Groupthink: The aid industry’s hidden weapon

by Sasha Alyson
Posted 27/06/2020; revised on 3/3/2021

• In February 2021, New York Times columnist Nicholas Kristof wrote that “As many as three million children [in the U.S.] have gotten no education for nearly a year.” He treats schooling and education as synonymous, although a person can have either one, but not the other. This same mistake has led the U.N. to fill schools with children, regardless of whether the children learn anything.

• UNESCO accepted funding from Nokia, the tech company, then announced that mobile phones promote literacy – although the study conducted by UNESCO did not actually address that question, and did not find evidence to support such a claim.

• The U.S. Navy released a photo which sailors giving books to students in Nigeria. It looks helpful, in the picture! But actually, the books were leftover Florida test preparation manuals that nobody wanted.

• NGOs must get government permission wherever they wish to carry out a program – and local officials use this leverage to demand thinly-disguised bribes. UNICEF gave vehicles to government offices in Zimbabwe and Zambia to “help education.” The government can ignore its citizenry; this is far more lucrative.

In each case, it’s hard not to wonder: What were these people thinking? Did Navy officials actually believe that Florida test prep manuals were what Nigerian students needed? Did UNICEF staff not understand they were encouraging and rewarding government corruption?

The answer, I suspect, is that they were trying hard not to think about it at all. They were simply going with the flow, staying in the boss’s good graces, in a process known as groupthink.

Despite its bad rap, groupthink is an unavoidable part of life. We cannot conduct fresh research about every decision we face. Following the crowd is usually the safest course – even when the others are wrong. Make the same mistake as everybody else and who can really blame you? If you’re a giant corporation, you’re probably in line for a government bail-out. If you were the outlier, you’ll hang.

But often, groupthink does great harm. The obvious examples include centuries of groupthink about racial, geographic, sexual, and gender differences; groupthink-enforced silence about events that led to the Black Lives Matter and MeToo movements; and the wars – including World War I, the American war in Vietnam, and the invasion of Iraq – in which groupthink suppressed debate and reason.

In 1999, Bill Clinton’s Energy Department announced that “Converting biomass feedstocks to biofuels is an environmentally friendly process. So is using biofuels for transportation. When we use bioethanol instead of gasoline, we help reduce atmospheric CO2.” George W. Bush called for massive increases in ethanol production, despite growing alerts from scientists, and the push continued into the opening years of the Obama administration.

But the rush to biofuels was a colossal mistake. Farmers from Brazil to Indonesia lost their land to foreign palm-oil conglomerates. Ancient forests and peat were burned in Indonesia, releasing long-trapped carbon as well as massive clouds of smoke, estimated to cause 100,000 premature deaths. Corn and cassava were used to feed gas tanks instead of hungry people. And then further studies showed that in many circumstances biofuels actually increased greenhouse emissions. But by then, a powerful, newly-rich biofuels industry had formed. ProPublica reporter Abrahm Lustgarten concluded in a lengthy New York Times Magazine story: “This was what an American effort to save the planet looked like. It was startlingly efficient, extremely profitable and utterly disastrous.”(1)

Groupthink can spring from many motivations, but money usually plays a leading role. A U.S. Senate report listed some major causes of the 2008 financial crisis: Complex financial products, undisclosed conflicts of interest, and a failure by government regulators and credit rating agencies to do their jobs. Lenders made quick profits by selling mortgages to highly unqualified home-buyers, then repackaged and sold those mortgages in complex ways that disguised the risk. Agencies such as Moody’s and Standard & Poor’s were eager to assign a triple-A rating to junk. If they told the truth, banks wouldn’t give them any more securities to rate. Could no one see the flaw in this system?(2)

In this case, raw greed reinforced the groupthink, but wasn’t essential to it. The IMF’s internal watchdog agency found that many IMF failures in Europe stemmed from “groupthink and intellectual capture” within the Fund; staff members had withheld important documents from both the IMF board and the watchdog agency. Rewards went to those who played along, not those who best understood the situation. Michael Lewis, in The Big Short: Inside the Doomsday Machine, tells about a fund manager who got a 489% return for investors in a period when the S&P had returned about 2%: “It outraged him that the people who got credit for higher understanding were those who spent the most time currying favor with the media…. facts and logic were overwhelmed by the nebulous social dimension of things.”

