Excellent article from COUNTERPUNCH inspired by Walt Bogdanich's new book, "When McKinsey Comes to Town":
JANUARY 9, 2023
McKinsey’s Addiction Corporations
Photograph by Nathaniel St. Clair
Almost 30 years ago, tobacco CEOs were forced to answer questions – under oath. For the first time, corporate bosses had to admit that tobacco companies were designing cigarettes to sustain addiction – a dark day for corporate profits, tobacco corporations, and the ever supportive management consultancy firm: McKinsey. Yet, it was a good day for everyone else. Corporate CEOs also confessed that they had manipulated an addictive drug. But Big Tobacco wasn’t finished.
The $157bn heavy tobacco giant Philip Morris shot back by trying to intimidate the media. The corporation did this by filing a $10bn lawsuit against two reporters and their employer – ABC News.
The goal was to shut them up – in the so-called “land of the free speech”. The corporation did this because of their investigation into nicotine manipulation in cigarettes. Yet, the corporate strategy came a touch too late. Public sentiments began to turn against Big Tobacco.
Watching all this unfold in horror was McKinsey. The global consultancy juggernaut was forced to observe a rising tide of public disapproval. Yet, McKinsey knew full well – for decades on end – what they had done.
McKinsey had facilitated some of the world’s largest tobacco corporations with the goal to sell more cigarettes. For McKinsey and Big Tobacco, it meant profits and handsome fees. While for smokers, it often means a painful and early death.
The entire affair was handled in a traditional McKinsey way. The firm kept out of the limelight. Even better for the world’s largest management consultancy firm, is when its name did not even feature once in the congressional hearings on tobacco. An outstanding corporate PR success achieving its corporate goal of hiding the truth.
Nobody even asked McKinsey whether its support for Big Tobacco matches its very own and much trumpeted “values” or not? And, what happened to Corporate Social Responsibility (CSR) and Business Ethics?
Next to corporate propaganda, the WHO estimates that about eight million people die from smoking related illnesses every year. McKinsey – in part – makes these deaths possible. Worse, the mass casualties of tobacco corporations are camouflaged by McKinsey’s so-called Values, CSR and the ultimate oxymoron of business ethics.
Perhaps it all followed McKinsey’s purpose, mission, and values. These values assisted tobacco corporations in killing about 15 people every hour. In any case, Big Tobacco offers what McKinsey really wants – mountains of cash. Despite what McKinsey calls o”bserve high ethical standards,” Big Tobacco was good for and to McKinsey.
Worse than McKinsey’s ethical greed was the fact that – as Walt Bogdanich and Michael Forsythe write in When McKinsey Comes to Town – “McKinsey knew about the health risk of smoking.” Today, this so-called health risk is a certainty as about three jumbo jets full of people die every hour on a so-called “smoking related disease”.
Imagine three 747 jumbo jets falling out of the sky every hour? After a few hours, global air traffic would grind to a halt. Luckily for tobacco corporations, most, if not all, smokers die quietly. With mass death out of sight, Big Tobaccocan carry on raking in $912bn per year – year after year after year. These are the wonders of Capitalism.
But things got even worse. As global alarms about death through cigarettes intensified, McKinsey found three perfect solutions, while, of course, adhering to their self-imposed task of observe high ethical standards:
1) McKinsey took on new tobacco clients. And these included R. J. Reynolds, Lorillard, Brown & Williamson, British American Tobacco;
2) on top of that, McKinsey even expanded their reach by getting Japan Tobacco International; and,
3) McKinsey sought to boost cigarette sales in Germany and Latin America.
Beyond that, McKinsey also cranked up two of their all-time favorites in order to turbo-charge the profits of Big Tobacco corporations. McKinsey recommended: its classic solution of offshoring, i.e. shifting manufacturing to low-cost countries; and simply paying workers less.
But McKinsey wasn’t done. In cahoots with Big Tobacco, McKinsey also pushed two more strategies: for one, McKinsey sought to weaken tobacco control measures in line with semi-religious belief in deregulation (read: pro-business regulation). The ideology of the free market serves corporations. But perhaps, it is not so good for people dying from lung cancer.
McKinsey’s second strategy was to push the idea that Big Tobacco moves its field of operation towards developing countries where it hopes to find less regulation, weaker states, and the ability to corrupt officials.
Perhaps it is not surprising when federal judge Gladys Kessler wrote, that Big Tobacco has,
known many of these facts for at least 50 years or more. Despite that knowledge, they have consistently, and repeatedly, and with enormous skill and sophistication, denied these facts to the public, to the Government, and to the public health community.
