Among the hoops that candidates for plum consulting jobs at McKinsey & Company had to jump through in late 2006 was a bit of play acting: They were given a scenario involving a hypothetical client, “a business under siege,” and told they would be meeting with its chief executive the next day. How would they structure the conversation?
One contender stood out that year: a 24-year-old Rhodes scholar named Pete Buttigieg.
“He was the only one who put all the pieces together,” recalled Jeff Helbling, a McKinsey partner at the time who was involved in recruiting. Mr. Buttigieg soon won the other candidates over to his approach.
“He was very good at taking this ambiguous thing that he literally had no background on and making sense of it,” Mr. Helbling said. “That is rare for anyone at any level.”
The preternatural poise that got Mr. Buttigieg hired at McKinsey has helped him rise from obscurity to the top tier of the 2020 Democratic primary presidential contest.
On the way there, he ticked all the boxes. Harvard. Rhodes scholar. War veteran. Elected mayor of a midsize city before age 30.
Mr. Buttigieg sells his candidacy, in large part, on his mayoralty of South Bend, Ind., and a civic revitalization there rooted in the kind of data-driven techniques espoused by McKinsey. His nearly three years at “the firm” set him apart from many of his campaign rivals, underpinning his position as a more centrist alternative to progressive front-runners like Senators Bernie Sanders and Elizabeth Warren.
Yet Mr. Buttigieg’s time at the world’s most prestigious management-consulting company is one piece of his meticulously programmed biography that he mentions barely, if at all, on the campaign trail.
As Mr. Buttigieg explains it, that is not a matter of choice. For all of his efforts to run an open, accessible campaign — marked by frequent on-the-record conversations with reporters on his blue-and-yellow barnstorming bus — McKinsey is a famously secretive employer, and Mr. Buttigieg says he signed a nondisclosure agreement that keeps him from going into detail about his work there.
But as he gains ground in polls, his reticence about McKinsey is being tested, including by his rivals for the Democratic presidential nomination. Senator Warren, responding last month to needling by Mr. Buttigieg that she release more than the 11 years of tax returns she already had to account for her private-sector work, retorted, “There are some candidates who want to distract from the fact that they have not released the names of their clients and have not released the names of their bundlers.”
Beyond Mr. Buttigieg’s agreement with McKinsey, this is something of an awkward moment to be associated with the consultancy, especially if you happen to be a Democratic politician in an election year shadowed by questions of corporate power and growing wealth inequality. The firm has long advocated business strategies like
raising executive compensation,
moving labor offshore and
laying off workers to cut costs.
And over the last couple of years, reporting in The New York Times and other publications has revealed episodes tarnishing McKinsey’s once-sterling reputation: its work advising Purdue Pharma on how to “turbocharge” opioid sales, its consulting for authoritarian governments in places like China and Saudi Arabia, and its role in a wide-ranging corruption scandal in South Africa. (All of these came after Mr. Buttigieg left the firm.)
Just this week, ProPublica, copublishing with The Times, revealed that McKinsey consultants had recommended in 2017 that Immigration and Customs Enforcement cut its spending on food for migrants and medical care for detainees.
After a campaign event on Wednesday in Birmingham, Ala., Mr. Buttigieg remarked on the latest revelations. “The decision to do what was reported yesterday in The Times is disgusting,” he said. “And as somebody who left the firm a decade ago, seeing what certain people in that firm have decided to do is extremely frustrating and extremely disappointing.”
The Buttigieg campaign says he has asked to be let out of his nondisclosure agreement so he can be more forthcoming about that formative time in his life. A McKinsey spokesman said Mr. Buttigieg “worked with several different clients” during his time with the firm, but “beyond that, we have no comment on specific client work.”
But interviews with six people who were involved in projects that Mr. Buttigieg worked on at McKinsey, along with gleanings from his autobiography, fill in some of the blanks.
New Recruit
Mr. Buttigieg was recruited by McKinsey at Oxford. The company seeks out Rhodes scholars like him, banking that their intellects will make up for their lack of M.B.A.s from traditional recruiting grounds like Harvard Business School.
Yet even during the recruitment process, Mr. Helbling recalled, Mr. Buttigieg made it known that, like many applicants, he saw the business experience on offer at McKinsey as a good job “in the near term,” in his case an asset on the way to a career in public service.
