Showing posts with label corruption. Show all posts
Showing posts with label corruption. Show all posts

Wednesday, June 08, 2016

Dissecting drug price leaps: The hydroxychloroquine story

Hydroxychloroquine (HCQ) is an old drug. It’s a descendant of chloroquine, which is as old as dirt:

Chloroquine was discovered in 1934 by Hans Andersag and coworkers at the Bayer laboratories, who named it “Resochin".  It was ignored for a decade because it was considered too toxic for human use. During World War II, United States government-sponsored clinical trials for antimalarial drug development showed unequivocally that chloroquine has a significant therapeutic value as an antimalarial drug. It was introduced into clinical practice in 1947 for the prophylactic treatment of malaria.

HCQ largely replaced chloroquine in the 1940s; when it was on patent it was sold as Plaquenil. Today it’s still used for malaria, but it’s mainstay drug for Lupus (increasingly popular) and rheumatoid arthritis. Some rheumatologists use it for osteoarthritis because it’s thought to slow cartilage erosion (few studies, mixed results).

It has a fascinating 400 year history (emphases mine):

The Nine Lives of Hydroxychloroquine | RheumNow

The HCQ story begins in 1638 when the wife of the Viceroy of Peru, Countess Cinchona, acquired malaria while living in the New World. Rather than getting the “approved” therapy, blood-letting, she was treated by an Incan herbalist with the bark of a tree (eventually, named for the countess-Cinchona Tree). Her response was dramatic; when the Viceroy returned to Spain, he brought with him large supplies of the powder for general use, which at the time was controlled by the Church and was thus called “Jesuit’s Powder”.

It took nearly two centuries for the active substance, Quinine, to be isolated from the bark (and was eventually to make a name for itself as a tonic to be added to gin).

Over the next century, quinine would become a common component in folk medicines and patent remedies for the treatment of malaria in the southern states of America, as well as for generic malaise. By the 1940s, quinine, or rather its derivative chloroquine, was recognized for its anti-malarial properties and found use among troops fighting in the Pacific during WW-II. However, it was noted that this compound had significant toxicities. In 1945, a modification of this compound via hydroxylation led to the development of HCQ, which was found to be less toxic and remains in use, without change, to this day.

Over time, physicians began to experiment with the medication and, in the early 1950s, began to use it for the treatment of SLE. ….. combination therapy [for rheumatoid arthritis], which became popular in the 1980s and has culminated in the recent studies showing the notable efficacy of triple therapy when HCQ was combined with MTX and sulfasalazine.

Most of the science regarding HCQ’s mechanism of action falls in the realm of speculation…

..  has been clearly shown to reduce the number of SLE flares, reduce the severity of SLE flares when they occur, can in some cases lead to “remission” including lupus nephritis, increase the risk of flares when stopped, and decrease the doses of prednisone needed to control the disease. In at least one study, the use of HCQ increased survival in patients with SLE by 70%…

HCQ used to be quite inexpensive — in the range of $30 a month, covered by all insurances. It’s a generic drug and it’s been off patent for decades. Things changed in late 2014 and early 2015 - shortages developed and the price jumped. The 2014-2015 Ebola epidemic disrupted health care systems and led to a surge in malaria and then high demand for HCQ to treat it.

The demand surge ended, and the drug shortage resolved, but the price has stayed high. In the US a month’s supply now costs about $400. Why hasn’t the price come down?

There used to be at least two manufacturers, but now there is only one: Covis Pharmaceuticals. Covis was acquired by Concordia, a company that makes its money by increasing the costs of old drugs. Ranbaxy, an Indian manufacturer, had severe quality issues and has itself been acquired by another similar predator - Sun Pharma. Sun is another Indian multinational with substantial power in the US generic drug market. Sun has also had FDA warnings; it’s likely their competitive edge comes from dodging FDA rules.

With the price increase the most profitable payors, like Aetna, have dropped coverage for HCQ. So the price has gone up ten fold, but Aetna’s patients are paying out of pocket.  Aetna has been more profitable than less unethical competitors like Cigna. So Aetna is growing and Cigna is being acquired. That’s another reason why DOJ should block Aetna and Anthem acquisitions.

Hydroxychloroquine is just one drug, but it’s a classic story. Dodgy manufacturers, globalization and regulatory evasion, monopoly development, price manipulation, ruthless healthcare insurance companies — the same themes appear across the lengthy ASHP drug shortage page.

There are fixes. The DOJ should absolutely block consolidation of US payors. Voters should demand government function — which today means voting against the GOP. Governments should coordinate responses. We need the “public payor” option that had to be dropped from Obamacare to keep a few Dem senators on board (all GOP opposed of course). We need the national formulary price negotiations most other countries have. We need a mixture of regulatory actions, market forces and buyer coordination to drive competition into the drug manufacturing industry. We need to end the monopolies.

It all begins with voters. Fortunately we have a meaningful election coming up. If the GOP is routed they may reform as a “smart-government” rather than “no-government” party — and we’ll have a better chance at intelligent action going forward. Vote accordingly.

Saturday, April 26, 2014

Salmon, Picketty, Corporate Persons, Eco-Econ, and why we shouldn't worry

I haven’t read Picketty’s Capital in the Twenty-First Century. I’ll skim it in the library some day, but I’m fine outsourcing that work to DeLong, Krugman and Noah.

I do have opinions of course! I’m good at having opinions.

I believe Picketty is fundamentally correct, and it’s good to see our focus shifting from income inequality to wealth inequality. I think there are many malign social and economic consequences of wealth accumulation, but the greatest threat is likely the damage to democracy. Alas, wealth concentration and corruption of government are self-reinforcing trends. It is wise to give the rich extra votes, lest they overthrow democracy entirely, but fatal to give them all the votes.

What I haven’t seen in the discussions so far is the understanding that the modern oligarch is not necessarily human. Corporations are persons too, and even the Kock Brothers are not quite as wealthy as APPL. Corporations and similar self-sustaining entities have an emergent will of their own; Voters, Corporations and Plutocrats contend for control of avowed democracies [1]. The Rise of the Machine is a pithy phrase for our RCIIT disrupted AI age, but the Corporate entity is a form of emergent machine too.

So when we think of wealth and income inequality, and the driving force of emergent process, we need to remember that while Russia’s oligarchs are (mostly vile) humans, ours are more mixed. That’s not necessarily a bad thing - GOOGL is a better master than David Koch. Consider, for example, the silencing of Felix Salmon:

Today is Felix's last day at Reuters. Here's the link to his mega-million word blog archive (start from the beginning, in March 2009, if you like). Because we're source-agnostic, you can also find some of his best stuff from the Reuters era at Wired, Slate, the Atlantic, News Genius, CJR, the NYT, and NY Mag. There's also Felix TV, his personal site, his Tumblr, his Medium archive, and, of course, the Twitter feed we all aspire to.

