The Fifth Risk

The Fifth Risk by Michael Lewis

In this episode, Erik Rostad discusses book 20 of 52 from his 2019 Reading ListThe Fifth Risk by Michael Lewis.

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Hello, this is Erik Rostad coming to you right outside of Nashville Tennessee. Today I'm going to cover the fifth risk by Michael Lewis this is book 20 out of 52 for my 2019 reading list this episode will consist of three segments the first will be a brief introduction to the book about the author or why I read it and my initial reactions the second segment will consist of the first ever pop quiz I'm going to ask a few questions about
the US government and see how much you know I'm also going to cover a cute few key takeaways and also a few counter points in segment two segment three is the one thing on one key takeaway from the book in the one
thing I plan to implement in my life as a result of having read this book.

So onto segments one the author Michael
Lewis he's published 18 books you may be
familiar with these Moneyball the
blindside in the big short those are
three of his books and those have all
been turned into movies and pretty good
movies at that he has a podcast called
against the rules
that he started in April of 2019 and
I've listened to a few episodes of that
and it's it's pretty good as for who
suggested the book I suggested it to
myself here's where I usually talk about
where I found out about the book and in
that sort of thing or who I originally
heard about it from but in this case
I've I've read other Lewis books and I
enjoy them and so if he has a new one
coming out chances are I'm gonna going
to be reading it and that's actually how
I read one of my books last year so for
my 2018 reading list and that was the
project and the cool thing about that
was I had Thinking Fast and Slow by
Daniel Kahneman on my list for last year
and it was book number six I believe so
it was towards the beginning of the year
when I read when I read that little did
I know that the undoing project was kind
of the story behind how Kahneman got
going with his partner-in-crime Amos
Tversky so it's an awesome book of the
story of their research and how they
came up with a lot of what we read in
Thinking Fast and Slow unfortunately
Tversky passed away early in his life
and so Thinking Fast and Slow is just by
Kahneman but it's really the result of
their work together and the undoing
project tells that story in a in a great
way so if you're planning to read
Thinking Fast and Slow or if you have
read it be sure to include the undoing
project with that it's it's a great
companion another book I read by Lewis
is flash boys and that tells the story
of how even milliseconds of difference
in getting information about stocks can
give an advantage to to someone to where
they can they can create a null
algorithm that will conduct a trade
before other people can and so it's it's
a scary book in the way that you you
just get the sense that it that the
game's rigged and as an investor you
don't want to hear that but but
important book in in that sense and as I
said kind of a scary one another one I
read of his was the big short that was
about the subprime mortgage and just had
some very interesting characters in that
book because basically talks about some
people that that understood what was
going on in the market in that the
mortgage industry and and market was
about to collapse and so they shorted it
and they they made just a ton of money
the last book that I've read of his is a
home game an accidental guide to
fatherhood and it's just kind of a fun
feel-good book about about becoming a
father he just kind of shares his
and so yeah that's kind of different
different not on the finding outside or
that sort of thing but but a good book I
read I read this one from June 2nd
through 6th of 2019 so just finished it
about a week ago so that took four days
219 page book so I read roughly 55 pages
per day it took me four hours 19 minutes
and 54 seconds to read it at a minute 11
per page and one of the reasons I track
this and share it is so that you get an
idea of how long the book might take you
to read I am NOT a fast reader people
ask me if I know speed reading skills or
things like that and and I always reply
with no I don't try to do any of that
kind of stuff I just I read it at the
pace I can read it and I myself to be a
slow reader and so just kind of take
that into account as I share these
numbers because you probably get through
the book probably even faster than then
the time that I'm sharing here as for
the structure of the book Michael Lewis
starts off with a problem and that's a
problem called he calls lost in
transition and basically there's a
problem with the Trump administration in
how they're transitioning power they are
supposed to be going in to the different
government departments and appointing
people to to manage them and to run them
and they're either not doing that or
they're taking their time which is
normally a process that kind of starts
immediately in terms of giving a list of
people meeting with these departments
finding out what they do and none of
that's going on at all and so Louis gets
concerned about this and starts
interviewing different government
employees and asking them specific
