How Consulting Firms Secretly Run Entire Countries

this episode and others like it are made possible by the generous support of my patrons on patreon in other news if you haven't heard already i have a podcast with hakeem and yugopnik if you're interested in longer form more casual socialist content check out the d program by following the link below this is emmanuel macron on the night of april 24th 2022 he's at paris's iconic field of mars right in front of the even more iconic eiffel tower the crowd gathered in front of him chanting his name and waving flags is on cloud 9 because not 30 minutes ago the national broadcast announced that macron had been re-elected to the french presidency for five more years and even though he was always preferred to win if you rewind the clock just two months back things didn't look so good for the sitting president two months ago the scandal since dubbed mckinseygate started making its way through the french press if you've never heard of mckinseygate don't worry it's very simple and we don't need to go back very far to understand it in early march of 2022 the french senate conducted an investigation into the finances of macron's executive branch they were looking for something fishy following leaks in the press about the government relying a bit too much on consultants and lo and behold they found what they were looking for right there in the budget of the elizae france's presidential palace they found a nearly 1 billion euro bill from various consulting groups racked up in just one year i don't need to tell you that 1 billion euros is a massive amount think of it like 1 billion dollars does that help no alternatively you can think of it as 200 times what the french government spent promoting equality between men and women anyway the report found that one firm in particular mckinsey and company seem to be getting the lion's share of the presidential wallet and may have been benefiting from favoritism furthermore the senate alleges that mckenzie's french branch hasn't paid a single cent in corporate taxes during the past 10 years despite making a cool 330 million euros on french soil first lucrative government funding then missing taxes the whole thing seemed a bit weird as a 100 impartial journalist i should tell you that mckinsey denies the tax avoidance allegations so you can make of that whatever you want in any case that's not the point macron's been dragging this reputation of president of the rich ever since he took office and now all of france just found out that he spent a bezos-like amount of public money on a few private cabinets well-known for their place in high society what's more these consulting firms were given big responsibilities like orchestrating the national strategy on coveted vaccinations and setting climate change plans for the future not exactly a small ask for just a few private firms if you're the guy in charge you couldn't ask for worse timing for a scandal like this with barely over a month until the first round of elections macron's response had to be immediate and authoritative of the manipulation [Music] perspective [Music] all of this is perfectly legal and not just that it's nothing special after all previous administrations used consultants too why should he be the one to deprive himself of that privilege the subtext here being that not only is this not a big deal it's being made into one to try to make him lose the upcoming election but as you might expect from this channel not only is macron's argument that while he did it too pretty weak when you're trying not to look guilty he's wrong this is kind of a big deal mckinseygate and i hate that name by the way can we just stop adding gate to scandals mackenzie gate highlighted something deeper within our society that extends far beyond the walls of the french presidential palace specifically who are these people we call consultants and why are they so influential the place to start is to determine whether consultants are really that influential at all and why not let them answer that question in a completely neutral way for example you probably know us for work in strategy and finance but what you may not know is that we're helping all industry sectors cut carbon emissions by half by 2030 and to reach net zero by 2050. we've completed more than 1600 cobit related projects in more than 60 countries published 500 articles and hosted 800 webinars to help safeguard lives and livelihoods navigate the pandemic and shape the next normal our purpose is to help create positive enduring change in the world i've emboldened our colleagues to be ambitious and find ways we can double our current rate of innovation so that's a great video but we have to pause here for a second double the innovation that's got to be at least like five times the creativity right or like 10 times the amount of disruptive revolutionary paradigm shifts in equivalent units how did they do that anyway of course consulting companies are going to say they're influential otherwise why would you hire them but you might still want to i don't know not take everything consulting companies say at face value after all during mckinseygate a lot of the discourse in france focused on the pointlessness of some of these expensive contracts one contract in particular got a lot of press a project by the boston consulting group to organize a conference that never happened and never got rescheduled absolutely nothing happened and it cost france over 500 000 euros but that example as ridiculous as it is is more of a red herring than anything else consultants really did