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Hey, Hillary Episode 1: Your biggest donors are hurting us

Google Pittsburgh in Bakery Square, East Liberty.

This is the first in a series as I try to catch Hillary up to what has happened in the last 7 years.

Back when she suspended her campaign in 2008, I thought her presidential hopes were finished. 2008 was her best year in terms of what she might have accomplished. After the financial collapse, there was an opportunity for a disciplined and knowledgeable president to force rehab on the malefactors of great wealth. Well, that didn’t happen. Instead, the malefactors recruited someone more pliable and easily dismissed. I’ll never forget the passages in Ron Suskind’s book, Confidence Men,  where he recounts the meetings Obama had with Tim Geithner, Larry Summers and Christy Romer. Obama would make an executive decision and Geithner would essentially blow him off and nothing would get done.

Anyway, what I could see happening after Obama won is that the bad deals on the financial clean-up and healthcare reform would get concretized. The changes to the workforce brought on by the massive layoffs and restructurings would lead to a different kind, but by no means better, kind of work environment for working people. And that’s pretty much what’s happened. Now, you could say that she’s working with what she’s got and I agree. In these circumstances, given what she’s got to work with, her policies are going to have to be more modest than the opportunities that might have presented themselves in 2008 would have created.

But if all you’re planning to do as president is tweak what is a sucky situation and slightly improve the status quo, then what’s the point of running? No, seriously. Wouldn’t that just make you Babysitter in Charge instead of a president? Oh, sure, Hillary would be a great babysitter, one of the best. No one is going to complain about her protecting us. By the way, that doesn’t mean she is a “hawk”, whatever that means. There are shades of gray. You don’t have to be one thing or the other. And she’ll probably be really good on infrastructure projects, especially broadband. That right there would be a not insignificant legacy. However, for working people who have been so busy trying to keep their heads above water that they are only now realizing how far out to see they have been dragged in terms of work security and income stability, that’s not going to be enough.

Hillary, you need to talk to your donors. Because right now, they can do whatever stupid shareholder value, McKinsey generated idea that pops into their heads and it’s going to hurt them. It is time that someone sat them down and told them that just because they are hiring people in India, or bugging out of NJ and we all need to adjust, doesn’t mean they’re going to save money in the end. In fact, they could be making their problems much, much worse.

Let’s take the latest examples of really stupid ideas in big pharma. It’s now more like, little disconnected, distributed pharma in a  very expensive part of the country. One of the latest Nature Alerts featured an article about the shortage of space in the Boston biotech belt and that the price of land in Cambridge Massachusetts is too expensive for new startups. In short, there’s very little land but big companies keep firing their R&D staff in Connecticut and New Jersey to relocate there. Now, the little start up companies to which we are all told we will find our pot of gold can no longer afford the cost of business there.

And we haven’t heard yet from the hapless souls who manage to get an invitation to work in Cambridge. Go read Derek Lowe’s comment sections on the latest relocation scheme to Cambridge of the virology division of BMS from Wallingford, CT. First, it should be noted that the business people are mostly keeping their jobs and relocating to a different site in CT. But by our calculations, the R&D staff is facing almost a 50% cut in personnel and the “lucky” ones will be relocated to… you guessed it. Cambridge. There’s a lot of anger and bitterness there. Housing prices are astronomical unless you live far from the city. If you live far from the city, your commute is long. Then there is the uprooting of families and finding new schools. Then, when they get there, there’s no guarantee that the job will be available for long. They will be expected to be ready to jump to a new job every couple of years.

And for what? What in God’s green earth would make all these companies decide that it HAS to be Cambridge or they aren’t truly living??

We have no f^&*ing idea.

Harvard is there and so is MIT. Ok, fine. But it’s not like there’s going to be a smorgasbord of people trading industry shattering techniques. Hell no. We all have secrecy agreements. You can’t just talk about what you’re doing over sushi with people from other companies or academic groups. Even 15 years ago the ACS meetings were becoming less and less useful and informative because presentations contained almost no relevant information, structures or data. It’s all protected by lawyers. So, the idea that Cambridge is some kind of hot bed of new open source learnings is just stupid. Do not let them tell you otherwise.

