{"id":200454,"date":"2021-04-05T22:38:00","date_gmt":"2021-04-06T03:38:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2021\/04\/05\/this-6\/"},"modified":"2021-04-05T22:38:00","modified_gmt":"2021-04-06T03:38:00","slug":"this-6","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2021\/04\/05\/this-6\/","title":{"rendered":"This:"},"content":{"rendered":"

Matt Stoller Makes a very good point, “Keep McKinsey Away from Biden’s Infrastructure Push<\/span><\/b><\/a>.” <\/p>\n

They are corrupt, and will make a dogs breakfast of everything that they touch:  <\/p>\n

If there\u2019s one striking feature of the Biden administration so far, it\u2019s the rejection of Barack Obama\u2019s policy framework by his own party. It is now the consensus that Obama\u2019s lack of ambition led to Trump\u2019s election. For instance, party leader<\/a> Senator Chuck Schumer recently called the Obama stimulus a \u201cmistake\u201d and \u201ca small measly proposal\u201d on CNN, as a way of selling Biden\u2019s much larger proposals. <\/p>\n

Biden\u2019s goal, and that of the Democratic Party that controls both houses, is to break from recent politics, and be \u201cmore like Franklin Delano Roosevelt (FDR) and the Congress of 1933, and less like Barack Obama and the Congress of 2009.\u201d Biden wants to spend a lot, to go big, instead of the go small vision of Obama. <\/p>\n

\u2026\u2026\u2026<\/p>\n

It\u2019s a bold vision. One important question is whether it\u2019s actually possible to spend that amount of money on so many things without immense amounts of corruption or waste. The difference between FDR and Obama, after all, was not just spending amounts. Obama didn\u2019t spend enough, but he did spend a lot. FDR, however, actually built things, whereas Obama\u2019s stimulus money for, say, California\u2019s high-speed rail, evaporated into a cloud of consultants<\/a>. (A particularly mean joke was that FDR won WWII in less time than it took Obama to build Obamacare web sites that didn\u2019t work.) <\/span><\/p><\/blockquote>\n

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This might be the best business meme of 2019 so far. pic.twitter.com\/hTXul3Muy3<\/a><\/p>\n

\u2014 ArtkoCapital (@ArtkoCapital) March 5, 2019<\/a><\/p><\/blockquote>\n

The McKinsey Way<\/i><\/div>\n

There is an important difference between Joe Biden and Barack Obama, Biden went to the University of Delaware and then Syracuse for law, and Obama went to Columbia University and then Harvard Law School, both of which are Ivy League institutions. <\/p>\n

Obama spent his formative years at colleges where McKinsey was actively recruiting, and his fellow students, and likely many of his friends, were eager at the chance to get their start there.<\/p>\n

As such, Obama placed a lot of trust in those consultants, because they were his people, a part of the “Clan of the Ivys,” and we got less than stellar results when the consultants were called in on California rail, or Obamacare.<\/p>\n

This is what normally happens when you bring in McKinsey: <\/p>\n<\/p>\n

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Skipped an aside about mismanaging Puerto Rico.<\/p>\n

\u2026\u2026\u2026

So what has McKinsey been doing, if it hasn\u2019t been running Puerto Rico? The answer is, McKinsey has been looking out for McKinsey. It has ensured that Puerto Rico will spend the mind-bogglingly large sum of $1.5 billion on professional services, meaning lawyers, bankers, and consultants (including McKinsey), which is five times what Detroit paid in services for its bankruptcy. I don\u2019t know how much the firm will make, but according to the GSA schedule, just one recent college graduate working at McKinsey costs around $3 million a year. Beyond the straight fee extraction, the conflicts of interest are comical; McKinsey\u2019s internal hedge fund actually owns Puerto Rican bonds.<\/p>\n

Far from an anomaly, such a situation for McKinsey is common. McKinsey helped ruin the U.S. spying apparatus with a bloated, failed contract. They helped run Trump\u2019s U.S. Immigration and Customs Enforcement; ICE even hired McKinsey to write its own contract. McKinsey structured France\u2019s terrible coronavirus response, and that of New York state. McKinsey is so brazen that it was caught by the GSA Inspector General for cheating the government out of $65 million. It didn\u2019t seem to matter. In 2019, McKinsey worked for more than 15 federal agencies and departments, and 25 states.<\/span><\/p><\/blockquote>\n

Unfortunately, the government has continued down this path for many decades, removing government capabilities, and even capability for government oversight, and turning it over the private sector. <\/p>\n

That was my experience working for over 2 years on a project run under a “Lead Systems Integrator” model that was so dysfunctional that future LSI contracts were banned by Congress.<\/p>\n

\u2026\u2026\u2026<\/p>\n

Roosevelt\u2019s first major infrastructure battle was over Muscle Shoals in Alabama, the great hydroelectric resource. The Morgan interests and the electric utility magnates wanted that resource privatized for their use. Roosevelt said no, and had the government directly build the Tennessee Valley Authority, a publicly owned and operated electric utility for much of Appalachia. TVA was part of a package of reforms to constrain and control Wall Street, to end what FDR called the \u2018informal economic government of the United States.\u2019<\/p>\n

Over the rest of the New Deal, FDR transformed the physical plant of the country, and spent a lot of money on infrastructure. But Roosevelt first made sure Wall Street had little say over how public money or public resources were spent. Public institutions got bigger and more competent, and the financiers and monopolists lost power. One key result is that the government could do big things. During World War II, military procurement officers had immense capacity and power, imposing tight control over contractors, and ensuring that there were at least a dozen competitors for each major weapon system. They could peer into the books of contractors, and even claw back excessive profits. <\/p>\n

America used this governing capacity for decades, constructing the national highway system, winning the space race, deploying the polio vaccine, landing on the moon and building the internet, and running the project Sematech in the 1980s to address foreign threats to semiconductors.<\/p>\n

In the 1990s, however, Bill Clinton\u2019s \u201cReinventing Government\u201d initiative killed the public capacity Roosevelt had constructed. Clinton encouraged the big prime defense contractors to merge, shrinking them from over 100 to just 5 firms. Clinton\u2019s procurement initiative, led by Steve Kelman, invented a whole new vocabulary for ways to let contractors steal. The details get complex<\/a>, but the gist was a \u2018light touch\u2019 approach to negotiating by the government. Procurement officers stopped making hard-nosed demands for better prices, and were stripped of the ability to look at the books of the contractors to make sure there weren\u2019t excess profits<\/span>.<\/p><\/blockquote>\n

It actually started under Reagan, and then SecDef Dick Cheney massively expanded this at the Pentagon under GHW Bush, but Clinton took the idea, and ran with it in a way that no administration has before or since. (I will leave the determination of their motives as an exercise to my reader(s)).<\/p>\n

We need to return core competencies to government, or will continue to be unable to efficiently do the business of government. <\/p>\n","protected":false},"excerpt":{"rendered":"

Matt Stoller Makes a very good point, “Keep McKinsey Away from Biden’s Infrastructure Push.” They are corrupt, and will make a dogs breakfast of everything that they touch:  If there\u2019s one striking feature of the Biden administration so far, it\u2019s the rejection of Barack Obama\u2019s policy framework by his own party. It is now the …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1300,987,1009,1003],"tags":[],"class_list":["post-200454","post","type-post","status-publish","format-standard","hentry","category-consultants","category-fail","category-government","category-philosophy"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/200454"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=200454"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/200454\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=200454"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=200454"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=200454"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}