questions and so he's meeting with
people who have either quit I'd have
discussed that things are not moving
forward with the Trump administration or
people who are still working there and
and he just kind of gets information and
without without giving their names but
some of the questions he asks are what
do you do within your department what is
your department do and what worries you
the most and so you actually end up
getting a lot of insight and knowledge
about the government and what the
different agencies do and so that's one
of the things in the in the pop quiz I
have for segment segment 2 is just to
ask some questions of things I learned
from this book regarding departments and
to see how much you know but when he
asked these questions he got he got
different responses of what worries the
people of the most and he asked in
particular the questions to John
MacWilliams of the Department of Energy
and he replied with a set of four risks
and then a rather surprising fifth risk
and that's where we get the title of
this book the fifth risk so the first
four risks should sound pretty pretty
normal nuclear weapons accident
number two North Korea number three Iran
and number four something happening to
the electric grid of the United States v
he says his project management and
that's the risk of society runs when it
falls into the habit of responding to
long-term risks with short-term
solutions or that's how Louis defines it
but project management basically these
departments are not being managed
they're running a tremendous amount of
things in the United States things
people have no idea that they do and
Trump is not appointing anyone to manage
but even stranger I guess is when Trump
does appoint somebody it's somebody like
Rick Perry to run the Department of
Energy and I'm gonna play a little clip
of Rick Perry you probably remember this
I think this is from 2013 President
presidential debate it's three agencies
of government when I get there that are
commerce education and the what's the
third one there let's see
EPA EPA there
is EPA the one who were talking about it
now sir you can't name the third one the
third agency of government I would I
would do away with the education the
hammerite the Commerce and let's see
I can't the third one I can't sorry and
that was actually from the 2011
presidential debates but the third
department that he forgot that slipped
his mind was the Department of Energy
that was the third one that he would
just cavalierly get away with and do it
do away with he's now in charge of the
Department of Energy so he once since
you've got the Trump administration
coming in and at least at first not
appointing anyone to manage these
departments I mean everyone has a
manager now so this is really towards
the beginning of the administration that
just kind of an apparent chaos but then
when he does appoint someone it's
someone like this and in Lewis
highlights other people in the book who
kind of a similar or like why would you
appoint that person and so just think
about that the guy that wanted to do
away with the department but didn't even
couldn't even remember the name of the
department you're talking thousands of
employees and just couldn't even
remember the name of it and now he
that's the one he runs so just crazy
that's kind of the structure of the book
and so we learn a lot as you read within
that structure as for an initial
reaction I was quite ashamed of myself
actually for for not knowing more about
the government and I learned a ton in
this book about it but it's like I
really should have known that like this
is this is really embarrassing so it's a
good book in that sense to to kind of
kick your butt into gear another
reaction is this is not good the people
who are lifetime employees of these
these departments according to Lewis
they're not
being consulted about what they do what
they know what they've been working on
maybe that's changed in the last year
and a half or so but at least at the
beginning they're not even being
consulted and that can't be a good thing
even if you plan to fire these people
like you you wouldn't you want to know
what's going on at least and then
another initial reaction is Trump Trump
basically as an assumption that the
government is ineffectual but what you
keep seeing over and over in this book
is that historically speaking the
government's running quite well and it's
run by people who love what they're
doing so what's strange is that Trump's
actions may actually create the
ineffectual government he's talking
about so just one one other reaction and
something I thought about a lot in this
book as for who should read the book I'd
say if you if you're wanting to learn
more about the government and especially
the first days of the the Trump
administration this would be a good book
for you
I like sharing about different tools
that can help you read better and one
that I came across last week is called
oxidative book notes you can auto import
all of the main information from any
book so you just kind of scan the ISBN
number and it'll pull the main data but
from there you can store quotes you can
write notes about the book and you can
tag the the notes so that you can then
cross-reference them so as you load more
and more of your books in as you're