Recent scandals within many big industries – autos, banking, cycling, drugs, education, football, and we’re only up to F – reveal how often groupthink hid evidence that their profits were built on causing injury, harm, and often death.

In every case, the cover-ups required wide collaboration amongst people whose rationalizations we cannot know with certainty, but who surely found ways to feel just fine about what they were doing – in large part because they were surrounded by others doing the same thing and apparently feeling fine about it. Todd Putman, once a top marketing official for Coca-Cola, remarked years later that “I have a large karmic debt to pay for the number of Cokes I sold across this country,” yet he recalls that earlier, when he was surrounded by fellow Coke enthusiasts, all richly rewarded for helping with Coke’s success, he swelled with pride as he saw soda sales climb, and particular pleasure when they passed milk.

After the doping scandals brought down Lance Armstrong and other cyclists, there was considerable hindsight about what had gone wrong. The media had gone along and eventually, so did everyone else. Cyclist David Millar wrote that “In 1996, I believed myself incapable of cheating.” The next year he turned professional and found himself immersed in a doping culture. “I was told early on that it would be impossible to win the Tour de France clean… though it was something that even clean riders were forbidden to talk about: cycling’s ‘omertà’ system. It took four years to turn me, too; my value system could hold on only that long.”


A stunning parable of groupthink centers around Elizabeth Holmes, an ambitious, charismatic Stanford dropout with tremendous self-confidence and an instinctive grasp of how to build credibility through connections rather than substance. She started with an appealing vision: Her new company, Theranos, would create a device able to quickly perform wide-ranging health analyses on a mere drop of blood, potentially saving millions of lives.

There were warning signs for anyone who looked. Holmes, the ultimate control freak, was the founder, president, and CEO of Theranos. She tuned out criticism; scientists and engineers were forbidden to talk with one another. She claimed great successes but never actually produced hard data. Google Ventures considered investing. They could get no information from Theranos so they sent someone to a Walgreens Wellness Center, which had swallowed the bait too quickly and was offering Theranos-based blood tests. But instead of pricking a finger to get a drop of blood, the Wellness Center required their customer to fill several large vials, precisely the off-putting process that Theranos boasted it would make obsolete. Google decided this was not for them. Many employees also soured on it, but they had signed non-disclosure agreements that were brutally enforced. Even visitors to the office had to sign such agreements.(3)

Those who should have been looking closely, did not. Her board, for example. Although she spoke proudly about wanting to help more women get involved in tech, Holmes was the only woman on the Theranos board. The others were essentially a monoculture: Old men whose connections and reputations she wanted to exploit. They included three former U.S. cabinet secretaries (Henry Kissinger, Bill Perry, and George Shultz), two former senators, a retired admiral, and a former CEO at Wells Fargo bank. Their average age was 80. None had a strong background in technology, accounting, or blood science. No one, it seems, had a bullshit detector. Here is George Schultz on Holmes: “Everywhere you look with this young lady, there’s a purity of motivation.” Retired general James Mattis: “She has probably one of the most mature and well-honed sense of ethics — personal ethics, managerial ethics, business ethics, medical ethics that I’ve ever heard articulated.” That’s 0-for-4. Mattis became Donald Trump’s Secretary of Defense.

George Schultz’s grandson Tyler landed a job at Theranos. Soon, Tyler began realizing that many things were amiss. John Carreyrou, who broke the Theranos story, writes of one episode in his nonfiction page-turner, Bad Blood:

A test is generally considered precise if its CV [coefficient of variation] is less than 10 percent. To Tyler’s dismay, data runs that didn’t achieve low enough CVs were simply discarded and the experiments repeated until the desired number was reached. It was as if you flipped a coin enough times to get ten heads in a row and then declared that the coin always returned heads.

There was much more. Tyler and colleagues had found that the device correctly detected syphilis only 65 to 80% of the time; Theranos reported 95% accuracy. When Tyler tried to alert his grandfather to what he’d seen, the elder Schultz abandoned his own grandson, rather than his illusions.

Time magazine named Holmes one its hundred most influential people. (Henry Kissinger wrote Time‘s fawning profile; George Schultz had introduced them.) She landed on the covers of both Fortune and Forbes. Suspicions were growing, but legal heavyweight David Boies accepted Theranos stock then valued at $4.5 million in return for handling Holmes’s many legal needs, which included threatening expensive litigation against a growing body of people who knew too much.

