Wednesday, 7 August 2013

A 'modest proposal' from McKinsey


[Paul Nash's painting 'Still Life with Shale Gas']

Yes, the global economy has had its difficulties, an unpredictable blip in the rising success of market economics, the result of a series of misjudgements by [INSERT NAME OR SECTOR]. But support for recovery is on its way in the form of a revolutionary technique, involving pumping deadly chemicals below our gardens, potentially earning huge sums.  

In the USA, pumping these chemicals has grown more than 50 percent annually since 2007. The chemical pumping boom could add as much as $690 billion a year to GDP and create up to 1.7 million jobs across the economy by 2020. The impact will extend to energy-intensive manufacturing industries and beyond.  

As always with profitable new manoeuvres, there is a small minority of naysayers, who are ignoring the extraordinary benefits to the economy - and to the poor - because they selfishly want to protect their homes and land from the benefits of future wealth.  We are confident that these misunderstandings are based on an unfortunate ignorance of the economics.  The potential profits are great enough that we can expect some of them to trickle down and compensate people for their ruined and poisoned landscape.

You can't stand in the way of progress, and we look forward to an era of chemical pumping, monetising huge wealth for future generations.  What non-economists fail to recognise is that, they may be living in a poisoned landscape (see artists impression above), but the wealth locked up in the land will be released for them and their children to spend on washing machines, giving them real choices which they would not otherwise have dreamed of.

After all, we are now growing hamburgers in test-tubes and no longer require outdated medieval concepts like 'land', when we can have a virtual version that will be in many ways better.

I am aware that this econ-babble is the most appalling nonsense, but it is worth spelling out what we are being asked to believe.

It is true that the ubiquitous management consultants McKinsey did not put their support for fracking quite like this, though there are echoes in their latest pronouncements on the five opportunities for the US economy.  They did at least recognise there were environmental issues which had to be solved, which at least goes further than the most bizarrely short-sighted cheer-leaders like Nigel Lawson.

Yet McKinsey is probably more responsible for the current state of the world than any similar organisation.  Their fatal reliance on one-dimensional measurement, central control and bone-headed pseudo-markets is one of the main reasons that UK public services are so staggeringly expensive, at the same time as being so staggeringly ineffective.

So I had to have a look at their prescriptions for future growth.  Fracking was one.  The others were:
  • Making the US economy more competitive in knowledge intensive industries. They estimate that global airline fleets will double by 2031.  I don't think so.  Not if climate change turns out to be significant.
  • Big data analytics for productivity: Well, yes, but only if the big data systems set frontline staff free to innovate and use the knowledge as they see best.  Thanks to McKinsey, most big data systems rely on rigid collection mechanism, linked to reward systems that render the data meaningless.  In other words, the benefits of big data have to be weighed against the McKinseyite costs of central control.
  • More investment in infrastructure: Well, yes, but once again this is based on those one-way cost-benefit analyses that only counts the benefits and ignores the costs.  More roads will tend to favour big business against small, and may simply destroy local jobs, and replace them with half as many corporate replacements - leaving many areas increasingly dependent on the centre. 
  • More effective talent development. You can't argue with that, until you come to the sentence: "introducing digital learning tools can boost student achievement."  But only alongside a close human relationship with a teacher; digital learning tools without a face-to-face relationship will tend to spread ignorance and one-dimensional knowledge.
In other words, McKinsey still seems to be committed to the same old mistakes: centralised data systems, centralised distribution systems and learning without transformative relationships.  It doesn't work.  

Worse, it is based on one-dimensional knowledge, and only one-dimensional knowledge - with the most simplistic and misleading bottom lines - could possibly make it worthwhile to poison the landscape to gorge ourselves briefly on shale gas.

2 comments:

Louise Alexander said...

The Lib Dem party line appears to be that Shale gas is worth subsidising if it can be 'regulated' ... we have to do better than this!

David Boyle said...

quite right!