reading books and kind of taking notes
this is just a great place to keep all
those notes together and and that
cross-reference tool would be it would
be really cool because you come across
ideas and that's one thing I've always
been interested in in this project is
seeing how ideas are across a variety of
different books how some themes start to
stick out and so this this program can
actually help you do that there's a
basic plan that starts for free and then
a pro plan that's just four dollars a
month and I have not used it I basically
my note system is this podcast and the
reviews I do on the website but neino
Rosella the the creator of this program
did reach out to me and let me know
about the program so I'm not being paid
for this or anything but I just like to
share different tools that are out there
and maybe this is something that would
help you to read better and to share to
that to compile all your notes from from
the books that you read so back to the
book I want to do a little pop quiz have
a little fun here here's four questions
about the US government and let's see
how many you get right and just for
reference I scored zero out of four
so zero percent F fail I did not know
any of this but here's some four
questions for you first one how many
departments are there in the US
government fifteen number two the
National Oceanic and Atmospheric
Administration the NOAA is within which
the Department of Commerce what
department oversees and guards the
nuclear arsenal do you know that one the
Department of Energy and what Department
has a little to do with Commerce and is
forbidden by law from engaging in
business well the Department of Commerce
of course
so hopefully got more of those right
than I did but speaking of the
Department of Commerce that goes into my
first key takeaway from the book and
just kind of a learning thing in this
sense Lewis calls the Department of
Commerce the Department of Information
or the Department of data and they
basically just collected this trove of
information about a variety of things
and we're not getting into like the
scary information where they're pulling
personal data and NSA stuff we're just
talking like farming information maybe
information from draw drones about how
how fields look in farms look just a
pleat police information police pull
pull overs and that sort of thing and
this information is basically sitting
there available for use and available to
dive in deeper maybe run it through some
algorithm algorithms and see if some
some new ideas come out and so I wanted
to share one one thing that happened as
they dug into some of this information
and this is about police police
information so here it goes this is page
178 in the book the policing data was
local and difficult to get a hold of and
that was DJ's point he wanted to show
what might be possible the government
collected the information we ask the
question what causes excessive use of
police force combining the data from ten
cities a team of researchers from
several American universities found a
pattern that would have been hard to
spot with the naked eye police officers
who had just come from an emotionally
fraught situation like a suicide or a
domestic abuse call in which the child a
child was involved were more likely to
use excessive force maybe the problem
wasn't as simple as a bad cop maybe it
was the emotional estate which the cop
had found himself
dispatch sent them right back out
without time to decompress give them a
break in between and maybe they behave
differently so just kind of interesting
information like that that could be
grasped if more of this information was
was dug into and one thing that lewis
mentions is is that trump that trump
administration has has limited access to
some of these databases they used to be
on on government websites where where
anyone could go in and kind of mine the
information I haven't done research
after this book to understand more of
why access was limited but it just seems
like there could be a lot to be learned
especially in this age of AI especially
after reading AI super powers kind of
digging deeper into some of this data it
might be might be something that could
be could be beneficial key point number
two this this just stuck out to me I
thought I thought it was really
interesting but one of the guys that
Louis talked about about the government
made this comment Mac's newest an
astonishing number of people and this is
people who had success stories of
working in the United States government
he back to the quote he detected a
pattern a surprising number of the
people responsible for them were
first-generation Americans who had come
from places without well-functioning
governments I just thought that was
interesting that I I think we take it we
take for granted a lot of what comes out
of our government and the the way that
it functions and historically pretty
well we just take a lot of that for
granted for but for people who come from
other countries they and that their
children are ones who who oftentimes
work in the government and and see the
importance of it because they came from
a failed state or they came from a state
where it maybe took 120 days to start a
business whereas it you can start one in
a day here