It’s not even like you even have to BE in Cambridge if by some weird chance you can actually share information. The internet makes location irrelevant. In fact, some of these companies farm out so much of their work to other companies that there’s no need for them to be in the same place geographically. Hey, if they want to break up their infinitely configurable corporate lab space and inefficiently run their research by having lab rats negotiate contracts with outside companies, complete with secrecy agreements so that they can become lightweight organizations free from the constraints of employees to whom they are obligated, let them do it and waste their money and talent. But in that case, they’d be saving a lot of money by relocating to Detroit.

And while we’re at it, why is it that the R&D people are the ones that have to make all the sacrifices? Why can’t an MBA who is after all just a bean counter live in a rust belt city? Aren’t they costing valuable office space for the shareholders if they’re located in Cambridge? I mean, if the almighty dollar is the reason why we are reconfiguring pharma, shouldn’t we eliminate the costs of things that don’t actually contribute to the discovery of drugs? If I were a shareholder, I’d want to know why the cubes have to be in an expensive high rise facing the Charles River. It’s not like an accountant or marketing person will have any reason to hob nob with the PhD superstars at Harvard so why are they there? Can’t we find plenty of English speaking MBAs in Hyderabad?

Speaking of rust belt cities, Pittsburgh, for example, offers a lot of culture and plenty of affordable housing for working people. We are not located in East Jabip, most people have all their teeth and this city has one of the most literate populations in the country thanks to Andrew Carnegie’s magnificent libraries. This is a great place to live and work with public transportation, a thriving university center with Carnegie Mellon and the University of Pittsburgh at the center. There’s plenty to do here from an outdoor perspective and free jazz every Tuesday in Katz Plaza downtown. And we have internet. We even have our own Google headquarters. Why Cambridge? Or why not Cincinnati? I only ask.

But nooooo. They’re all going to squeeze themselves into a shoebox or run themselves off a cliff like lemmings. In the process, they’re uprooting a lot of scientists or just plain ruining their careers, and setting back drug discovery by decades. Somewhere on Derek’s comments section a commenter noted that drug discovery requires Leonardos not Mozarts. That’s because it takes a very long time to learn to be a drug hunter. There are software moguls who think they can speed it up by applying something like Agile principles and maybe they can have a minor effect on the middle layer of research. That is, the layer between routine analysis and project team level collaboration. There is a sweet spot consisting of protein groups and crystallography groups that might be amenable to that kind of intervention. But, in most cases, they’re already there. They’ve figured it out and work as a team and they don’t need no stinking software guy telling them how to do it.

The rest of the time, research just needs to grind through it, one cell assay at a time. It’s aggravating to the shareholders who have the attention span of a newt. Ok fine, Ditch the shareholders. No, seriously, they don’t seem to have any appreciation for this stuff. Outsourcing doesn’t make the process go faster, in fact it can cost money and time in the end. What looks like a sure fire way to cut costs and put money in the shareholders’ pockets just doesn’t in the end.

So, Hillary, the next time you meet with these guys, and they are almost always guys, ask them why they are doing what they’re doing. Does it really make sense from a business perspective? Is cutting R&D really the only thing these toadstools can think of doing to increase shareholder value? Aren’t there better ways to cut costs? Or is there a hierarchy of costs to cut that have nothing to do with actual productivity? Are these titans of industry deliberately overlooking the obvious in order to appeal to their MBA culture of smartness? What is the long term strategy or is there even a long term strategy? Is all this pain on the R&D side really necessary? And how does that result in new drugs? Is relocation to certain areas of the country really about costs and collaboration, or is it really about egos and classism? And ask to see the numbers. Tell them you’ll wait until they find them.

Someone needs to start asking these uncomfortable questions and getting straight answers. Because if you want to be the next president and champion for us, you’ve got to start getting the executive class to explain how their McKinsey generated restructurings actually work in the shareholders’ favor. I’m not seeing how it provides value over what we had when the industry was working through new technology but still producing blockbusters. Call me extremely skeptical.

Someone needs to start holding these people accountable for the havoc they are creating. If you’re not going to do it, don’t be surprised if the country doesn’t get all excited about your campaign. Do you really want to be another British Labour party politician?

Next week, does contracting everything out really work?

Why are there more anti-vaxxers on the left?

still-of-nicole-kidman-in-the-invasion-large-picture

Sometimes the pod people you need to be careful of are the ones on your own side.

