control of knowledge and the protection of inside information are for Wall Street investment banks, it seems self-defeating that they do not place any premium on loyalty. Despite the fact that firms try above all to enforce secrecy, they accept and maintain this volatility and revolving-door policy.

At first glance, it seems not only improbable, but also “irrational” for investment banks to engage in such practices, for why would a business so focused on profitability and knowledge not engage in practices that always improve its bottom line and its control of information? As many anthropologists have demonstrated, capitalist organizations are not simply motivated by purely instrumentalist quests for profit or governed by perfect rational actors; they are sociocultural organizations with complex, contradictory worldviews and particular organizational practices (Yanagisako 1999, 2002). Profits may be claimed as one of investment banks’ primary ideals, but it is mediated, situated, and enacted-along with other values-through the social and cultural lenses of particular organizations, groups, and bankers. How profits are made, what constitute profits, and what amounts are considered “profitable” enough are also culturally, organizationally, and historically variable.

John Carlton, the seasoned investment banker and managing director from BT, described how Wall Street’s strategy is to operate without a long-term strategy:

“Again, it is a business where there is no tenure. There is no union protection. Basically, if things change, you could be out. That’s one reason why people are very flexible. So you need flexible people, and people who can deal with it every day. Some people would hate that. I don’t mind that. Some people can’t stand it. They can’t last. They say, “I like to know where I am going to be five years from now.” They like the idea of stability. It is not very stable. I think that is a characteristic. Probably most people you talk to would say that it is not a very stable environment. Most businesses have five-year plans-What are we going to be producing?-and have long product life cycles. [We] have very short product life cycles. How do you plan when you never know what the market is going to do?”

Although Carlton attributed the rationale for not having a plan to market unpredictability, my point is that not having a plan is central to the strategy and cultural identity of investment banks.

[...]

Underpinning the continual (re)creation of “instant” teams or product expertise is a corporate culture that values eagerness for change and expediency. The “build a new dam strategy” while the old dam overflows also prefigures waste and even decline. As I learned from informants throughout my fieldwork, these star hires and seven-figure offers are often abysmal failures: stories abound of senior bankers simply pocketing the cash and producing no results, of formerly successful teams that were separated and dislodged from the environments in which they had thrived.

In other words, reflection is not Wall Street’s strong suit.

This is the part of the book that kept me up at night. Here we have a bunch of “smart” people with no job security, driven by their own conditioning and the banks they work for, that see *themselves* as The Market. They are the ultimate precariats. They are no better than miners whose goal it is to take the top off the mountain. And they have asked and gotten more and more leeway to act as they please, without regard to rational expectations for the future of the things they act upon.

The pharmaceutical industry has been destroyed by Wall Street and now, it knows it. There won’t be a recovery for the gigantic monstrosities like Pfizer that merged so fast and furiously that it didn’t have time to structure its most valuable asset- its database of compound and assay information. They’ve jettisoned the most valuable parts of their organizations in order to feed the Wall Street beast and its spawn of corporate CEOs whose job tenure can be measured in less than a handful of years. It does not matter that there is a generation of scientists laid off who will never make the salaries they once had or can pay their taxes. It doesn’t matter that communities and states will feel the effects of hundreds of thousands of terminations. It doesn’t matter that millions of patients will now be left vulnerable to bacterial infections that can’t be stopped or cancer or schizophrenia. It doesn’t matter that once the labs have been dismantled and equipment sold off, there will be no one who will be ready to reconstitute the labs when or if our society wants to discover drugs again. It will not matter that they have retained the scientists who are the best salesmen- of themselves- and not necessarily the best experimentalists. All that mattered was the deal at the time it was made. And now, all that matters is getting in on the get-rich-quick deals that can be made from academic basic science and discoveries that are not quite ready for primetime and will be abandoned as soon as they do not generate the expected profits.

