Bonus material

"complexity" as a business strategy

by Rob Horning

5 October 2009


Over at Generation Bubble I have a post up about using complexity to intentionally sow confusion in markets. This NYT article about meat inspection and a woman’s paralysis from eating a tainted burger seems relevant to the issue too—the issue being what the government can do to ensure that the products we rely on are “safe” within some reasonable margin. Something about the way the meat of the E. coli burger was cobbled together in the industry reminds me of complex financial securities.

The frozen hamburgers that the Smiths ate, which were made by the food giant Cargill, were labeled “American Chef’s Selection Angus Beef Patties.” Yet confidential grinding logs and other Cargill records show that the hamburgers were made from a mix of slaughterhouse trimmings and a mash-like product derived from scraps that were ground together at a plant in Wisconsin. The ingredients came from slaughterhouses in Nebraska, Texas and Uruguay, and from a South Dakota company that processes fatty trimmings and treats them with ammonia to kill bacteria.
Using a combination of sources — a practice followed by most large producers of fresh and packaged hamburger — allowed Cargill to spend about 25 percent less than it would have for cuts of whole meat.


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