The work he did in his first year and a half at the firm — nearly a 10th of his adult life — is effectively a blank slate, though tax records give some hints. In 2007, his first year with the company, he filed tax returns in Illinois, where he worked out of the Chicago office, as well as in his home state of Indiana. But he also filed in Michigan, and in the city of Detroit, where he worked on a McKinsey project. In 2008, he filed a return in Connecticut (McKinsey has an office in Stamford). The next year, he filed in Connecticut and in California.
In early 2009 Mr. Buttigieg was spending his days, and many nights, in a glass-walled conference room in suburban Toronto. He was analyzing Canadian grocery prices, plugging the numbers into a database running on a souped-up laptop his colleagues nicknamed “Bertha.” PowerPoint slides and spreadsheets crept into his dreams.
He knew this wasn’t his calling.
“And so it may have been inevitable that one afternoon, as I set Bertha to sleep mode to go out to the hallway for a cup of coffee, I realized with overwhelming clarity the reason this could not be a career for very long: I didn’t care,” Mr. Buttigieg wrote in his autobiography, “Shortest Way Home.”
It was the only experience at McKinsey that Mr. Buttigieg wrote about in any detail. His next act at the firm didn’t merit a single complete sentence in the book. But it was a radically different, and for him far more interesting, public-spirited project: More than four years before he would be deployed as a Navy Reserve officer, he was heading to Iraq and Afghanistan.
McKinsey’s focus in Iraq during the latter part of George W. Bush’s presidency and the early years of Barack Obama’s was to help the defense department identify Iraqi state-owned enterprises that could be revived. The idea was to provide employment for men who might otherwise join the insurgency against the American-led occupation.
The McKinsey consultants on the ground in 2006 and 2007 were almost exclusively military veterans like Alan Armstrong, who flew fighters for the Navy and had an M.B.A. from the Wharton School at the University of Pennsylvania. Mr. Armstrong, in an interview, said that while the reasoning behind the program was sound, the ongoing insurgency and a crippled infrastructure — electricity, for example, was spotty or nonexistent — made execution very difficult.
But the program was popular among the top brass at the Pentagon. In 2006, the defense secretary, Donald H. Rumsfeld, met with the team in Iraq and asked about the “whiz kids” from McKinsey, which struck Mr. Armstrong as an obvious parallel to the Vietnam War era, when whiz kids of an earlier generation had worked for another defense secretary: Robert S. McNamara.
“McKinsey was more than willing to play along — they were being paid extraordinary rates to keep playing,” Mr. Armstrong said.
Another former McKinsey consultant who worked in Iraq recalled a surreal moment preparing a PowerPoint presentation while on a convoy to a shuttered food-processing factory, under the watchful eye of a burly private security guard. “It felt like we were completely half-assing everything — it wasn’t particularly effective,” he said.
Other former McKinsey consultants who worked on the Iraq project, Task Force for Business and Stability Operations, have a more positive recollection of the firm’s work.
“Over all I’m very proud of it,” said one consultant, who had met Mr. Buttigieg in Washington, where most of the McKinsey consultants assigned to the project worked when not visiting Iraq. Four of the six former McKinsey employees spoke on the condition that their names not be used, citing confidentiality agreements or the press policies of their current employers.
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Pete Buttigieg’s living quarters in Baghdad, where he recalls spending two nights in 2009.Credit…Buttigieg campaign
By 2009, the security situation in Baghdad was stable enough that McKinsey allowed in some nonveterans like Mr. Buttigieg, who had studied Arabic at Harvard. He went to Iraq aware of the stark similarities between the American experiences there and in Vietnam decades earlier.
At Harvard, his senior thesis had drawn parallels between the United States’ seeking to “save” Vietnam from “godless Communism,” and the 17th-century Puritan ministers who had come to America to civilize “savage lands.” In his autobiography and in an interview that has drawn charges of out-of-touch elitism from some quarters, he reflected on that history by quoting a passage from “The Quiet American” by Graham Greene: “Innocence is like a dumb leper who has lost his bell, wandering the world, meaning no harm.”
“I had protested the Iraq war,” Mr. Buttigieg said in an interview with The Times. “But I also believed that it was important to try to do my part to help have good outcomes there.” He found echoes, he said, of “the stories I had studied about well-intentioned Americans sometimes causing as many problems as they addressed.”
