Influencers with Andy Serwer: Michael Lewis

In this episode of 'Influencers', Andy speaks with Michael Lewis, the award winning journalist and author, as they discuss the U.S. government's pandemic response, the fight against disinformation, and why Michael says cryptocurrencies are 'fixing a problem that doesn't exist'.

Video Transcript

ANDY SERWER: In this episode of "Influencers," award winning author, Michael Lewis.

MICHAEL LEWIS: CDC kind of demonstrated that it wasn't a centers for Disease Control. It's like more a centers for Disease observation and reporting. They kind of gotten out of the business of controlling disease. There's this enormous pressure for people to masquerade as experts, when they actually aren't the expert. I think that if in some weird world, for millennia we'd been using Bitcoin. And someone invented the U.S. Dollar, they'd say, Oh, my God, this is so much better. This is not, they're fixing a problem that doesn't exist.

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ANDY SERWER: Hello everyone, and welcome to "Influencers," I'm Andy Serwer. And welcome to our guest, Michael Lewis, award-winning author and journalist, and host of the podcast, "Against the rules." Which recently returned for its third season. Michael, great to see you, welcome.

MICHAEL LEWIS: Good to see you, Andy.

ANDY SERWER: So, let's talk about "Against the rules," and your latest book, "The Premonition." Which both explore the rule of experts. And how their knowledge gets received by powerful political figures in the public. So is something wrong and broken between the relationship between experts and the public? And if so, what's at stake, Michael?

MICHAEL LEWIS: So I think there's a lot that's broken between, in the relationship between the experts and the public. And what's at stake is sort of like, knowledge getting into the right heads, at the right time, when decisions are being made. The way we deal with it in the podcast, is it's sort of like seven separate stories, sort of suggesting seven separate problems.

But I'll give you an example, that's kind of what got me going. It's really interesting how in certain spheres of American life, the experts are clearly getting better. And yet at the same time the people who use the experts, are more dubious of them, questioning of them, less likely to take their advice.

I mean, the most obvious example is medicine. That you went to a doctor 100 years ago, he was as likely to kill you as he was to help you. And the medical profession has just gotten better and better and better. And you're better off going to a doctor now, than ever in history. But you talk to doctors even before the pandemic. I mean, never mind the mess that is the pandemic response.

They'll tell you that like the bane of their existence, was people walking in who had read something on WebMD. Who as a result, refused to either acknowledge the diagnosis, or respond to the diagnosis, or even listen to the doctor. And there was just like this confusion in the users of the expertise, caused by access to information.

So medicine's like an obvious example. And every doctor will tell you this is a problem. But like take a really simple example, where you think how could that be a problem. Weathermen, one of the characters in the show is a guy, Alabama meteorologist. Who's been doing it for 50 years. Guy's name is James Spann, great colorful character.

But he said you know, when he started he knew very little. That he was like he'd open the window, decide what the-- tell everybody what the weather was. His 10 day forecast was useless, you might as well just guess. His three day forecast was like a third as accurate as it is now. He couldn't tell people where tornadoes were coming, or when they were coming, or where they would touch down. You know, it was just like, it was really primitive.

He said but on screen, on the television, he was encouraged to be unbelievably confident. He said it was the Ron Burgundy era. Like project total certainty about this forecast, he really wasn't so sure about. And he says what's happened over time is that, both because of the ability to gather and analyze data, weather data. The forecasts have gotten a lot, lot better, I mean amazingly better. But he's expressing them in more probabilistic terms, with less certainty.

And he says, do you think that's part of the reason why, as time has gone on, even as they've gotten better. He gets more grief when they go wrong. So it's like there's an expectation has been created, that is not being met. And if he says, I don't know, there's a 20% chance of rain, and it rains. He gets 1,000 letters saying he doesn't know what he's talking about. They're never going to listen to him again.

And you see this practically, I'll shut up, but you'll see this practically play out. Where like, tornadoes rip across Kentucky, people are better warned than they've ever been warned. And 80 people die because they didn't listen. So that's what's at stake.

