Profits, Production, & Acquisitions

Profits, Production, & Acquisitions

I listened to the latest episode of The Readout Loud from Stat News yesterday, and the hosts of the show said that bio-tech companies have a huge amount of cash available as 2022 starts. The hosts stated that they are interested to see if any major acquisitions are announced by bio-tech companies at this year’s JP Morgan Chase Healthcare Conference.
 
 
This short discussion about mergers and acquisitions from the podcast came to mind when I re-read a short quote from Yuval Noah Harari on capitalism in his book Sapiens. Harari writes, “in the new capitalist creed, the first and most sacred commandment is: the profits of production must be reinvested in increasing production.”
 
 
Bio-tech companies, which range from major pharmaceutical companies to start-ups using artificial intelligence to better diagnose disease, seem to have a lot of money at their disposal (at least the major companies do). This suggests that companies have not been following Harari’s capitalist creed. Rather than reinvesting in their own production, companies are sitting on capital, waiting to purchase a smaller company. It is interesting to consider that major companies are expected, by journalists and shareholders, to use their money in this way. They are not expected to invest in their own research and development, but in an acquisition of a smaller company. As an example, the hosts quickly mentioned a few companies with blockbuster drugs that will soon be loosing their patent protections, meaning another manufacturer can begin making those medications. When that happens, the companies will need a new drug to bring to market to maintain profits. That new drug is expected to come from a smaller bio-tech company with a break through medication or treatment technology that could be absorbed by the larger existing pharmaceutical or bio-tech giant. 
 
 
In the capitalist system that Harari described, acquisitions doesn’t seem to fit with the idea that profits need to be reinvested to increase production. Following that model, companies wouldn’t sit on cash produced by patent protected drugs until they could acquire a new company. Instead, they would continually put their profits back into their own systems to increase productivity of their manufacturing process, supply chains, and their own drug development. Instead, what we see is cash and funding infused into smaller start-ups that can drive a particular technology or product to a point of success, and from there a larger company buys out the start-up, flushing the initial investors in the start-up with profits. This model seems to work fine, but it is distinctly different from the capitalist system that Harari describes, and which most of us probably think about when we consider what capitalism is.
Egoism is Altruism?

Egoism is Altruism?

In his book Sapiens, author Yuval Noah Harari reflects on Adam Smith and writes, “what Smith says is, in fact, that greed is good, and that by becoming richer I benefit everybody, not just myself. Egoism is altruism.”
 
 
This idea seems rather mean and like it can’t possible be correct when I first read it. When I pause for a second, there is a part of me that wants to be mad at economic and political systems and complain about corporate greed and how it operates with this mindset. But if I pause for even longer and pull myself back further, I see that this idea has even deeper roots than modern American economic and political thought.
 
 
The idea of egoism is altruism doesn’t seem too far off from the protestant ethic that has defined America since its inception. The idea is that we all need to be hard-working, avoid vice and excess, and be good people in order to be rewarded by a deity. By doing our individual part we will make the deity happy, and we will help each other and our communities. When we have a whole group of people who have made the deity happy, then we are going to receive some type of compounded reward which will play out at a societal level.
 
 
This protestant idea has been a driving force for hardworking Americans with our individualistic political system and capitalistic economy. We might dislike corporate greed and we might be able to find plenty of flaws where broken markets produce rents that hurt everyone. But the egoism is altruism idea which may incentivize such corporate greed extends beyond companies and rocket riding billionaires. It is at the heart of the expectations of American society. We are all expected to work hard and achieve high standards and results. Striving for our individual best, in whatever it is we are doing, doesn’t just help us, it helps everyone. At least that is the way that our political and economic systems operate and it is how we understand ourselves relative to others. The idea is beyond corporate greed and economics. It extends into nearly every aspect of our lives and culture.
Racism & Culturism: Beliefs in Western Superiority

Racism & Culturism: Beliefs in Western Superiority

I have spent a decent amount of time thinking about the racial disparities we see in American society. I think there is pretty clear evidence that we generally underrate the historical importance of blatant racism and discrimination in the outcomes of people’s lives today, and that has created substantial racial challenges that many people fail to acknowledge. Red-lining had a serious impact of people’s ability to build wealth through home ownership. Andre Perry at Brookings has argued that black business to this day are still undervalued due to segregation, difficulties in accessing the best locations, and continuing implicit racism. Issues which seem like they belong in or only took place in the past still have influences that linger today.
 
