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How McKinsey Destroyed the Middle Class - The Atlantic
How McKinsey Destroyed the Middle Class - The Atlantic

The rise of management consulting firms like McKinsey played a pivotal role in disempowering the American middle class by promoting corporate restructuring that concentrated power and wealth in the hands of elite managers while stripping middle managers and workers of their decision-making roles, job security, and opportunities for career advancement.

Key topics:

  • Management consulting's role in reshaping corporate America
  • The decline of the middle class and the rise of corporate elitism
  • McKinsey's influence on corporate restructuring and inequality
  • The shift from lifetime employment to precarious jobs
  • The erosion of corporate social responsibility
  • The role of management consulting in perpetuating economic inequality
what consequences has the rise of management consulting had for the organization of American business and the lives of American workers? The answers to these questions put management consultants at the epicenter of economic inequality and the destruction of the American middle class.
Managers do not produce goods or deliver services. Instead, they plan what goods and services a company will provide, and they coordinate the production workers who make the output. Because complex goods and services require much planning and coordination, management (even though it is only indirectly productive) adds a great deal of value. And managers as a class capture much of this value as pay. This makes the question of who gets to be a manager extremely consequential.
In the middle of the last century, management saturated American corporations. Every worker, from the CEO down to production personnel, served partly as a manager, participating in planning and coordination along an unbroken continuum in which each job closely resembled its nearest neighbor.
Even production workers became, on account of lifetime employment and workplace training, functionally the lowest-level managers. They were charged with planning and coordinating the development of their own skills to serve the long-run interests of their employers.
At McDonald’s, Ed Rensi worked his way up from flipping burgers in the 1960s to become CEO. More broadly, a 1952 report by Fortune magazine found that two-thirds of senior executives had more than 20 years’ service at their current companies.
Top executives enjoyed commensurately less control and captured lower incomes. This democratic approach to management compressed the distribution of income and status. In fact, a mid-century study of General Motors published in the Harvard Business Review—completed, in a portent of what was to come, by McKinsey’s Arch Patton—found that from 1939 to 1950, hourly workers’ wages rose roughly three times faster than elite executives’ pay. The management function’s wide diffusion throughout the workforce substantially built the mid-century middle class.
The earliest consultants were engineers who advised factory owners on measuring and improving efficiency at the complex factories required for industrial production. The then-leading firm, Booz Allen, did not achieve annual revenues of $2 million until after the Second World War. McKinsey, which didn’t hire its first Harvard M.B.A. until 1953, retained a diffident and traditional ethos
A new ideal of shareholder primacy, powerfully championed by Milton Friedman in a 1970 New York Times Magazine article entitled “The Social Responsibility of Business is to Increase its Profits,” gave the newly ambitious management consultants a guiding purpose. According to this ideal, in language eventually adopted by the Business Roundtable, “the paramount duty of management and of boards of directors is to the corporation’s stockholders.” During the 1970s, and accelerating into the ’80s and ’90s, the upgraded management consultants pursued this duty by expressly and relentlessly taking aim at the middle managers who had dominated mid-century firms, and whose wages weighed down the bottom line.
Management consultants thus implemented and rationalized a transformation in the American corporation. Companies that had long affirmed express “no layoff” policies now took aim at what the corporate raider Carl Icahn, writing in the The New York Times in the late 1980s, called “corporate bureaucracies” run by “incompetent” and “inbred” middle managers. They downsized in response not to particular business problems but rather to a new managerial ethos and methods; they downsized when profitable as well as when struggling, and during booms as well as busts.
Downsizing was indeed wrenching. When IBM abandoned lifetime employment in the 1990s, local officials asked gun-shop owners around its headquarters to close their stores while employees absorbed the shock.
In some cases, downsized employees have been hired back as subcontractors, with no long-term claim on the companies and no role in running them. When IBM laid off masses of workers in the 1990s, for example, it hired back one in five as consultants. Other corporations were built from scratch on a subcontracting model. The clothing brand United Colors of Benetton has only 1,500 employees but uses 25,000 workers through subcontractors.
