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When McKinsey Comes to Town

12 min

Introduction

Narrator: In 2016, Jonathan Arrizola, a young steelworker and father of two in Gary, Indiana, was sent to troubleshoot an electrical problem. He was electrocuted and died. His wife, Whitney, was left to wonder how this could happen. "All they care about is money," she said. "My children have no father... Jon was everything to me." Jonathan’s death was not an isolated incident. It was part of a pattern of fatal accidents that began after his employer, U.S. Steel, hired the world’s most prestigious consulting firm to implement a new, hyper-efficient business plan.

This story opens a window into the dark side of influence explored in When McKinsey Comes to Town by investigative journalists Walt Bogdanich and Michael Forsythe. The book presents a damning exposé of McKinsey & Company, arguing that behind its veil of objective, data-driven advice lies a relentless pursuit of profit that has destabilized governments, fueled inequality, and contributed to public health crises across the globe.

The McKinsey Playbook: Efficiency at a Human Cost

Key Insight 1

Narrator: At its core, McKinsey’s value proposition is to make organizations more efficient. However, the book argues this quest for efficiency often comes at a steep, and sometimes fatal, human cost. The firm’s recommendations, presented in slick PowerPoint decks, frequently prioritize cost-cutting and shareholder value above all else, including worker safety and well-being.

The case of U.S. Steel in Gary, Indiana, provides a stark illustration. In 2014, the struggling steel giant hired McKinsey to implement a plan called "The Carnegie Way." The goal was to slash costs and boost profits. McKinsey’s consultants, many with no experience running a steel mill, recommended drastic cuts to maintenance staff and procedures. The union warned that these measures were dangerous, but the changes went ahead. The consequences were tragic. First, Charles Kremke was electrocuted due to safety violations. A year later, Jonathan Arrizola died in a similar incident. The government fined U.S. Steel, but the initial penalty of $42,000 was negotiated down to just $14,500 for the two deaths.

This pattern was not unique to heavy industry. In the 1990s, Disneyland hired McKinsey to "transform maintenance." The firm recommended cutting maintenance staff and outsourcing jobs to save money. A maintenance supervisor, Bob Klostreich, warned Disney executives that the cuts were compromising safety, comparing it to a pilot deciding to skip a preflight check because the plane hadn't crashed recently. In 1998, his fears were realized. A metal cleat, improperly secured with a nylon rope instead of steel, tore loose from the Columbia sailing ship ride, striking and killing a tourist. The book argues that in both cases, McKinsey provided the intellectual justification for cost-cutting measures that management already desired, allowing them to deflect blame when disaster struck.

The Inequality Machine: Widening the Gap Between the Rich and the Rest

Key Insight 2

Narrator: Bogdanich and Forsythe trace McKinsey's role in accelerating economic inequality back to the 1950s. At the time, a social contract, exemplified by the "Treaty of Detroit" between automakers and unions, was creating a stable American middle class. But corporate executives felt their pay wasn't keeping pace. General Motors hired McKinsey to study executive compensation, and a consultant named Arch Patton produced a report that would change corporate America forever.

Patton’s study benchmarked CEO pay across dozens of companies, creating a competitive "keeping up with the Joneses" effect. His work championed linking executive pay to company profits through bonuses and stock options. This ignited an arms race in executive compensation. In 1950, the average CEO made 20 times more than a typical worker. By 2020, that ratio had exploded to 351-to-1.

McKinsey didn't just help the rich get richer; it also advocated for policies that squeezed the working class. The firm was a major proponent of downsizing and offshoring. Consultants advised corporations that loyalty was a relic and that their primary duty was to shareholder value, not their employees or communities. In the early 2000s, McKinsey aggressively promoted India as the world's top offshoring destination, creating reports that guided U.S. companies on how to move jobs overseas to take advantage of cheap labor. As one McKinsey report stated, focusing on job losses "misses the most important point: offshoring creates value for the US economy by creating value for US companies."

Playing Both Sides: Conflicts of Interest in Government and Healthcare

Key Insight 3

Narrator: The book reveals a disturbing pattern of McKinsey working for both government regulators and the very industries those agencies are meant to oversee, creating profound conflicts of interest. This is particularly evident in the healthcare sector.

