Category Archives: Web Article Review

the gospel of shareholder value

This article from the Boston Globe talks about the idea that maximizing profits and shareholder value (which hypothetically is the present value of all future profits) is the sole function of a corporation.

Experts on the history of business say the Market Basket saga is a window onto something deeper than a power struggle among the Demoulas clan that owns it. They see it as emblematic of a war over the future of the American corporation—what its purpose is, how it should be run, and whom it should be engineered to benefit. They argue that maximizing profit and shareholder value—an approach to running companies that drives investment on Wall Street and serves as the closest thing to modern management gospel—is only one way of defining corporate success, and a fairly new one at that…

Post and others argue that a well-run company can—and should—be managed in a way that benefits not just the investors who own its stock, but a wide range of constituents. As opposed to “shareholders,” they call these people “stakeholders”: a group that includes employees, customers, suppliers, and creditors, as well as the broader community in which the company operates, and even the country that it calls home. According to that view, Market Basket’s employees and customers are essential to the firm’s success and, thus, rightful beneficiaries of its prosperity.

It also links back to a 1970 Milton Friedman article in which he argued that it is unethical for a person employed by a corporation to try to be ethical on the company dime:

In a free-enterprise, private-property sys­tem, a corporate executive is an employee of the owners of the business. He has direct re­sponsibility to his employers. That responsi­bility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while con­forming to the basic rules of the society, both those embodied in law and those embodied in ethical custom.

The main problem I have with this is that the ownership of corporations is so diffuse these days that it is almost impossible for shareholders to exercise any sort of ethical control. Many shareholders are large institutions that collectively have no motives beyond the profit motive, even if individuals among them are ethical. No, the only way for society as a whole to behave ethically is for the vast majority of individuals to consciously act ethically every day – be they shareholders, employees, or customers. I don’t see that happening today.

more on Ebola

Spillover: Animal Infections and the Next Human Pandemic

NPR has an interview with the author of this book. An excerpt:

How did we go from a virus that’s found largely in animals to a virus that can be deadly for humans — and spread across four countries?

Human behavior is causing this problem. More and more, we’re going into wild, diverse ecosystems around the world, especially tropical forests.

Some scientists believe that each individual species of animal, plant, bacterium and fungus in these places carries at least one unique virus, maybe even 10 of them.

We, humans, go into those wild ecosystems. We cut down trees. We build mines, roads and villages. We kill the animals and eat them. Or we capture them and transport them around the world.

In doing that, we expose ourselves to all these viruses living around the world. That gives the viruses the opportunity to spill over into humans. Then in some cases, once the virus makes that first spillover, it discovers that it might be highly transmissible in humans. Then you might have an epidemic or a pandemic…

The experts I talk to say the next big one will almost certainly be caused by a zoonotic virus, coming out of animals. And it’s likely to be one that is transmissible through the respiratory route — that is, through a sneeze or cough.

Ebola is not an easily transmissible virus. It requires direct contact with bodily fluids. It doesn’t travel on the respiratory route.

Viruses such as the and SARS are much more of a concern to scientists that study these things than Ebola because they are already transmissible through the respiratory route. They are also highly adaptable, and they mutate quickly.

In terms of the next big one, SARS and MERS stand higher on the watch list than Ebola.

do airplanes spread horrible plagues?

Are you more likely to be exposed to germs on an airplane because of the recirculation of air? No, according to Wired, because the air is very well filtered and constantly exchanged with outside air. Now, I too have gotten that cold right after traveling. So I probably got that cold from something I touched at the airport T.G.I. Fridays. So the moral of the story, I think, is always remember to wash your hands at the airport before you pick your nose. Other theories I have come up with, without trying to collect a shred of scientific evidence, is that the dry air on planes dries out your mucous membranes so there is less of a barrier to germs, and/or that the general stress and lack of rest when you travel just wears down your body’s defenses to the ordinary garden-variety germs you encounter every day.

making chemotherapy “a thing of the past”

From the BBC, this caught my eye:

Prime Minister David Cameron has said it “will see the UK lead the world in genetic research within years”.

The first genetic codes of people with cancer or rare diseases, out of a target of 100,000, have been sequenced.

Experts believe it will lead to targeted therapies and could make chemotherapy “a thing of the past”…

The project has now passed the 100 genome mark, with the aim of reaching 1,000 by the end of the year and 10,000 by the end of 2015

U.S. Drought Monitor

20140729_CA_trd

According to the United States Drought Monitor, the drought in California is getting pretty alarming.

mounting evidence from reservoir levels, river gauges, ground water observations, and socio-economic impacts warrant a further expansion of exceptional drought (D4) into northern California. For California’s 154 intrastate reservoirs, storage at the end of June stood at 60% of the historical average. Although this is not a record for this time of year—the standard remains 41% of average on June 30, 1977—storage has fallen to 17.3 million acre-feet. As a result, California is short more than one year’s worth of reservoir water, or 11.6 million acre-feet, for this time of year. The historical average warm-season drawdown of California’s 154 reservoirs totals 8.2 million acre-feet, but usage during the first 2 years of the drought, in 2012 and 2013, averaged 11.5 million acre-feet.

Given the 3-year duration of the drought, California’s topsoil moisture (80% very short to short) and subsoil moisture (85%) reserves are nearly depleted. The state’s rangeland and pastures were rated 70% very poor to poor on July 27. USDA reported that “range and non-irrigated pasture conditions continued to deteriorate” and that “supplemental feeding of hay and nutrients continued as range quality declined.” In recent days, new wildfires have collectively charred several thousand acres of vegetation in northern and central California. The destructive Sand fire, north of Plymouth, California—now largely contained—burned more than 4,000 acres and consumed 66 structures, including 19 residences.

 

 

the zombie cat virus

If there’s one thing I don’t put a whole lot of stock in, it’s scientific and medical information provided by random websites. Like this one, Corante, which claims that toxoplasma, a virus that incubates in cats, affects rats’ brains so that they are less afraid of cats. Then it goes on to suggest that half of all people are infected with this virus, and that it has unknown, subtle but possibly harmful effects on people. It just makes me think about how little we really know about most of the vast community of microorganisms inhabiting our bodies. The scariest thing would be something that is harmful, but has a long incubation period so it can infect a large fraction of the population before we are even aware of it.

Ebola

The Ebola situation makes for some scary headlines. From the CDC, the number of cases as I write this (July 31) in Guinea, Liberia, and Sierra Leone is 1,322 of which 728 (55%) have died.

Ebola is a disease with no known cure which incubates in bats. To put these numbers in perspective, Wikipedia says that 8,231 people in Haiti have died of cholera since 2010, a disease we know the exact cause of and exactly how to prevent (clean drinking water) and treat (staying hydrated with clean drinking water).

R and NetLogo

I had never heard of Netlogo, which is a programming language for simulating and teaching agent based models. Agent-based modeling is important because it might be the key to real quantitative simulation in economics and the social sciences. You can keep drilling down into the links in this post from R-bloggers until you either run out of time or find out everything you want to know about it.