 
Many people discount these historical factors and turn their argument toward the nebulous construction of “culture” when explaining racial disparities in the United States. This feels uncomfortably close to blatant racism to me, but is hard to argue against, especially with people who are smart and wise enough to avoid explicitly racist and discriminatory language. It is not hard to hide arguments that may be racist in nature behind a veil of cultural critiques. Yuval Noah Harari in his book Sapiens suggest that this has been an important aspect in the ideology of many Western societies. He writes,
 
 
“Racist theories enjoyed prominence and respectability for many generations, justifying the Western conquest of the world. Eventually, in the late twentieth century, just as the Western empires crumbled, racism became anathema among scientists and politicians alike. But the belief in Western superiority did not vanish. Instead, it took on new forms. Racism was replaced by culturism. Today’s elites usually justify superiority in terms of historical differences between cultures rather than biological differences between races. We no longer say it’s in their blood. We say it’s in their culture.”
 
 
I think that what is key to recognize is that both racism and culturism is used to explain and demonstrate the superiority of one group over another. That means both become a justification for discrimination and disparities. Racial discrimination and disparities are dismissed through a lens of culturism. After-all, we are accepting that black, brown, or other people could be just as good as white people (or whoever is in the majority) but they simply choose not to be as good for peculiar cultural reasons. Culturalism in this way seems to be a form of supercharged racism with a shield.
 
 
However, the result is the same. One group is celebrated over another with discrimination and disparities justified and even praised. Culture is a broad term, and it is hard to argue against. It is hard to see where modern cultures have roots in historical inequalities and discrimination. It is hard to understand why cultural practices that deviate from – or deliberately eschew – the dominant culture persist when you yourself are part of the dominant culture and have found success through such practices. It is easy to use culture as a shield for arguing that you and your group is better than another, even when your argument is essentially a lightly cloaked racist argument.
Challenges with the Scientific Process: Setting Priorities & Managing Conclusions

Challenges with the Scientific Process: Setting Priorities & Managing Conclusions

Science provides objective answers to questions about the world, but that doesn’t mean that science is an entirely objective enterprise. Science exists within a world dominated by human needs, biases, and prejudices which means that science can be impacted by the same political, discriminatory, and mistaken judgements and decisions that any other human activity can be overwhelmed by. In his book Sapiens, Yuval Noah Harari shows how this happens when it comes to selecting scientific research topics, setting the priorities of science, and when objective conclusions flow into the world where they can be used by less than respectable actors.
 
 
Harari writes, “science is unable to set its own priorities. It is also incapable of determining what to do with its discoveries.” Part of the reason why science cannot set its own priorities because science is expensive. Especially as we continue to make new discoveries, the subsequent steps require more time, energy, and resources. To discover the next quantum particle will require an even more impressive supercollider. To discover the next secret of the Amazon river will require taking new technology further up river. The cost grows, and individuals conducting research need to be able to convince those with resources to commit those resources to their particular interests. This means that science doesn’t unfold uniformly or in equal ways. As Harari puts it, “to channel limited resources we must answer questions such as what is more important and what is good? And these are not scientific questions.”
 
 
But even when good science is done, and even when accurate and objective measurements are obtained with reasonable conclusions drawn from those measurements, the impact of science can be unpredictable. Many scientific studies and results are obscure, with very few people outside a select expert community ever hearing about the results. But other conclusions can be taken out of their original context and can become part of the cultural zeitgeist. How studies and their conclusions are understood can get away from the researchers, and can be used to further specific political or economic goals, even if those goals really don’t have a real relationship to the original conclusion that was drawn. Harari demonstrates how this happened with scientific conclusions being merged with racist ideas about the inferiority of non-white people. He writes, “racist theories enjoyed prominence and respectability for many generations, justifying the Western conquest of the world.” Whether researchers were explicitly racist or not, their research was adopted by people who were, and used to justify unsavory political ends. The science became wrapped up in a political culture that wanted to justify discriminatory and prejudiced behaviors and attitudes.
 
