Speaker 1: This is Mesters in Business with Very Redoults on Bloomberg
Speaker 1: Radio this weekend. On the podcast What Can I Say?
Speaker 1: Michael Lewis, author of so many amazing books, starting with
Speaker 1: Liars Poker, which just celebrated its thirty something anniversary and
Speaker 1: the audio rights reverted back to Lewis. We have a
Speaker 1: fascinating conversation about that, about expertise about his podcast, Really
Speaker 1: what can you say? Michael Lewis is just one of
Speaker 1: a kind's everything he does is just absolutely fascinating. I
Speaker 1: really enjoyed this conversation and I think you will also,
Speaker 1: with no further ado, My interview with Michael Lewis. This
Speaker 1: is Mesters in Business with Very Redhoults on Bloomberg Radio
Speaker 1: my extra special guests this week. You know him, you
Speaker 1: love him, You've read all of his books. Best selling
Speaker 1: author Michael Lewis. He has written so many seminal books,
Speaker 1: so many seminal tomes on Wall Street, from Liars Poker,
Speaker 1: The New New Thing, The Big Short, Flashboys, The Premonition,
Speaker 1: on and on and on it goes. Uh. He is
Speaker 1: out with season three of his podcast Against the Rules,
Speaker 1: and he also created a series of short uh discussions
Speaker 1: about Liars Poker, which celebrated its thirtieth anniversary right before
Speaker 1: the pandemic. You can get that either as an audio book,
Speaker 1: the print book, or listen to the audio companion that
Speaker 1: he's put out on other people's money. Michael Lewis, Welcome
Speaker 1: back to Bloomberg. Good to hear your voice. Same here,
Speaker 1: same here. So for for the people who may not
Speaker 1: be familiar with you, let's let's just do a brief background.
Speaker 1: You graduate from Princeton and you head to Wall Street
Speaker 1: to make your fortune, where you were pretty much rejected
Speaker 1: by everybody, most notably Lehman Brothers. Tell us a little
Speaker 1: bit about that experience. Well, I was at that point.
Speaker 1: I was a senior Princeton, and everybody was showing up
Speaker 1: on odd days of school wearing a suit and going
Speaker 1: to the career services office and interview with the Wall
Speaker 1: Street firms. Because that's just what you did. And so
Speaker 1: this is what one two uh, and it was. It
Speaker 1: was kind of a new thing that you know, half
Speaker 1: the class of Princeton wanted to go to Wall Street. Um,
Speaker 1: but half the class of Princeton want to go to
Speaker 1: Wall Street. So I thought, well, I must want to
Speaker 1: go to Wall Street. Too, and I rolled into a
Speaker 1: few of those interviews, one with Lehman Brothers, uh, not
Speaker 1: even knowing really what Wall Street was, and um, I
Speaker 1: didn't really understand why I was supposed to know what
Speaker 1: Wall Street was. But but it was humiliating, you know,
Speaker 1: uh like, do you know the difference between the stock
Speaker 1: and a bond? No, I'm happy to learn the kind
Speaker 1: of thing. And but but I was doing it not
Speaker 1: I really, I kind of it's not it's probably too
Speaker 1: starting to say it was a lark, but I just
Speaker 1: didn't have anything better to do, so I thought, what
Speaker 1: the hell, I'll go go to these interviews. And it
Speaker 1: was only later, so three years later, after I've done
Speaker 1: a master's at the London School of Economics, that I
Speaker 1: really accidentally falling into a job at Solomon Brothers. Um
Speaker 1: and just to slush this out, at Princeton, you're not
Speaker 1: taking economics of business courses. Was an art history major,
Speaker 1: you know, I was an art history major. But that
Speaker 1: that didn't stop anybody. I mean it was I mean,
Speaker 1: that's the beginning of the world we're still kind of
Speaker 1: living in today. I may I have a daughter who's
Speaker 1: a junior in college, and you know, a third of
Speaker 1: her class wants to go work in financial services. Where
Speaker 1: in financial services a little different. Back then, it really
Speaker 1: was very bank centric. It was Morgan, Stanley, Goldman, Sachs,
Speaker 1: Lehman Brothers, Solomon Brothers, and so on. Uh, but but
Speaker 1: it was I mean it was strange, right, I mean
Speaker 1: everybody just takes it for granted. Now, you don't grow
Speaker 1: up learning the difference between stock and a bond. Uh,
Speaker 1: you don't grow up knowing what a difference between a
Speaker 1: commercial banker and an investment banker. That was a question
Speaker 1: that you had to have the answer to if you
Speaker 1: were interviewing for investment banks, because they really needed to
Speaker 1: be flattered that you knew the difference. That investment bankers
Speaker 1: were like, you know, they're alpha, alpha dogs and the
Speaker 1: commercial bankers were Nobody's. Uh, you need to be able
Speaker 1: to explain that difference. So you did. I remember kind
Speaker 1: of cribbing for the thing, getting the cliff notes from
Speaker 1: a friend who really cared about it, Like if they
Speaker 1: what are they gonna ask me? And what I gotta say?
Speaker 1: And it was like, well, if they asked you about
Speaker 1: the difference between investment bankers and commercial bankers, you tell
Speaker 1: them that investment bankers drive ferraris and and commercial bankers
Speaker 1: drive forwards kind of thing, and and uh and it
Speaker 1: was but but it was it was so I mean shallow.
Speaker 1: It was a It was a shallow as having a
Speaker 1: quick conversation with a friend and then ducking into an
Speaker 1: interview with Lehman Brothers to see if I could get
Speaker 1: away with it um And it wasn't any genuine interest
Speaker 1: because you how could it be genuine interests? You no
Speaker 1: idea what they did. Now, my insight was that this
Speaker 1: was true of the other you know, seven d people
Speaker 1: in my class who were applying for these jobs too,
Speaker 1: that nobody knew what they did. Almost nobody knew what
Speaker 1: they did, so everybody wanted to do it even though
Speaker 1: they didn't know what it was. I found it really
Speaker 1: ironic that you got rejected by Lehman Brothers who then
Speaker 1: come back into your life with the big short Well.
Speaker 1: I never really made that I didn't feel deeply embitter
Speaker 1: everybody being injected. Were followed me about the Lehman Brothers
Speaker 1: interview and his inn liars poker, and I feel this
Speaker 1: to the day is that there were two people interviewing me,
Speaker 1: and one of them was a young woman I really
Speaker 1: liked who was two years ahead of me at Princeton
Speaker 1: and we were like pals on the Princeton campus and
Speaker 1: she knew me well pretty well. And when I get
Speaker 1: into the interview, it's like she's a different person. She's like,
Speaker 1: we've never met. And if I don't know, if I
Speaker 1: can't talk intelligently about stocks and bonds, she's giving me
Speaker 1: a cold stare. And she created a really chilly environment.
Speaker 1: And I thought, this is strange. It's strange to do
Speaker 1: that with someone who you probably know well enough already
Speaker 1: to evaluate whether this person is going to fit in
Speaker 1: or not fit in, or be able to do the
Speaker 1: job or not do the job, or you know, has
Speaker 1: anything going on between their ears or he doesn't. And
Speaker 1: she it was this really artificial thing. She was in
Speaker 1: one of those at the time, the suits that women
Speaker 1: wore with a big boat the little puffy boat ie
Speaker 1: and uh, and I just thought that it's just it's
Speaker 1: just it's just a really uncomfortable, socially uncomfortable. And I
Speaker 1: did pick up. I don't know, probably every kid picks
Speaker 1: this up when they're moving from school life to work life.
Speaker 1: Just um, how how how artificial work life can be,
Speaker 1: how artificial it can seem. Uh And and that was
Speaker 1: that was my first brush with it, and it was
Speaker 1: really unsettling. I can I can imagine. So, so you
Speaker 1: don't get by Lehman Brothers. But eventually, through a crazy
Speaker 1: story you telling liars poker, you end up at what
Speaker 1: actually is the hottest firm in the world, Solomon Brothers.
Speaker 1: How soon after you arrived at Sally did you realize
Speaker 1: this is a really unusual place. Well, I'll tell you.
Speaker 1: I'll tell you two stories and you can decide which
Speaker 1: one is true, because I actually don't remember. But um,
Speaker 1: the first story is I told myself, I thought, I
Speaker 1: told myself, Look, I know I want to be a writer,
Speaker 1: but no one's paying me to be a writer, and
Speaker 1: a really and you know, I can get ninety dollars
Speaker 1: an article writing for the Economist of the Wall Street
Speaker 1: Jurnal up at page or I can go take this
Speaker 1: job for huge piles of money. I can make some
Speaker 1: money and then figure out how to be a writer.
Speaker 1: I think that's what was on my mind. And but
Speaker 1: but but I walked into I knew even before I
Speaker 1: walked into the place that it was a really interesting place.
Speaker 1: I mean, it was if you just go back and
Speaker 1: look at how much at Solomon's profits compared to the
Speaker 1: rest of Wall Street in say Night four they made,
Speaker 1: it was like they made more money than all the
Speaker 1: rest of Wall Street. Like it was just you were
Speaker 1: they were clearly in some other business. Even if you
Speaker 1: didn't know what it was, you'd say, something weird is
Speaker 1: going on here, and I get there and it's raucous.
Speaker 1: I mean, it's crazy. The training program as a frat house.
