Devin Singh

Social theorist / religion scholar / critical visionary

“Markets aren’t that rational”: The real wisdom of Martin Shkreli

Ex-hedge funder turned pharma CEO Martin Shkreli made headlines last month when his fledgling company, Turing Pharmaceuticals, purchased the rights to AIDS drug Daraprim and hiked its price over 5000%. Shkreli defended his move among outcries of price gouging and exploitation, concerns that even garnered a tweet from Hillary Clinton. He’s even recently been outed on Tinder when one of his matches conducted an impromptu interview with him about his thoughts on the evils of capitalism. Attempting to manage public opinion, Shkreli stated publicly that Turing would lower the drug price. Weeks later, such promises appear unfulfilled.

A heated exchange between CNBC’s Brian Sullivan and Shkreli gives us insights into Turing’s approach. It also reveals a basic truth about markets that Shkreli lets slip, almost as an aside. Watch the exchange here:

 

Sullivan begins by asking whether Shkreli is a “free markets gentleman,” to which Shkreli chuckles in response, “Sure, whatever that means.”  We sense that Sullivan's broad and vague category here is going to lead to some equally vague claim to universal truth, and Shkreli is understandably uncomfortable. Sullivan goes on to inquire about the dynamics of drug pricing and what the market "said" was the "right" price. Shkreli retorts, while Sullivan talks over him, “markets aren’t that rational.”

Shkreli unintentionally reveals a true statement about the constructed nature of markets. By this I mean that humans make markets (in conjunction with other forces like money and states, of course). Markets don’t pop up in nature like cloud formations or function according to a stable, linear logic.

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This simplistic belief is revealed in the silliness of Sullivan’s question to Shkreli about pricing the drug. The assumption is that if a previous owner of the drug priced it at around $13.50, this reveals some inherent law of markets that this is the “true” or “real” cost of the drug.

The implication is that a simple formula of supply and demand, and calculation of production costs, should yield a fixed truth. Shkreli, as a “free markets gentleman,” should apparently abide by this truth. That Shkreli didn’t and that he scoffs at the idea reveals his insights into the operation of markets, operations that “aren’t that rational.”

In reality, pricing is influenced by a variety of factors called “real life” that economics tries to filter out. These issues include emotional attachment and desire, future hope and expectation, and simple opportunity. Prices are influenced by practical material factors like cost of production, to be sure. But, at the end of the day, prices are set by humans with a host of very real human needs, desires, and dreams.

The public outcry and demand for a price change of the drug shows that markets include a broad scope of human wishes and longings. Economics would have us believe these claims are somehow illegitimate: the sense of injustice and demand for a better price is seen as something external to the truth of markets.

Thus, exploring the so-called irrational exuberance in markets has been framed as making sense of the surprising (from economics’ perspective) persistence of humanity in markets. Such human forces or “animal spirits” appear to challenge the simplistic assumption of fixed rationality in markets.

At best, for economics, calls to reduce Turing's drug price need to be defended with “real” economic arguments about the “true” price of the drug. In reality, however, public demands and desires for a better price are central factors for making this exchange happen. Much economic blindness to these human factors leads to absurdities like thinking a “true” price of a commodity magically and spontaneously emerges in a market.

If Shkreli changes the price of the drug, this will show that markets are made by more than simple economic factors. Public opinion, i.e., the desires of the exchanging community, matters greatly in the economy. Calls for fair and compassionate pricing are perfectly legitimate considerations for determining price, and have as much place in market considerations as material factors like production costs.

Again, markets are created by humans for humans, with all the messiness and complexity that this entails. If Shkreli keeps the price the same, this will merely show that his will and desires trump and override the desires of the community, not that some inherent law or rationality of the market has won out. In other words, it won’t be some victory for “pure” economics.

Unbreakable Purpose

The film "Unbreakable," by M. Night Shyamalan, is about many things, but one theme has remained with me after watching it years ago in the theater when it first came out (2000). As much as it is a thriller about superpowers and crime fighting, it's primarily a tale about finding one's sense of identity, purpose, and calling. It's a film about the exhilaration and energy that can course through us when we discover our meaning and direction in life. It also gives us clues about how to reach this.

As Roger Ebert noted, "If this movie were about nothing else, it would be a full portrait of a man in crisis at work and at home." David Dunn (Bruce Willis) is leading a listless existence, clocking in and out of work, struggling in his passionless marriage to wife Audrey (Robin Wright), moving through life in grayscale, muted in emotion, stunted in purpose. Part of the lesson that the film offers, we learn, is that he needs to be awakened to his reason for being here, and called into action to activate the gifts that lay dormant within.

Elijah Price, aka Mr. Glass, (Samuel L. Jackson) asks Dunn at the end during the big reveal, "Do you know what the scariest thing is? To not know your place in this world. To not know why you're here." Granted, as the film's villain, this predicament is dramatized and played up for Price. For most of us who are still struggling to find our full sense of calling, purpose, and direction, we need not see it in such dire terms. It certainly can be scary. But it need not terrify or paralyze us. Rather, the film is quite hopeful about moving forward.

