tv Book Discussion on The Gray Rhino CSPAN April 30, 2016 8:45pm-10:01pm EDT
back or detain, sprinklers, capital controls, you can do stupid things but you have to have more capital on balance sheets so when it goes back you won't go bust, living wills, we are going to have the documents in place to make sure you don't pull the rest with you. theoretically everything that dodd-frank is what we need to do. i have no idea whether it's going to be successful or not. i think that's the history of the regulation of plans. we are always one crisis behind unfortunately. i took a bad note to end on. [laughter] >> but thank you very much for coming out. [applause] >> well, thank you very much for coming out, ladies and gentlemen, it's fair to say that we have learned a huge amounts in the world of money and just think about what reading one book will do. i urge you to read it, please
stay and have book signed and say hello, thank you very much for coming and thank you very much charles weelan. [applause] [inaudible conversations] >> here is a look at some books that are being published this week. in the assassination complex jeremy along with the staff the intercept reveals classified documents relating to the u.s. drone program. fox news contributor pete calls on americans to adopt the ideals of teddy roosevelt in in the arena. in bright infinite future,
1960's through present day. imprisonment in north korean labor camp in not forgotten. in the morning they came for us, middle east editor for news weeks looks at the impact at the syrian civil war on ordinary people. also being released this week, in the country we love in which actress dane guerrero, cofounder andy argues modern culture has corrupt it had feminist movement in we were feminist once. in the winter fortress, gives an account of how the allies sabotaged nazi efforts to create nuclear weapon. fox business anchor cheryl casone look at the challenges
in the foreign policy institute with author michelle. she has just produced her latest and excellent book, the gray ri no. how to recognize the obvious dangerouses that we ignore. it's wonderful to welcome michelle, i'm so grateful for her to putting sign as stop on her book tour. i had the pleasure of traveling with michelle in uae and heard about this book and have been anticipating it and it's an exciting read. i think she has through asking the question why we ignore crisis that we can see coming when they're literally stampede us.
this book follows to others on haitians and domenicans. also received numerous awards, world economic forum and also been recognized and has been the president of the world policy institute among other leadership roles. welcome, michelle. and leading our conversation this evening is dr. jeff leonard , private equity fund that invests in growth companies that focus on renewable energy and
environmental cleanup and as well as energy efficiency. he is chairman of a number of boards including the board of the washington monthly, he also serves on the board of new america and he himself is a prolific writer. so we are very grateful to have him lead the conversation this evening and i hope that all of you will stay and continue at the end of discussion and the q&a, we are going to have a ralph and -- raffle and raffle up some books. i hope you join the reception and discussion for this evening so welcome. >> thank you very much, everyone, for coming. it's great for me as a
washington person to be here. the worldliness of a student and awarding student is what we really need at gef. we have to have the policy picture and the ability to do without really serious financial skills. michelle, i'm very fortunate because i've been able to assort of an idle friend of michelle we get together periodically and e-mail often about ideas and so i've been able to be present since the early parts of the gestation of this book and it's very exciting. it's an extraordinarily well-written book and i don't usually say that about policy books or books like this, but it's very well written. it has -- it unfolds in so many profound layers and we will only
scratch the surface of the gray-rino syndrome in our conversation today but you really could apply -- we are going to try to keep it to foreign policy. some of the richest parts of the book are on corporate behavior and domestic policy and even down to individual behavior and political settings and so on. but so -- i think it's really going to be fun today because we'll elicit from you, we hope, ideas on how to apply in foreign policy. the concept i'm going to let michelle define for you and then tell us a little bit how she found her way to it. i just want to say that about 30-something years ago as a graduate student as school of economics i was traveling and i kept a journal and i was studying political economic systems and i really wanted to understand socialist economics and what was going on with
reform and the socialist systems so i traveled all over yuig -- yugoslavia and one thing that stands in the journal and says, everybody that i talk to hates everyone else . i said this country is going to blow high when tido dies. anyone who was present there could see, could feel that that was a country only held together by the force of one man, in 1980 he died and then we had bosnia and all the horrors and terrible situations, but that gray rhino was so apparent and nobody talked about it. so me to the me that is the
apitamy of what michelle is going to talk about. >> sure. he's quite an accomplished writer himself, so thank you for that. the gray rhino is something that's really big. it's coming at you, it has a big horn. it's really dangerous as if you think of the elephant in the room, the big obvious thing that nobody wants to talk about and that we take for granted that nobody is going to go anything about but it's standing still and you get the elephant in the room together with the black swan, a book that came out ten years ago saying that we needed to pay more attention to highly improbable, unpredicted, high-impact events that as an individual it's hard to predict but as a group happens much more than we think. so you get the e lef feint in the room together with the black swan. it's something that's highly probably, it's predictable
within reason, of course, you might not know every single contour of but it's going to happen, it's a matter of when not if unless somebody does something pretty big and dramatic to deal with it. but it's something that's certainly not being dealt with properly, it's certainly not resolved and the way i came to the rhino was looking at solving debt crisis, in a former life i was a financial journalists and was fascinating by argentina and as many of you remember in 2001 they had a pretty dramatic falling apart, about nine months before that there was a proposal from wall street, some very smart bankers and academics saw the direction things were going, there was no way argentina was going to be able to pay its debt if it kept going the same direction.