Speaker 1: The trading floor is an even better frat house. It's
Speaker 1: it's it's intellectually stimulating. It's actually the the the false
Speaker 1: kind of presentation of Wall Street at the time was
Speaker 1: that these investment bankers and the people in the investment
Speaker 1: banking department start out as analysts and become associates, and
Speaker 1: that worked their way up to vice presidents and they're
Speaker 1: always they're meeting with CEOs and they're doing the M
Speaker 1: and A transaction and all that. That that's where the
Speaker 1: actual intellectual life was. If you were a really good student,
Speaker 1: that's where you went. And if you were like just
Speaker 1: had greasy elbows, you went to the trading floor. The
Speaker 1: truth was that the real intellectual work was being done
Speaker 1: on the trading floor. It was pricing these figuring out
Speaker 1: how to price and value and and trade these all
Speaker 1: these new complicated securities, and it was riveting. And also
Speaker 1: understanding how global markets were working. I mean just just
Speaker 1: they are all these new markets opening up everywhere, and
Speaker 1: their relationships. It was far more intellectually stimulating than then
Speaker 1: the stuffy stuff that was going on inside the offices
Speaker 1: of the investment bankers. So instantly it's like, wow, people
Speaker 1: are wild here, and wow, it's actually intellectually interesting. So
Speaker 1: that the training class, which goes on for five months
Speaker 1: or wherever it was was, was one of the best
Speaker 1: courses I've ever had in anything. It was absolutely riveting,
Speaker 1: and I sat there taking notes and asking questions and
Speaker 1: feeling like I was getting the world's best survey course
Speaker 1: in how the financials and worked. Um so I was
Speaker 1: so the second story. So the first story is I'm
Speaker 1: gonna go make some money and then figure out how
Speaker 1: to be a writer. The second story. And you can
Speaker 1: decide whether this ring is true or not. I have
Speaker 1: a friend who was in that training class, that first
Speaker 1: training class that I was in. His name was Keenan Damon.
Speaker 1: He was an earnest young guy from Minnesota, and I
Speaker 1: never met him. I sat down next to him the
Speaker 1: first day of class, he says, and he said, and
Speaker 1: he says, I sat down and I said, Hey, who
Speaker 1: are you and what are you here for? And he said,
Speaker 1: I'm Keenan Damon and I'm here because I want to
Speaker 1: sell mortgage bonds and this is the place to sell
Speaker 1: mortgage bonds, which I thought was strange because how would
Speaker 1: anyone know they know me wanted to sell mortgage bonds.
Speaker 1: But anyway, uh, and he said, he said to me,
Speaker 1: who are you and what are you here for? And
Speaker 1: according to him, I said, I'm Michael Lewis, and I'm
Speaker 1: here to write a book. Uh. Now, I can't believe
Speaker 1: I would have said that the you know, the first
Speaker 1: day of class as Solomon Brothers. But it is possible
Speaker 1: that I was already thinking this material is so good
Speaker 1: that this is what I'm gonna do. I'm gonna spend
Speaker 1: a few years here to write a book about it.
Speaker 1: But it was messy because I was kind of like,
Speaker 1: I got very engaged with it for a while. If
Speaker 1: you'd asked me a year in what I was gonna do,
Speaker 1: I probably would have said I was going to stay
Speaker 1: five years. So you also kept a diary well during
Speaker 1: your days at Solomon Brothers. That that might suggest that
Speaker 1: you had a book on the mine. When did you
Speaker 1: start keeping that diary. Yeah, I'm not really a diary keeper,
Speaker 1: so that's true. If I was, and I was keeping
Speaker 1: a diary, diary is a little strong. It wasn't like,
Speaker 1: you know, I'm sad today and because my my best
Speaker 1: friend said something mean to me. I didn't do it,
Speaker 1: none of that stuff. It was. I was just recording
Speaker 1: what I saw, and um and my thoughts about what
Speaker 1: I saw, and by the and and by the I mean,
Speaker 1: I do remember that by the crash of U when
Speaker 1: I just by chance was wandering around the New York
Speaker 1: trading floor, I worked in London but had been flown
Speaker 1: back to New York, and all hell was breaking loose.
Speaker 1: I I wandered around with a notebook out, just writing
Speaker 1: everything down. Uh, And I knew that I was going
Speaker 1: to write about this at that point. I left three
Speaker 1: months later, But I think that what I was doing
Speaker 1: was going I was. I was still writing while I
Speaker 1: was there. I was going home at night and trying
Speaker 1: to publish, write magazine articles, so I think at the
Speaker 1: same time I was just kind of kind of keeping
Speaker 1: a record in my computer of what I was seeing
Speaker 1: and and so that does suggest that at some point
Speaker 1: I realized this was material for me. So you touch
Speaker 1: on so many things. I have to ask. First, good
Speaker 1: trade leaving Sally three months after the eighty seven crash?
Speaker 1: Was that was that good timing? Well, the timing wasn't
Speaker 1: to the crash. The timing was to my bonus, which
Speaker 1: landed in the bank account at the end of January.
Speaker 1: So I had to hold my breath until that money hit. Um.
Speaker 1: At the end of eighty seven, I already had a
Speaker 1: book contract. I didn't sign it, but so I'd already
Speaker 1: I'd already sold an idea for a book and gone
Speaker 1: in And so at the end of January I went
Speaker 1: and told my employers that I was leaving this good trade. Um, well,
Speaker 1: if my literary career hadn't worked out, it had been catastrophic,
Speaker 1: I was. I was. It looked anyway like I was
Speaker 1: gonna make a lot of money Solomon Brothers. I was paid.
Speaker 1: Then they told me I was gonna make a lot
Speaker 1: of money. Um. And I tell you, there was a
Speaker 1: really funny moment, and this tells you something about the
Speaker 1: spirit of that moment. It's very different from now. It's
Speaker 1: hard for people to believe that. You would think right
Speaker 1: anybody was within like Goldman Sacks. Now we think there's
Speaker 1: no way I can like walk out of Golden sacttions
Speaker 1: and write a book about what I just saw. Goldman
Speaker 1: Sacs are gonna assume me. I will have signed all
Speaker 1: these non disclosure agreements. I'll be discredited every which way. Actually,
Speaker 1: there were no non disclosure agreements that Solomon Brothers. There was.
Speaker 1: I told when I told the bosses I was leaving,
Speaker 1: they took me. They took These were very senior people.
Speaker 1: They took me into a room and I told him
Speaker 1: I was leaving. I was gonna write a book about
Speaker 1: Wall Street. I didn't know what the book was gonna
Speaker 1: look like exactly, but I said, I'm gonna go write
Speaker 1: a book about Wall Street. They didn't say, oh, like,
Speaker 1: what's in the book, and don't write about us. Nothing
Speaker 1: that was like furthest from their minds. They were worried
Speaker 1: about my mental health. They were sincerely worried. It was
Speaker 1: really sweet. If you're there, you just be thinking, these
Speaker 1: people really care about this young man they really thought.
Speaker 1: They said, look, you just made whatever, a quarter of
Speaker 1: million dollars, You're probably gonna make twice that next year.
Speaker 1: They actually said, now, this is probably b s. But
Speaker 1: they did say, we think you're someone who might run
Speaker 1: the firm one day. And and I was just like, wow,
Speaker 1: you know, this is so nice of them to care
Speaker 1: so much, um and the and it was like, they
Speaker 1: just just don't do this, Like they said, wait ten years,
Speaker 1: wait five years, you get rich and then go write
Speaker 1: your books, which is also what my father said. And uh,
Speaker 1: and I said to them, you know, I just can't.
Speaker 1: I just feel like I got to do this thing.
Speaker 1: And it was does a really sweet departure conversation, and
Speaker 1: they're just worried. They thought I was insane. So at
Speaker 1: the moment, it looked like in the moment, it looked
Speaker 1: like a totally insane trade. But but you know, when
Speaker 1: you're twenty seven years old and you are full of
Speaker 1: passion and you think you know what you want to do,
Speaker 1: I think you really, I think it's smart to honor
Speaker 1: those ceilings. Ceilings. I really had a I mean I
Speaker 1: had a head of steam. I had no real justification
Speaker 1: for thinking that I was going to be a big
Speaker 1: success as a writer, but I had a head of steam.
Speaker 1: So so there are two points I have to sort
Speaker 1: of annotate what you said. First, I think it's fair
Speaker 1: to say that liars poker is to some large degree
Speaker 1: why Goldman Sachs has non disclosure agreements. You kind of
Speaker 1: you kind of force that on the rest of the street.
Speaker 1: I think that's pretty fair, right, So I I ruined
Speaker 1: it for everybody. You did. Hey, listen, someone has to
Speaker 1: break the glass. And then second really end up on
Speaker 1: the bottom of the sea and concrete shoes. But yeah,
Speaker 1: but secondly, you had already published a coliment the Wall
Speaker 1: Street Journal while you were working at Sally that got
Speaker 1: you into trouble that had the most hilarious resolution. Tell
Speaker 1: us about the compromise that was reached when you published
Speaker 1: under your own name. So this you have to do
Speaker 1: a tiny bit of back story you need here. It
Speaker 1: was so I was writing while I was there, and
Speaker 1: things would get into print, and maybe a year and
Speaker 1: a half into my journey there, um I published an
Speaker 1: article on the op ed page of The Wall Street
Speaker 1: Journal arguing that investment bankers were overpaid. And it said
Speaker 1: at the bottom Michael Lewis is an associated Solomon Brothers
Speaker 1: in London, and um and I know, so this actually
Speaker 1: gets to you really kind of can't believe the spirit
Speaker 1: of the thing. But I remember exactly how I felt.
