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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.

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Speaker 2: Hello and welcome to another episode of the Odd Lots podcast.

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Speaker 3: I'm Joe Wisenthal and I'm Tracy Alloway.

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Speaker 2: Tracy, we're recording this on June sixth, and yesterday we

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Speaker 2: got the news of New York City Governor Kathy Hochel

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Speaker 2: permanently putting a pause on a proposed congestion tax people

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Speaker 2: driving into the City of Manhattan from the outer boroughs

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Speaker 2: or other states. And I have to say, like reading

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Speaker 2: about the whole thing like it kind of depresses me.

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Speaker 4: It's crazy that story.

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Speaker 3: I'm sorry, but Joe saw me kind of going off

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Speaker 3: on this in an internal chat room yesterday when the

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Speaker 3: news kind of filtered out. But regardless of where you

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Speaker 3: sit on the ingestion pricing debate, I think we can

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Speaker 3: all agree that a last minute you turn, after years

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Speaker 3: and years and years of public consultation, all this matter,

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Speaker 3: after the installation of the machines that we're supposed to

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Speaker 3: take photos of everyone's license plate and actually get the fees,

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Speaker 3: that this is not an ideal outcome to actually cancel

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Speaker 3: the plans two weeks before they were supposed to go

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Speaker 3: into effect.

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Speaker 5: Yeah.

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Speaker 2: Look, I'm a neutral journalist at a mainstream publication, so

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Speaker 2: I have no opinions on policy. Ever, it is not

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Speaker 2: my job. But it does seem to me that there's

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Speaker 2: something wrong if you spend like probably one hundred million

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Speaker 2: dollars in studies and you talk about something for sixteen

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Speaker 2: years and you have all these things and then it's

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Speaker 2: like at the end, it's like nah, and it's like

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Speaker 2: how do we like build anything in this country?

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Speaker 4: It's just surreal.

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Speaker 3: Sorry, the more I think about it, the more I

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Speaker 3: just like start laughing and then kind of crying as well.

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Speaker 4: It's it's crazy.

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Speaker 2: But of course this comes up all the time in

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Speaker 2: so many episodes we do, whether it's around housing, or

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Speaker 2: whether it's about electrification, or whether it's about installing offshore wind,

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Speaker 2: whatever it is. It seems like there is a major

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Speaker 2: problem in this country about like how long it takes

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Speaker 2: to plan things, how long it takes to get permits

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Speaker 2: for things, the cost of construction. The crazy thing with

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Speaker 2: the congestion text, it wasn't even like a construction thing.

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Speaker 2: You know, it's literally just tolls. It's not like they

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Speaker 2: had like build some new bridges and you know, demolish

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Speaker 2: tens of thousands.

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Speaker 3: Well, they still spend a lot of money on it.

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Speaker 3: But yes, I take the point. It's not like they

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Speaker 3: were building a new highway that would go through you know,

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Speaker 3: some neighborhoods or something like that.

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Speaker 2: Right, right, It's also crazy to me anyway, I do think, like,

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Speaker 2: you know, this recurring question of like why is it

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Speaker 2: so hard to build stuff or just actually like take

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Speaker 2: any decisive policy towards anything, seems like a real problem.

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Speaker 5: Oh.

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Speaker 3: Absolutely, And even though this particular issue I think we

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Speaker 3: can all agree was very contentious, there.

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Speaker 4: Are people who feel wrongly on both sides.

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Speaker 3: There are other things that I think have more collective

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Speaker 3: public support and maybe certainly bipartisan support. So I think

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Speaker 3: most of Americans, most politicians would agree, for instance, that

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Speaker 3: housing supply is kind of a bipart is an issue now.

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Speaker 3: But even on something like that where everyone kind of

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Speaker 3: agrees like, yes, this is a problem, we need more supply,

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Speaker 3: we need places for people to actually live, there are

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Speaker 3: all these questions about how you actually decide where to

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Speaker 3: put those houses, and then even more controversially, how do

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Speaker 3: you fund that, Like what does support for real estate

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Speaker 3: residential real estate actually look like? Where does the financing

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Speaker 3: come from. How do you structure that? Is it the

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Speaker 3: form of subsidies, is it the form of incentives? Is

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Speaker 3: it public private partnerships. It just seems like there are

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Speaker 3: so many points in the process at which you can

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Speaker 3: kind of like get stuck.

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Speaker 2: So many, so many Anyway, I'm really excited because we

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Speaker 2: do have the guest today. We're going to be speaking

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Speaker 2: with someone who is extremely interested in this topic and

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Speaker 2: sort of puts his money where his mouth is, spends

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Speaker 2: a lot of money researching and trying to think up

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Speaker 2: solutions to some of these things. We're going to be

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Speaker 2: speaking with John Arnold. He's the co chair of Arnold Ventures.

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Speaker 2: Prior to that, he was a famed energy trader, made

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Speaker 2: his fortune at Centaurus Energy. Prior to that, I learned

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Speaker 2: he was the recipient of the single biggest cash bonus

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Speaker 2: when he was a trader at Enron, where he was

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Speaker 2: not accused of any wrongdoing a bunch of people there

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Speaker 2: obviously were. And now he is a philanthropy co chair

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Speaker 2: Ernold Ventures, as I mentioned that, among many other things,

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Speaker 2: works on problems like this. In fact, they do a

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Speaker 2: lot of health, criminal justice, higher ed public finance, all

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Speaker 2: of which could probably make for a great specific episode

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Speaker 2: of the podcast. John, thank you so much for coming

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Speaker 2: on out Laws.