ANDY SERWER: Is this because of misinformation and disinformation on the internet? I mean, it certainly sounds like that's at least most of, or much of the case, when it comes to medicine. But maybe not so much with this weather phenomena you were talking about. What is--

MICHAEL LEWIS: And other phenomenon like that. So I think it's like, look there is in the air, in the atmosphere general distrust of authority. Authority figures have not had a good time of it the last 50 years. So there's that. But I actually think part of it of the story is the change in not just the nature of the expertise, but the way it's presented. Like weather is maybe the exception, because it has always been probabilistic. It always is, it's always been 80% chance of rain.

But political forecasting hasn't been, or sports forecasting hasn't been. It didn't used to be that Hillary Clinton had a 77% chance of winning right, right? And I think people don't-- essentially the experts are much more overtly acknowledging that their expertise is probabilistic. Which means that they're dealing with an inherently uncertain world. It's not perfectly knowable. They just know it a bit better than they used to know it. But they're expressing the uncertainty along with it.

They know it a bit better because you know, it's a relatively recent phenomenon that you can gather and analyze huge piles of data. And people who receive the expertise, have trouble thinking probabilistically. I think you can even say this is true about medicine. Medicine is probabilistic. And there's a chance the vaccine will make you sick. It's just the probabilities are really on the side of taking the vaccine.

And so people are sort of deterministic devices in a probabilistic world. And they kind of get wrong-footed when they're given-- they don't understand that they don't understand the prediction. It's a 80% chance of rain and it's sunny, you're an idiot. Not 2 out of 10 times it wasn't supposed to rain. I think that happens over and over. And I think that because I saw this with Moneyball.

When I was working on Moneyball, like the thing that the old baseball guys couldn't get through their head was this probabilistic judgment. They want it on or off. Is he a Major League star or is he not a Major League star? You know, can he hit, can he not hit? And not like there's an 80% chance he's going to be 10% above replacement value.

ANDY SERWER: Yeah, that's sort of a paradox too, with baseball stuff. Because he figured they'd be pretty good at understanding that. Given they've got two hits to 36 in double-A. I mean, right? So, get it?

MICHAEL LEWIS: Yeah.

ANDY SERWER: Anyway, that's fascinating. I mean, it doesn't sound easily solved either. And I want to go switch over and ask you a little bit about "The premonition." When you talked about the pandemic. And experts in the federal government prepared for the possibility, there's that word again, of a pandemic. But weren't listened to when COVID arrived. Who is to blame for that? Was it the individuals at the top? Or institutions like the CDC? Or both?

MICHAEL LEWIS: So, for a moment to keep this as not like nonpartisan as possible. They're actually like these structural problems in the way we govern ourselves. And one of them is this lack of continuity in Government. Over the past, I don't 50 or so years, there has been a drift at the top of the Government. And not just in the White House, but in all the agencies. That manage their existential risks that we all have hovering in the background at a given time.

There's been a drift of the management from being career civil servants, who were there permanently. To Presidential appointees who are there for 18 months. Because it takes them forever to get confirmed by the Senate. And the President is out of the White House they whole other--

So. There are 4,000 and something of these people now That happened at the top of the Centers for Disease Control in the 1980s. They changed the job from a Career Civil servant to Presidential appointee. And that combined with the ranker in our politics, means that when one lot of people come in, and sweep out a whole other lot of people who are going out. With those people going out, like all this knowledge goes.

And in this particular case, it was a Republican administration. The Bush administration that crafted the pandemic plan. Bush was freaked that we didn't have one after he'd endured 9/11, and Katrina. And he's like what's going to happen next. And these doctors, not political people, came in and did a really interesting, I mean, they essentially turned themselves into pandemic experts.

And stayed together, not just through the Bush administration, but through Obama administration. They were kind of present and involved in Zika outbreaks and Ebola outbreaks. I mean, they really knew a lot. And they knew a lot also about the problems of communicating strategy to the American people. They had a breadth to their understanding.

