Issues Economy
 

I believe that American's are fundamentally a hard working, good and honest people.

It troubles me that the media so seldom reports on the thousand's of private companies who produce great products, serve their customers with integrity and pay their employees generously. Sadly though, a fact which can not be blamed on any censorious media, we are experiencing a systemic increase in corporate greed, and one has to ask why?

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Money money money !

I remember debating the topic, "power corrupts, and absolute power corrupts absolutely", in a school debate one Sunday eveing in the late 1970's. But I think the argument might be better stated today as, "money corrupts, and infinite money corrupts infinitely". Dollars are the currency of power. The more the dollars, the more the power that can be bought.

Luke 16 13: No servant can serve two masters, for either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve God and money. This is the truth. As it was given to us by our creator God. To protect us.

I recently posited to a friend that our issue lay in a failure to pursue holiness. He corrected me by saying, "I do not agree. There are many who seek after righteousness.

 

Our problem is that we do not fear God. Proverbs 9:10 states, fear of God is the beginning of wisdom". He was right and I asked him if I could include this in our article? I know that we are not who we think we are. We are what we actually do.

The issue gets more complicated as one digs more deeply into it. Who is corporate? Are there other factors besides human greed? The boards of public corporations are there to serve their shareholders. Private companies have fewer regulations. I think we need to be careful about what we conclude from the conduct of a few? Always remembering that capitalism is only a system. While greed can be a subjective opinion based on expectations and how people  behave.

We have selected three case studies. Each highlighting a common business practice used to optimize profits. These are; Health care: the use of regulatory approval to increase prices; Manufacture: the use of frivolous litigation to stifle competition; Open Source: taking the public works of a community for corporate gain. Our approach remains to report objectively and accurately on the facts. This way we can equip our readers to develop their own informed opinions.

Study 1: Mylan Corp. takes advantage of heath care monopoly to hike prices of EpiPens by over 500% between 2007 and 2016. CEO Heather Bresch says, "I am running a business". According to SEC. filings, (Washington Post: August 24 2016) Bresch's total compensation went from $2,453,456 to $18,931,068 from 2007 to 2015. A 671% increase.

In 2007, the Pittsburgh Post-Gazette reported that Bresch had claimed to have an MBA degree from West Virginia University, but the university disputed that. The university subsequently awarded her an EMBA despite her having completed only 26 of the required 48 credits. In the ensuing controversy, the university announced in April 2008 that it would rescind Bresch's degree. Michael Garrison, WVU President at the time, was reported to be "a family friend and former business associate of Bresch" and a former consultant and lobbyist for Mylan.

"I am aware of the questions my colleagues and many parents are asking, and frankly, I share their concerns about the skyrocketing prices of prescription drugs,” Sen. Joe Manchin, D-W.V., said Thursday in a statement."

Senator Amy Klobuchar, Democrat of Minnesota, called earlier for a Judiciary Committee inquiry into the pricing and an investigation by the Federal Trade Commission. (New York Times: August 23 2006)

Study 2: Dentsply litigates against start up Bio-Pure Products, Inc. alleging false and misleading advertising. eMails provided during discovery show that the litigation was intended to protect market share of Purevac in USA (a chemical evacuation system cleaner from subsidiary Sultan Healtcare) after Bio-Pure's organic microbial cleaner won 20% of the Canada dental market in its first year.  Canada has strict requirements for amalgam (mercury) containment by dentists, where chemical cleaners can lead to mercury captured in a amalgam separator to solubilize and go down the drain.

Dentsply has a long history of using its financial muscle and legal department for competitive advantage. Dentsply know that the costs of litigation are beyond the financial capabilities of most small companies. And few contingency lawyers are prepared to challenge Dentsply's legal resources. A federal jury did award an Albuquerque dentist $44 million after he claimed a rival dental equipment supplier tried to run his startup company out of business.

