The Fifth Risk: Book Review

The Fifth Risk (2018), Michael Lewis, begins with "Lost in Transition," the Trump presidential transition under Chris Christie--a process Trump has no interest in and he fired Christie and his gang on day one. In the meantime, Obama had his team prepare detailed briefings for each department and agency for the incoming Trump team (the same briefings that would have been given to the Clinton team if Hillary won). With some exceptions, no one showed up ["The Trump people weren't anywhere to be found."]. Much later, Lewis asked for these briefings. This book is about his finding for three departments: Energy, Agriculture, and Commerce. Granted, these are not the giant departments of Defense, Treasury, Homeland Security or HHS, but interesting none the less--probably because most of us know next to nothing about any of them. This is that story. It's short and simple. The downside to me was Lewis' love of story telling beyond the underlying thesis (e.g., the head of NOAA under Obama was the first woman to walk in space, told in detail); story telling is great, but I wanted more details (a few tables crammed with statistics for example) and less story telling. Not much of a complaint, Lewis is a great story teller. I suppose the details can be found on Wikipedia or the various federal web pages.

To determine the merits of the federal government, Lewis turns to Max Stier, CEO of Partnership for Public Service, who viewed the US governments as the most important institution on earth. Why? The fed provided "services that the private sector couldn't or wouldn't; medical care for veterans, air traffic control, national highways, food safety guidelines. ... The basic role of government is to keep us safe. ... It managed a portfolio of risks: a financial crisis, a hurricane, a terrorist attack" (p. 24). "How to stop a virus, how to take a census, how to determine if some foreign country is seeking to obtain a nuclear weapon or if North Korean missiles can reach Kansas City" (p. 37). The complete list is much longer. Given how seemingly inept and inefficient Congress is, it is amazing that a functioning government really exists. There are about 2 million federal employees plus a military with about the same number of people. The president appoints about 4,000 top people and there are probably 6,000 senior level positions. Assuming the Trump people view government employees as stupid, lazy and bad, it is no wonder many of these positions are unfilled. When reducing or fundamentally destroying the effectiveness of government, ignorance is bliss. As critical people leave (apparently about 20% when Lewis wrote the book), government quality deteriorates. The effects will be felt for many years and no one knows the long-term effects. Assuming Republicans view government as worthless, this becomes a self-fulfilling prophesy.

First up was the Department of Energy (DOE, a $30 billion department). This was the department Rick Perry could not remember as one of three to be eliminated ("oops"). That apparently made him qualified to be Energy Secretary in a Trump administration. The former head was Ernest Moniz, PhD in nuclear physics from Stanford. Formed in 1977 after the OPEC oil embargo, DOE has responsibility for a bunch of energy related programs and nuclear programs. The department handles nuclear weapons, testing, nuclear cleanup, inspections, plus hunting down loose nukes and weapons grade plutonium and uranium materials. DOE's Office of Science has 17 labs and funds basic science research, some $6 billion annually. DOE also provides loans for alternative energy. The big failure was Solyndra. It was at DOE that Lewis heard about the top risks: nuclear weapons accidents, espionage of every kind, nuclear war from North Korea, Iran and other states, cyber intrusions with the electricity grid especially vulnerable, and project management at #5. This apparently meant long-run risks versus short-term solutions (there is also the related short-term gains versus long-term costs, such as tax cuts versus the national debt).

Next up was the Department of Agriculture, again with multiple missions related to farming, forestry and food. It was created during the Civil War (1862), with a $150 billion budget. The Forest Service (National Parks and Wildlife & Fisheries are in the Interior Department) has 193 million acres of national forests and grasslands; firefighting is a big part of the responsibility. The departments inspects all meats. Food, Nutrition and Consumer Services included the school-lunch program and a number of related nutrition programs. The food stamp program (now called Supplemental Nutrition Assistance Program or SNAP) represents over $70 billion in spending for 44 million people. Fraud in the program probably is about 5% of that. States run the program, which is problematic is Texas and some of the other red states. Research also is a big deal, with increases in productivity based in part on their research. Much of the research also is directed at climate change, including $3 billion in research grants. Ironically, money is spent on rural development, basically to people who oppose government and vote in people wanting to cut this funding--including some $220 billion in a loan bank.

The Commerce Department was particularly important because the Census Bureau housed here provided incredible amounts of economic and demographic data I used in much of my research (some of which goes back to 1790 and other like unemployment data was really up to date). The National Oceanic and Atmospheric Administration (NOAA) consumed more than half the departments budget, some $5 billion, including the National Weather Service. Weather forecasting has been improving thanks to the efforts of NOAA and other weather services across the world, particularly important as weather issues such as hurricanes become more severe. For example, every day some 900 weather balloons are released (about 10% from the US), plus thousands of buoys collect information from the ocean surface, not to mention satellites and radar stations. Lewis describes the weather data analysis in considerable detail. Commerce also runs the Patent and Trademark Office. Wilbur Ross runs Commerce, a billionaire with a shady reputation. Barry Myers runs NOAA; he owns a private weather service, meaning his interest in weather is to make a buck. Like Trump, conflicts of interest make this a problematic appointment. One problem with private companies is they sell data, so only those paying for it get the information. This leads to a discussion of what a public good is. My favorite story is ornithologists at Cornell use NOAA data to plot bird migrations and actually have maps by individual species show migration patterns each year from North and South America (based in part on infrared satellite images over the last 40 years). Similar data has been used on soil composition in farm fields, moisture at any given time, and plant stocks. Much of the accumulated data is disappearing under the Trump administration.

Lewis uses many examples to show the importance of the federal government and the public employees who run and serve the various interests--and why the Trump administrations is such a disaster. A major point here is that most people have no clue of what these departments do and the current damage being done. Over time, the federal government becomes less effective