The Fifth Risk

Michael Lewis, “The Fifth Risk,” W.W. Norton, 219 pp.

In The Fifth Risk, Lewis, author of Liar's Poker, Moneyball, The Big Short, and The Undoing Project, (all of which I have read and previously reported on), makes a compelling argument that the "willful ignorance" of the Trump administration allows it to maximize short-term financial and political gain "without regard to the long-term cost."  Drawing on interviews with government officials from previous administrations, Lewis takes readers inside the departments of Energy, Agriculture, and Commerce.  Hollowing out the federal government, he warns, is fraught with dangers, ranging from food contamination, nuclear accidents, and weather-related disasters to terrorist attacks on the electric grid.  The long-term demonization of the federal government is now poised to present consequences under the Trump administration that could be catastrophic to the American public, a phenomena Lewis calls the fifth risk.

Lewis provides detailed examples of the contempt for science, lack of expertise, political agendas, and conflicts of interest among officials of the Trump administration. Secretary of Agriculture Sonny Perdue, we learn, recently announced that the USDA would no longer require schools to meet whole-grain and sodium standards, or ban fat in artificially sweetened milk.  Mick Mulvaney, when acting head of the Consumer Financial Protection Bureau, ended public access to records of consumer complaints against financial institutions.  After Hurricane Maria, FEMA deleted from its website information on access to drinking water and electricity in Puerto Rico.  And the Trump administration has eliminated funding for research on climate change.

“The Fifth Risk” is about what many Americans forget when screaming for restricted governments when demanding tax cuts.  We tend to forget the things that government does that keep us from getting killed. We tend to forget the daily things we take for granted and often don’t even realize are a function of the federal government.  Such as the National Weather Service and the data it gathers.

My Notes:

Pg. 53:  The Department of Energy (DOE), though created in the late 1970s, largely in response to the Arab oil embargo, had very little to do with oil and had a history that went back much further.  About half its budget in 2016 went to maintaining the nuclear arsenal and protecting Americans from nuclear threats.  A quarter of the budget went to cleaning up all the world-historic mess left behind by the manufacture of nuclear weapons.  The last quarter of their budget went to shaping Americans access to, and use of, energy.  (This is the agency Trump assigned Rick Perry to head; Perry, before withdrawing from the Presidential race, had stated that the DOE was one of the three agency’s he would get rid of.  Trump said, during the campaign, that Perry should be forced to take an IQ test, he was unintelligent but wore glasses to look intelligent).

Pg. 55:  Ernie Moniz*, the Secretary of the DOE, brought John MacWilliams onboard as the first ever chief risk officer to analyze the workings of the 115,000 employees involved in the agency.  He found and documented an endless list (150 items) of things that could go wrong inside DOE.  MacWilliams cataloged the greatest risks for the next administration.  He never got a chance to share the information with Trump appointees as they were never made or never showed up.  It was five months after MacWilliams left government service before anyone approached him about the cataloged items:  this was the author of this book. 

*Ernest Jeffrey Moniz, is an American nuclear physicist and former United States Secretary of Energy, serving under U.S. President Barack Obama from May 2013 to January 2017.   Rick Perry, the current head of the DOE, graduated in 1972 with a Bachelor of Science degree in animal science; he is a career politician and wears glasses.

Pg. 57f:  “Broken Arrow” is a military term for a nuclear accident that doesn’t lead to a nuclear war.  An incident occurred in 1961 when a pair of 4-megaton hydrogen bombs, each more than 250 times as powerful as the Hiroshima bomb, broke off a damaged B-52 over North Carolina.  One of the bombs disintegrated upon impact, but the other floated down beneath its parachute and armed itself.  It was found with three of its four safety mechanisms tripped or rendered ineffective by the plane's breakup.  Had the fourth switch flipped, a vast section of eastern North Carolina would have been destroyed, and nuclear fallout might have descended on DC and New York City.  (This is one of the items that today’s DOE deals with and develops mechanisms to prevent; the DOE spends a lot of time trying to make bombs less likely to explode when they are not meant to.)

Pg. 63f:  The idea that the private sector underinvests in energy innovation is part of the origin story of the DOE.  The basic problem, though, is there is no constituency for an energy program but many opposed.  The sort of research needed often doesn’t pay off for decades.  One example is Fracking which is the fruit of DOE research from twenty years ago.  Solar and wind technologies are another example.  The Obama administration set a goal in 2009 of getting the cost of utility-scale solar energy down by 2020 from 27 cents a kilowatt-hour to 6 cents.  It’s now at 7 cents, and competitive with natural gas because of loans made by DOE.  The private sector only steps in once DOE shows something works.  (The one bad loan, Solyndra, has allowed the Right Wing to demonize the entire loan program, ignoring successes.)