For society at large, the strategy of no strategy is behind the austerity measures pushed on all of us. For countries that took out loans, that money must be paid back regardless of the havoc it plays on the citizens or that more austerity makes recovery of that money even less likely. What matters is that the recovering the money is as optimal an exercise as possible as quickly as possible, to get the highest return in the shortest amount of time. It’s sort of like harvesting organs before the body can’t be kept alive any longer. Go read Never Let Me Go and you’ll know what I mean. So, Spain, Ireland, Greece, Great Britain and the US will continue to pay and pay and pay until no further profits can be extracted. Then, they will move on to a different hemisphere. What is surprising it how passive many countries have been in accepting this fate. How long will it take for western countries to rebel like the middle east has? Decades? Will we have to live with decades of austerity and growing authoritarianism?

And now we can see why our governments act the way they do. Back in 2007, when Hillary Clinton was the front runner. I remember talking to a colleague who had a friend who was once an investment banker on Wall Street who had insights into how the bankers were thinking in 2007. They knew there was trouble coming and were trying to thread the needle. A Republican candidate might cause another Depression with the wrong policies. No, they didn’t want the patient dead, well, not until they could recover themselves. Maybe a Democrat. But Hillary Clinton had a strong responsibility streak in her. Besides, she came from Yale and we know that the culture of smartness distrusts Yalies as being too liberal. Another New Deal might have been too much like rehab. So, they threw their weight behind the Harvard guy whose unchecked ambition and cool demeanor was more like the cut of their own jibs. Just like the undergrads they hire from Princeton and Harvard, it didn’t matter to them if he knew nothing about finance. They would teach him.

If you’ve ever wondered, like I have, why Obama careens from saving one institution  to another in negotiations behind closed doors and apparently without any guiding principles, like he was making it up as he goes along, now you know why. He is governing on a deal by deal basis, without a worldview and without a strategy. It’s his modus operandi and he does it with equal fluidity with the bankers, the auto industry, congress, health insurance companies and voters themselves. He’s playing Let’s Make a Deal with each individual entity and with everything on the table.  Flexibilty and the “culture of smartness” is important to him, which is why Geithner and Summers got so much face time with him.  Loyalty and planning not so much, which is why Christina Romer got the shaft.  All of the reports on the way the White House operates with the fast paced credit stealing and high profile tasks going to smart young men and the golf outings with “front office” guys, sounds a lot like Wall Street.  If it turns out that his team hadn’t thought about how Republicans would game the debt ceiling business or how the individual mandate without a public option would make employees *more* vulnerable to layoffs and loss of health benefits, well, this is what you have signed onto with Obama.  He doesn’t see his role as a long term policy maker or seasoned politician and it shows.  If you’ve never worked in a corporate environment, you might be forgiven for not recognizing how the schmoozer works the system but there’s no excuse the second time around.

All around the world, bankers had their way with government leaders, well, except for Iceland, whose decendents of marauding Vikings and new female prime minister told them to f&*( off.  I guess it takes pirates to know pirates.  But the rest of the world bowed quickly to the notion that recovery of the banking system was The. Most. Important. Thing. Everything else, their sovereignty, public welfare and future growth, was made secondary to the immediacy of keeping the paper flowing between the banks. The fear of a global meltdown made them cower. But there is no strategy to ever get out from under these conditions. There was no effort to reign in the bankers either. And they have a well oiled propaganda machine and know that when a population is under stress, it circles the wagons and becomes more conservative and nationalistic. Liberal policies look too risky and threatening. In next week’s vote in France, I would not be at all surprised if Nicolas Sarkozy managed to hang onto power, despite his unpopularity. The rational people of France may look to the right at Marine Le Pen’s crazy nationalists and fear that Le Pen’s faction will get enough votes to form a coalition with Sarkozy’s. Voting for the socialist candidate may look too risky. I hope I am surprised.

And what does it mean for this country? Well, I am not at all surprised that expectations have been set for Hillary in 2016. The press only sounds beneficent and contrite this time around, acknowledging that maybe they have regrets about what they and the party did to her in 2008. Bullshit. They know damn well that her chances of getting elected in 2016 are nearly zero. But pushing the timeline for her forward is an attempt to pacify the restless elements of the populace who see her as the only legitimate alternative to either Romney or Obama. At this point, it doesn’t even matter who wins the White House. Wall Street doesn’t see either of them as a threat.

