The Fifth
Risk, by Michael Lewis
Review by
Dave Gamrath
Overview:
Immediately
after winning the election, the Obama Administration (as with previous
administrations), sent a large team to visit key departments within the government
that they would be taking over in the new year.
In preparation for these meetings, each of the departments spent
extensive time and effort preparing review materials to facilitate a smooth
transition. Prior to the 2016 election,
government departments completed this effort for bringing the new
administration up to speed, whether the winner was Trump or Clinton. The departments anticipated that, as had
always occurred in the past, the winning President’s team would be eager to get
going. However, with the 2016 election,
the departments were very surprised, and highly concerned, when the Trump
Administration failed to show up for briefings for days and weeks. When the Trump people finally did visit, they
showed extreme lack of interest or preparation.
The few people Trump did finally send did not have backgrounds
qualifying them to run these key departments.
They clearly didn’t understand the key missions and responsibilities of
the departments. In addition, they often
showed contempt and disrespect for the departments and departmental personnel.
In
The Fifth Risk, author Michael Lewis details how this process went for three
key US government departments: the
Department of Energy, the Department of Agriculture and the Department of
Commerce. Lewis provides the history of
each department and many their key personnel, and details the key functions and
surprising responsibilities for which the departments are responsible. Lewis explains the risk to the country if these
departments aren’t run well, or even worse, purposely run poorly to “prove”
that government is ineffective and inefficient.
The
Trump Administration’s approach to running these departments can be summed up
as follows:
·
Don’t do any prep
work prior to the election
·
Post-election, after
a few weeks of silence, put unqualified people in charge
·
Don’t ask
questions or really try to understand what these departments actually do
·
Often appoint
people that have a history of attacking the department
·
Also appoint
people that want to use information/data from the department for personal
profit
·
Work to diminish
department moral; attack them for being inefficient
·
Decimate budgets
directed at science, especially regarding climate change
·
Reduce budgets
directed at helping rural American even though they are Trump’s base
·
Reduce budgets
directed at innovation which would better America and make us safer and more
efficient, but might compete with some of Trump’s biggest corporate supporters,
such as Big Oil
·
Cut public access
to publicly funded data if this data may point to outcomes different from the
Trump world view, or interfere with the profits of Trump supporters
·
Extensive lack of
concern with project management or basic department performance, putting the
department’s goals and mission at risk
·
Purposely run
departments poorly to “prove” that government is ineffective and inefficient
Summary:
Department of Energy (DOE) –
The
DOE has an annual budget of $30 billion and surprising has very little to do
with oil. About 50% of its budget in
2016 went to maintaining the nuclear arsenal and protecting Americans from
nuclear threat. Example – the DOE sends
teams to events like the Superbowl with equipment to measure radiation levels
in hope of detecting a dirty bomb before it is exploded. Around 25% of the DOE’s budget goes to
cleaning up the mess left behind building nuclear weapons. The final 25% of budget goes to programs
aimed at shaping American’s access to and use of energy. Underpinning DOE’s work is Big Science,
research that requires high investment.
The DOE runs the 17 national science labs. The scientists at these labs are some of the
country’s best and brightest. No one
notices when things go right at the DOE; only when they don’t. The work performed by the DOE is critical,
and comes with extreme risk if not done well.
The
morning after the 2016 election, the DOE cleared 30 parking spaces for Trump’s
team. But no one showed. They didn’t show the next day either, or the
next. Finally, a month after the
election, Trump’s first appointee to the DOE showed up and met with DOE leaders
for an hour. He didn’t take notes or ask
questions. He never asked to meet with
them again. But he did send over a list
of questions trying to identify any DOE employees that had worked on or been
associated with climate change. In that
it was clear that Trump wanted to punish these employees, the DOE refused to
provide the names. Trump then sent over
a handful of young ideologues that “mainly ran around the building insulting
people”, implying all government is bad and government employees are
stupid. They resisted briefing offers
and seemed more interested in disrupting operations then learning what the
department actually did. Finally, in
frustration, the CFO of the DOE quit, and left without anyone to replace
him. Many others at the DOE, the people
with the most intimate knowledge of the problems and possibilities at the DOE,
walked out the door. The Trump
Administration does not seem interested in filling a multitude of vacancies they
created, to the detriment of department performance.