Shift from lifetime employment to reliance on outsourced labor; decline in unions
The shift from permanent to precarious jobs continues apace. Buttigieg’s work at McKinsey included an engagement for Blue Cross Blue Shield of Michigan, during a period when it considered cutting up to 1,000 jobs (or 10 percent of its workforce). And the gig economy is just a high-tech generalization of the sub-contractor model. Uber is a more extreme Benetton; it deprives drivers of any role in planning and coordination, and it has literally no corporate hierarchy through which drivers can rise up to join management.
In effect, management consulting is a tool that allows corporations to replace lifetime employees with short-term, part-time, and even subcontracted workers, hired under ever more tightly controlled arrangements, who sell particular skills and even specified outputs, and who manage nothing at all.
the managerial control stripped from middle managers and production workers has been concentrated in a narrow cadre of executives who monopolize planning and coordination. Mid-century, democratic management empowered ordinary workers and disempowered elite executives, so that a bad CEO could do little to harm a company and a good one little to help it.
Whereas at mid-century a typical large-company CEO made 20 times a production worker’s income, today’s CEOs make nearly 300 times as much. In a recent year, the five highest-paid employees of the S&P 1500 (7,500 elite executives overall), obtained income equal to about 10 percent of the total profits of the entire S&P 1500.
as Kiechel put it dryly, “we are not all in this together; some pigs are smarter than other pigs and deserve more money.” Consultants seek, in this way, to legitimate both the job cuts and the explosion of elite pay. Properly understood, the corporate reorganizations were, then, not merely technocratic but ideological.
corporate reorganizations have deprived companies of an internal supply of managerial workers. When restructurings eradicated workplace training and purged the middle rungs of the corporate ladder, they also forced companies to look beyond their walls for managerial talent—to elite colleges, business schools, and (of course) to management-consulting firms. That is to say: The administrative techniques that management consultants invented created a huge demand for precisely the services that the consultants supply.
Consulting, like law school, is an all-purpose status giver—“low in risk and high in reward,” according to the Harvard Crimson. McKinsey also hopes that its meritocratic excellence will legitimate its activities in the eyes of the broader world. Management consulting, Kiechel observed, acquired its power and authority not from “silver-haired industry experience but rather from the brilliance of its ideas and the obvious candlepower of the people explaining them, even if those people were twenty-eight years old.”
A deeper objection to Buttigieg’s association with McKinsey concerns not whom the firm represents but the central role the consulting revolution has played in fueling the enormous economic inequalities that now threaten to turn the United States into a caste society.
Meritocrats like Buttigieg changed not just corporate strategies but also corporate values.
GM may aspire to build good cars; IBM, to make typewriters, computers, and other business machines; and AT&T, to improve communications. Executives who rose up through these companies, on the mid-century model, were embedded in their firms and embraced these values, so that they might even have come to view profits as a salutary side effect of running their businesses well.
When management consulting untethered executives from particular industries or firms and tied them instead to management in general, it also led them to embrace the one thing common to all corporations: making money for shareholders. Executives raised on the new, untethered model of management aim exclusively and directly at profit: their education, their career arc, and their professional role conspire to isolate them from other workers and train them single-mindedly on the bottom line.
American democracy, the left believes, cannot be rejuvenated by persuading elites to deploy their excessive power somehow more benevolently. Instead, it requires breaking the stranglehold that elites have on our economics and politics, and reempowering everyone else.
·archive.is·
How McKinsey Destroyed the Middle Class - The Atlantic
From Tech Critique to Ways of Living — The New Atlantis
From Tech Critique to Ways of Living — The New Atlantis
Yuk Hui's concept of "cosmotechnics" combines technology with morality and cosmology. Inspired by Daoism, it envisions a world where advanced tech exists but cultures favor simpler, purposeful tools that guide people towards contentment by focusing on local, relational, and ironic elements. A Daoist cosmotechnics points to alternative practices and priorities - learning how to live from nature rather than treating it as a resource to be exploited, valuing embodied relation over abstract information
We might think of the shifting relationship of human beings to the natural world in the terms offered by German sociologist Gerd-Günter Voß, who has traced our movement through three different models of the “conduct of life.”
