McKinsey works at the heart of government. Samuel Corum/Getty Images
Only the most unflappable CEO or government executive can resist the siren call of a management consultant during a crisis. For about a century now, consulting firms have dangled a tantalising proposition in the face of the wretched and the weary of public and private administration: we’ll solve all your problems, make all your dreams come true, and then we’ll vanish, cradling our newfound, formerly confidential knowledge of your industry.
It’s a tempting bargain. So tempting that management consulting is now America’s biggest business-to-business service industry, with roughly $385 billion in annual revenue. But as appealing as the industry may be to business leaders, it is all the more attractive for the public sector, where managers need to achieve high levels of flexibility while confronting limited resources and medieval hiring processes. The beauty of bringing in management consultants is that you don’t have to hire or train new employees, or repurpose or lay them off when the project’s done. Consultants swoop in at the right moment with the right expertise, and then disappear.
In the US, consultants work with all levels of government. At the federal level, they play a central role in creating the intellectual capital that powers our government, earning $23.5 billion on almost 30,000 separate federal contracts in 2022. At the nucleus of this booming business is a small group of firms, which are far more significant for the consequence and sensitivity of the work they do than the number of dollars they make. These include Deloitte, Booz Allen Hamilton, and of course, McKinsey and Company.
Over the past 10 years, McKinsey has completed around $1 billion worth of contract work for the federal government, more than half of which was contracted by the Department of Defense. As a report from the Quincy Institute found: “This work has ranged from advising senior officials on developing technology for the Air Force and Space Force to evaluating the management of the F-35 program.” In the same report, we learn that McKinsey has for several years considered the Defense Department one of its top clients, and that one of President Trump’s leading assistant secretaries of defence worked for McKinsey both before and after his federal tour of duty.
The consequences of this line-blurring between public and private would be complicated enough if leading consultancies confined their work to the US. But they do not. While management consulting grew throughout the latter half of the 20th century to saturate the American private and public sectors, it was also spreading internationally on the promise of selling “American management knowhow” abroad. “Whether reorganising the Bank of England, Royal Dutch Shell, the Government of Tanzania, or even the World Bank,” writes business historian Christopher McKenna, “management consultants disseminated American management techniques throughout the world.” While management consulting had originated in the West, it came to be a valuable resource to business, organisations and governments everywhere — in East and West, market and command economies, democratic and authoritarian states.
As the consulting hydra has grown ever more colossal, with consultants embedded in most large organisations, consulting firms’ webs of allegiances have become ever more complex. Frequently, this leads to conflicts as fraught as those in George Orwell’s 1984, in which a single entity is advising both sides in an adversarial system. These conflicts are legally challengeable when a consultant shares one company’s proprietary information with another — a problem firms can avoid by assigning different teams to competing client companies. But the legal system cannot solve the broader conflict, whereby the same consulting firm stands to benefit if either team wins. It has no answer to what happens when one consulting firm advises both a regulating agency and a regulated company — to cite a recent example, McKinsey advising both the U.S. Food and Drug Administration and Purdue Pharma. Or when the same firm consults two competing companies, or two governments that are geopolitical rivals or even enemies.
One such conflict arrived in the halls of Congress a month ago, when US Senators Marco Rubio and Josh Hawley challenged McKinsey and Co. for its work with the Urban China Initiative, a think-tank based in Beijing. The Initiative published a report in 2015 entitled “The Trend and Impact of World Technological Revolution and Industrial Transformation”, a litany of recommendations for Chinese government officials and business leaders to aid in the implementation of the Chinese Communist Party’s (CCP’s) “Made in China 2025” industrial initiative. Rubio and Hawley, who obtained a copy of the report, noted that it aimed to support the CCP’s goals of “dominating other countries in cutting-edge fields”, ranging from cloud computing and big data to artificial intelligence, renewable energy and human genomic technology.
In response to the senators’ criticisms, McKinsey attempted a Clintonian dodge. “[T]he Urban China Initiative,” read an official statement, “is not McKinsey, and it did not perform work on McKinsey’s behalf” — using the technical meaning of the word “behalf” to distract from the two organisations’ deep connection. As Rubio and Hawley go on to highlight, McKinsey co-founded the Urban China Initiative with Columbia and Tsinghua Universities, and the think tank was based at the same address as McKinsey’s Beijing office. McKinsey’s top China hand, Lola Woetzel, wrote the foreword to the report — acknowledging the role her company played in the research — and then hand-delivered it to China’s second-highest-ranking official at the time, Premier Li Keqiang.
