The EpiPen Tycoon game is a gentle reminder of the monster we’ve made of our stock market


epipen tycoon screenshotScreenshot, EpiPen Tycoon

There’s an EpiPen Tycoon
computer game
.

In it, you are the
CEO of Mylan, Heather Bresch
, the daughter of a US senator
who has been handed a drug that lays a golden egg — EpiPen, an
emergency anaphylaxis treatment that stops people’s throats from
closing in the event of an allergic reaction.

It’s mostly for children.

In real life, Bresch infamously jacked up the price of the drug
from around $100 in 2007 to where it now sits, at $608. This
caused has caused a public outcry.

In the game, you, the player, must balance making your
shareholders happy — apparently they love if when you increase
the price of the drug — and making sure you’re not tarred and
feathered on Twitter.

Aside from being able to control the price of an EpiPen, you can
also call your dad for a favor. You can introduce a generic at
just the right moment. Sad things can happen too, though. For
example, you may have to sell a vacation home if the price of the
EpiPen gets too low and your shareholders are mad.

All the while, there is a bar that swings from left to right as
you swing from enraging your money-hungry shareholders or the
public. All the while, your salary is constantly changing as you
toggle the price.

It’s a pretty fun game, actually. But what’s more interesting
about it (for nerds like myself) is what it says about what our
stock market has become.


epipen tycoon screenshotScreenshot, EpiPen Tycoon

Let’s think about this for a second. The romantic notion of the
American stock market is dead. The stock market is not an
investment club of doctors in central Pennsylvania spitballing
ideas about Coca-Cola. It’s not aunties in Wisconsin watching
CNBC and listening to Jim Cramer either.

The stock market is barely even a
place where companies raise money
anymore. Mostly it has
become a place where companies return money to shareholders.


Bloomberg’s Matt Levine
touched on this a while ago:

“In 2014 those companies’ combined earnings were about $950
billion, dividends were about $350 billion, and buybacks were
about $553 billion. So total cash handed back to shareholders was
about 95 percent of profits, up from 88 percent in 2013 and 72
percent in 2010.”

That trend hasn’t changed. Companies are still returning money to
shareholders — or “renters,” as the Roosevelt Institute refers to
them — at a rapid clip.

“In other words, the financial system is no longer an instrument
for getting money into productive businesses, but has instead
become an instrument for getting money out of them,” the
Roosevelt Institute’s researchers write. “The sector overall is
now predicated largely on seeking rents through payouts rather
than increasing profits through growth.”

And so who are these lucky renters/shareholders?

Well, the top shareholders in Mylan (aside from Abbott Labs, part
of which Mylan acquired last year) are a bunch of mutual
funds/asset managers — like Wellington Management Group,
BlackRock, Vanguard, T. Rowe Price, and State Street — and some
hedge funds, like John Paulson’s Paulson Co. and David
Einhorn’s Greenlight Capital.


epipen tycoonScreenshot, EpiPen Tycoon

In the game, these investors get ANGRY when the price of Mylan
goes down — after all, it’s pretty much all Mylan’s got. If
Mylan’s margins are thin, that means less cash is returned to
shareholders. They don’t care how it’s done.

And in the game, when that happens, the shareholders call for
Bresch’s head. One way to lose is to get ousted by the board when
the investors get good and angry.

Here’s the thing, though — most of these investors aren’t going
to do diddly squat to Bresch.

Most of these stock market dinosaurs are sleepy. Every now and
then, an activist investor, like a Bill Ackman or Carl Icahn,
will get involved with the stock and try to wake them into some
kind of action. Every now and then, a third party like
Institutional Shareholders Services will recommend this or that
change.

But for the most part, the mutual funds are just passive — but
powerful — waves, flowing through the stock market.

And they are investing for America’s retirement. This is the
structure we’ve chosen.

Not that you would know that the people investing for your last
decades are in Mylan, though; most Americans don’t even know
what’s in their 401(k)s. We aren’t shareholders anymore. We’re
not investors. We’re clients — dumb ones.


epipen tycoon screenshotScreenshot, EpiPen Tycoon

Of course, this isn’t just our fault. There are other ways to
look at what companies should be doing other than the one it
seems we have in place — the one where the only player in the
game who matters is the shareholder.

Until about the 1970s, companies took Harvard Law professor
Merrick Dodd’s approach to the function of a corporation.

“The business corporation,” Dodd said in a 1932 issue of the
Harvard Law Review, is “an economic institution which has a
social service as well as a profit-making function.”

In the 1970s, that flipped.

Noted economist
Milton Friedman wrote in The New York Times Magazine
in 1970
that a corporation’s only “social responsibility of business …
[is] to increase its profits” for shareholders who “own” the
corporation.

We’ve lent credence to that idea by making our retirements depend
on shareholders’ returns. It’s not working either. Investing
isn’t making the cut, as Sens. Claire McCaskill (D-Missouri) and
Susan Collins (R-Maine) pointed out in a press release on Friday
morning.

“As of 2015, the difference between what people have saved and
what they will need to live in retirement was a staggering

$7.7 trillion
. This serious gap is concerning workers across
our country,
82 percent of whom
say their generation will have a much
harder time achieving financial security compared to their
parents’ generation.”

The little we have put away, obviously, is precious. In turning a
blind eye to how companies have made profits to return to us,
we’ve let them know we don’t care how they do it. We don’t care
if they’re harming society anymore.

The only way to let companies know that isn’t the case is to sell
a company’s stock when they’re doing so. We have to do it over
and over again.

We have a crisis on our hands either way. We don’t need to make
it any worse.

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