And these people who had been the natural people. Not that they were the only people. But there would been a natural crowd of people to run a pandemic response. Had in fact been basically badgered into the Trump White House in the beginning of the administration. By a guy named Tom Bossert, who was in Homeland Security. Who knew of him from way back when.

And so in the beginning of the Trump administration, the link to the knowledge was there. But then Trump cleaned house. John Bolton came in, fired Tom Bossert. And people forgot these people ever existed. And it was this lack of continuity in knowledge and expertise, if the government is one of the problems.

And you could go some way to fixing it by restoring the permanent civil service status to some of these jobs, that are naturally permanent civil service. And just so that you don't lose that continuity. So that's at least part of it. I think there's another big thing though. That you know, these things like pandemic comes around once a century or whatever. These kinds of things, the kind of people who deal with-- who might be kind of considered experts.

Like battlefield Command and Disease Control, which has been very much in the back of American minds for a long time, are our local Public Health officers. Because they're actually doing it. You don't pay much attention to them. But you know, in your neighborhood there might be a multidrug-resistant Tuberculosis outbreak. That would actually cause you a lot of inconvenience, if it got to you.

And there are some public health officers there shutting it down. Sometimes with a great deal of controversy. And those people, because it had never been a big deal, became increasingly low status people. With a lot less-- with not great resources. And their low status made it, I think, really hard for us to hear them, especially at the beginning of the pandemic. And they were the people we needed to hear from.

And even now, you turn on the TV and see people yakking away, including myself, about the pandemic. Those are the people who should be yakking away about the pandemic. And they're not on the television set. It's kind of funny how status blinds us to expertise. We think the important person is the one who knows. And in these cases, like these sorts of problems, often the person who knows, is going to be kind of low down in the society.

ANDY SERWER: Yeah. How's the Biden administration doing now? How would you assess what's going on today?

MICHAEL LEWIS: You know it's funny. I've returned to my status as civilian, since the book's come out. And I watch it just through the newspapers. I'm not writing about it. I'd say better, in like honestly confronting the magnitude of the problem. And trying to persuade the American people to do the right thing, like get vaccinated. Better in that sense.

I don't think they've actually grappled with the deep issue. And I say that because you don't see them fighting for example, the Senate's inclination to dump a bunch of money onto the CDC as currently structured. CDC kind of demonstrated that it wasn't a centers for Disease Control. It's like more centers for Disease observation and reporting.

They kind of gotten out of the business of controlling disease. Controversial, it's political, it's unpleasant, it requires real kind of leadership that they have a hard time providing as a politicized institution. So you don't really want to give them $8 billion. And say just do more of the same. You want to sort of build other structures.

Now in fairness, inside the CDC they're trying to build a structure that we should have had long ago. Which is kind of like a National Weather Service for Disease. That we should have better predictability. And there's no reason some years from now, we won't have models that say, Uh-oh, watch out in Thailand right now. It looks like there's a new pathogen that might emerge. That kind of thing.

And it would go a long way to stopping pandemics before they happened. So they understand the need for that. I'm not sure inside the CDC is the best place to do it. But at least seeing there are lots of signs of intelligent life. But you're dealing with-- they're dealt a different hand than the Trump administration.

The Trump administration had a blank slate. They could have done whatever they wanted in leading the country. They could have brought the country together, rather than divided it. The Biden administration is stuck with people with their heels stuck in. 30% of people saying they'll never get a vaccine. Some number of people think COVID is still a hoax. People sick to death of any kind of non-pharmaceutical intervention.

So they're playing a much more difficult hand. So I'm a little more I don't know, I feel a little less judgmental. Like I don't know how I'd be doing either in this situation.

ANDY SERWER: Yeah. I want to take a step back. And ask you about of this bigger take on truth and information in our society. Michael. And ask you about social media, but also cable TV. And well, specifically Facebook and Google are making money through providing information that they don't necessarily vet. Of course, that's the model. What should be done about all of this? I mean, how can we attack it? Or address it, I guess is probably the right word.