they said, look, there's a propeacal, let's write down 30% of the debt and that's what it will take to turn the situation around. argentina said no. and the banks were doing all sorts of crazy restructurings that were expensive and months later argentina collapsed and the banks lost 70% of face value instead of 30%, the idea of 30% versus 70% was a pretty clear example to me. greece is having the same dynamic happening and this time it threatens the whole european union. i wrote a paper about that saying basically, greece, you can learn from argentina's example and if you don't, the consequences are going to be bad.
it went right down to last minute. they were halfway off the cliff and they came to an agreement that it was not perfect and not everything was solved but certainly help keep greece from defaulting and, in turn, help the european union from falling apart. so i started asking myself, what's the difference, what's the difference between greece and argentina, what's the difference between people who see this big scary thing at them and do something and the ones who don't. >> you say that it's really not about weak signals so in both of the cases the signals were there, it's about weak perception or weak action to the signals and i presume that's kind of how one way you would distinguish a gray rhino from a black swan. but paragraph early in your book after you defined it where you say, many of the challenges we
face in the world today are ray rhinos and it's breathless, climate change, the debt levels, economic growth rates, changes in labor markets, disparities, youth unemployment, and on and on and on, so we, know, of course, a theory that explains everything can't explain anything. so i want you to help -- because since this is really in the book, the whole rest of the book describes why it doesn't explain everything. but take us through the broad sort of stages of a recognizing and dealing with a gray rhino of the crisis and do also help me because there's one great point where you say behind every black swan is a crash of gray rhino, likely i read the part of the book that rhino group is called a crash.
so why is a crash of gray rhinos behind every black swan and tell us how you recognize the black swan, distinguish it and cope with it? >> sure, when you see a lot of things come together, when they meet you might not be able to predict exactly how they meet or exactly what the consequences are, but it's a combination of predictable things coming together. the 2008 financial crisis is just a classic example of that. you have the subprime crisis, questionable uses of derivatives and you had lots of warnings. a few months cristina came out and when you do references to crisis, credit defaults, it's pretty clear that, yes, we saw
it coming despite what so many people have said in hindsight and the black swan had just come out at the time and everyone was talking about black swan and financial crisis. nobody saw it coming even though people did and i felt that they misused the black swan concept. first of all it's unpredictable. the minute that you can see it coming it's definitely not a black swan anymore. on the flip side using almost perfectly logic, you have people after something happened that would say, oh, well, that was a black swan. perfectly unpredictable unforeseeable and 2008 really was a crash of gray rhinos. certainly people who saw elements of that happening probably didn't quite have a sense of exactly how extensive the damage was going to be but a
lot of people knew it wasn't going to be good. i was living in new york city at the time and i had an apartment that i bought a few years earlier and had almost doubled in value and it's a very small example but i sold my apartment and i think there are some other people who made much bigger bets on the fact that things were not going to keep going the direction that they were. >> so the way you described it, though, at the beginning stages you talk about denial and then a muddling face specially and sometimes that's benign, people don't want to admit it and sometimes more negative. you have a lot of examples how institutions systemically fail or don't allow people to -- to call to attention and i want to give you one example that's so striking about 2008. i was the chairman of the board of merging market association at the time and my board was filled with some of the smartest investor people on the planet and we had an off-it the-record
dinner in 2007 and some of the people on the board were behind closed doors saying, what the hell is in this, and the guy just basically said, honestly, we don't know, we are as worried as you are. there were all the comments that made you aware, these institutions were aware. they were just praying it would go away. we are praying it's going to go the other way and not come our way but sooner or later we have to deal with it. how did it unfold that we tried to deal with it or we did. >> a lot of people that didn't know what was going on, there were certainly a lot of journalists who wrote about things, this denial is very interesting. it's the first stage and when i started thinking about this
denial, the first thing i did was buy a copy of elizabeth cooper's book. the five stages of grief. and she had said that it's a -- it should be a temporary phase, it gives you enough of a cushion that you can start absorbing what's happening. if you absorb all at once it's too much and people will freak out and break down. that was interesting to me. some of the psychological mechanisms that humans have with dealing with problem are that denial. but we also set up decision-making systems and also some unconscious things that we do. i spent a lot of time looking at denial, some of the cognitive bias that we have to get in a way when the biggest ones have to do with the decision-making structures that we set up, a group thing, which is that when you get a lot of people who are
similar, have similar perspectives, whatever similarity you want to use, when one person around the table says something, it's much more likely that you see all the heads nod around the table and it becomes very difficult to say something that it's not what people want to hear and i think that's certainly something that happens in markets, we are very tempted to think that the party is just going to keep going on and nobody is going to take the punch bowl away. some of the people made the proposal from argentina in 2001 were very much fans of his. anyone who read charles had to have recognized that and, you know, of course, his classic book recently, so first stage there is denial. there are other reasons, i think there are a lot of people who take advantage of this human
tendency towards denial, things that we don't want to hear. actually you have the monkeys, see no evil, hear no evil, you get the ostrich with the head in the sand. hanging out with the gray rhino and black swans and elephant in the room. once you realize that people are so susceptible to it, you look at the tobacco companies, you look at the testimony that's coming out about the oil companies that knew inside very well what the risks were and what were going to happen and really concealed that and there's a manufactured denial that we can either take advantage of or we can be aware of and so why are we denying it. >> wishful thinking. >> wishful thinking. >> a lot better than me to have to fess up. >> very much so.