Pg. 69f:  In 1943 the US army began evicting everyone from an area in eastern Washington, Hanford, nearly half the size of Rhode Island and setting out to create enough plutonium for a nuclear bomb. This spot was chosen for its remoteness, proximity to the Columbia River that supplied cooling water, and its poverty (cheaper to pay the people to leave).  From 1943 until 1987, when Hanford closed its last reactor, the place created two-thirds of the plutonium in the US arsenal.  It had supplied the material for seventy thousand nuclear weapons.  This area is now a contaminated site that is estimated to cost a hundred billion dollars to the standards now legally required.  Each year 10 percent of the DOE budget, $3 billion, goes to the cleanup effort in this area.

Pg. 77f: Advanced Research Projects Agency (ARPA-E) was conceived during George W. Bush’s administration as an energy equivalent of DARPA—the Defense Department’s research-grant program that had funded the creation of GPS and the internet, among other things.  If you, for example, thought you could make water from sunlight, or genetically engineer some bug so that it eats electrons and craps oil, ARPA-E was your place.  ARPA-E’s $300 million budget was a trivial amount inside the DOE budget.  In March 2017, Trump’s budget proposed eliminating ARPA-E.  After a barrage of criticism from the likes of Bill Gates, Lee Scott, the former CEO of Walmart, to Fred Smith, the Republican founder of FedEx, the elimination proposal was removed. Trump’s budget proposal, like the social forces behind it, is powered by a perverse desire—to remain willfully ignorant (especially regarding climate change).  If you are seeking to preserve a certain worldview, it actually helps to gut science.  Trump didn’t invent this desire.  He is just its ultimate expression.

Pg. 87:  Most of what the Department of Agriculture (USDA) has little to do with agriculture.  It runs 193 million acres of national forest and grasslands, for instance, it is charged with inspecting all the animals Americans eat.  Buried inside it is a massive science program, a large fleet of aircraft for firefighting and a bank with $220 billion in assets.  It financed and managed the free school lunch for kids living near the poverty line.  To prepare for the incoming Trump administration, the USDA staff compiled 2,300 pages of documents to brief their replacements.  No one showed up—not even Joel Leftwich, the former lobbyist for PepsiCo, the guy Trump wanted to lead the USDA transition team.  He finally turned up a week later and stayed for an hour.  Finally, after a month passed, Brian Klippenstein, an advisor to Secretary Perdue, showed up.  He wanted the names of the people working on climate change, the career staffer running the transition politely declined to give the names. 

Pg. 102:  In 2016, after several counties in North Carolina suffered severe flooding, the state tried to distribute federal disaster-relief food-benefit cards on the day of the presidential election, to give poor people a choice between eating or voting.  

Pg. 108:  Most every college in the US with ‘Tech’ or ‘A and M’ after its name, was established in the wake of an 1862 law passed by the same Congress that created the Department of Agriculture, created as a giant science lab to make US agriculture more efficient and free up people to do something else (fight in the Civil War?).  Statistics illustrate the astonishing effects that the lab has had—it has changed the way we live.  In 1872, the average American farmer fed roughly four other people; now the average farmer feeds about 155 other people.  In 1950, the average cow yielded 5,300 pounds of milk; in 2016 the average is 23,000 pounds of milk. 

Pg. 151:  Weather prediction accuracy since the end of WWII is one of the major intellectual achievements of the twentieth century.  The change was gradual and at any given moment impossible to detect.  For instance, the five-day-out forecast in 2016 was as accurate as the one-day-out forecast had been in 2005.  In just the last few years, for the first time in history, a meteorologist’s forecast of how hot it will be nine days from now is better than just guessing (P. 169).

Pg. 159f:  Like so many US government agencies, the Department of Commerce is seriously misnamed and has almost nothing to do with commerce directly, trade is maybe ten percent of what the Department of Commerce does.  It does run the US Census.  It collects and makes sense of all the country’s economic statistics and through the Patent and Trademark Office it tracks all the country’s inventions.  It also contains the National Institute of Standards and Technology.  But of the roughly $9 billion spent each year by the Commerce Department, $5 billion goes to NOAA, and the bulk of that money is spent on figuring out the weather.  A better name for this agency would be the Department of Information.  Or maybe the Department of Data. 

Pg. 160f:  Right up until early January 2016, no one from the new Administration showed up for briefings at NOAA.   