As the Financial Times and New York Times reported, the Urban China Initiative is only one product of a fruitful decades-long collaboration between McKinsey and the CCP. In 2019, the company’s China website touted a series of Chinese government projects: “McKinsey’s impact in China goes well beyond our work in the corporate sector. In the past decade alone, we’ve served over 20 different central, provincial and municipal government agencies on a wide range of economic planning, urban redevelopment and social sector issues.”
Over the 2010s, McKinsey was also retained by 22 of China’s 100 largest state-owned enterprises (SOEs). One of these companies aided the Chinese government in the construction of an archipelago of artificial islands in the South China Sea — a vital tool in China’s quest for naval domination in Asia. On the topic of Chinese military aggression, it should not escape our notice that even McKinsey’s current “Greater China” website, sanitised in response to recent scrutiny, includes the firm’s Taiwan office. While diplomatic realities have forced the US government into its farcical “One China Policy” that refuses to acknowledge Taiwan as an independent nation, McKinsey is under no obligation to make the same declaration. It is one indication among many that American international businesses fear offending the Chinese government more than their own.
In part, this is because democracies tend to be more sympathetic than autocracies to the idea that businesses must sometimes make decisions that don’t benefit “the home team”. But it also evinces a deeper truth: that given the blurry distinction between Chinese government authority and all Chinese businesses (not just officially state-owned ones), it is difficult for a consulting company to trust that if they run afoul of the CCP, any of their Chinese business will be left unscathed. As Curtis Milhaupt and Wentong Zheng have convincingly argued in the Georgetown Law Journal, China is “a state in which no firm — irrespective of ownership — is truly autonomous from the government”.
Admittedly, it is virtually impossible in a globalised world to ensure that no American resources — economic, human, or intellectual — are harnessed for the benefit of our geopolitical adversaries. We are a democracy after all, and projecting a totally unified front to the world isn’t one of democracy’s strong suits. But that doesn’t mean that there isn’t any low-hanging fruit for us to address — management consulting being within particularly easy reach.
As US-China geopolitical competition has heated up, a group of legislators has begun to take notice. In May, the Senate Homeland Security and Government Affairs Committee passed the Time to Choose Act of 2024 by a 10-1 bipartisan vote, referring the bill to the broader Senate. The Act, which calls out both McKinsey and Deloitte by name, would prevent the US government from doing business with consulting firms that also work for the governments of China, Russia, identified state sponsors of terrorism, or SOEs in those countries, among certain other entities.
It’s a good start, but far from a complete solution. It fails to account for the fact that outside the West, the boundary between public and private is often murky, if not downright illusory. In China, for example, the government has the right to requisition data or information from any company or citizen in the name of national security. For that reason, no law that targets only governments and SOEs can ever be entirely airtight when it comes to keeping valuable American data or ideas out of the hands of our adversaries. For that reason, the law should be passed as written, but only if bolstered by two other initiatives.
The first would be a “patriotic consulting” policy stating that all US government agencies must offer preferential consideration to firms that do not consult for the governments of countries that lack a mutual defence treaty with the US, or for private companies in China, Russia, Iran or other geopolitical adversaries of the US. This would decrease the financial desirability for consulting firms of doing business abroad that conflicts with US interests. It would also push federal money and talent toward smaller firms that cater more to the Americas and our allies in Europe and East Asia.
But even this would be insufficient. Many of the biggest consulting firms will continue to invest in China because the money is simply too good. For that reason, in the interests of national security and competitiveness, we must in the long run decrease the federal government’s reliance on consulting. The best way to do this might be to form an all-of-government internal consulting department, which would draw top talent from the private consulting industry, pay similar salaries to private firms, and replace private consultants throughout government.
As our adversaries work relentlessly to erode the boundary between public and private, our best policy is to reinforce that boundary. While private businesses should be allowed to spend as much as they like on the expertise of management consultants, who must in turn remain free to pursue profit however they see fit, US interests demand that our government, in the fullness of time, put its days of hiring management consultants behind it.
Join the discussion
Join like minded readers that support our journalism by becoming a paid subscriber
To join the discussion in the comments, become a paid subscriber.
Join like minded readers that support our journalism, read unlimited articles and enjoy other subscriber-only benefits.
SubscribeSo now they’re coming for Pinker, who is about as ‘progressive’ as you can get.
Progressive,yes. Woke, emphatically not.
Not really coming for Pinker, but sending a message to more junior, less established, less secure academics.
Pinker has a rather charitable interpretation of (or excuse for) the tactics of woke’ism, identity politics and political correctness, and so forth. These are pure bigotry — ruthless application of stereotypes to individuals regardless of any inappropriateness or gross inaccuracy/inapplicability, requiring either malign intent or absolute ignorance or brainwashing (by professors or the press or activists) with a false narrative combined with an overriding tendency and ability to engage in confirmation bias (to continue to support the narrative in one’s imagination).
