Today, I engaged in my daily ritual of browsing Google News in an attempt to pass myself off as an informed member of society. While I was expecting to encounter the typical mash of of terrorist attacks, movie speculations, and amusing, yet scary, Trumpisms, something caught my eye. A photo of man in handcuffs, flanked by FBI agents and surrounded by cameramen, and a caption that read “Martin Shkreli In America Indicted For Securities Fraud.”
Courtesy prohibits me from writing exactly what my first thoughts were after reading that, but it was something to the tune of “Hallelujah. Justice is served.”
For those of you with impaired memories, Shkreli made news back in September when his company, Turing Pharmaceuticals, bought the manufacturing license for Daraprim, a drug commonly used to fight HIV-related afflictions, and proceeded jack up the price overnight from $13.50 to $750 per pill. This drew intense criticism from, among others, the Pharmaceutical Research and Manufacturers of America, the White House, the Wu-Tang Clan, and even Donald Trump.
While we can all take pleasure at the possibility of this greedy, smirking Gordon Gecko wannabe getting his comeuppance, this entire incident sheds a lot of light on the dark side of American capitalism, where greed is a virtue, scrutiny is rare, and maximizing profits is the be-all-end-all of morality. As appalling as Shkreli’s business practices were, they are by no means rare. Most of the time they were not even illegal.
The biotech industry is just the latest industry to be take advantage of by ambitious and unscrupulous businessmen, as it is relatively new, rapidly expanding, and not scrutinized. The same situation of under regulation coupled with consumer confidence preceded the housing crisis. Banks were allowed to give loans to people they knew would probably not be able to afford in the hope that they would default and be forced to give their property to the bank. The resulting disaster not only collapsed the industry, but threw the entire economy into a recession that we are still fighting off. Now, eight short years later, we appear to be ready to jump off another cliff.
While we obviously have not learned our lesson, the same cannot be said for Wall Street. After the recession and the Occupy movement exposed their foul dealing to the cold light of day, they immediately took steps to minimize future exposure while maximizing their bottom line. Measures such as relocating headquarters to countries with lower corporate tax rates and stock buybacks became more common and more lucrative, enabling companies to grow even larger than before in less time.
The aggressive strategy of buying growth rather building it from scratch has turned consultants and financial managers like Shkreli into billionaires at the expense of long term market stability. To top all this off, a number of court decisions, notably Citizens United v. FEC, has allowed these giants to buy as much political capital as they need to ensure that when their next investment turns the global economy on its head, justice, if any, will be showing up with even less teeth than before.
Shkreli’s arrest, while deserving and uplifting, is a paper cut to an industry that grows stronger every day, and we don’t pay it any heed unless it does something so reprehensible and public, that we can’t help but gawk and wonder “How did we end up with this.” If we don’t want to find ourselves repeating the same cycle of economic Russian Roulette, we need to pay attention to the people with both the power the money to keep it.
