Blog

There’s a neat cover article on BusinessWeek this week about how GDP methodology misses the impact of R&D and other knowledge-based expenditures. The writers contend that outdated methods of measuring the economy have made government stats pretty useless. More to the point, they argue that factoring in this “dark matter” will alter our view on the trade deficit.

While showing that the economy is stronger than the accepted stats show, the missing info also explains why the recent recession was worse than it appeared:

Factoring in the knowledge economy also helps us understand why the recession of 2001 seemed worse than the official statistics showed — and why the recovery was so slow. According to the published numbers, the six-month recession of 2001 was so mild the business sector actually grew at a modest 0.4% pace that year. By 2003, however, more than 3 million private sector jobs had disappeared.

One reason for this disconnect is simple: Corporations hacked back their budgets for R&D, advertising, training, and so forth. Yes, that canceled out a ton of high-paying jobs, but had no direct effect on GDP. Remember that R&D and other intangible business investments are not currently counted as national output. Therefore, when a company laid off an engineer doing long-term product development but kept selling the same number of its old products, GDP stayed the same. Productivity even went up, because fewer workers were producing the same amount of output. And if that laid-off engineer went to work, say, building houses? National output might even have risen.

I have no training as an economist (if you’re looking for that stuff, go to Jane Galt and Dismally, and follow some their blogroll links), so I can’t make any substantial assessment about the thesis. As a layman, it seems to hold up with some of my observations about the business world. I mean, the shift of expenditures from capital projects to R&D mirrors some of what my day job is about.

I work on a magazine about outsourcing in the pharma/biopharma industry. The “lesson” of the industry (and of industry in general) is, “If you don’t do it well, don’t do it in-house.” There’s a lot of business-speak about “core/critical competencies,” “skill sets,” etc., but the key is the use of outsourcing/contract service providers to handle tasks that a company is either unable or unwilling to do on its own.

Often, this can boil down to a company’s decision to avoid a massive capital expenditure on a drug facility. While the finished in-house facility may be able to produce Drug X at a lower unit cost than a contract manufacturer could, the resulting tie-up of capital has to be factored into the equation. Also, the flexibility of working with a contractor can trump the fixed costs of running that in-house facility when there’s not enough demand for Drug X.

This isn’t to say that big companies (in my industry) are all abandoning their in-house manufacturing processes. In the last few weeks, Amgen’s made a bunch of announcements about plowing billions into its own facilities. But they’re also pretty darn confident in their sales projections for their products.

But a lot of pharma outsourcing is conducted by smaller companies that know they can’t invest in manufacturing. They have to develop intellectual property, and I’m not sure how that gets evaluated, especially if they don’t have a product on the market yet.

Anyway, just like with that post about News Corp.’s wireless strategy, I find this stuff fascinating. If you do, then read the article.

And if you wanna take up any points with the author, go to his blog entry about it.

In my ongoing mission to find a good gin, I’ve had some ups and downs.

Up? Why, Tanqueray No. 10, which was the first premium brand of gin I tried out. It taught me that there is a difference betwen the cheap(ish) stuff and the higher price stuff.

Down? Well, maybe I got a bad bottle, but Hendricks was a massive disappointment. It taught me that, even though you have a high price (around $27 for a 750 ml bottle), you might taste like crap.

So I had no great expectations when I tried the humorously named Wet by Beefeater this week (note: “this week” does not necessarily mean that I go through a bottle of this stuff every week). I bought it on a whim, while Amy was picking up some Rieslings at the Wine Library.

It was a mid-price point brand ($18 for 750ml), and had classier packaging than the regular brand. And that was enough to sway me. I’m easy.

So how does it stack up? It’s awfully darn good in my standard gin & tonic combo. It has a really interesting “high note” that I couldn’t place. I checked out the label and realized that it’s infused with pear. Amy liked it in the martini I made for her, so we’re willing to Nick-and-Nora it up with a gin called Wet by Beefeater for a while.

If you come by for the Superbowl next week, I promise to make one of my un-American drinks for you. It’ll go well with Amy’s Frito-pie.

Ass-bleaching. Enjoy, unless you object to graphic content (no pix, just text), in which case you shouldn’t follow that link.

I attended the Graduate Institute at St. John’s College in Annapolis, MD from 1993-1995. At the end of that period, I was awarded a Master of Arts, Liberal Arts degree (we nicknamed it the evil Spanish woman degree, or M.A.L.A.).

During four different job interviews (between 1995 and 1997), the person on the other side of the desk would look at my résumé, get a furrowed brow, and ask, “Why did you get a liberal arts graduate degree?”

There were a couple of responses to this, none of them particularly useful (nor indeed adequate). The best I could come up with was, “It taught me how to learn.”

I used that phrase when I had to give a speech at my undergrad alma mater, Hampshire College, in 2002. I don’t think the kids got what I was saying, but I tried.

This morning, I was reading an interview in The Comics Journal with Eddie Campbell, one of our age’s finest cartoonists (excerpts here). His 4-page Little Italy comic strip (collected in Three Piece Suit) is my all-time favorite. Here’s a snippet from the interview:

I think on the education front, the world focuses too much on the idea of education as a means to a job. Imagine learning all the great wisdom of the world so that you can get a job. What an absurdity. We should be learning all the great wisdom of the world in order to become wise.

All of which is to say, nothing at St. John’s explicitly prepared me to be the editor of a pharmaceutical contract services business-to-business magazine, but I wouldn’t trade those two years for anything (now, the four years at Hampshire, on the other hand. . .).

The Fairfax (VA) County police shot an unarmed optometrist to death because he was a bookie.

Okay, that’s a little misleading. Here’s a more refined version: Fairfax County police sent a SWAT team to serve a search warrant on an unarmed optometrist, for suspicion of gambling. As the team descended on the optometrist, one member’s handgun went off, killing the unarmed man.

The Agitator is all over this story, here and here

“When you draw the weapon, you always try to assess what the potential threat is going to be,” [Lt. Richard] Perez said. He said the officers in the tactical squad are “highly trained officers. Do unintentional shootings occur? Absolutely. We’re humans, and these kind of things do occur.”

Actually, they don’t occur when SWAT teams aren’t deployed for ‘routine’ warrants!

Read Charles Krauthammer’s column about his brother. It makes me wish I’d sat down and wrote about Chris Penn’s death a few days ago.

I thought about it, and brotherhood. I’m a much bigger fan of Michael Penn than I am of Sean Penn, even if Jeff Spicoli is one of the greatest film characters ever. I tried digging up an e-mail address for MP, out of some misguided notion that he’d appreciate reading condolences from an anonymous fan of his music, but that went nowhere.

And then comes Charles Krauthammer’s lovely and sad tribute to his brother Marcel.

My brother’s going to be standing at my side in a month and a half, ready to catch me if I faint during the wedding ceremony (I hope his back’s stronger than mine).