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Speaker 5: It's a great honor to be on my favorite financial podcast.

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Speaker 4: Hi, thank you.

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Speaker 2: I'm skeptical favorite, but thank you.

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Speaker 3: Just accept the compliments show and move on.

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Speaker 2: We'll take it. So we're going to get into all

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Speaker 2: this permitting. And you had a great tweet yesterday. Actually

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Speaker 2: you did a little mini history of the congestion pricing

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Speaker 2: in a tweet. Starting in two thousand and seven, Mayor

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Speaker 2: proposes worded FED grant two thousand and eight, plants finalized

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Speaker 2: two thousand and eight to twenty seventeen in stalllah blah

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Speaker 2: blah blah, environmental assessment, another delay, another delay, and now

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Speaker 2: the indefinite delay. I want to get into all that,

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Speaker 2: but before we do, there are a lot of billionaires

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Speaker 2: who want to give away their money and have philanthropies,

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Speaker 2: et cetera. I get the impression that Arnold Ventures tries

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Speaker 2: to solve these problems sort of differently, or try to

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Speaker 2: have a novel approach to giving your money away. What

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Speaker 2: is the sort of driving philosophy behind what you do?

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Speaker 5: Yeah, it might be good to start at the beginning

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Speaker 5: of our phone tropy efforts. My wife, Laura, and I

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Speaker 5: came out of professional careers from the private sector. I

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Speaker 5: was in energy trading for seventeen years. Kind of got

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Speaker 5: burnt out after those seven teen years. My wife was

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Speaker 5: an m and a lawyer. She kind of got burnt out.

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Speaker 5: And we had this fledgeling foundation at the time that

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Speaker 5: was doing work in mostly in K twelve reform efforts,

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Speaker 5: and I think a lot of people from the financial

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Speaker 5: sector kind of got involved in those efforts in the

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Speaker 5: two thousands, and then after two thousand and eight, we

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Speaker 5: got very interested in the public pension crisis that was happening.

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Speaker 5: Both the funding design and benefit design we viewed as

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Speaker 5: flawed and started working in that area. And then we

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Speaker 5: got interested in criminal justice reform, and we stepped back

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Speaker 5: and saw, wait a minute, the tie amongst these three

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Speaker 5: very disparate areas is that they're all related to public policy.

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Speaker 5: It's all about the rules and incentives of the systems

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Speaker 5: that drive behavior. And so we started thinking more and

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Speaker 5: more about public policy as the framework for our philanthropic

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Speaker 5: efforts and really believe that there's a shortage of philanthropy

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Speaker 5: focus on this very important issue of policy. We think policies,

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Speaker 5: yes it's sustainable, it's scalable, and it's structural change in

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Speaker 5: a way that maybe funding programs is not. But for

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Speaker 5: a variety of reasons, it tends to be underfunded from

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Speaker 5: the filmtharbic community. It's changing a little bit. But that

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Speaker 5: really laid us down this pathway of getting involved in

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Speaker 5: a number of areas of public policy, including infrastructure and

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Speaker 5: the energy and climate and housing debates.

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Speaker 3: How do you decide what you want to look at?

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Speaker 3: Because I was searching for some of your previous projects,

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Speaker 3: and there's a lot of them. So criminal justice reform

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Speaker 3: is probably one of the ones that you're better known for,

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Speaker 3: charter schools, which you just mentioned, but there are other

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Speaker 3: things like high drug prices, expensive college textbooks, even geoengineering,

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Speaker 3: which I don't think a lot of billionaire philanthropists have

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Speaker 3: even begun to look into the quality of academic research.

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Speaker 3: I think that's something you've been working on as well.

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Speaker 3: But it seems like a very varied collection of interests

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Speaker 3: that you have.

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Speaker 5: It is we kind of get drawn to issues where

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Speaker 5: there starts to be bipartisan support at least out of

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Speaker 5: a where at a suboptimal equilibrium, and so there starts

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Speaker 5: to be some political consensus of desire for change. Now

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Speaker 5: finding what the overlap is across the two parties can

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Speaker 5: be a much more challenging endeavor. So we're looking for

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Speaker 5: those types of issues where at least one side is

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Speaker 5: starting to move and there starts to be this political

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Speaker 5: window that's opening for reform. We're looking for areas that

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Speaker 5: have promising ideas. There's we're not necessarily going into areas

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Speaker 5: saying here's our idea. We're not the experts in it,

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Speaker 5: but we survey the field and try to find out, oh,

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Speaker 5: here's a promising idea. Maybe we can support this or

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Speaker 5: test this or evaluate that in an idea and I

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Speaker 5: think you know again, we're looking for areas that have

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Speaker 5: this public policy focus to it, where it's about the

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Speaker 5: rules and incentives of systems and how can we change it.

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Speaker 5: And then we have to believe that we as an

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Speaker 5: outside third party can have influence on a system, which

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Speaker 5: in some areas we can and some I think we've

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Speaker 5: had to turn away thinking that it's not obvious how

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Speaker 5: we can have a positive influence on those areas.

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Speaker 3: This is going to be my next question, actually, But

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Speaker 3: once you identify an area where there either is bipartisan

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Speaker 3: support or the I guess first inklings that this could

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Speaker 3: have bipartisan support, what's the value proposition that you bring

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Speaker 3: to the table, Because just to play devil's advocate, but

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Speaker 3: you know, if both sides of the aisle are interested

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Speaker 3: in this and are discussing solutions, then maybe they can

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Speaker 3: figure it out on their own.

