The Fifth Risk, by Michael Lewis

When I was at the Bank of England, I remember discussing with someone over a coffee about the need to screen new candidates for a willingness to work as public servants. The idea—as argued by my counterpart—was that people who work for the public sector should have some sort of trait(s) that makes them suitable for that sector. I thought that made no sense. Why would you purposely limit the pool of potential candidates? It is not as if it was easy to attract new PhDs; on the contrary, the low pay—compared to other finance departments and central banks—and the reputation of the institution regarding the little importance placed on research—a reputation that has improved substantially since Mark Carney became the Governor—made it challenging to hire.

But that was the whole point. If you do not screen for such candidates, the ones that come to the public sector might leave shortly afterwards. And hence the recruitment process needs to start again. Without entering into a discussion of how to screen them, it now appears clear to me that this should be one of the most important selling points of the Bank of England when recruiting: come to develop your research, not only to satisfy intellectual curiosity, but importantly to improve policies and help maintain financial stability and prosperity.

The subjects that serve the public are the main focus of the latest Michael Lewis’ book, The Fifth Risk. The author highlights the career and work of (many former) employees of the Federal Government and their crucial contribution in different areas such as nuclear power, weather forecasting, or sea rescues. And, importantly, details the new Trump Administration’s approach—or lack thereof, to be more precise.

As seen with the Coronavirus pandemic, Trump is completely unprepared for his job. While he might not be the first President to be unfit for office, a crucial difference with Trump is that he is not even able to recruit people that will do a good job. His ego and insecurities are so big that he needs people around telling him how good he is. He has the opposite of a civil servant mentality; it’s all about him. And one of the consequences is that he cannot understand how vital certain parts of the government are. Not only is he unfit for office, but also he thinks he is the most fit for it. The danger that this produces is huge.

I have tended towards more libertarian positions for many years now. I do not consider myself a libertarian—I might have, in the past—but my “default” position in most cases is no government intervention. There are many reasons for this, and I think this is not only a defensible position, but actually the most rational one. Of course government intervention is necessary; unfortunately, ex-post rationalisation of moral urges provide cover for interventions that are misplaced and can create dangerous precedents. My favourite example is the banning of the Niqab or the Burqa.

And yet I have felt extremely sympathetic with the main characters in The Fifth Risk. Maybe it is because they remind me of my mother. She was a primary school teacher for several decades—she has retired now. She used to bring work at home; exams to mark, activities to prepare, etc. Don’t get me wrong: she managed to do everything—this is not a story of absent mothers. But early on what I thought was: Why are you doing this? Your salary does not depend on this additional effort. I think this is what I find so compelling about some of the examples: they just do their job as best as they can, saving lives as a result, without any apparent private benefit. Many of them could clearly be making a lot more money… but they choose not to.

Anyway, as usual, these posts are less about the book and more about my thoughts. It is an interesting book, recommended, although nothing close to Liar’s Poker, Flash Boys, or The Big Short. Those are masterpieces!

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