In defense of Martin Shkreli
I’m not a fan of Martin Shkreli, the CEO whose company bought an obscure drug and raised its price from $13.50 to $750 per tablet. But I’m pretty annoyed by all these people hating on him. Folks are calling him a douchebag; a sociopath. And that is totally missing the point.
Shkreli’s role as CEO was to look for creative ways to raise capital and make a profit. That’s what financiers do, be they hedge fund managers, CEOs, or your entrepreneurial neighbors. It’s a game where the playing field is a spreadsheet: formulas determine what assets are undervalued, and the maximum price the market will bear. Managing the numbers to maximize profits is not always the only possible play in the game of business, but it’s a critical part, and good luck finding any informed person who believes that businesses can exist without strategic attention to profits.
When we turn a circumstance like this into a judgment about one individual’s character and choices, it may seem as though we are punishing him. But we are actually doing him, and others like him, a great service, and making it easier for other Shkrelis to proliferate and flourish.
Why? Because when we focus on shaming one individual, we are letting the real villain off the hook.
The real villain is the set of rules that govern enterprise, rules that make such galling transgressions not only defensible, but laudable, and most of the time completely invisible outside the company or industry. Hating on Shkreli without considering the circumstances that would lead someone to make such a move is like mocking soccer players who take dives to get free kicks, but letting that play stand in the rulebook.
The sin that turns everyone’s stomachs is not some evil that lurks in the hearts of a few people. It lies in the system of rules and incentives that govern the business playing field in this country, rules that we have allowed to become shockingly imbalanced against the public good in favor of personal profits of a vanishingly small number of Americans. If the play is legal and it helps win games, it doesn’t matter whether it’s morally questionable: people are going to keep doing it.
Even though Shkreli has since been shamed into submission, will his story deter others? Hardly. The game is all about probability: managing small risks in pursuit of big profits. The possibility of public shame is part of the risk. Once you weigh the odds of getting hammered in the media, it often makes sense to do the deed and then take precautions to reduce the likelihood that the story will ever come out. The lesson Shkreli and others likely learned from this is merely not to brag to a business reporter about one’s profit-maximizing acumen.
If you are incensed about Shkreli, don’t settle for reprisals against one man. The real answer lies in maintaining a healthy system of checks and balances between government and business. Raise your voice and change the rules.
