Lessons from the Book 📚 The fifth Risk

Overview

The Fifth Risk (2018) by Michael Lewis is a journalistic account of how broad swaths of the US government are being ignored or dismantled under Donald Trump’s administration. After shunning the conventions of a presidential transition, Trump and his tiny team assumed stewardship of the government without ever bothering to learn how it works. Lewis spoke to former representatives of three key government agencies to hear the briefings that the Trump team never received. What he learned was deeply unsettling.

One way to conceptualize the American government is as a team of project managers who oversee a huge number of disparate risks. Contagious diseases, natural disasters, terrorists, and many other threats are constantly present to varying degrees. Two million people work for the US government, in part to make sure these bad things never happen, or to mitigate the effects when they do happen.

One challenge when power changes hands from one president to the next is the steep learning curve as the new team is brought up to speed on problems and processes. Even during a relatively calm transition, this is a difficult and chaotic undertaking. As President Barack Obama prepared to finish his second term, he asked a team of thousands to organize transition documents and procedures of unprecedented scope to prepare the next administration, whether it was Republican or Democrat, to govern.

The Trump team, however, wasn’t interested in the memos and meetings that Obama’s appointees had spent more than a year preparing. If Trump showed little interest in preparing for a transition before he was elected, he showed even less after he won. Chris Christie attempted to lead a capable transition team for Trump during the election despite Trump’s objections, but Christie was fired by Steve Bannon after the election. All of Christie’s preparations were discarded without being replaced. Whereas past presidents sent teams of people into the government’s agencies right after Election Day, the Trump team contacted no one. Most agencies spoke to a single Trump representative for as little as an hour, providing an overview of functions and operations when they had prepared to spend months explaining to a capable team.

Lewis collected these “lost briefings” from high-ranking officials who had served under Obama in the Departments of Energy, Agriculture, and Commerce. Various officials had slightly different explanations of what they considered the top five threats to US security, including other countries, such as North Korea and Iran, and problems with the US electrical grid. Generally speaking, the “fifth risk” is project management, or the government’s ability to oversee its many responsibilities. Under Trump, this threat has escalated sharply.

Speaking to people from the Department of Energy (DOE), Lewis learned that half of the agency’s $30 billion budget helps to protect the nuclear arsenal, clean up nuclear waste, and prevent nuclear theft. But the Trump team has shown more interest in rooting out employees who have worked on climate change initiatives. The man who was eventually appointed to lead the DOE, Rick Perry, had once voiced a hope to eliminate the agency altogether.

The Department of Agriculture is often tasked with helping the rural poor, especially farmers and small businesses in small towns. The Americans who are most served by this agency almost uniformly voted for Trump, yet his administration is trying to slash funding for food stamps, loan programs, and other benefits that they need.

Some of the most disturbing activity under Trump has been within the Department of Commerce, which is a huge data-collection agency. This is the agency in charge of the US Census. It also helps warn Americans about natural disasters like hurricanes. The country’s rich stores of data about the weather in particular are at risk under Trump, who has nominated the CEO of AccuWeather, a for-profit forecasting agency, to lead the National Oceanic and Atmospheric Administration. Much of the US government’s data has already disappeared from public portals like websites, and may be privatized to profit companies like AccuWeather even though the data was funded by taxpayers.

Even well-informed presidents are ignorant about many areas of government when they take office. And Trump was not well informed, partly out of willful ignorance and partly because of his lack of experience in government. By ignoring or dismantling many of the basic functions of government, Trump continues to put all Americans in harm’s way.

Key Insights

Most Americans have a poor understanding of the intricacies of the federal government.

The key cabinet members whom Trump has nominated or appointed are rarely subject matter experts.

Trump routinely nominates and appoints officials with deep conflicts of interest.

Trump has left many government positions across agencies unstaffed.

The government’s massive stores of data are only now starting to be mined for insights.

Usually, some federal employees are motivated by money, while others are motivated by mission. Under Trump, very few employees seem motivated by mission.

The government needs to attract new talent into civil service.

While the Trump team’s transition was a spectacular failure, the government’s system for transition in general is always perilous.

Key Insight References

[#1: Prologue; #2: Chapters 1-3; #3: Chapters 1-3; #4: Chapters 1-3; #5: Chapter 3; #6: Chapter 3; #7: Chapters 1-3; #8: Chapters 1-3]

Key Insight 1

Most Americans have a poor understanding of the intricacies of the federal government. 

