VW's diesel scandal and Shkreli's drug price-gouging

More of the same - this week was not exactly ethical capitalism's (if such a thing exists) finest hour:

VW may have to pay fines in the billions for deceiving pollution monitors and violating the Clean Air Act with their TDI "clean diesel" vehicles (stock plunged 20% in response). Apparently it's not so easy for a diesel engine to be both clean burning AND great mileage.

There is a new (and sick) trend in biopharma (link1, link2) where shell companies buy up the rights to "below market price" drugs and then jack up the prices by orders of magnitude to make a ROI. Well, at least those firms aren't deluding themselves that they're trying to help patients - they're explicit in their pure pursuit of profit, and it doesn't matter if needy patients are priced out.

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Following up on VW and drug prices:

How an academic lab at UWV (an ironically similar acronym) detected VW's diesel cheating: http://www.vox.com/2015/9/23/9383663/vw-emissions-scandal-photo. I just wonder why VW's diesel rivals didn't question how VW could get superior mileage/torque while still keeping pollution low (the diesel engine is kind of zero-sum for these performance metrics). Like wouldn't they say, "Wow, in our lab we can only get 25 mpg if we stay under the NOx limit - I wonder how VW gets 40 mpg?" (numbers are fictional) Other auto makers are professing that their vehicles don't cheat, but we'll see. Even though very few light cars in the US are diesel, we of course have plenty of semi-trucks and heavier vehicles spewing particulates and carcinogens every day (but at least in CA, these vehicles now have to adhere to tighter limits). Not sure how big the impact will be in Europe, where ~half their light cars are diesel (but they have fewer cars per capita and drive fewer miles per capita vs. the US).

This article has an interesting viewpoint on the Shkreli drug prices scandal: http://www.vox.com/policy-and-politics/2015/9/23/9383899/martin-shkreli-daraprim-price. He's been such an a-hole and unapologetic capitalist re: his company's actions that he's garnered a ton of negative publicity. That actually helps to shed light on the drug price-gouging issue that Big Pharma has been engaging in for decades (BS loopholes to extend patents, buying the rights to generics or cheaper rival drugs to keep them off the market, etc.). Hopefully the increased attention and outrage will motivate lawmakers to consider new rules for the industry, but I'm not holding my breath.

Oh the "tragedy" of the IRS scandal

http://www.npr.org/templates/story/story.php?storyId=188699174
http://www.thedailyshow.com/full-episodes/thu-may-23-2013-morgan-freeman (the 2nd segment, Jason Jones piece)
http://www.youtube.com/watch?v=TlQ5xWAo89w

First of all, is it wrong for a gov't agency to act with prejudice? Certainly. Should some people be fired or jailed? Yes if the proper evidence is available. Should we have an investigation to see how high it goes? Probably. But the outrage and tear-jerking by the right over this is worse than comical, it's enraging. NPR reported on the Congressional hearings, and it was like an episode of Maury. One Tea-bagger testified that she couldn't sleep because she could only imagine what evil the gov't would inflict on her next. Give me a break. She and others got her apps delayed and had to answer some annoying questions. Not right, but not the end of the world either (and the same thing happened to some liberal-sounding groups during the Bush years, and that was pre-Citizens United). Did they get shut down and their assets frozen? Did baton-wielding brutes launch tear gas and kick their teeth in? Were they detained for hours without charge or rendered overseas to be tortured? Because that stuff happened to Americans, and I didn't hear a peep out of the Tea-baggers then.

I would be more outraged if the wronged parties were like Mormons or soybean farmers or bugle players. But these are fundamentalist conservatives here, frankly with un-American ideology. They were still wronged, but they don't get to bitch about oppression and abuse when they are the ones advocating policies that marginalize gays, Muslims, people of color, women, the planet, and people with common sense. If they are all about keeping the vile gov't out of our lives and protecting our god-given rights, then why do they want to dictate who you can marry, what you can smoke, where you can build a mosque, what official language we should speak, and when life begins?