Once upon a time, a feudal Baron or Russian oligarch would have violently silenced an annoying critic like Salmon (example: Piketty - no exit). Today’s system simply found him a safe and silent home. I approve of this inhuman efficiency.

So what comes next? Salmon is right that our system of Human Plutocrats and emergent Corporate entities is more or less stable (think - stability of ancient Egypt). I think Krugman is wrong that establishment economics fully describes what’s happening [2]; we still need to develop eco-econ — which is notecological economics”. Eco-econ is the study of how economic systems recapitulate biological systems; and how economic parasites evolve and thrive [3]. Eco-econ will give us some ideas on how our current system may evolve.

In any event, I’m not entirely pessimistic. Complex adaptive systems have confounded my past predictions. Greece and the EU should have collapsed, but the center held [4]. In any case, there are bigger disruptions coming [5]. We won’t have to worry about Human plutocrats for very long….

See also

and from my stuff

- fn -

[1] I like that 2011 post and the graphic I did then. I’d put “plutocrats” in the upper right these days. The debt ceiling fight of 2011, showed that Corporations and Plutocrats could be smarter than Voters, and the rise of the Tea Party shows that Corporations can be smarter than Voters and Plutocrats. Corporations, and most Plutocrats, are more progressive on sexual orientation and tribal origin than Voters. Corporations have neither gender nor pigment, and they are all tribes of one.

I could write a separate post about why I can’t simply edit the above graphic, but even I find that tech failure too depressing to contemplate.

[2] I don’t think Krugman believes this himself - but he doesn’t yet know how to model his psychohistory framework. He’s still working on the robotics angle.

[3] I just made this up today, but I dimly recall reading that the basic premises of eco-econ have turned up in the literature many times since Darwin described natural selection in biological systems. These days, of course, we apply natural selection to the evolution of the multiverse. Applications to economics are relatively modest.

[4] Perhaps because Corporations and Plutocrats outweighed Voters again — probably better or for worse.

[5] Short version — we are now confident that life-compatible exoplanets are dirt common, so the combination of the Drake Equation (no, it’s not stupid) and the Fermi Paradox means that wandering/curious/communicative civilizations are short-lived. That implies we are short-lived, because we’re like that. The most likely thing to finish us off are our technological heirs.

Sunday, February 26, 2012

Americans Elect - another try at GOP 2.0

Unsurprisingly, given the current state of the GOP presidential primary, people who'd prefer to vote GOP are advocating third party equivalents. This endorsement is from a Marketarian venture capitalist ...

A VC: Americans Elect (Fred Wilson)

Yesterday my partner Albert and I sat down with the people behind Americans Elect. For those that don't know, Americans Elect is an online third party movement. In their words, "Pick A President, Not A Party."...

Fred and  his kin assert the usual 'false equivalence' claim that both parties are equally dysfunctional. Sorry, that's not true. Team Obama is a good representative of a reason (data + logic, including evaluation of political realities) based implementation of social compact ("Branch I") values for a multicultural nation. The 2012 Dems are about as healthy as political parties get in an era where voters tolerate widespread corruption.

The problem, of course, is with the GOP. It has fallen into a political death-spiral where its survival depends on tribes that lack a common framework for interpreting reality. Some cleave to particular religious doctrines, others to secular tribal beliefs. The modern GOP is the party of unreason.

Obviously, this is bad. It's bad because the GOP has quite a good chance of taking full control of government. It's bad because a weak GOP will lead the Dems to destroy themsevles - and we'll have no government at all.

We all need need GOP 2.0, a reason based representation of Branch II values, a party that speaks for the powerful, the incorporated, the status quo, the authoritarian impulse and all those wary of change and disruption. Americans Elect is a part of the process of finding GOP 2.0. I wish them luck; we need this process to succeed.

Friday, January 13, 2012

CEO Compensation: Apple and more

Apple's Tom Cook isn't the worst example of excessive CEO compensation, but his huge stock option grant is bad news all the same.

It's bad news because it tells us that Apple 4.0 is becoming an average publicly traded corporation even more quickly than expected. This kind of compensation demoralizes employees who deal with tight budgets, even as their CEO earns a year of their pay in a day. Perhaps worse of all, when you pay a CEO a hundred times what their star employees receive, they imagine they're 100 times better than those employees.

An overpaid CEO is a CEO on chronic meth - intoxicated by the inarguable evidence of their perfect brilliance.

See also:

Sunday, January 08, 2012

Rule 34 by Charlie Stross - my review

I read Charlie Stross's Rule 34. Here's my 5 star Amazon review (slightly modified as I thought of a few more things):

Rule 34 is brilliant work.

If Stross had written a novel placed in 2010, it would have been a top notch crime and suspense novel. Charlie's portrayal of the criminal mind, from silence-of-the-lambs psychopath (sociopath in UK speak, though that US/UK distinction is blurring) to every day petty crook, is top notch.

Stross puts us into the minds of his villains, heroes, and fools, using a curious 2nd person pronoun style that has a surprising significance. I loved how so many of his villains felt they were players, while others knew they were pawns. Only the most insightful know they're a cog in the machine.

A cog in a corporate machine that is. Whether cop or criminal or other, whether gay or straight, everyone is a component of a corporation. Not the megacorp of Gibson and Blade Runner, but the ubiquitous corporate meme that we also live in. The corporate meme has metastasized. It is invisible, it is everywhere, and it makes use of all material. Minds of all kinds, from Aspergerish to sociopath, for better and for worse, find a home in this ecosystem. The language of today's sycophantic guides to business is mainstream here.

Stross manages the suspense and twists of the thriller, and explores emerging sociology as he goes. The man has clearly done his homework on the entangled worlds of spam and netporn -- and I'm looking forward to the interviewers who ask him what that research was like. In other works Stross has written about the spamularity, and in Rule 34 he lays it out. He should give some credit to the spambots that constantly attack his personal blog.

Rule 34 stands on its own as a thriller/crime/character novel, but it doesn't take place in 2010. It takes place sometime in the 2020-2030s (at one point in the novel Stross gives us a date but I can't remember it exactly). A lot of the best science fiction features fully imagined worlds, and this world is complete. He's hit every current day extrapolation I've ever thought of, and many more besides. From the macroeconomics of middle Asia, to honey pots with honey pots, to amplified 00s style investment scams to home foundries to spamfested networked worlds to a carbon-priced economy to mass disability to cyberfraud of the vulnerable to ubiquitous surveillance to the bursting of the higher education bubble, to exploding jurisprudence creating universal crime … Phew. There's a lot more besides. I should have been making a list as I read.