Mr. Buttigieg recalled spending only two nights in Baghdad, where McKinsey consultants were quartered in a building near the Tigris River, and “going to a ministry.” He never left the city during his time there, he said.
“Remember I’m like the junior guy, kind of new,” Mr. Buttigieg said. “It’s not like I was the one whose expertise was needed to sort out what was going on in the provinces.
“Eventually I knew what I was doing a little more and was more useful by the time I got to the Afghan side.”
Mission in Afghanistan
Mr. Buttigieg spent more time in Afghanistan. While Iraq had a fairly well-educated populace, a modern road system and large oil revenues, Afghanistan was far less developed. But the mission was similar: identify small and medium-size businesses to nurture so that they could employ Afghans, providing an attractive alternative to joining the Taliban while fueling economic growth.
Citing his nondisclosure agreement, Mr. Buttigieg declined to specify in the interview what he had worked on, though he mentioned having looked at opportunities in the agricultural industry — onions, tomatoes, olive oil — as well as paint manufacturing.
“They had some things to work with,” he said, “but would have benefited from support on things like business planning, more resources on how to plug in and eventually connections to markets too.”
In the years after Mr. Buttigieg left McKinsey, that program came under criticism from the Special Inspector General for Afghanistan Reconstruction. McKinsey had been awarded $18.6 million for the project, but the watchdog wrote in an April 2018 report that it had been able to find just one piece of related work product: a 50-page report on the economic potential of the city of Herat.
A former McKinsey consultant who worked in Afghanistan described a more extensive McKinsey presence there, involving work in the mining industry and a government transparency project, along with the Herat study.
“One of those sounds just exactly like what I was doing,” Mr. Buttigieg said. When asked which one, he said, “I can’t think of a way to answer that without getting in trouble with the N.D.A.”
Mr. Buttigieg’s work on the Afghanistan project ended in late 2009, close to the time he was commissioned as an officer in the Navy Reserve. And that October, when he was still several months from leaving McKinsey, he set in motion the next phase of his life: He registered as a candidate for office with the State of Indiana.
The next year, he lost a bid for state treasurer, after emphasizing his McKinsey experience during the campaign. (He recounted at one campaign event that after his Rhodes scholarship, “I came back and went into business, and I worked for a company where my job was to do math. I’m a card-carrying nerd.”) In 2011, at age 29, he was elected mayor of South Bend.
Mr. Buttigieg at a campaign event in Iowa last month.Credit…Tamir Kalifa for The New York Times
The full range of Mr. Buttigieg’s work at McKinsey isn’t clear, though in his autobiography he says that he worked on other projects, including “energy efficiency research” to help curb greenhouse-gas emissions for a client he didn’t name. He also found time in the summer of 2008 to travel to Somaliland, the autonomous region in the Horn of Africa. He went as a tourist, but while there talked to local officials and wrote an account of his experience for The International Herald Tribune.
Mr. Buttigieg has been asked on the presidential campaign trail about his time at McKinsey and, in several interviews this year, has sought to reconcile the company’s recent troubles with his own work there.
For Mr. Buttigieg, the solution to McKinsey’s ethical pitfalls may come in a rethinking of the rules that business abides by. Maximizing shareholder value, the North Star of modern American capitalism, has a downside when the rules of the game leave many people worse off, he said.
“The challenge is that’s not good enough at a time when we are seeing how the economy continues to become more and more unequal, and we are seeing the ways in which a lot of corporate behavior that is technically legal is also not acceptable in terms of its impact,” he said. “There has got to be a higher standard.”
This lecture is part of the McMaster Department of Philosophy’s Summer School in Capitalism, democratic solidarity, and Institutional design https://www.solidaritydesign2019.com
This lecture sets out a brief history of two versions of capitalist software. The first drove the capitalist hardware during the period known as the Great Compression—1945 to 1980. The second did the same for the period many refer to as the era of neoliberalism—1980 to 2008. This lecture describes the bug in the system that crashed the first version of the capitalist software and the subsequent design of the neoliberal software. It also describes the bug that led to the 2008 Great Recession, landing us in the current transitional period that we might describe as the era of neonationalism or Global Trumpism. A key idea is that the emergence of contemporary populist politics, both left-wing and right-wing Trumpist variants, are attempts to rewrite the software of capitalism once again.
America’s working class is in desperate shape, and its longtime protectors — unions — have lost much of their power.
