McKinsey in, Goldman out

BARACK OBAMA will almost certainly preside over an era of big government, the trillion dollar question is whether it will also be smarter government.

Mr Obama and his transition team certainly seem aware that this almost certainly necessary attempt to boost the recession-battered economy could turn pear-shaped. Last week’s appointment of Nancy Killefer to fill the newly created post of “chief performance officer” for the federal government is the clearest evidence of this. Ms Killefer will be the first alumna of McKinsey & Company to hold such an important post in government. The blue-chip consulting firm has also previously employed Karen Mills, who has been chosen to head the Small Business Administration.

Mr Obama may favour McKinseyites in much the same way as his predecessor seemed addicted to hiring alumni of Goldman Sachs. President Bush turned to Goldman Sachs for Hank Paulson, his treasury secretary; Robert Steel, Mr Paulson’s assistant secretary; Josh Bolton, the White House chief of staff; and many others besides.

Mr Obama’s wish to distance himself from Wall Street’s high profile ethical and business failures, means that he is unlikely to hire Goldman alumni with the same enthusiasm that Mr Bush had—although Goldman’s employees have been enthusiastic donors to Mr Obama’s campaign and now his inauguration expenses.

Yet the national mood has changed. Under Mr Bush, working for Goldman Sachs seemed in itself to be a qualification for high office. This, after all, was an era where what counted was understanding the financial markets and globalization, and having great connections all over the world.

The new era may place a higher value on finding practical ways to improve the workings of vast bureaucracies, and most of McKinsey’s clients are large multinational companies and government departments.

McKinsey has worked with many governments, even helping Tony Blair restructure the British Cabinet Office. As far back as 1952, the firm advised the transition team of the incoming president, Dwight Eisenhower.

Admittedly, McKinsey is by no means perfect—its advice is said to have led to the bankruptcy of Swiss Air, and it gave Enron, and eventually the rest of us, Jeffrey Skilling. But, for now, such faults can be overlooked. Here’s hoping those McKinsey pointy-heads can help turn America’s fiscal mess into one of the firm’s famed “solutions”.