The first, and for much of human history the only conduct of life, is what he calls the traditional. Your actions within the traditional conduct of life proceed from social and familial circumstances, from what is thus handed down to you. In such a world it is reasonable for family names to be associated with trades, trades that will be passed down from father to son: Smith, Carpenter, Miller.
But the rise of the various forces that we call “modernity” led to the emergence of the strategic conduct of life: a life with a plan, with certain goals — to get into law school, to become a cosmetologist, to get a corner office.
thanks largely to totalizing technology’s formation of a world in which, to borrow a phrase from Marx and Engels, “all that is solid melts into air,” the strategic model of conduct is replaced by the situational. Instead of being systematic planners, we become agile improvisers: If the job market is bad for your college major, you turn a side hustle into a business. But because you know that your business may get disrupted by the tech industry, you don’t bother thinking long-term; your current gig might disappear at any time, but another will surely present itself, which you will assess upon its arrival.
The movement through these three forms of conduct, whatever benefits it might have, makes our relations with nature increasingly instrumental. We can see this shift more clearly when looking at our changing experience of time
Within the traditional conduct of life, it is necessary to take stewardly care of the resources required for the exercise of a craft or a profession, as these get passed on from generation to generation.
But in the progression from the traditional to the strategic to the situational conduct of life, continuity of preservation becomes less valuable than immediacy of appropriation: We need more lithium today, and merely hope to find greater reserves — or a suitable replacement — tomorrow. This revaluation has the effect of shifting the place of the natural order from something intrinsic to our practices to something extrinsic. The whole of nature becomes what economists tellingly call an externality.
The basic argument of the SCT goes like this. We live in a technopoly, a society in which powerful technologies come to dominate the people they are supposed to serve, and reshape us in their image. These technologies, therefore, might be called prescriptive (to use Franklin’s term) or manipulatory (to use Illich’s). For example, social networks promise to forge connections — but they also encourage mob rule.
all things increasingly present themselves to us as technological: we see them and treat them as what Heidegger calls a “standing reserve,” supplies in a storeroom, as it were, pieces of inventory to be ordered and conscripted, assembled and disassembled, set up and set aside
In his exceptionally ambitious book The Question Concerning Technology in China (2016) and in a series of related essays and interviews, Hui argues, as the title of his book suggests, that we go wrong when we assume that there is one question concerning technology, the question, that is universal in scope and uniform in shape. Perhaps the questions are different in Hong Kong than in the Black Forest. Similarly, the distinction Heidegger draws between ancient and modern technology — where with modern technology everything becomes a mere resource — may not universally hold.
Thesis: Technology is an anthropological universal, understood as an exteriorization of memory and the liberation of organs, as some anthropologists and philosophers of technology have formulated it; Antithesis: Technology is not anthropologically universal; it is enabled and constrained by particular cosmologies, which go beyond mere functionality or utility. Therefore, there is no one single technology, but rather multiple cosmotechnics.
osmotechnics is the integration of a culture's worldview and ethical framework with its technological practices, illustrating that technology is not just about functionality but also embodies a way of life realized through making.
I think Hui’s cosmotechnics, generously leavened with the ironic humor intrinsic to Daoism, provides a genuine Way — pun intended — beyond the limitations of the Standard Critique of Technology. I say this even though I am not a Daoist; I am, rather, a Christian. But it should be noted that Daoism is both daojiao, an organized religion, and daojia, a philosophical tradition. It is daojia that Hui advocates, which makes the wisdom of Daoism accessible and attractive to a Christian like me. Indeed, I believe that elements of daojia are profoundly consonant with Christianity, and yet underdeveloped in the Christian tradition, except in certain modes of Franciscan spirituality, for reasons too complex to get into here.
this technological Daoism as an embodiment of daojia, is accessible to people of any religious tradition or none. It provides a comprehensive and positive account of the world and one’s place in it that makes a different approach to technology more plausible and compelling. The SCT tends only to gesture in the direction of a model of human flourishing, evokes it mainly by implication, whereas Yuk Hui’s Daoist model gives an explicit and quite beautiful account.