Ok, slight diversion before I get to why I think there are more anti-vaxxers on the left.

Back in 2006, I went to the first YearlyKos event. I was a latecomer to the whole DailyKos… thing… but my particular concerns had to do with the Iraq War and its immense costs and the attacks on Social Security, and women’s and GLBT rights. Plus, people around me were going mad, MAD!, I say! More and more right leaning people began to lean more and more right. They were getting religious, self-righteous, judgmental. They took it upon themselves to police social activities, making sure everyone stuck to a unnerving and suffocating conservative viewpoint. These pod people were everywhere in the suburbs and it was difficult to find people who were more rational, less militaristic and willing to think for themselves.

So, I went to YearlyKos I because I thought I had finally met my cohort. I’m pretty sure we were love bombed there by the media, the organizers and the politicians. (If you were there, tell me what you think in the comments) We love bombed each other as well. We went home thinking we were the smartest, most enlightened people on the planet and no one else in the world was as savvy as we were. That all changed at YearlyKos II in 2007 for me. As I sat in that convention hall in Chicago watching John Edwards film-flam the crowd like PT Barnum and watching the people around me falling for it lock, stock and barrel, I felt that familiar tinge of alienation.Yep, the left can get suckered in just like the right if you use the right words. The next morning at breakfast, my membership in the corporate R&D industry made me no longer welcome. But that was OK in a way because the last thing I wanted was to spend too much time with yet another group of people who could be flattered into losing their minds.

Yesterday, as I read some of the comments on the NYTimes article on anti-vaxxers reaction to the measles epidemic, I was struck by how many commenters were identifying anti-vaxxers with the left. I guess the left is starting to lose its shine as being the people most likely to spot a con when they see it. Some of these commenters made the link to anti-vax attitudes and the lack of trust in pharmaceuticals in general. I think I touched on that yesterday from the perspective of “physician, heal thyself”. Big Pharma has to clean up its act as a greedy, irresponsible purveyor of things that make you sicker. Except, drugs can actually make you well. I know and the pharma industry knows that it’s one of the best regulated industries in America. Of course, it won’t stay that way if the FDA isn’t kept in tip-top shape. Maybe we can take that up with the Republicans running the government right now. If the FDA ability to function effectively goes sharply down hill in the next two years, you can blame it on them. But I digress.

Big Pharma shares only part of the blame. The other part of the blame is caused by the class action industry. There has never been a side effect that they didn’t love. The class action industry has been responsible for many drugs being pulled from the market. Maybe you think that’s a good thing. Maybe it is, maybe it isn’t. But there have been some medications that have had profound quality of life benefits for patients that are no longer available because the class action industry has made it sound like every time a patient takes them, they’re risking heart attacks or cancer. We saw the front page banner headlines and those of us who can actually evaluate risk were shocked by how badly information was interpreted and distorted. Sometimes, this is in the pursuit of a story, sometimes, it’s in pursuit of monetary award.

It is worth noting that Andrew Wakefield, the British doctor who discovered the fictitious link between the MMR vaccine and autism, wrote his infamous, retracted paper at the behest of class action lawyers who were hoping to cash in big when terrified parents sued vaccine manufacturers. Says BMJ author Brian Deer, a journalist hired to investigate the Wakefield claim:

Deer said Wakefield “chiseled” the data before him, “falsifying medical histories of children and essentially concocting a picture, which was the picture he was contracted to find by lawyers hoping to sue vaccine manufacturers and to create a vaccine scare.”

To head off suits like these, the number of ADME/T models that groups like mine had to create and run to try to weed out bad early stage drug candidates grew enormously over the past two decades. That’s not necessarily a bad thing, although, as I said the other day, the models have their limitations. And there were many times I saw promising projects killed because the animal model had a borderline liver assay or some other anomaly. Ok, fine, cancel the project early so that no harm comes to anyone down the line and the company doesn’t lose billions in lawsuits.

But the publicity surrounding these suits can make the general public think that the industry is putting out dangerous products. And the legal industry has an interest in keeping that fear going. It suits them very well, thank you very much.