Yes, Rule 34 is definitely a "hard" science fiction novel -- though it's easy to skip over the mind-bending parts if you're not a genre fan. You can't, however, completely avoid Stross's explorations of the nature of consciousness, and his take on the "Singularity" (aka rapture of the nerds). It's not giving away too much to say there's no rapture here. As to whether this is a Rainbow's End pre-Singular world … well, you'll have to read the novel and make your own decision. I'm not sure I'd take Stross's opinion on where this world of his is going - at least not at face value.

Oh, and if you squint a certain way, you can see a sort-of Batman in there too. I think that was deliberate; someone needs to ask Charlie about that.

Great stuff, and a Hugo contender for sure.

If you've read my blog you know I'm fond of extrapolating to the near future. Walking down my blog's tag list I see I'm keen on the nature and evolution of the Corporation, mind and consciousness, economics, today's history, emergence, carbon taxes, fraud and "the weak", the Great Recession (Lesser Depression), alternative minds (I live with 2 non-neurotypicals), corruption, politics, governance, the higher eduction and the education  bubble, natural selection, identity, libertarianism (as a bad thing), memes, memory management, poverty (and mass disability), reputation management, schizophrenia and mental illness, security, technology, and the whitewater world. Not to mention the Singularity/Fermi Paradox (for me they're entangled -- I'm not a Happy Singularity sort of guy).

Well, Stross has, I dare to say, some of the same interests. Ok, so I'm not in much doubt of that. I read the guy religiously, and I'm sure I've reprocessed everything he's written. In Rule 34 he's hit all of these bases and more. Most impressively, if you're not looking for it, you could miss almost all of it. Stross weaves it in, just as he does a slow reveal of the nature of his characters, including the nature of the character you don't know about until the end.

Update: In one of those weird synchronicity things, Stross has his 2032 and 2092 predictions out this morning. Read 'em.

Monday, December 26, 2011

Greece, America and GOP 2.0

Krugman tells us Germany and the EU must bail out Greece lest the entire EU crash and burn. Germany is unenthusiastic. Michael Lewis makes Germany's lack of enthusiasm understandable ...

Amazon.com: Boomerang: Travels in the New Third World Michael Lewis

… government owed … $1.2 trillion, or more than a quarter-million dollars for every working Greek ….

… In just the past twelve years the wage bill of the Greek public sector has doubled … The average government job pays three times the average private-sector job ...

… The national railroad has annual revenues of 100 million euros against annual wage bill of 400 million ...

… The retirement age for Greek jobs classified as "arduous" is … fifty for women …

… In 2009, tax collection disintegrated, because it was an election year ...

… as estimated two thirds of Greek doctors reported incomes under 12,000 euros a year ...

…. Greece has no working national land registry ...

… all three hundred members of the Greek parliament declare the real value of their houses to be the computer-generated objective value … "every single member … is lying to evade taxes"...

Lewis describes Greece as a "perfectly corrupt society". Greece seems to have hit the limits of corruption; where the only honest people are either perversely oppositional or autistically incapable of deceit.  It's easy to see why Germany wants to put Greece through a world class social reengineering program.

Wow. Good thing we Americans aren't so corrupt. Good thing we don't have vast corporations paying no taxes. Mercifully our corporations aren't hiding trillions of dollars abroadOur politicians don't use charitable donation scams or generate profits through insider trading that's illegal for all but Congress critters.

No way do we have the kind of widespread fraud and abuse of the weak that can lead to economic collapse.

Seriously though, if Greece is a nine on a ten point scale of democratic collapse and societal bankruptcy, how do we score? Are we a six? Do I hear a seven?

More importantly, how do we get back to a reasonable "four"? Greece is getting schooled by Germany (whose bankers were as stupid as any on earth), but nobody is going to school the US. All of Greece is barely New Orleans; we're too big to be taught.

We are going to have to reform ourselves. Occupy Wall Street can help, but to reform government we need to solve the problem of the Republican Party.

Both our political parties are corrupt, but the Dems are at least connected to science and logic. The GOP is no longer a part of the reality-based community; whatever Romney and the like may really think they have to pretend to be delusional.

We can't salvage our democracy with only one working political party. We need a reformed GOP. Some party has to do the bidding of the powerful -- lest the powerful tear the nation down. We don't need the GOP to become a shining beacon of integrity, but we do need them to be connected to logic and arithmetic and falsifiable predictions.

This isn't inconceivable. I can't imagine voting for a modern Republican, but only fifteen years ago I voted for a Republican Governor named Arne Carlson. Arne is still around, and he represents a faint voice of sanity in the modern GOP (emphases mine, note that "Pawlenty" is considered a "moderate" by modern GOP standards, but to Carlson he's a far right extremist) ...

MinnPost - Gov. Arne Carlson Blog: Bedford Falls or Pottersville?

... the Republican Party went from moderate to what I call “the new Right”. But it was more than a shift in political philosophy. Leaders like Sutton and Pawlenty and numerous others saw the party as representing not only a different and more narrow philosophy but also as having the power to rigidly enforce that philosophy on its elected members. Orthodoxy prevailed over representativeness and the result has been that cooperative governance with Democrats, Independents and Republican moderates is not possible. It is either the way of the “new Right” or not at all.

Politics is no longer a contest of competing ideas with respect for dissent but increasingly the imposition of an authoritarianism that all too often is cloaked in patriotism and religion. In this environment, the party and its beliefs are paramount and elected officials serve the party...

... my memory of Republicanism in Minnesota goes back to a party that was always building a better community … So many of our leaders came out of the progressivism of Harold Stassen while still committed to the conservative virtues of prudent financial management. Policies ranging from consumer and environmental protection to human rights to metropolitan governance bore the fingerprints of an endless array of community oriented GOP Governors from Elmer Andersen to Harold LeVander through Al Quie and on.

In addition, Republicans produced an endless array of truly talented legislators from all over Minnesota who came to our capital city to govern and always with an eye to the future. Simply put, Republicans, like their counterparts, the Democrats, felt that good politics stemmed from the competition of good ideas that produced quality governance.

And in this mix, leaders from every walk of life and every profession from medicine to agriculture participated. There seemed to be a sense of obligation to give something of oneself in order to build a better community for our children….

...The Republican Party both in Minnesota and nationally has a choice to make. Does it want to build a true Bedford Falls with a commitment to the well being of the whole or does it want to lead us to “Pottersville” where the quality of life rests with the privileged few?

We're in a bad place, but we can work our way out. Occupy Wall Street can help with some things, but they can't help with the critical mission. The critical mission is to reform the GOP; and only Republican voters can do that ...

So how do we help them?

Friday, October 07, 2011

Investment in a whitewater world

During the last half of the 20th century retail investors earned positive returns with some mixture of stocks, bonds, real estate (personal) and cash. Mutual funds, and especially index mutual funds, made middle class investing possible.