have a lot of influence in french politics for the past few years take housing assistance in january of 2021 the french government announced it would reform its housing assistance program supposedly in need of quote modernization what did modernization look like 30 percent of state fund recipients saw their assistance shrink another six percent got cut off entirely processing delays went from one month to three under the new more technical system in short several hundred thousand french people in poverty were put into an even more difficult situation than they were in before and behind it all a four million euro check made out to the consulting cabinets mckinsey and company but don't worry thanks to mckenzie's advice the state saved nearly 4 billion euros yay how did they do it by following mckenzie's incredible tip to cut off the poor and dump them on charity's lap truly revolutionary stuff but that's not the only place where consulting cabinets were involved according to the french senate report consulting cabinets were involved in most big reforms made by the macron government consultants orchestrated the management of the coveted vaccination campaign intervened in the reform of unemployment insurance a vocational training legal aid and in the health system consulting services are used from the top of the government all the way down to road speed radars which the state has deferred the responsibility of managing to soap wisteria and egis two more consulting firms at a cost of 82 million euros when you take the time to look it turns out you can find the fingerprints of this or that consulting firm at every level down to even the most basic functions of the state still you might be tempted to ask whether this is a problem people are people somebody was going to have to take care of it why does it matter that it's consultants and that's not a bad question but the problem with all this is that consultants don't operate on the same incentives and logic as civil servants consulting firms since their private industries operate on the logic of businesses and profit the author journalist and as it turns out former mckinsey consultant anand giridhas writes about the way consulting works in his book winners take all here he is describing how consulting firms present themselves and the messages that they communicate mckinsey like goldman had a persuasive story to tell it was a place where you could change the world improve lives invent something new solve a complex problem but these firms were in fact channeling a widespread dogma of the market as the place for world changing and of market types as ideal world changers consulting firms exist to deliver a central message that change is the exclusive domain of the private sector that governments might have good intentions but that markets are more effective more efficient and more capable of bringing about any desirable outcome including social justice this message that's at the core of consulting firms and more broadly neoliberalism suggests that governments should therefore try to act like the private sector to adopt its logic and its methods or downright outsource responsibilities if they really want to make good on their promises in other words if they want to work governments have to start acting like startups and to do that they have to hire consultants to show them how the problem is that consulting firms don't typically end up delivering on the promise of efficient social justice for one key reason profit and social justice don't mix according to consultants you can always find a win-win solution that satisfies both the good thing you're trying to do and helps your bottom line you can always do well by doing good but the reality is you can't but consulting firms try to sell it like this capitalism is in crisis people are wary of big business and blame it for the major social economic and environmental problems they face businesses are accused of profiting at the general public's expense and the public's not wrong but we consultants we can fix businesses and society at the same time we can align businesses and their immediate goals of profit with social responsibility consulting can help get rid of outdated methods of value creation that hurt the image of the capitalist economy today basically if you're a business owner don't worry the consultants are here and we're going to rehabilitate capitalism and that's not me jt from second thought saying that that's michael porter and mark cramer two consulting firm founders writing in the harvard business review in practice this works about as well as you can imagine consulting firms don't rehabilitate capitalism as much as they give it more room to breathe when they work with governments as in france they are there to dismantle the state apparatus bit by bit make things like poverty the private sector's problem pawn people off on charity because when you want to run the government like a business it's just good business sense to cut down on your expenses but it doesn't end there when they work with other private firms consultants are there to serve as a tool for executives to wield against their workers to formalize the power dynamics inherent to capitalism consultants expensive flashy and well-regarded pump out reports that outline how the best thing for a company to do the most profitable thing is to disregard workers and their demands for higher wages better benefits and work conditions no no see our report says the best thing to do is to make incremental reforms and make sure workers feel valued without giving them a nickel more of course