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While McKinsey and its global clients expanded in China, the country’s human rights record drew international condemnation. China threw activists like the Nobel Peace Prize laureate Liu Xiaobo in jail, where he died. The Communist Party cracked down on any group that might pose a challenge to its rule. But people still hoped, as Clinton did in 2000, that China’s economic boom would eventually bleed over into the political sphere. In 2008, China hosted the Olympic Games. Tens of millions of young Chinese were discovering that they could voice their opinions on the country’s dynamic social media platforms. Relations between the United States and China, though often testy, were at times cordial.
what???? lmao
One such program was the Belt and Road Initiative. Invoking the Silk Road, the caravan route of centuries past, the trillion-dollar plan sought to extend China’s influence by building ports, roads, bridges, railroads, and other projects across Asia, Africa, and beyond.
The plan quickly raised alarms in Washington and other Western capitals. Leaders feared China’s government would use the initiative as a stealth plan to expand its own military influence, to entrap poor nations by lending them money that they couldn’t repay, and to bind those nations in a Beijing-dominated sphere of influence. “These roads cannot be those of a new hegemony, which would transform those that they cross into vassals,” France’s president, Emmanuel Macron, said on a visit to China.
lmaoooooo
In an authoritarian state like China, where police have few constraints and there is no rule of law, that sentence takes on a very different meaning than it would in London, Tokyo, or New York City. A report issued by a U.S. congressional panel on China said that Chinese security officials are using smart cities technology to “expand, improve, and automate information collection and analysis for mass surveillance.”
lmao no way
Murray H. Bring, a senior Philip Morris lawyer, said the industry had nothing to apologize for. “We know that we are manufacturing a lawful product,” Bring said. “We also know that we are honorable and honest people.” Geoffrey Bible, a senior Philip Morris executive, cautioned against banning cigarettes, using words not likely to end up in a McKinsey slide:
What do you think smokers would do if they didn’t smoke? You get some pleasure from it, and you get some other beneficial things, such as stress relief. Nobody knows what you’d turn to if you didn’t smoke. Maybe you’d beat your wife. Maybe you’d drive cars fast. Who knows what the hell you’d do.
incredible
McKinsey also consulted for a group widely viewed as a tobacco industry front group—the Foundation for a Smoke-Free World. Founded in September 2017, the nonprofit organization asserted that its goal was to reduce deaths and disease from smoking while assuring potential donors that its board was independent with no ties to the tobacco industry. That statement was noteworthy for what it did not say—that Philip Morris International started the group with donations of $8.4 million. Of that, more than $400,000 went to McKinsey. PMI was the group’s sole donor, and McKinsey was the sole consultant.
crazy
OxyContin first sank its teeth into the poorer communities. “From a sales perspective, OxyContin had its greatest early success in rural, small town America—already full of shuttered factories and Dollar General stores,” Beth Macy wrote in Dopesick, her powerful account of opioid addiction and abuse. Within the first two years of the drug’s release, 24 percent of high school juniors in a small western Virginia town said they had tried OxyContin along with 9 percent of seventh graders.
jesus
In one slide, McKinsey told Allstate to try to settle 90 percent of its claims as quickly and as cheaply as possible. For the other 10 percent, policyholders or third-party claimants who didn’t take the Allstate offer or, even worse, hired a lawyer, the “boxing gloves” treatment was in order. They would fight in courts, for years if necessary, wearing down anyone who dared to sue.
McKinsey designed a system—the Claims Core Process Redesign—that pushed adjusters to make quick, lowball offers rather than allow them to come up with settlements that they considered fair. Adjusters, now tethered to a computerized claims system called Colossus, were reduced to little more than call-center workers reading prepared scripts. Pop-outs became rare. For homeowners’ claims, it was another computer program—Xactimate. But the idea was the same. Push claimants to accept less than the covered amount. Allstate says this characterization is “false and misleading” and that it overhauled its claims system in the 1990s to “pay claims more promptly and accurately.” McKinsey declined to comment.
omg this part made me so mad
By the 1990s, with McKinsey-led financialization sweeping the economy and ever-increasing pressure from activist shareholders for companies to boost profits, the firm pushed a big new idea to its clients: reducing the amount paid out in claims. In McKinsey-speak: “After years of squeezing the cost side, management recognized huge opportunities to rebalance and invested cautiously in LAE to capture indemnity savings.” The new approach to boosting profit was to curtail what insurance companies saw as unjustifiably high amounts paid out to some claimants. To control what it called “leakage.”
The surge in Allstate’s share price was accompanied by a dramatic fall in the “pure loss ratio,” the measure of claims payouts divided by premium income, before factoring in operating costs. In 1987, Allstate paid out 70.9 cents in claims for every dollar it took in. By 1997, two full years into the McKinsey makeover, the ratio had fallen to 58.2. By 2006, after spiking a year earlier amid huge claims resulting from Hurricane Katrina, it was 47.6.
i am going to become the joker
The insurance adjuster’s role had been greatly diminished. During her father’s time, setting a value for a claim had been a skill. Under Allstate’s new system, the computer would spit out an estimate. This was Colossus, a program that analyzed hundreds of different injuries entered by adjusters like her. As Brady soon learned, Colossus had been tweaked to lowball claims amounts. It was then her job to persuade the policyholder to accept a claim even lower than the one disgorged by Colossus.
Mark Romano, one of the people responsible for tweaking Colossus so that it favored the insurer, worked out of Allstate’s headquarters in Northbrook, Illinois. “I could turn the knob, so to speak, and increase the values of cases, or I could turn the knob down and decrease the value,” he said.
When payout data indicated something was amiss, Romano took to the road to find out what was going on. He and his colleagues discovered that adjusters were entering an unusual amount of herniated disk injuries into Colossus, a far more valuable claim than a “soft tissue” claim like whiplash. Romano was told to “calibrate” the claims teams across the country, telling them to reduce the number of herniated disk claims “regardless if a neurologist or an orthopedic surgeon or a radiologist or whomever said it was a herniated disk.”