does the Harvard Business School, Michael Porter, teach the essence of business strategy is the elimination of competition, by regulation if possible. Is this legal? Is this basically socialism or communism? – Quora

Original question on Quora: Why does the Harvard Business School, Michael Porter, teach the essence of business strategy is the elimination of competition, by regulation if possible. Is this legal? Is this basically socialism or communism?

My response: Trying to pin this on Michael Porter is ridiculous. He says no such thing. Based on the way the question is phrased, I wonder if there is an ideological purpose in asking it.

But in any case, there is a serious issue behind the question, namely an increasing level of oligopoly (decreasing levels of competition) among companies in many US industries. See, for example, “Big Companies Are Getting a Chokehold on the Economy Even Goldman Sachs is worried that they’re stifling competition, holding down wages and weighing on growth.”  or.

“America Has a Monopoly Problem—and It’s Huge”.

One theory about this trend is that it is partly due to growing power of corporations in Washington. That, in turn, may be traced partly to the increasing role of money in elections, largely as a result of the infamous Supreme Court “Citizens United” decision. For example, the way Trump’s massive tax cuts were put together without any hearings and in a VERY short period of time, and the amount of “goodies” for many industries in the resulting package, would never have happened with previous massive changes in taxes.

An effective strategy in some highly concentrated industries is to persuade the government to selectively regulate your industry, in ways that favor large and established companies. That is, all companies may experience higher costs because of a regulation, but if your company can respond more cheaply than anyone else, it is still a net win for you. An example is pharmaceuticals. For example pharma companies increasingly use the legal system, regulations, and side deals to keep generic drugs off the market for years after drug patents expire. The industry has also been very effective at keeping foreign competitors out – e.g. blocking imports by individual citizens from Canada.

(I buy one medication at $1 per pill from abroad, when it costs $30/pill at the local Rite-Aid. But it takes a lot of research and effort.)

Source: (32) Why does the Harvard Business School, Michael Porter, teach the essence of business strategy is the elimination of competition, by regulation if possible. Is this legal? Is this basically socialism or communism? – Quora

Each new generation needs to learn the lesson of Theranos: appearance ≠ reality

Every 10 years or so, a conspicuous bubble bursts, and in doing so it resets the expectations of the next generation of young adults.

  • Enron
  • 2008 financial collapse
  • Now Theranos

Reading this article, I’m astonished at how little substance the adulation of Elizabeth Holmes was based on. And how much secrecy her investors allowed her. Given that she was claiming that her system would be ~100x better than established technologies, why didn’t they demand evidence? Why was it left to a reporter to figure out that the emperor had no clothes? And, was she nothing more than a successful con-artist with no genuine scientific expertise?

“In a searing investigation into the once lauded biotech start-up Theranos, Nick Bilton discovers that its precocious founder defied medical experts—even her own chief scientist—about the veracity of its now discredited blood-testing technology.”

Source: Exclusive: How Elizabeth Holmes’s House of Cards Came Tumbling Down | Vanity Fair

Zika virus: Forbes columnist can’t bear to say “market failure”

Here’s a column by a Forbes blogger about Zika saying that “we should not wait so long to develop vaccines against tropical diseases.” He concludes:

 Many pharmaceutical companies don’t focus on a disease until it becomes common enough to be highly profitable. The trouble is the vaccine world has become a bit like the plot line for “She’s All That” or “Cinderella.” Attention towards a person or thing does not occur until a cool person notices he or she or it. But when it comes to disease and stock market opportunities, as the saying goes, once your grandmother knows about it, it is usually too late.

Source: Zika Vaccine: Another Example Of Waiting Until It’s Too Late? – Forbes

This is not news. And it’s a classic situation where market forces are not enough to give socially desirable behavior. Developing a vaccine for a disease that is not in rich countries has low expected profitability. Even if the disease goes epidemic, pharma company will have to sell at a price near marginal cost.

The only solution is to use a different way to fund development. Contests, grants (Gates foundation), purchase guarantees (used by US DoD) all work. But waiting for the traditional patent system + pharma profit motive won’t lead to timely development of medication for poor-country diseases.

I guess a Forbes columnist is not allowed to point this out.