Barry Myers, the chief executive of the private weather forecasting company AccuWeather, which gets all its information from NOAA and then sells it, is President Trump’s pick to run the National Oceanic and Atmospheric Administration.  AccuWeather has, in the past, supported measures to limit the extent to which the Weather Service can release information to the public so that private companies could generate their own value-added products using this same taxpayer-funded information.  Myers in the past has actively lobbied to privatize the National Weather Service to benefit his own company’s bottom line.  In 2005 Rick Santorum, a senator from AccuWeather’s home state of Pennsylvania and a recipient of Myers family campaign contributions, introduced a bill, that failed, that would have eliminated the National Weather Service’s website or any other means they used to communicate with the public.  This bill would have allowed a private company, AccuWeather, to force the US taxpayer to pay all over again for what the National Weather Service might be able to tell him for free. 

The Trump appointment of Myers breaks from the recent precedent of appointing scientists and many worry about the obvious conflict of interest Myers presents.  Every past NOAA administrator but one, attorney Richard Frank who served from 1977-1981, held science degrees.  The agency oversees the National Weather Service, conducts and funds weather and climate research, and operates a constellation of weather satellites as well as a climate data center. It also has critical responsibilities in monitoring and protecting the nation’s coasts, oceans, and fisheries.

Pg. 177:  Analyzation of IRS data reveals the while just over 90 percent of children born in 1940 went on to earn more than their parents, only 50 percent of children born in the 1980s did so.  Every year, the economic future of an American child was a bit less bright. The reason is not lower rates of economic growth but the increasingly unequal distribution of money.  More and more of the gains are being captured by the very rich. (It's a bit more complicated: Globalization, Artificial Intelligence and robots, just to name a couple).

187f:  When you come from San Francisco every measure is about progress. The progress in society.  The progress in the economy.  The progress of technology.  And you kind of get used to that and you think that’s the norm because you see everything getting better.  Then you get on a plane and land anywhere but a big city.  It’s total stagnation.  It’s ‘we’ve been farming the same six fields for the last seventy years’.  It’s getting married at nineteen or twenty.  It’s the opposite of progression.  Life is about keeping up.  Life is about keeping everything the same.  People live paycheck to paycheck. 

Pg. 188:  Farmers didn’t work on desktop computers, and so they’d largely skipped the initial internet revolution.  But they had mobile phones, and in 2008, when the 3G networks went up in rural America, farmers finally got online. 

Pg. 190:  Under each act of data suppression in the Trump administration there is usually a narrow commercial motive: a gun lobbyist, a coal company, a poultry company.  The NOAA webpage used to have a popular link to weather forecasts, but it has now been buried.  There is a rift in American life that is now coursing through the American government.  It isn’t between Democrats and Republicans.  It is between the people who are in it for the mission, and the people who are in it for the money.

DOE list of America’s five greatest risks (pg. 54ff):

1.     1.   Nuclear accident (see “Broken Arrow” notes for example)...

2.      2.  North Korea: risk of an attack by them is increasing.  (Maybe sarin gas rather than a nuclear weapon).

3.      3. Iran developing a nuclear bomb.

4.     4.  Safety of the electrical grid.  (Life in America has become increasingly reliant on food, water, and electricity).  In 2016 there were half a million cyber-intrusions into various parts of the US electrical grid.

5.    5.   Project Management (P. 69f).  The Trump administration has failed to fill leadership vacancies in various departments or filled them with people who know nothing about the agency or have a conflict of interest.  There will be no one to bridge the gap from the pre-Trump knowledge to post-Trump operations.

Addenda:

In 2017, Trump appointed Sam Clovis as chief scientist at the USDA. He was not a scientist. (Clovis lasted but five months on the job; Trump has nominated Scott Hutchins, an entomologist by training, to replace him.)  Trump's nominee to head the National Oceanic and Atmospheric Administration is the CEO of AccuWeather, a for-profit weather company, who wants to stop the National Weather Service, his competition, from building an app to disseminate disaster warnings to the public.

President Trump, of course, is entitled to appoint people who will implement his policies.  That said, Lewis notes many of the challenges that federal agencies face — "how to stop a virus, how to take a census, how to determine if a certain foreign country is seeking to obtain a nuclear weapon" — are more technical than ideological.  As The Fifth Risk documents, expertise and experience matter, a lot — however, many deeply knowledgeable people have left government service, and are now forbidden by federal law from making contact with their replacements.  Most important, perhaps, this book makes it more difficult to deny that government can be and has been the solution, not the problem.

The book begins with former New Jersey Gov. Chris Christie, who headed Mr. Trump’s transition team, fired by campaign chief Steve Bannon. Apparently, Trump didn’t think he needed a transition team (later someone pointed out that it is the law).

But what is the “fifth risk” that makes it important enough to be a book title? The term comes from John MacWilliams, chief risk officer at the Energy Department. The fifth risk, he said, after citing such blockbusters as nuclear accidents, lies in “project management”—in other words, the danger of civil-service failures in the face of a crucial challenge.