i think our culture is like that. you know, you look at income inequality and you look at the people who -- who look up to certain candidates, you know, millionaire, billionaires, very wealthy people, you look at the debates over taxes, you look at the debates over trying to -- trying to address this problem of income inequality which is affecting growth, which is helping to create the poisonous and a lot of people don't want to make a lot of the hard decisions even people that would benefit from because i one day could have a shiny building with my name on it. >> when you say that the crisis takes much longer in coming than you think and happens much faster than you think and it's a challenge in markets, in the financial markets, i could never be a hedge fund manager because there are so many times that i'm
write but it takes three years to be right. i remember in the 1990's we went to investors in private equity, we said, we think the u.s. market is completely overvalued and blah, blah, blah, and they -- you know, two years later or three years later they were saying, the private market -- public markets are outperforming you by 280 basis points every year and we were sure that they were overvalued but it was way too early. how do you deal with that? when you arrive you see the crisis so early but others don't or they're not ready to act or their institutions aren't ready to hear you? like we heard so many stories from 2008. >> yeah, it's very common n many cases it's a matter of when, but exactly when that's a little -- little devil on your shoulder. that's where i think you need to come into understanding some of the later phases of a gray
rhino. start with denial. i was so inspired by the book. maybe i could have five stages too. it actually worked out well that way. but so the second stage is muddling. it's when everyone is saying, okay, yeah, this is a problem, they come up with all sorts of reasons not to do anything about it and i call diagnosing but you can call it blaming or bargaining. it's what you do and making sure you have the right solution. the fourth stage is panic, the time when the rhino is just on top of you and it's a double-edged sword. on the one hand you are much more likely to make missteps, you are going to make bad decisions, we see that often in financial crisis and when the economy is booming, nobody wants to cut the budget, nobody wants to be responsible and it's just
on the way down that they all want to cut the budget and actually create it is snowball effect and things get worst and worst. final stage is action. is when you do something and usually action happens in such a way that a small group of people start acting and you want to create a ripple effect, how do you get these leaders, these influencers, how do you convince people that it's in their interest to actually do something, to make the hard decisions. >> boy, that's a great transition what you and i both said was the biggest inconvenience, the biggest elephant in the room which is climate change. and the reason i say that is because 20 years into or more to the diagnosis and so i remember taking a course at harvard in the 1970's with roger ravele, he was talking about climate change and the greenhouse gas effect and so on, so here we are, this year we had the
monumental set of agreements so how do you see where we are with climate change and where we go in coming years so the scheme of your framework? >> the number of people in denial is shrinking happily after many years of very hard work by many people. you hear modeling, diagnosis, what do we do and what we don't do, some of the diagnosing questions become kind of loud. we are going to see the clouds, technology is going to solve everything. i think some technology very much can. there's one in the book that just blew me away in conversation that i had moderated a couple of years ago in summer davus with a company that had created something to literally create plastic out of thick air.
