Posts Tagged ‘graft’
“I Seen My Opportunities and I Took ’Em”*
U.S. Senators and Congresspeople are routinely privy to news that easily fits the definition of insider information (“a fact about a public company’s plans or finances that has not yet been revealed to shareholders and that could give an unfair advantage to its possessors if acted upon“), investing on which would constitute the crime of insider trading in any other setting. There are easy ways to avoid this risk (blind trusts, widely-held stock funds, et al.); still, over half of our elected representatives trade individual stocks.
The chart above is from Quiver Strategies, a company with a “democratizing” mission:
Over the past decade, alternative data has exploded in popularity among professional money managers. Alternative data allows investors to tap into new and unique data sources to aid their decisions. However, alternative data is typically priced for institutional clients, and is not widely available to retail investors.
Trends in FinTech such as commissions-free trading have made it easier than ever to actively manage your own portfolio, which has created millions of retail traders around the world.
Quiver was founded by two college students in February of 2020, with the goal of bridging this information gap between Wall Street and non-professional investors.
Maybe not surprisingly, one of the most successful families of strategies they’ve identified tracks the stock trades of Senators and Congresspeople (per the illustration above; use pull-down to see others).
Huge majorities of Americans favor a ban on Congressional trading; and a few legislators have introduced a bill to curtail it (along with others). But it been tried before, and failed. As for this wave, as Reuters reports “It was unclear when the legislation might be considered in committee or whether it will advance to the full Senate for debate and votes anytime this year.”
[Toth to Mark Frauenfelder and Boing Boing]
* Tammany Hall boss George Washington Plunkitt, as part of his justification of what he called “honest graft“
###
As we hold our noses, we might note that today is National Happy Hour Day.
“There’s an honest graft, and I’m an example of how it works. I might sum up the whole thing by sayin’: ‘I seen my opportunities and I took ’em.'”*…
McKinsey has a lot of high-flying rhetoric about strategy, sustainability, and social justice. The company ostensibly pursues intellectual and business excellence, while also using its people skills to help Syrian refugees. That’s nice.
But let’s start with what McKinsey is really about, which is getting organizational leaders to pay a large amount of money for fairly pedestrian advice. In MacDougall’s article on McKinsey’s work on immigration, most of the conversation has been about McKinsey’s push to engage in cruel behavior towards detainees. But let’s not lose sight of the incentive driving the relationship, which was McKinsey’s political ability to extract cash from the government. Here’s the nub of that part of the story.
The consulting firm’s sway at ICE grew to the point that McKinsey’s staff even ghostwrote a government contracting document that defined the consulting team’s own responsibilities and justified the firm’s retention, a contract extension worth $2.2 million. “Can they do that?” an ICE official wrote to a contracting officer in May 2017.
The response reflects how deeply ICE had come to rely on McKinsey’s assistance. “Well it obviously isn’t ideal to have a contractor tell us what we want to ask them to do,” the contracting officer replied. But unless someone from the government could articulate the agency’s objectives, the officer added, “what other option is there?” ICE extended the contract.
Such practices used to be called “honest graft.” And let’s be clear, McKinsey’s services are very expensive. Back in August, I noted that McKinsey’s competitor, the Boston Consulting Group, charges the government $33,063.75/week for the time of a recent college grad to work as a contractor. Not to be outdone, McKinsey’s pricing is much much higher, with one McKinsey “business analyst” – someone with an undergraduate degree and no experience – lent to the government priced out at $56,707/week, or $2,948,764/year.
How does McKinsey do it? There are two answers…
The estimable Matt Stoller (@matthewstoller) explains: “Why Taxpayers Pay McKinsey $3M a Year for a Recent College Graduate Contractor.”
See also: “How McKinsey Makes Its Own Rules.”
[Image above: source]
* “Everybody is talkin’ these days about Tammany men growin’ rich on graft, but nobody thinks of drawin’ the distinction between honest graft and dishonest graft. There’s an honest graft, and I’m an example of how it works. I might sum up the whole thing by sayin’: “I seen my opportunities and I took ’em.” — George Washington Plunkitt, New York State Senator and “Sage of Tammany Hall”
###
As we reconsider consultants, we might recall that it was on this date in 2010 that Tunisian street vendor Mohamed Bouazizi, despondent after the confiscation of his wares and the harassment and humiliation inflicted on him by a municipal official and her aides, set himself afire in his home town of Sidi Bouzid… a central catalyst for the Tunisian Revolution— the Jasmine Revolution– and the wider Arab Spring uprisings against autocratic regimes throughout the region.
You must be logged in to post a comment.