The operations and finances of the US government are highly complex. Americans don’t understand these intricacies, in part because of the government’s own inability to articulate the inner workings and accomplishments of its departments.

It’s not just the complexities of government that Americans don’t grasp; many citizens don’t have a basic understanding of the fundamental principles on which the government was built, how it is structured, or how it operates. The University of Pennsylvania’s Annenberg Public Policy Center surveys 1,000 Americans each year about their basic knowledge in its Constitution Day Civics Survey. The survey always asks participants if they can name the three branches of government: executive, legislative, and judicial. In 2018, 33 percent could name none; 21 percent could name one branch; 13 percent named two; 32 percent named all three branches, and 1 percent did not respond. Though these numbers vary to some degree from year to year, the long-term trend suggests that roughly a third of Americans don’t have even the most basic conception of how government works. Each year the Annenberg Center renews its call for better civic education in schools. [1]

For each survey, the Annenberg Center researchers tailor some questions to reflect current events so they can better gauge Americans’ understanding of specific issues that have been in the news. For example, many of the 2016 questions were about immigration. Many 2017 questions focused on freedom of religion, and 2018 questions emphasized the Supreme Court because of the Kavanaugh confirmation. The findings consistently suggest that many citizens misunderstand or even completely misinterpret these issues. For example, in 2018, nearly 40 percent of respondents couldn’t name any of the rights protected by the First Amendment, which include freedom of the press, freedom of speech, and freedom of religious expression. [2]

Key Insight 2

The key cabinet members whom Trump has nominated or appointed are rarely subject matter experts. 

Across the board, Trump has not sought out individuals with conventional qualifications and experience to serve in his government. One deeply under-qualified person Trump appointed was Ben Carson, who is the secretary of housing and urban development. When he took the job, Carson, a former neurosurgeon, had no experience at all in government or housing policy; instead, he and Trump cited Carson’s personal experience with poverty and growing up in the inner city. [3]

Some of Trump’s closest advisers have also been inexpert. Michael Wolff has described Trump’s White House team as utterly unequipped to run the government. Steve Bannon, who was once Trump’s chief strategist, and Stephen Miller, a presidential adviser, crafted Executive Order 13769, the so-called Muslim ban, with no knowledge of how to craft an order, and with no advice from lawyers or other informed professionals. [4]

Even when Trump has worked with experts, he has shown little respect for their advice. According to many insider accounts of Trump’s White House collected by journalist Bob Woodward in Fear (2018), Trump disdains expert opinions in general, which he often shuns in favor of laypeople’s opinions, particularly if those opinions agreed with his own. Trump often makes important staff appointments based on physical appearance or political beliefs. For example, Trump almost didn’t hire former National Security Advisor H.R. McMaster (who was fired in 2018), because the president thought McMaster should wear more expensive clothes. The president also didn’t care for the academic mannerisms of McMaster, who holds a PhD. When McMaster was in office, Trump frequently rejected McMaster’s expert point of view, such as when he recommended sending more troops into Afghanistan. [5]

Key Insight 3

Trump routinely nominates and appoints officials with deep conflicts of interest. 

One major problem with the people who Trump tends to nominate and appoint is how many of them have conflicts of interest. Trump himself is often accused of having conflicts of interest, particularly with regard to his business investments, Robert Mueller’s investigation into Russia’s involvement with the 2016 presidential election, and his ties to Saudi Arabia. In the White House, Trump works closely with his daughter Ivanka.

Trump has more broadly been accused of cronyism, appointing not just his personal associates, but donors to the Republican Party. Betsy DeVos, whose path to her role as the secretary of education was described by The New York Times as “one of the most contentious confirmations in history,” had made many large donations to Republicans. Many people saw her appointment as a reward for money, particularly given that she had no experience in education, civil service, or even politics. [6]

Trump’s hiring of friends, family, and political supporters may be part of a strategy to consolidate his power. He chooses people who are loyal to him personally rather than people who wish to serve the American people. Their allegiance is to an individual, not their country.

Key Insight 4

Trump has left many government positions across agencies unstaffed. 

