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I have just completed a paper that represents “first thoughts” arising from a project on medical innovations that I am doing with Katherine Stebbins McCaffrey and Srikant Datar. This paper draws on a case history of HIV/AIDS that Katherine has been working on, my reading of medical history and my prior work on “multi-player” innovation.

Although it is not a “policy” paper it concludes thus:

In medicine too, we should expect that an FDA that made safety its primary focus would reduce the incidence of dangerous drugs or devices brought to market. Meanwhile, scaling back the regulation of efficacy promises two important benefits. Sharply reducing the costs of regulatory compliance should foster some of the hectic, frugal innovation that we find in so many other fields. And, replacing centrally supervised randomized trials with more pluralistic evaluations (by medical associations, insurers and other third-party payers, and on-line communities of consumers) should improve the matching of treatments and patients. True, useless treatments might increase with more innovations coming to market. But, as is the case outside medicine, widespread sharing of diverse experiences of actual use, might also yield more knowledge of what works best and under what circumstances. We could sip a little more of the holy grail of personalized medicine on the cheap, simply by allowing more ad-hoc user experimentation.

We certainly should not suppress science, disdain bio-tech and Big Pharma, or replace trained physicians with Maoist barefoot doctors, but we could be less credulous about imminent research breakthroughs and offer more scope for nurse practitioners and even completely un-credentialed outsiders to innovate. Placing ever-larger bets on exclusive innovation is a poor remedy for its debilities. Harnessing the enterprise and ingenuity of the many and for the many should be the way ahead.

Download the paper here

Widespread private and public cheating in Greece is old hat. Michael Lewis documented it splendidly in Vanity Fair in 2010.

What’s “novel” in this just published piece (tho Ive made it a few times before) is that the Euro doesn’t need or can’t have “convergence” of standards of living or in the quality of governance.  Rather the common currency needs rules and structures that *minimize* the supporting standardization and regimentation.

 “Standardize and centralize only when necessary” is a staple of modern management.  And figuring out what and how to centralize (establishing “loose tight controls as Peters and Waterman put it) are an important part of a CEOs job. (more…)

A civil libertarian and free-speech absolutist’s concern about the Charlie Hedbo demonstrations

By Amar Bhidé

http://www.washingtonmonthly.com/ten-miles-square/2015/01/restraint_is_called_for053846.php

Mass demonstrations of solidarity in favor of free speech and against the Charlie Hebdo killings are understandable, but they could inadvertently give cover to actions that subvert the very liberties the protesters cherish. Legitimate public outrage should not be channeled into declaring or escalating wars on Islamic (or any other kind of) terror. Democracies should coolly rely on existing tools and procedures against criminal conspiracies.

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Talk at Cato conference on the future of US growth

Excerpts from my Editorial Commentary in Barron’s November 22, 2014

“In Capital in the Twenty-First Century, Thomas Piketty announced an audacious thesis that sets his opus apart … Capitalism inevitably increases inequality, Piketty claims, because the return on capital grows faster than the economy.

…..

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Amar Bhidé and Pankaj Ghemawat

Quartz  October 9, 2014

Clay Christensen’s theories are great for entrepreneurs, but not executives

http://blogs.law.harvard.edu/corpgov/2014/08/26/the-hidden-costs-and-underpinnings-of-debt-market-liquidity/#more-65323

Market Liquidity

Posted by June Rhee, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Tuesday August 26, 2014 at 9:08 am

Editor’s Note: The following post comes to us from Amar Bhidé, Thomas Schmidheiny Professor at The Fletcher School.

Even as rabble rousers rail against financiers, the powers that be prize the breadth and liquidity of financial markets. Flash traders are investigated for unsettling stock markets and violators of securities laws receive jail sentences on par with violent criminals. The Federal Reserve has spent trillions with the avowed aim of pumping up the prices of traded securities, while expressing little more than the pious hope that this largesse might spill over into old-fashioned, illiquid loans.

In my article, The Hidden Costs and Underpinnings of Debt Market Liquidity, I offer a skeptical view of pro-liquidity policies. A good financial system may be vital for a thriving economy, but what warrants favoring liquid over illiquid claims? Yes, the United States—the world’s leading economic power since 1914—has exceptionally broad and liquid financial markets. But, “industry led and finance followed.” The transformation of the US from agrarian society to industrial powerhouse occurred before the smoothly functioning stock and bond markets became indispensable stars of American capitalism. The NYSE even shut down for nearly six months in 1914 without paralyzing the economy. Britain, the birthplace of the Industrial Revolution, actually lost its economic leadership, even as financial markets flourished in the City of London. Meanwhile, in spite of defeats in two World Wars, Germany’s economy and industry surpassed Britain’s, powered by businesses with illiquid stocks and banks making illiquid loans.

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For geeks (and bitcoin fans):

I got a referee report on my liquidity paper earlier this week that said (among other nasty things)

“The definition of liquidity is so vague as to be completely useless. In a related vein, the paper seems to use tradability and liquidity as synonyms which is either a grave mistake or an expositional shortcoming.”

My definition was

“I define a financial claim to be liquid if: 1) there are no legal or practical restrictions on who the claim can be sold to, on when (during normal trading periods) sales can be made, or on the amounts that can be sold (partial sales allowed); and 2) during normal trading times and conditions, market makers quote firm bid and asked prices that are not contingent on any further investigation of the claims or of the identity of the seller or buyer of the claim.”

This was slightly sloppy. I should have said “I define the market for a financial claim” etc.

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Finally good to go on medical innovation project today! 

Welcome Katherine and Julie who start their “orientation” at HBS this morning (not that Julie needs any orientation to HBS). 

It took 15 months of noodling, talking, lobbying (with all kinds of people) and a *really* generous friend who was willing to take a chance on a one page proposal. But if we are lucky and it doesn’t sputter out, this should keep us occupied for the next eight years…

“certified organic by COCF”, country of origin China (whose residents smuggle in baby-formula milk powder when they return from abroad)

And Ive been eating pounds and pounds of this stuff (what’s COCF anyhow?)

 

http://www.nuts.com/snacks/pumpkinseeds/organic.html