Economic gurus versus global consulting giants: smoke or fresh air for governments?

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“I have not come to present a plan for the country, I am simply here to share my experience. Menem asked me many questions and one was whether I would be willing to help his finance team with my experience. it would be a great honorreplied the American economist Jeffrey Sachs going out to see the then president who had just taken office. It was July 1989. The expert had arrived in Buenos Aires introducing himself as guru and author of Bolivian stabilization through a shock plan in 1985.

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“What does it take to stop hyperinflation in Argentina? Stop issuing and close the deficit”.

The words came out of Sachs’ mouth like dark magic, but they were nothing but experience and evidence. Even Menem’s economists – Guido Di Tella, Domingo Cavallo and those of the Bunge y Born group such as Orlando Ferreres – knew what Sachs was saying. And not Menem? Also.

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Why, then, do many times capable people in positions of power fall into a board of advisers or advisers that is in the palm of everyone close to them?

This is one of the questions that a recent book by an economist from the University of London, Mariana Mazzucato, seeks to answer. At The Big Con you propose to change the relationship that governments and companies have with large global consulting firms (McKinsey & Company, Boston Consulting Group, Bain & C, PwC, Deloitte, KPMG, EY). For the Italian economist, this relationship is flawed and harmful to development.

Mazzucato is celebrated for this book. But also criticized. Her figure today represents for the world of the left and the economic policy of the governments of emerging countries something similar to what Naomi Klein was perhaps on the issues of globalization and the unfulfilled promises of the Washington Consensus in the 1990s. A few days ago, The Americas was published Quarterly recalled that in a short time she managed to be received by Gabriel Boric and to visit Argentina (last year with Stiglitz they visited Alberto Fernández in Olivos).

Mazzucato’s book is curious in one aspect (actually more than one). And it is that it questions large consultancies and the limits of the consultancy profession, providing collaboration with the Colombian government of Gustavo Petro in industrial policies and growth through the public policy institute leading to UCL (college of the University of London ).

Counseling, economics and governments have been intertwined since the welfare state was established as such. It is enough to read the work and the path of Alberto Hirschman to understand it this way. and see what Today one of the main job opportunities for the youngest economists in Argentina is consulting. There are schools in Buenos Aires that offer an economics degree that is almost tailored to the job needs of the industry. The back office of many multis has not only consolidated in recent years in the country, but also companies such as JP Morgan or S&P Global they have invested a lot for what is to come.

Mazzucato and Rosie Collington (the other author of the book) are right in their work: the big consultants fail – in the case of health care reform under Barack Obama – by weakening the state. But they also fall into clichés like the one serving these companies he encouraged the implementation of neoliberal policies as in Britain and the United States in the 1980s and 1990s.

“There are many cases and situations in which consultancy has a clear added value. Large consulting firms, in particular, have an enormous level of knowledge and experiencewith thousands of consultants and experts around the world, with significant experience and credentials in a wide variety of sectors,” explains Nicolás Grosman, a 10-year consultant and professor at the School of Government of the Universidad Di Tella. He has served 7 years at McKinsey and worked for 15 countries in the region.

“There are undoubtedly aspects that need to be discussed and reviewed for the consultancy to have a greater impact not only on clients, but also on the surrounding communities and in a sustainable way.”

The question that remains after reading the book is: if the authors were right, were the governments or companies that hire these consultants on a recurring basis being deceived? Don’t they realize? Clients use consultancies as much as they use their clients. Menem with Sachs, Kirchner with Stiglitz. Mauricio Macri also hired McKinsey for micro jobs. And Gustavo Lopetegui, the voice and eyes of his chief of staff, had worked as a consultant, meeting Horacio Rodríguez Larreta.

Mazzucato’s book is full of examples and cases but fails to demonstrate – perhaps it does not intend to – why their UCL institute could do the work that they themselves invalidate compared to large consultancies. Yes, however, they are right to point out that any McKinsey or EY can help justify an unsympathetic policy (a pension reform for example). And which can also represent the seal of quality that governments sometimes look for. Like Sachs with Menem. The man from La Rioja knew what the guru was doingtoday ‘progress’.

Source: Clarin

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