 
This doesn’t only happen with racist ideas, though those ideas can be the most prominent and dangerous. Small scientific findings can be taken up by militaries, by corporations, and by media organizations which may use the research and findings in ways the authors could not have predicted. Research on technology that helps improve light detection could find its way into a guided missile, into mass surveillance systems, or onto the grocery store shelves to be used by advertisers. The science itself cannot control the way that results end up being used in the real world, and that can be problematic.
Science, Money, & Human Activities

Science, Money, & Human Activities

The world of science prides itself on objectivity. Our scientific measurements should be objective, free from bias, and repeatable by any person in any place. The conclusions of science should likewise be objective, clear, and understandable from the outside. We want science to be open, discussed, and the implications of results rigorously debated so that we can make new discoveries and develop new knowledge to help propel humanity forward.
 
 
“But science is not an enterprise that takes place on some superior moral or spiritual plane above the rest of human activity,” writes Yuval Noah Harari in his book Sapiens. Science may strive for objectivity and independence, but it still takes place in the human world and is conducted by humans. Additionally, “science is a very expensive affair … most scientific studies are funded because somebody believes they can help attain some political, economic, or religious goal,” continues Harari.
 
 
No matter how much objectivity and independence we try to imbue into science, human activities influence what, how, and when science is done. The first obstacle, as Harari notes, is money. Deciding to fund something always contains some sort of political decision. Whether we as individuals are looking to fund something, or whether a collective is looking to fund something, there is always a choice between how the final dollars could be used. Funding could be provided for science that helps develop a vaccine that predominantly impacts poor people in a country far away. Funding could be provided for a scientific instrument that could help address climate change. Or funding could be used to make a really cool laser that doesn’t have any immediate and obvious uses, but which would be really cool. Depending on political. goals, individual donor desires, and a host of other factors, different science could be funded and conducted. The cost of science means that it will always in some ways be tied to human desires, which means biases will always creep into the equation.
 
 
It is important to note that science is built with certain elements to buffer the research, results, findings, and conclusions from bias. Peer review for example limits the publication of studies that are not done in good faith or that make invalid conclusions. But still, science takes place in society and culture and is conducted by humans. What those individual humans chose to study and how they understand the world will influence the ways in which they choose and design studies. This means that bias will still creep into science, in terms of determining what to study and how it will be studied. Early material scientists working with plastics were enthusiastic about studies that developed new plastics with new uses, where today materials scientists may be more likely to study the harms of plastics and plastic waste. Both fields of research can produce new knowledge, but with very different consequences for the world stemming from different cultural biases from the human researchers.
 
 
This is not to say that science cannot be trusted and should not be supported by individuals and collectives. Science has improved living standards for humans across the globe and solved many human problems. We need to continue pushing forward with new science to continue to improve living standards, and possibly just to maintain existing living standards and expectations. Nevertheless, we do have to be honest and acknowledge that science does not exist in a magical space free from bias and other human fallacies.
Organization Over Technological Progress in Warfare

Organization Over Technological Progress in Warfare

“The obsession with military technology – from tanks, to atom bombs, to spy-flies – is a surprisingly recent phenomenon,” writes Yuval Noah Harari in his book Sapiens.
 
 
There is a scene in the first Iron Man film where a terrorist leader explains that Genghis Kahn was able to dominant huge regions and many people’s through the superior technology of the bow and arrow. The story that the terrorist leader tells seems obvious to us. An army with a better technology easily overpowered opposing armies with less powerful warfare technologies. The Iron Man character is a literal personification of this idea. However, that story may not be accurate, and the way we think about historical wars may overemphasize the role of technological developments in weapons of war.
 
 
Harari argues that our technological progress, our introduction of new ways to blow things up, spy on our enemies, and dominate a war, only dates back a few centuries at the most. Today we imagine that global armies and militaries have the most advanced technologies possible (and use military technology to explain phenomena we otherwise cannot), but that doesn’t mean we should apply that same framing to past human conflicts. We look at the incredible power that military technology has today and assume it always been the most advanced area of technological development. We assume that new technologies always lead to more battlefield dominance. However, this is a misappropriation of modern warfare technologies and techniques to the past.
 
 
Harari continues, “up to the nineteenth century, the vast majority of military revolutions were the product of organizational rather than technological changes.” Better ways to organize troops, to manage supply chains and information, and to command groups of people have been more important in war, Harari argues, than the things that armies used to kill each other. Our fascination with technological innovation leaves out the importance of better human organization, which ultimately may be the bigger factor.
 