and hey because they're experts and did the research consultants are infinitely more legitimate than a handful of workers coming up with ideas themselves discussing them together and uniting for better working conditions that's not very scientific after all and it turns out the science commissioned by your managers says capitalism was the best way to go all along so we'll just listen to that and you can stop with all the unionizing stuff if this sounds far-fetched to you look no further than a mckinsey report from september 2021 published amid fears of the great resignation in which the consulting firm alleges that employees crave investment in the human aspect of work more than pay benefits or perks workers want to quote feel valued the report was accompanied by this chart plotting the importance for employees of health and compensation somewhat or less important alongside their having a sense of belonging and feeling valued very important according to the report these reports tell executives to quote listen to their people just listen to your people people but never to the point of actually letting them decide anything themselves and certainly not when their demands start getting in the way of your bottom line and this isn't some cherry-picked example anti-union consulting is a rampant problem companies like google amazon microsoft and ikea are hiring all sorts of consulting firms with less publicly recognized names to tamp down unions or any sort of labor power a study by the economic policy institute estimates that american employers spend roughly 340 million dollars annually on union avoidance consultants using a wide range of legal and illegal tactics to frustrate the rights of workers to form unions and collectively bargain in the process and for good reason a worker covered by a union contract earns 13.2 percent more than a peer with similar education occupation and experience in a non-unionized workplace in the same sector union workers are more likely to have employer-sponsored health insurance and their employers contribute more towards these plans they are also more likely to have paid vacation and sick leave union workers are more likely to have retirement plans with their employers contributing more towards those plans than comparable non-union employers do unions also create safer workplaces and union workers are covered by due process protections so that unlike non-union workers in the u.s union workers cannot be fired at will with no warning and for almost any reason with all that in mind it's easy to see the kind of capitalism consultants are trying to rehabilitate in their reports [Music] a lot of people think consulting is a scam understandably so but what is a scam the dictionary my favorite book says a fraudulent or deceptive act or operation but you and i might just say a lie used to get something for consulting to be a scam then it would mean that it doesn't deliver on its promises that its promises are just lies used to get someone to pay for their services so you might ask do consultants deliver on their promises if their promises are to make the world better to aid humanitarian causes to improve people's lives consulting is a scam they might have shiny reports awards and fancy client lists that go on for pages but their methods of capitalism first social justice second mean that all their projects are ultimately empty shells for promoting a neo-liberal ideology but social justice isn't really what consultants promise at least not to the people that hire them those do good promises that's what they tell their employees and the general public when they write up client contracts the promise is very different consulting firms promise to further empower the rich and the powerful to turn over democratic institutions to the market and its select few dominant actors both in the workplace and at the national level and when it comes to keeping that promise consulting delivers consulting isn't a scam it's the most honest business there is i mentioned at the beginning of this video that my content is made possible thanks to my patrons on patreon when i made the switch to political content most of my sponsors bailed which is fine i'd rather just have a few that genuinely care about my channel and its message but that also means i'm having to rely much more heavily on viewers like you if you enjoy the content i'm producing and you're able to chip in even a dollar a month i would greatly appreciate the support you'll also get a bunch of cool perks if my undying love and appreciation isn't enough also if you're looking for something to listen to at work or on your commute make sure you check out the d program it's my podcast with hakeem and ugopnik and it's dedicated to helping listeners unlearn all the capitalist programming we've all been subjected to over the years that and it's just fun to hang out and talk kami stuff the response has been great so far and i really think you'll enjoy it links to both my patreon and the podcast are in the description that's all for today as always thanks for watching and i'll see you next week [Music] [Music] you

Channel: Second Thought

Views: 254,597

Keywords: Second thought, second thought channel, facts about, facts you didn’t know, things you didn’t know, McKinsey, mckinseygate, macron, france, French politics, le pen, capitalism, socialism, education, learning, educational videos, consulting, consultants, consulting firms, how consulting, how consulting firms secretly run entire countries, countries

Id: q6yu8F3TvpQ

Length: 16min 4sec (964 seconds)

Published: Fri May 20 2022