MICHAEL LEWIS: Well, you must have had this experience. I've had it over and over in my career. Where I write something and I'm not the expert. I've written about experts. And cable TV wants me to come on and pretend I'm the expert. I've had experiences. My first book, "Liar's Poker," where I wrote that basically the story is, never asked me for financial advice because I don't know what I'm doing with money.

And people want me to come on TV and pretend like I'm an expert about money. There's this enormous pressure for people to masquerade as experts, when they actually aren't the expert. And rewards for doing so. People recognize you on the street. It's so my list of prescriptions, we should ridicule this more. That they should be on the level of like pretend expert, there should be much less tolerance of pretend experts.

And gatekeepers to spend more time thinking about who actually knows. Now in terms of policing actual willful misinformation. So I think, look there are-- I mean, the social media companies are not doing nothing. And one way is to deal with this problem is to regulate them. So that they're-- so they have to have more rules around what people can and can't say.

I have a feeling that that's going to end up being-- that that's going to have limited use. That the misinformation is going to find other ways out. I kind of think that you're talking about a big social problem. And the big social problem is how people consume and understand information. So I kind of think that we should be thinking and talking as a society about just basic things in our education system.

That we need to teach people, kids, like how this stuff all works. Not that they don't mostly know. But it's like we have to become more sophisticated consumers of information. I think that's true. Otherwise you're just like ripe for this sort of exploitation. I don't know, I kind of think with this problem, that if there was a solution we'd have found it already. I could be wrong.

This may be like one of those problems that is not solvable. That people want to hear, what they want to hear. And they'll go and people will supply that information if there's a demand for it.

ANDY SERWER: Yeah, I don't think you're wrong. I mean, it's not a comforting endpoint. But it's probably a realistic one. And you know, it's like houses catch on fire, we're never going to solve that. We're just have to do a better job of mitigating--

MICHAEL LEWIS: Yeah.

ANDY SERWER: --A little bit. I want to switch over and ask you about Wall Street. Which you know you've written a lot about, suggest "Liar's Poker." By the way, did I ever tell you I almost was in the same class as you at Salomon Brothers, but I didn't take this job. Yeah?

MICHAEL LEWIS: Where Where'd you go instead?

ANDY SERWER: I went to Columbia. I went to the journalism school instead. I had two offers. I was accepted to J school, and was accepted. And I had a job offer at Salomon. So I regret not joining you there. We would have a lot of fun.

MICHAEL LEWIS: You might have had the book.

ANDY SERWER: Yeah, I doubt it. You had the book. Anyway, so you had that book, you have Moneyball. Which is well, that's not really about Wall Street, of course it's about money. But "Flash 'Boys, of course. And well, let me ask you about "Flash Boys" and payment for order flow. Which is maybe a small question? But what do you think about that?

MICHAEL LEWIS: Well, on the face of it, look without diving into the plumbing of the stock market. It is incredible to me that high frequency traders pay billions of dollars a year to stock brokerage firms. To execute, to trade against the orders of their customers, without anybody asking what are they getting.

Because the people who run those firms are now some of the richest people in the country, multi-billionaires. In the old days, when there were people on the New York Stock Exchange serving as the market makers in the stock market, they did well. They didn't become billionaires. They also didn't have days when they didn't lose money.

I mean, we've seen the books of like virtue. That we don't get the glimpse of the books very often. But they brag that we don't have a single unprofitable trading day. So if you're actually a market maker taking risk in the market and supplying liquidity to the market, you have losing trading days.

So this is no longer, except for the substantial high frequency trading and Stock Exchange smoke and fog machine. Which has pumped millions of into Washington and to public relations firms, to try to make this thing really cloudy. I don't think anybody really has any illusions about exactly what's going on. So it's like, do they have the political will to shut it down.