Then came the great market bubble of the 90s, the real estate bubbles of the 00s, and the rise of IT enabled economic predation. The vast flow of growth returns was diverted from the middle class investor to corporate executives and sharper, faster, players. Corporate financial statements became less and less credible as new ways were found to obfuscate financial status. In a world of IT enabled complexity, risk assessment became extraordinarily difficult. Where growth opportunities were strong, as in China, the markets were corrupt and inaccessible.

Maybe we'll return to the relative calm of the 1980s, or even the slow growth of the 1970s. Oil prices may stabilize around $150/barrel. China's economy may make a soft landing and the Chinese nation may follow Taiwan's path to democracy. The GOP may shift away from the Tea Party base and, once in power, raise taxes substantially while implementing neo-Keynesian policies by another name. North Korea may go quietly. The EU may hold together while gradually abandoning the Euro. Cultural shifts might make personal integrity a core value. Disruptive innovations, like high performance robotics and widespread AI, may slow. The invisible hand and social adaptation may solve the mass disability problem of the wealthy nations. Immigration policy, a breakthrough in the prevention of dementia, or the return of ubasute may offset the impacts of age demographics. We may even ... we may even look intelligently at the costs of health care and education and manage both of them.

If these things happen then some economic growth will return, stock prices will reflect fundamentals, bonds will become feasible investments, and interest rates will be non-zero.

Or they won't happen.

In which case, we can look forward to more of the same. The best guide to the near future, after all, is the near past. In this whitewater world then, in which financial statements are unreliable and wealth streams are diverted, what are the investment opportunities? We cannot recover the lost returns of the past 11 years, but it would be nice to be less of a chump.

Real estate seems a reasonable option, though there we face the problem of untrustworthy investment agents. There is not yet a John Bogle of 21st century real estate investment. (This, incidentally, suggests something government could do -- engineer a trustworthy investment representative for American real estate.)

The other option is to switch from prey to predator.

During the 20th century retail investors could only make one way bets. We basically had to bet on economic growth and prosperity. For a time we could shift a bit. If we thought near term growth looked bad, we could shift to bonds. If we thought a crash was coming, we could shift to cash. Basically, however, we could only get good returns by investing in stocks and betting on growth. This worked under conditions of economic growth and relatively integrity. Under the conditions of the past decade this made us prey.

Predators don't make one way bets. They make bets on downturns, on upturns, on volatility, on stability, on irrationality, on continued fraud, on reform. They make bets on bets. They play the options and straddle options games that brought down the world economy. It's too bad they won, but, with a bit of help from our AI friends, they did.

So I'm learning about options. It's not what I like to do, but I don't make the rules.

Sunday, August 07, 2011

Fraud, IT, Economics and the Depression: Galbraith is most impolite

Earlier today I reviewed a decade of Gordon's Notes posts about how information technology has supercharged old frauds.

It's an odd hobby I admit. It started fourteen years ago when I finally noticed charges from Netfill had been showing up on my Visa card. By the time the story was done I was on Japanese TV and I was on a first name basis with FTC investigators. Today this level of fraud wouldn't even make the back pages..

Even then I realized that banks were, perhaps by a happy accident, making money on this fraud. So I figured it would take a few years for consumer and legislative pressure to reform credit card transaction security.

I was a naif. Today Verizon and Comcast make millions from their cut of the $2 billion a year take from US mobile cramming frauds. Instead of reforming, America has elected marketarian zealots who believe Elizabeth Warren and the Consumer Financial Protection Bureau are agents of the Devil.

Of course this is small stuff compared to the IT enabled complexity frauds that played a role in our latest economic depression. We area  very long way from responding to those frauds. That's why I appreciate James Galbraith, an economist well to the Left of Krugman/DeLong (and me), focusing on the role of IT powered fraud and the key role of complexity (emphases mine)...

James Galbraith on How Fraud and Bad Economic Thinking Got Us in This Mess « naked capitalism

... the financial system is both necessary and dangerous, that strict financial regulation is both indispensable and imperfect...

... The Galbraithian line ... accepting the central role of aggregate effective demand, the national income accounts, the credit circuit view of economic life and the financial instability hypothesis. But, it is also embedded in a legal institutionalist framework, rooted in pragmatism, framed by Thorstein Veblen and John Commons, forged in the political economy of the New Deal in the United States. This tradition emphasizes the role played in financial crisis by the breakdown of law and the failure of governance and regulation — and the role played by technology as a tool in the hands of finance for the purpose of breaking down and evading the law....

... When you engage the mainstream on the national income accounts, at least they know what the damn things are. And these days you can even get, though for who knows how much longer, a respectful mention of Minsky...

What you cannot get ... is any serious discussion of contract law and fraud..

... Why not? Why is this one of the great taboo topics of our modern economic history? Well, personal complicity, frankly, plays a role ...

But it’s more than that. Let me try to frame it in somewhat more abstract terms. I would say that the commodity is the foundation stone of conventional economics. That the theory of exchange requires the commodification of tradable artifacts. Without that, there is no supply and demand. A world of contracts, each backed by a separate and distinct set of promises each only as good as the commitments made specifically and the ability of the laws and courts to enforce them, is a different sort of world. Just because you can call a set of such contracts by a name, “collateralized debt obligation” or “credit default swap”, and just because you can create something — you may even be able to create something called an exchange to trade them on — does not make them into commodities with a meaningful market price.

Complexity here is what is going to defeat the market with, in principle, infinite variability, and in practice, more distinct features than one can keep up with. In great volume, contracts of these kinds are per se hyper-vulnerable to fraud. Examples range from the New Jersey phone company that simply printed made-up fees on its bills hoping that no one would notice and for a long time nobody did, to the fact that almost no one at the insurance giant AIG realized that the CDS contracts they were selling contained a cash collateral clause, something that would cost them billions at a time when they didn’t have access to the cash. They range from unnoticed provisions permitting CDO managers to substitute worse for better mortgages in previously sold packages without notifying the investors, to the Mortgage Electronic Registration System and the pervasive incentive to document fraud in the foreclosure process.

I highly recommend...  that you read the Financial Crisis Inquiry Commission Report just published in the United States, or the even more recent report of the Senate Permanent Committee on Investigations, the many reports of the Congressional Oversight Panel and the report of the Special Inspector General for the Troubled Asset Relief Fund, SIGTARP. These are, by the way, very, very good documents prepared by serious public servants and it’s plain as day. Fraud was not a bug in the system, it was a feature. The word itself, along with abusive, egregious, reckless and even criminogenic suffuses these accounts of what went on.

