Ranbaxy Laboratories, Admiral Samuel Eliot Morison, And Reforming Nationalism
May 27, 2013, 03:07 AM
A+
|
a-
Print Friendly and PDF

Here's an editorial about the immense scandal involving Ranbaxy Laboratories, the Indian maker of many generic drugs, from Live Mint. This is an Indian business journal that I've quoted in the past about how the preliminary PISA tests in a few Indians states show that India has enormous work to do to improve its terrible schools.

Ranbaxy holds up an ugly mirror to corporate India 

The US Food and Drug Administration (FDA) has been kind to Ranbaxy, too kind. The $500 million fine that the company has to pay is actually fairly light sentence for what it has done to the generics business out of India. The rapidly growing industry is now under a cloud. The first consequences of Ranbaxy’s actions are already being felt with the FDA issuing an alert banning import of products made at another pharma exporter Wockhardt’s plant in Aurangabad. It could be just the first of many more strictures against India’s generics companies.

Ranbaxy’s is no ordinary misdemeanour. The US department of justice said the company had “pleaded guilty today to felony charges relating to the manufacture of certain adulterated drugs”. Felony is a serious criminal charge. 

By accepting to pay a criminal fine and forfeiture and agreeing to settle civil claims, Ranbaxy may have succeeded in effecting damage control. That does not, however, mitigate the seriousness of its actions. 
The implications of its guilt cast serious doubts not just over the conduct of generics exporters from India, but over the way business is conducted in this country. First up, it proves beyond doubt that there is no monitoring, by an independent agency, of business practices of wannabe Indian multinationals.
Expecting companies to voluntarily follow all the rules of the book is naiveté. 
... Our markets are riddled with companies in every industry segment flouting norms of ethical behaviour. Falsification of data submitted to regulators, is so common a practice that Ranbaxy must have wondered what the fuss was all about. And used to getting away with lax governance and ethics standards at home, no Indian company will automatically turn lily-white merely because it is selling in a developed market. 
The Ranbaxy affair also raises issues of executive conduct. ... 
Nor does current Japanese owner Daiichi Sankyo, come out clean in all this. For a $4.6 billion deal (to buy a controlling interest in Ranbaxy), the due diligence it did in 2008 appears to have been rather skimpy and inadequate. Or, did it simply choose to turn a blind eye to what by then was publicly known?  
But the bitter truth is that we have been too elastic in condoning corruption all around so that it has become deeply and shamefully a part of the ethos of Indian firms. Not all the regulation in the world will stop fraud. Corporate integrity is about culture and sadly ours is a culture where unethical behaviour is condoned and rewarded....
As Indian firms seek to do business abroad, their culture of deceit will come back to bite them. 
Back when I was in high school, I read Professor Admiral Samuel Eliot Morison's 1965 trilogy Oxford History of the American People. Morison was the ultimate Boston Brahmin, related to all sorts of famous Eliots such as Harvard's reforming president Charles Eliot and poet T.S. Eliot. He was the last Harvard professor to ride to work everyday on horseback. After Pearl Harbor, he suggested to his sailing buddy FDR that he should write the official history of the Navy in the new war, but with an inside perspective available only to somebody who had experienced the war at sea. So, in his mid-50s he joined the Navy and saw combat. Like movie star General Jimmy Stewart in the Air Force Reserve, he stayed in the Naval Reserve after the war and rose to the rank of admiral in 1951.

Morison's Oxford History was deeply biased. The heroes of Volume III covering the century after Appomattox were guys very much like himself and his relatives, WASP Progressives, Republican and Democrat, who, in his view, in the 19th and 20th Century had modernized government, tamed the Robber Barons, stopped snake oil salesmen from poisoning their customers, checked the ethnic urban political machines, and limited immigration to keep management from exploiting labor. Thus, WASP Progressives built the efficient, fair, and unified America that had won the Big One and could win the Cold War.

Morison's bias toward reforming nationalists is not a popular prejudice anymore. Libertarians consider his economics unsophisticated. His assumption that the immigration restrictions of the 1920s were pro-labor reforms — just as anti-trust was a pro-consumer reform — is almost inconceivable to 21st Century minds. Finally, the Protestant ethnicity of most of his Progressive heroes has become unforgivable. No doubt, most of Morison's heroes felt positively toward eugenics, thus permanently tainting the entire breed with the new version of Original Sin.

All that said, though, Morison still had a point: reforming nationalism won WWII and then finished building the most middle class and free society in history in the postwar era, the age of Tom Wolfe's "Happiness Explosion."

Now, though, the big wars are over and thus nationalism is in disrepute. Who needs it?  Globalism reigns as the highest ideal — just ask everybody you meet at Davos. Lowering the wages of American workers so billionaires can become even bigger billionaires is, as we all know, Good for the Economy.

You have to consider this kind of global mental atmosphere before judging the Indians' lack of progress too harshly. Indian elites read many of the same English language publications that American elites do, and thus where would they even hear about the concept of reforming nationalism?

Some countries that are less entrenched in the Anglosphere than India seem more aware of the old Anglo-Saxon lessons. For example, South Korea is currently having a scandal in which politicians' plagiarizing on their old academic dissertations is being exposed. Why now? Probably because Germany had the same scandal just a little while ago, and the Koreans think the Germans are worth emulating.