The application of Daoist principles is most obvious, as the above exposition suggests, for “users” who would like to graduate to the status of “non-users”: those who quietly turn their attention to more holistic and convivial technologies, or who simply sit or walk contemplatively. But in the interview I quoted from earlier, Hui says, “Some have quipped that what I am speaking about is Daoist robots or organic AI” — and this needs to be more than a quip. Peter Thiel’s longstanding attempt to make everyone a disciple of René Girard is a dead end. What we need is a Daoist culture of coders, and people devoted to “action without acting” making decisions about lithium mining.
Tools that do not contribute to the Way will neither be worshipped nor despised. They will simply be left to gather dust as the people choose the tools that will guide them in the path of contentment and joy: utensils to cook food, devices to make clothes. Of course, the food of one village will differ from that of another, as will the clothing. Those who follow the Way will dwell among the “ten thousand things” of this world — what we call nature — in a certain manner that cannot be specified legally: Verse 18 of the Tao says that when virtue arises only from rules, that is a sure sign that the Way is not present and active. A cosmotechnics is a living thing, always local in the specifics of its emergence in ways that cannot be specified in advance.
It is from the ten thousand things that we learn how to live among the ten thousand things; and our choice of tools will be guided by what we have learned from that prior and foundational set of relations. This is cosmotechnics.
Multiplicity avoids the universalizing, totalizing character of technopoly. The adherents of technopoly, Hui writes, “wishfully believ[e] that the world process will stamp out differences and diversities” and thereby achieve a kind of techno-secular “theodicy,” a justification of the ways of technopoly to its human subjects. But the idea of multiple cosmotechnics is also necessary, Hui believes, in order to avoid the simply delusional attempt to find “a way out of modernity” by focusing on the indigenous or biological “Other.” An aggressive hostility to modernity and a fetishizing of pre-modernity is not the Daoist way.
“I believe that to overcome modernity without falling back into war and fascism, it is necessary to reappropriate modern technology through the renewed framework of a cosmotechnics.” His project “doesn’t refuse modern technology, but rather looks into the possibility of different technological futures.”
“Thinking rooted in the earthy virtue of place is the motor of cosmotechnics. However, for me, this discourse on locality doesn’t mean a refusal of change and of progress, or any kind of homecoming or return to traditionalism; rather, it aims at a re-appropriation of technology from the perspective of the local and a new understanding of history.”
Always Coming Home illustrates cosmotechnics in a hundred ways. Consider, for instance, information storage and retrieval. At one point we meet the archivist of the Library of the Madrone Lodge in the village of Wakwaha-na. A visitor from our world is horrified to learn that while the library gives certain texts and recordings to the City of Mind, some of their documents they simply destroy. “But that’s the point of information storage and retrieval systems! The material is kept for anyone who wants or needs it. Information is passed on — the central act of human culture.” But that is not how the librarian thinks about it. “Tangible or intangible, either you keep a thing or you give it. We find it safer to give it” — to practice “unhoarding.”
It is not information, but relation. This too is cosmotechnics.
The modern technological view treats information as a resource to be stored and optimized. But the archivist in Le Guin's Daoist-inspired society takes a different approach, one where documents can be freely discarded because what matters is not the hoarding of information but the living of life in sustainable relation
a cosmotechnics is the point at which a way of life is realized through making. The point may be illustrated with reference to an ancient tale Hui offers, about an excellent butcher who explains to a duke what he calls the Dao, or “way,” of butchering. The reason he is a good butcher, he says, it not his mastery of a skill, or his reliance on superior tools. He is a good butcher because he understands the Dao: Through experience he has come to rely on his intuition to thrust the knife precisely where it does not cut through tendons or bones, and so his knife always stays sharp. The duke replies: “Now I know how to live.” Hui explains that “it is thus the question of ‘living,’ rather than that of technics, that is at the center of the story.”
·thenewatlantis.com·
From Tech Critique to Ways of Living — The New Atlantis
Why Do Employers Provide Health Care in the First Place?