>> i had to google that one. [laughter] >> if you like technologies, they basically -- it's a carbon capture technology where they put something, i don't know, on top of the smokestacks, i'm sure that's not exactly what happens and they shoot enzymes at it and turns into plastic. in fact, it's been used in a lot of smart phones. carbon out and tushes into something good and saves whatever carbon might be produced otherwise in creating. you look at some of the renewable technologies, there's lots of very interesting things going on. you know, when i was in the emeretes in last october, they were doing very interesting things with clean energy and you see a lot of it across the middle east now that they are looking at clean-energy technologies. i just saw a couple of stories about more -- morrocco.
you're not seeing enough of a sense of the risks that climate change is posing to those companies. some of the changes we have seen in oil prices over the last year are in some part due to the changing technologies. there's lots of supply in other factors in that as well. but -- so you are seeing action. i think some of the dramatic numbers and facts that have come out in the last couple of years, the crazy receding of artic ice, you look at some of those maps, it reminds me of the painting. this is a scream. the highest temperatures on
record, you see some of these increasingly violent storms, every time it happens you get predictions of rising sea level and more people affected personally by it, the more em -- empatus on change. i don't know anybody that thinks that was enough. i don't know anybody that thinks that it's going to be implemented fully. that's a real cautionary tale. it's never quite as far as it ought to be. >> right, it seems to me we have always been trying to fight specially environmental problems an related things and you cite a number of examples in the book about companies that have taken a leap-frog approach to start
fighting action for environmental-type problem but addressing they lead to new technologies or change business model and completely avoid a gray rhino. i thought about that. in the corporate sectors you sort of say what it takes for that is a group of ceo's, maybe ceo to ceo to start talking about these things and they're almost competing against each other. i was struck by the fact that you said about last year to china and the u.s. seeming to say a long-term agenda for leadership in climate change. is that potentially to what you have seen in the corporate sectors where corporations, you know, tried to, you know, outdo each other in sustainability issue?
>> absolutely, you have to see countries working together. i have a friend that i have all sorts of arguments with, a friend who it's fun to argue with and might be here tonight. i remember having arguments about suv's. i'm not going to stop driving because no matter what i do china is building a coal plant every day, there's no point. helplessness about worrying about what the other guy is going to do is a real issue, you get countries worried about competitiveness, they are worried about people falling behind and one of the solutions to that, i think, is the idea of transparency and actually one of the things that came out of paris was the discussion, you know, who is going to hold countries accountable and when you count something, it's much, much easier to do something about it. [laughter] >> it really helps.
>> but as it becomes harder and harder to hide risks and as it becomes harder to get away with doing things, we have social media, we have the digital outreach, we have people becoming more and more vocal on these sort of things, it becomes much harder to avoid. shining the new light on transparency on what's happening is incredibly important and, you know, china certainly had pressure from outside as the united states but there's also been a lot of pressure from inside, some of the videos that were going around and the protests about pollution in china, they were hurt, you could tell they were being hurt. >> that's a gray rhino in china. people in the food chain trying to keep it from being poisoned. starting at least 5 or 7 years
ago was that there was huge demonstrations and disruptions of civil disobedience in china. >> very much so, one of the interviews is of peggy lu who helps promote u.s.-chinese corporation on clean energy and she's got all of the elaborative face masks for the pollution. she's beautifully embroided and she's very passionate about this and says, look, if you can't have air that people can breathe, that's going to be a big problem. she had to evacuate her kids sometimes. i was amazed, being able to
count the quality index every day is important and saying something about it is important. >> let me take you back to big picture policy cons accepts an let's talk about how can we can apply gray rhino and maybe open up to when we open up for questions and stimulate issues. first of all, one interesting thing, mish ' -- michelle, you went to bangani camp and i have a picture of our jeep literally right behind a rhino down the road and the rhino is marking its territory. boy, does that stink. the must that they let out -- you have to have pretty stinky things associated with the rhino. we all remember the concept and effectively by doing a deal with the delve -- devil, we created
the circumstances, policy makers call that blowback of cia operation. how do we look at? we had to do a pact with stalin to defeat hitler and many issues in foreign policy. how can we look at that and -- it's almost like dealing with one rhino crisis sometimes you have a baby rhino that many years later in the next generation comes down to haunt you. >> very much so. sometimes i see situations like this right now where you've got clashing rhinos and you have situations where people find it very differently. syria, you look at that one of the types of rhino, how hard it
is to unpack. i think you know russia and the united states defining the nature of the threat and the problem and the solution in extremely different ways. so i think that tells you how important it is to try to find ways to align the key stakeholders which is much easier said than done. i'm not pretending that it's easy. assad is the problem, you know, assad is the only one that can bring order, opposed ideas or you look at the debates over interest rates and quantitative easing right now. you have, you know, quantitative easing has led to bubbles in the market that have a lot of people thinking or going through 2008 again, but then on the other side you have economic growth, which is still -- numbers that
have come out are not very cheery, you've got two completely seemingly butting horns, butting heads, not sure. sorry, i didn't want to get to heavy with the metaphors there, but deciding what is the biggest problem and there are times when you have to trade one problem for the other. okay, this one i'm going to let it go. >> your book came to me -- i preordered it from amazon and that came two days ago and the one from for publisher came two weeks ago and i came to see the new movie eye in the sky which is about drones, stunning movie for me, anyway. it hit home but made me think as i was reading the book, your concept of gray rhino is such a rational self-interest.