The Trump administration has left critical positions across government agencies unfilled to an unprecedented degree. The Washington Post reported that just a little over half of the key positions in government had been filled as of October 2018, nearly two years into Trump’s presidency. Of those unfilled positions, some have nominees that have not yet been confirmed; slightly over 150 have no nominees at all. While Lewis focuses on vacancies in the Departments of Energy, Commerce, and Agriculture in The Fifth Risk , similar vacancies have been reported across other departments. As of October 2018 no one had been nominated in the head positions of the Federal Aviation Administration or the Federal Highway Administration, for instance. One of the most conspicuously understaffed departments is the State Department, which still has unfilled Foreign Service positions at embassies in Saudi Arabia, Pakistan, Turkey, Mexico, and other countries. [7]

In War on Peace (2018), Ronan Farrow reported that the State Department is running on a skeleton staff of low-level officers. After Trump’s inauguration, he purged the department, accepting the resignations from senior officials that had, in the past, been an empty formality, their careers stretching over many different presidential administrations. Even high-ranking politically important ambassadors, who are routinely replaced under new administrations, were ousted much more quickly than in the past. Farrow speculates that the gutting of the State Department will have monumental long-term implications. One problem is that the people who were fired took with them institutional knowledge that cannot be recaptured. Another, bigger problem is the fact that diplomatic relationships that took the United States a long time to develop will suffer from inattention, and perhaps even break. [8]

Key Insight 5

The government’s massive stores of data are only now starting to be mined for insights. 

The government has been collecting rich data streams for many years. But data scientists have only recently begun to interrogate and analyze the large stores of information. This turn of events echoes the way Big Data trends have unfolded in the business world, where around 2012, experts began to recognize that collecting data is one thing, and analyzing it is quite another. In January 2012, a high-profile report at the World Economic Forum described Big Data in terms of currency, like gold. At that point, the sheer volume of data being collected was growing exponentially, more than doubling in size every two years. [9]

Since then, the business world has started to come to terms with the idea that humans would be needed to make sense of all this data. After insights are gleaned, they must be communicated, whether it’s to the public or to decision makers in the executive or legislative branches of government. Often, there’s a large divide between data scientists and decision makers. Historically, people who are trained in analytics aren’t also trained in communications, but institutions of higher learning such as Harvard are beginning to include communications classes in their curricula. [10]

Key Insight 6

Usually, some federal employees are motivated by money, while others are motivated by mission. Under Trump, very few employees seem motivated by mission. 

Some appointees in the higher echelons of Trump’s administration are involved with government because of the financial opportunities. For example, Barry Myers, Trump’s nominee to lead the National Oceanic and Atmospheric Administration, would likely use the position to privatize weather data for his own monetary gain. In the past, however, and especially under Obama, federal employees have been attracted to their jobs because of the mission; they privilege service to the public over their own personal satisfaction. These federal employees could have made more money in the private sector, but they wanted to serve society.

The idea that the workforce, or at least a large portion of it, is more motivated by mission than money, is relatively new, but it has gained much traction in management theory over the past decade. Mission-motivated management is a trend that has been observed even outside of government offices. In Drive (2009), Daniel Pink describes how, for decades, managers assumed that employees were motivated by rewards like a high salary or bonuses. Some people are motivated by those things, of course, but many more are driven by feelings of purposefulness, personal satisfaction, and service to others. [11]

Now that managers are beginning to recognize mission as such an important factor, they can better motivate employees, at least in theory. But working in the federal government can be discouraging, even under an administration that is sympathetic to one’s goals. Bureaucracy can be stifling, and as a result, even for federal workers who are attracted to their jobs for altruistic reasons, satisfaction and retention are real problems. In 2015, a survey of thousands of federal employees conducted by Vanderbilt and Princeton Universities found that one-third of federal executives are unable to retain their most talented employees. Among employees’ discontents, a lack of autonomy ranks highly; many feel as though the bureaucratic system stifles the ability to get meaningful work done in a timely manner. This problem can likely only be addressed through federal reform. [12]

Key Insight 7

The government needs to attract new talent into civil service. 

Generally speaking, the federal government has a problem attracting talent, particularly young talent. Under Donald Trump, this problem has been greatly exacerbated by the huge number of people he has fired without replacing, as well as the problems his administration has had in retaining employees. In the first year of the Trump administration alone, 20 percent of the top 6,000 manager-level employees left by force or by choice. It’s difficult to overstate how harmful this great migration of talent and institutional knowledge will be to the government, and the country, even long after Trump’s presidency ends.