In Missouri, the governor hired McKinsey for $2.7 million to overhaul the state's Medicaid program, which provides healthcare for the poor. The firm's final report, which contained generic recommendations, was used to justify a new system. The companies hired to administer that new program were, unsurprisingly, either existing or soon-to-be McKinsey clients. In Arkansas, Blue Cross Blue Shield offered the state a $1.5 million grant on the condition that it hire McKinsey to evaluate its Medicaid program. The state accepted, awarding McKinsey a no-bid contract that eventually ballooned into over $100 million of work.

This "playing both sides" strategy reached a peak during the debate over the Affordable Care Act (ACA). In 2011, McKinsey released a survey claiming that nearly a third of employers would drop health coverage under the new law. The report, which clashed with all other credible studies, was seized upon by Republican opponents of the ACA. When pressed, McKinsey admitted its survey was not predictive and used slanted questions. The firm’s deep client relationships with major health insurers, who were privately trying to weaken the law, raised serious questions about its motives and objectivity.

Turbocharging the Opioid Crisis: Profit Over Public Health

Key Insight 4

Narrator: Perhaps the most damning chapter of the book details McKinsey’s work with Purdue Pharma, the maker of OxyContin. From 2004 to 2019, Purdue paid McKinsey over $83 million to help it "turbocharge" opioid sales, even as the death toll from the opioid epidemic mounted.

McKinsey advised Purdue on how to counter the emotional messages from mothers of overdose victims with data-driven arguments. They developed strategies to target high-prescribing doctors and focus on "growth pockets" for OxyContin, like Fort Wayne, Indiana, where opioid deaths were already surging. Most shockingly, McKinsey consultants proposed giving Purdue’s distributors, like CVS, a rebate for every OxyContin overdose attributable to pills they sold. One presentation calculated that Purdue could pay a rebate of $14,810 per "event," projecting 2,484 CVS customers would overdose or develop an opioid use disorder in a single year.

When the legal pressure on Purdue intensified, internal emails show McKinsey partners discussing whether they should purge all their documents and emails related to the work. One partner wrote, "it probably makes sense to have a quick conversation with the risk committee... as things get tougher there someone might turn to us." McKinsey eventually paid nearly $600 million to settle investigations into its role in the crisis, but it admitted no wrongdoing.

The Accountability Shield: "We Do Execution, Not Policy"

Key Insight 5

Narrator: Throughout its most controversial engagements, McKinsey has defended itself with a simple mantra: "We do execution, not policy." The firm argues that it is a neutral implementer, merely helping clients achieve their goals more efficiently, regardless of what those goals are. The book argues this is a shield used to abdicate moral responsibility.

This defense was tested most severely by the firm's work with Immigration and Customs Enforcement (ICE) during the Trump administration's crackdown on immigration. McKinsey was paid over $20 million to help ICE become more efficient. Its recommendations included cutting spending on food and medical care for detainees and accelerating the deportation process. The work sparked a rebellion inside the firm. During one conference call, a project leader defended the work by stating, "we don't do policy, we do execution." A young consultant shot back, "With that logic, you could justify working for any despot, even the Nazis."

This ethical firewall allows McKinsey to work with clients that other firms might shun, from Big Tobacco and major polluters to authoritarian regimes in China and Saudi Arabia. The book details how McKinsey advised a Chinese state-owned company that was building militarized islands in the South China Sea, directly challenging the interests of another top-tier client: the U.S. Department of Defense. For McKinsey, the book contends, the client’s interest is paramount, and the consequences are someone else’s problem.

Conclusion

Narrator: The single most important takeaway from When McKinsey Comes to Town is that the firm's influence is not a neutral force for good. Its ideology, which champions efficiency and shareholder value above all else, has become deeply embedded in the DNA of modern capitalism, often with toxic results. McKinsey's consultants are not just advisors; they are active participants who have repeatedly provided the intellectual cover and strategic roadmaps for actions that have harmed workers, consumers, and the public.

The book leaves readers with a challenging question about the nature of expertise in our society. It forces us to scrutinize the advice of the "smartest guys in the room" and ask a fundamental question: At what point does simply "executing" a client's wishes become complicity in the damage they cause?

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