companies can use it to see the rational self-interest and what about making moral judgment as an eye in the sky where the judgment is one collateral damage is perfectly fine by united states policies and everything but this girl in the movie and you're sitting in the movie that she's the one collateral damage, the drone strike, you are just add the horns of a dilemma and how can you -- how can we apply gray rhino to moral issues? >> it's very tough. at one point in the book i talk about the trolley problem. the dilemma trolley or train coming down a track and it's going to run over six people, the question is do you flip the switch to run over one person or
six people, it's the active behavior that people have so much trouble with. >> in the movie where killed by the bombers and one girl you had gotten to know in movie and hit by strike. >> that speaks about emotion and other decision-making. i'm perfectly happy to walk out with as many number and analysis. i like the rational approach to things. that's not how people react to things. you know, you think about the tragic photo of the little boy on the beach. you look at the tremendous reaction to that and it was -- it was really heart rending to see that. you look at the reactions of the people who were killed in the
terrorist attack in paris and in brussels and the tremendous reaction there and not as much to deaths of people -- same number of people in places that westerners didn't have as many connections with or where there were much more regular attacks, the more acta -- attacks there are, the more they lose their resonance. i think it speaks to policy making. are these lives worth more than those lives? it's not an easy decision at all. you've got constituents to answer to and i guess basically they're going to be trade-offs and they're going to be harder and there are emotional decisions to be made. >> i just thought of something. you started talking about
argentina and greece and what's the difference, is there a possibility of nationalism or racism involved here because greece was at least a country in our union that we knew and argentina was, you know, western bankers against them in a way, is there some of that? >> i think it has to do more with the interconnection that, you know, that the greece were so tied in with the whole european ideal and argentina was way down in south america somewhere. >> perfect setup because what i wanted to get to is you do talk about that, you talk about engagement, engagement. i talked with my people, ceo joe and others who talked about power in foreign policy, in a sense that's to solving gray rhino problems. the secret to it is talking
about cases and legislators talk about things, you know, and that ties us, the united states, more into a system. we've facilitated china and other countries getting into world trade organization and so on and that locks them more and china is a reserved currency and they're locked into the world. is that an example of gray rhino revolution, engagement. >> in many cases it's step by step but the engagement and ties you create different trade-offs and emotional associations and you know it's funny the title gray, i didn't come up with it intending nuance.
but i think that's a very good additional sort of like -- the icing on the cake. it's a way that the metaphor works. that's where the gray came from of the black rhino and white rhinos. i was talking to a friend. this is a rhino. made a black swan joke. wait a minute, there's such a thing of a black rhino. they're all gray. something so obviously in front of you. the premise of the black swan is you can't picture a black swan so it doesn't exist. you can't picture a gray rhino because you're thinking of the white and black. >> a gray swan was called? i forget. >> i forget, there's so many
titles. it's funny. in the talk that i did at davus i was paired with william, fantastic crisis management expert so he had me on swans. you can have so much money with all the animals but it's actually quite serious, there's a reason that we pick animals, so many powerful animal images, you know, my friends tease me. and it's coincidence but it's not. we can see things in animals that help us to see more clearly what we are doing. >> so maybe we should take a few questions. i would strongly urge everyone to read the book, it's -- it's a lot of fun to read and it's a lot more detail -- she's got one full page of the diagnosis and
what kind it is. i forget what a dead-cat bounce rhino. [laughter] >> you really have broken it down to show, you know, the different and how to diagnosis and then that leads how you try to solve it, whether you confront it, run from it or slide out of the way. anything you want to say before you open up? >> the questions that you ask yourself about, the most important things to start out picking is what are my top gray rhinos, whether it's in your company, your top rhino at work, what's your top rhino on the planet. if you have too many it becomes very complicated. you have to prioritize but i think in the questions you asked yourself when you're prioritizing which ones to go
after, you ask is this something that i know how to solve, do i need to bring in ammunition on this, do i know who needs to be convinced and who has come along on and who is on board on fixing it and how fast it's moving and the biggest one how inner connected is to other gray rhinos, if you have something that's going to affect several other things, then you want to prioritize that over one of the smaller ones, and, you know, it's not easy. there's no silver bullet answer but just start asking what's a gray rhino to get you on the path to get you thinking more clearly to solve in front of you. >> so you give a couple of examples of country, some of the oil producers that have tried to create funds for commodity-type funds to tie the commodity cycle
and most of the time the treasury gets drained like in venezuela after they have drawn for good purposes. i thought one of the great example of positive gray rhino was in the last couple of weeks when saudi arabia announced that they are creating a 2 trillion-dollar fund in era. revenue from oil but informing -- energy transition they will need to make. >> he probably conducted some of theirs. >> have not been there yet. >> i think it would be a probably a good idea if you gave us your name briefly. [inaudible] >> a great way of looking at the