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Speaker 5: I wish it were that easy. Yeah, I think most

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Speaker 5: of our work centers around one of three roles. The

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Speaker 5: first is providing tension in a system. So from a

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Speaker 5: economist framework, it's often areas that have a concentrated benefits

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Speaker 5: diffuse costs area. So you can think about healthcare, where

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Speaker 5: you have many companies that get one hundred percent of

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Speaker 5: their revenue from the system. They're very dedicated and inclined

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Speaker 5: and very motivated to be involved politically. And so some

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Speaker 5: of the strongest, if not the strongest lobbies in DC

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Speaker 5: are from the healthcare industry, whether it's pharmaceutical or hospitals

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Speaker 5: or physicians or insurers, PVMs, et cetera. And the costs

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Speaker 5: of the system fall to individuals, it falls to the taxpayers,

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Speaker 5: it falls to individual firms, and none of those really

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Speaker 5: have the incentive to put significant resources to counter the

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Speaker 5: weight of industry, and so we see a rule for

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Speaker 5: trying to provide proper tension into a system, and so

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Speaker 5: we're stepping in, Like when you have everybody in DC,

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Speaker 5: every lobbyist trying to advocate for more money into the system,

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Speaker 5: we're stepping in saying, how can you bend the cost

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Speaker 5: curve in healthcare without having any compromise on quality of care?

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Speaker 5: And it is a very lonely position because you know,

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Speaker 5: again there's not much incentive.

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Speaker 2: For others to do this.

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Speaker 5: And a second aspect we get involved in is the

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Speaker 5: development and piloting of new ideas. I was talking about.

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Speaker 5: You know, we survey a field and try to see

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Speaker 5: what are academics, what do practitioners, what are their ideas

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Speaker 5: as to how the system could be performing better, and

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Speaker 5: do they need resources in order to kind of more

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Speaker 5: fully develop the idea or even start to test the idea.

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Speaker 5: And then the third area we often get involved in

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Speaker 5: is evaluation. And I think this is a very underfunded

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Speaker 5: aspect of public policy, is trying to figure out what

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Speaker 5: works what doesn't. And this includes what programs work and

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Speaker 5: what policies work. And I think that's led to some

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Speaker 5: surprising findings over the years that things that seem obvious

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Speaker 5: that they should be productive, should be efficient, turn out

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Speaker 5: to have counterproductive aspects to them, and you might not

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Speaker 5: be a good policy or a good program.

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Speaker 2: What's an example of that, something that everyone thoughts like, yeah,

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Speaker 2: let's do this, and then when you actually looked at

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Speaker 2: the results, no, it didn't.

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Speaker 5: This is a small one, but I think it's very tilling.

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Speaker 5: Is there was a program that was started, I think

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Speaker 5: it was in the eighties or nineties of a Scared

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Speaker 5: Straight where the idea was, let's take high school students

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Speaker 5: who were kind of starting on the pathway of misbehavior

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Speaker 5: that people thought they might be going into criminally justice

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Speaker 5: involves individuals and will take them into prisons in jails

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Speaker 5: and show them how horrible it is in these places

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Speaker 5: and try to quote unquote scare them straight. And you know,

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Speaker 5: this program went on for a number of years, got

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Speaker 5: federal funding, state funding, and then someone came around and

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Speaker 5: did an evaluation and they did a RCT you know,

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Speaker 5: put some people through the program, some people not, and

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Speaker 5: it turned out after the fact that those that had

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Speaker 5: gone through the program actually you know, committed more crimes

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Speaker 5: than those that didn't and so you know, kind of

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Speaker 5: had this theoretical background, but when you actually apply in practice,

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Speaker 5: you often get very different results than what the theory said,

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Speaker 5: or there are unintended consequences of those programs that are

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Speaker 5: very hard to think about in advance.

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Speaker 2: One of the debates I see online a lot is

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Speaker 2: whether it's productive from like a political standpoint, to sort

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Speaker 2: of always talking about worst case scenarios. And there's a

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Speaker 2: lot of people it's like, oh, yeah, when you're talking

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Speaker 2: about say climate, always air on the worst situation. And

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Speaker 2: then there's other peoples like, no, let's actually talk about

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Speaker 2: what the most likely situation is or whatever. And I

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Speaker 2: find this sort of an interesting, interesting sidetrack.

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Speaker 3: Absolutely, I've seen that argument before that if you're always

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Speaker 3: focused on the worst case, then you're never going to

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Speaker 3: do anything much less get out of bed in the morning.

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Speaker 4: But John, I wanted to.

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Speaker 3: Ask you as well, in addition to the evidence based approach,

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Speaker 3: there's something else that you do that's a little bit

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Speaker 3: different to a lot of other philanthropic organizations, and that

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Speaker 3: is the actual structuring of the company. So Arnold Ventures.

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Speaker 3: I think you have different aspects of the organization, but

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Speaker 3: one big part of it is structured as a limited

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Speaker 3: liability company versus say a charitable foundation or a donor

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Speaker 3: advised fund. And I'm really curious why you decided to

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Speaker 3: take that approach because to date, there aren't that many

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Speaker 3: billionaires that have gone down that route. Zuckerberg is probably

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Speaker 3: the big exception there. But how did you decide to

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Speaker 3: take that line? In terms of organizational structure.