It would be naive for the people on the left to think that the interest groups on their side don’t use fear, uncertainty and dread to get what they want- just like interest groups on the right. I’m all in favor of regulation but I am not in favor of using fear of harm as a bludgeon to reach into what are considered “deep pockets” whenever a drug interaction isn’t perfect.

That fear, uncertainty and dread has been reaching a crescendo for a couple of decades now. It is becoming increasingly more difficult to get drugs approved by the FDA. That’s part of the reason why so many of us are out of work right now. The block buster drugs discovered in the late 80’s and 90’s went off patent and couldn’t be replaced by newer drugs. The FDA insisted on an ever higher number of safety profiles and drug companies became skittish when the drugs that did get approved were quickly taken off the market for adverse reactions. It has crippled the industry, caused the price of drugs to soar and driven up the fear levels in people on the left who were influenced by the Ralph Nader crusaders.

I’m not going to say that there haven’t been imperfect drugs. But the idea that every adverse interaction is a result of negligence or malice is deliberately misleading and is now getting into the heads of people who can’t evaluate risk. Couple this with the helicopter parenting frenzy that makes every mother personally responsible for any harm that happens to a child once the umbilical cord is cut and you have a perfect storm for anti-vax activity.

Your status as a parent depends on the lengths to which you will go to protect your child- from everything. You don’t let them out of your sight for a moment, don’t let them ride their bikes to school, don’t let them eat anything with sugar, and you don’t put vaccines in their bodies that were manufactured by the sleazy, careless drug lords. It’s a competition of sorts, as any mother in the suburbs will tell you. How far will you go to protect your child from harm? Is it enough to keep vaccines out of their blood stream? Is anything good enough, protective enough, safe enough??

Parents are going to be naturally untrustworthy these days. You can get arrested for letting your kid play outside by herself. Now, add to that the fear of science and medicine that has been planted by the advocates of the class action industry that everything that goes into your body is designed to kill you for excess profit. Measles are just the tip of the iceberg.

When I told you Research had left NJ, I wasn’t making it up

 

Hoffman-LaRoche Nutley, NJ- recently shuttered.

NPR ran a recent piece on the problem of ghost towns being left in the wake of the great pharma mergers and layoffs of the last 10 years.

The facility I worked at in Bridgewater, NJ closed in 2011.  I’m not sure they were able to find renters but the MBAs seemed to have a habit of overestimating what new tenants for labs space would be willing (or able) to pay.  The lab buildings I worked in were beautiful with lots of natural light but they were never full. The facility I worked at previously in Monmouth Junction, NJ was also abandoned for awhile but I had heard that there were some plans to lease it.  Or bulldoze it.  I can’t remember which.  I stand corrected.  Google maps says the site is “closed”.  That building was smaller and more contained.  It would have been perfect for a small biotech company on the rise.  It had a state of the art animal breeding facility and room for about 400 people. More than that makes it feel too cozy.

But as I wrote back in 2011, it is difficult to get funding for a startup.  The vulture capitalists like to see most of the work done before they commit their money.  Then there is the problem of finding money for equipment (this is cheaper due to the big pharmas auctioning off all their stuff), subscriptions to journals, buying expertise for robotic HTS assays, structural

The place where I spent the best years of my life

biology, specialized analytical chemistry and ADME analysis, and every other thing that a small biotech doesn’t have in its own arsenal.  A regular Joe researcher funding his own research will probably lose his house before the year is out.  So, he and his colleagues don’t have a whole lot of money to spend on lab space, which despite its abundance, is going to be expensive.

In the meantime, Big Pharma is counting on graduate students living on subsistence wages to pick up the slack on what are now reduced government grants.  It was hard enough to be a graduate student in Chemistry before the sequester.  Now, the money is much harder to come by.  For a person who may not get a decent paying job until he or she is almost 30, the prospects are bleak.

You can see Paul Krugman from here!

You can see Paul Krugman from here!

Funny how Paul Krugman doesn’t talk about this.  He’s living in the heart of what was Big Pharma territory and the desolation is hard to ignore.

