La La Land: Galileo's Warning

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Hello Tim here. Shortly after we recorded this episode I received the sad news that Charles Perrault the great sociologist. Who's worked we discussed just has died? I was sorry to hear it. I do hope that Charles would like what we've done with his ideas as the night draws in and the fire blazes on the half the one the children by telling them Stories Stall Star Wars teaches them always scan for droids. But my stories for the education of the grown-ups advice. My stories are all true. I'm Tim Harford Gavitt. Close and listen to my cautionary tale You've heard this story before you might even have watched it happening. Live thirty three million people did there. They stand band together. ONSTAGE Faye Dunaway and Warren Beatty Bonnie and Clyde together again after fifty years even for a pair of veteran veteran Hollywood stars. It must have been a nerve wracking moment yet. That task seen simple open a red envelope. Take out a card and read out. The title of the film that had won the Academy Award for Best Picture Beatty opens the envelope so far so good then then he looks at the card in his hand. He hesitates then. He looks inside the envelope again. As though checking to see if there was a cover note he looks over at dunaway then raises both eyebrows. She reaches over and touches his arm. Affectionate Naval Academy Award Beatty begins. He he pauses again. He looks at the card again. He slips his hand inside the envelope. One more time the audience laugh at the moment of maximum tension. Engine that whole rogue is playing with everyone's emotions he continues for best picture he stops again Faye dunaway thinks. He's goofing around a two year impossible. She says come on he shows the card. She doesn't hesitate for a moment. La La land. The audience erupts in applause. And the producers of La La land take to the stage to get their acceptance speeches speeches meanwhile off in the wings. An accountant named Brian. Callanan knows that the biggest screw up in the history of the academy. The awards is in full flow. The twenty sixty and winner of best picture isn't La La land it's moonlight so yes you've heard the story. Have you understood what it really means. You're listening to another cautionary tale. Aw in This a simple way to tell the story of THIS FIASCO AS Warren Beatty won't come stage. Brian CONAN's job was to hand him the envelope for best picture instead. Callanan handed over the envelope for best actress. A few moments earlier. That award had been won by Emma Stone for her performance in La La land and so when beatty opened the envelope he saw Emma Stone. Lalande Lalande Jimmy Kimmel the host of the Oscars that evening jokingly blamed it all on beatty did you do. I want to tell you what happened. But it really wasn't Betas fold. He didn't understand what he was looking at. And rather than say the wrong thing he hesitated hated then he turns to Faye dunaway. She was the person who actually authored the title of the wrong film. But it wasn't her fault either. Imagine her situation Asian. She's on stage in front of the most star-studded audience imaginable plus tens of millions watching live on television. Beatty seems to be messing around. And she doesn't know why the first thing she sees on the card is lowland then straightaway. That's what she says some people blame beatty. Some people blamed dunaway. Most most people blame Brian. Cullen the accountant who handed over the wrong envelope but all of those people. I think I'm making a mistake. You almost a decade ago years before this fiasco I interviewed one of the world's most important thinkers on how accidents happen. He's a sociologist. Named Charles Perot and he told me something that stuck in my mind that we always blame the operator. It's always. He says a case of pilot error. Charles Perrault is a wild man. He's older than the Academy Awards themselves. Selves he was full back in nineteen twenty nine when they were first presented. And Perot is absolutely right. We inevitably look for someone. I'm to blame and that inclination leads US astray. Our instinct is to blame the Accountant. Brian Callanan he did give beatty the wrong envelope. He was distracted. He tweeted a photograph of Emma Stone Holding her Oscar. Statuette at a time he should have been focusing on giving beatty the right envelope. He he was on his phone enjoying being host to one of the world's most beautiful people at a moment of triumph. We can all learn a lesson from that. Get off your phone. Get off your phone when you're supposed to be having dinner with your family. Get off your phone when you're supposed to be driving and get off your phone when you're supposed to be giving the envelope containing the best asked Picture Card to Warren Beatty. But the reason that it's a mistake to simply blamed Cullinan is because colon was just being human. Humans are always getting distracted. Humans always making mistakes if our system's coat with those mistakes and it's hopeless to demand better. Humans we need better two systems when lowland fleetingly worn Moonlights Oskar. Some rich and successful people suffered some embarrassment in some heartache. AAC But nobody died yet. The lesson of the fiasco is far from trivial. The same kind of mistake in different situations compete catastrophic. Such mistakes can lead to nuclear accidents and financial meltdowns. And when I say can lead I mean half half lead. Such disasters have already occurred. So let's try to understand what really happened that strange night at the Oscars perhaps. Perhaps we can use that insight to prevent far more serious calamities. What kind of person falls a hack? And what kind of person awesome tracks down the voice on the other end of the call. 