There are five times as many federal employees over the age of 60 than under the age of 30, a ratio that is the inverse of more progressive sectors like Wall Street and Silicon Valley. As of 2015, only about 11 percent of the federal government’s workforce consisted of millennials. [13] This is less than a third of the number of millennials who actually work in the United States. A 2018 Pew survey named millennials, who account for about 35 percent of workers in the United States, as the largest generation in the American workforce. [14]

The lack of millennials in the federal workforce may reflect a much broader trend of political disengagement among members of that generation. Famously, millennials vote in elections in low numbers. The problem of how to make an entire generation more engaged in the political system is much more difficult to solve than attracting young talent to the federal workforce, which could be addressed through incremental steps, such as targeted recruitment efforts.

Key Insight 8

While the Trump team’s transition was a spectacular failure, the government’s system for transition in general is always perilous. 

While the transition between the Obama and Trump administrations in particular went very poorly, there is a larger problem with the transition process itself.

Other democratic governments around the world generally have a system in which the opposing party of a given administration has a shadow cabinet. The United Kingdom is a prominent example. When a changeover in leadership occurs, senior members of the opposing party are already prepared to govern. In the United States, new presidents must scramble to put together a large team in the short amount of time between election day in early November and inauguration day in the middle of January. These first months of preparation set the stage for the president’s four-year term. [15]

Presidential transitions in the United States grew more formal over the course of the twentieth century, especially after the terrorist attacks on September 11, 2001. The careful preparation of Obama’s team, which the Trump team basically ignored, was actually an echo of the deep preparations that had been made by George W. Bush’s team as they prepared to cede power to Obama. Having experienced a terrorist crisis on American soil less than a year into his presidency, Bush had an acute understanding of the need for a rapid and thorough transition for future presidents. An unprepared administration would be more vulnerable to attack, potentially compounding the effects. [16]

During his presidency, Obama began the process of codifying more careful transitions into federal law. However, his preparation failed to anticipate an administration like Trump’s that was simply uninterested in preparing at all. Further reform is needed to ensure continuity of government in the future.

Important People

Michael Lewis, the author, is a journalist who writes about government, finance, data, and sports, among other subjects.

Donald Trump is the 45th president of the United States.

Barack Obama was the 44th president of the United States.

John MacWilliams was the chief risk officer at the Department of Energy under Obama. He dealt with problems such as nuclear cleanup.

Ali Zaidi is a former Republican who worked under Obama in the Department of Agriculture.

Kevin Concannon worked under Obama in the Department of Agriculture. He worked with the food stamp program, among other responsibilities.

Kathy Sullivan is a former astronaut who was a high-ranking official in the Department of Commerce.

DJ Patil was the chief data scientist under Obama, who created that role.

Barry Myers, the CEO of AccuWeather, is Trump’s nominee to lead the National Oceanic and Atmospheric Administration, an agency within the Department of Commerce.

Chris Christie was the head of Trump’s transition team until Trump was elected.

Author’s Style

The Fifth Risk is a brisk work of nonfiction structured into three parts and a prologue. The most dramatic section is the prologue, which describes the Trump team’s transition. It goes behind the scenes of Donald Trump’s election and transition, and offers the cover of anonymity to Lewis’s sources. The other three sections each focus on a single government agency, including the Department of Energy, the Department of Agriculture, and the Department of Commerce.

As he has in many of his other titles, Lewis constructs his narrative around in-depth interviews he has conducted with subject matter experts. Lewis also interviews a number of Republicans who work under Trump or used to work under Trump, though almost all of them are unnamed. The prologue in particular cites many anonymous sources who spoke off the record, using creative nonfiction techniques to construct its story. For instance, Lewis often quotes things that Trump and others said privately, using quotation marks even though he’s reconstructing the conversation based on interviews.

Author’s Perspective

Michael Lewis is a journalist who has written extensively about data analysis and risk assessment, two of the most important subjects in The Fifth Risk . One of his most famous works, Moneyball (2003), examines how data analytics transformed the Oakland Athletics baseball team and, eventually, all of professional baseball. The Undoing Project (2016) is about the behavioral economists Daniel Kahneman and Amos Tversky, who specialize in decision making and risk-taking behaviors. Before he was a writer, Lewis worked on Wall Street. This background, as well as his master’s degree in economics, inform his elegant, cogent explanations of complicated Big Data concepts.