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Speaker 5: Part of this was a realization that research alone doesn't

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Speaker 5: pass laws, and that we had to have the political

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Speaker 5: know how and advocacy and comm strategies tied directly into

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Speaker 5: our five H one C three work, charitable work, the

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Speaker 5: research focus, and so we created these two arms. Over

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Speaker 5: the years, we had our C three and we had

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Speaker 5: our C four. They have different tax treatment, and so

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Speaker 5: we had to have this Chinese wall between the two,

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Speaker 5: and it became very annoying because we had some employees

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Speaker 5: that were with the C three and some that were

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Speaker 5: with the C four. Now we're very strongly advocate that

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Speaker 5: we want to put more research and more evidence based

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Speaker 5: findings into government, into policy, and so trying to combine

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Speaker 5: those organizations had a lot of synergy. And so what

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Speaker 5: we did was we brought all employees up into this

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Speaker 5: LLC and we could knock down the Chinese Wall. There

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Speaker 5: was a few kind of negative tax consequences from that,

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Speaker 5: but in the grand scheme it wasn't that significant, and

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Speaker 5: we thought the benefits from having one organization where employees

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Speaker 5: could both be experts on the research as well as

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Speaker 5: sit and talk with policy makers to advocate for better policy,

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Speaker 5: was the better approach.

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Speaker 2: Let's get into some of the the infrastructure and policy

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Speaker 2: questions that we let off with. You know, we're talking

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Speaker 2: about this congestion pricing seventeen years was about to go

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Speaker 2: into effect, finally delayed at least in definitely two weeks

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Speaker 2: before it was about to go into effect. When you

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Speaker 2: look at a story like this and you watch it

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Speaker 2: and you see how long it enfolds and then never happens.

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Speaker 2: Is this being replicated across the country on smaller scales

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Speaker 2: all the time that we don't see because they're not

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Speaker 2: as big. And as you look at situation after a situation,

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Speaker 2: what do these have in common? I mean, this wasn't

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Speaker 2: even an infrastructure project, which blows my mind. It was

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Speaker 2: just basically increasing the tolls. But what's really going on

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Speaker 2: here that it's so hard to get a policy like

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Speaker 2: this past.

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Speaker 5: You're right, that is not an infrastructure project, but it

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Speaker 5: was very illustrative and similar to the timeframe and journey

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Speaker 5: that many infrastructure projects in the US are now facing.

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Speaker 5: And maybe we start back with and the environmental framework

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Speaker 5: for this country really got started in this three year

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Speaker 5: period between nineteen seventy and nineteen seventy three under Republican

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Speaker 5: Richard Nixon, with bipartisan support, and this was the creation

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Speaker 5: of the EPA. It was the creation of NEPA, the

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Speaker 5: Clean Air Act, Clean Water Act, and Endangered Species Act,

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Speaker 5: and even today, that's really the framework that most of

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Speaker 5: the environmental law is based upon. And those were enacted

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Speaker 5: for good reasons and have been very effective policies as

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Speaker 5: a whole. If you think back before nineteen seventy, there

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Speaker 5: were a lot of environmental disasters in this country, from

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Speaker 5: the Cuyahuga River catching on fire, to the smog that

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Speaker 5: you saw in la in Houston and Pittsburgh, to the

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Speaker 5: oil spill in Santa Barbara, and so there was a

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Speaker 5: reason why there was broad both voter support and bipartisan

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Speaker 5: support for this and it's had good impact over the years,

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Speaker 5: but it's changed, and I'd say starting at the turn

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Speaker 5: of this century, although that's not a hard turn, but

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Speaker 5: two things happened. One was that the courts started becoming

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Speaker 5: more aggressive about interpretation of these laws and made it

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Speaker 5: harder and harder for developers to build things. The second

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Speaker 5: was that opponents to projects became smarter about how to

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Speaker 5: utilize the laws to stall and ultimately cancel many projects.

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Speaker 5: And one example of that is instead of filing all

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Speaker 5: your objections to a project at the same time and

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Speaker 5: let them be heard simultaneously, what opponents started doing was

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Speaker 5: file one opposition. You know, wait a couple of years,

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Speaker 5: is that chugged through the court system. When that got reconciled,

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Speaker 5: then file your next claim and then do your next claim.

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Speaker 5: And so a process that should have taken two years

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Speaker 5: to hear the oppositions and the complaints about it ends

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Speaker 5: up taking ten years to do it. And that does

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Speaker 5: several things right, and it greatly increases the cost to

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Speaker 5: the developer to do it. It increases the time to

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Speaker 5: bring these important infrastructure projects to the market, and it's

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Speaker 5: just provides this kind of general sense of malaise that's

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Speaker 5: developed across both the end users of these infrastructure projects

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Speaker 5: as well as the developers.

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Speaker 3: So I know you spent a lot of time in

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Speaker 3: DC as part of your philanthropic push, But when you're

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Speaker 3: talking to politicians or other policy makers, or maybe even

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Speaker 3: court officials or people from the judiciary, is there a

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Speaker 3: recognition that this is an issue now, that it is

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Speaker 3: harder to build things, or that it just takes longer.

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Speaker 5: Absolutely, And I think the passage of the IRA really

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Speaker 5: changed the discussion around permitting. And I think, you know,

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Speaker 5: there was a growing sense around the difficulties that the

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Speaker 5: environmental framework we're creating for projects, but then the IRA

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Speaker 5: passed this kind of deregulation or this desire to look

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Speaker 5: at the kind of environment process was historically a Republican

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Speaker 5: one or a conservative one, right, And then the IRA

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Speaker 5: passes and the CBO scores the environmental provisions at I

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Speaker 5: think three hundred and ninety one billion dollars, and then

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Speaker 5: as the private sector and as environmental orgs spent time

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Speaker 5: with that law and started thinking about what does this

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Speaker 5: actually mean. You started hearing numbers that were actually in

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Speaker 5: excess of a trillion dollars. And this was kind of

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Speaker 5: a secret that was going around the environmental community was

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Speaker 5: don't tell anybody but this is a trillion dollars of

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Speaker 5: new spending on environmental projects because they were modeling this

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Speaker 5: on spreadsheets. And then the reality sets in and the

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Speaker 5: reality is that modeling things on spreadsheets versus actually building

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Speaker 5: physical infrastructure is two radically different things. And so then

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Speaker 5: the next twelve months was about holy cow, like, we

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Speaker 5: need to change and make it easier to build, because

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Speaker 5: instead of trying to stall and cancel projects, in order

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Speaker 5: to have an energy transition in this country, we need

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Speaker 5: to build a lot of things. And so there's a

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Speaker 5: lot of energy infrastructure that needs to get built. Now.