Godleyans teach that stocks can not be separated from flows. Minskyans teach that finance can not be separated from reality. And my father’s tradition is that the legal and the technological can not be separated. The financial world, as it exists, has nothing to do with the commodity world of real exchange economics with its delicate balance of interacting forces. It is the world of technology at play in the form of quasi mass produced legal instruments of uncontrolled complexity. It is the world of, in other words, of evolutionary specialization in the never ending dance of predator and prey. In nature, when predators achieve an overwhelming advantage, the prey suffer a population crash, from which the predators in turn suffer later on. In economics it’s a financial crash, but process and dynamics are essentially similar.

Corporate fraud is not new; financial fraud is not new...

... In the computer age, on the other hand, we entered the world of private labeled securitization, of negative amortization payment optional Adjustable Rate Mortgage with a piggyback to cover the down payment. Oh, and documentation optional...

... Rendering such complex and numberless debt instruments comparable requires a statistical approach based on indicators. And that launches into a world which was not imaginable in, say, 1927. The world of credit scores, ratings and algorithms, a world of derivative and super derivative instruments of sliced and diced residential mortgage backed securities, collateralized debt obligations, synthetic CDOs, synthetic CDOs squared, credit default swaps — all designed to secure that triple-A rating and to place the instruments which had been counterfeited to begin with — they looked like mortgages but were not really mortgages. Laundered, that is to say, transformed from the trash that they were into a triple-A security and fenced, which is to say, sold to the legitimate investment market by an intermediary called a commercial or an investment bank. To place these counterfeit, laundered and fenced instruments into the hands of of the mark. The mark. And who was the mark? Michael Lewis, in the The Big Short tells us who the mark was. The mark had a name in the industry, they would say, “who are we selling this stuff to?” And the answer would come back, “Düsseldorf.”

The Texas institutionalist, Clarence Ayres, to bring you a voice from my home territory in Austin, Texas, stressed most strongly the role of technology and the irreversible contribution of new tools to the production process. In finance, it’s the algorithm that is this tool, it seems to me...

...  The corruption and collapse of the rule of law, in the financial sphere, is basically irreparable. It’s not just that restoring trust takes a long time. It’s that under the new technological order in this field, it can not be done. The technologies are designed to sow and foster distrust and that is the consequence of using them. The recent experience proves this, it seems to me. And therefore there can be no return to the way things were before. In other words, we are at the end of the illusion of a market place in the financial sphere....

... t practically speaking what we’re dealing with here and what we need to recognize is not an interruption to a long process of economic growth, a recession or some shock to aggregate demand. It is an incurable disease at the heart of the system.

... it’s our task, it seems to me, against the odds, to build a new line of resistance. And I’ll wind up by saying that I think that line must have at least the following elements in it:

... Third, a full analysis of the criminal activity that destroyed the banking sector, including its technological foundation, so as to quell the illusion that these markets can effectively be restored to anything like their form of 4 or 5 years ago...

Fourth, an understanding of the way in which financial markets interact with the changing geophysics of energy, especially oil, with the commodity markets to choke off economic recovery unless the energy problem is addressed squarely. I think that’s something that we’re seeing happening now.

Fifth, a new strategic direction to redesign and rebuild our societies for the challenges of aging, infrastructure, energy, climate change and shared development which we all face. And to create the institutions required to make this happen. That requires, I think, from an intellectual point of view, a merger of the Keynesian, Post-Keynesian and the Institutionalists traditions which is, in fact, something that is already underway.

Sixth, to achieve these goals by mobilizing human brains and muscles to overcome unemployment and to assure a widely-shared, decent, and reasonably egalitarian society according to the most successful and enduring social models, by which I mean a commitment to the deepest policy principles that Keynes himself held and also an understanding that we should use history as a guide to what has worked and what does not.

And seventh, the reconstruction of the instruments of public power — the power to spend, the power to tax, the money power and the power to regulate — so as to effectively pursue these goals with democratic checks and balances to prevent the capture of new state institutions by predatory forces.

Galbraith sometimes reads like an egotistical crank, but if he is a crank, he is a crank with a point. He's the first economist I've read who has focused on the intersection of old frauds and new technologies, and the role of complexity, in the birth of our latest depression. I even appreciate the Peak Oil reference smuggled into his closing paragraphs.

His remedies are familiar, they are calls to an 'enlightenment 2.0' movement. The seventh sounds grandiose, but Ed Dolan's summary of Sweden's fiscal rules gives us a pragmatic guide to action.

Thanks James.

See also:

Fraud on Cyber: An annotated sample of Gordon's Notes

For the past fifteen years I've been fascinated by how the information technologies of the late 20th century supercharged old frauds. I suspect that our current depression, and the Depression of the 1930s, have enabling technologies as one common cause.

It takes time for law and custom to adapt to new technologies and complexities, and until they do frauds as old as the human mind take on new forms and power.

For almost ten of those fifteen years I've been publishing notes here. In honor of a post I'm working on now I've assembled an annotated biography. There's a sort of grouping order to the list, it's not chronological ...

Tuesday, July 12, 2011

Ebert on Murdoch and The Guardian

Roger Ebert pays some debts to Murdoch. Debts of vengeance that is.

Murdoch has made many enemies. He was particularly good at making enemies of intelligent and wise people who buy electrons by the gigabyte. Now they will speak.

Ebert also gives due honor to the Guardian, which must be clearing shelf space for its Pulitzer prize.

For my part, I'm adding the Guardian feed to Google Reader. I had it a while ago, but it seemed too leftie even for me. Clearly, I was wrong.

I'm back now.

Sunday, July 10, 2011

Dyer on Murdoch

Gwynne Dyer, a journalist once blacklisted by convict Conrad Black (Canada's mini-Murdoch), has reviewed Rupert Murdoch's latest set of challenges. He suggests ...

  • Murdoch's empire paid for the silence of convicts Clive Goodman and Glenn Mulcaire
  • British police were slow to investigate Murdoch's minions because they'd leaked stories for pay. Some officers have a lot to lose. Dyer doesn't point out that some of them may now be powerful.
  • James Murdoch was moved from London to New York to escape the British legal system
  • Murdoch will use Rebekah Brooks to draw fire until the British government approves News Corps bid for control of British Sky Broadcasting. Then she will be sacrificed.

Dyer doesn't say this won't work. A Michael Wolff story from 9/2010 quotes British politicians who felt Andy Coulson was safe. Murdoch's control of the UK media rivaled Berlusconi's control of Italy and Murdoch's own control of Australia.

Except, Wolff pointed out, the New York Times was involved. The story had gone global.

Even so, perhaps Murdoch would have taken it down, but for the unpredictable outrage of the restless masses -- and for the media he doesn't quite control.

