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[Noteable]

Is McKinsey and Company a Threat to Democracy?

Michael Forsythe reflects on McKinsey’s work with autocrats and corrupt regimes.

" They’re the ones who are talking to the deputy directors of government agencies or the directors of agencies like ICE and the FDA. It’s hard to think of another organization in the world with that kind of reach now."

"McKinsey’s very focused on short term solutions, things that will get a real pop in terms of profitability in the short run, but they don’t always think long term. I think that might actually be an outgrowth, now that I’m talking about it, from the fact that they’re hiring young and experienced people. People that can see how to be able to make profitability but don’t fully understand the long-term implications of it because they haven’t been through multiple business cycles yet so they haven’t really seen how past efforts to do similar stuff have really had an impact."

"McKinsey people say is their work is what they call an accelerant."

" One of the things  at McKinsey, is it’s a model of hyper credentialism. The idea that if you are a Rhodes Scholar, if you went to the right school, if you’ve got the right check marks behind your name, that you’re qualified to be a McKinsey consultant and qualified to give certain advice. But if you have the experience in the industry, if you’ve worked your way up and came from those alternative routes, you’re not really qualified. In fact, oftentimes they recommend firing you from the job because you are part of middle management and you don’t need to be there providing that kind of advice anymore.

" To get deeper into this elitism thing and the ‘we know best,’ ‘mind your own business because we’re the smart people,’ what’s fascinating and we point out in the book is that McKinsey works for these companies, for example, pharmaceutical companies, and also for the regulators of the pharmaceutical companies. Until 2021 they worked for the tobacco companies and also the regulator for the tobacco companies, the FDA. So, the idea that they can do that, when you think about it, it’s just staggering. States like Illinois hiring McKinsey to design and to help manage its Medicaid program. But so many of the Medicaid administrators, the administrators of that program, the people who are hired to basically take those block grants of money and administer them are these big healthcare hospital companies that are big, giant McKinsey clients, companies like Anthem. They’re not just McKinsey clients. They are the biggest McKinsey clients, as in the top five moneymakers for the company." "  in the chapters on Purdue Pharma. Then after we finished, pretty much turned in the book, we got access to a slew of documents from McKinsey regarding their work with Purdue Pharma and we wrote a couple of stories last year in the spring and into the summer detailing McKinsey’s work with Purdue, you know, they’re the makers of OxyContin. They’ve obviously run into a lot of problems because of the perception that they were contributing to the massive opioid crisis we have in the United States. And then McKinsey was there to advise them on how to increase their sales."

" It was one of these slide decks where they are pitching for some work with these opioid makers. They’re saying, ‘One of the reasons is we have a lot of regulatory experience.’ These companies live and die by their ability to get approval from the FDA for drugs. One of the things they were advertising was, ‘Hey, we have all this deep regulatory experience with the FDA. We’ve worked on so many projects.’ So indeed, they were touting that experience with the regulator to their private sector clients and, in this case, with an opioid maker. Then further to that, there were people who worked on the Purdue project for McKinsey, working with Purdue and also some of the other opioid makers who were also working, maybe not simultaneously, but then they would go to work on a McKinsey project in the FDA or vice versa."

" One of the sections of the memo was about the addiction crisis to opioids and what HHS could do to help combat the opioid crisis. That section was reviewed by the McKinsey senior partner who was overseeing the work at Purdue Pharma and he watered it down. He literally watered it and we could see. We had the drafts. So, we could see him doing this. Those are three examples of the cross pollination of the regulator and the regulated and McKinsey’s in the middle there. You also talked about companies and McKinsey for many decades has not made any secret of the fact that they work for multiple companies in the same industry. A lot of times the other companies will want to hire McKinsey, because they want to find out what the other company’s doing. So, McKinsey’s the glue between them."

" Saudi Arabia is no democracy. It’s never really had a big democratic movement or anything, but the now infamous slide deck they made certainly cannot be interpreted any other way other than identifying people who are critical of the Saudi government and literally putting them in slide decks. I think that was a very clear example.