world and when you look here in the united states in election season, i would like for you to reflect on the rise of donald trump. it's a gray rhino or balance swan, number one, and number two, what are some of the biggest gray rhinos you see in the united states? >> sure, that's a great question . [laughter] >> it's something i've been giving a lot of thought to. for me the idea that reality, tv star becomes a leader in the primaries, that hasn't been a black swan but i also very much see him as a gray rhino. i feel like trump is the embodiment of several gray
rhinos behind him. inequality issue which a couple of years ago was topped on the world of economic to -- to rum best seller on inequality and lip service and i haven't seen much, if any, progress. and backwards on that, and you see the rise of populist movements in the u.s. and europe and closely tied to our failure to address the inequality of gray rhino. the other part is agency, a feeling of powerlessness. it's a theme you hear often among some of the people interviewed about why they support trump, why they support sanders and the way that they're eager to reach out and embrace someone who says, yeah, i'm
going to solve with great certainty and little detail of how it's going to happen, on a certain level it comes back to magical thinking of one of the examples of the books mars attacks, which i love. i try to be wacy -- wacky and totally serious. listening to the radio and they're about to come and speak to granny and sing picking song comes on. it's a magic thing that make it is green martian heads explode. i have to go back and watch that. it's this idea of magical thinking. someone has a magical solution which, you know, one of the points. it's a lot harder and it's not easy. so i think the combination of the feeling of powerlessness to
influence government to make change happen and that powerlessness is particularly powerful, sarah palin, that hopey changey stuff. i think it's true. when obama came in there was so much enthusiasm and raise hope, i've seen this in latin america and also social media is playing into that in a very interesting way which we haven't begun to see the effect of. they feel like they have a voice on social media and say things in certain ways but there's a disconnect between what people are saying and what the government is doing where at a time certainly in the u.s. the government is paralyzed, it's extremely polarized. the primaries are increasing nasty, there's just lack of
civility and those, i think, are the bigger gray rhino. trump is kind of a baby rhinorhino with orange hair. these things are so big and heavy and scary and i don't at all want to make light of them but i also feel like you need to have some sort of levity in the discussion, you have to have ways to step back sometimes and say, hey, this is not impossible without being a poliena, i think that you need to be able to say, yes, there are things we can do. >> you're citing the issue of politicians sort of giving hope where there isn't a solution yet. don't forget that's policy failure in this country on two cases. obama went to egypt and said it and i remember a friend of mine just last year when i was there after revolution had been
stunted and crashed, you told us it was okay and you're not there with us now. and similarly in syria. foreign policy perspective that may have done more damage to our credibility. >> absolutely. >> those are the examples of think. letting the rhino out before you're ready to solve the problem, letting it run around instead of dealing with it. >> absolutely. [inaudible] >> hi. thank you. >> it is. >> okay. we are one week from the anniversary of the gulf oil spill. i just did a huffington post
blog. i would like to you to talk about is how your principles that you wrote about in gray rhino, how we can speed this up because what happened with the oil spill is it increased investment in 32% light right out of the bat, now we are at $1,329,000,000,000 in investments in energy. we have the environmental movement, 37 states per territory now have renewable energy standards and goals. so we hate it. 11 people lost their lives. 600 square miles of crap on animals. there's science coming out of it and how do you use a stinky event to speed up action and frankly where does diversity
come in to help that? >> two issues she does deal with. >> exactly. [laughter] >> one of the points and i'm certainly not the first person that has ever said this. a crisis is a terrible thing the waste. in many cases the positive change is after a big mess. after 2013 floods and looking at that was prompting measures and real thinking about probabilities of future floods and what to do about it. the panic stage in the book is really a double-edged sword. it's either a place where you make very bad decisions or it's the time that pushes action and i'm really glad to see the silver lining coming out of what
happened in the gulf oil spill. you know, that said, it can be extremely dangerous to -- to try to accept -- accelerate things. example from pop culture that's also in the book from gray's anatomy. a patient had a heart problem, it wasn't bad to get on the trans list and she fiddled with the machines in such a way that his heart became bad enough, to get higher, of course, because this is a drama soap opera they had him ready to get surgery and the surgeon got shot or attacked and so he died, that was an example of obviously -- a made-up example of how dangerous
it can be to try to push something toward but at the same time i think that there are some situations where there are choices to be paid. sometimes people try to model through and try to hide how bad a situation is and so i think that shining some light and letting people see how bad a situation is it might be a more benign way of doing that. and i think that we are starting to see more and more of that with some of the ways the digital media can bring on corporate level and the panamá papers, for example, i think that's a way of saying, this is a problem that's happening that we need to do something about. >> diversity. >> yes, diversity. diversity, it's sort of a -- it's one of the things i called a meta rhino, a problem that affects other situations and decision making, but if you