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Speaker 5: The same rules that we're making it difficult to build

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Speaker 5: clean energy infrastructure were also making it difficult to build

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Speaker 5: traditional oil and gas infrastructure. And so today the Mountain

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Speaker 5: Valley Pipeline, which has gotten very famous because of the

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Speaker 5: discussions over the past couple of years, is very near completion.

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Speaker 5: But there's no other interstate pipeline that's in development after that,

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Speaker 5: and the developers have pretty much given up because you've

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Speaker 5: now had three major pipelines that ended up getting canceled

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Speaker 5: or very significant delays. That has greatly affected the economic

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Speaker 5: outcomes of those projects, and so developers are saying, we

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Speaker 5: don't know what the rules are anymore to build these projects,

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Speaker 5: and so we're not even going to start because we've

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Speaker 5: seen three instances where they became financial albatrosses. And all

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Speaker 5: this was happening on the energy side at the same

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Speaker 5: time time that the housing side really started to pick up,

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Speaker 5: and this was coming from a lot of this originated

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Speaker 5: in California, which the lot of well known stories about

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Speaker 5: the difficulty of building housing, especially a workforce housing in California,

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Speaker 5: and there started to be the creation of a YMBI

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Speaker 5: movement and real questions about what are all these hurdles

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Speaker 5: that are in the way of development, and that helped

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Speaker 5: to spur this whole movement around the abundance agenda. And

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Speaker 5: so all these things are coming together and we see

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Speaker 5: that there is now great political will from both sides politically,

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Speaker 5: but also includes a lot of the environmental groups who

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Speaker 5: had traditionally worked to kill projects and delay projects are

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Speaker 5: now realizing they need to find projects to support.

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Speaker 2: So let's drill deeper into this because we actually recently

404
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Speaker 2: did an interview with the CEO of ORSTED Americas and

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Speaker 2: slow permitting for offshore wind was one of the bottlenecks

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Speaker 2: that he cited. I saw you've done something with a

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Speaker 2: sort of like more advanced power lines so that clean

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Speaker 2: energy in one part of the country can be distributed

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Speaker 2: to other parts of the country, et cetera. But what

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Speaker 2: are the sort of specific issues that arise in permitting

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Speaker 2: or maybe what are the specific types of reforms that

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Speaker 2: would be necessary so that this trillion dollars can actually

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Speaker 2: get spent in some sort of relatively efficient manner that

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Speaker 2: produce it good, Like, what are the actual issues that

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Speaker 2: play here?

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Speaker 5: Yeah, this applies not only to clean energy, but to

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Speaker 5: all energy infrastructure and kind of all linear infrastructure. You

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Speaker 5: think about linear infrastructure, which includes rail and highways and transportation,

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Speaker 5: transmission pipelines. All these things have gotten very very difficult

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Speaker 5: to build in the twenty first century. So the question

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Speaker 5: is kind of what to do, and that's where things

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Speaker 5: often kind of start to bog down. There's been kind

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Speaker 5: of extensive negotiations between Senator Mansion and Senator Brosso in

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Speaker 5: the Senate, and they've been reported days away from potentially

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Speaker 5: releasing a bill that it starts to address this. And

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Speaker 5: the framework that they've mentioned would do a lot of things,

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Speaker 5: and I think The question is that oil and gas

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Speaker 5: has traditionally had exceptions on some of the environmental framework,

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Speaker 5: and so everybody talks about NEPA and the categorical exemptions

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Speaker 5: that certain industries have from the NEPA process, and so

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Speaker 5: oil and gas has a lot of exemptions from that.

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Speaker 5: Clean energy generally doesn't. So things like geothermal, the transmission

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Speaker 5: that's necessary to unlock the wind and solar resource, and

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Speaker 5: then even things like sighting of wind turbines all end

435
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Speaker 5: up tied up in a lot of environmental process that

436
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Speaker 5: either stall or make them uneconomic. And so the question

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Speaker 5: is that do you bring clean energy down and make

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Speaker 5: it at an equal basis to oil gas and make

439
00:25:01,520 --> 00:25:05,000
Speaker 5: everything easier to build, or if we do nothing, and

440
00:25:05,160 --> 00:25:07,879
Speaker 5: oil and gas is becoming harder and harder to build

441
00:25:08,440 --> 00:25:13,240
Speaker 5: and everything across the energy spectrum becomes very difficult to build.

