The Consulting Trap: How Professional Service Firms Hook Governments and Undermine Democracy

by Chris Hurl, Leah B. Werner

The Consulting Trap does a deep dive into how governments have become hooked on private consultancy firms with dire consequences for democratic decision-making, public accountability and accessible public services. Hurl and Werner contend that firms like McKinsey, Accenture, KPMG and Deloitte increasingly take responsibility for core public services, trapping governments in cycles of dependency. Through orchestrating tax avoidance for the wealthy while engineering austerity for the rest, they show how these firms have created the foundations for the deepening privatization of the public services, further entrenching their power.

Drawing on case studies from Canada and around the world, Hurl and Werner investigate how big consultancies leverage social networks, institutionalize relationships, mine and commodify data, and establish policy pipelines that facilitate the quick diffusion of ideas across jurisdictions. Drawing from real world examples, The Consulting Trap offers strategies for how these powerful firms can be resisted using people’s audits, public consultations, access to information requests, and social network analysis.

Genres: Politics, Nonfiction

196 pages, Paperback

Published June 18, 2024

Reviews

[Andrew · Rating 5 out of 5]

The Consulting Trap: How Professional Service Firms Hook Governments and Undermine Democracy, by Chris Hurl, is a fascinating little analysis of consultancy firms and their impact on modern democracies, with a focus on Canada, the UK and the US. Firms like KPMG, IBM and McKinsey are examined. Most countries have standards set that require third-party financial auditing on an annual, or sub-annual basis. This legislative requirement forces governments to engage the services of third party auditing and consultancy firms. Hurl starts their book with an examination of the history of consultancy in public service; these firms started in financial and technical auditing, and came into the fore with the advent of New Public Management (NPM), a theory that sought to bring business-like efficiency in government, and whose extreme proponents seek to operate government as business. In the modern world, consultancy firms audit, but also engage in benchmarking. This has led to a large conflict of interest; more money can be obtained if public services score lower on benchmarks set by the firms that audit them. Furthermore, value added services can be sold to "improve" government services, and raise a services standard on the benchmark. The temptation for shenanigans is overwhelming, I am sure.

Hurl looks at a number of interesting case studies; the Phoenix payment systems scandal in Canada is one of the more extreme examples of the ballooning costs possible under a consultancy led project. COVID-19 tracing apps is another great example. Consultancies are often hired to complete projects that are outside the scope and capacity of government agencies cut to the core by NPM principles, and a voter base that prioritizes low-tax initiatives, and distrusts government. Consultancy firms, therefore, are often required on large-scale projects that a government agency does not have the internal staffing and infrastructure to complete. These firms fill the gap of the missing public infrastructure our small government systems has prioritized over the last few decades. Advocates of NPM might argue that these features are cheaper on the whole, but the thousand percentage point increases in projected vs. actual costs of some of the projects listed above, calls that into question. Third party consultancy firms often offer basic, standardized products to their public agency customers. These products and ideas often end up being unhelpful, and do not solve key issues that may be specific to a locality. The global reach of these firms allows them to create vast archives of "lessons learned", that they then attempt to apply in a standardized, packaged format to various governments and services across the world. The auditing they do is often no better - lacking detail, and being largely unhelpful to elected officials and bureaucratic staff.

The allure of working at a consultancy firm is large. As anyone in the public service field can attest, pay and benefits is often middling at best, compared to the large sums offered by a consultancy firm. Often, talent that would be hugely beneficial in the public sphere, is captured in the private world, as many folks may see financial incentives over community spirit as a prime motivator for employment. This "mercenary" nature has had its impact. Many firms listed above have been implicated in scandal. The looting of state resources in South Africa was directed and supported by consultancy firms that audit governments on accountability and transparency in finance. Tax evasion for wealthy families in Canada is also supported by services offered by public consultancy firms. In the US, specific consultancy firms were helping the US Department of Health combat the opioid crisis, while simultaneously advising Purdue on how to sell more narcotics. These firms see these issues as "project specific", but the impact on their trustworthiness is noticeable. These firms were set up to be "watchdogs" against public corruption, but have come out promoting levels of corruption society has not yet been able to categorize. This is the destruction of the soul of private-sector style government.

Hurl proposes some excellent ideas after going thought the case studies and musing noted above. Keeping consultancy public, but using partnerships with education institutions, is one of the most promising ideas. Having good connections between University led thinktanks, and government agencies, allows knowledge sharing and connections to operate between the education and public sectors, and not between private and public institutions, which is where much corruption seems to stem from. It also has obvious and important impacts on government staffing, allowing a good collection and pool of great, knowledgeable candidates that has assisted in government-led R&D projects from their educational institutions. Another key idea, and a challenging one, is filling out public sector institutions properly. IT consultancies, for example, dominate public contracts for IT infrastructure. The security risk of privatizing data collection, information archiving, and internal and external payment systems, is obvious. A further wrinkle, becoming more apparent, is sovereignty. The country I live in is being threatened with annexation by the United States, through economic integration. Using American companies to build you critical government infrastructure, therefore, comes associated with the risk of a seizure of power by holding critical services hostage.

All in all, a very thoughtful and interesting book. An excellent read for those interested in NPM-theory, democratic infrastructure, and the intersection of public and private entities. I found the book highly though provoking.

[Jack McClelland · Rating 4 out of 5]

Informative and accessible primer on the wily rise of consulting firms in the USA, Canada, and UK. Equal attention was given to exposing how global professional service firms (Deloitte, KPMG, etc.) have snuck their way into delivering poorer and more costly public services in anglo-American countries – this being the titular "consultancy trap" – and showing how activists and professionals can push back against this trend.

While a longer book could have taken a more global scope, this brief read (clocking in at 152 pages) gives a concise and digestible overview of these firms' malicious operations in the US, Canada, and UK, while offering up some inspiring cases of resistance to the commodification of public services.

[renée · Rating 3 out of 5]

Book answers the question "wtf do consultants do" and "why are they everywhere" — Interesting look into the relationship between public entities and consultants but would of appreciated a deeper insight in the case studies.