I consider the culture-war activist and campus nonsense to be pure fraud by self-interested parties who are some combination of Leninist/Marxist and fascist, more or less. I believe that the leaders of these loosely defined and organized “movements” know exactly what they are pushing, and have no utopian notions whatsoever, but well understand that they can utilize the ignorance of many to lure with utopian appeal.
There appears to be a tremendous instinctive appeal of the utopian promise of socialism/communism/fascism (all variants of the same basic theme) that is built into human nature. It requires some historical knowledge to disabuse one of the idea that the utopia is even remotely possible, and to recognize that certain types of people will always be attracted to the kind of authoritarian or totalitarian power necessitated by real-life attempts to implement these ideologies. These would be Stalin-like characters at best — nothing about them is good for societies, especially relatively free and prosperous ones.
There has been a frightening additional growth of (self) entitlement, infantilization and expectation of a paternalistic environment that has increased in prevalence with each successive generation since the end of WWII in Euro/American societies (at least). Appeal to this has enhanced the ability of the malcontent ideology to convince, false and phony as it is.
IMO these jerks should be ridiculed and ignored. But the press is almost totally part of the “movement”, and so there is a sort of Catch-22 problem. Too many lazy intellects will listen to a narrative or look at a “painting” and buy in, rather than developing and implementing a skepticism with the skills needed to gather valid info and separate this from all of the disinfo and misinfo — e.g. skeptical reading skills.
The pandemic has just been a microscopic example of the same social phenomena, aided by the near universality of social media now. Even most well-educated people, I find, have no idea how to draw accurate conclusions from the epidemiological data which is freely available to anyone everywhere now, at least in Euro-American countries.
Thank you Freddie for this fascinating interview with Steven Pinker. Although insightful in itself, within it are several references to the extremely important open letter published in Harper’s magazine calling for the end of cancel culture with 150+ signatories from across the political spectrum. Hopefully one of the excellent Unherd team is penning a commentary on this extremely important event in the free speech debate as we speak. I would hate to think that purely because many of the signatories are left-leaning and one line in the letter casts aspersions on President Trump that it is not deemed of sufficient interest to the Unherd readership to merit a slot within the big four daily stories on our site.
Some good discussion in here along with the meat of discussion about free speech (on which Pinker’s stand is genuinely inspiring).
1. Sayers challenges Pinker on whether the Enlightenment might be partly responsible for the Woke, gesturing at their shared attitude that the world can be re-engineered if given enough effort. Pinker responds that he views the Woke as one form of counter-Enlightenment, which I think is fair enough and true, but also it seems like he missed Sayers’ point a little, and didn’t address the similarity.
I think there is a grain of truth when you contrast this element against its (almost definitional) absence in conservative thinking, but ultimately Wokism is not special for drawing on this Enlightenment idea and using it for other purposes, and many of the radical ideological failures of the 20th century — on the left and the right — could lay equal claim to such inspiration.
2. Sayers wonders whether the Enlightenment’s relative lack of focus on subjective value and ‘nourishing the soul’ fosters populist backlash. Pinker doesn’t really seem convinced that the current moment in Anglosphere politics demonstrates that. I think I would agree with Pinker’s doubt that it clearly points to a trend of decreasing happiness. The idea is worth considering, but it also seems like it could be the function of some other element of society compatible with Enlightenment values to nourish the soul.
No Pinker was on the money with that I think.
Wokism came out of the Enlightenment only in as far as it came out of movements long after and would therefore logically have some tenuous roots in it. But even that is stretching it.
The woke are actively, explicitly and vocally rejecting the Enlightenment across the board, because for them it is seen as the root cause of most prejudice and is too white and western for their liking.
Yes, what a splendidly
acerbic, spiteful, debate that was, and the Woke “never forgive and never forget”.
However I don’t have much sympathy for Pinker, he has always “run with the hare and hunted with the hounds”.
“ªPinker states that the right populists are a bigger threat than the left ‘because they are in power’ extraordinary !! So after 4 years of Trump what has actually happened that threatens our freedom?? Meanwhile the woke establishment has been enacting and fermenting profound and deeply corrosive societal change while being kept OUT of office -that is surely a great deal more threatening ?
Things that threaten our freedom under trump:
A deeply corrupt, vindictive DOJ.
A new Postmaster General who directs local facilities to “slow down” delivery of first-class mail, meaning many people near the end of routes don’t receive any mail, or not on a regular basis. To connect the dots, this threatens our free and fair elections.
A terribly mismanaged pandemic that has made it risky to leave our homes, or to walk around unencumbered with a face mask; and has closed nearly the entire world to a US passport.