442
00:25:13,480 --> 00:25:16,439
Speaker 5: So going back to what are the specifics, one is

443
00:25:17,119 --> 00:25:21,800
Speaker 5: what is the role between federal and state on trying

444
00:25:21,840 --> 00:25:25,480
Speaker 5: to permit things? And so there's this inherent tension between

445
00:25:26,000 --> 00:25:29,199
Speaker 5: needs of society and the preferences of a community. Right,

446
00:25:29,520 --> 00:25:34,120
Speaker 5: we need energy, we need transportation, mining, workforce, housing, et cetera. Right,

447
00:25:34,160 --> 00:25:38,800
Speaker 5: but individual neighborhoods usually prefer that that be built somewhere else,

448
00:25:39,440 --> 00:25:42,040
Speaker 5: and so the question is what's the right tension in

449
00:25:42,080 --> 00:25:46,760
Speaker 5: that system between society versus the community, And that really

450
00:25:46,760 --> 00:25:50,680
Speaker 5: boils down to federal versus state and local. And so

451
00:25:50,720 --> 00:25:54,359
Speaker 5: the question that needs to be addressed is, especially on

452
00:25:54,480 --> 00:25:58,679
Speaker 5: a lot of these linear infrastructure projects, where are projects

453
00:25:58,760 --> 00:26:02,919
Speaker 5: of national signs diifficants that need the ability for the

454
00:26:02,920 --> 00:26:06,480
Speaker 5: federal government to come in and permit it because it's

455
00:26:06,520 --> 00:26:10,359
Speaker 5: of national strategic interest. A second issue is around these

456
00:26:10,440 --> 00:26:15,440
Speaker 5: judicial reforms and again allowing these objections to come in,

457
00:26:16,000 --> 00:26:18,920
Speaker 5: allow them to be heard, but that the opponents to

458
00:26:19,000 --> 00:26:22,040
Speaker 5: projects need to present those objections in a timely manner,

459
00:26:22,480 --> 00:26:25,520
Speaker 5: and the courts need to hear those objections and rule

460
00:26:25,560 --> 00:26:28,920
Speaker 5: on them in a tiny manner. And the agencies need

461
00:26:28,960 --> 00:26:33,040
Speaker 5: to respond to anything that's coming out of Lowe's rulings

462
00:26:33,119 --> 00:26:35,600
Speaker 5: in a timely manner. And I think kind of the

463
00:26:35,680 --> 00:26:38,880
Speaker 5: combination of those two things is really what the permitting

464
00:26:38,920 --> 00:26:40,280
Speaker 5: reforms are looking like.

465
00:26:55,600 --> 00:26:59,159
Speaker 3: So I have two questions on permitting reform, and the

466
00:26:59,200 --> 00:27:02,760
Speaker 3: first one is if we agree that speed of build

467
00:27:02,800 --> 00:27:06,560
Speaker 3: out is important here in addition to actually freeing up

468
00:27:06,640 --> 00:27:07,560
Speaker 3: the financing.

469
00:27:08,000 --> 00:27:08,840
Speaker 4: Then why didn't the.

470
00:27:08,840 --> 00:27:14,240
Speaker 3: IRA just include permitting reform from the beginning? And then secondly,

471
00:27:14,600 --> 00:27:18,800
Speaker 3: you know you mentioned NIPA, the National Environmental Policy Act.

472
00:27:19,359 --> 00:27:23,199
Speaker 3: What do we give up in permitting reform because you know,

473
00:27:23,359 --> 00:27:27,199
Speaker 3: I imagine a lot of these rules and regulations exist

474
00:27:27,520 --> 00:27:31,040
Speaker 3: for a reason, and so I would also think there

475
00:27:31,040 --> 00:27:35,040
Speaker 3: would be some sort of trade off in maybe liberalizing

476
00:27:35,080 --> 00:27:36,000
Speaker 3: some of those rules.

477
00:27:36,240 --> 00:27:38,480
Speaker 5: Yeah, let me start with the second question, and that's

478
00:27:38,680 --> 00:27:42,040
Speaker 5: it's about balancing the interests of the system. And so

479
00:27:42,600 --> 00:27:46,159
Speaker 5: the United States has gone through a history where it

480
00:27:46,320 --> 00:27:49,760
Speaker 5: just built everything and barreled through neighborhoods. And I think

481
00:27:50,080 --> 00:27:53,000
Speaker 5: Robert Moses in the forties and fifties was the great

482
00:27:53,000 --> 00:27:56,399
Speaker 5: example of this. And on one hand, he got a

483
00:27:56,400 --> 00:27:59,480
Speaker 5: lot of things built. On the other hand, he barreled

484
00:27:59,480 --> 00:28:01,840
Speaker 5: through neighbor hood's created a lot of pain and a

485
00:28:01,840 --> 00:28:07,080
Speaker 5: lot of inequitable outcomes, particularly amongst the poor and minority groups.

486
00:28:07,880 --> 00:28:09,959
Speaker 5: And so that's not the right way to do it.

487
00:28:10,160 --> 00:28:13,640
Speaker 5: But I think there's growing consensus that where we are today,

488
00:28:14,000 --> 00:28:17,680
Speaker 5: where it's very very difficult to build anything, is also

489
00:28:17,760 --> 00:28:20,640
Speaker 5: gone too far in the other extreme. So again it's

490
00:28:20,680 --> 00:28:24,600
Speaker 5: about balance neighborhoods and communities need to be heard. Objections

491
00:28:24,680 --> 00:28:27,280
Speaker 5: need to be heard and litigated. We need to find

492
00:28:27,320 --> 00:28:31,160
Speaker 5: the best way to do these projects. But we can't

493
00:28:31,240 --> 00:28:33,960
Speaker 5: let perfect be the enemy of the good. And a

494
00:28:34,000 --> 00:28:37,080
Speaker 5: lot of these times, like we need to build stuff,

495
00:28:37,240 --> 00:28:40,200
Speaker 5: we need to build transportation infrastructure, we need to build housing,

496
00:28:40,280 --> 00:28:43,280
Speaker 5: we need to build energy infrastructure, there's going to be