Some of the lame excuses that Big Pharma gives for pulling out of NJ is that it’s too far from the City and the kids nowadays want to be right in the middle of some hot urban action, complete with expensive tiny apartments that they will have to share with roommates until they retire.  Also, Big Pharma has relocated to the coasts to be close to Harvard, MIT, Stanford and Scripps.  That’s so they can share ideas in the areas where genomics and molecular biology are king.  But this is utter bullshit.  For one thing, if you are working in Cambridge, MA or San Francisco, you are precluded from talking about your work with anyone.  There’s no sharing going on in the spirit of the Scientific Revolution of the 17th century.  It’s all proprietary and very hush, hush.  Your work won’t be published until the lawyers have taken out anything that’s remotely patentable.  It could be years before you can share your big breakthrough.

Plus, there is this new fangled device called the internet.  If I wanted to, I could use an online tool to order up a synthetic gene from California from the comfort of my backyard wisteria covered swing in Pittsburgh.  I can access thousands of journal articles, provided I had $33/electronic copy and could get over my impulse to strangle the ACS and Elsevier every time I had to do it.  I could attend meetings and conferences.  My work does not depend on my location.

And here’s one more reason why pulling out of NJ to go to Boston doesn’t make sense.  It’s fricking expensive.  If the MBAs were trying to save money, which is what they always claim is the reason for shuttering labs, why the hell would they relocate to some of the most expensive real estate in America??  Why not go back to the midwest where the mothballed labs are still cheap?  That’s where most of research was before the big mega mergers in the 90s brought everyone to the Northeast.  Cinncinnati, Kalamazoo, Ann Arbor all had thriving research communities before the business people decided to manage things.  Or even Pittsburgh.  This place is hopping lately, it’s urban, housing is cheap and there’s plenty of mass transit.

And this is where I think we come to the crux of the matter.  The relocation is about what the business people want.  They don’t want to be stuck in dowdy, suburban NJ with the high property taxes and they can’t think past the rust belt image of the midwest.  It’s not glamorous enough for the people who consider themselves the culture of smartness.  Smartness demands that it hang around other smart people.  Maybe if the business types rub shoulders with the supersmart MIT researchers, they won’t feel like they sold out their biology degrees to become finance wizards?  Projection of sorts?  I can only guess.

It’s also easier to jettison your workforce if you claim you HAVE to move to stay competitive.  Yep, just cut those hundreds of thousands of experienced STEM workers loose when they are in middle age and have family responsibilities.  Leave them stranded in NJ while their property values sink and they are stuck peddling themselves as consultants from one poverty stricken startup after another.

This is no way to treat the people who brought you Lipitor, Effexor and Allegra.  And, yet, this is the way it’s going.  Big Pharma sees its future as chronic illness specialists.  They will charge hundreds of thousands of dollars a year for a drug that some people can’t live without and will expect insurance companies to pay for them.  Think of it as sponge from some Nathan Brazil Well World novel. I know that a few of my friends are still making a living in companies that are focusing on orphan diseases and oncology but there’s something immoral about hooking up people to drugs you know they can’t live without with the goal of milking every dollar from them.  I realize that research is expensive but we didn’t use to be so mercenary about it.  Instead of solving the problem of out of control research costs, the new wizards of pharma finance have glommed onto cheap, dirty and unsustainable new ways to make money. Reduce your workforce to desperation, focus on the poor unfortunate chronically ill and ignore everyone else. This is the new business model.

And it is broken.

What’s in my Instapaper queue?

It’s getting crowded in the Instapaper queue.  Time to clean it out.  This is what I’ve found interesting lately:

1.) The Dragons of Inaction is a 2011 paper from the journal American Psychologist listing the reasons behind the resistance to climate change claims.  As you may expect, resistance can be grouped into ideological and non-ideological causes.  One of the most interesting causes is mistrust.  We should expect that the people most likely to benefit from climate change denialism will play on trust issues in their target audience.  The conclusion section is light on recommendations but I thought it would be a good exercise to learn how the Fox News crew might put this information to use.

2.) An Ominous Health Care Ruling is the latest editorial by the NYTimes on the two Obamacare rulings yesterday regarding subsidies.  The editorial board is remarkably frank, given its boosterism for the ACA:

The 2-to-1 decision issued by the panel hinged on how to interpret language in the Affordable Care Act that most experts agree was poorly drafted and would ordinarily have been corrected by a Congressional conference committee. In this instance, there was no conference committee because the law was passed on a take-it-or-leave-it vote in the House to avoid a Republican filibuster in the Senate.

