Posted by greydogg, 99GetSmart
* COMPANY PROFITS DEPEND ON THE ‘WELFARE PAYMENTS’ THEY GET FROM SOCIETY
The free market is a myth. From drug patents to quantitative easing, businesses make money because of state help
By Ga-Joon Chang, Guardian
Earlier this week, India’s supreme court ruled that the country will not grant a patent to Novartis, the Swiss pharmaceutical company, for the cancer drug, Glivec. Being a new version of an existing drug, the ruling said, it does not deliver enough innovation to warrant a patent. Novartis condemned the ruling as “a setback for patients that will hinder medical progress for diseases without effective treatment options”.
This statement is rich coming from a company from Switzerland – a country that infamously had no patent law until 1888, half a century after its introduction in most rich capitalist countries.
Even after 1888, Switzerland refused to award pharmaceutical and other chemical patents for two decades, the new patent law having stipulated that patents are granted only to “inventions that can be represented by mechanical models”. The country introduced chemical patents only in 1907 under intense pressure from Germany, whose technologies its pharmaceutical companies were liberally “borrowing”. Ciba-Geigy and Sandoz, whose merger in 1996 created Novartis, were among those companies. […]
* WE’RE LIVING THROUGH A RARE ECONOMIC TRANSFORMATION
Those who understand its ‘post-capitalist’ rules will prosper
By Charles Hugh Smith, PeakProsperity
In 1993, management guru Peter Drucker published a short book entitled Post-Capitalist Society. Despite the fact that the Internet was still in its pre-browser infancy, Drucker identified that developed-world economies were entering a new knowledge-based era– as opposed to the preceding industrial-based era, which represented just as big a leap from the agrarian-based one it had superseded.
Drucker used the term post-capitalist not to suggest the emergence of a new “ism” beyond the free market, but to describe a new economic order that was no longer defined by the adversarial classes of labor and the owners of capital. Now that knowledge has trumped financial capital and labor alike, the new classes are knowledge workers and service workers.
As for the role of capital, Drucker wryly points out that by Marx’s definition of socialist paradise – that the workers owned the means of production (in the 19th century, that meant mines, factories and tools) – America is a workers’ paradise, because a significant percentage of stocks and bonds were owned by pension funds indirectly owned by the workers.
In the two decades since 1993, privately owned and managed 401K retirement funds have added to the pool of worker-owned financial capital.
Drucker’s main point is that the role of finance and capital is not the same in a knowledge economy as it was in a capital-intensive industrial economy that needed massive sums of bank credit to expand production. […]
* POSITIONING YOURSELF TO PROSPER IN THE POST-CAPITALIST ECONOMY
The dawn of the ‘self-reliant’ worker
By Charles Hugh Smith
- The importance of “ownership” of specialized & skills
- Why decentralization of work (vs the traditional hierarchical organization) is the future
- Why disruption and fluidity will be the norm for most sectors of the economy
- Why flexibility, innovation and self-reliance will be the hallmarks of the successful post-capitlaist worker
In Part I: We’re Living Through a Rare Economic Transformation, we reviewed the basic structure of what author Peter Drucker termed the post-capitalist society, a knowledge economy based on a model of decentralized, perpetually innovating organizations.
In Part II, we ask: How do we turn these structural insights to our own advantage?
I want to start with the social-political-economic divide that is endemic to the knowledge economy: the widening gap between the class of knowledge workers, which Drucker understood would be the smaller of the two classes, and service workers.
In broad brush, those workers and enterprises engaged in sectors that generate most of the wealth creation will do much better financially than those engaged in low-margin sectors. In the knowledge economy, those with high-level, specialized skills will create more value and thus be better compensated than those with generalized knowledge and/or lower-level skills.
A fast-food worker, for example, is the modern-day assembly-line worker. The entire process of assembling and serving fast food is highly organized for speed and efficiency. But since the product is not high-value, the workers cannot be highly compensated for this work.
As Drucker recognized, all work requires management, and all organizations need to learn to innovate. This creates opportunities for highly trained, specialized workers and managers, but it doesn’t do away with service jobs, which will remain more numerous than knowledge-intensive jobs.
This leads to a sobering conclusion: Just producing more highly educated workers does not create a demand for those workers’ skills … […]
* POP QUIZ: HOW BIG IS THE BAILOUT OF CYRPUS?
By Antonis Polemitis and Andreas Kitsios
Most publications talk about the 10B or 17B Cyprus bailout. Let’s take a pop quiz on the right answer:
(a) 17 B Euros (89% of GDP)
(b) 10B Euros (52% of GDP)
(c) 2.5B Euros (13% of GDP)
(d) -3.0B Euros (-15% of GDP)
(e) -7.5B Euros (-39% of GDP)
Now let’s work through the answers, in steps:
(a) The 17B figure was calculated assuming the bailout would provide 7B for the banks. The final number provided not a single Euro for the banks who were asked, against the approach taken in the last 147 banking crises worldwide tracked by the IMF, to find the whole 7B out of their depositor base. So, part (a) is wrong
(b) The remaining 10B is described as a bailout of the government. Of this 10B however, 7.5B is being used to refinance maturing debt.