The last two administrations, this one and the last one. Have been poking around of this, trying to figure out what you do about payment for order flow. Because it seems like a problem. So the reason I wrote "Flash Boys," in some ways you look at it-- viewed from one angle, it's an inoffensive problem. Or not that big a deal because each trade, what's happening is pennies are being shaved off. It's tiny amounts of money.

And it's really true that it's cheaper to trade in the stock market now, than it was a long time ago. When you paid a broker a ridiculous commission to execute your trade. But it's also really true that those pennies are unnecessary. And that when you add them up over across the whole market, it is billions of dollars. And you have people getting rich in this way. And are examples of success to the rest of society.

When really what they're just doing is skimming rent, unnecessary rent. And I think that it's sort of like morally offensive. And it's not me talking. It's Brad Katsuyama at Ajax, who investigated this thing for years. And I think proved beyond a shadow of a doubt, what was going on. With all kinds of little science experiments in the market.

So it's been troubling to me, that since the book came out, how hard it's been for people at the SEC. Who find these practices offensive, to actually make big change. There's just so much political influence on the side of the people who are making the billions of dollars.

ANDY SERWER: Let me jump off that point, when you said SEC. Because I want to ask you, Michael, about a perspective I have. Which is that the SEC is just becoming less and less effectual. And in a very significant way, in that all the action is going to the parts of Wall Street that are not regulated by the SEC. I mean, you yourself were just talking about the B team and the A Team.

B team being investment bank, A team private equity venture, crypto, not under the purview of the SEC. You know look at Sand Hill Road, the valuations, and the unicorns. All the action goes to those guys. It's not in the public markets. And the SEC is overseeing a smaller and smaller part of the financial services industry. Do you agree with that? And what are the consequences?

MICHAEL LEWIS: So that's true. I think it's true. One of the interesting consequences. I mean, there are all kinds of consequences. But one of the interesting consequences its in crypto. Is that essentially a separate financial structure is being built alongside the old legacy financial structure. And this financial structure has several properties. But the one apropos of what we're just talking about, is that it eliminates middlemen.

That if you are trading on a cryptocurrency exchange, you have an account with the exchange. You don't have an account with a broker who's moving your stuff on in and out of the exchange. They're not high frequency traders who are paying the cryptocurrency exchange for faster information about the exchange.

The whole Jerry rigging of the stock market isn't happening there. It's really clean in a funny way. I mean, I don't know about cryptocurrency itself. But the mechanisms that are being built to exchange this, are far more egalitarian, more equal. The participants in the marketplace are not privileged in relation to one another, in the same way they are in the stock market.

And I think that the proof of concept outside of the regulated markets, that you can actually run a market this way. And it works really well. And it's better for the individual investors. May end up being persuasive in the conversations about how we reform our regulated markets.

So, that I think that might be a big deal, might not. I mean, the whole thing may come crashing down. Because nobody you know, crypto is an act of faith, right? It's like gold, like the dollar. But you don't know. It's hard to judge, like impossible to judge whether that faith is sustainable or not, I don't know. But if the longer it goes on, the more of a threat it poses to the existing financial order.

ANDY SERWER: And I understand you were looking for a narrative, a story, maybe in this world of crypto to delve into as a future project. I mean, how would you do that? Is that in fact the case?

MICHAEL LEWIS: I'm looking at it. I mean, I'm also looking at SEC football and 6 other worlds, too. But I'm looking at it. And I'm looking at because, in part because I don't fully understand the implications of it. I want to go learn about it. But it's also just feels you know-- when it was just Bitcoin. Or when it was just a few coins way back when. And it was just a handful of libertarians in Silicon Valley who were really interested in this.

And the sums of money were not that big. I had trouble getting interested because I still have trouble seeing it as money. Like I think that if in some weird world, for millennia we'd been using Bitcoin. And someone invented the U.S. Dollar, they'd say, Oh my God, this is so much better. This is not-- it's they're fixing a problem that doesn't exist. And introducing new problems. But as a Casino or as a new kind of gold, maybe it works.

