Tucker Carlson goes full Alinsky on McKinsey for outsourcing manufacturing to China
Tucker Carlson spent the first 15 minutes of his show last night decrying the loss of so much of our manufacturing base to China. That concern has spread from the already devastated Rust Belt to the coastal habitats of the elites now that the pandemic has exposed our reliance for survival on an increasingly threatening China for pharmaceuticals, protective gear, and many other critical strategic goods, such as the rare earths necessary for the manufacture of advanced electronic components.
With the dangers of such dependence obvious to all, Tucker took an original angle and followed Saul Alinsky’s Rule #13: "Pick the target, freeze it, personalize it, and polarize it." His target: McKinsey & Company, the global consulting group that has helped many a giant corporation outsource its manufacturing to lower-wage countries, pre-eminently but not exclusively China, as a means of competing in world markets and in the domestic American market, which for the most part has been wide open to foreign competition.
Full disclosure: I was courted by McKinsey in my second year (1975–6) at Harvard Business School — I was even flown at their expense to their partners' meeting in the Bahamas, as well as interviewed in the U.S. and Tokyo — and received a job offer that I declined with thanks in order to complete my doctoral dissertation and join the Harvard Business School faculty. In the process, I got to know the firm pretty well and found that their reputation as the top of the consulting business was justified. At the time, I thought academia was a more idealistic life course, an illusion that lasted only a couple of years.
In helping U.S. corporations outsource manufacturing, McKinsey was following orthodox classical economics as first articulated by David Ricardo, who died in 1823 and therefore is not available for television interviews.
Among the notable ideas that Ricardo introduced in Principles of Political Economy and Taxation was the theory of comparative advantage, which argued that countries can benefit from international trade by specializing in the production of goods for which they have a relatively lower opportunity cost in production even if they do not have an absolute advantage in the production of any particular good. For example, a mutual trade benefit would be realized between China and the United Kingdom from China specializing in the production of porcelain and tea and the United Kingdom concentrating on machine parts. Ricardo is prominently associated with the net benefits of free trade and the detriment of protectionist policies. Ricardo's theory of comparative advantage produced offshoots and critiques that are discussed to this day.
Ricardo (and McKinsey) did not consider strategic issues of dependence on foreign sources that might cut off critical supplies in times of conflict. Nor did Ricardo stress the costs the domestic producers driven out of business; for him and other classical economists, the welfare of consumers enjoying lower prices and of producers of goods where comparative advantage lies, and who have more resources available, more than compensates for their losses. In modern American terms, Youngstown may lose its steel mills, but Hollywood and Wall Street benefit from access to China's and other global markets.
These theories, put into practice by McKinsey and many others, have been a major driver of the prosperity of coastal blue cities and the impoverishment of inland manufacturing bases, from Binghamton and Allentown, through the Midwest, and all the way out to Pueblo, Colorado and Fontana, California.
Tucker first challenged McKinsey's role in implementing these theories and vented on McKinsey, which he has been highly critical of before. A partial transcript via Grabien, followed by video:
Good evening and welcome to "Tucker Carlson tonight." If you are under the age of a hundred you have never lived in a world where that United Nations was not the most powerful country on Earth. For centuries America's dominance has shaped the globe, many of our most basic assumptions that we think of America, about democracy, culture, art and the value of human life are now much of the world's assumptions, at least, officially. This has been an American century but there is no mandate that we could leave the world forever. In countless ways this pandemic has showed us that, it has terrifyingly vulnerable we are. We know longer make masks here, we need specific medicines and we know longer need thos either. Ct scans in an endless list of other critical devices, none of them are made here anymore. Just like our phones and our routers and our machine tools in our airplane parts. China makes an awful lot of what we use and by the way, a lot of what our military uses. China has grown rich from selling all of this to us and that's why when we need to raise money in a crisis, this crisis for example, we sell our debt to China. If America goes bankrupt after all this, bankruptcy and the way that our leaders are responding to the pandemic that could happen. It will likely be the Chinese who bail us out, they are the only ones who can afford it. All of this is real and horrifying and most of us are just waking up to it now. So the question is, how did it happen? How did the world's richest democracy become dependent upon a hostile foreign dictatorship? There are a lot of reasons for that. Our leadership class allowed this to happen. Sometimes they did it in secret. And they got rich from doing it. Last night we talked told you about a consulting firm called Mckinsey and company. Mckinsey is the recruiter of choice for many graduates. Pete Buttigieg did out of Harvard. Mckinsey makes money selling advice and that advise Saudi Arabia's crown Prince for example how to silence all descent and his kingdom. In the 1980s, Mckinsey urged banks to expand something called securitization, that's the practice of selling bundled loans. That practice led directly to the 2008 financial crisis. Mckenzie promoted a concept called outsourcing. U.S. Companies they argued could increase short-term profits by sending many of their Jobs overseas. Kenzie defended this process by producing in-house research which, in the end they thought would be, it didn't happen. And early on, Mckenzie even offered its services to the communist party of China at a discount. The managing director served at the advisory board of the China developing bank which is the main driver behind of the most aggressive and brutal kind of colonialism of the world has seen in more than 100 years. So China rose and America declined but Mckenzie still found ways to make money here in the U.S. The company advised Purdue Pharma on how they could "Supercharge sales" of their addictive painkiller oxycontin. Mckenzie urged Purdue to use mail orders to bypass pharmacists that were trying to keep addicts from getting narcotics. Mckenzie advised Purdue on how to "Counter the emotional messages from others with teenagers who overdosed on opioids. Considering all the injuries this country has sustained over the past 40 years, the loss of manufacturing and unprecedented drug academic epidemic that has changed art demographics, leaders aligning with foreign dictatorships and a financial ice economy.