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We'll wait even though the winner is Emma Stone. The rest is detail. Meanwhile the important words best actress a talk talk to way at the bottom of the card and they're tiny. If Best Actress had been prominent Warren Beatty wouldn't have been confused. He would have have known that he had the wrong card in his hand. And if Emma stone had been in larger type than Lala Land Faye Hey dunaway wouldn't of blurted out the name of the wrong film it would have been awkward forbade he and Dunaway to walk off stage to get the right envelope but not nearly as awkward as not walking off stage to get the right envelope so the academy should have hired designer but they know the only woman's imagine that your the night shift supervisor. It's a nuclear power plant. It's four o'clock in the morning and you don't know it yet. But the turbine system that draws away the heat from the reactor core has just shut down. You'RE GONNA have to make some quick decisions assuming you can figure out what's going wrong and why let's see it. Can you doing the first few minutes of the accident. More than a hundred alarms went off and there was no system for suppressing the unimportant signals rules. So that operators could concentrate on the significant alarms. Information was not present it in a clear and sufficiently understandable form. That's from the overview view of the official inquiry into what was then arguably the world's most serious nuclear accident at Three Mile Island in nineteen. Seventy nine came it destroyed. The reactor came close to a serious release of radioactive material on the eastern seaboard and shattered the reputation of the American nuclear industry. It's striking how quickly the inquiry focused in on the question of design but twenty one who studies. How accidents happen? It's not surprising at all. The plans control rooms were so poorly designed. The error was inevitable. Don't Norman the director of the design lob. Uc San Diego was asked to help analyze the problems at three mile. Island design was at fault. Not The operators the control panels were baffling. They displayed almost seven hundred fifty lights some next to the relevant switches or above them or below them sometimes sometimes nowhere near the relevant switch tall red lights indicated open valves or active equipment. Green indicated closed fouls or inactive commitment. But some of the lights would typically read and others were normally green. The overall effect was dizzying. So yes this. The operators made mistakes at Three Mile Island but with better design they might not have Warren Beatty and Faye dunaway. Would sympathize. But something else went wrong that night to the Oscars something deeper and more surprising. It's a strange strange effect and it was first observed by a man less famous for looking at why things go wrong and more famous for looking at the stars. Galileo Leo gotTa Lay is known for his astronomy and because his work was consigned to the church his index. Lebron prohibit autumn the list of forbidden books but the great man's final work opens with a less provocative topic the correct method of storing stone. Column column on a building site bed with me. This book from Sixteen Thirty Eight is going to explain the Oscar fiasco and much more. I must have relate to circumstance which is worthy of the rotation as indeed olivennes which happened contrary to expectation especially when win a precautionary measure turns out to be a cause of the disaster. A precautionary measure. It turns out to be a cause of disaster. That's very interesting. Galileo please go on a large marble column was laid out so that it's two ends rested each upon piece of beam. I can picture that in in my mind. Support the column while it's being stored horizontally ready for use. You lay it on the ground. It may get stained and you'll probably break it when you try to get ropes. Something eath it to put it up right so yes store it flat but propped up by a support at one end and to support at the other but what what if the column Com support its own weight like that and simply snaps in half. Galileo has thought of that a little later. It occurred art to a mechanic that in order to be doubly shore of it's not breaking in the middle it would be wise to third support midway. This seemed to all an excellent idea. Yes if to support good surely three supports better. It was quite the opposite for not many months passed before the column was found cracked and broken exactly above the new media support. How did that happen from one of the end supports had after a long while become decayed and sunken but the middle one remained hard and strong thus is causing one half of the column project in the air without any support? The central support didn't make the column Safer It pressed into it like the central pivot of a seesaw snapping it in half Galileo's tale isn't really about storing columns neither is mine. It's about what I'm going to call Galileo's principle the steps we take to make ourselves safe sometimes lead us into danger. The problem Galileo described is well known to safety engineers. There's an article. In the find scholarly journal final process safety progress titled No Good Deed Goes Unpunished case. Studies of incidents and potential instance caused posed by protective systems. These case studies are magnificent. There's a chemical plant where to pressure. Relief Systems James Interact in a way that means neither from work. There's a flare designed to destroy pollutants which ends up causing the release of toxic gases. There's an explosion suppression device. That causes an explosion. This kind of thing happens more than you might I think. An