In the meantime, they have just scored another victory in the JOBS bill where they can be less than transparent to investors who they hope to make new deals with. I think the idea behind this was to help small companies, like small biotechs, get investment capital. Small biotechs don’t really have a product to sell. They have ideas and beginnings of products. But development takes a lot of time and money and as the big pharmas have already found, you can sink billions of dollars into an idea and have it shot down by the FDA or siphoned off by a side effect that no one anticipated. So the risks are high. But that doesn’t matter. All that matters is the deal and in innovative industries like biotech, there are a lot of potential deals to be made.

And then there is correlation between bonuses and crashes. Ho says that record high bonuses on Wall Street frequently precede crashes. That’s not really surprising. It means that there is a frenzy of unchecked deal making and risk taking with large sums of money in some corner of the market where all of the investment bankers have been attracted like magpies to shiny things. All of the money has poured into this sector and bets have been placed for and against. Maybe the new rules will prevent overleveraging. Maybe they won’t. But there is one thing the bankers can count on- a steady stream of new funds from your 401K accounts to their hands that they can bet in a global casino. Pensions are so passe. 401Ks are the new black and you can be sure that there will be an even bigger push for the banks to get their hands on even more piles of money that are sitting around that no one seems to be using.

There is no goal. There is no plan. There is no strategy. It’s all, “What have you done for me since lunch?”.

The system is broken. Its entropic, unsustainable, moving at speed of fiber optic cables and out of control. The best thing we average Joe’s can do is to limit our own losses, get out while we can and sleep with the lights on.

29 Responses

  1. An incredible series, Riverdaughter. Thank you.

    • If you really want to thank me, you could hop a plane from kansas and help me paint.
      What do you mean you can’t drop what you’re doing?
      {{sigh}}.
      The front room came out looking great. I should have taken a before picture. I’m using Benjamin Moore Simply White, the most glorious white on the planet.

      • I’ve said it before and I’ll say it again: This country is too damn big. Seriously, I would be there in a flash if it was possible.

        Would my brain power work?

        • Do you mean you’ve always wanted to direct? ;-)
          I think you’re overqualified.

  2. RE: The “Pensions are so passé” thing (I know that was snark)

    I was there when it happened but, I can’t remember how it was decided that we could all be investment analysts in addition to our day jobs. I was lucky to be in a field (Librarian) that while underpaid generally comes with a pension so I didn’t get swept up in the 401k excitement but…. I know a lot of people who did.

    I’m thinking that it had a lot to do with the fact (by then a pretty glaring fact) that pensions were passé for a long time before 401k’s were common. My ex-father-in-law lost a pension when his first bankrupted engineering firm stole it back in the 1970s.

    I remember wondering why (Why, why, why!) they didn’t open the various state pension funds to state residents. Aren’t those managed by investment experts.

    But, even there — something weird was going on. I guess a lot of states decided that the employer contribution could be waived pretty much permanently. I don’t know how that was supposed to work.

    The thing is, we’re getting pinched at all the edges. Cutting back on contributions to Social Security just when (one way or another) we should be EXPANDING contributions to SS. That’s going to lead to discussions about how “Benefits” MUST, must, must be cut.

    (shaking head) It’s not a “benefit” if it’s our money. And a 7% per paycheck investment is an investment. NOT a contribution. And the Return is a RETURN on investment. Not a “benefit”.

    So. I’m bummed. But, thanks for the post.

    • I don’t know how bummed i would get. The whole thing is unsustainable. Wall Street didn’t think about or care what it was setting up but like a star tha is consuming all of its fuel, it’s bound to collapse, this time even more spectacularly than before and there won’t be any bailout. At that point, we will have some very serious discussions about the finance industry because there are a lot more of us than there of them. So, bring on the catastrophe. Let’s just get it over with already.