I googled Murdoch's Wall Street Journal for editorials on one of the biggest media stories of the decade. I found a few short articles. The New York Times, not yet a Murdoch property, has much more.

Funny that.

I wonder what Murdoch's Fox News is saying.

It could happen here. It probably has happened here.

Monday, January 03, 2011

America 2011: exploring the boundaries of democracy and capitalism

Reading about the fall of Detroit, the ranting of the GOP's Tea Party House, ubiquitous fraud and corruption, and the emergence of the corporate person, it's easy to imagine that we're going where no nation has gone before -- testing the limits of both democracy and capitalism.

But has any nation been here before? How long did Athenian democracy last? Not all that long actually ....

Athenian democracy - Wikipedia, the free encyclopedia

Athenian democracy developed in the Greek city-state of Athens, comprising the central city-state of Athens and the surrounding territory of Attica, around 508 BC. ..

... The greatest and longest lasting democratic leader was Pericles; after his death, Athenian democracy was twice briefly interrupted by oligarchic revolution towards the end of the Peloponnesian War ... It was modified somewhat after it was restored under Eucleides; the most detailed accounts are of this fourth-century modification rather than the Periclean system. It was suppressed by the Macedonians in 322 BC ...

The Peloponnesian war lasted from 431 BC to 404 BC. So Athenian democracy might have lasted as little as 100 years. If you count periods of restoration you might get to 160 years. American "Democracy" [1] is about 235 years old.

Going where no nation has gone before ...

See also

[1] Assuming one starts with white male landowner voters.

Tuesday, October 05, 2010

Krugman takes on Rupert Murdoch

Took longer than I’d hoped, but at last Krugman has Rupert Murdoch in the crosshairs.

This won’t be his last Murdoch editorial. We all need to stop saying “Fox” when we mean Murdoch (emphases mine) …

Paul Krugman - Fear and Favor - NYTimes.com

… As Politicorecently pointed out, every major contender for the 2012 Republican presidential nomination who isn’t currently holding office and isn’t named Mitt Romney is now a paid contributor to Fox News. Now, media moguls have often promoted the careers and campaigns of politicians they believe will serve their interests. But directly cutting checks to political favorites takes it to a whole new level of blatancy.

Arguably, this shouldn’t be surprising. Modern American conservatism is, in large part, a movement shaped by billionaires and their bank accounts, and assured paychecks for the ideologically loyal are an important part of the system. Scientists willing to deny the existence of man-made climate change, economists willing to declare that tax cuts for the rich are essential to growth, strategic thinkers willing to provide rationales for wars of choice, lawyers willing to provide defenses of torture, all can count on support from a network of organizations that may seem independent on the surface but are largely financed by a handful of ultrawealthy families.

And these organizations have long provided havens for conservative political figures not currently in office. Thus when Senator Rick Santorum was defeated in 2006, he got a new job as head of the America’s Enemies program at the Ethics and Public Policy Center, a think tank that has received funding from the usual sources: the Koch brothers, the Coors family, and so on.

Now Mr. Santorum is one of those paid Fox contributors contemplating a presidential run. What’s the difference?

Well, for one thing, Fox News seems to have decided that it no longer needs to maintain even the pretense of being nonpartisan.

Nobody who was paying attention has ever doubted that Fox is, in reality, a part of the Republican political machine; but the network — with its Orwellian slogan, “fair and balanced” — has always denied the obvious. Officially, it still does. But by hiring those G.O.P. candidates, while at the same time making million-dollar contributions to the Republican Governors Association and the rabidly anti-Obama United States Chamber of Commerce, Rupert Murdoch’s News Corporation, which owns Fox, is signaling that it no longer feels the need to make any effort to keep up appearances.

Something else has changed, too: increasingly, Fox News has gone from merely supporting Republican candidates to anointing them. Christine O’Donnell, the upset winner of the G.O.P. Senate primary in Delaware, is often described as the Tea Party candidate, but given the publicity the network gave her, she could equally well be described as the Fox News candidate. Anyway, there’s not much difference: the Tea Party movement owes much of its rise to enthusiastic Fox coverage.

As the Republican political analyst David Frum put it, “Republicans originally thought that Fox worked for us, and now we are discovering we work for Fox” — literally, in the case of all those non-Mitt-Romney presidential hopefuls. It was days later, by the way, that Mr. Frum was fired by the American Enterprise Institute. Conservatives criticize Fox at their peril.

So the Ministry of Propaganda has, in effect, seized control of the Politburo. What are the implications?

Perhaps the most important thing to realize is that when billionaires put their might behind “grass roots” right-wing action, it’s not just about ideology: it’s also about business. What the Koch brothers have bought with their huge political outlays is, above all, freedom to pollute. What Mr. Murdoch is acquiring with his expanded political role is the kind of influence that lets his media empire make its own rules…

We need to name Murdoch, we need to name the billionaires who wish to rule America. They are succeeding.

We need to remember what Berlusconi did to Italy.

We need to subscribe to the NYT.

Saturday, October 02, 2010

Why do corporations (firms) exist?

Economists used to wonder, from a theoretical perspective, why "firms" including companies, and especially large corporations, exist (aka theory of the firm). In 1937 Coase thought that while corporations didn't allocate labor and capitol as well as the market, this was offset by lower transaction costs.

Of course transactions costs in the net era are far less than in Coase's time, so this doesn't explain why corporations remain so entrenched.

This still seems like a valid question. Does knowledge work, in particular, scale all that well? Movies seem to be put together by loose coalitions of small to medium sized companies, why aren't more things done like that?

I suspect most people familiar with large corporations would agree that often the company seems much less than the sum of its parts. In particular, the absence of internal markets can make intra-company collaboration less efficient than market based collaboration. Corporations, on the inside, operate like the command economies of the Soviet Empire (or, for that matter, like today's China -- which is doing well for the moment).

I'm trying to put together a list of things that large corporations can do uniquely well. I wasn't at all impressed with the conventional "theory of the firm" list. Here's mine ...

  1. Act without the restraints of antitrust law. A large corporation can do many things that would require collusion to be done by smaller entities.
  2. Change laws, particularly accounting standards and tax laws, to favor large corporations and lower their cost of capitol. This creates a positive feedback loop where tax laws and accounting rules favor large corporations, which in turn influence laws and rules that favor large corporations and so on.
  3. Corporations can buy senators and lesser politicians, again without collusion.
  4. Corporations can engage in financial warfare, cutting off suppliers to smaller competitors, blocking access to capitol, and so on.
  5. Corporations can capture regulators.
  6. Corporations may be able to create and institute processes that allow them to do knowledge work with "average" knowledge workers instead of temperamental and expensive "stars". (I don't think this actually works, but a lot of effort is spent on this.)
  7. Corporations can buy A and above ratings from (corrupt) rating agencies.
  8. Once a corporation exists, it has an unusual ability to sustain itself even when its mission ends (like the inquisition)

Taking these items as a whole, it's apparent that once corporations are established, they are large and powerful enough to change their ecosystem to suit them. Rather like some primates.