Lewis
asked the Chief Risk Officer at DOE what the five largest risks were. One is that nuclear weapons are not lost or
stolen, and won’t explode when they aren’t supposed to. There have been some major “close calls” in
our past. Risk with North Korea and Iran
make the Top 5. The Chief Risk Officer
explained why the Iran deal (the deal that Trump got the US out of)
significantly lowered risk to the US.
The forth risk is the safety of the US electrical grid. Risk #5 is project management, or in the case
of the Trump Administration, lack thereof.
Thus the title of the book: The
Fifth Risk. Run things poorly and you
pretty much guarantee bad shit will happen.
The
DOE spends 10% of its budget, or $3 billion per year, on the cleanup at
Hanford, where two thirds of all US nuclear waste resides. Lewis details the massive complexities and
risks involved with this clean up effort, including potential contamination of
the Columbia River. Ironically, Trump
won the district around Hanford by a landslide.
Yet now the budget for Hanford cleanup is at risk.
One
key responsibility of the DOE is a low interest rate $70 billion loan program,
to stimulate innovation and develop game-changing energy technologies. For decades government has been needed to
provide investment in technologies that may take time to pan out. The “free market” won’t risk their capital on
these potential long-term bets that the country needs; the market won’t go into
their labs to work on something that may or may not work out yet takes
extensive capital investment. Whether in
energy, healthcare or one of the many other critical infrastructure elements,
government investment remains a key to innovation. This loan program has had many
successes. Fracking is an example of one
of the technologies developed in this program.
But the program only receives attention for a rare failure: Solyndra, a failed loan to a solar
company. Trump’s first budget proposal
sought to completely eliminate this loan program. Big Oil wants government subsidies, but doesn’t
want competition that can come from innovation.
Trump’s budget also cut funding to national science labs that would lead
to 6,000 layoffs. It halved the funding
for work to secure the electrical grid from attack or natural disaster. It eliminated all research on climate
change. Effectively, his budget attacks
science and pursues the perverse desire to “remain ignorant”. If you are seeking to preserve a certain
worldview, it actually helps to gut science.
If your goal is to preserve your personal immunity to a potential huge
problem, it’s better to never really understand those problems. In this case, there is an upside to ignorance
and a downside to knowledge.
Department of Agriculture (USDA)
The USDA
runs 193 million acres of national forest and grasslands and has an annual
budget of $164 billion. It is charged
with inspecting almost all the animals Americans eat, including 9 billion birds
per year. It includes a massive science
program. It has a large fleet of
aircraft for fighting fires – fighting wildfires is the most visible thing the
USDA does. It has a bank with assets of
$220 billion. Actually, only a small
fraction of the USDA’s budget is spent on farmers, but it finances and manages
extensive programs in rural America, such as free lunches for kids living in
poverty, many in rural America. Approximately
70% of the USDA’s budget is for feeding people with taxpayer money.
As
with the DOE, the USDA completed extensive effort in preparation to brief
Trump’s transition team. Also as with
the DOE, it took a month for Trump’s team to show up at USDA, and it was a team
of one guy, who came from an organization who’s purpose was to demonize
organizations like the Humane Society that worked to keep people from treating
animals cruelly. This is a bit ironic in
that one of USDA’s many duties is to police conflicts between people and
animals. When this guy showed up, the
one and only issue he wanted to focus on was climate change. After a month went by, Trump’s team expanded
to four people, who were woefully unqualified.
As at the DOE, they worked to disrupt operations. They instructed staff to stop using the
phrase “climate change”. They removed
the inspection reports on businesses that abused animals, and other similar
actions. And they failed to fill most of
the key USDA jobs.
The USDA
official in charge of 70% of the budget (that goes to feeding people) had zero
contact from Trump’s team. It’s easy to
connect the dots: lack of interest and
lack of caring will not lead to program efficiencies, rather the opposite. And if you run a program ineptly, you will
lose political support: these
bureaucrats are inept! Cut their
budget! Trump’s budget proposed cutting
food stamps by 25%.
Lewis
interviewed USDA’s Chief Scientist. In
recent years, much of the USDA’s research as dealt with the effects of climate
change. Example: a project seeking to improve sheep’s ability
to graze at high altitudes – one day that may be the only place they can
graze. As at the DOE, interest in
planning for and doing something about climate change at the USDA was
quashed. If climate change is a hoax,
why plan for it?