The most beautiful and memorable moments in the film for me are the series of scenes half way through where Dunn discovers his power and purpose. Things begin to fall into place. Energy surges through him and he experiences impact and effectiveness. His marriage is rekindled. The gray of life peels away to reveal the rich color beneath. He is inhabiting his full self and his relationship with the world begins to flourish. He's found his reason for being.

While I agree with Quentin Tarantino that "Unbreakable" is "one of the masterpieces of our time," I disagree that the film is another superman story. Rather, it's an everyman tale. I know I've had those moments where everything clicked and came together, where I felt I was doing what I was meant to be doing in that phase of life, where energizing meaning and purpose pulled me out of bed in the morning, where barriers of fear, uncertainty, or despondency melted away. The lesson for us all is to seek to actualize those periods more often and more regularly in our lives.

How do we do this? 

According to the film, we must observe, take stock, reflect, listen, act, explore, and grow. Dunn's character is advised to pay attention--to his inner voice, to the intuitive decisions he makes, to the places and people to which he feels drawn, to what feels energizing and fitting to his sense of being in the universe, to his inner compass for justice and desire to correct what is wrong in the world. Indeed, it is very much an intuitive and mindful process that Dunn follows, coupled with attentive mentoring and the space to practice and experiment.

The metaphor of "Unbreakable" that forever remains with me is the hope that we all have incredible direction to find, meaning to cultivate, gifts to actualize, wrongs to right, compassion to extend, purpose to achieve, and deep fulfillment to experience. May you find your authentic purpose and direction and so become unbreakable.

 

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Review of Thomas Piketty's Capital in the Twenty-First Century

Piketty’s achievement in his recent book, Capital in the Twenty-First Century is to demonstrate in the language of positivist empiricism—today’s most persuasive idiom—a longstanding truth. It is a reality that most societies have sensed and declared in a variety of ways. It is a dynamic that is seen as antithetical to the American dream and one that classical liberal and neoliberal economic theories have vigorously sought to suppress. While the truth risks being disregarded as cliché, what Piketty shows is that money is power and that, by extension, monetary economies are not inherently level playing fields. One of the ways this has been expressed over the ages is through money’s association with religious discourse and with the realm of the gods.

Read more at Cosmologics...

Empathy, Leadership, and Teaching

When speaking with SurePeople, a groundbreaking human capital analytics company specializing in emotional, relational, and team intelligence, we explored the topic of empathy. This is a broad topic with a variety of angles. Here I speak briefly about the link between empathy, leadership, and communication. For the message to be heard, the recipient is helped by sensing authentic concern and investment on your part. Empathy forges a part of the bond between speaker and listener that enables connection, understanding, and positive impact, whether in the boardroom, the classroom, or the family room.

Clear-eyed vision

In a recent feature article in ForbesLIfe, Italian businessman, fashionista, and playboy Lapo Elkann explained why he chose stylish eyewear as an industry sector for his breakaway success, the company Italia Independent: "Glasses are a way to protect your soul from others."

Elkann is drawing on ancient wisdom here. In the Christian scriptures, Jesus is depicted as uttering this curious phrase: "The eye is the lamp of the body. If your eyes are healthy, your whole body will be full of light" (Matt 6:22). Furthermore, ancient scientific theories of vision believed that eyes projected rays from them to enable objects to be perceived. Eyes were seen to be openings of a certain kind, revealing things about the body--and perhaps soul-- of their bearer. Even modern science claims that certain personality traits and psychological dispositions are revealed by one's eyes.

So, perhaps, Elkann has good reason for wanting to protect these gateways.

Yet, this is also why I find it troubling to talk to someone who is wearing sunglasses, whose eyes I cannot see. I feel disconnected from them, unable to bond. I almost never wear sunglasses in part for this reason. So, while I understand Elkann's reasoning and do believe it is grounded in something very real, it's not the direction I would take.

If indeed the eyes are the window to the soul, and a source of real engagement and connection with the world, why hide them? Why shield oneself off fearfully or suspiciously from others? Why not instead seek boldly and meaningfully to connect with people and the world?

What this means to me is to endeavor to live in a way that makes clear-eyed engagement with the world and with people a joyful prospect. This means having a purposeful vision and a fearless, risk-taking attitude of relational connection. It means being open to love, and to the wounds that love might bring. It means not being afraid to be real, vulnerable, and present.

Sure, wearing sunglasses or not might be secondary to the metaphor they invoke, one of a closed posture vs. trusting openness. But they still send a signal. I won't challenge your sense of style; but, in the least, if you happen to stop to talk with me on the street someday, I would so appreciate it if you removed your sunglasses and thus expressed openness to a meaningful encounter and exchange.
 

On Work-Life Balance

I've had the pleasure of working with SurePeople, a human capital analytics company specializing in emotional, relational, and team intelligence. I spoke with them about a variety of matters related to human flourishing in the workplace, including this snippet on work-life balance:

Balancing work and everyday life can be a challenge. https://www.surepeople.com/ Dartmouth College Assistant Professor Devin Singh shares insights on why you need a work-life balance in order to deepen your sense of significance. To find out more about SurePeople's data-driven learning and development platform for businesses, visit https://www.surepeople.com/ or call 1-855-755-SURE (7873).