And if they distrust/criticize the gov't so much, then why do they expect to get swift, fair, and competent processing of their 501(c)4 status as a tax-free, non-profit, "social welfare" org? They claim to love America, yet hate the gov't. Well the gov't is America too. What are they, bipolar? America is not just a 200-year-old parchment with some old edicts. It needs agencies and people to carry them out. I think over 10% of our workforce is public sector. Maybe that is bad, but those people are your neighbors and family and they mostly mean you no harm (unless they work for DHS or CIA). In fact they help you in so many obvious and subtle ways that you should show some freaking humility and gratitude. Wasteful bureaucracy sucks, but unfortunately it's the easiest way to have a society, unless you trust the free market and for-profit corporations to "run your life" instead. And by the way, there would be no functional market without the government. Well there may be a market, but it would be like a giant craigslist swap meet cluster F.

We know that our system of political finance/influence is broken and corrupt (yes, other nations are much worse but we'd like to think that we're better than Iran or Italy). Citizens United really re-wrote the book and most Americans can't directly experience/fathom the effects. So you now can have orgs where million-dollar donors can be totally anonymous. And you can have some orgs that don't have to pay taxes because they claim to do just enough community service to go along with their 95% narrow political advocacy. Tea-baggers don't like the debt? Then before you cut off a poor working mom, why don't you pay some tax on the collections you reaped at your BS worthless rally? Why don't your employees have to pay into SS and Medicare, yet a literally job-creating company has to (even if it's in the red this year)? The nation is subsidizing your stupid beliefs and advocacy. Yes, you are constitutionally entitled to hold and propagate your stupid beliefs. But don't tell me you should get special treatment and a free ride. Doesn't that make you a taker? And yes, I also believe that religious orgs (that don't do enough REAL social work) and liberal orgs should pay taxes too. The Bugle Players of Alameda County are not the Red Cross. Neither is the Tea Party, any Tea Party.

It's ironic because the bad people that the Tea-baggers claim to be saving America from actually resemble them a lot (apart from being rich, old, and white). And it's strange that the majority of Americans do not hold the same beliefs as these Tea groups. Only in this crazy age do self-proclaimed patriots get financial assistance to advocate for policies that are clearly damaging to the country and its values. And then when they are slightly inconvenienced in the process, it's the worst tragedy-scandal since Benghazi (which is the worst tragedy-scandal in history... their version of history where Republicans like Cheney, North, and Nixon never existed).

Good discussion on Penn State scandal

http://www.kqed.org/a/forum/R201207240900

I took a class from the guest on this radio show (Cal sports sociology prof and 49ers consultant Harry Edwards) when I was in high school and he is really insightful (C - were you in that course with me too?). He described how PSU football has become "too big to fail" (biggest student body and alum network in the US, one of the most famous football programs, huge $, TV contracts, scholarships, etc.), and there are so many emotional and financial vested interests that they couldn't tolerate any loose ends, even if it meant keeping child abuse quiet.

Paterno has a long record of showing above-and-beyond concern for his players and community (promoted high standards of conduct and graduation rates among his players, even spoke out against black athlete exploitation ahead of his time), so it's unlikely he just didn't care about those kid victims. That's what makes this lapse so shocking, and strengthens the argument that even such a historic and principled personality was powerless to speak up. I guess he was the victim (not meant to denigrate the true victims of this tragedy) of cognitive dissonance: he knew that even if he "did the right thing", the PSU-football-industrial-complex wouldn't have, so what's the point of fighting an impossible battle? It would have been "noble" for him to resign in protest and maybe go to the media (not the style of old school guys like him), but he knew that his players and the fan base were also counting on him. He didn't want to let his "family" down either (and PSU football is really serious about the "family" thing - it's not just cliche), so that meant letting the kids down instead. Though how can Paterno teach his players about living life right and being good men when he didn't walk the talk when he needed to? Like the Catholic sex abuse, the reputation and preeminence of the organization come first. Big money sport is very similar to big money religion and business, so unfortunately we've seen a lot of this stuff contributing to other scandals too. Powerful organizations and culture can enable their members to reach new heights, but ironically they can also force even moral, prominent individuals into bad decisions that end up hurting/destroying the org.