Speaker 1: I was so excited I was in the Wall Street Journal.
Speaker 1: I thought when I came in the next day, like
Speaker 1: people would be slapping on the back, going, wow, you
Speaker 1: got a piece of the journal. All that I thought.
Speaker 1: I thought like everybody could be happy for me. And
Speaker 1: I rolled in to the London office and the next
Speaker 1: morning and Charlie mcpayh, who I had adored, who ran
Speaker 1: the whole of Solomon Brothers International and had been the
Speaker 1: one who hired me, was waiting at my desk ashen faced,
Speaker 1: and he hadn't slept, and he said, we've had meetings
Speaker 1: with like the board of directors overnight about your piece
Speaker 1: because it's being apparently gonna be reprinted all over the
Speaker 1: country and people are talking about the clients are calling.
Speaker 1: And he said, he said, you can't. I mean, my god,
Speaker 1: you've created crisis. And now you would think, oh, Michael,
Speaker 1: you're fired. There is the next line, But actually I
Speaker 1: think this is the backstory. I was in a very
Speaker 1: odd position I had at that point, maybe the second
Speaker 1: or third biggest customer of the whole firm who would
Speaker 1: speak only to me. Uh, it was it was a
Speaker 1: it was a proto hedge fund in London. Jacobroth's child
Speaker 1: was the was the firm. But and the guy who
Speaker 1: ran the money there. Um thought it was amusing because
Speaker 1: I acknowledged to him how little I knew. He said, well,
Speaker 1: nobody knows anything. You want to at least try to
Speaker 1: sell me stuff. As long as don't try to sell
Speaker 1: me stuff, he said, I'll do my business through you,
Speaker 1: and he made me like the most successful salesman and
Speaker 1: in in in the London office overnight. He was just
Speaker 1: channeling a huge volume through me and would refuse to
Speaker 1: like speak with anyone else at the firm, including John
Speaker 1: good Friend, the chairman. When he would show up in London,
Speaker 1: he'd say, I only talked to Michael. So I had
Speaker 1: this situation where that guy, he was probably generating ten
Speaker 1: million dollars of profits for Solomon Brothers, they were going
Speaker 1: to fire me because of him, and so it was
Speaker 1: sort of like, how do we deal with this problem?
Speaker 1: And the boss of all of the bosses was sitting
Speaker 1: there at my desk and he said, I said, I'm
Speaker 1: not stopping writing that. That's you know. I made to
Speaker 1: do this. I'm gonna do it. And he said all right,
Speaker 1: he said could we do could you do it under?
Speaker 1: Could you leave us out of it? I said, yeah,
Speaker 1: I'm sorry, Ibou sad and he said, he said, uh.
Speaker 1: He said could you use another name? And I said, well,
Speaker 1: how about if I used my mother's maiden name. I
Speaker 1: don't know why that popped into my head, but my
Speaker 1: mother's main name was Diana Bleaker Monroe, and Diana Bleaker
Speaker 1: Monroe wrote several pieces, a couple for the New Republic,
Speaker 1: a couple for a magazine in London about and I'm
Speaker 1: still using the material around me. It was just disguised
Speaker 1: and um and I would come a couple of times
Speaker 1: the New Republic rand pieces. I'd come into the office
Speaker 1: or the evening. They'd come out kind of thing that
Speaker 1: someone would fax them over to the London office. They
Speaker 1: would be reprinted a thousand times and all over the desk,
Speaker 1: and no one knew it was me who wrote them,
Speaker 1: and they were everybody was reading him. So I had
Speaker 1: market testing for this stuff before I wrote. War was poker.
Speaker 1: I knew that people fought what I was writing about
Speaker 1: Wall Street was kind of funny and like on point.
Speaker 1: But that's that's so I had a little literary career
Speaker 1: rolling alongside my my career on the Solomon Trading for
Speaker 1: because of this conversation with this guy. So not a
Speaker 1: total leap of faith. You had an idea, Hey, I
Speaker 1: have some traction as as a writer. I just you know,
Speaker 1: it seemed to me when I published a couple of
Speaker 1: things I published that were about Wall Street, that everybody
Speaker 1: on Wall Street wanted to read them. I wasn't thinking.
Speaker 1: I didn't know how big the audience was exactly, but
Speaker 1: I thought that was a good sign. Really interesting. Season
Speaker 1: three of Against the Rules just dropped. Season one was
Speaker 1: about umpires and all the interesting things they go through
Speaker 1: and how umpire has changed. Season two was about coaching.
Speaker 1: Tell us a little bit about season three and experts.
Speaker 1: Why did you choose experts as a topic. Well, so
Speaker 1: the idea is to pick some role in American life.
Speaker 1: So referees are coaches very broadly defined, like referee is
Speaker 1: also regulators for example, um or or you know, art
Speaker 1: kind of sours people who are making making calls about
Speaker 1: things and with experts, and the key to the role
Speaker 1: is that it be important and then it be a
Speaker 1: little volatile, and you're asking the question like, what's happened
Speaker 1: to this role? And there are a couple of things
Speaker 1: about experts that got me into it. Well one, I mean,
Speaker 1: just to hook it up to the liars poker. I
Speaker 1: have been bewildered by people's willingness to accept other people
Speaker 1: ex experts since I was on Wall Street. But when
Speaker 1: I was on the phone selling stuff to people and
Speaker 1: professional investors would take what I said seriously when I
Speaker 1: knew I didn't know what I was talking about. That
Speaker 1: because I was at Solomon Brothers, I was the expert,
Speaker 1: and so I I got So I think my interest
Speaker 1: actually dates back to that, to the just how how
Speaker 1: how fuzzy the whole concept is. And then of course,
Speaker 1: like my whole literary career is based on finding true
Speaker 1: the best experts. I mean, it's one way of looking
Speaker 1: at all the books I find. I find people who
Speaker 1: actually know what's going on, who you might not think
Speaker 1: are the people who know what's going on. Certainly true
Speaker 1: the big short moneyball, I mean, it happens over and
Speaker 1: over the PREMNISI exactly. It's it's it's it's surprising where
Speaker 1: you find the expert I have found over and over again.
Speaker 1: And it's often not the high status people. It's often
Speaker 1: people who are buried away and no one knows who
Speaker 1: they are. And so I wind up writing whole books
Speaker 1: about people characters that the world thinks are in the
Speaker 1: beginning at least obscure until they make the movie about them.
Speaker 1: But they are obscure to begin with. And and but
Speaker 1: there they shouldn't be, because they are the one who
Speaker 1: actually knows, say, how you value a baseball player, or
Speaker 1: how you should manage a pandemic, or what's going on
Speaker 1: on in in in sub prime mortgages in two thousand
Speaker 1: and six, um. And so I think that's another source
Speaker 1: of interest. Um. But but so that's got that got
Speaker 1: me into it. But they are all these questions that
Speaker 1: just seemed really worth exploring, starting with like the pandemic. Um.
Speaker 1: Before the pandemic, the United States was like judged to
Speaker 1: be by far the most expert in managing pandemics of
Speaker 1: all countries on earth. But in a in a survey
Speaker 1: that had been done, and you know, a year into it,
Speaker 1: we have we have four pent of the world's population.
Speaker 1: Of the world of death. We clearly didn't whatever that
Speaker 1: expertise was, it didn't quite work. And I kind of
Speaker 1: look at the world and I think over and our country,
Speaker 1: and I think over and over again. We're demonstrating this
Speaker 1: very strange ability to generate expertise, to generate knowledge and
Speaker 1: not use it, or not understand it, or not identify
Speaker 1: it or not respected. Um. So that gives me in
Speaker 1: and and the nature of the podcast is different from
Speaker 1: what you and I are doing, right, I mean, these
Speaker 1: are I'm writing film script. Every episode is is I
Speaker 1: mean a pain in the ass. It's every episode is.
Speaker 1: It's what everyone's like. Everyone takes me about as long
Speaker 1: as a long magazine article tak I interview a bunch
Speaker 1: of people and try to make sense of some aspect
Speaker 1: of this problem and try to tell it as a story.