In other words, for about half a century, McKinsey kindly – well, for a fee! – assisted tobacco corporations in flogging off their deadly and toxic goods. McKinsey did so without getting much bad publicity and penalties.
What Big Tobacco and McKinsey did goes well beyond the standard volume of corporate criminality. Meanwhile, $10bn-firmMcKinsey did all this while making a fortune –‘quite’ ethically.
Perhaps the final success of McKinsey’s ethics is that well above 20% of children under eighteen years of age are using e-cigarettes – compared to less than 3% of adults. Big Tobacco knows exactly where profits are coming from. It isn’t from adults. It’s from our children. Of course, McKinsey assisted tobacco corporations in achieving such outstanding successes.
In the end, ethical McKinsey is about corporate growth and profits and, as Walt Bogdanich and Michael Forsythe say, stuff about health was just a cover. Companies like McKinsey and Big Tobacco corporations tend to see “stuff about health” – the impact of smoking on people and society – merely as an externality. It can be off-loaded to someone else.
Yet, as soon as McKinsey smells money, it is very happy to reach beyond Big Tobacco. Of course, McKinsey doesn’t shy away from venturing into another commercial sector. This is the sector where highly addictive behavior can be, as management jargon says, monetized. People can be made addictive to turn a profit.
This time it was gambling – a $260bn global behemoth. McKinsey was never shy when it comes to advising, for example, a major casino on how to keep gamblers at the table when they were about to leave. Pretty soon, super-ethical McKinsey understood that addiction offered big rewards – whether opioids, tobacco, or gambling.
McKinsey was also at hand when people can be made addicted to drugs. Between the years 2004 and 2019, the pharma giant Purdue and its secret Empire of Pain – handed over a cool $83.7 million in fees for so-called marketing adviceto McKinsey. The ethical McKinsey assisted Sackler’s Purdue when turbo-charging opioid sales. As a consequence, thousands of people were dying of overdoses.
750,000 people had died in an epidemic crank up by the sales of OxyContin. As of late 2021, opioid deaths showed no sign of abating – thanks to Big Pharma and its lackey of McKinsey. Beth Macy – the author of Dopesick – noted the inevitable, “companies, instead of seeing the potential for tragedy, saw a path to bigger profits.” This is capitalism – our enduring love story!
When Purdue started to realize that it is increasingly under public scrutiny, the corporation sought help. It hired McKinsey. Ethical company McKinsey was tasked with helping – not the people the drug made addicted to but the Big Pharma and how to protect its opioid profits. Seeking McKinsey‘s assistance wasn’t an irrational hallucination. It had three very good reasons:
1) McKinsey had a “good” track record given its ability to crank up profits for Big Tobacco;
2) McKinsey calls itself the leading consultancy for medical product companies – very true; and
3) McKinsey also had a good track record, not just in Big Tobacco, but also with Big Pharma corporations. It had already been advising Johnson & Johnson – a pivotal corporation in opioid production.
McKinsey had already assisted Johnson & Johnson sell its signature opioid drug – a narcotic patch called Duragesic. Meanwhile, as drug stores and law enforcement were trying to limit how much OxyContin was running through the USA, ethical McKinsey was doing the exact opposite.
McKinsey even suggested ways to get around specific safety measures. Such safety measures are unnecessary and unwarranted Uber-regulations for the crypto-religious believers in the free market. In other words, the free marketshould be free to kill – and, for a profit, of course!
Perhaps the height of immorality and corporate hypocrisy was reached when McKinsey itself claimed to have, “the duty to serve the client’s bottom line within moral and ethical boundaries.” McKinsey showed that hallucination like “corporate social responsibility” and “business ethics” are ideological fig-leafs for what McKinsey calls a “client’s bottom line,” i.e. profits.
It may well be that McKinsey’s understanding of ethics and profits can best be expressed by none other than Karl Marx who once wrote,
a certain 10%, will ensure its employment anywhere; 20%, certain will produce eagerness; 50%, positive audacity; 100%, will make it ready to trample on all human laws; 300%, and there is not a crime at which it will scruple, nor a risk it will not run, even to the chance of its owner being hanged.
So far, McKinsey has – and given the accounts outlined above – avoided being hanged. As a management consulting firm, it operates in the shadows of corporate capitalism.
Yet, McKinsey oils the wheels of capitalism and has – seemingly – no qualms when profit-making causes the death of hundreds of thousands of people made addicted by large corporations. All for a profit as we are told – that capitalism is the best system to allocate goods and services, and that competition serves us all. It is Capitalism – a Love Story, sold to us through corporate mass media every day.
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