I don't know much about the NCAA and college sports, but the punishment is also kind of fishy and may not produce the intended results. From the Reggie Bush mess, USC was punished similarly (though much less) with wins erased and postseason ineligibility (not sure if they were fined also). They are another football powerhouse, with a coach who doesn't nearly have the likability and integrity record of Paterno, at least pre-2012. They bounced back rather well, and may now be a top ranked team coming into the new season. So it may not be the end of the world for PSU football (but who cares, it's just amateur football played by barely-literate teens?). Some wondered why the NCAA didn't give PSU the "death penalty" as they did to SMU for illegally paying players and other violations (http://en.wikipedia.org/wiki/Southern_Methodist_University_football_scandal). They were banned from intercollegiate competition for a year, but it really hurt the program for a decade since they needed to rebuild recruiting and such. Also SMU de-emphasized football and actually tried to be an institution of higher learning, so while they did recently appear in a minor bowl, they are not a top-ranked program anymore. Obviously that can't be so for PSU, where people literally enroll there for the football team (silly I know, but it's a free country). Though the NCAA's ruling has basically communicated to schools that they can practically kill someone, and their programs will not get the death penalty. But pay players a small fraction of the huge sums you are making off their talents? That is somehow worse than covering up child rape - because it perturbs the system. And we wonder why others think Americans are crazy! And it's not like SMU and USC are the only culprits. The big programs east of the Mississippi are probably just as corrupt, but the NCAA doesn't go after them out of fear, favoritism, or other COI.

I have always had a problem with collective punishment. 99.9% of the PSU community didn't know about the criminality going on (unlike SMU where it was pretty obvious to anyone with half a brain). Now their lives will be forever affected. I know they can't expect to have everything go back to the way it was after a big scandal. The program would change even if Sandusky never existed; Paterno would retire someday, PSU would go through slumps, etc. But now innocent people are hurting because of the misdeeds of a few. It's like economic sanctions against Iran/Cuba, or more extreme - nuking Hiroshima. Why not just ban the perpetrators for life, but leave the rest of the program alone - apart from assigning a special auditor and requiring extra training, charity, etc.? I guess the PSU punishment is kind of like letting Lehman fail out of principle? But it's not like other schools are going to clean house now and make sure they haven't been hiding any abuses. They're just going to hide their misdeeds more carefully.

I just don't know the point of it all, it's just college sports. The universities in most other nations don't even have organized intermural sports - if athletes are serious and good, then they are cultivated at a young age by the pro clubs using private money, and don't attend school anymore. You can be a big time jock or a serious student, but not both. The highest paid people in US academics now are not Nobel winners or historical figures, but football coaches. The coaches at Cal and UCLA make over $2M a year (the highest paid public employees in CA) and have probably gotten raises while academic staff were furloughed/laid off and tuition has gone up 50% over the last few years. But football is part of the college "arms race". Schools want to look awesome in order to attract better employees and students. Everyone loves a winner. Some sports make a lot of money for powerful people. Sadly or not, it's more valuable for Cal to spend big $ to get 2 more wins per season, rather than continue to fund an ethnic studies program or expand a medical research lab. And who knows - those intellectual enterprises could be total wastes or money, or possibly lead to significant, lucrative discoveries for the school and humanity. But the +2 wins are definite financial, recruiting, and PR boons, so I guess it's easier and less risky to invest for that goal?

Living large at the Dept. of Interior

So you have federal employees tasked with collecting royalties from oil companies actually partying, accepting gifts, fornicating with, and doing drugs provided by those companies' representatives. And coincidentally or not, many feel that the government is getting shortchanged on resource royalties. Heh, who needs lobbyists when you can just bribe and dope up the tax collectors instead? This exact scandal happened not long ago (1990) at the same department, so obviously they haven't learned their lesson. Yet another consequence of toothless regulation and laissez-faire government.

http://www.presstelegram.com/ci_10437371?source=rss
Oil brokers sex scandal may affect drilling debate
By H. Joseph Herbert The Associated Press
Article Launched: 09/11/2008 10:05:03 AM PDT

WASHINGTON - A scandal involving sex, drugs and - uh, offshore oil drilling.

