The Superorganic World of Transfer Pricing

Business anthropology is an emerging sub-discipline in anthropology. As an academic discipline, business anthropologists study business practices and organizations from a cultural and cross cultural perspective. As an applied discipline, the Business anthropologist works with business owners and corporations to solve cultural and cross cultural problems that arise in the course of international business and/or working with a socially and culturally diverse workforce, market place and business environment.

One problem unique to the international business corporation is the impact of "transfer pricing" on the corporation's organizational structure and operational processes. This is a concept that the business anthropologist should become familiar with when working with international\global corporation.

Transfer Pricing is an accounting tool used in international business to account for sales between a parent company and its subsidiaries located in a different tax jurisdiction. Transfer pricing deals with the problem companies face when they have operations in several different taxing jurisdictions and engage in intra-company sales of goods and services. It can also be a tool that can be used to maximize corporate income taxes savings.

A recent NPR interview on Fresh Air with reporter Jesse Drucker, from Bloomberg News, describes how this tool is being used by such global corporations as Google,Forest Laboratories and other companies to save billions of dollars of taxes.

Financial Engineering as the wave of future for the Superorganic evolution

This is an NSF (National Science Foundation) sponsored lecture by Doctor Andrew Lo of MIT in which he attempts to explain the technology behind the financial crisis of 2007 - 2009. He addresses the issue of who or what was responsible. His conclusions are that it was the free market and human behavior which ultimately brought about the crisis. The technology of modern financial engineering has created products which are far more complex than the systems designed to regulate and control these markets could adapt to in a timely manner. That is, success in regulating these instruments requires perfect timely in a perfect free market by totally rational human actors, none of which exists.

Financial systems are super organic systems. They exist and operate at the societal level. As social systems they are beyond the control of single individual actors. They depend on the coordinated actions of many moving parts and the perfect synchronization of all elements in the process to achieve the 'engineered" outcome. These action turn out to be the parts in an imperfect free market being synchronized by poorly prepared and integrated human actors.

While Dr. Lo's lecture deals with rather complex issues, his presentation is geared to an informed, but not necessarily technically trained, audience. His presentation style, illustrated with simple PowerPoint slides, is understandable and enjoyable.

Are Mathematical Models the Cause for Financial Crisis in the Global Economy? from jojimbo on Vimeo.