Bio-Pure Products, Inc. is a privately held Nevada S Corp, that provides limited public information on its business operations. I was hired to write a series of articles for Dental Product Report in 2014, exploring dental office hygiene and the potential of organic science. My first article titled; are you using too many chemicals in the  dental industry; was published in February 2014. The series was terminated by DPR in May 2014. The litigation revealed that executives from Sultan Healthcare, Kerr and OSAP called DPR's editorial team and advertising representative into a meeting, Chicago dental convention, and made it clear that DPR should not publish any further articles by myself.

I understand the difficult position Stan Goff and Kevin Henry, senior editor, editor, at DPR were placed in. There is always tension between what advertisers want and what editors think is true. The real losers were the junior staff in the dental offices who lost their monthly platform to discuss "human friendly" new science cleaning products. Bio-Pure Products and Sable Industries were left stranded as collateral damage. Open4BioClean lost a media partner who cared about amalgam mercury separation, and the new regulations being made effective by the EPA in December 2016.

Study 3: Commerce Guys, developers of Drupal Commerce eCommerce platform close Series B funding for $7.3 million. One of a # of investments. In January 2016, after inadequate returns and conflict with the development community, the VC's cut their losses leaving 38,000 eCommerce web sites with a materially changed platform.

This is the third of Venture Capital entrant into the Open Source community. Each geared to capitalize on the development work and market created by an open source community. Each eliminating an important technology platform used by small companies to innovate, initially created by the free community efforts of talented developers.

One might say buyer beware and what can you expect from a free open source project. The answer; no Google; no Firefox; no Android; no Java; no Drupal; no PHP; no Apache; to name but a few of the technologies that have driven innovation, and forced stagnating software monopolies like Microsoft and Oracle to innovate again.

OpenX: adServing platform announced $20 million in additional venture capital in June 2011. Since its founding in 2007, OpenX has raised $50 million over four investment rounds. But no one speaks of the lost development team; replaced by a free community hosted service; and then discontinued. We are deeply grateful to Andrew Hill, who refused to see the community project serving small publishers like ourselves die. The new project called Revive AdServer was announced in September 2013. This article would not exist without the platforms of Drupal and Revive.

Magento: eCommerce platform announced it is being acquired by eBay for $180 million. But no one speaks of osCommerce, the original open source shopping cart. It has had its community splits. Including the formation of Zen Cart and Magento. In all cases, the innovation by talented engineers who believed that there were better and more cost effective ways to offer eCommerce software to small companies have been consumed by the need for profits and lost.

Drupal Commerce: The path taken by this visionary eCommerce platform, built to extend Drupal, and its relationship with European VC's is more convoluted than this short introduction can accommodate. 38,000 companies who adopted the platform; from small to large; wait in anxious hope that the project author, Ryan Szrama, will be able to gather the community support to build the next generation platform and provide the customer base with a viable way forwards.

Avalara AvaTax: In 2010 Avalara, Inc. actively engaged the Open Source community to secure partners and developers to support their tax platform. But after raising $50 million for growth, and $46 million to buy out early investors, Geekwire reports that their culture has taken a serious dive. One might speculate what has caused this. And what other gremlins lie in waiting for the poor customers who "paid" for the early investors to get rich? I would bet money that Warburg Pincus, Sageview Capital and Technology Crossover Ventures will have something to say very soon?

Editorial

Imagine if we stop small business innovation in America? Because there is more profit to be made in monopolies and price fixing. Because entrenched corporations can use their power to protect their stagnating products. Because innovators get tired of seeing their efforts taken over by powerful financial interests.

The specifics of each case study we have covered are obviously problems that needs to be resolved in their respective markets. But there is a far bigger issue. Corporate greed is killing the very goose that lays the golden egg of America.

I believe that New Media, the Internet, social media, and twitter have come just in time. The minimal costs of making the facts available (like this article) and breaking the financial hold corporation have on small businesses and innovation are available. They will only succeed if we the public turn to finding the facts, and to putting them to use.

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