But then it reverts to form at the end by stating that regardless of what Congress did or didn’t do by rushing the bill through, the judiciary has a responsibility to not use ideology as an excuse to take subsidies away.  IMHO, the ACA perfectly demonstrates my former advanced inorganic chemistry prof’s saying, “If you don’t have time to do it right, when will you have time to do it over?” In other words, we are all potentially screwed by the effects of this bad legislation until Congress decides to do it over the right way.  When it has time.  And when it also has the rare astronomical convergence of a filibuster proof majority in the Senate, a majority in the House and a president in the White House who, you know, actually gives a crap.  Maybe some time next century. Maybe that was the plan.

3.) In A $650Million Donation to Psychiatric Research, we find research into the causes and a cure for bipolar disease funded by a billionaire with deep pockets who also has a son afflicted with the condition.  It’s great for people with bipolar spectrum disorder but not so great in that it takes a private person to fund it.  The reason so many pharmaceutical companies are pulling out of psychiatric research is that it’s incredibly expensive and there is an extra hurdle to jump when it comes to the brain.  It’s called the blood brain barrier and it gives drug designers and medicinal chemists fits because only compounds with certain physical properties can cross this barrier and they are devilishly hard to make and get approved.  So, you know, there’s not so much profit in it for Big Pharma.  And now we have to rely on billionaires with a personal stake.  {{sigh}}

By the way, the recipient of this largess, the Broad Institute in Cambridge, MA, is primarily a computational biology outfit.  That will be very useful for tracking down the genetic causes and systems biology associated with bipolar spectrum disorder and schizophrenia but biologists don’t make the drugs.  That’s what medicinal chemists, structural biologists and drug designers are trained to do.  It will be curious to see going forward whether the Broad Instituts recruits more of these specialties or decides to farm them out.  Farming it out would be a mistake, I think, since project teams need to see the same material and work on it together.  On the other hand, if Broad doesn’t mind hiring modelers remotely, I am available.  ;-)

4.) The Atlantic posted an article on The Dark Side of Emotional Intelligence.  In short, being acutely attuned to the emotional states of everyone around you might be great for salespeople but it sucks for people working in professions that require concentration and contemplation.  For the latter group, paying attention and kissing up to the people around you is a distraction.  The resulting effects on the working environment of those people expected to play the EQ game when they don’t have time for it are predictable. From the study cited in the article:

Cote’s team assessed how often the employees deliberately undermined their colleagues. The employees who engaged in the most harmful behaviors were Machiavellians with high emotional intelligence. They used their emotional skills to demean and embarrass their peers for personal gain.

Seen that happen with my own eyes.  Depressing but all too common, especially in the uber-competitive environments engineered by biz school grads and propagated throughout the industries they manage.

5.) The website, Ask the Headhunter, has a video for those of you who can’t get through the HR filters that you are required to navigate to apply for jobs.  If you are lucky enough to already have a job and haven’t been through this exercise in futility, it goes something like this: You see a job on a website for which you are (probably over)qualified and are directed to the company’s HR application system.  Then you spend hours per application uploading your resume and then reformatting it (god knows why the reformatting step is necessary but the OCR never gets it right.  Besides, didn’t you just upload a copy of your resume??).  Anyway, after you have edited and reformatted and written a brilliant cover letter telling the company all of the reasons why you would be more than perfect for the job, you never hear from them again.  Oh, sometimes you’ll get a form generated reply saying they received your information.

The truth is, there are filters that are set to weed people out and nobody knows what they are.  In some cases, the HR filter is set so unproductively that most applicants who qualify never make it to the resume review round.  That may be why so many employers whine they can’t get good help anymore.  If they would only hire people who could reset the filters for them they might get better candidates.  But to do that, they’d have to reset the filters themselves in the beginning and that takes vigilance, time and probably one FTE. It’s a vicious circle. Nick Corcodilos says to scrap the resume and don’t bother going through the HR application process.  The best way to get a job is to hang around people in your field or the area that you want to get into, and make connections.  In other words, you need to be a human with a face because HR filters do a lousy job of staffing and are probably not worth your time.