don't want to hear about a problem or it exists, you're not going to. and you look at the very, very small numbers of women on corporate boards as ceo's and corporate positions and it's not just anyone with a different perspective, just the fact that there's not as much inclusion of people who can raise red flags, women have very, very different tolerances for risks, so i think it's -- it's a huge risk not to have diversity in the decision-making process and across companies, governments, whatever, organizations to not make sure that there's a way for people to raise a red flag. >> go ahead. [inaudible] >> this is my first event. so thank you very much. i wanted to talk a little bit --
i feel like this is a cheat sheet for problem solving tough problems. you mentioned a little bit about data. i spent time in beijing. it's pretty rough. but whether it's domestic or international, i see ideology and personal narratives really obstructing problem-solving, and so, you know, specifically in today's world, i'm a mel inial but i feel like we are undated with data. in beijing if i look at the embassy it tends to be much higher. everyone has data but am i looking at parts per million in 2.5 or 10, which one and so and so forth. how do we start parsing the data to achieve consensus?
>> that's a fantastic, fantastic question and i totally agree with you that ideology is getting in the way. you look at data and you go bark to mark twain. i think finding the right data and yet there's so much data it's shorting out that you don't just have, you know, a hay stack and a needle, there's some people doing very interesting work on that and i don't pretend to have the answers to that, but one of the things that i'm hoping that the gray rhino can do is bring together people with different areas of expertise and help them to identify the gray rhinos in their industry and field to work together.
.. i think ideology is a rino but i wonder how possible it is to have no ideology but generally -isms make me very uncomfortable. even on a certain level pragmatism. i think people are often not aware enough of how the ideological wearing the collar the way they see a problem. being able to ask yourself okay,
inflation for for example if you have a certain view on inflation you are not going to see the interest rate debate similarly. i think think it is a matter of asking yourself, is your goal specific, measurable, outcome-based, or ideological. you have raised so many great points, we we could have a whole another hour to discuss. >> the business culture is showing that everybody we just knew how horrible like smoking was but yet we all did not admit it. >> thank you about the discussion. you've alluded to this a few times, you mentioned leadership in the role of leaders.
in this process including the audacity of racing hope. how did your thinking about the gray rhino phenomenon make you reflect on leadership and what it means to be a good and reflective leader? >> that's a great question. one of the conclusions was not a very happy one, unfortunately. it is really that leadership sometimes means being aware that you're going to take a fall. like the joan of arc, got burned at the stake, but you're not always going to get credit for things. another part of it really has to do with listening. it goes back to the decision-making and diversity part of the conversation. as been very interesting, we've we've had a couple talks that i
have given people have said, and i've spoken at very high level but also to people forgetting their job done. they said when we see a problem what can we do to make sure people up top with the power to allow change to happen, how do we get them on board with it? that is a very different one. different one. it speaks to leadership really been the ability to hear things that you do not want to hear. to hear things from different people and looking at different perspectives. and of not considering yourself to be infallible. it very much is about leadership. a leader being willing to say this is big, this is in front of me and i do not have a handle on it.
>> on trying to understand how you apply this thinking. to play devil's advocate look at the things we have talked about before. we had a question to identify one or many huge problems that we know are coming in the we have to decide whether we are going to act or not. my question is, what if we act too soon? look at the the case for example of germany and the energy, they spent a huge amount of money trying to figure out climate change and if they would awaited it would've been cheaper. when it becomes a crisis at least psychologically, i guess from a devils advocate perspective, how do we know for addressing gray rhino's because we feel like we should and how do we know if we are actually ignoring them because they are more important things right now? >> that's a great question and it goes alongside with how do you know if you're dealing with
a threat just because it's there, how do you prioritize. there's no easy answer and certainly not one that fits between the covers of the book. one of the things i was trying to do was harness some of the intellectual energy that the black swan did. i looked at so many people going there's a black swan, if you don't even know if what the nexis search or google search would be of how many mentions a black swan, even the people were misguided in their interpretation of it i just felt the focus was in the wrong place. there are not easy answers, i do not not pretend to say that there are. in terms of cost of responding there is a bit of a paradox in financial or energy, whatever measure you want to use, it often is much more expensive to
respond at the last minute, your your options generally narrowed quite dramatically, on the work on resilience has showed quite extensively how much return you get if you invest in prevention and resilience. it is avoided cost which we do not account for properly. for example when i went to minnesota to the memorial for the bridge that collapsed there, and i don't have numbers on that how much more cost to build it quickly plus the cost of lives and the lost community times a must business. as a problem, to infrastructure. i think there's like 80,000 bridges 80000 bridges that need to be fixed. it becomes as long-term versus short-term cost calculation. same we don't have any money in the budget right now to deal with it, we have to deal with this other urgent thing.