Speaker 1: And um, and so the seven episodes, each one is
Speaker 1: a different story. And UM, I mean, like the one
Speaker 1: that dropped this week to just give you, just to
Speaker 1: give an idea of how it works. One that dropped
Speaker 1: this week is an attempt to make a kind of
Speaker 1: argument in story, um about why about this paradox and
Speaker 1: the paradox is, they're all these fields where you can
Speaker 1: see expertise has improved, where the experts are getting better
Speaker 1: and better, but where people trust them less and less
Speaker 1: or think they're actually say they're more. They're all I
Speaker 1: think less and less of them. So medicine is a
Speaker 1: really good example. Nurses and doctors will tell you that
Speaker 1: for the last you know, fifteen years, they've felt they're
Speaker 1: clearly more likely to help you than they were. You know,
Speaker 1: every day they're learning stuff and uh, and yet every
Speaker 1: day the people who walk in their office are more
Speaker 1: likely to be armed with something from like web m
Speaker 1: D they read that says the doctor doesn't know what
Speaker 1: he's talking about. And um, but but you know, really
Speaker 1: so that's complicated example, but a really simple example that's
Speaker 1: kind of fun. Um talked to a really old weatherman,
Speaker 1: someone who's been a meteorologist on TV for the last say,
Speaker 1: fifty years, as we did, and they'll tell you that, um,
Speaker 1: look fifty years ago, my forecast is basically sticking sticking
Speaker 1: my head out the window and saying with the weather
Speaker 1: was that that, yeah, I could kind of do it
Speaker 1: a kind of okay, two or three day forecast, my
Speaker 1: ten day forecast was just as good as guessing and
Speaker 1: no better. And I certainly could and tell you like
Speaker 1: where when tornadoes were gonna happen and where they were
Speaker 1: going to hit. They can do all this stuff now.
Speaker 1: They can be very precise about extreme whether their ten
Speaker 1: day forecasts are pretty good, their three day forecasts are
Speaker 1: multiples more accurate than they used to be. But they
Speaker 1: used But they'll also say, we used to get on
Speaker 1: TV and speak with total certainty, like Ron Burgundy. We
Speaker 1: were like puffed up, important, confident people. Now we speak
Speaker 1: because we understand that we really understand things. We're kind
Speaker 1: of talking in terms of probabilities and uncertainties, and we're
Speaker 1: expressing uncertainty and the audience. The way the audience has
Speaker 1: responded is you like to doubt the more. Uh. So
Speaker 1: the podcast is about how people don't really think probabilistically
Speaker 1: and and if you give them, if you tell them
Speaker 1: there's uh chance of rain and it rains, they think
Speaker 1: you don't know what you're talking about it they don't
Speaker 1: understand what that means. And so I think so much
Speaker 1: modern expertise. One answer to the question why the expertise
Speaker 1: is getting better and better and why people understand it
Speaker 1: less and less is the nature of the expertise. The
Speaker 1: expertise is very is probabilistic and data based, and it's
Speaker 1: it's a you know, in grand historic terms, data is
Speaker 1: a relatively new phenomenon, and people really don't understand when
Speaker 1: Nate Silver says, you know, Hillary Clinton has a seventies
Speaker 1: seven percent chance of beating Donald Trump and Trump wins.
Speaker 1: They think Nate Silver doesn't know where he's talking about.
Speaker 1: What they should say is well, Nate Silver was actually
Speaker 1: a little more bush on Trump than all the people
Speaker 1: on TV, and in his model, Trump won almost three
Speaker 1: out of ten times. So it's it's um, it's so
Speaker 1: it's exploring this phenomenon, this this problem people have with
Speaker 1: problems with experts who talk in terms of probabilities. And
Speaker 1: you and I discuss this when we did the podcast
Speaker 1: after the Undoing Project that if someone goes on TV
Speaker 1: and says something bold with a lot of confidence, they're
Speaker 1: believed more by the audience. And the person who comes
Speaker 1: out and says, well, you know, there's a sixty percent
Speaker 1: chance this could happen, and there's a probably if that
Speaker 1: can happen, they're perceived as wishy washy not. Not only
Speaker 1: does the person who expresses certainty, usually stupidly, um, get believed,
Speaker 1: they're much more likely to be on TV. When the
Speaker 1: TV producer calls you up if you say maybe this
Speaker 1: and maybe that, they just don't invite you on TV.
Speaker 1: TV wants you to come on and be certain, uh
Speaker 1: and bold and interesting. Uh So it's um, it is.
Speaker 1: It's screwy how we don't we should respect experts who
Speaker 1: expressed doubts, even in their own understanding of the world,
Speaker 1: far more than experts who seem really confident. Uh. That
Speaker 1: should be like a that should be the bias, not
Speaker 1: the opposite. Um. And instead we were we reward this
Speaker 1: phony certainty, this phony confidence. We think we think it is,
Speaker 1: we think it reflects a deep understanding. We sort of
Speaker 1: we sort of get bluffed all the time at the
Speaker 1: poker table. Um, instead of realizing that this is a bluff. Um.
Speaker 1: And the person, of course, oftentimes the person who's expressing
Speaker 1: total certainly thinks they're right. It isn't that they're lying,
Speaker 1: it's that they actually actually they know they they know
Speaker 1: little enough about what they're talking about to sound certain
Speaker 1: about it, often wrong, never in doubt, often wrong, never
Speaker 1: in doubt that there is Um a quote of yours
Speaker 1: from I don't remember it was the first or second
Speaker 1: episode this season about how challenging it is to find
Speaker 1: the experts, and the line that you uses your job
Speaker 1: is to find the L six explain what the L
Speaker 1: six is. And and this I specifically is the person
Speaker 1: who ends up saving thousands of lives via the Coast
Speaker 1: Guard because he changes the way we look for missing voters.
Speaker 1: So those are you're conflating two episodes here, Uh yeah,
Speaker 1: the ALL six. The L six episode is about a woman,
Speaker 1: a woman who figures out how to get money out
Speaker 1: of insurance companies. Me. But but you know what, the
Speaker 1: it's also true that the guy in the Coast Guard
Speaker 1: is an L six, uh six, and L six is
Speaker 1: six levels down in the organization. And this is an
Speaker 1: insight that I first heard from an entrepreneur named Todd Park.
Speaker 1: And Todd Park had Um has created I think three
Speaker 1: different multibillion dollar companies in the healthcare industry, and in addition,
Speaker 1: he was chief Technology Officer for the United States and
Speaker 1: the Obama administration. And Tod Park said to me, and
Speaker 1: the story we tell in the first episode is his
Speaker 1: first company and it's the story of he's trying to
Speaker 1: create um a business where he makes pregnancy less dangerous,
Speaker 1: more pleasant for women and and cuts the cost of
Speaker 1: catastrophic outcomes by basically caring for the mom better and
Speaker 1: buys a pregnancy clinic in San Diego. And it's catastrophe
Speaker 1: because it's a catastrophe because one the insurers won't pay
Speaker 1: him and make pregnancy more pleasant, and to the clinic
Speaker 1: itself isn't getting paid for the work it's doing. And
Speaker 1: he realizes that the problem he really needs to solve
Speaker 1: is medical billing, that all around the country the insurance
Speaker 1: industry has gotten so complicated, and how it responds to
Speaker 1: doctor's claims that doctors aren't getting paid. And he finds
Speaker 1: burying a basement in the hospital in Boston, this woman
Speaker 1: who has mastered the complexity the thousands of different insurance
Speaker 1: programs and the thousands of different permutations on the programs,
Speaker 1: and it's just got a gift for getting paid, uh
Speaker 1: knowing how to handle the complexity. Her name is Sue Henderson.
Speaker 1: And he realized that like on the ORG chart of
Speaker 1: the hospital, she's six levels down. But without her, the
Speaker 1: hospitals that goes bankrupt, and the hospital itself doesn't think,
Speaker 1: it doesn't understand why it's business is working. And Todd
Speaker 1: extrapolates from this and realizes that in big systems and
Speaker 1: big corporations and big agencies and government that at when
Speaker 1: there is a crisis, when there is a problem and
Speaker 1: you're looking for the expertise to solve the problem, to
Speaker 1: answer the question, it's never at the top of the organization.
Speaker 1: It's always some someone low in the organization who has
Speaker 1: some specific knowledge. And when you have, when you have uh,
Speaker 1: hierarchical organization, not a flat organization, that knowledge, the expertise
Speaker 1: has unbelievable difficulty in finding its way into the decision
Speaker 1: maker's hands. Um. And so Todd sets out to kind
Speaker 1: of build a career on this insight, and they're really
Speaker 1: spectacular results he gets. He gets called in when when
Speaker 1: Obamacare fails on the first day, when the website crashes,
Speaker 1: and it's a it's like one of the one of
Speaker 1: the catastrophes of the Obama presidency. Right, he goes all
Speaker 1: the trouble of getting getting the thing passed and and
Speaker 1: now the website crashes to is I think it's that
Speaker 1: point CTO of the country, and he knows, don't ask
Speaker 1: the people who are a top goes go go six
Speaker 1: levels down to ask who understands how this software works,
Speaker 1: and he finally finds six levels down contractors for the
Speaker 1: government who who can solve the problem. But over and
Speaker 1: over he finds that you've got to go to these people,
Speaker 1: and so it raises like this bigger issue about expertise.
Speaker 1: I think, um, when you live in a society that's
Speaker 1: more or less equal, where where the persons six levels
Speaker 1: down is not all that far away in status from
Speaker 1: the person at the top and pay in the way
Speaker 1: people look at them in their sense of self importance,
Speaker 1: there's a freer flow of conversation information. It's easier for
Speaker 1: the L six to get what they know into the
Speaker 1: head of the all one. But when you literally live
Speaker 1: in an increasingly unequal society where the CEO is being
Speaker 1: paid thirty million dollars and the L six is being
Speaker 1: paid fifty thou and is regarded as you know, an
Speaker 1: interchangeable art um, it's harder. And I think that part
Speaker 1: of our problem in unearthing expertise is a problem with inequality. UM.
Speaker 1: But we that that we get it, that only elliptically.
