Ain't No Science Like Old Science

What has become a recurring theme, or warning, in these endeavors: it is foolish to view the future as pure extension of the past. This is particularly true of anything science or engineering related. As I have described more than once (and referenced the writings of those more famous than I), we humans are on the ever flattening asymptote of knowledge of the real world. We already know, pretty much, exactly how the (macro) world works. We even know, pretty much, how the molecular (atomic) world works. We may have some things to learn about the cosmologic and sub-atomic worlds, but I'm not sure even there that anything we do learn will be economically significant. The upshot of that: there are fewer and fewer groundbreaking discoveries to be discovered. In other words: those quants/micros out there thinking they can extend their financial models based on the last X years in Y industry are morons. It ain't 1850 with a vast land of resources and new science to be uncovered.

There is no Mr. Fusion sitting the back of a DeLorean in our collective future.

One the sectors of the economy I find fascinating, which perplexes me still since I abhored biology in high school and never took such a class in college, is biopharma (or, whatever they call it these days). There are two aspects of the sector which have emerged in the last few years. One is the exploitation of the orphan drug act, where companies spend money to garner approval for drugs which may, or may not, make much difference to patients with "rare" diseases (the legal definition makes rare not so rare; that's part of the problem) at exorbitant prices. The HepC arena is gaga over the issue as we speak. And, how much of that accounting number assigned to a drug's existence was actually spent in the lab? Hmmm?

The other, more pernicious perhaps, is the active destruction of what R&D is left in companies as motivation for M&A. Derek Lowe (who merely has some of his blogging copied) has a piece on SA today, bemoaning recent events. One of the excuses given, no cite off the top of my head on offer, for the rush to China for manufacturing is that the USofA no longer has the feeder companies necessary to support large scale assembly/manufacturing, and China does. Of course, which is the chicken and which the egg? Here in South Butt Plug CT, the small metal working companies died out when the large companies to which they had been selling decamped for The Red States and The Red Country. It wasn't the other way around.

Turning all American corporations into financial firms will, sooner or later (and, be prepared for sooner) fail. Financial services is merely a matter of moving moolah from one pocket to another, or robbing Peter to pay Paul. It is non-productive. All value derives from some underlying activity. All finance profit derives from skimming off some part of that activity's value. We saw with the Great Recession that moving massive amounts of capital to housing failed because the underlying "asset" produces no saleable product, so the vig had to be paid out of the real earnings of mortgage holders. Since said earnings have been, at best, stagnant for at least a couple of decades, the whole edifice had to fall. The banksters got to keep most of what they'd taken, of course. The large builders made out like bandits, since they got the moolah up front. Once sold, the house and mortgage were somebody else's problem.

For the STEM folks? Well, some say we should be making more of them in school. But, why would a kid sign up for the brain warping hell of electrical engineering, in the face of such jobs being shipped to India (or some such)? The alternative, of course, is to do Business Administration and learn how to design the next liar loan!! Not so much strain on the brain cells, and lots more moolah for the effort. Kids may be high on dope all day, but that doesn't mean they have lost all touch with reality. They, by and large, aren't dumb enough to take out loans (which all but the top .001% of students have to) to learn an occupation which will never employ them. And, we know what happens when a country generates more STEM graduates than it has jobs for: Eastern Europe is the center of cyber crime for a reason.

Obambi said that all kids should learn to code? Yeah, right. Just what we need; a bunch of kids dreaming of grabbing the brass ring (look it up) of WhatsApp (they'll end up finding their wage driven down by IIT kids in Mumbai). Could that be worse than dreaming up liar loans? Or will we just build a domestic cyber mafia? Stay tuned.