Executives and their consultants had legitimate reasons for wanting to reimagine the American corporation. Cheap, high-quality Japanese products were challenging U.S. manufacturers, especially in the auto industry, prompting General Motors once again to seek help from McKinsey. But instead of focusing on quality-control issues, a major reason for Japan’s success, GM and McKinsey embarked on a massive corporate reorganization, notable mostly for how much it cost and how little it accomplished. In the end, the workers paid the stiffest price for this miscalculation through job losses.

The 1980s brought more instability, sparking a breathless string of stories about sudden riches, corporate raids, leveraged buyouts, and the fading appeal of once stable companies. “Billions could be made by buying up American companies and loading them with mountains of debt,” said Les Leopold, director of New York’s Labor Institute and author of Runaway Inequality. As these raiders got rich off what Leopold called “the deindustrialization of America,” their apologists praised them for making corporations more efficient. Some companies had indeed become complacent, but raiders often bought companies to break them up and sell off the pieces, leaving thousands of employees without jobs. “This is not the invisible hand of the market,” Leopold said. “This is the financial extraction process.”

McKinsey initially focused on India, where it aggressively promoted that country’s educated, English-speaking population as a landing spot for U.S. corporations seeking cheap labor. With McKinsey’s help, India became the world’s top offshoring location, earning the nickname “Offshore-istan.” According to Anita Raghavan, who has written about the rising influence of the Indian elite, McKinsey’s success in India was due largely to two senior leaders in the firm, Rajat Gupta, the firm’s managing partner from 1994 to 2003, and Anil Kumar, who had developed the firm’s internet practice in Silicon Valley. Kumar, pompous and abrasive, was not popular in the firm, but he had a powerful ally in Gupta, who shared his desire to spur economic development in India.

McKinsey worked closely with two of India’s biggest outsourcing companies: the trade group NASSCOM; and Infosys, which specializes in information technology and business consulting. McKinsey continued to advise Infosys as recently as 2020. Offshoring hurt American workers, but it was very good for India’s economy. “Our employee stock options program created some of India’s first salaried millionaires,” Infosys boasted on its website.

“Companies move their business services offshore because they can make more money—which means that wealth is created for the United States as well as for the country receiving the jobs,” McKinsey said. The benefit, the firm said, was a “bigger cake” for everyone to share. McKinsey pointed to how the airlines save money through offshoring: “By leveraging cheap labor, airlines are now able to chase delinquent accounts receivables that they would earlier be forced to ignore.”

McKinsey acknowledged that some American workers may suffer in the short term, but said that shouldn’t overshadow the benefits. “Focusing the offshoring debate on job losses misses the most important point: offshoring creates value for the US economy by creating value for US companies,” McKinsey wrote. It also produces new revenue and repatriates earnings that indirectly help create jobs for displaced workers. Some displaced workers can move to “other, high value-added activities,” McKinsey said.

Whereas other companies might celebrate employees for their loyalty and experience, apparently Walmart was not one of them. “Given the impact of tenure on wages and benefits, the cost of an associate with seven years of tenure is almost 55 percent more than the cost of an associate with one year of tenure, yet there is no difference in his or her productivity,” the task force found. “Moreover, because we pay an associate more in salary and benefits, as his or her tenure increases, we are pricing that associate out of the labor market, increasing the likelihood that he or she will stay with Wal-Mart.” More than anything, this showed how attitudes toward labor had changed since the Treaty of Detroit once held out the promise of a more secure future for workers, one in which their children might have a better life than their parents.