Speaker 1: The story of this woman kind of coming in a
Speaker 1: completely unknown, unsung person and what's in her head, going
Speaker 1: into software and creating a multi billion dollar company called
Speaker 1: the Sene Health is a spectacular story. And and so
Speaker 1: that's the first episode of the season. So now you're
Speaker 1: you're almost done with season three. How do you like
Speaker 1: the sort of scripted podcast format that you're doing it?
Speaker 1: It seems a whole lot more collaborative than sitting alone
Speaker 1: and typing in your your office at home. It's a
Speaker 1: perfect palate cleanser cleanser between books because it does a
Speaker 1: couple of things, and it is collaborative. It does work
Speaker 1: different muscles because you're writing for the year rather than
Speaker 1: the eye, and the year is a more. It's a more,
Speaker 1: it's got a it's it's got a different emotional palette
Speaker 1: than the It really responds differently to emotion you hear,
Speaker 1: you hear the emotion in people's voices. It rewards emotion
Speaker 1: um and so I like being pulled in that direction
Speaker 1: for the podcast. I love I love the storytelling challenge
Speaker 1: of writing these scripts. I think it's just really useful
Speaker 1: for me. It's just it's a different it's it's um
Speaker 1: it's in some ways looser some way it's tighter than
Speaker 1: what happens with with when I'm writing a book. But
Speaker 1: it's it is cross training. It's like working different muscles.
Speaker 1: So I really like doing them. I wouldn't want to
Speaker 1: just do them. I think alternating between books and podcast
Speaker 1: seasons is a really good thing, is really good for me,
Speaker 1: really healthy. A year ago, or barely a year ago,
Speaker 1: you released The Premonition, a Pandemic story, which was all
Speaker 1: about America's history with pandemics and how well prepared we
Speaker 1: were for the coronavirus rest. So, so it's been a
Speaker 1: year since the book has come out, and probably two
Speaker 1: years since you first sat down to start writing it.
Speaker 1: How do you think it's held up in the ensuing decades. Well,
Speaker 1: it was a story that was designed to hold up
Speaker 1: in this way that I knew that it ended in
Speaker 1: May of two thousand, of two thousand and twenty, So
Speaker 1: it ended once it was clear that the United States
Speaker 1: had screwed up its response. Uh, and that most of
Speaker 1: what comes before is characters kind of showing you why
Speaker 1: the response was going to be screwed up. So and
Speaker 1: that's and so it didn't depend It didn't depend on
Speaker 1: anything after that. It really is. It was the story
Speaker 1: was kind of over when I wrote it, which sounds
Speaker 1: strange because the pandemic is not over. Um the UM.
Speaker 1: I'm disappointed with the the the effect of the book
Speaker 1: in that I thought I'd watched the big short have
Speaker 1: a very big effect. I don't know it was exactly
Speaker 1: the right effect, but I thought that there was such
Speaker 1: an obvious response to the stories. It wasn't you know
Speaker 1: what I was saying with the characters were saying, who
Speaker 1: were clearly the people among the people we should have
Speaker 1: been listening to going into the pandemic, uh, and that
Speaker 1: they were saying that the CDC has ceased to do
Speaker 1: what it what you think it does. It does not
Speaker 1: control disease. It observes and reports on disease. It's not
Speaker 1: set up to be battlefield command in a pandemic. And
Speaker 1: so the first thing you do is create this creates
Speaker 1: something new that does respond uh to a pandemic, and
Speaker 1: you acknowledge this isn't what goes on in the CDC,
Speaker 1: and instead sent it's trying to pour more money into
Speaker 1: into the CDC. That surprised me. I thought I thought
Speaker 1: the book might stop such stuff from happening. So I'm
Speaker 1: kind of disappointed. I'm kind of disappointed in that. Um
Speaker 1: the second and kind of this isn't the fault to
Speaker 1: the book, but it's it's it's a curious aspect of
Speaker 1: our society that one of the things the book points
Speaker 1: out that I find riveting. One of the characters had
Speaker 1: gone back, you know, uh, this was now fifteen years ago.
Speaker 1: He'd gone back and looked at what happened in nineteen
Speaker 1: eighteen in the pandemic and realized that the people then
Speaker 1: at the end of their pandemic hadn't fully understand what
Speaker 1: it actually happened that they did. They didn't understand, in particular,
Speaker 1: that the things they had done to slow disease and
Speaker 1: prevent death, like closing churches and schools and saloons and
Speaker 1: social distancing stuff wearing masks, had actually really worked and
Speaker 1: explained differences in death rates between cities in America. And
Speaker 1: they hadn't. They hadn't. They just thought, well, there were
Speaker 1: deaths everywhere, it's hard to see the effects of these things.
Speaker 1: They didn't have the data whatever, um, But they hadn't
Speaker 1: really done a postmortem that enabled them to be prepared
Speaker 1: if it happened again, like what worked and what didn't?
Speaker 1: And it seemed to me, I described that what this
Speaker 1: guy does and some at some length it seems to
Speaker 1: me like a natural thing for us to be doing
Speaker 1: now and we're not doing it. Uh, And I can't
Speaker 1: I can't. I can't quite believe it. I mean, I
Speaker 1: can't believe that no one's asking why the death rate
Speaker 1: in Miami is three and a half times the death
Speaker 1: rates in San Francisco, or or why the death rate
Speaker 1: in in the red counties out here in California that
Speaker 1: didn't comply with public health orders is double or triple
Speaker 1: the death rate in the blue counties that did you know?
Speaker 1: I It may it may not be that the social
Speaker 1: distancing worked. There may be some other explanation, but we
Speaker 1: need to know it because there were really different outcomes
Speaker 1: from place to place, and it's and I think we
Speaker 1: need ununderstand why. So so let's bring this back to
Speaker 1: our previous conversation about experts. It seems that the pandemic
Speaker 1: has led to even greater mistrust for experts, Or am
Speaker 1: I saying that backwards? Did the pandemic reveal a mistrust
Speaker 1: that was already there. You know, what it revealed was
Speaker 1: an L six problem, that the that there was so
Speaker 1: little honest concern about pandemics for such a long time,
Speaker 1: that we had shoved the that the role, the actual
Speaker 1: job of controlling communicable disease, of preventing disease from moving
Speaker 1: from person to person, had been shoved down on local
Speaker 1: public health officers who had very who had very little
Speaker 1: social cloud, poorly paid, no one knew who they were, uh,
Speaker 1: you know, not important people, and so they You know,
Speaker 1: if you want to find expertise in actually controlling communicable disease,
Speaker 1: you go inside you're really who nobody does, inside your
Speaker 1: local public health office, and you talk to the local
Speaker 1: public health officer who handled the measles outbreak at the school,
Speaker 1: or or or the you know, drug multi drug resistant
Speaker 1: tuberculosis outbreak in the bad neighborhood. You know, it's it's um.
Speaker 1: They've been doing this and they have been very aware
Speaker 1: of the political consequences of trying to constrain people's movements
Speaker 1: and very aware of how you actually stop people from
Speaker 1: getting sick and dying. And they've been they're they've been
Speaker 1: fighting battles. So this war breaks out and to this
Speaker 1: day we have not acknowledged to those are the people
Speaker 1: who should be in front of the Senate talking about it,
Speaker 1: or or on a commission riding up a plan for
Speaker 1: the country. It isn't kind of grand pubas who are
Speaker 1: floating around Washington. It's people at the local level who
Speaker 1: who we should surface as the experts. And they were
Speaker 1: the experts going in and they got slaughtered because they
Speaker 1: didn't have the social authority that you know. And what
Speaker 1: happened is in various states around the country, their their
Speaker 1: legal authority is being dialed back, which I think is
Speaker 1: a catastrophe. I think that that that that removing the
Speaker 1: authority from the expert to do what needs to be
Speaker 1: done if there's a disease operak in your neighborhood is
Speaker 1: really a bad idea. To leave it in the hands
Speaker 1: of politicians is really a bad idea. Well, let's talk
Speaker 1: about one of those local experts who you surfaced. Um.
Speaker 1: Charity Dean is one of the key characters in the book.
Speaker 1: I actually got to interview her at a conference last
Speaker 1: weekend of all places, Miami, since you mentioned it, and
Speaker 1: she is saying that given the b A to omicron
Speaker 1: variant that's starting to show up both in hospitals and
Speaker 1: in in waste treatment um plants, which she believes we
Speaker 1: should be checking lots and lots more of. She's looking
Speaker 1: for a surgeon in May and June. Tell us a
Speaker 1: little bit about how you found charity Dean. Yeah, the
Speaker 1: the charity Dean was a is a wonderful character because
Speaker 1: she dramatizes the central problem is just how brave you
Speaker 1: have to be as a local public health officer to
Speaker 1: really do your job. Well, nobody should have to be
Speaker 1: as brave as she had to be. And um, she
Speaker 1: but I found how I found her. It's kind of funny. Um.