6.) Alistair McCauley reviewed the current production of the Bolshoi’s Swan Lake at Lincoln Center.  It’s not pretty but it is a fun read:

At the start of every dance, my heart would lift again, noting some marvelous feature of Bolshoi style. The communicative generosity of manner! The thick-cream legato flow and keen dynamic sense! The juicy red-meat richness of texture! The unaffectedly erect posture of the torsos and their gorgeous pliancy! The easy amplitude of line! The powerful sweep through space! Yet nothing availed. Each dance soon grew monotonous.

I can’t remember, is McCauley the critic who thinks all ballerinas could stand to lose a little weight?  Anyway, I’m not a fan of companies with a lugubrious ballet style.  Give me something livelier, and, er, probably not Swan Lake.

7.) I. Must. Have. This. Desk from CB2.  I am confident that my life and blogging will be improved by it.

And a heads up to you IKEA fans.  The 2015 Catalog is supposed to hit the interwebs tomorrow.  I can hardly wait!

8.) Finally, I am on the third part of the longest Audible book I have ever “read”.  It’s The Last Lion, a biography of Winston Churchill.  It’s excellent and probably more detailed than any biography has a right to be.  Highly recommended.  5 sponges.

So, I ran across a page on some of his predictions and inventions.  For example, did you know that Winston invented the tank and the onesie?  Ok, maybe not his finest hour.  But he was a great futurist.  Check it out.

The funny thing is, Churchill was never a great student but he had a formidable intellect.  He was definitely not Ivy League material in the most 2014 sense of the word.  That would have been a great loss for England if our current standards of performance were in effect then.  He might have ended up writing Op/Eds for WaPo and gone no further in life.

And here are a few Winston quotes for good measure:

“If you’re going through hell, keep going.” (Sound familiar?)

“Success consists of going from failure to failure without loss of enthusiasm.”

“If you have an important point to make, don’t try to be subtle or clever. Use a pile driver. Hit the point once. Then come back and hit it again. Then hit it a third time – a tremendous whack.”

“It is no use saying, ‘We are doing our best.’ You have got to succeed in doing what is necessary.”

“The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.”

He made his share of mistakes and was on the wrong side of history as far as women’s suffrage was concerned (they turned out for him anyway).  He failed many times but he learned from his failures and he never surrendered.  Cool dude and an honest guy.  We need someone like him right now.

 

 

 

 

 

 

Re: Christie

I am not at all surprised that New Jersey is experiencing financial difficulties:

April’s income tax revenues from the state’s wealthiest residents are far less than expected, and the overall shortfall for the current fiscal year is $800 million below the Christie administration’s projections.

From a first hand perspective, I lived through Pharmageddon from 2007-2013 when lab after lab shut down, transferring a tiny fraction of the workforce to Cambridge, MA and leaving tens of thousands of highly skilled, well paid STEM professionals to rot in the vast suburban jungle between New York City and Philadelphia.  (Don’t believe me, you congressional lurkers out there?  Go look up the NJDOL stats for those years.  When you’re done cringing in horror at the waste of human and tax resources, you can tell those Pharma lobbyists to f^&* off the next time they whine that they just can’t find good help anymore and need to import from Asia.)

Of course, it wasn’t all Christie’s fault.  He wasn’t elected until 2009 (no, I didn’t vote for him.  I voted for Chris Daggett).  By then, the merry axmen in the executive suites were already hacking away at families and careers with abandon.  Living in New Jersey ain’t cheap and it gets damn near impossible when you lose your $100K salary to be replaced by a measly $2000/month in unemployment.  Someone besides me should see the link between the hemorrhaging of highly paid jobs and NJ’s fiscal problems.

Just think of all the tax revenue that was lost when Christie couldn’t be bothered to stop the carnage.  That’s tens of thousands of well paid jobs, *poof!*, gone in a flash.  Deval Patrick didn’t seem to have trouble attracting that (vastly reduced) pool of jobs, did he?  By the way, did those biotechs in Cambridge who promised to hire in order to get tax breaks actually hire all the people they said they would?  And why didn’t Christie try to make a deal with the pharmas to keep them in the state?  Was he just too busy putting his political adversaries in thumb screws?  Was he having too much fun killing infrastructure projects and slashing the NJ Transit budget in order to give hard earned NJ tax dollars to developers of a white elephant in the Meadowlands?

