Tuesday, June 3, 2014

The sad part is this doesn't significantly lower my opinion of Matt Miller

Joseph and I try to avoid the overtly partisan at this blog. We frequently endorse Democratic positions but that has a lot to do with the current state of the GOP, which recently disavowed most of their best ideas because they saw that some Democrats liked them. When we do like an idea that Republicans still hold like expanding nuclear power, both Joseph and I have been fairly open with our support.

We certainly aren't in the business of endorsing candidates but I'm about to come damned close to endorsing anyone in today's primary who isn't named Matt Miller.

From Lee Fang via Brad DeLong:
Ethics forms filed by Miller to the House Clerk’s office, a standard procedure for any candidate for Congress, reveal that Miller received $239,099 from Burson-Marsteller, the influence and public relations firm, in 2013.

The ethics forms show a laundry list of other corporate clients, including American Express, General Electric, Linder & Associates, RLM Finsbury, and Wal-Mart. The New York Times’ Mark Leibovich, in his write up of the race, described Miller as a former consultant to McKinsey & Company. The ethics forms show that Miller continued to receive a salary at the firm up until announcing his run: $295,927 in 2013 and 2014, and $318,721 in the previous year, 2012. Many of Miller’s clients continued to pay him up until he announced his candidacy, including RLM Finsbury, which bills itself as a public affairs firm that helps influence lawmakers and regulators. RLM Finsbury says Miller left the firm as he launched his campaign.
The many corporate consultancy gigs held by Miller may cast his policy and pundit positions into question. For instance, when Miller penned a column for the Post defending corporations that take full advantage of the tax code to dodge paying billions in corporate income taxes, he did not disclose at the time that he was being paid by GE, a company that has become a symbol of this problem. Miller has endorsed cutting entitlement programs such as Social Security. As PR Week reported, Miller’s Burson-Marsteller was retained by billionaire Pete Peterson’s Fix the Debt campaign to help advocate for spending cuts to reduce the national debt.

Miller, in response to a query from Republic Report, says he has “always kept my editors and producers at my various outlets informed about my business activities, and have routinely made disclosures on air or in print where a reader or audience member should know of such work to avoid any conflict.” On KCRW radio, where Miller has hosted the popular show “Left, Right, and Center,” Miller says he has mentioned on air that he is an advisor to GE chief executive Jeffrey Immelt.  ”I advised on strategy, policy and communications, and helped lead work on two reports issued by McKinsey’s education practice on the achievement gap and on elevating the teaching profession in the US. At Burson, I advised clients on external communications and reputation matters, and helped with client development,” Miller says.
For me, Miller has long been among the worst of the professional centrists, eagerly jumping on any passing bandwagon that conventional wisdom has deemed sensible. What I did not realize how often he was getting fat checks to take those opinions.

I have to admit that I was caught off guard by the McKinsey/ed reform connection, not because it was unbelievable but because it seemed almost too apt to be true. I've already discussed McKinsey from the David Coleman side while Joseph has talked about the company's comical health care study. Here's Barry Ritholtz on McKinsey's overall record and culture:
McKinsey, the global consulting firm, has created dubious strategies for all manners of companies ranging from Enron to General Electric. Indeed, where ever there has been a financial disaster in the world, if you look around, somewhere in the background, McKinsey & Co. is nearby.

That’s a pretty significant accusation. But it is bore out by the track record of the firm. Some of the more questionable strategies of McKinsey:

• Advocating side pockets and off balance sheet accounting to Enron, it became known as “the firm that built Enron” (Guardian, BusinessWeek)

• Argued that NY was losing Derivative business to London, and should more aggressively pursue derivative underwriting  (Investment Dealers’ Digest)

• General Electric lost over $1 billion after following McKinsey’s advice in 2007 — just before the financial crisis hit. (The Ledger)

• Advising AT&T (Bell Labs invented cellphones) that there wasn’t much future to mobile phones (WaPo)

• Allstate reduced legitimate Auto claims payouts in a McK&Co strategem (Bloomberg, CNN NLB)

• Swissair went into bankruptcy after implementing a McKinsey strategy (BusinessWeek)

• British railway company Railtrack was advised to “reduce spending on infrastructure” — leading to a number of fatal accidents, and a subsequent collapse of Railtrack. (Property Week, the Independent)

No consulting firm that has been around as long as McKinsey has a blemish free record. But the total number of clusterf**ks and McKinsey foibles they are associated with goes on and on.

The question of today goes beyond the illegal insider trading of their former managing director — what is it about McKinsey that allows them to give some very awful, legally questionable advice, and yet escape blame?
Probably the same way a journalist does it and manages to keep his reputation.

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