Speaker 1: At the beginning of the pandemic, I thought I should
Speaker 1: be looking into this as a subject because I the
Speaker 1: book before the Premonition was the Fifth Risk, and was
Speaker 1: about how the government manages or doesn't manage or uh
Speaker 1: existential risks, how the federal government, how the tools we
Speaker 1: have at the federal level have been allowed to decay
Speaker 1: and offify and so so, and what were the consequences
Speaker 1: of that. Well, here this existential risk pop pops up,
Speaker 1: and I think, well, it's an example of kind of
Speaker 1: what I was writing about. Let's see, let's see if
Speaker 1: there's a story here, And Charity was the last character
Speaker 1: I found of the main characters, and every other main character,
Speaker 1: UM Joe to you see a prominent viral prominent um
Speaker 1: virus hunter. Basically at UCSF UM a group of doctors
Speaker 1: they called themselves the Wolverines who had written the US
Speaker 1: Pandemic plan um uh. Various people all said to me, Look,
Speaker 1: if you want to get to the guts of this,
Speaker 1: you've got to meet Charity Dean, because we met her,
Speaker 1: and she knows more more about like how to actually
Speaker 1: manage this in the middle of you know, in the
Speaker 1: fog of war than anybody. But Charity Deane herself was
Speaker 1: an L six. She was buried inside the State of
Speaker 1: California Health Department, and she wasn't even running it. She
Speaker 1: was she was actually exactly six levels down from Gavin
Speaker 1: Newsom and and was being in January of two thousand
Speaker 1: twenty forbidden from using the word pandemic and banned from
Speaker 1: the meetings where they were discussing what would happen if
Speaker 1: this was this thing that was happening in China was
Speaker 1: actually serious. She had already figured out it was very serious,
Speaker 1: and it was already thinking about strategies to deal with it,
Speaker 1: and she was being excluded from the conversations that that
Speaker 1: we're happening in California for the first couple of months
Speaker 1: of this thing, and um, and so I wrote her,
Speaker 1: I have an email somewhere where I wrote to the
Speaker 1: Department of Public Health in like, oh, I don't know May,
Speaker 1: April or May, and said I really want to interview
Speaker 1: Charity Dean. And I got a note back saying she
Speaker 1: doesn't want to. She's she's unable to talk to you.
Speaker 1: I'm afraid that that's not going to happen. And it
Speaker 1: wasn't from her, so I put it to one side.
Speaker 1: I thought it was too bad, you don't want to
Speaker 1: talk to me, And then I got it annoyed me,
Speaker 1: And like a month later I managed to get her
Speaker 1: cell phone and I texted her and she said, they
Speaker 1: never sent me, they never asked me, they never told
Speaker 1: me that you would call it. I'm happy to talk
Speaker 1: to you and uh and thus began this, I mean,
Speaker 1: an exploration of the character who I would argue might
Speaker 1: be the best character I have ever had for any book. Um,
Speaker 1: just spectacular and and who took que two to the
Speaker 1: nub of the problem in our pandemic response. UM, And
Speaker 1: I tell you what among the other things that A
Speaker 1: surprised that surprised me about writing the premonition. When you
Speaker 1: go and spend time with someone who is a local
Speaker 1: public health officer, just asked them to tell you stories
Speaker 1: from their day or their career, it is so dramatic.
Speaker 1: I mean, it's it's guns and violence and scary stuff
Speaker 1: and people dying of disease and squirrelly doctors who were
Speaker 1: with dirty needles who are giving people hepatitis. It's it's
Speaker 1: it's one drama after another. And I couldn't figure out
Speaker 1: why no one had done the TV show. I mean
Speaker 1: it was just the material was so good, I thought,
Speaker 1: And it was. It was naturally dramatic, naturally anecdotal material.
Speaker 1: I couldn't figure out why we didn't know about these people. UM.
Speaker 1: It was it was an arbitrage. It was like finding
Speaker 1: it was like finding a stock. No one's paid attention
Speaker 1: to UM and she was the stock. Uh. And I
Speaker 1: went along say the very least the last last premonition question.
Speaker 1: We're recording this two days after a Trump appointed judge
Speaker 1: who the A b. A Described as not qualified, overturned
Speaker 1: the CDC mass mandates. What what are your thoughts on this?
Speaker 1: I think with the judges with effectively saying I didn't
Speaker 1: read I need to go read the you know, sixty
Speaker 1: page decision, but um, I glanced at it. Uh. The
Speaker 1: is that's that the Congress, not the CDC, has the
Speaker 1: power to do this, And it's sort of a version
Speaker 1: of which happened at the local at the state and
Speaker 1: local level across the country. That the political process, and
Speaker 1: it's the it's the right wing removing the authority from
Speaker 1: the public health expert to do public health. I think
Speaker 1: it's really a really bad idea. However, inapt to see
Speaker 1: DC has been um for for sort of these sort
Speaker 1: of federal decisions. They really you know, until we get
Speaker 1: something better, that they kind of need to be the
Speaker 1: expert who's making the call on this, not not not
Speaker 1: a Congress. Uh. And I think, um, effectively, what what's
Speaker 1: what what's happened is she's killed a lot of people. Um,
Speaker 1: she's doing this just as there is a rise in
Speaker 1: the number of cases she's making. She's making public trends.
Speaker 1: I don't want to wear a mask. So you're talking
Speaker 1: to someone, but half of my brain says, God's great,
Speaker 1: I don't have to wear a mask on an airplane anymore.
Speaker 1: I'm not at risk. I got I'm vaccinated, I'm Elsie nothing,
Speaker 1: I don't have any I'm none of them, none of
Speaker 1: the risk buckets. So who Yeah, great, I don't have
Speaker 1: to wear a mask. You you actually do have a
Speaker 1: risk bucket because sixty plus is a co morbidity. Yeah,
Speaker 1: but I'm sixty one with the body of a thirty
Speaker 1: year old. So so so I actually don't think I'm
Speaker 1: in the risk bucket. You feel and it's it's um
Speaker 1: and so I just I don't. I don't myself. I
Speaker 1: really my first reaction is that, wow, great, thank God
Speaker 1: enough to wear my mask. But the second reaction is
Speaker 1: this is really bad public policy. This is like if
Speaker 1: you're just looking at what's going to happen because of this,
Speaker 1: and I mean, I just it's a shame. It's a shame.
Speaker 1: It's a shame. And I think that that bold people
Speaker 1: will pay the price and what. But this gets back
Speaker 1: to the question of we need a post mortem at
Speaker 1: the end of this to show why people died where
Speaker 1: they died and were like what and why they were
Speaker 1: saved where they were saved, not for purpose of the retribution,
Speaker 1: not for purposes of blaming this judge for people dying
Speaker 1: because they caught it on an airplane, but for purposes
Speaker 1: of going forward into the next one. We're not we're
Speaker 1: not using this as a learning experience. We're using is
Speaker 1: an arguing experience, and that it is such a shame
Speaker 1: because it's going to happen again. Cherry's right. I think
Speaker 1: Cherry's write about this. I mean, all my characters they say, look,
Speaker 1: this steals anomalous, this steals once every century. But actually
Speaker 1: the last twenty years, these these things have been jumping
Speaker 1: from animals to people at a greater rate. And there's
Speaker 1: a reason our relationship with nature is broken, and and
Speaker 1: we're watching the result of that. Uh, and it's there's
Speaker 1: no reason to think it's not going to keep happening.
Speaker 1: So we need to learn. We really really need to learn.
Speaker 1: Our experts need to learn. And you're not learning if
Speaker 1: you're not asking honestly why things happened, really really really fascinating.
Speaker 1: When the audio rites for Liars Poker reverted back, you
Speaker 1: decided to make a complete audio recording of the book.
Speaker 1: I just reread it for the first time since the
Speaker 1: mid nineties. Tell us what your experience was rereading your
Speaker 1: own work unsettling. I just I don't reread my books.
Speaker 1: Sometimes I feel like I should, and I pick them
Speaker 1: up in the first sentence that I got, I can't
Speaker 1: do this. And I did that with Liars Poker. I remember,
Speaker 1: right on the paperback tour year after it came out,
Speaker 1: I thought I gotta go read it and remember what
Speaker 1: was in it, and I couldn't even do it. Um,
Speaker 1: So this really is the first time I've reread it,
Speaker 1: And I thought A couple of things were instantly obvious.
Speaker 1: One I was in the hands of an amateur um
Speaker 1: and I could actually hear. One form the amateurism took
Speaker 1: was the pros is infected by the voices of whoever
Speaker 1: is book I was reading while I was writing it.
Speaker 1: So at one point I was reading from George Orwell
Speaker 1: and other Mark Twain or or Tom Wolfe or Rebecca
Speaker 1: West or. I remember what I was reading at the
Speaker 1: time because I can hear their voices in my prose,
Speaker 1: and that's it's a pale imitation of their voices. But
Speaker 1: I could see that the voice was wavering in in
Speaker 1: the book, and particularly early in the book, and not
Speaker 1: the first chapter because I wrote the first chapter last.
Speaker 1: But but when you start at chapter two, you're seeing
Speaker 1: me in the beginning of my career, and it's kind
Speaker 1: of interesting. It's not until I get to about I
Speaker 1: can't do the passage in like chapter eight where I thought, huh,
Speaker 1: I'm liberated. This is actually more me. I recognized this
Speaker 1: and it's subtle, but it was watching. It's sort of
Speaker 1: like I was, I don't advise anybody to do this.
Speaker 1: I was learning how to write a book by writing
Speaker 1: a book. And um, and you can see it in
Speaker 1: the pages of the book. So that surprised me. Um.
