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Responsibility Clawbacks (McKinsey and Purdue Pharma)

In recent weeks consulting firm McKinsey has been back in the news because of the advice it gave its client Purdue Pharma, makers of OxyContin. The advice blatantly looks like increasing drug sales at the expense of patient health and a worsening opioid epidemic. As a result, McKinsey has been fined $573 million.

But even if the Purdue Pharma-related fine is extreme, the example is just one example of McKinsey’s many bad client outcomes. A short list of other bad outcomes or questionable clients include:

  • Advising badly-run government coronavirus responses.
  • Advising financial firms to increase their debt load in the lead up to the 2008 financial crisis.
  • Advising Enron in the lead-up to its financial scandal.
  • Advising Riker’s Island jail on ways to improve safety with the outcome a more dangerous situation.
  • Advising authoritarian governments including Saudi Arabia, Russia, and China.

Continue reading “Responsibility Clawbacks (McKinsey and Purdue Pharma)”

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Inevitable Surveillance?

What is the purpose of surveilling a domestic population? Is it inevitable?

Surveillance and spying are a little different but the benefits of each have long been understood. The purposes of spying are to know when an enemy is going to attack, their capabilities, the potential to attack them first, or what one might gain in making an attack, state to state or tribe to tribe. Learn plans, intentionally mislead, survive.

Domestic surveillance is different or at least thought of as being different. For some types of domestic surveillance the purpose seems to be that the population harbors enemies (overlapping with spying above), whether this means enemies of the state itself or those harmful to the rest of the population.

A version of that is that if there are people who have “wrong thinking,” then their “wrong thinking” can infect their neighbors, and eventually lead to violence or chaos. Continue reading “Inevitable Surveillance?”

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Changes in Value (Part 2)

While I discussed silver, tulips, and drugs in Changes in Value Part I, here I look at education, art, spices, chicken feet, and conformity. What systems influence the value of things? Why does value change?

At the end I provide suggestions to assess your own situations.

Education

I’ve been critical of higher education on this blog before, but for other reasons. When it comes to the the price of a college degree — and here I’m mostly talking of the price of American college tuition — we’ve seen a doubling in price, adjusting for inflation, over the last 30 years. A number of factors combine to drive up the price.

Continue reading “Changes in Value (Part 2)”

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Changes in Value (Part 1)

When something changes in financial value quickly, unintended consequences abound. When this change happens at scale, affecting many people, the consequences are even more extreme. These changes impact supply and demand and social change around the world.

Let’s look at some examples of value change causing havoc. This week I’m intentionally (well, almost entirely) not writing about the topic you can’t escape.
Continue reading “Changes in Value (Part 1)”

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Destructive Collection (How We Destroy Things)

Some destruction is accidental. Some is intentional. Destruction works in different ways. And for different reasons.

These are types of destruction I’ve cataloged. I arranged this list according to what each type of destruction means, methods to achieve, first-order effects, second-order effects, and examples.

(Reminder: first-order effects are the direct, commonly noticeable changes. Second-order effects are the effects of the effects and often not obvious.)

Note that there is a lot of overlap between categories. I didn’t attempt a mutually exclusive, collectively exhaustive list. That just felt unrepresentative of the messiness of life. 

This is a destructive collection that I hope will change the way you think. Continue reading “Destructive Collection (How We Destroy Things)”

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Food Follows Function (Why we eat what we eat)

I’ve kept these early posts focused on issues that many people can relate to, rather than going into systems theory, complexity, chaos and more. Second-order effects touch the common things we consume, not just the esoteric. 

Second-order effects are everywhere — even in the choice of what we eat. But who chooses the choices? Some varieties of crops cannot easily be shipped far or produced for large markets. Other varieties are at risk of shocks and therefore put their focused producers and consumers at risk. 

Continue reading “Food Follows Function (Why we eat what we eat)”

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Substitutions – The Temperance Movement and Ether

Unintended consequences come about when a change, believed to improve the current situation, actually makes the situation worse. That these changes are often well-meaning only adds to the irony of second-order effects. One source of new problems is the substitutions made when replacing the status quo.

As I’ve started to research famous second-order effects, several of the famous historical claims (like the one that follows) seem to be “just so” stories. The claims are too simplistic. There is just one change and just one result. While these stories make for a memorable explanation, without more detail, we just miseducate ourselves on second-order effects. Continue reading “Substitutions – The Temperance Movement and Ether”

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Smoking Bans. Smoking’s Back.

What were unintended consequences of smoking bans and how can we use second-order thinking to decrease health effects of smoking tobacco?

Back in 2003 when the smoking laws changed in New York City, increasing the cigarette tax and eliminating indoor smoking sections in restaurants and bars, I noticed some other interesting effects. (Note: I am not a smoker.)

The first change was related to the increased local price of a pack of cigarettes, which went up to around $7 at the time (now $10.50 and above). The new $7 price was double the earlier local price. It was a big jump and immediately noticeable. An increased cigarette price had already been connected to fewer cigarettes being smoked. Continue reading “Smoking Bans. Smoking’s Back.”