I'll update my list as I get more ideas. Any suggestions?

See also:

My stuff

Other people's

Update 2/25/11: In a Krugman article I learn that Williamson won the Nobel in 2009 for work in the 70s on the theory of the firm. So Williamson extended Coase ...

Williamson argues that the firm is best regarded as a "governance structure," a means of organizing a set of contractual relations among individual agents. The firm, then, consists of an entrepreneur-owner, the tangible assets he owns, and a set of employment relationships ...

Personally I wasn't that impressed with the descriptions I read of Williamson's work, but Krugman likes it (emphases mine)...

Oliver Williamson shared the 2009 Nobel mainly because of his work on a question that may seem obvious, but is much less so once you think about it: why are there so many big companies? Why not just rely on markets to coordinate activity among individuals or small firms? Why, in effect, do we have a lot of fairly large command-and-control economies embedded in our market system?

Williamson answered this in terms of the difficulties of writing complete contracts; when the tasks that need to be done are complex, so that you can’t fully specify what people should do in advance, there can be a lot of slippage and strategic behavior if you rely on market incentives; in such cases it can be better to do these things in-house, so that you can simply tell people to do something a particular way or to change their behavior.

... there are times when it’s better to rely on central planning than to leave things up to the market...

Krugman's "Central planning" comment sent the usual suspects frothing mad. They've obviously never lived in a large corporation. I have. Krugman is spot on.

 

Friday, May 07, 2010

Jackpot: Leonard predicts oil spill in 2008

There should be a blogger prize for best medium term prediction. Leonard gets my vote for his 2008 prediction, quoted by him in today's article...
How to guarantee a Gulf oil spill - How the World Works - Andrew Leonard Salon.com

... Try, if you can, to ignore all the lurid coke-and-sex bombshells contained in the three Department of Interior Inspector General reports about the shenanigans at the U.S. Minerals Management Service (MMS). The program director who snorted speed off a subordinate's toaster oven, and made her give him a blow job while driving around the neighborhood. The two "MMS Chicks" who were notorious for getting plastered at conventions and having one-night stands with oil industry employees.

Try -- and yes, I know it's hard -- try even to ignore the allegation that one program director told a subordinate that if she could score him some coke during the MMS performance appraisal period, he would increase her performance award. What's the big deal? Who wouldn't be motivated by such an incentive? And what's a little drunken sex and coke binging on government time among friends? It happens to the best of us.

The significance of the three reports delivered by the inspector general to Congress on Wednesday lies not in the prurience of some of the indiscretions, but in the symbolism. The Royalty-in-Kind Program of the U.S. Minerals Management Service is where offshore drilling meets the U.S. government. And gosh, is it ever one heck of a mess. You want a toxic oil spill in the Gulf of Mexico? Just read the reports.
That was the Bush modus operandi. Government must be destroyed, so turn it over to the incompetent and the corrupt.

Wednesday, February 17, 2010

American crisis – imagining a way out

 
This betrays a certain lack of historical perspective. We’ve been through worse, other nations have been through much worse. Compared to the American Civil War, the Black Death, or even the many versions of “great” Depressions we’re in pretty good shape.
 
Not that success is guaranteed, but it’s quite easy to imagine.
 
As a starting point, I’d suggest some subset of this list would suffice:
  1. Political reform. I’ve got another post brewing on this. Fourteen years ago I satirized “public incorporation” of representatives, but now we have corporate persons with political rights. We’re in trouble. Many current Senators appear to have early dementia, and our political candidates are often lousy. We need to rethink who we elect, how we elect them, and how old they can be. We should draw on ideas from professional training and licensing and from jury selection.
  2. Taxes. We’re going to raise taxes – a lot. We should do a Carbon Tax. We will do a VAT equivalent. We’ll do “death” taxes – again.
  3. Immigration - Oh Canada: Canada figured this one out years ago. We have too many decrepit boomers. We  need to balance my generation with vigorous, energetic highly talented youth. So let them in based on professional and academic qualifications and business guarantees.
  4. Inflation: 3% should help whittle down those foreign debts. Don’t say you weren’t warned China.
  5. Give up on the Empire. The Soviets couldn’t afford their empire. Guess what? We can’t either.
  6. Delay Dementia: We’re all going to have to work longer, but we can’t all bag groceries. For one thing, that job’s going to a robot someday. Unfortunately, normal brain aging means most of us won’t be good for much more by the time we’re 72. We need a ton of research into slowing the inevitable onset of dementia. (Ok, so if you die it’s not inevitable.)

Note that my list doesn’t include “controlling health care costs”. That one’s simply inevitable, so I don’t bother with it.

Tuesday, December 22, 2009

Scylla and Charybdis: Corruption, health care reform and climate change.

A combination of flawed institutional practices, the nihilistic devastation of the Party of Beck and Limbaugh, and the political, economic and social importance of health care reform have made corrupt Democratic party senators immensely powerful.

Since these people care about nothing but their own power and privilege, and because they hold millions of Americans hostage, they can extort a heavy price from far more honorable people. They make the Beckians seem almost respectable.

It’s a tooth grinding time for compassionate rationalists. We know the historic price of failure. We know the GOP is ever more the party of unreason. We know too, the deep cost of social and institutional corruption.

Knowing all this, for the sake of health care “reform” we’ve eroded our enamel. Do we go to dentures for the sake of senate action on climate change?

I don’t think we can afford it, and I don’t think it will work. American support for climate policy is as fickle as the weather – by comparison support for health care action is relatively strong. Even if we continue to feed the leeches we still won’t get meaningful senatorial action.

We’re going to have to find ways to act on climate change through a combination of Presidential powers, EPA regulatory authority, and state policy (California still matters – just as in the days of Silent Spring). Perhaps international CO2-based trade tariffs will cause enough American corporate pressure to bring pet Senators into line.

No, it’s time to stop feeding the leeches. We’ve given up a lot, and the price continues to rise.

This is the time to change course. The midterm elections are ahead, and the party of relative reason is almost certain to lose its Senatorial supermajority. Even if nothing else happens, Robert Byrd will expire.

Losing the supermajority means we can now open yet another front against political corruption in America. No, not against Lieberman – that corrupt sod is safe until 2012 and will be well rewarded thereafter. Forget mere justice, this is about survival.

We need to resurrect old ideas about campaign finance reform and start the long, hard fight against a culture of corruption that has grown up in so many aspects of American life – in politics, professional societies, physicians, the judiciary, corporate governance, the media, and in finance and regulatory authorities.