Speaker 1: I mean, let me jump in here because I just
Speaker 1: have to tell you I had the same experience rereading
Speaker 1: this in that it's clear in the beginning it's not
Speaker 1: truly you hadn't discovered your voice yet, but towards the
Speaker 1: mark or so, and I read this on a kindle,
Speaker 1: which I normally I prefer hard paper. But UM, I
Speaker 1: noticed that where you start talking about the mistakes that
Speaker 1: Salomon Brothers Management made, like the beginning of the end
Speaker 1: of Salomon Brothers, Your you're becoming Michael lew. Listen that
Speaker 1: you're making these broad observations about other people's judgment errors
Speaker 1: and your voice really rings true there and my own
Speaker 1: judgment errors. I mean, I think the moment I said,
Speaker 1: the moment I first recognized, really recognized myself on the
Speaker 1: page is um an eight page or ten page story
Speaker 1: where I it's the first time I rip off a
Speaker 1: customer and I don't I'm so stupid. I don't know
Speaker 1: I'm ripping them off. I think that the trader has
Speaker 1: just given me a smart thing to do, and um,
Speaker 1: and that that's the first time I thought, oh god,
Speaker 1: this works. I wouldn't actually change this, and this feels
Speaker 1: like me. Uh So that's you know, that's um. It
Speaker 1: was so that So that was the first takeaway was
Speaker 1: it was just I was I was figuring out how
Speaker 1: to trust myself as I was writing the book, and
Speaker 1: I came to trust myself eventually. Uh So that first
Speaker 1: that's observation number one. Observation number two, UM was how
Speaker 1: much the financial world had changed since then. That I
Speaker 1: remember thinking as I was reading, I was thinking, God,
Speaker 1: I was so lucky that people actually shadowed at each
Speaker 1: other and prove telephones at each other, and and and
Speaker 1: we're actually doing trades face to face, because that's you know,
Speaker 1: without that, the book just has no life. And you
Speaker 1: walk into a trading floor or edge fund now and
Speaker 1: it's just like silence. It's like people staring screens and
Speaker 1: tapping away and al goes are doing the trades. And
Speaker 1: I would be very hard to make it interesting now
Speaker 1: as it was. It's just I think it was just
Speaker 1: a more lively place. But but there was the butt
Speaker 1: was you could see the seeds of what Wall Street
Speaker 1: is now in what Wall Street was becoming. Men. Uh
Speaker 1: that there are big macro things happening, and they're happening
Speaker 1: in the book. That are big changes starting with like
Speaker 1: half the class of Princeton wants to go work on
Speaker 1: Wall Street. Uh, these changes that are happening in the culture. Uh,
Speaker 1: that are happening right then. And so in that way
Speaker 1: there was a current, there was still some currency to it.
Speaker 1: Um that was That was the other reaction had lots
Speaker 1: of other little reactions. The main little reaction was, and
Speaker 1: this is like a rule, is that it was when
Speaker 1: I thought I was being funny, I wasn't funny. And
Speaker 1: the stuff that was funny I didn't realize was funny.
Speaker 1: When I was I was laughing when I was rereading
Speaker 1: my book. I was laughing in places where I didn't
Speaker 1: laugh when I wrote it, and I wasn't laughing in
Speaker 1: places where I did laugh where I wrote it. So
Speaker 1: so let me share one thought with you that I
Speaker 1: didn't I couldn't have picked up in in nine whenever
Speaker 1: I read it the first time. But but it was
Speaker 1: very clear this time. Um not just that Salomon Brothers
Speaker 1: was was formative to Liars Poker, but Liars Poker very
Speaker 1: much foreshadowed your future books. The whole discussion of of
Speaker 1: how mortgage bonds were developed and other the IO p
Speaker 1: O bonds and other sort of things sort of uh
Speaker 1: presage the Big Short. That there's conversations about geeks and
Speaker 1: experts being ignored, presaging money boil and premonition. There's even
Speaker 1: some discussions about the computer guys coming in and they're
Speaker 1: still ignored. But eventually that's flashboys. And am I wildly
Speaker 1: overstating this or are there seeds of of your future
Speaker 1: books present? There's no question that the Big Short is
Speaker 1: presaged in in the mortgage all the stuff about the
Speaker 1: mortgage market that's going on. I mean, Louis Rohnieri himself,
Speaker 1: the guy who who created the mortgage securities market when
Speaker 1: when the the financial crisis happens, blames himself. I don't
Speaker 1: think that's fair. It's like it's like it's like Dr
Speaker 1: Frankenstein blaming himself for what the monster became. But it's uh,
Speaker 1: he it's um, he saw the connection. So that's there's
Speaker 1: an obvious connection between the innovation that occurred while I
Speaker 1: was at Solomon Brothers and the disaster that ensued twenty
Speaker 1: years later. Um. The intellectualization of finance, um is there
Speaker 1: is a connection between that and the intellectualization of sports. Um.
Speaker 1: You know. First, I mean I would there's probably a
Speaker 1: great story in the undergraduate physics program at M I T.
Speaker 1: And if you go back forty years, I bet like
Speaker 1: they all become physicists. And if you go back thirty years,
Speaker 1: a few of them are trickling onto Wall Street. Uh.
Speaker 1: And you go there now and it's sort of like
Speaker 1: they either go to Wall Street or they go into sports.
Speaker 1: It's it's it's it's uh. It's it's interesting how we've
Speaker 1: or maybe Silicon Valley, how we have channel that kind
Speaker 1: of intellect in the enterprises that previously didn't see a
Speaker 1: need for it by complicating those enterprises. And you know,
Speaker 1: first finance got very complicated, and then sports got very complicated. Huh,
Speaker 1: really really interesting, Um, tell us, what was the law
Speaker 1: of the jungle which runs through the book so much.
Speaker 1: I always thought of it as as you know, kill
Speaker 1: or be killed, which very much is a factor here.
Speaker 1: But but Solomon Brothers was a little unique in the
Speaker 1: way they managed that. And you point out later in
Speaker 1: the book how they allowed their biggest, best, most profitable
Speaker 1: traders to leave after they were no longer a partnership.
Speaker 1: And you know, these guys are traders, and they made
Speaker 1: the trade to you know, to hit the bid and
Speaker 1: joined goldman Or or Morgan Stanley or somewhere else where
Speaker 1: they were Merrill Lynch where they would be paid millions
Speaker 1: more than the few hundred thousand they were getting, plus
Speaker 1: a bonus at Sally. Yeah, there was an odd contradiction
Speaker 1: in the solemn management theory. Um. John good Friend would
Speaker 1: say things like, um, you gotta get you're gonna come
Speaker 1: work here. You have to be you have to wake
Speaker 1: up in the morning willing to bite the ass off
Speaker 1: a bear. Or he'd say, nobody here is gonna get
Speaker 1: stabbed in the back of people are gonna come at
Speaker 1: you through the front door with a hatchet. Uh. That
Speaker 1: he encouraged this red and tooth and claw free for
Speaker 1: all on the trading floor where everybody kind of for himself,
Speaker 1: all for the firm sort of thing. And um, at
Speaker 1: the same time, he's after he sold the firm, and
Speaker 1: so there was not the partnership stake to yoke people
Speaker 1: to the firm. Um. He expected total loyalty and fealty
Speaker 1: from these killers who we had encouraged, and that that
Speaker 1: they weren't if they were being paid three thousand dollars
Speaker 1: and Solomon Brothers and Merrilynch offered him a million, it
Speaker 1: would have been it was it was regarded as treason
Speaker 1: to take the million, and that was crazy that you
Speaker 1: couldn't have both. Um. So he sort of encouraged the
Speaker 1: very qualities that led people to look out for themselves
Speaker 1: and respond to market incentives rather than to other kinds
Speaker 1: of incentives like loyalty of the firm um. And and
Speaker 1: didn't see the contradiction. Uh, And it really cost him.
Speaker 1: I mean, he had virtual monopolies in markets that he
Speaker 1: just let's slip away by letting traders go and of
Speaker 1: course they wouldn't have been able to preserve the monopoly.
Speaker 1: Eventually they would have lost their grip on the mortgage
Speaker 1: market or on the arbitrage trading or whatever it was.
Speaker 1: That they had an edge, but they had have kept
Speaker 1: it free some more time. And while they had it,
Speaker 1: it was so valuable. So it was, it was, It was.
Speaker 1: It was an odd situation, um and the whole firm,
Speaker 1: the whole firm knew it was mismanaged. While I was there,
Speaker 1: I mean, down to the lowest geek, everybody knew whatever
Speaker 1: they thought about Good Fund personally, they realized that the
Speaker 1: thing was just not managed well and they couldn't quite
Speaker 1: understand why it was managed the way it was managed.
Speaker 1: But the effect for me was a really smoothly managed
Speaker 1: firm is much less fun to write about. The total chaos,
Speaker 1: just a total chaos. So the chaos that I got
Speaker 1: to write about was much more fun. So I mean,
Speaker 1: in some ways I'm forever in John good Friend's debt
Speaker 1: because because he created an environment that was literary gold mine.
Speaker 1: To say the very least last question before we get
Speaker 1: to our speed round, and that is throughout the book.