example is one of the earliest nuclear accidents at Fermi won- an experimental reactor in Michigan. It's barely remembered now except in Gil. Scott Heron Song. We almost lost Detroit this time. The operators at Fermi worn lost control all of the nuclear reaction for reasons that were baffling to them. Some of the reactor fuel melted. It was all touch and go eventually. They got the reactor under control control. Shut it all down and waited until it was safe to take apart. It was almost a year before the reactor had cooled enough to identify the culprit. A piece of metal. The size of crushed beer can had blocked the circulation of the coolant in the reactor core. It was a filter that had been installed at the last moment for safety reasons. The Express request of the Nuclear Regulatory Commission. It had come loose and caused the entire problem. Galileo's principal strikes again why do safety systems sometimes backfire. The wise old sociologist Charles. Perrault's most famous book is called normal accidents. It's about how how certain kinds of system vulnerable to catastrophic failure so vulnerable in fact that we should view accidents in those systems as inevitable evitable the vulnerable systems have two features. The first is that. There what Perot calls tightly coupled in a tightly coupled system one thing leads to another and another and another it's like domino toppling which is actually a great example of tightly coupled system. Once you start. It's hard hard to hit the pause button. A second feature is complexity. A complex system has elements that interact in unexpected ways. A rainforest is a complex system. So is Harvard University but how university usually isn't tightly coupled if there's a problem there's also time to find a solution a system that's both complex and tightly coupled is dangerous the complexity means that will occasionally be surprises. The tight coupling means that there will be no time to deal with the surprises Charles. Charles Perrault's theory explains Galileo's principal every time you had a feature that's designed to prevent problem you're adding complexity the middle support for the column added complexity so did the safety filter that damage the family one reactor safety systems. Don't always make safe safe. Here's the question we should be asking about that. Bizarre Dr Evening at the Oscars how is it even possible. For the distracted Accountant Brian Colon to give Warren Beatty the wrong envelope type A few minutes earlier. The envelope for best actress the envelope containing the card that read Emma Stone La La land. That envelope ELOPE had been in the hands of Leonardo DiCaprio as he stood onstage announcing her win. How could that envelope have made? Its way into the the hands of Warren Beatty. The answer it didn't there were two envelopes. Every envelope for every category had duplicate version waiting in the wings. These duplicate envelopes were there as a safety measure and that safety measure. He's what made the fiasco possible. Galileo's principal had bitten hard Charles Perrault's argument is is that when systems of both complex and tightly coupled we should expect catastrophic accidents. Does the Academy Awards ceremony fit not description it certainly tightly coupled you can't easily interrupt to live. TV spectacular in front of millions of people to ask for advice ice. The show must go on yet. The ceremony doesn't have to be complex giving an envelope to Warren Beatty doesn't have to be complex. But you can make complex if you try Brian Callanan's partner in crime that evening was Martha. Ruis like cullman element. She was a senior accountant. The pair of them carried identical briefcases with an identical set of envelopes on the day of the show. We'll get the ballots and Brian and I will go to the theater on two separate roads. He'll go one route and I'll go another route. Putz how moth Ruis helpfully flee explain things to journalists just before Oscar night. Both she and Colin had been proudly giving interviews about the foolproof system. We do that data to ensure that in case anything happens to one the other will be there on time and delivering. What's needed with the full set? We do have security measures off until where at the theater and delivering that envelope to the presenter. Just seconds before they walk on stage will be in two different locations. Brian will be on stage right and all the onstage left it all sounds sensible and in many ways it is sensible. It's also complicated. The system of twin envelopes meant that every time an envelope was opened on stage age it's duplicates in the wings had to be set aside moth Ruis stage left handed the envelope for best actress. Two Leonardo di caprio PRIO leaving. Brian Cullen stage right with a job of discarding duplicate the job. He failed to do. If that hadn't been that that set of twin envelopes Warren Beatty could never have been given the wrong one. So bad design helped caused the Oscar Kaffee Lasko. It also helped cause the accident at Three Mile Island and a complicated safety system was at the root of the Oscar Cafasso it was also at the root of the Fermi one accident but it's not just Oscars in nuclear power. I promised you a financial shaw catastrophe too. And this woman both safety systems and typography at the blame you might even start to see the banking crisis. It's a very different light in September. Two Thousand Eight at the height of the financial the crisis. An Insurance Executive named Robert William Start requested a meeting with Tim. Geithner Guidina would like to be the Treasury Secretary Retrea at the time he was the president of the New York Federal Reserve that meant he was responsible for supervising wall. Street's banks including including Lehman