It's a strange mix, and it couldn't have come at a worse time for those in Congress pressing to expand oil and gas development off America's beaches while trying to stave off an election-year rush by Democrats to impose new taxes and royalties on the oil industry.

An Interior Department investigation describing a "culture of substance abuse and promiscuity" by workers at the agency that issues offshore drilling leases and collects royalties hit lawmakers Wednesday just as they prepared for votes next week on expanding offshore drilling.

"On the eve of Congress starting this big debate you've got a horror story of mismanagement and misconduct in programs that are going to be a key part of the discussion," Sen. Ron Wyden, D-Ore., said in an interview, adding that it can't help but influence the debate.

The two-year, $5.3 million investigation by Interior's inspector general found workers at the Minerals Management Service's royalty collection office in Denver partying, having sex, using drugs and accepting gifts and ski trips and golf outings from energy company representatives with whom they did government business. The investigations exposed "a culture of ethical failure" and an agency rife with conflicts of interest, Inspector General Earl E. Devaney said.

Between 2002 and 2006, 19 oil marketers - nearly a third of the Denver office staff
- received gifts and gratuities from oil and gas companies, including Chevron Corp., Shell, Hess Corp. and Denver-based Gary-Williams Energy Corp., the investigators found.

"Employees frequently consumed alcohol at industry functions, had used cocaine and marijuana, and had sexual relationships with oil and natural gas company representatives" who referred to some of the government workers as the "MMS Chicks."

The director of the royalty program had a consulting job on the side for a company that paid him $30,000 for marketing its services to various oil and gas companies, the report said. MMS Director Randall Luthi said in an interview the agency was taking the report "extremely seriously" and would weigh taking appropriate action in coming months.

Interior Secretary Dirk Kempthorne in a statement released Thursday vowed to take swift action, saying that he was "outraged by the immoral behavior, illegal activities and appalling misconduct of several former and long-serving career employees."

"We must and we will eliminate any remaining negative elements in the Minerals Management Service," Kempthorne said.

"This IG report has it all - sex, drugs and the Bush administration officials once again in cahoots with Big Oil," said Sen. Charles Schumer, D-N.Y., whose Joint Economic Committee released a report last year claiming the Minerals Management Service has failed to collect millions of dollars in oil royalties.

Republicans and Democrats promised further scrutiny of the Interior Department agency which last year handled $4.3 billion in royalty-in-kind payments from energy companies drilling on federal lands. Under the program oil companies give the government oil in lieu of cash and the MMS office in turn sells the oil on the open market. Sen. Jeff Bingaman, D-N.M., chairman of the Senate Energy and Natural Resources Committee, said the IG report "raises very serious questions" about the royalty collection process, something especially troublesome "given the potential for expanded domestic drilling." He said some basic reforms in the royalty-in-kind program should be included in drilling legislation.

Wyden said the program should be suspended to "clean house" at the federal agency and "bring back the process of rigorous audits and accountability."

House Democrats on Wednesday offered a broader drilling proposal than they had floated previously. It would lift all moratoria on drilling 100 miles from shore and allow energy development beyond 50 miles from the coast if a state agrees. Waters closer than 50 miles would continue to be protected.

The drilling measure is part of a broader energy package that also would roll back tax breaks for the largest oil companies and require them to pay additional royalties, with the money to be used to spur renewable energy programs and conservation.

House Majority Leader Steny Hoyer, D-Md., called it "a strong bill that will increase responsible drilling and invest in renewable energy" and said those criticizing it would "rather have a political issue."

But House Republican leader John Boehner, R-Ohio, accused the Democrats of "trying to pull a hoax on the American people." He said the plan would result "in little or no new American energy production" because states would share no royalties and have little financial incentives to allow drilling.

The Senate, meanwhile, is expected next week to take up several drilling proposals, including one that would open waters off the Atlantic from Virginia to Georgia and the eastern Gulf off Florida to drilling but keep the bans in place elsewhere. That plan also would allow for a 50-mile coastal buffer.

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Associated Press writer Dina Cappiello contributed to this report.

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On the Net:

Office of the Inspector General: www.doioig.gov