Olivia: In 1950, the average CEO made about 20 times more than their typical worker. Today, that number is over 350. Jackson: Whoa, hold on. Three hundred and fifty times? That's not just a gap, that's a canyon. What on earth happened? Olivia: What happened is a fascinating and frankly, terrifying story. And a huge part of the answer might be hidden in the work of a single, incredibly powerful consulting firm. A name you've definitely heard, but whose influence you probably can't even begin to imagine. Jackson: Okay, I'm hooked. This sounds like a conspiracy theory, but with spreadsheets. Olivia: It’s less a conspiracy and more a quiet, deliberate revolution in how business is done. Today we’re diving into the book that pulls back the curtain: When McKinsey Comes to Town: The Hidden Influence of the World’s Most Powerful Consulting Firm by Walt Bogdanich and Michael Forsythe. Jackson: And these aren't just any authors, right? I feel like I've heard their names. Olivia: You have. They are both Pulitzer Prize-winning investigative journalists at The New York Times. For this book, they did something remarkable—they got access to McKinsey's highly secretive client list. They followed the money and the PowerPoints to uncover the firm's hidden role in some of the biggest stories of our time. Jackson: Access to the secret client list? That's like a journalist's Holy Grail. So, this book is the real deal. It’s an exposé. Olivia: Exactly. It argues that McKinsey, while projecting this image of a brilliant, values-driven organization, has often acted as a force for destabilization, inequality, and even death. All in the relentless pursuit of profit. Jackson: That is a massive claim. So where do we even start? How did one consulting firm get so powerful that it could reshape the entire economy? Olivia: It starts with a simple, seductive idea that became their calling card: efficiency. But as we're about to see, when McKinsey comes to town to make things "more efficient," ordinary people can end up paying a terrible price.

Jackson: "Efficiency." It sounds so clean, so rational. Like something you can't argue with. Who doesn't want to be more efficient? Olivia: That's precisely the appeal. McKinsey presents itself as a group of the world's smartest people, armed with data and scientific management principles, who can solve any problem. They offer objectivity. But the book opens with a chilling case study that shows what this "efficiency" can look like on the ground. Let's go to Gary, Indiana, in 2014. Jackson: U.S. Steel. I'm picturing a classic American industrial town, probably seen better days. Olivia: Exactly. U.S. Steel was struggling with aging equipment and fierce competition. So, they brought in McKinsey to implement a "transformational" plan with a very grand name: "The Carnegie Way." Jackson: The Carnegie Way. Sounds impressive. What did it actually involve? Olivia: In practice, it was a brutal cost-cutting exercise. McKinsey's consultants, many of them young MBAs with zero experience running a steel mill, recommended massive layoffs, demotions, and a radical reduction in maintenance staff. Their own compensation, by the way, was tied to how much money they saved the company. Jackson: Wait, their pay depended on how much they cut? That feels like a massive conflict of interest right there. You're incentivizing them to slash and burn, regardless of the consequences. Olivia: And the consequences were immediate and tragic. The steelworkers' union, led by a guy named Mike Millsap, started screaming about safety. They warned that with fewer maintenance workers and less experienced staff, something terrible was going to happen. They said the consultants were treating the mill like a spreadsheet, not a dangerous, complex industrial site. Jackson: And I have a sinking feeling they were right. Olivia: They were. In 2015, a 63-year-old worker named Charles Kremke was electrocuted. The government investigation found multiple safety violations. The company paid a small fine. Then, a year later, another worker, 36-year-old Jonathan Arrizola, a father of two, was also electrocuted while troubleshooting an electrical issue. Jackson: Oh, man. That's just devastating. Olivia: The book includes a quote from his widow, Whitney Arrizola, that is just gut-wrenching. She said, "All they care about is money. I have no husband. My children have no father... Jon was everything to me." The total government fine for both deaths, after negotiations, was just $14,500. Jackson: Fourteen thousand dollars. For two lives. That's not a penalty; that's the cost of doing business. But here's the question that keeps nagging at me, Jackson: How is McKinsey to blame? They're just advisors, right? U.S. Steel made the final call. Olivia: That's the genius of their model, and the book argues this is their central function. They provide what the authors call "intellectual cover." The CEO, Mario Longhi, already wanted to cut costs. McKinsey, with its prestigious name and fancy charts, came in and legitimized that decision. They gave it the stamp of scientific objectivity. When things went wrong, the company could say, "We were just following the advice of the world's top experts." It allows management to deflect blame. Jackson: So it's like getting a doctor's note for a decision you already wanted to make. You can show it to everyone and say, "See? It was a professional recommendation!" That's incredibly cynical. Olivia: It gets worse. This wasn't a one-off. The book details a strikingly similar story at Disneyland in the late 90s. A new executive, Paul Pressler, hired McKinsey to find savings. Their report was titled "Transforming Maintenance: Defining the Disney Standard." Jackson: I'm guessing "transforming" meant "cutting." Olivia: You guessed it. They recommended slashing the maintenance budget, laying off experienced workers, and shifting maintenance to the overnight shift to be less visible. A maintenance supervisor named Bob Klostreich warned them, saying they were compromising decades of safety culture. He was ignored. Jackson: And let me guess what happened next. Olivia: On Christmas Eve 1998, on the Columbia sailing ship attraction, a metal cleat that was supposed to be secured to the hull tore loose. A heavy rope snapped across the waiting crowd, killing a tourist named Luan Dawson and severely injuring his wife. The investigation found that an improperly trained supervisor had used the wrong kind of rope because the right kind wasn't available, and the cleat itself was weakened from a lack of proper maintenance. Jackson: Unbelievable. It's the exact same pattern as U.S. Steel. A focus on cost-cutting, a disregard for experienced workers' warnings, and then a preventable tragedy. Olivia: Exactly. Another former maintenance supervisor had a perfect quote for it. He said the attitude became, "'Hey, we haven’t crashed in a while, let’s skip the preflight.’" That's what happens when you apply spreadsheet logic to systems that require constant vigilance and respect for safety. McKinsey's "efficiency" created the conditions for disaster. Jackson: Okay, so the pattern is clear. They provide the intellectual justification for companies to prioritize profits over people's safety, and the results can be deadly. That's horrifying on its own. But how does this connect back to that insane CEO pay statistic you mentioned at the start? How do they go from advising on factory maintenance to reshaping the entire economy? Olivia: That's the next, and arguably even bigger, part of the story. They took the same logic—objective, data-driven analysis—and applied it not just to a single company, but to the very structure of American capitalism.