President Trump talks a good gameabout helping American workers but has pursued arguably the most anti-labor agenda of any modern president. Now he has doubled down by choosing for secretary of labor a corporate lawyer who has spent his career battling workers.
This is a bit like nominating Typhoid Mary to be health secretary.
The official mission of the Labor Department emphasizes the promotion of “the welfare of the wage earners,” but Trump’s mission has been to promote the exploitation of wage earners.
So Eugene Scalia is a perfect fit. Scalia, a son of the late Supreme Court Justice Antonin Scalia who has fought unions on behalf of Walmart and other companies, is a talented and experienced litigator who upon assuming office will be in a position to disembowel labor.
There’s a larger issue: The relentless assault on labor has gained ground partly because, over the last half-century, many Americans — me included — became too disdainful of unions. It was common to scorn union leaders as corrupt Luddites who used ridiculous work rules to block modernization and undermine America’s economic competitiveness.
There’s something to those critiques. Yet it’s now clear that the collapse of unions — the share of employees belonging to unions has plunged to 10 percent in 2018 from 35 percent in the mid-1950s— has been accompanied by a rise of unchecked corporate power, a surge in income inequality and a decline in the well-being of working Americans.
For all their shortcomings, unions midwifed the birth of the middle class in the United States. The period of greatest union strength from the late 1940s through the 1950s was the time when economic growth was particularly robust and broadly shared. Most studies find that at least one-fifth of the rise in income inequality in the United States is attributable to the decline of labor unions.
Unions were also a formidable political force, and it’s perhaps not a surprise that their enfeebling has been accompanied by a rise in far-right policies that subsidize the wealthy, punish the working poor and exacerbate the income gap.
“Labor unions, and their ability to create a powerful collective voice for workers, played a huge role in building the world’s largest, richest middle class,” notes Steven Greenhouse in his superb, important and eminently readable new book about the labor movement, “Beaten Down, Worked Up.”
“Unions also played a crucial role,” Greenhouse adds, “in achieving many things that most Americans now take for granted: the
eight-hour workday,
employer-backed health coverage,
paid vacations,
paid sick days,
safe workplaces.
Indeed, unions were the major force in ending sweatshops, making coal mines safer, and eliminating many of the worst, most dangerous working conditions in the United States.”
Greenhouse, who covered labor for 19 years for The Times, acknowledges all the ways in which labor unions were maddening and retrograde. But he notes that corporations run amok when no one is minding them.
Union featherbedding and rigid work rules have been real problems. Yet without unions to check them, C.E.O.s engage in their own greedy featherbedding and underinvest in worker training, thus undermining America’s economic competitiveness.
Sure, it’s frustrating that teachers’ unions use political capital to defend incompetent teachers. In New York City, the union hailed its defense of a teacher who passed out in class, her breath reeking of alcohol, with even the principal unable to rouse her.
It’s also true that states with strong teachers’ unions, like Pennsylvania and Vermont, have far better student outcomes than states with feeble unions, like South Carolina and Mississippi. Teachers’ unions have also been heroic advocates for early childhood education, and Red for Ed strikers forced states like West Virginia, Oklahoma and Arizona to improve their school systems.
Remember, too, that manufacturing workers in Germany are unionized and earn $10 more an hour than their American counterparts. Mercedes-Benz autoworkers earn $67 an hour in wages and benefits, and German workers are guaranteed a presence on corporate boards. Unions don’t detract from Germany’s economic system and competitiveness but are a pillar of it.
The bigger picture is that America’s working class is in desperate shape. Average hourly wages are actually lower today, after inflation, than they were in 1973, and the bottom 90 percent of Americans have seen incomes grow more slowly than the overall economy over the last four decades. The reasons are complex, but one is the decline of unions — for unions benefit not only their own members but also raise wage levels for workers generally.
So I’ve come to believe that we need stronger private-sector unions — yet the Trump administration continues to fight them. Greenhouse notes that nearly 20 percent of rank-and-file union activists are fired during organizing drives, because the penalties for doing so are so weak: A corporation may eventually be fined $5,000 or $10,000 for such a wrongful dismissal, but that is a negligible cost of doing business if it averts unionization.
That’s why we need a secretary of labor who cares about laborers. Trump campaigned in 2016 as a voice for forgotten workers, but he consistently sides with large corporations against workers, and his nomination of Scalia would amplify the sad and damaging war on unions.