 
I don’t think Harari needed to limit himself to time periods before the nineteenth century when suggesting that human organization outperformed technological improvements in warfare success rates. The Germans lost WWII in part because they were fighting a war with two fronts, and in part because they pushed into Russia during the winter time, and were limited by simple logistical challenges. Many have argued that the Japanese would have lost to the United States in a US ground invasion during the winter if we had not used nuclear weapons on Hiroshima and Nagasaki. Superior technology doesn’t mean anything if you don’t have the organizational capabilities to have that technology at the right place at the right time. Perhaps drones and nuclear weapons change this, but I think that strong organization still matters in determining whether those unsurpassable technologies are used in a reasonable and effective manner, though hopefully nuclear weapons will never again be needed in combat. At the end of the day, we like the flashy new tech, but what really drives progress may truly be improved organization – a lesson we can all think about in our daily non-warfare lives.
Truth is a Poor Test for Knowledge

Truth is a Poor Test for Knowledge

We live in what is being called a post-truth world, where facts don’t seem to stand up on their own and motivated reasoning drives what people believe. Politicians, activists, and people of note say wild things without regard to accuracy. Against this backdrop, many people have begun to argue that we need more truth in our news, statements, and beliefs.
 
 
This quest for truth is noble, but also has its downsides. The COVID-19 pandemic is an example of how standards around truth can become self-defeating and can contribute to people’s motivated reasoning and cynicism around information. Science has moved very quick with regard to COVID-19, but that has often meant changing recommendations for how to stay healthy. We have changed what we know about infection rates, hospitalization rates, treatment, prevention, and death. This means that what people know and believe about the disease may change on a weekly or monthly basis, and consequently public policy and recommendations change. Unfortunately, that change can be a difficult process. Former Press Secretary Sean Spicer unfairly used the quick changes in science around COVID for political purposes in a tweet. On the other end of the spectrum, people are not happy with how slow some regulations update in the face of changing science, as George Mason Economist Bryan Caplan unfairly mocked in another tweet.
 
 
Yuval Noah Harari would argue that truth shouldn’t be the goal. In his book Sapiens, Harari writes, “truth is a poor test of knowledge. The real test is utility. A theory that enables us to do new things constitutes knowledge.” We treat scientific knowledge and information about the world as clear and deterministic. The reality is that our scientific knowledge and understanding of the world is incomplete, especially on a personal level. We all live with models for reality, and we should not make complete truth and accuracy our goal. We should strive to be as accurate and truthful as possible, but we should recognize that knowledge comes from how well our models work in the real world. Improved information along with more accurate and true knowledge should help us perform better, do new things, make new advances, and improve the world. We don’t have to mock science, policy, or the statements of others. We need to look for ways to update our models and theories so that we can do the most with what we know. We should be willing to update when we learn that our information is not true or accurate. Holding ourselves to impossible truth standards doesn’t help us build knowledge, and can actually be an obstacle to developing knowledge. 
Scientific Observations & Math

Scientific Observations & Math

My last post was about science and newness. Modern science values new information more than existing information and rewards research that pushes forward into new territories. What unites new science in any field with the historical information that the new science rests on, is mathematics. As Yuval Noah Harari writes in his book Sapiens, “mere observations, however, are not knowledge. In order to understand the universe, we need to connect observations into comprehensive theories. Earlier traditions usually formulated their observations into stories. Modern science uses mathematics.”
 
 
Mathematics are used to communicate observations because mathematics can be objective, precise, and evaluated for accuracy.  My experiences of reality and how I may interpret and communicate that reality is not likely to be the same as the way someone in New York City, Tokyo, or Kabul experiences, interprets, and communicates their immediate reality. However, if we chose to measure our worlds through data and agree on the scales to use, we can begin to bring our subjective experiences of reality into a unified and consistent framework. A lot of how we understand the world is subjective. For example, I run a lot and a lot of my friends run, so a three mile run sounds short to me. However, for someone who doesn’t run often and doesn’t have friends who run often, a three mile jog may as well be a 26 mile marathon. Mathematics escapes the subjective, goes beyond stories and narratives that we may develop from our subjective experiences. It ties our collective experiences together into something more objective. Mathematics allows us to go from stories to real theories.
 