A threat to “postpone” the election, which he clarified the same day he made it was NOT meant as a joke.
I could go on.
He also strangely makes no reference to woke social media enterprises and their unaccountable control and manipulation of the public square which is beyond the reach of the democratically elected ‘populist’ politicians
I think perhaps the “I’m all right” is actually a healthy contempt.
It bothers you that a free press is able to publish freely, and you would prefer they be within the reach of your preferred politicians? That violates the first amendment.
Nothing strange about it. Nationalist/Populist movements invariably devolve into authoritarian dictatorships. A few modern places one can see this process as it happens: the Philippines, Turkey, Hungary, Russia, and Brazil. Everybody wants a strong Daddy to keep them safe and make sure everyone else behaves. Some of us are more conscious of it and able to remove it from our politics than others.
I’m assuming by “woke rebellion,” you refer to people having a modern view of older institutions and mores.
“Woke” refers to things like people taking a critical look at accepted truisms, such as “Christianity is a force for good in the world,” or “Black people have as much chance as anybody else of making it in America,” or “If Black people would only obey the (always courteous and lawful) police, no one would get beaten or killed.” In evaluating current events, “woke” refers to a preference for secular humanism and compassion, a sort of “do no harm” ethos, along with a focus on reform of unfair practices. “Understanding that terms like ‘Kung flu’ and ‘China virus’ drive bigoted behavior towards Asians, we resolve not to use them” is one current example.
We seem to be between the devil and the deep blue sea – between an arid materialistic scientism and a ‘popular’ movement that seeks to impose the primacy of raw unreflected emotion on all discourse and every aspect of society.
I guess, if by “Left orthodoxy” you mean findings derived from careful studies of child development, including the powerful “twins separated at birth” studies that amuse us by pointing out, “They both like blue-checked shirts!” and “They’re both in church choirs!” and “Look how similar their bedspreads are!” I’m a developmental psychologist who’s naturally given a lot of thought and study to the question of nature/nurture. I, like my colleagues in that field — not linguistics — have certainly not concluded that only nature is formative.
I don’t believe developmental psychologists have an interest in “cancelling” Pinker. We accept that he’s talking through his hat and ignore him, similar to how we don’t take our dirty car to a shoe shine to be cleaned.
I continue to marvel that things as apolitical on their surface as cloth face masks, to what traits are heritable and which more refined by peers and parenting, have become “left” and “right,” with “left” ideas being based on swell-designed, replicated studies, and “right” meaning “I don’t like leftists and I don’t like this idea, therefore this idea is ‘left’.”
But who the hell are these “people”
They don’t represent the majority….does democratic majority no longer have credence?
I am stunned to constantly hear that “everyone is outraged” when in fact very few give a toss and the “outraged” are dangerous minority nut jobs!
Free speech runs both ways!
You seem kind of upset. Outraged, even.
How far we can go or how deep we can search in the deepest realm of our minds depends on how much we dare release ourselves and embrace new assumptions that might lead us into a better human condition. I must say that Socrates might have been wrong but by getting him to have the hemlock he became a victim of injustice. Let’s remember that truth is not necessesarily a democratic experience.
First they came for Katie Hopkins…
He makes a good point that if certain ideas are not allowed to be scrutinised then they run the risk of gaining currency. That is something everyone on all sides of an issue would do well to ponder. Cancel ideas and the very argument you so despise is allowed to live on!
The canaille have always been there and social media is simply another street corner. What has changed is the integrity of people who have entered contracts with targets of the mob. I believe it should be possible for anyone who loses any job as a result of such mob screeching to sue the nuts off the person firing them and get exemplary damages.
Let’s play this one out. Suppose an employee is caught on tape screaming, “America is a cesspool and I hope someone bombs US back to the Dark Ages!!” It gets posted online and everyone has an opinion about this guy, many of them negative.
The online mob does their “research.” They find out who the loudmouth is. They find their employer, and deluge them with video and strong opinions. Freaked out, the employer decides he doesn’t want his business associated with this kind of speech. They’re pretty sure keeping them on will cause some customers to forsake him, and their profits will drop. This has turned into an existential threat to their business.
Is it not the employer’s right to hire and fire whomever they please?
Die Gedachten sind Frei. But open speech is not free, and it’s getting more and more costly as the Jacobins look for that handy guillotine.
Off with their heads!
My own alma mater shelters one Noam Chomsky, who also happens to be an academic linguist like Pinker. I doubt very many have read even one work by Chomsky in the field of linguistics, but of course he spouts off incessantly and ridiculously about topics he knows absolutely nothing of. The fact that a clown like Chomsky can do so as successfully as he has is also a good reflection of the susceptibility and ignorance of the society at large.