I did have a few criticisms of the book
I think back to a Reagan's line of run
and the other way if someone comes up to
you and says hey I'm from the government
and I'm here to help it's kind of a
funny line but the book you get you kind
of get the sense that everything the
government is doing is is good and and
it's helpful then it's if we don't let
them continue in what they're doing then
there's going to be these horrible
things coming down the pipeline but
what's not addressed is that were 22
trillion dollars in debt like we can't
afford the things that we're doing right
now and if we continue on that path
what's gonna happen and so we could
debate all day of well if we don't have
this program then this could potentially
happen but we're 22 trillion dollars in
debt not addressed in the book another
thing is is kind of the bigger
conversation that's taking place right
now in terms of of data and access to
data the where I was talking about the
Department of Commerce having these
troves of databases and how would be
nice to to run some have that go through
some algorithms to try to to mind send
some information that might be good that
could help people that that's all good
and well but but where's the line like
where's the line and the personal side
and that's the conversation that's going
on right now especially with like
Facebook and the different social
platforms how much access should they
have to the information how much access
should they be able to share how much
access should the government have of
information about you and so I Luis
presents a lot of the those databases is
kind of being impersonal data and not
not for individuals and not going past
privacy concerns but that's that's
actually more of what's going on in and
I think that the debate in and where
there's an issue and perhaps why Trump
is limiting some of this the access is
some of this data is
with that conversation to go on like I
said that I could be way off on that but
just a few criticisms I had from the
book and speaking of criticisms it ties
into my one thing my one key takeaway
from this book and that's that I need to
stop criticizing the government if I
don't actually know what it does there's
a quote from Kathy Sullivan in this book
and it goes like this
I'm routinely appalled by how profoundly
ignorant even highly educated people are
when it comes to the structure and
function of our government the sense of
identity as citizen has been replaced by
consumer the idea that government should
serve the citizens like a waiter or
concierge rather than in a collective
good sense and I'm always busted by that
I highly educated people I in in the
sense of having gone to undergrad and
grad I'm highly educated I don't
consider myself very bright but in terms
of having gone to and done a lot of
education I've done that and I knew like
1% of what was presented in this book
about the government and that's really
appalling and so that's my my one key
takeaway from this book is I can't go
around criticizing something that I
don't even know the basics about and I
need to start learning about our
government and wherever you're listening
from on this episode maybe it's kind of
a call for you to start learning about
your government how it's wrong what the
departments are alright there's 15
government departments I should learn
what those are and then just start
digging deeper what's in with each of
those departments what do they do what's
their role what's their budget just
learning about that and and and being a
more informed citizen yes and but just
to actually know what's going on and how
things are run the the way it's
presented in this book is that even a
lot of people that work in government
no idea they might they might know what
their particular department does but
even outside of that there there's
there's just kind of a general lack of
information and one of the reasons is
because of its complexity there's one
guy highlighted at the beginning of the
book where he kind of just spends his
whole life researching it and he loves
and he wants to learn about the
government and thinks it's fascinating
but and then another guy who goes into a
part department and it takes him a whole
year to just kind of understand even
what's going on and the lingo and all
that but I got to start somewhere and so
this book has made me want to learn more
about the government and what the
different agencies do I kind of like
Rick Perry naively thought that some of
these agencies could be done away with
and maybe they can but I don't know
enough about them to make a statement
like that and I want to learn more about
them I want to have informed opinions
and not just spout off things like like
what Rick Perry said there and in Rick
Perry is has regretted that statement
and talked about it at length but um
yeah if you're looking for a book if you
really have no idea how the government
is organized and who does what this
would be a good book for you to get to
start down that path of learning that's
gonna do it for this episode before I
sign off just a reminder you can share
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we'll be back next week with another
book until then keep reading keep
learning and keep listening

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