    • Obama is cutting back contributions to Social Security so he can kill it off during his second term, just as Wall street installed him in the White House to do.

      Obama-crats, republicans with out the bat shit crazy.

    • Contributions to Social Security were “payroll holiday-ed” exactly in order to manufacture a “trust fund shortfall” in order to hype and fast-forward the plans to destroy Social Security and privatise the money.
      Obama always wanted to be the so-called “Democrat” who pulled a Nixon-goes-to-China against Social Security. The so-called “Democratic” Senators and Representatives also support the goal of abolishing Social Security and privatising the money. They pretend otherwise to con their trusting voters into voting for them again. (Are there any exceptions? Sure. Harkin in the Senate. Dingell in the House. Any others? Any others who really mean it as against just pretending?)

      If Romney becomes President, the “Democrats” will pretend to protect Social Security in order to protect thir “bparty brand value”. If Obama becomes President again, the “Democratis” will conspire with Obama and the Republicans to cut payroll taxes further and implement the Simpson-Bowles Catfood Commission Plan as a first step to abolishing Social Security. They would find that conspiracy harder to pull off under a President Romney whom they would have to pretend to oppose. That is why it is so important to make Romney instead of Obama our next President. Also we should try to regain a so-called “Democratic” majority in the Senate and try to regain a so-called “Democratic” majority in the House to make it harder for the Democratics to conspire against Social Security the way they actually want to do.
      And the rest of us should learn and practice survivalism at various individual and group and political levels. There are blogs and bloggers which could be very useful if we take their information and outlooks back to the analog meatspace reality-sphere and apply that information and those outlooks I think blogs and bloggers like ClubOrlov, Energy Bulletin, Catherine Austin Fitts, Ran Prieur, Carolyn Baker (Truth to Power), the Contrary Goddess, Sharon Astyk, etc.; have a lot to offer. Collectively, they offer a lot of information and outlooks which could, if applied, help us protect ourselves and eachother against the Two Party Conspiracy Against America.

      • And “young people” who are just thinking of getting started on “careers” should probably read all the relevant survival articles and entries by Dmitri Orlov and Ran Prieur in particular; and learn how to get as educated as possible without going to college at all. And beyond that, go to the very least possible college so as to emerge with the least debt or no debt. And learn how to live on the least money possible so as to need the least money possible from a job for which they studied the least possible in college so as to emerge with the least debt or no debt. They might also learn how to do as much of their work as possible in the emerging Black Market Economy, the emerging Barter Economy, the emerging Survivalist UnMoney Economy, etc. The best thing parents could in-reality do for their chidren is to refuse to help them go to any college which requires a loan to go to. Parents should indoctrinate their children in the concept of No Loan Ever! Ever! Ever! for any post-high-school education.

  3. The pharmaceutical industry in America has indeed been destroyed, and it’s not likely to ever come back. Merck is spending 1.5 billion dollars to build a pharma R&D facility in Beijing, People’s Republic of China. The rest of Big Pharma is following suit, winding down R&D in the U.S., and moving to the PRC as quickly at time permits

    • Good luck to them. China is not going to be a magic bullet. But that will become apparent pretty soon.

      • True, China is not a magic bullet. But Big Pharma may be willing to commit there over the long haul, simply because Big Pharma’s senior managers have tremendous respect for the economic achievements brought about by China’s leadership and the Chinese Communist Party. The *like* them, if that makes any sense.By contrast, I don’t think they *like* their fellow Americans very much…

        • LOL! My point in this post is that there is no long haul for the management class. Not even for China. If the Chinese don’t start churning out blockbusters, like next year, that’s it, the money will move elsewhere. Time is sped up and deals must be worth a lot of money for them to be successful.
          The other thing I think the business class forgets is that chinese labs operate very differently than they do here. We used to have culture over here of somewhat more independence and risk taking, although Bruce Booth says that’s almost gone nowadays. It’s completely absent over there. The courage to take risks on an individual level and go outside what has been spelled out is going to take time to develop. If you’ve worked with chinese scientists here, you know what I mean. They are some who are more than capable of doing this but I think they benefit from the American way of doing things. Otherwise, they keep their mouths shut, their eyes on their work and their heads down.