that of course when something falls apart because you haven't dealt with that early on that creates a vicious spiral. so i think we need to think differently on how we account for things and policymaking to look harder at avoided costs. the other question is when there's a crisis there are these magical of money from federal disaster funds, what if we were to and said shrink the federal disaster fund pool and reallocate some of the towards prevention? with aid in other countries as well. stephen covey has this great tool out of the seven habits of highly effective leaders, he has a grid.
is it urgent and important and he points out how much we spend in the urgent category whether not it is important. so there are some things that i think you can just let go. and business sometimes that is called creative destruction. it can be a very good thing, you won't have to cushion the people who are affected by it is much as you can. but find ways to allocate more time, more budget, more energy, priority to the things that are important but not necessarily immediate. i think we could do a lot better at every level from policymaking at the global to the national, to the regional and local level to businesses, to personal life. one of the great rhino set, by the up all the time is retirement planning or saving for college, there's all sorts of things that are very relevant on a personal level. obviously those are not the big giant things that affect everyone but for an individual who is affected it's pretty darn
important. i think you can be flexible in your definition there. >> someone who invest in what you're talking about one way that i have had to reconcile this for many years is to argue that you do not go off and try to invent all new technology immediately, that leads to problems and all kinds of crazy things. you do the things that are cost-effective right away, energy efficiency, pricing, all of these things, you buy time, you don't turn off the nuclear power plants today because they have 20 more years to run. and that's 20% of electricity in the country even if you don't like nuclear power. but if you do buy 20 or 40 more years what matters to you for climate changes where we are technologically in 2050. not somehow doing it immediately tonight. i have the transitioning guy
from germany come in ten years ago saying we put 25000 megawatts and we spent more money than we could've imagined and we cannot even say its greenhouse gas positive because we had so much standby generation, that we had to keep in germany to meet when the wind isn't blowing. so policymakers often are not great rhinos solvers in a way that michelle is talking about, look at the long-term, you have 20, 30 years for your technology sites are put in a good program like saudi arabia is doing with their 2 trillion-dollar facilities. >> you have that pressure coming in.
>> talked about it gray rhino. >> but your talking about the same kind of gray rhino. >> is it they should just let sleeping dogs lie. >> very much so. i think there are situations where you have to say this is not worth fighting, an example for the corporate world, kodak invented the digital camera. they decided not to run with it because they were afraid that they were going to cannibalize their existing technologies. they didn't work out real well for them. but, the other thing what i said minnesota i was amazed at the bridge memorial was right near the mill museum, all these old flour mills in the area. they're just all there. of course when the mills switch from waterpower to other sources of energy they could be anywhere
so i think there are industries that become obsolete and fall aside because there's something better. it's important to realize when that is. when is something fighting a losing battle, when does something fall aside and let something better come by. it goes back to one of the big points in the book which is how do you turn a threat into an opportunity. a very common one is a question of succession. and control. yet people saying in older management does not want to recognize that it's time for newer energies to come in. so there definitely times when the right thing to do is okay, trample me. >> put me in an iceberg. i want to thank everyone, i think michelle is willing to
stick around and answer a few questions but i think this is great. thank you for hosting this and thank you michelle for writing this book and for spending time with you. [applause]. [inaudible conversation], c-span, created by america's table cable companies and brought to you by your cable or satellite provider. >> afterwards is next on book tv. america online cofounder steve case speculates on the future of
the internet and discusses how to navigate the ever-changing digital landscape. he is joined joined by representative john delaney of marilyn. >> so this is going to be a special treat steve for all of our viewers to talk about your new book, the third way. you and i have known known each other for about 15 years. before i went to congress we have the opportunity to get to know each other in the private sector, it is a real privilege to have you here and to have the opportunity one of the few people in the congress that understands what's going on in that startup community. i'm i'm grateful you pick the time to talk about the. my first question is really the timing of this book. you went to america online when it was called something different in the 80s it had a completely different business plan, you really reformulated the whole company. you were its founder and leader,