497
00:28:43,320 --> 00:28:46,160
Speaker 5: trade off with every project. No project is going to

498
00:28:46,160 --> 00:28:48,880
Speaker 5: be perfect, and so the question is what's the right

499
00:28:48,920 --> 00:28:52,880
Speaker 5: standard with regards to you Why weren't these in the

500
00:28:53,120 --> 00:28:56,120
Speaker 5: IRA bill And that was just you know, the congressional

501
00:28:56,440 --> 00:29:00,080
Speaker 5: rules about what could be part of reconciliation and pass

502
00:29:00,120 --> 00:29:04,320
Speaker 5: with fifty votes versus requiring sixty And the parliamentarian ruled

503
00:29:04,320 --> 00:29:09,240
Speaker 5: that permitting reform was not a financial issue and therefore

504
00:29:09,360 --> 00:29:13,719
Speaker 5: needed sixty votes, needed regular order, and so Senator Mansion,

505
00:29:14,000 --> 00:29:17,520
Speaker 5: as part of the negotiation, came to an agreement with

506
00:29:17,920 --> 00:29:21,760
Speaker 5: Leader Schumer that Schumer would bring to the floor a

507
00:29:21,800 --> 00:29:26,200
Speaker 5: permitting reform bill in the future, and that came very close.

508
00:29:26,400 --> 00:29:30,200
Speaker 5: Senator Mansion realized that it didn't have the sixty votes,

509
00:29:30,240 --> 00:29:32,320
Speaker 5: and so it never actually came to the floor, but

510
00:29:32,880 --> 00:29:35,880
Speaker 5: discussions and negotiations have been continuing ever since.

511
00:29:36,280 --> 00:29:38,640
Speaker 2: You know, I'm very fascinated by this idea that many

512
00:29:38,720 --> 00:29:44,080
Speaker 2: problems come down to one extremely motivated but small opposition.

513
00:29:44,480 --> 00:29:47,560
Speaker 2: Whether it's a community, whether it's the one percent of

514
00:29:47,640 --> 00:29:51,440
Speaker 2: people on Long Island who get into the city via car,

515
00:29:51,520 --> 00:29:54,720
Speaker 2: whatever it is, that they end up having more cloud

516
00:29:54,840 --> 00:29:56,440
Speaker 2: or influence in a way than a bunch of other

517
00:29:56,480 --> 00:29:58,360
Speaker 2: people who don't even really know about the project, or

518
00:29:58,360 --> 00:30:00,640
Speaker 2: don't think about it, or can't see it's tangible impacts

519
00:30:00,840 --> 00:30:04,080
Speaker 2: on something like permitting reform at the national level. Who

520
00:30:04,120 --> 00:30:07,840
Speaker 2: are the interests as you've identified them, making some of

521
00:30:07,880 --> 00:30:09,760
Speaker 2: these votes harder to get to the floor or get

522
00:30:09,800 --> 00:30:10,560
Speaker 2: to sixty votes.

523
00:30:10,840 --> 00:30:14,560
Speaker 5: So the environmental organizations are doing a lot of soul

524
00:30:14,600 --> 00:30:17,560
Speaker 5: searching today. I would say I've talked to a lot

525
00:30:17,600 --> 00:30:20,240
Speaker 5: of them, and it's not correct to put them all

526
00:30:20,280 --> 00:30:24,640
Speaker 5: into one grouping. There's a wide variety of them that

527
00:30:24,760 --> 00:30:27,920
Speaker 5: have varying views on this. And so you get some

528
00:30:28,120 --> 00:30:32,480
Speaker 5: very kind of moderate ones who are done the modeling

529
00:30:32,680 --> 00:30:36,520
Speaker 5: and realize that in order to get to a lower

530
00:30:36,560 --> 00:30:38,520
Speaker 5: carbon future, we're going to have to build a lot

531
00:30:38,720 --> 00:30:42,800
Speaker 5: and that requires changing some of the environmental framework. And

532
00:30:42,800 --> 00:30:45,719
Speaker 5: then you have some groups, you know, particularly you know

533
00:30:45,760 --> 00:30:49,880
Speaker 5: with the environmental justice community, who have very legitimate concerns

534
00:30:50,000 --> 00:30:53,160
Speaker 5: about how infrastructure has been built in the past and

535
00:30:53,240 --> 00:30:57,560
Speaker 5: are highly reluctant to make the process easier because they

536
00:30:57,640 --> 00:31:00,680
Speaker 5: are scared that things are going to be built in

537
00:31:00,720 --> 00:31:02,560
Speaker 5: the same way that they have in the past and

538
00:31:02,680 --> 00:31:06,400
Speaker 5: don't trust the system. And again, like there's good reason

539
00:31:06,440 --> 00:31:09,000
Speaker 5: why they should be skeptical of this, but I think

540
00:31:09,040 --> 00:31:13,800
Speaker 5: that's kind of across that spectrum. The environmental communities trying

541
00:31:13,800 --> 00:31:17,160
Speaker 5: to figure out what to do, and there has been

542
00:31:17,160 --> 00:31:19,760
Speaker 5: a lot of discussion, I will say in this community.

543
00:31:19,800 --> 00:31:23,920
Speaker 5: I again have been parts of a lot of these discussions,

544
00:31:24,720 --> 00:31:27,880
Speaker 5: and I think the trick is, how do you find

545
00:31:27,920 --> 00:31:31,360
Speaker 5: a bill that gets support from the majority of the

546
00:31:31,440 --> 00:31:35,800
Speaker 5: environmental community and also has support from industry and they

547
00:31:35,840 --> 00:31:38,239
Speaker 5: get sixty votes And the reality is, you know, it

548
00:31:38,280 --> 00:31:41,400
Speaker 5: has to get Republican votes as well as Democratic votes,

549
00:31:41,440 --> 00:31:44,360
Speaker 5: and so it has to make everything easier to build.