          • I understand. And in the English-speaking world, the money will move elsewhere quickly. Because in the English-speaking world, it’s now all about tearing everything down. It’s why pharma is never coming back in the U.S. It’s destroyed. But In China, it’s about building up. The Communist Party sets the tone. Big Pharma in China does not. This is of course, not the case at all here.

            Believe me, if you think American scientists are angry now, just wait until they see the willingness of Big Pharma to commit to China for the long haul, but not in the U.S. It’s not going to be pretty.

          • But this is my point. I don’t think there is such a thing as committing to the long haul. Right now, they’re going to china, NOT for the long haul but because they think it is cheaper. It’s all to extract money. They think it will be less expensive to do research there quickly, like yesterday. That’s not going to happen. It’s not going to happen because china hasn’t developed the kind of culture it needs to do innovative research. They even admit it themselves. They are into knock offs. But even if it develops there, it’s going to take a lot of money and time. The bozos who are calling the shots think it’s all about lazy American scientists who cost too much. I didn’t know any lazy American scientists in my last year there. I take that back. There were some scientists who thought that a better use of their time was to stab other people in the back than to do science but you get what I mean.
            The goal is to make money quickly. That’s all they’re interested in. If it can’t be made quickly, the money will go elsewhere. And china has its own set of bureaucratic hurdles. Here we have the FDA and other regulations but at least there is a business infrastructure to get things done with a whole cannon of law that protects transactions. That’s not the way things operate in China. I had long talks about this with my chinese colleagues. If pharma moves to china, it’s going to have to take the entire infrastructure with it, including the vendors and suppliers and transportation stuff and the financial system to negotiate and get paid. It’s a lot of extensive work. And once it’s all set up, it’s going to take years for it to all come to some kind of fruition.
            That’s not quick enough for the financiers. They’re going to lose patience before anything gets to the development stage. They don’t understand research at all. This is the most damaging part of the strategy of no strategy. They’ve completely wiped out research in this country to set it up in asia but they think that it can all be reduced to a set of pieces parts where every little company does one little thing. It’s a very auto industry or hardware view of research. It ignore the biological part of research that is the rate limiting step. By the time they realize they’ve made a mistake, it will be too late to do anything about it either here or in china and long before that, they’ll have given up on china and looked for other get rich quick opportunities in other industries.
            Are you seeing it yet? There is no long term committment to research in pharma anywhere in the world and won’t be until these people are reined in.

          • I understand your point, RD. Wall Street uses its financial wizardry as a giant wealth pump to pump out all the wealth that the English-speaking world built up over the past several hundred years. and leave it as one giant economic wasteland, and then move on.

            However, the reason that Wall Street will be unable to subject China to its wealth pump in a similar way is the presence of the Communist Party. China is a planned economy, and the CP sets the tone. The CP can punish Wall Street in ways that the DPUSA and RPUSA can only dream of, up to and including the use of thermonuclear weapons, if necessary. Bottom line, it’s a different system, and Wall Street, by and large, has to play it by their rules. Besides, as I said, Wall Street *likes* the Chinese, their food, their culture, the people…in a way that they don’t like Americans (or even themselves, for that matter).

          • I don’t think it matters,NK. After a few quarters, the finance MOTU are going to see the chinese as we do: very driven, very smart but limited by their cultural conditioning and mostly by the biology, which is the same everywhere on earth. They think that if they just throw more cheap scientists at the problem that the solution will fall out of thin air. And for anyone whose been in the research environment, that is just a very naive point of view. Maybe some of them will get lucky. But we’re no longer in the era of old biology. This is a new territory with a more complex landscape and more questions than we will ever have answers for.
            There is more than enough work in this new biological renaissance to keep every scientist on the planet overwhelmed with work for the rest of their natural lives. THAT is what the finance gods are not understanding and why their so-called “long term plans” in China will fizzle out pretty quickly. It’s not like they care anyway. They’ll just move on to the next big thing.

