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Op-Ed | The American Prospect | December 17, 2020

Does Jeffrey Zients Have the Private-Sector Experience We Want in Government?

2020 Election/TransitionCoronavirusJeff ZientsPrivate Equity
Does Jeffrey Zients Have the Private-Sector Experience We Want in Government?

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On December 4, the Washington Post editorial board came to the defense of Jeffrey Zients, who has been appointed coordinator of COVID-19 response in the incoming Biden administration. A high-profile New York Times story, based on the Revolving Door Project’s research, exposed Zients’s history of investing in surprise-medical-billing firms and other exploitative industries. As we wrote, during his time in government, Zients was “a management consultant for the executive branch: cutting costs, finding efficiencies and looking at things like a businessman.”

“We’re struggling to understand what’s wrong with pursuing worthy objectives in the most cost-effective manner,” the Post editorial board wrote, going on to argue against a “simplistic anti-business mentality” among opponents of corporate control of government. “For all their excesses and abuses,” the board wrote, “corporations create useful products and jobs, and there is a long and healthy American tradition by which business leaders have put their expertise at the service of the public sector.”

We don’t dispute a word of this. But it is a telling and dangerous misunderstanding of the revolving-door critique to equate Zients’s private-sector history with that of any and all businesses. Zients is not a wealthy and respected businessman because he made a particularly good widget, or displayed unusual managerial skill.

Zients is wealthy because he told billionaires what they wanted to hear, exploited regulatory arbitrage, and furthered the financialization and consolidation of the American economy. None of these are useful skills. They are, in fact, many of the root causes of our age of economic inequality.

Zients initially made his money by leading a pair of management consultancies, the health care–focused Advisory Board and more general Corporate Executive Board. According to the Post’s own reporting in 2006, Corporate Executive Board “gets senior executives to share confidential details about their operations and success stories, collects and analyzes the data, and then disseminates its conclusions about ‘best’ and ‘worst’ practices back to those same executives.”

As for workers, again according to the Post, Corporate Executive Board directly advised its clients not to bother trying to establish any sort of social contract between their firms and their employees after rounds of layoffs: “The social contract is never coming back, and your employees know it.”

Zients, in other words, made his wealth by justifying to billionaires that they can and should get ever richer and ignore the consequences for the rest of society. He is not someone with unusual creativity, or even much experience working in the real economy as everyday people experience it—he is simply someone willing to reassure the egos of the powerful.

Since the Obama years, Zients has done a tour on Facebook’s board and managed the Berkshire Hathaway–esque investment firm Cranemere Holdings, which is sort of an umbrella company for an array of subsidiary businesses purchased over the years. The Cranemere deal which Zients most directly oversaw was its acquisition of NorthStar Anesthesia, a firm that provides anesthesia services to hospitals. Anesthesiologists are private-sector workers who provide a valuable service to society: Without their work, surgery would be impossible and lives would be lost.

But Zients’s work with NorthStar has had nothing to do with the firm’s actual services. Instead, Zients has guided NorthStar to buy up rival anesthesia providers, furthering an industry-wide trend toward regional monopolization. Despite—or perhaps because of—his due diligence, Zients also looked the other way on NorthStar’s use of surprise medical billing both before and after Cranemere’s acquisition. NorthStar routinely profited by doling out giant out-of-network bills to unsuspecting patients, who had no say in who served as their anesthesiologist for their medical procedures.

Zients’s much-vaunted private-sector “expertise,” in other words, is in taking a firm that actually provides a useful service and shaking down its customers for as much cash as possible while leaving no viable alternatives. Are these the skills we want in our nation’s leaders? Is it even possible to use these skills in the public interest?

It’s not as if Zients showed particularly unusual talents while in government the last time around. He is often celebrated for fixing healthcare.gov, which he did not through personal IT wizardry, but by bringing in a host of Silicon Valley fixers. At the time, some were subject to an illegal non-poaching conspiracy between Google and several other firms, which would have later fallen directly into Zients’s issue portfolio as the Obama administration’s point man on competition policy. Zients also had personal investments in a pediatric home health business during the healthcare.gov debug, a conflict of interest that the Obama team solved by … just deciding that it wasn’t a conflict of interest.

When the Revolving Door Project and other progressive voices raise concerns about Zients’s private-sector work, the objection is not to the private sector itself. Like it or not, America is a capitalist country, and refusing to appoint anyone who has ever worked for a living is simply untenable.

But Zients hasn’t exactly worked for a living for some time, has he? Certainly not in the way a bagel shop owner works for a living, or a coder, or an engineer. Each of these individuals contributes something to the common good. Zients’s work in the private sector appears to be mostly taking the contributions of people like small entrepreneurs, coders, and engineers and slapping a higher price tag on them. He is a financier who collects rents.

Similar stories underlie the rise of most of today’s best-paid professions. Management consultants are paid mostly to tell CEOs to get greedy and damn the consequences. Private equity moguls take businesses built by the hard work of actual entrepreneurs and strip them for parts, gorging themselves on easy cash, then leaving the firm a debt-addled husk. BigLaw partners trade DOJ secrets for massive fees, or sue enfeebled governments into oblivion for getting in the way of extractive businesses. As Alex Pareene wrote last week, that institution has made a whole ethical code out of springing to the defense of plunderers. Getting rich in Silicon Valley these days is not about having a particularly creative idea, but about exploiting regulatory loopholes, forcing gig workers into ever more dystopian conditions, and making too-rich-for-their-own-good venture capitalists feel especially proud of themselves—hell, do that last one well enough, and you don’t even need a business model.

This type of private-sector experience is not about creatively solving problems, turning ideas into reality, or even managing and invigorating employees. It is about financialization, consolidation, and otherwise rigging the system for profit at the expense of the workers and communities. Because this type of work is enormously lucrative, it has come to be seen as elite and respectable. It is neither. But its practitioners still implant themselves in our government and in front of our television cameras to normalize their grift. A functioning, public-oriented government would send many of these individuals to jail.

It is this sort of private-sector work that the Revolving Door Project opposes, since it is the private-sector work that requires a revolving door to maintain its legitimacy. It is also, sadly, much of what the American economy produces these days. To the Post’s suggestion that Biden bring in “manufacturing, transportation and commerce” leaders, we ask who in these fields neither exploits their workers nor profiteers from some financial engineering on the side? Actual “manufacturing” or “transportation” leaders are rarely the names bandied about for high-level political appointments—it’s financialization experts, revolving-door BigLaw attorneys, and Big Tech glad-handers.

We live in an era where businesses maximize shareholder value over all else, a mindset utterly inapplicable to public service, unless you want to, say, close down the industrial Midwest for underperformance. (Isn’t that what many Midwesterners think Democrats believe?) We have no chance of ending our Second Gilded Age if we cannot even identify why it exists: because many of the most powerful people of our time are experts only in maintaining their own power. Biden should steer clear of vesting yet more power into this plutocratic elite, no matter how many comforting stories they spin.

2020 Election/TransitionCoronavirusJeff ZientsPrivate Equity

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