Anyway, Paul Krugman should stop wondering about why people are so enamored with Christie.  Well, some of us weren’t but then we weren’t taken in by Obama either and for roughly the same reasons.  Both politicians coasted to victory by playing on the emotions of the electorate.  In Christie’s case, he says what he thinks everyone is thinking.  Or at least he’s not afraid to verbally abuse the defenseless.  He gives his supporters status by picking on someone down the totem pole, separating them from their fellow citizens.  In Obama’s case, he was all about appealing to the aspirations of the insecure.  He called them “the creative class”, gave them status and separated them from their natural allies.  He made some vulnerable democrats feel all warm and gooey.  Yes, we can.

So, what can we learn from Christie and Obama?  My guess is that when it comes to politics, it’s best to be a cold blooded voter and ask very directly and persistently, “What have you done for ME lately?”  And when those pols start going for the emotional jugular to tell them to talk to the hand and walk away.

 

What Yves said

Yves Smith at Naked Capitalism has a long post about former Goldman Sachs Vice President Greg Smith’s new book on the company.  Smith’s book, Why I Left Goldman Sachs, describes the atmosphere at Goldman and how vulnerable clients are in an environment when making a deal and the gigantic fees that come with it is more important than selling a complicated and flawed financial instrument to unsophisticated clients.  Yves gives her own insider view of Goldman and why the company has gone ballistic over Smith’s book while at the same time insisting that Smith was too junior to know what was going on.  The money quote comes at the end of her piece:

Goldman has such a strongly developed internal culture that even a change at the top would take a while to percolate through, and Smith appears to have seen the impact.

I can relate.  Those of us in the lower rungs of the pharmaceutical industry witnessed a similar phenomenon.  At one point, we were governed by scientists and MDs who rose through the ranks to head the companies.  But that started to change radically in the 90’s during the era of many mergers and acquisitions and it really accelerated in the 2000s.  The financiers began to have more influence at about that time and we read accounts of CEOs under fire from analysts to cut research and outsource heavily. In retrospect, it looks like they were setting up pharma companies for their next M&A deals but eventually, all of the restructuring and Wall Street culture of constant change tricked downwards. The performance and compensation system changed, adopting Jack Welch’s program that was designed for GE salespeople, until it resembled Enron with even the lowly lab rats ranking each other, hoarding resources and actively engaging in cutthroat activities in order to avoid the ax.  And that, my friends, is about the worst thing you can do to a research organization.  Collaboration is essential to research.  By the time Wall Street values had trickled down to our level, we could see that they were more suited to the sales executives but in the labs were alien, out of place and destructive.  When it got to the point that lab equipment repairs had to be justified and we were forced to charge other departments for services we used to provide as part of our project collaboration, it was over.

So, I have no doubt that whatever Smith witnessed at Goldman was significant, profound and deeply disturbing.  It may be a similar situation where the business has begun to run amok and eat itself from the inside out, where policies no longer make sense and where the bulk of his time was spent pushing the competition in the next office off of his pedestal.  At that point, it’s no longer a functional business.  It’s a game of winner take all musical chairs.

Yves speculates on the reasons why Smith doesn’t spill all of the beans on Goldman or is even as detailed in his account as someone like Michael Lewis.  Some of those reasons include his relatively low level and institutional omertà.  But another possible reason is that there are few former insiders, even low level insiders like Michael Lewis who can write well on what are pretty complex financial instruments and make them intelligible to the average consumer.   I loved Lewis’s book The Big Short but it wasn’t until I was halfway through the book before I understood enough of it that I saw the humor in some of Lewis’s passages.  Now I know what Wall Street was up to but I doubt that even many Wall Street analysts truly understand the math and models behind their dynamic proprietary programs.  If Greg Smith understands them, there’s probably a lot he can’t divulge without  getting the Goldman legal department to bear down on him.

In any case, Smith’s book sounds interesting but I probably won’t be adding this one to my audible queue.  It’s not because I don’t think it is a worthy read or can’t learn more.  It’s just that through Karen Ho’s book Liquidated, and Lewis’s The Big Short and Boomerang, I think I get the picture well enough to know what went wrong.  But if you don’t have the time or patience for more than just a high level summary. it sounds like Greg Smith’s book might be just the horror story to keep you up on a cold and stormy October evening.

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.

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