Thursday, October 27, 2011
The truth about Rajat Gupta and McKinsey: He was arrogant and so was McKinsey
It is nice to see the silly Englishwallahs in India -- and NDTV fits the bill so well -- bending over backwards to defend Rajat Gupta, the former Goldman Sachs honcho being indicted for insider trading, passing on information to Rajaratnam, the hedgefund player, who has been convicted.
Gupta headed McKinsey India and his arrogance could be seen in the way he led the consultancy, in the attitude of the advice he gave -- he was contemptuous of the Indian government, of government as such. Of course, the market imbeciles in India considered what he and McKinsey had to say about reforms and restructuring of the government -- it was the government's stupidity that they should have turned to a callow private sector consultancy for advice on how to improve the efficiency of governance -- as distilled wisdom. They would time and again quote the McKinsey report for improving governance in India. What did the McKinsey report have to say? Oh, it said shrink the government, have these departments and do away with others. They were not saying all these not on the basis of some hard thinking but from sheer private sector perspective and bias, which was anything but knowledgeable and objective.
McKinsey like other multi-national organisations like the World Bank and the International Monetary Fund was plain stupid. It was prescribing for an Asian country based on experience of how things work in developed Western countries, with no concern for cultural frameworks and economic realities.
Gupta is not the lone example of private sector arrogance. The Wall Street was full of them, and one man whose arrogance comes through at a higher level is that of president George W Bush's last treasury secretary Hank Paulson, who was also from Goldman Sachs and who worked out the bailout package after the September 2008 financial market implosion, who arrogantly admitted that he did not know what went wrong and who also indirectly conceded that when Lehman Brothers was allowed to collapse the government did not realise how seriously the whole damned financial institutions were all implicated in it all.
Gupta is a warning sign for imbecile Indians who do not realise that free markets are like open seas and that storms could break out and no amount of smart-alecky intelligence will not help in times of danger though one can get away with undeserving laurels when the going is good. The Indian middle class intellectuals cannot be expected to display proper understanding of markets because it is a fuzzy, fizzy complicated phenomenon and Indian intellectuals have no talent for understanding anything inexact and un-mechanical.
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