Speaker 1: Because Sally was a bond shop there's a lot of
Speaker 1: talk about debt, government debt, consumer debt, mortgage debt, America's
Speaker 1: borrowers and and all, what an evil this is, how
Speaker 1: it will eventually weaken the dollar and cause all sorts
Speaker 1: of economic mischief. But it's three decades later, and it's
Speaker 1: other than the financial crisis, which was very specific and
Speaker 1: not traditional debt driven. We really haven't seen a lot
Speaker 1: of the bad things come to pass from all that debt.
Speaker 1: What's your assessment of that era? Did everybody just repeat
Speaker 1: the same things and more or less out at wrong? Well? Yes,
Speaker 1: part of what was going on is it's such a
Speaker 1: departure from American historical historical American finance, uh that it was.
Speaker 1: I mean the people who said this is all going
Speaker 1: to be fine have improved right so far. I think
Speaker 1: that there's still another shooter drop and maybe it's dropping now.
Speaker 1: I mean, eventually, you can't live beyond on your means
Speaker 1: forever and um. And the financial crisis was in some ways,
Speaker 1: of a lot of ways a byproduct of this American
Speaker 1: a willingness to live well beyond its means um and
Speaker 1: using and using debt to do it. Um the machine,
Speaker 1: I mean, the crucial ingredients, the crucial parts of this
Speaker 1: enabled this machine to function, or things like the dollar
Speaker 1: is a reserve currency around the world which we're putting
Speaker 1: at risk, or um, I mean it's it's so I'm
Speaker 1: not I know, I'm not completely answering your question that
Speaker 1: people kind of get it wrong back then. I don't.
Speaker 1: I mean I think people would. If you go back
Speaker 1: and talk to Henry Kaufman way back in three or
Speaker 1: eighty five, I think he probably would say that I'm
Speaker 1: surprised by what happened. I would have thought that. I
Speaker 1: wouldn't have fought the federal government will be able to
Speaker 1: run the deficits it's been running for as long as
Speaker 1: it's been running it. I wouldn't have thought the American
Speaker 1: consumer would get way with with the American consumer got
Speaker 1: away with in the run up to the to the
Speaker 1: financial crisis. But and it's not going to end well,
Speaker 1: he would say, But it's still has it ended? I mean,
Speaker 1: we're still kind of in this period. So, um, the
Speaker 1: period the Great American debt explosion. So I have to
Speaker 1: point out that each of your books led to a
Speaker 1: subsequent expansion of American debt. You had Liars Poker and
Speaker 1: the big debt explosion we saw in the eighties and nineties,
Speaker 1: the big short look at look at how the FedEx
Speaker 1: been in the barrel battleship, and then the pandemic. So
Speaker 1: I'm not suggestingzation, right, but but you're talking. Every time
Speaker 1: you describe one of these big issues in a book,
Speaker 1: it's often because the result of that issue was a
Speaker 1: huge expansion of debt. Yeah, it's true. So so I
Speaker 1: know I have a hard stop with you. So let
Speaker 1: me in the last two minutes jump to our speed
Speaker 1: round and score favorite questions. Five questions, seconds on the clock.
Speaker 1: Let's let's get this started. What are you streaming these days?
Speaker 1: Tell us what's keeping you entertained? Well, oddly, I'm streaming
Speaker 1: a preview of the six part neck Netflix series called
Speaker 1: The G Word, which is based on the Fifth Risk.
Speaker 1: So I'm just started watching my own television show. I
Speaker 1: didn't make it, Adam kind of over made at the comedian,
Speaker 1: But um, I'm watching that. When when does that come
Speaker 1: out on Netflix? When can the rest of us dream that?
Speaker 1: End of may? Alright, looking forward to that? So so
Speaker 1: you uh in in the new podcast in in UM
Speaker 1: season three, you kind of um reveal some of your
Speaker 1: mentors tell us a little bit about dash rip Rock
Speaker 1: and Alexander and the human Piranha. Um. I actually go
Speaker 1: back and talk to these pseudonymous characters, and they reveal
Speaker 1: themselves in the podcast. Um, it's it's kind of where
Speaker 1: they are now. That's interesting because you can see where
Speaker 1: they were and then in the book. But the human piranha,
Speaker 1: who was ferocious on the Solomon training floor, has mellowed
Speaker 1: into just a sweet guy who is emotionally intelligent. He's
Speaker 1: just he's transformed in some ways. Um. Dash rip Rock
Speaker 1: spenting his career he made up up until very recently
Speaker 1: was in the bond markets and has watched essentially, he says,
Speaker 1: the death of the American bond salesman. He's watched his career,
Speaker 1: his occupation just more or less banish. Uh and Alexander
Speaker 1: left Solomon Brothers, had a blew up, blew up at
Speaker 1: a hedge fund um and it has had a kind
Speaker 1: of interesting career as a private investor and lives in Singapore. Um.
Speaker 1: So they they're all, they they've all, they've all kind
Speaker 1: of mellowed. Uh. And they all I think I think
Speaker 1: it's probably fair to say, like everybody in my training class. Us.
Speaker 1: All the people who stand on Wall Street anyway, they
Speaker 1: all made more money than me. Uh that I don't doubt. UM.
Speaker 1: Give us two books that you've read, either a longtime
Speaker 1: favorite or what you're reading right now. I've got two
Speaker 1: novels that I'm starting and I'm gonna I'm reading. I
Speaker 1: shouldn't do this, but I'm about to do it, uh,
Speaker 1: or read at the same time. One is a novel
Speaker 1: called Horse by Geraldine Brooks, who is an old friend
Speaker 1: and and is like a really great writer. And it's
Speaker 1: so much fun when one of your friends is actually
Speaker 1: a great writer. Um and so, and that actually isn't
Speaker 1: out yet, that comes out next month. So I'm reading
Speaker 1: the galleys of that book. And I just picked up
Speaker 1: at the same time, UM, a book about my hometown
Speaker 1: and novel set in my hometown by a writer I
Speaker 1: don't know books called The Yellow House set in New Orleans.
Speaker 1: I think it won the Pulitzer Prize of the National
Speaker 1: Book Award. Sarah Broom is the name of the author.
Speaker 1: And it's a it's a it's a view of New
Speaker 1: Orleans as very different from the New Orleans I grew up.
Speaker 1: It's it's it's um, it's black New Orleans rather than
Speaker 1: white New Orleans, and that always interests me. So you
Speaker 1: have said that Liars Poker had a very different impact
Speaker 1: on the world than you expected, and people requested advice
Speaker 1: of you after the book came out or thought the
Speaker 1: book was a how to guide. What sort of advice
Speaker 1: would you give today to a recent college grad who
Speaker 1: was interested in a career on Wall Street? Um, ask
Speaker 1: why you're interested first, and go talk to people who
Speaker 1: were twenty years older than you who kind of remind
Speaker 1: you of how you, who kind of looked like they
Speaker 1: might have been like you when they were your age,
Speaker 1: and see what you think of their lives. Because they're
Speaker 1: really great ways to have careers on Wall Street, and
Speaker 1: they're really bad ways a career in Wall Street, and
Speaker 1: people go in for the wrong reasons, for obvious reasons. Um.
Speaker 1: The other thing I'd say is figure out whether whether
Speaker 1: you're a job a career person, a job person, or
Speaker 1: a calling person. That if you need a calling as
Speaker 1: opposed to a job, um, uh, you can find it
Speaker 1: on Wall Street. But it's much more likely you got
Speaker 1: a job that pays real well and you're gonna be
Speaker 1: really frustrated with your life if you spend it in
Speaker 1: a job when what you really need is a calling. Alright,
Speaker 1: Final question, what do you know about the world of
Speaker 1: either investing or writing today? You wish you knew when
Speaker 1: you first sat down to write Liars Poker thirty two
Speaker 1: years ago. This is damning. I don't think I've actually
Speaker 1: learned anything about investing in the last thirty two years.
Speaker 1: It's all at all useful. I think that's sort of
Speaker 1: like all the useful things are really simple, and I
Speaker 1: picked those up by doing the opposite back in with
Speaker 1: other people's money. Um writing, you know, I'll give you
Speaker 1: one simple answer. It's and it's I think the best
Speaker 1: things I've done are because I've got the best characters.
Speaker 1: That I think that I underestimated the importance of character
Speaker 1: early on in my writing career, and I've I've gotten
Speaker 1: better and better at at at identifying characters who are
Speaker 1: really good and and writing them. So I think that
Speaker 1: leading with character is what I've learned. We have been
Speaker 1: speaking with Michael Lewis, author of such seminal books as Moneyball,
Speaker 1: The Big Short, and Liars Poker. If you enjoy this conversation,
Speaker 1: be sure and check out any of our previous three
Speaker 1: prior discussions. You can find those wherever you get your podcasts.
Speaker 1: We love your comments, feedback and suggestions right to us
Speaker 1: at m IB podcast at Bloomberg dot net. Check out
Speaker 1: my daily reads at rid Halts dot com. Follow me
Speaker 1: on Twitter at rit Halts. I would be remiss if
Speaker 1: I did not thank the crack team who helps with
Speaker 1: these conversations together each week. Justin no Her is my
Speaker 1: audio engineer. Attica Valbran is my project manager. Paris Walds
Speaker 1: is my producer. Sean Russo is my research director. I'm
Speaker 1: Barry Results. You've been listening to Masters in Business on
Speaker 1: Boomberg Radio