This debt, I would guess, is mostly at this point beneficially held by ECB. This is just an assumption, but we know that 75% of it was held domestically, largely by the banks. This was probably the first collateral pledged by the banks via the ELA, so ultimately if the Central Bank and the government default it will ultimately fall on the ECB’s balance sheet. The 25% is probably traded internationally and, again outside of Cyprus hands.
So, the 7.5B is being lent to Cyprus in order to be paid right back to Europe. That is not charity, that is ‘hiding their embarrassing losses until later when someone else is in office’. If moral hazard requires clueless Cypriot retail depositors to pay for their banks’ decision to lend to the insolvent Greek government, then presumably it also applies to the financial wizards at ECB that lent to the insolvent Laiki, despite having full access to their financial information.
That leaves 2.5B of fresh financing for the government which I will concede is new money, though until we see the Memorandum and the terms under which we receive this money, I am not too excited about it. Cyprus could raise this amount domestically so long as it did not have to do it overnight (which it does not – it is to fund deficits over the next few years).
(c) Does that mean that 2.5B is the right answer? Not really, see below.
(d) At least 5.5B of the ELA taken by the banks (I suspect it is more) was for losses in the Greek branches of the Cyprus banks. These branches have 15B of deposits that presumably could have also been haircut, along with the Cyprus-based deposits, to make up for the losses.
Yet, under tremendous time pressure, they were sold to a Greek bank for 17% of NAV, even post NPL haircuts (very suspicious), while the liabilities (the ELA) stayed in Cyprus and are now, beyond all logic, is being transferred to the Bank of Cyprus. […]
* MASSIVE LEAK OF SENSITIVE INFORMATION ON OFFSHORE TAX HAVENS
* KEEPING THE GOVERNMENT’S SECRETS
By Steve Randall, FAIR
“The government’s power to censor the press was abolished so that the press would remain forever free to censure the government…. The press was protected so that it could bare the secrets of the government and inform the people.”
‑U.S. Supreme Court Justice Hugo Black, New York Times Co. v. United States (6/30/71)
Journalism is supposed to hold power to account. That’s the principle implicit in the U.S. Constitution’s singling out a free press for protection.
If that principle were respected, the Washington Post’s admission (2/6/13) that it and “several news organizations” made a deal with the White House to withhold the news that the U.S. has a drone base in Saudi Arabia would have been a red flag, triggering widespread discussion of media ethics.
But these deals have become so commonplace that the story generated less concern among journalists than did the denial of press access to a recent presidential golf outing. The latter outrage resulted in a sternly worded letter of protest from the White House press corps (Huffington Post, 2/18/13).
As the Washington Post explained, it was convinced to sit on the drone base story by administration concerns that:
exposing the facility would undermine operations against an Al-Qaeda affiliate regarded as the network’s most potent threat to the United States, as well as potentially damage counter-terrorism collaboration with Saudi Arabia. […]
* THE REAL STORY BEHIND THE “MONSANTO PROTECTION ACT’
* CAN WE PATENT LIFE?
By Michael Specter, NewYorker
On April 12, 1955, Jonas Salk, who had recently invented the polio vaccine, appeared on the television news show “See It Now” to discuss its impact on American society. Before the vaccine became available, dread of polio was almost as widespread as the disease itself. Hundreds of thousands fell ill, most of them children, many of whom died or were permanently disabled.
The vaccine changed all that, and Edward R. Murrow, the show’s host, asked Salk what seemed to be a reasonable question about such a valuable commodity: “Who owns the patent on this vaccine?” Salk was taken aback. “Well, the people,” he said. “There is no patent. Could you patent the sun?”
The very idea, to Salk, seemed absurd. But that was more than fifty years ago, before the race to mine the human genome turned into the biological Klondike rush of the twenty-first century. Between 1944, when scientists determined that DNA served as the carrier of genetic information, and 1953, when Watson and Crick described it as a double helix, the rate of discovery was rapid. Since then, and particularly after 2003, when work on the genome revealed that we are each built out of roughly twenty-five thousand genes, the promise of genomics has grown exponentially.
The intellectual and commercial bounty from that research has already been enormous, and it increases nearly every day, as we learn ways in which specific genes are associated with diseases—or with mechanisms that can prevent them. It took thousands of scientists and technicians more than a decade to complete the Human Genome Project, and cost well over a billion dollars. The same work can now be carried out in a day or two, in a single laboratory, for a thousand dollars—and the costs continue to plummet. As they do, we edge closer to one of modern science’s central goals: an era of personalized medicine, in which an individual’s treatment for scores of illnesses could be tailored to his specific genetic composition. That, of course, assumes that we own our own genes. […]