If everybody kind of agrees upon it. That's the caveat, everybody has to kind of agree. And more and more people are agreeing. To the point where just the cryptocurrency market itself is like worth-- the cryptocurrencies are worth like $2 trillion. And on top of that, you've got I don't know, $500 billion, a trillion in companies in crypto. And it starts to have these really dramatic distortive effects on the world, when that kind of wealth is created that fast.

I mean, I'm trying to think of what precedent there is for this. I can't really think of any. It's just the speed with which it's happened, that really interests me. It's sort of like the knock on real world effects of this kind of really rapid wealth creation. Which could easily also turn out to go poof. But even that's interesting, too. So it's just that volatility interests me a lot. And I haven't figured out exactly how to tell a story in it. But I am interviewing people and trying to figure it out.

ANDY SERWER: I want to ask you about inequality a little bit here. In the Big Short you talked about how the financial crisis of 2008 is a legacy that still lives with us, or will be living with us. So how do you think that we're still defined by what happened in 2008? And is part of that inequality?

MICHAEL LEWIS: That's an interesting question. You know 2008 was a momentous year. Because it's not just the financial crisis, the financial crisis right away gives us Bitcoin and cryptocurrency. Also gives us the Tea Party, which leads to Trump. And I do think, and this is like something you couldn't prove in a lab. But this is just like me talking.

I think it changed the relationship of the broader society to its economy and its political process. That I think up until that moment, ordinary Americans could tell themselves, Yeah, life can be harsh. Yes, this capitalist system there are winners and losers. And I lost or I might lose, or I feel stressed. But we're all kind of playing the same game.

And after 2008, the narrative changed. It's yes, almost all of us are playing the same game, except the elites on Wall Street who get a rigged system. If they fail, they don't fail. If they fail, they get propped up by the government. And they get their big bonuses and they get to go right back to normal. The people who have the most privilege are skewing the society to their advantage.

That created a rancor that was seen in a bitterness and an anger, that feels new. Now of course it's mixed up with lots of other stuff that's going on. So it's hard to just isolate this as a cause of anything. But I think that we still live with that. And on the other side of this, is I think American prestige in the world took a huge blow in 2008.

Because whatever else people might have thought of it us, they thought we knew what we were doing with money. Our bankers ruled the world in some ways. And I think suspicion of if you go to Germany right now, and ask a typical German financier what he thinks about American financiers. I bet you get a different kind of answer than you would have gotten 15 years ago or 16 years ago.

So I do feel like we are still in some ways living in the post financial crisis world. And the big part of it is that there was never any obvious reckoning, of kind of punishment of the people who should have been punished, kind of thing. People didn't see-- they didn't have their need for vengeance slate.

ANDY SERWER: Right, quick last question, Michael. What are you looking to do going forward? Just generally in a big picture.

MICHAEL LEWIS: So the big picture, the pattern of my writing life is alternating between books and podcasts seasons. And they really, it's almost like literary cross training. It really worked well together. And I think it's kind of making me better to do both. And then the only question is the subjects. And as you say, I've gotten very interested in this part of the financial world, cryptocurrency.

But there's also a part of me that longs to find another Sports book. For a very simple reason, it's very hard to write about a lot of subjects, and get to everybody right now that people's guard is up. So if you write about the pandemic, instantly is being filtered through, is this pro-trump? This is anti-trump? What does it mean for the right, for the left, all that. You can't just tell the story. People won't just read the story.

You can still do that with sports. And smuggle in all kinds of other stuff. But people's guard isn't up about sports in the same way. So I've been kicking around the sports world, too.

ANDY SERWER: Right, so maybe another "Blind side" or "Moneyball" or something like that, which a book will come out.

MICHAEL LEWIS: Yeah.

ANDY SERWER: Got it.

MICHAEL LEWIS: Yeah.

ANDY SERWER: Michael Lewis, award-winning author and journalist, and host of the podcast, "Against the rules." Thanks so much for joining us.

MICHAEL LEWIS: Total pleasure.