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17 Apr, 2020 19:10

Dueling corporations: Cuomo's elite consultants spar with Trump's Big Business CEOs to control Americans' futures

Dueling corporations: Cuomo's elite consultants spar with Trump's Big Business CEOs to control Americans' futures

US President Donald Trump and New York Governor Andrew Cuomo have retained squads of Big Business honchos to advise them on reopening the economy. Lost in the scuffle are the voices of those worst affected by the shutdown.

A ‘scientific’ model advised by two elite management consulting firms tasked with ‘Trump-proofing’ the reopening, or a business-first model recommended by the CEOs of some of the largest corporations in the US? The 22 million-plus Americans put out of work by the coronavirus-induced recession might balk at both, and they wouldn't be wrong.

Cuomo's coalition of mostly Democratic governors is advised by McKinsey & Co., the same elite management consulting firm that drew up an egregiously flawed model to predict the number of Intensive Care Unit (ICU) beds the state of New York would need during the pandemic. That model's worst-case scenario projected 40,000 beds would be needed by April 7 – and in the best-case scenario, by April 14.

In reality, the number of ICU patients has scarcely inched above 5,000. While such a catastrophically wrong prediction might get an ordinary person fired, or at least demoted, McKinsey (along with fellow management super-consultants Deloitte) has been rewarded with an opportunity to make policy that will affect the populations of seven East Coast states. While they're hardly the only ‘experts’ to get the numbers wrong – nearly every statistical model dramatically overestimated fatalities and hospital burden – putting them in charge risks repeating the mistakes made in shutting the economy down.

Cuomo, in coalition with six other governors, has nevertheless threatened to keep his state closed, potentially for several months more, if the nebulous goal of ‘public safety’ cannot be assured. But his choice of advisers – in addition to the consulting firms, private equity giants Bill Mulrow of Blackstone Group and Steven Cohen of MacAndrews & Forbes have been summoned to participate – is unlikely to inspire confidence among the small businesses that are typically preyed upon by private equity. 

The consultants win no matter what happens. Even if the policy they devise plunges the East Coast economies deeper into depression, both companies have large restructuring divisions capable of cashing in on the resulting wave of bankruptcies, and private equity firms specialize in turning what are politely termed ‘distressed’ corporations profitable. That wave of bankruptcies is already surging, and has doubtless accelerated after the small business bailout fund established last month via the CARES Act ran out of money. Cuomo announced on Thursday that social distancing guidelines and stay-at-home orders would be extended until at least May 15 – forcing ‘non-essential’ businesses to remain shuttered past the May 1 rent due-date and likely forcing many more to close their doors permanently.

But those who would seek their fiscal salvation in Trump's reopening plan might be disappointed. The president scrapped his initial goal of restarting the economy for Easter, which came and went uneventfully last Sunday aside from scattered protests against continuing lockdowns, and has extended the government's own social distancing guidelines to the end of April. Meanwhile, the corporations whose CEOs are advising on the administration's reopening plan include Apple, Bank of America, Goldman Sachs, Lockheed Martin, and McDonalds – hardly a list to encourage a small business owner worried about their future.

The Great American Economic Revival Industry Group, as it has been auspiciously named, will also include union leaders, along with professional sports figures and a smattering of think tank representatives. But their voices are likely to be drowned out by the corporate behemoths whose profits will fill the election coffers of both parties come November.

Republican congressman Thomas Massie, the one holdout against the CARES Act bailout, warned it would represent the largest transfer of wealth in history. As Trump and Cuomo duke it out over who has the ultimate authority to reopen the states whose economies make up over a third of the US' GDP, ordinary people are caught between a rock and a hard place as the vulture capitalists on both sides lick their lips and circle in closer.

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The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.