Brothers which was on the brink of collapse row but William Stat was the boss of an insurance company called. AIG and since A G wasn't a bank. It was far from obvious why Williamson it was kindness problem in his book too big to fail the journalist Andrew Ross sorkin reports the intimate details of this ill-fated meeting. I'm really sorry Mr Williams debt Mr Cotner. It's going to be a few minutes no problem I have time. I'm sorry I know you've been waiting a long time Mr Gardiner's on the phone to the boss Breath Lehman brothers. He's up to his eyeballs. Lehman Tim Guy was also exhausted. had been on an overnight flight from a banking conference in Switzerland. He must have felt completely overwhelmed. Who wouldn't have Baba's it sorry to keep you waiting coming William Stat. Got His moment he badly needed to be able to borrow from the Fed. Not Normally something edgy would be allowed to do. But he also didn't want to panic guide he needed to walk a tightrope to suggest that AIG could use some help but wasn't actually bankrupt. Is this critical or emergency Z.. Situation Bob will you know. Let me just say that it would be very beneficial day gene geithner. Perhaps I can beat lethal with you. William Start handed guide ner a briefing note buried deep within. It was a fast ticking time bomb the largest just firms on Wall Street were relying on. AIG to pay out insurance against financial trouble. The total sum insured was a truly ludicrous. Two thousand seven hundred billion dollars. Aig couldn't possibly pay if all all the claims came in and it was starting to look as though they might but that meant that the big Wall Street banks wouldn't get the insurance is payments they were relying on Aig was both a bigger threat to the financial system than Lehman brothers and far more surprising one if AIG I g was a safety net. It was one that wasn't going to break anyone's fall but to realize that Tim geithner would actually have to read need an absorb the information the note and he was busy really busy so instead he filed it away then turned end back to the Lehman Brothers problem. AIG would melt down a few days later. The parallels with Oscar night are uncanny for one thing guy who's no fool had no idea how to interpret what he was looking at. It was unexpected and the key information was buried the small print fading away in Warren Beatty know the feeling. Then there's Galileo's principal safety systems don't always make a safe those insurance contracts was opposed to offset risk not create it right the by now. We know that safety systems also also introduce new ways for things to go wrong. The insurance contracts that were about to destroy. Aig we're called. CREDIT DEFAULT SWAPS SWAPS. Let become popular as a way to offset risk with the blessing of regulators. They seemed smart idea. Just as the third support for for the columns seems like a smart idea and the metal filters at the FERMI reactor and the duplicate set of award envelopes but they backfired Wall Street banks were relying on these credit default swaps to keep them safe if there was trouble when it became clear that insurance companies such his. AIG couldn't possibly pay out. The banks. All scrambled to sell off their risky investments. That the exact same time for the exact same same reason. A few days after William's stance had met gainer officials and bankers worked through the weekend on the Lehman Brothers problem only only on Sunday. Evening did one of those bankers receive a request for a Treasury official to ask if she could drop everything and work on rescuing. Aig instead the surprising phone call was greeted with a response that was unsurprisingly. Unsuitable for certainly is hold on. Hold on your calling the Sunday night saying that we just spent the entire weekend on layman and now we have this. How huck did we spend the past forty eight hours on the wrong thing? How indeed for the same reason? They gave the Oscar to the wrong movie confusing confusing communication and above all a safety system that created a brand new way to fail the banking crisis crisis of two thousand and eight shook the world financial system and destroyed millions of jobs more than a decade later. We're still living with the consequences quences. It was in its way a more serious crisis than any nuclear accident. It was certainly far. Graver than a bungalow at the Oscars yet the same problems for the roots of all these accidents after the la La land shambles Vanity Fair reported. What'd the Oscars have an intense six step plan to avoid another envelope disaster? The six steps include lewd getting rid of the two accounting partners. Brian Callanan and mouth overseas and the Tweeden sets of envelopes. Instead says Vanity Fair there will be three partners. A third partner will sit in the show's control. With the producers. All three partners will have a complete set of envelopes. If having two sets coast problem having three sets is better right. I'm not don't Shaw. Galileo would agree. You've been listening to cautionary tales expand on some of the ideas in this episode. My book adapt you might like it. Cautionary Tales is written and presented by me Tim. Harford producers are Ryan daily and Marilyn roused the sound designer and mixer was Pascal wise who also composed the amazing music. This season stars. Alain coming off. Pange rb Toby Stevens and Russell Tovy with end. So Chiletti Ed Gordon Melanie Gutteridge Miss You Monroe Rufus right and introducing Malcolm Bradwell. Thanks to a team. That Pushkin Industries Industry's Julia. Barton has fame meal Lebel Kelly Migliori Jacob Weisberg and of course the mighty Malcolm Dodwell. Thanks to my colleagues all the eggs at the Financial Times

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