          • That assumes that the finance gods, and Big Pharma, will be permitted to take their assets (and in a few cases, themselves) out of China. That may not be a valid assumption. Merck and Goldman executives will no doubt still be treated very well, I’m sure. One can get comfortable living in a guilded cage…

            That being said, I understand why, in a political and economic struggle between China and Wall Street/Big Pharma, you are inclined to bet on the latter. They have, after all, done a most thorough job of using their wealth pump to their advantage in the English-speaking world, so their track record is good. Even so, I’ll still put my money on the former. The Communist Party of China is not nearly as corrupt as Americans have been led to believe. All the new, luxurious imperial-style trappings notwithstanding, the Party remains ideologically driven by Chinese nationalism and Communist principles, not money. Wall Street/Big Pharma are going to find out that using the wealth pump on China is not going to be so easy.

          • On the contrary, I think the Chinese government is plenty corrupt. It consists of humans, after all, and we all know about how power is a naturally corrupting influence.
            I do believe that the finance gods think of themselves as somehow smarter than the Chinese and that the communists can’t possibly understand financial markets the way they to. The Fellowes company found out the hard way how china can work, especially with intellectual property. In fact, it might be the IP issue that keeps design in the US or other western nations, relegating the Chinese to grunt work.
            Nevertheless, I don’t think the finance gods have got this one right and it will backfire on them.

          • On the contrary, I think the Chinese government is plenty corrupt. It consists of humans, after all, and we all know about how power is a naturally corrupting influence.

            There once were two college students, one Chinese, the other American, who became close friends. Some years after graduation, the Chinese friend, now an important member of the Communist Party, invited his American friend to his home in China for vacation. As the two caught up, the American noted that his Chinese friend had done well for himself. “Here, let me show you how”, his Chinese friend said, and opened the window shades to reveal the scene of a beautiful suspension bridge spanning the local river. The American was duly impressed by the scene. His Chinese friend pointed to the bridge, then himself, smiled and said with a wink, “20%”.

            A few years later, the American, now the CEO of a major pharmaceutical company with close ties to Wall Street, returned the favor, inviting his Chinese friend to his home in the U.S. for vacation. As the two caught up, the Chinese noted that his American friend had done very well for himself. “Here, let me show you how”, his American friend said, and opened the window shades to reveal the scene of a devastated pharmaceutical campus, all the buildings abandoned, windows shattered, doors ripped off, tumbleweeds blowing in the wind. His Chinese friend was utterly flabbergasted. “But, but, there’s noone here! No work is being done! Everything looks smashed!”. His American friend pointed to the destroyed campus, then himself, smiled and said with a wink, “100%”.

            There’s corruption, and then there’s CORRUPTION.

            In fact, it might be the IP issue that keeps design in the US or other western nations, relegating the Chinese to grunt work.

            If you want access to the Chinese market, sooner or later you have little choice but to move your design work to China as well. Party rules, you know.

  4. Sacrificial post so I can be the Monster.

  5. If I were betting between RD’s scenario and NK’s, I’d bet on RD’s.

    Authoritarian systems defy not only human nature, but the nature of Nature itself.

    Authoritarian systems love order, but the Second Law of Thermodynamics (aka Entropy) indicates that Mommie Dearest Nature loves chaos.

    The Chinese are human beings. Their corruption will reach the ALL CAPS stage soon enough. :twisted:

    • *sigh* I was NOT trying to italicize the whole last sentence.

      I wish this was the kind of forum I enjoy on my anime sites, where I can edit such errors. :(

    • The Chinese are human beings. Their corruption will reach the ALL CAPS stage soon enough

      Perhaps.

      But not today.
      :-)

      • Indeed, not today.

        But soon enough.

        And yet another attempt by utopian authoritarians to vanquish selfishness and entropy will fail, and praise Haruhi for that. :twisted:

  6. Very nice series RD,
    This whole “strategy of no strategy”, sounds very much like the financial equivalent of an opportunistic infection

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