Threats and bullying kept the press and former employees at bay for a time, but the fraud was too big. Holmes deceived not only investors, but apparently also herself. The best explanation for her behavior is that small lies and deceits repeatedly led to an awkward choice: Graduate to a bigger lie, or be exposed. So she chose the bigger lies, and hoped the technology would come through in time to save her. It did not; at this writing she’s looking at a possible twenty years in prison.

It’s easy to feel smug when writing about somebody else’s groupthink. Now let’s ask a harder question. When is groupthink a natural, necessary response to all the decisions we face, and when does it merit strong condemnation and scorn because it represents an abdication of responsibility by a group feathering its own nest at great cost to others?

The worst cases often begin innocently. Surely Elizabeth Holmes believed that it was possible to create the device she envisioned. Biofuels were an effort to address a pressing global threat. The trouble arises when that original vision doesn’t work out so neatly, and the insiders who can see this have begun getting substantial rewards – jobs, profits, status, and more – as long as the danger remains hidden. That’s when the minor cover-ups begin.

Soon, a bigger deceit is necessary. Some people refuse to take that step. Others plunge forward, and at that point must become willfully blind to contrary views. Soon, the only people who know the truth have money and reputations at stake. They are surrounded by others whose future will be cheerier if everybody wears the same blinders. When the benefits are concentrated in a small and determined group, while the costs are dispersed, hypothetical — or paid by those far away, with no voice in the matter — it becomes nearly unstoppable.

I consider this a good description of the aid industry. Most, though not all, players started with high ideals, even where self-interest was also involved. Fixing the lives of the poor, halfway around the world, turned out not to be so easy. But by then, U.N. agencies, non-profits, and government aid agencies depended on keeping the aid myth afloat. Anyone working in those agencies – just like those in Theranos – has to play along, or leave. Many do leave, but others take their place.

The FAO recalculated 20-year-old hunger data again, and again, and again, finally arriving at a number that would make U.N. goals look successful – much like the “keep running the tests till they come up with the numbers you need” approach at Theranos that dismayed Tyler Schultz. UNESCO took tech money and produced a fawning report which said what the buyer wanted it to say, just as the ratings agencies did in 2008. For a quarter-century the United Nations has pushed to get all children enrolled in school, regardless of whether they learn anything. It’s now painfully obvious that this is a terrible idea – as bad as burning down forests to create palm oil plantations – but it gave birth to a big industry which re-invests some of its substantial profits to keep spreading the notion that compelling children to attend a failing school is a noble enterprise.

If John Carreyrou hadn’t uncovered the fraud at Theranos, it would have eventually crashed anyway. Investors were not going to throw their money into a black hole forever. With other cases of groupthink – palm oil, and also the aid industry – the dynamics are different. They bring in money for those who are well-connected, while the harm falls on those who are powerless.

Here, I would say, those in the aid industry, who continue to reap the salaries and benefits while remaining willfully blind to the harm, have crossed a moral line. Looking the other way does not absolve them of responsibility. Those of us who see it in action, need to speak out.

Notes and Sources

Top illustration: Deforestation by Aidenvironment (Creative Commons license CC-BY-SA-2.0)

1. Abrahm Lustgarten, “Palm Oil Was Supposed to Help Save the Planet. Instead It Unleashed a Catastrophe.” The rapid biofuel push of the late 1990s seems like a good example of groupthink. However, most experts agree that biofuels can play a role in reducing carbon pollution and climate change – for example, when they are made from waste products. This Guardian story looks at that side of the issue.

2. One factor in groupthink is summed up by title of James B. Stewart’s New York Times story: “In Corporate Crimes, Individual Accountability Is Elusive.” He quotes Brandon L. Garrett, a law school professor: “More often than not, when the largest corporations are prosecuted federally, individuals aren’t charged.” Going along with the crowd is safe. Challenging it might get you fired.

3. John Carreyrou, who exposted the Theranos fraud in the Wall Street Journal, gives the full story in Bad Blood: Secrets and Lies in a Silicon Valley Startup, which reads like a thriller. An excellent shorter account is Nick Bilton’s Vanity Fair story, “How Elizabeth Holmes’s House of Cards Came Tumbling Down.” One observation is particularly relevant to a discussion of groupthink: “Silicon Valley, which is 50 square miles, has created more wealth than any place in human history. In the end, it isn’t in anyone’s interest to call bullshit.” I have drawn from both sources.

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