Jackson: Right, so let's connect the dots. We've seen the micro-level damage. How did McKinsey's influence scale up to create these massive, economy-wide problems like the pay gap? Olivia: It starts back in the 1950s, a completely different era of American business. The book talks about something called "The Treaty of Detroit," an agreement between the auto workers' union and General Motors. It guaranteed things like health insurance and pensions. There was a sense that if the company did well, the workers should too. Jackson: A shared prosperity model. It sounds almost quaint today. Olivia: It does. But even then, executives were getting restless. In 1950, GM executives hired McKinsey to answer a simple question: "Are we being paid enough?" A McKinsey consultant named Arch Patton led the study. And what he did fundamentally changed everything. Jackson: What did he do? Olivia: Before Patton, executive pay was a closely guarded secret. There was no real way to compare salaries across companies. Patton's study benchmarked executive compensation across dozens of top corporations. For the first time, CEOs could look at a chart and see that the CEO of another company was making more than them. Jackson: Oh, I can see where this is going. It created jealousy and competition. It's like when you find out your neighbor just got a brand new car. Olivia: Exactly! It kicked off an arms race. Patton's work linked executive pay to company profits, popularizing bonuses and stock options. Every board of directors now felt pressure to pay their CEO in the "top quartile" to attract the "best talent." And so, the rocket ship of executive compensation was launched, while worker pay stayed relatively flat. McKinsey didn't just report on the trend; they created the mechanism that fueled it. Jackson: So they essentially invented the justification for the modern CEO pay package. They gave boards the "data" to say, "Well, to be competitive, we have to pay our CEO 300 times what the average worker makes." Olivia: Precisely. They turned it from a question of fairness into a matter of market mechanics. And while they were helping executives get rich, they were also pioneering the strategies that would hollow out the American middle class. This brings us to offshoring. Jackson: Another one of those words that sounds neutral but has huge consequences. Olivia: In the early 2000s, McKinsey became one of the most aggressive champions of moving American jobs overseas, particularly to India. They published reports, advised top companies, and essentially created the playbook for globalization. They evaluated countries on cost, talent, and infrastructure, telling corporations where they could find the cheapest labor. Jackson: And I'm sure they framed it in that same "efficiency" language. Olivia: Of course. They had this infamous quote in one of their reports. They said, "Focusing the offshoring debate on job losses misses the most important point: offshoring creates value for the US economy by creating value for US companies." Jackson: Value for whom? That's the question. It's value for shareholders and executives, the same ones whose pay they helped skyrocket. It's certainly not value for the factory worker in Ohio whose job just got shipped to Mumbai. Olivia: And that is the core argument of the book. McKinsey's advice, presented as objective and scientific, consistently benefits capital over labor. It benefits the few at the expense of the many. Whether it's cutting maintenance at Disneyland, benchmarking CEO pay to the moon, or creating a roadmap for offshoring, the result is the same: profits are concentrated at the top, while risks and costs are pushed down to workers and communities. Jackson: It's a stunningly consistent pattern. They seem to have this ability to step into any situation, apply their framework, and the outcome is always a more unequal, and often more dangerous, world. Olivia: They call it "scientific management." The authors of this book suggest a different name might be more appropriate: an "inequality machine."

Jackson: So when you put it all together, the picture that emerges is... pretty damning. It's not just one bad project or one unethical client. It's a systematic pattern. Olivia: It is. The book argues that McKinsey's true product isn't strategy or advice; it's justification. They provide a veneer of intellectual, data-driven legitimacy for decisions that are often just about maximizing profit at any cost. They are the high priests of shareholder value, and their gospel has reshaped our world. Jackson: And they do it all from behind this curtain of secrecy and prestige. They work for governments and the companies those governments are supposed to regulate. They advise on public health while helping opioid manufacturers "turbocharge" sales. The conflicts of interest are staggering. Olivia: And that's the central tension. They recruit the brightest, most idealistic young people, promising them they can "make a difference" and work on "change that matters." The book is filled with stories of consultants who joined with the best intentions, only to find themselves creating PowerPoints that would lead to layoffs or environmental damage. Jackson: It's a powerful and disturbing thesis. They're like the invisible architects of our modern economy, and we're all living in the building they designed, with all its flaws and cracks, whether we like it or not. It really makes you wonder... how many other "McKinsey-isms" are shaping our lives right now, completely without our knowledge? Olivia: That is the question the book leaves you with. It forces you to look at the world differently, to ask who benefits from the systems we take for granted. Have you ever been in a workplace where a consultant's report was rolled out to justify a big, unpopular change? A restructuring, a round of layoffs? Jackson: Absolutely. It's a classic corporate move. And now I'm going to be looking at those situations with a whole new level of suspicion. Olivia: We'd love to hear from our listeners on this. If you have a story about consultants in your world, find us on our socials and share your thoughts. It’s a conversation that affects all of us. Olivia: This is Aibrary, signing off.