Why Do Employers Provide Health Care in the First Place?
In 2017, Americans spent $3.5 trillion on health care — a level nearly equal to the economic output of Germany, and twice as much as other wealthy countries spend per person, on average. Not only is this a problem for the people seeking care; it’s also a problem for the companies they work for. Currently, about half of Americans are insured through an employer, and in recent years companies have borne the financial brunt of rising costs. Frustrated, many employers have shifted the burden to workers, with average annual deductibles rising by more than 50% since 2013.
·hbr.org·
Why Do Employers Provide Health Care in the First Place?
The End of the English Major
The End of the English Major
. Perhaps you see the liberal-arts idyll, removed from the pressures of the broader world and filled with tweedy creatures reading on quadrangle lawns. This is the redoubt of the idealized figure of the English major, sensitive and sweatered, moving from “Pale Fire” to “The Fire Next Time” and scaling the heights of “Ulysses” for the view. The goal of such an education isn’t direct career training but cultivation of the min
Or perhaps you think of the university as the research colony, filled with laboratories and conferences and peer-reviewed papers written for audiences of specialists. This is a place that thumps with the energy of a thousand gophers turning over knowledge. It’s the small-bore university of campus comedy—of “Lucky Jim” and “Who’s Afraid of Virginia Woolf?”—but also the quarry of deconstruction, quantum electrodynamics, and value theory. It produces new knowledge and ways of understanding that wouldn’t have an opportunity to emerge anywhere else.
English professors find the turn particularly baffling now: a moment when, by most appearances, the appetite for public contemplation of language, identity, historiography, and other longtime concerns of the seminar table is at a peak.
“Young people are very, very concerned about the ethics of representation, of cultural interaction—all these kinds of things that, actually, we think about a lot!” Amanda Claybaugh, Harvard’s dean of undergraduate education and an English professor, told me last fall.
In a quantitative society for which optimization—getting the most output from your input—has become a self-evident good, universities prize actions that shift numbers, and pre-professionalism lends itself to traceable change
One literature professor and critic at Harvard—not old or white or male—noticed that it had become more publicly rewarding for students to critique something as “problematic” than to grapple with what the problems might be; they seemed to have found that merely naming concerns had more value, in today’s cultural marketplace, than curiosity about what underlay them
·newyorker.com·
The End of the English Major
Why education is so difficult and contentious
Why education is so difficult and contentious
This article proposes to explain why education is so difficult and contentious by arguing that educational thinking draws on only three fundamental ideas&emdash;that of socializing the young, shaping the mind by a disciplined academic curriculum, and facilitating the development of students' potential. All educational positions are made up of various mixes of these ideas. The problems we face in education are due to the fact that each of these ideas is significantly flawed and also that each is incompatible in basic ways with the other two. Until we recognize these basic incompatibilities we will be unable adequately to respond to the problems we face.
·sfu.ca·
Why education is so difficult and contentious
Introducing metalabel | Metalabel
Introducing metalabel | Metalabel
Record and fashion labels use the actual word “label,” but publishing houses, art galleries, filmmakers, and other collectives are all examples of a category we might call “culture labels” — entities that exist to fund, distribute, and promote culture of one kind or another.Most culture labels exist to promote a specific aesthetic, region, or point of view. A punk label flies the flag for punk rock with every record it puts out. A postcolonial fiction publisher creates space for marginalized voices in wider culture. These labels establish this perspective incrementally, release by release.
Labels provide seed funding to new ideas. Labels find, sign, and support talent. Labels signal to the rest of their ecosystem what matters. Taken all together, we can better appreciate what labels are. Labels are startups and institutions for culture.
It’s no coincidence that the push against labels coincided with the rise of the so-called “Creator Economy” and its new heroic myth of the independent creator who out-hustles and out-competes their way to millions of subs and riches. But the truth of the Creator Economy myth has become clear: billion-dollar platforms turning people into content factories and offering little in the way of creative support, financial security, or context in return.
·releases.metalabel.xyz·
Introducing metalabel | Metalabel