 
That still doesn’t mean we all understand and interpret the numbers the same. In his recent book How to Make the World Add Up, Tim Harford shares an example of national statistics in the UK showing that the average rail car has only 100 passengers. However, in Harford’s experience, traveling at rush hour, the average rail car is completely packed with far more than 100 people. The statistics can be viewed through a different reference point, through the average passenger traveling at rush hour, or through the rail car traveling throughout the day. Without mathematics we could never describe this reality in a consistent and unified way. Our descriptions of the world would be based on narrative and story. Mathematics gives us a grounding through which we can understand the universe in a more comprehensive and generalizable manner.

Newness in Science

“Modern science has no dogma,” writes Yuval Noah Harari in his book Sapiens. “Yet it has a common core of research methods, which are all based on collecting empirical observations – those we can observe with at least one of our senses – and putting them together with the help of mathematical tools.” Harari continues to explain that science may not be dogmatic, but that there are two key defining aspects of modern science that set it apart from the ways that humans have traditionally understood the world. Those two aspects are the reliance on mathematics in understanding observations and the desire to seek out new knowledge and observations.
 
 
Mathematics gives us a common language to discuss observations and allows us to compare observations for veracity. Newness pushes our observations and knowledge in a continuously expanding manner. Relying on tradition, historical knowledge, and existing information has not been enough for science to advance. Newness has been a central idea in the basic structure of modern science. Harari writes, “as modern people came to admit that they did not know the answers to some very important questions, they found it necessary to look for completely new knowledge.”
 
 
New information is rewarded in academic institutions and drives the way that modern universities work. You can work at a college as a lecturer without doing research, but the prized positions are primarily research positions. As a researcher at a university you are rewarded for the number of papers you publish, and journals want to publish novel scientific studies. The goal of science today is to take what we already know and push beyond. Science doesn’t just help us better understand what has come before us, but helps us push into new worlds. We use math and the scientific method to make and communicate our discoveries.
 
 
This is a new approach from most of human history. We don’t simply assume we already have the answers or that our current knowledge will be sufficient into the future. We look backward less than we look forward. Science is centered around what we can do with our knowledge, expanding that knowledge, and doing new things with it.
 
 
Admitting Collective Ignorance

Admitting Collective Ignorance

I generally agree that we are too confident in our opinions and judgments about the world. We live with a lot of complexity and very few of us are superforcasters, carefully considering information and updating our knowledge as new information comes along. We rely on personal experiences and allow ourselves to believe things that we want to be true. However, there are some modern institutions which help push back against this knowledge overconfidence.
 
 
In his book Sapiens, Yuval Noah Harari writes, “Modern-day science is a unique tradition of knowledge, inasmuch as it openly admits collective ignorance regarding the most important questions “ (emphasis in original). As Harari notes, physicists openly admit that we cannot study what happened in the first moments of the Big Bang and scientists cannot explain what consciousness is or how it arises. On the largest problems science is great at admitting collective ignorance, something that is very unique among humans. Throughout our history many humans have attempted to answer the most important questions through narratives and stories, resulting in religions and dogmas. For modern science to eschew this trend is rather remarkable.
 
 
I would say that modern science actually goes a step beyond admitting collective ignorance in the largest questions we can ask. Something I often noted during my masters program, where we read a great deal of academic public policy and political science papers, was how often we could argue that authors were confident in their findings in the body of the paper (sometimes overstating the impact of their finding) only to admit in the conclusion that their study was limited in scope and could not be generalized to broader contexts. Within social sciences at least, papers encourage researchers to place their work within an appropriate context, and from my experience, the best papers do a good job of being honest and realistic about their conclusions. They admitted ignorance even when identifying effects that appeared to be real.
 
 
Humans cannot admit ignorance in business, politics, and religion. A CEO who admitted that the company didn’t really know what was happening and that they were operating from a place of ignorance probably won’t be CEO for long – especially not if they face a stretch of bad luck. Very few voters would elect a candidate who admitted to being ignorant on much of the world. Religions (in my view – which could be wrong) seem to provide more answers than admissions of ignorance (although Christians at least seems to admit that humans cannot understand their deity’s decision-making process).
 
 
Science is a unique place where we can admit that we don’t know much, even when announcing findings and things we have learned from careful study. This is one of the strengths of science and something we should do a better job communicating.  An admission of ignorance within science is a sign that scientific institutions are functioning well. That seems to have been forgotten at times during the pandemic, and often has been mocked by people who are unhappy with regulations and decisions by public policy officials.