And it’s not just the United States that’s going on. We point out in Britain, the same situation. So, you have this company that’s working for both sides, the regulator and the regulated. Those companies are doing very well. Unfortunately, we didn’t get into this in great detail at all. We didn’t get into detail in the book. We did write about it a little bit for the newspaper back in late 2018 – their work for Yanukovych. In Ukraine, it was mostly while Yanukovych was a candidate for president, which he won. They did work to polish his economic credentials. Yanukovych isn’t by no means a democrat, a democrat with a small d. He was an incredibly corrupt pro-Russian politician there. So, they polished up his image on managing the economy. The guy who was working on the political side was a guy named Paul Manafort. So, it was Manafort for the politics, McKinsey for the economy, for this very anti-democratic person. So, there’s that."

" So, McKinsey is hiring the elites in a non-democratic country who have large stakes in keeping that system. If you’re the son or daughter of a Saudi minister, not only your livelihood, not only your wealth, but your life is dependent on the continuation of the House of Saud as the rulers of Saudi Arabia. So, in some cases these elites from these autocracies or theocracies are the people who are working at McKinsey." " on China. Right now, just to update you and the readers and listeners here, I mean, right now, US Consulting companies in China are having some problems. There’s a lot of suspicion of foreign companies, especially American companies in China right now and consulting companies are kind of in the thick of it. There were some Chinese employees of Bain that were detained recently, if I’m not mistaken. So, there’s a focus on them in China. But for the past decade or so McKinsey has really been deep in China. We talked about McKinsey being an accelerant."

" They’ve been a real champion of pushing some of these marquee Chinese policies, which are often at odds with US policy. There’s a policy they have called the Belt and Road policy, which is building ports, airports, railways around the world with Chinese money lent from Chinese banks and development banks that extend China’s influence and also strengthens trade ties between these mostly developing countries, but sometimes European countries and China. McKinsey wrote a lot about that. It was actually touting that idea to some of its clients around the world that you should really work with China and maybe hire a Chinese company because that’ll help you improve your relations with China, specifically Malaysia, I’m talking about in this case from one of the slide decks we uncovered. "

" But McKinsey’s also was working with this big state-owned Chinese company called China Communications Construction Company or 4Cs as the Defense Department people call it here in the US. One of their subsidiaries was building those islands in the South China Sea. Those artificial islands were basically turning the South China Sea into a Chinese lake. That had a personal resonance with me because I used to be a US Navy officer in the 7th fleet out in the Western Pacific and had been through that area many times as a navigator on a guided missile cruiser. The idea that a McKinsey client, one of their subsidiaries, was building these militarized islands with their dredging machines, really kind of rubbed me raw, especially because McKinsey’s even bigger client would be the Pentagon."

" So, the Pentagon’s interests, US national security interests, and the interest of this Chinese client of McKinsey are really at odds. Again, it gets back to the fact that McKinsey in China, in order for it to do well, had to hire elites in China and often these elites in China were actually also Baker Scholars from Harvard Business School, really smart people. But one of these Baker scholars, right around the time he graduated, married the daughter of the prime minister of China, this guy Wen Jiabao. This is how elite we’re getting in Chinese circles. Again, these people are not thinking about the Pentagon. They’re not thinking about US national security when they pick their clients. They just aren’t."

" They are products of the system in China. Often extremely well educated, sometimes liberal minded in the fact that they went and studied in the US for so long. But their success depends on them getting clients. Those clients are often state-owned companies. You have to toe the line in China. So, they’re not seeing some of these conflicts that are much easier for people like you and me to see. You know, how can you be working for this company that’s building these islands while at the same time working for the Pentagon? How can you be doing that? A person in China is not going to see that as smart as they are. "

" They’re not going to see any problem with having a party in Xinjiang, just about 4,000 meters away from a detention camp where these Uyghur minority Muslims are being detained. They’re not going to notice that. So, yeah, that’s just the work they’re doing in China, which is obviously the biggest autocracy in the world, by many measures, the most effective autocracy in the world." "

https://democracyparadox.com/2023/08/01/is-mckinsey-and-company-a-threat-to-democracy-michael-forsythe-shares-his-reporting/