Following that introduction, he interviewed the retired managing partner of McKinsey, Peter Walker, who had spent roughly a quarter of his career working in China, not, as he explained, exporting American jobs, but principally advising Chinese insurance companies on how to manage their strategy and operations at world-class levels — not much of a threat to American interests. I embed a partial transcript via Grabien and the full segment below:
>> Mr. Walker, thank you so much for coming on. I want to start with the pandemic because that's what we were talking about in the first place. And I'm telling you — I'm quoting you here. We were praising China's response and I said, when people look back at what was done with the magnitude of the quarantine in China, they are going to get high praise. Credible reports suggest that Chinese authorities locked people in their apartments and left them to die. We know they snatched people off the street and threw them into police vans and that's where they went. That's a quarantine that you think they deserve high praise for. Why?
>> I think tucker if you just look at the results, there will always be questions about what the numbers are but I think the harsh action that they took given the scale of China and a number of big cities was exactly what they needed to do to be able to prevent the outbreak from going any further. The reality is that outbreak hasn't gone much beyond Wuhan. Their lack of disclosure and lack of transparency, they should be faulted for that and accountable for that.
>> Tucker: Okay. What would you say to the families of those who died, starve to death alone in their apartments are people wondering where their relatives went after they were bundled into Chinese police vans. How would you square their grief with the praise that you just heaped on the quarantine?
>> At the end of the day you just have to look at the total picture. It's like when Cuomo gets on every night and Trump gets on every night. Everyone's heart goes out to every individual that died and that's part of the suffering that comes with the disease. It's heartbreaking, every single one of them is. But they had to do it otherwise, if you can imagine the scale of China, if that blew out in large numbers to other cities the numbers will be off the charts.
>> Tucker: Wuhan where it began is roughly the size of the New York metro area. Given that you are praising their response, is there anything you are locking into New York?
>> I think we got a late start. In China got a late start, too. But the U.S. Got a late start and was also more unprepared when it comes to having the kind of people, the staff, the health workers, the equipment that was required to, the ppe and all of that.
>> Tucker: For sure, I think that's right. But if we had started earlier do you think it would be wise to lock people in apartments until they die?
>> Look, there are a lot of things about it that I don't like and those specific actions were I think overly harsh, insensitive. And China bears the brunt of that, they are accountable for that and I totally agree.
>> Tucker: Okay. So you said you don't like some of the things China has done. I want to go to something you said to come this is from your website, that you do like. You are asked about the uighurs, I'm sure you've been asked many times. Contrasting U.S. For example you mentioned the weakness, and dramatic improvements in the uighurs quality of life and that would include the last 50 years including a sharp reduction in Islamic terrorist incidents. That's what China got out of putting in? It sounds like it was a fair trade-off.
>> No I don't. I understand that for the government's point of view, clamping down on Islamic terrorism was a high priority. They are fanatics about stability. Do I agree that locking down a million people in an internment camp is a smart way to deal with Islamic terrorism? Absolutely not. So —
>> Tucker: May I ask, why would you note that their literacy had increased? I guess —
>> That's an important point. One of the things and researching my book which became very clear to me, the Chinese people, I said you have a lot of things going, why are you doing the things the way you do? One of the things you discover about the Chinese society, it's a collective society. So, very different from the individualistic society of the U.S. so in China, literally the way they would look at it is there were probably 80 million people where they live. We locked up 1 million and so 79 million people are materially better off in terms of the quality of life, standard of living and everything else. It was only about 1.5% that we locked up and that's how they think about it. Do I agree with that? No. I don't agree with it. That difference between collectivism and common good is a huge disconnect with the U.S. We regard and always have been proud of every human life is sacred and therefore any unjustice or injustice is something we ought to be railing against and they are just not wired that way.
>> Tucker: Sure. Do you think it's a genetic question when you said they are not wired that way?
>> No, it really goes back to Confucian values. I know there's been a lot of negative press on Confucian institutes but if you just go back to Confucian values, one of the things you will learn his family first, society second. Individual way down the totem pole and the individual's role is self improvement through education to better serve family and society. So whenever you talk to the Chinese about, how is the country doing, they always go back to the broad base of maximum number of people out of poverty and education.
>> Tucker: I bet they do. That's a pretty handy way to excuse putting a million people in a concentration camp. I wonder though, and I know this is hard, this is a problem in my life, it's hard to hear myself sometimes when I speak. But listening to you it sounds like a pure apology for fascist behavior.
>> Well let me go back to what I said before. Do I agree with putting a million people in an internment camps, absolutely not. In the U.S. Went through this, too.
>> Tucker: Will actually — well let me ask you the obvious question because I don't think anyone would do this for free. How much money have you made over the course of your long career with Mckenzie in China, just a rough estimate out there, it might be helpful to understand.
>> Yeah, look. I'm not — I probably spent a quarter of my time in China over the course of roughly a dozen years, something like that. And so you know —
>> Tucker: I guess the point I'm making ...
A couple of days ago, I referred to those who profited by exporting manufacturing to China as compradors, the Chinese merchants who profited from trade with the West as China declined from pre-eminence into poverty and dependence. McKinsey could fairly be called a comprador, at least in part — other aspects of its consulting doubtlessly developed American producers of goods and services.
I leave it to readers to decide for themselves whether or not Tucker Carlson is being fair to McKinsey. I am reasonably confident we will be hearing more from him on the subject.
Photo credit: Grabien screen grab.