Personally, I’ll be writing more on this topic in the months to come under a new tag of “corruption”. To start with I’ve asked the Center for Public Integrity to make it easier to find the feed for their latest from the center page. I’ve also become a Facebook fan of the CPI (yeah, there’s irony in using FB to fight corruption).

I’ll be pointing to similar organizations and making some donations*. I’ll even be consorting with the enemy; although the GOP is merely seeking to advance their own immense corruption their attacks on corrupt Dems do provide valuable intelligence we can use.

We’ve given a lot of ground for the millions of Americans held hostage to health care reform. We’re at the cliff’s edge now, we’ve got no more ground to give. We need to push back.

Take your anger against Lieberman, Nelson, and the like – and use it. Not against them – forget ‘em. They’re history. Use your anger against their kin everywhere.

Fight.

* If you donate to any of these groups, you will be spammed mercilessly. Yeah, that’s kind of corrupt too. It ain’t a sweet world out there. Don’t give them a phone number, do give them your spam-only Yahoo email account.

Tuesday, November 10, 2009

Next up: AAFP to endorse e-cigarettes

I had a real bad feeling when the American Academy of Family Physicians closed our once excellent web site to public access. So I wasn’t all that surprised by their latest move …

How the World Works – Family Doctors go better with Coke - Salon.com

… directed to this story from the Cleveland Plain Dealer reporting that the American Association of Family Doctors has "a six-figure grant from the Coca-Cola Co. to create content about beverages and sweeteners for the academy's consumer Web site, FamilyDoctor.org."

From the AAFP press release: “The Consumer Alliance program is a way of working with interested companies to develop educational materials to help consumers make informed decisions so they can include the products they love in a balanced diet and healthy lifestyle," said AAFP President-elect Lori Heim, M.D., of Vass, N.C…

…The Consumer Alliance program also will create a new source of funding for AAFP, which, in recent years, has broadened its search for funding outside the pharmaceutical industry…”

I just sent these guys over $600 for my 1 year membership – to find out that the AAFP’s consumer health site is doing covert marketing. Next up – the health benefits of e-cigarettes.

Worst bit? Maybe this is an improvement over pharmaceutical funding.

I expect this will be my last year of AAFP membership.

Update: I received a standard response letter signed by AAFP President Lori Heim when I wrote the academy. It included a bit of further context ...

... I would finally note that this is not new territory for the AAFP. Over the past 4 years we have had funding relationships with Pepsi and McDonald's for support of the AIM program - and we have managed them very well in maintaining a positive image for the Academy while advancing our message about fitness, activity, and healthy choices. And Coca-Cola has been a corporate member of our Foundation for several years as well which is why we reached out to them initially.
So why not Philip Morris? These are publicly traded companies -- their mission is not public health. Their mission is to make money from people who buy Pepsi, Coke and McDonald's products.

The AAFP needs a reform agenda. It can't afford to live in the style it's grown accustomed to, so the AAFP needs to radically downsize.

Monday, November 02, 2009

Marcia Angell on the corruption of physician expertise

I missed this Jan 2009 quote when it came out. I tracked it down after reading a post Jacob Reider shared (emphases mine, I remember that she was the Editor in NEJM's glory days) ...
Drug Companies & Doctors: A Story of Corruption - The New York Review of Books - Marcia Angell

... The problems I've discussed are not limited to psychiatry, although they reach their most florid form there. Similar conflicts of interest and biases exist in virtually every field of medicine, particularly those that rely heavily on drugs or devices. It is simply no longer possible to believe much of the clinical research that is published, or to rely on the judgment of trusted physicians or authoritative medical guidelines. I take no pleasure in this conclusion, which I reached slowly and reluctantly over my two decades as an editor of The New England Journal of Medicine.

One result of the pervasive bias is that physicians learn to practice a very drug-intensive style of medicine. Even when changes in lifestyle would be more effective, doctors and their patients often believe that for every ailment and discontent there is a drug. Physicians are also led to believe that the newest, most expensive brand-name drugs are superior to older drugs or generics, even though there is seldom any evidence to that effect because sponsors do not usually compare their drugs with older drugs at equivalent doses. In addition, physicians, swayed by prestigious medical school faculty, learn to prescribe drugs for off-label uses without good evidence of effectiveness...
I've been long away from the world of practice, but my recollection is that there were very good thinkers on groups like the US Preventive Services Task Force. On the other hand, confident experts ruled the big panels, and they were as predicted, often confidently wrong. (The American Cancer Society was infamous for this, but lately they've surprised.)

Angell may be too harsh, but the reversals of the past ten years (estrogen therapy being only one) should humble all physicians. I'd suggest starting with humility and seeing where we go.

See also:

Friday, July 17, 2009

When the market is your deity, there is no such thing as corruption

Paul Krugman picks two examples of the corruption of conservative political institutions …

Opinions for sale - Paul Krugman Blog - NYTimes.com

Politico has a scoop: … The American Conservative Union asked FedEx for a check for $2 million to $3 million in return for the group’s endorsement in a bitter legislative dispute … For the $2 million plus, ACU offered a range of services that included: “Producing op-eds and articles written by ACU’s Chairman David Keene and/or other members of the ACU’s board of directors….

Think Tank’s Ideas Shifted as Malaysia Ties Grew: ..The Heritage Foundation sharply criticized … Malaysian prime minister Mahathir Mohamad … Heritage’s new, pro-Malaysian outlook emerged at the same time a Hong Kong consulting firm co-founded by Edwin J. Feulner, Heritage’s president, began representing Malaysian business interests…

Similar examples of corruption of left-leaning institutions doubtless exist. I was most struck, however, by his closing comment …

… Despite everything that’s happened, I don’t think many people grasp just how raw, how explicit, the corruption of our institutions has become.

During the 1990s and into the Bush era, America confused The Market with The Good, and, in some Protestant groups, with the God. I’ve called this Marketarianism; it’s a kissing cousin of Libertarianism.

In the Marketarian theology they share, the Heritage Foundation and the American Conservative Union are not corrupt. They are merely obeying the Will of the Market. That is right and just.

Few people, other than Paul Krugman and perhaps Frank Rich, have commented on how deeply this corruption has infested our society. We don’t understand what this means. It might help to compare corruption to lawlessness.

You don’t create a lawful society through a police force. Obviously, policing is essential, the police are a last resort. The foundations of a civil society are cultural norms reinforced through everyday examples and interactions.

Similarly, you can’t create a health economic society through regulation. Regulations are as essential as police, but they’re a last resort. A healthy economy requires a cultural foundation of honesty and personal integrity.

We’ve lost that cultural understanding, it’s been eroded by the Marketarian meme. We need to slowly, painfully, resurrect a lost ideal of institutional integrity.