Lewis chose relatively obscure departments in the government about which the public is less well informed rather than highly visible agencies such as the State Department. His perspective is firmly on the side of bureaucrats, who are framed as heroes trying to make the world a better place. Since most of the bureaucrats on the record worked under Obama, Lewis’s perspective naturally sides with the Democrats. Additionally, Lewis’s judgments of Trump suggest that he might personally have a liberal point of view, though such judgmental remarks are infrequent. Most of Lewis’s arguments center on relatively nonpartisan issues such as nuclear de-escalation and weather data. Much of the text in The Fifth Risk first appeared as articles in Vanity Fair magazine, where Lewis was a contributing writer, in 2017.

References

“Civics Knowledge Predicts Willingness to Protect Supreme Court.” Annenberg Public Policy Center. September 13, 2018. Accessed October 14, 2018. https://www.annenbergpublicpolicycenter.org/civics-knowledge-survey-willingness-protect-supreme-court/

Ziv, Stav. “Under Trump, Most Americans Lack Basic Knowledge to Understand Current Events, Study Finds.” Newsweek . September 18, 2017. Accessed October 14, 2018. https://www.newsweek.com/trumps-america-americans-basic-knowledge-understand-current-events-667106

Gabriel, Trip. “Trump Chooses Ben Carson to Lead HUD.” The New York Times . December 5, 2016. Accessed October 14, 2018. https://www.nytimes.com/2016/12/05/us/politics/ben-carson-housing-urban-development-trump.html

Wolff, Michael. Fire and Fury . New York: Henry Holt and Company, 2018.

Woodward, Bob. Fear . New York: Simon & Schuster, New York, 2018.

Huetteman, Emmarie and Yamiche Alcindor. “Betsy DeVos Confirmed as Education Secretary; Pence Breaks Tie.” The New York Times . February 7, 2017. Accessed October 14, 2018. https://www.nytimes.com/2017/02/07/us/politics/betsy-devos-education-secretary-confirmed.html

Naylor, Brian. “‘The Fifth Risk’ Paints A Portrait Of A Government Led By The Uninterested.” NPR. October 2, 2018. Accessed October 13, 2018. https://www.npr.org/2018/10/02/652563904/the-fifth-risk-paints-a-portrait-of-a-government-led-by-the-uninterested

Farrow, Ronan. War on Peace . New York: W.W. Norton & Company, 2018.

Lohr, Steve. “The Age of Big Data.” The New York Times . February 11, 2012. Accessed October 14, 2018. https://www.nytimes.com/2012/02/12/sunday-review/big-datas-impact-in-the-world.html

Davenport, Tom. “Telling a Story with Data.” Deloitte Insights . January 31, 2013. Accessed October 14, 2018. https://www2.deloitte.com/insights/us/en/deloitte-review/issue-12/telling-a-story-with-data.html

Pink, Daniel. Drive: The Surprising Truth About What Motivates Us . New York: Riverhead Books, 2009.

Lewis, David E. “The People Problem in Government.” The Conversation. July 16, 2015. Accessed October 14, 2018. http://theconversation.com/the-people-problem-in-government-44734

Gross, Terry. “Michael Lewis: Trump’s Approach To Government Shows ‘Neglect And Misunderstanding.’” NPR. October 2, 2018. Accessed October 13, 2018. https://www.npr.org/2018/10/02/653607732/michael-lewis-trumps-approach-to-government-shows-neglect-and-misunderstanding

Fry, Richard. “Millennials are the largest generation in the U.S. labor force.” Pew Research Center. April 11, 2018. Accessed October 14, 2018. http://www.pewresearch.org/fact-tank/2018/04/11/millennials-largest-generation-us-labor-force/

Hess, Stephen. “First Impressions: A Look Back at Five Presidential Transitions.” Brookings. March 1, 2001. Accessed October 13, 2018. https://www.brookings.edu/articles/first-impressions-a-look-back-at-five-presidential-transitions/

Davis, Julie Hirschfeld. “In an Age of Terror, an Early Start on the Presidential Transition.” The New York Times . April 20, 2016. Accessed October 13, 2018. https://www.nytimes.com/2016/04/21/us/politics/in-an-age-of-terror-smoothing-the-transition-to-the-next-presidency.html