The
USDA’s bank focused it’s $220 billion of assets on a loan program to help out
rural America, with loans made through local banks. Often the loan recipients, in this red part
of the country, never know that financing for their needed infrastructure
project came from their hated government.
The program’s function was to provide low-interest loans, along with a
few grants, mainly to towns with fewer than 50,000 people for things like a new
health center, housing or a small business.
Nearly all of these loans got repaid.
The Trump Administration eliminated the organization that ran this bank
and moved the $220 billion bank portfolio into the office of the Secretary. Lewis interviewed many that believe this is
so Trump’s Secretary could work with Wall Street to do things with these funds out
of the public eye. So much for helping
with the problems of rural America, even though they represent Trump’s
base.
Department of Commerce
As
with the other departments, the day after the election, dozens of civil
servants at the Department of Commerce waited for Trump’s team, which didn’t
show. No briefings were given. No Trump people came until January, and then
it was just one guy, Trump’s Department Secretary, 79-year-old Wilbur Ross, who
showed no knowledge of the department, and not much interest in its key functions. Lewis details how Wilbur Ross has a history
of lying about his true wealth to make it seem that his wealth is much higher
than it is. Who’s that sound like? And Ross doesn’t have a scientific bone in his
body, which isn’t a good thing when the department you’re chosen to run is
basically a science and data department.
Lewis
states that the Department of Commerce is seriously misnamed. It has almost nothing to do with commerce
directly and is actually forbidden by law from engaging in business. Trade is only about 10% of what the
Department does. What it does with its
annual $9 billion budget is collect and make sense of all of the country’s
economic statistics. Roughly $5 billion
of its budget, or over 50%, goes to NOAA to figure out the weather. NOAA resides in the Department, and every day
NOAA collects twice as much data as is contained in the entire book collection
of the Library of Congress. The
Department also runs the US Census.
Lewis states that the better name for the Department should be the
Department of Data, or the Department of Science and Technology. Oh, by the way, weather data is also climate
data. So guess what happened? Data started disappearing.
Lewis
interviewed the Chief Data Scientist at the Department of Commerce. The Department’s biggest data collector is
the National Weather Service. This data
is crucial to keep the country operating.
Planes wouldn’t fly without it, for example. After Trump took office, extensive data
disappeared across the federal government.
The EPA and the Department of the Interior removed from their websites
the links to climate change data. The
USDA removed the inspection reports of businesses accused of animal abuse by
the government. The new head of the
Consumer Financial Protection Bureau wanted to end public access to records of
consumer complaints against financial institutions. Statistics that detailed access to drinking
water and electricity in Puerto Rico were deleted from the FEMA website two
weeks post Hurricane Maria. The FBI’s
first annual crime report under Trump was missing nearly 75% of the data tables
from the previous year. It clearly seems
that the Trump Administration’s view is quite the opposite of “the data will
set you free!” Rather, it’s if the data
points in a direction different than your worldview, get rid of it.
To
run NOAA, Trump chose the CEO of AccuWeather, a company that sells weather data
that NOAA and the National Weather Service provide for free. This guy, Barry Myers, likes to say he’s in
competition with the federal government.
So what does Trump do? Trump puts
him in charge of the organization that is his prime competitor: NOAA.
Not a good set up for the rest of us Americans. Myers has a history of trying to restrict
what weather data the department can provide the public, working to force the
public to buy this data from him. Myer’s
long history in the business make him highly
knowledgeable and quite effective at dismantling NOAA. Myer’s goal is effectively taking a public
good that’s been paid for with taxpayer dollars and restricting it for use by a
privileged few (basically him) to make a profit from it.
Reviewer Opinion:
I
personally had no idea of what these Departments actually did. The Fifth Risk does a good job reporting this,
which is important to understand the risks to the country if these departments
are run ineptly or for personal gain.
Lewis tells many personal stories of key department personnel, showing
their expertise and commitment to public service over making money. These stories read like, well, a good
book. Just over
200 pages, this short book packs a powerful punch. The book is highly important for showing
another typically overlooked way that Trump is wrecking our infrastructure and
putting the country in danger. Sigh……..
Rating: thumb way up