550
00:31:44,480 --> 00:31:48,840
Speaker 5: It cannot be a bill that just focuses on clean energy. Again,

551
00:31:49,080 --> 00:31:54,080
Speaker 5: it's impossible to virtually impossible to build an interstate pipeline today. Yeah,

552
00:31:54,080 --> 00:31:58,360
Speaker 5: there's the pause on LG export permitting that has the

553
00:31:58,400 --> 00:32:02,840
Speaker 5: industry up and armed, and so a bill that is

554
00:32:02,880 --> 00:32:07,480
Speaker 5: a compromise bill is going to make building energy infrastructure

555
00:32:07,880 --> 00:32:09,200
Speaker 5: across the board easier.

556
00:32:10,400 --> 00:32:13,840
Speaker 3: So I love talking to you about specific examples. And

557
00:32:14,040 --> 00:32:16,800
Speaker 3: I know you're based in Texas, and of course you

558
00:32:16,920 --> 00:32:19,520
Speaker 3: have an energy trading background. So I feel like we

559
00:32:19,600 --> 00:32:22,080
Speaker 3: would be remiss if we didn't ask for your thoughts

560
00:32:22,160 --> 00:32:25,840
Speaker 3: on the Texas power grid in particular, And if that's

561
00:32:25,880 --> 00:32:29,120
Speaker 3: something that has come up on your radar, either by

562
00:32:29,200 --> 00:32:32,960
Speaker 3: dint of your interest in policy or the mere fact

563
00:32:33,080 --> 00:32:35,800
Speaker 3: that you are in Texas and maybe you have experienced

564
00:32:35,960 --> 00:32:38,760
Speaker 3: some of the issues that have sprung up from various

565
00:32:38,760 --> 00:32:40,320
Speaker 3: problems in the past couple of years.

566
00:32:40,880 --> 00:32:44,479
Speaker 5: I've thought about it, and I've been part of some

567
00:32:44,560 --> 00:32:47,680
Speaker 5: of the problems that have developed. The goals of the

568
00:32:47,760 --> 00:32:51,840
Speaker 5: energy system are how do you make energy affordable, reliable,

569
00:32:52,080 --> 00:32:56,520
Speaker 5: sustainable to the environment, and secure. Now, on the energy security,

570
00:32:56,520 --> 00:32:58,880
Speaker 5: that's less of a concern for the United States because

571
00:32:59,480 --> 00:33:03,800
Speaker 5: of the quantities and diversity of the energy resource within

572
00:33:03,840 --> 00:33:08,600
Speaker 5: our boundaries. So now we think about reliability versus affordability

573
00:33:08,800 --> 00:33:12,840
Speaker 5: and environmental sustainability, and at times you can find things

574
00:33:12,880 --> 00:33:16,080
Speaker 5: that don't have trade offs in that, but sometimes there

575
00:33:16,080 --> 00:33:18,280
Speaker 5: are trade offs, and so one of the trade offs

576
00:33:18,360 --> 00:33:21,520
Speaker 5: is reliability versus affordability. Do you want to build a

577
00:33:21,560 --> 00:33:26,160
Speaker 5: system that's four nines reliable or five nines reliable and

578
00:33:26,240 --> 00:33:29,520
Speaker 5: there's a cost difference to doing so. And so different

579
00:33:29,520 --> 00:33:33,160
Speaker 5: communities really we're talking about in different states and different

580
00:33:33,640 --> 00:33:38,320
Speaker 5: INERK regions URCOT versus PGAM, for instance, have come to

581
00:33:38,400 --> 00:33:44,120
Speaker 5: different preferences on that spectrum. And I think Texas being

582
00:33:44,200 --> 00:33:47,960
Speaker 5: Texas has always prioritized being low cost, and as part

583
00:33:48,000 --> 00:33:51,040
Speaker 5: of that there's a tradeoff on some of the reliability issues.

584
00:33:51,840 --> 00:33:57,400
Speaker 5: It's been exacerbated by the enormous power demand growth that

585
00:33:57,440 --> 00:34:01,120
Speaker 5: we've seen in URKOT, so it's struggling just to keep

586
00:34:01,200 --> 00:34:05,000
Speaker 5: up with the system, and utilities now across the nation

587
00:34:05,160 --> 00:34:08,520
Speaker 5: are starting to face some of these similar challenges. There

588
00:34:08,600 --> 00:34:11,399
Speaker 5: was this fifteen year period roughly from two thousand and

589
00:34:11,600 --> 00:34:15,759
Speaker 5: seven to twenty twenty two, where load growth across the

590
00:34:15,920 --> 00:34:19,359
Speaker 5: nation was relatively flat. That kind of hid. There were

591
00:34:19,360 --> 00:34:22,719
Speaker 5: some areas that were growing like Texas slash Orcot. There

592
00:34:22,760 --> 00:34:26,359
Speaker 5: were some areas where load was actually contracting as energy

593
00:34:26,400 --> 00:34:30,400
Speaker 5: efficiency gains were happening. But utilities are now facing load

594
00:34:30,440 --> 00:34:33,759
Speaker 5: growth kind of across the board. So they're being asked

595
00:34:33,760 --> 00:34:35,680
Speaker 5: to deal with that, They're being asked to deal with

596
00:34:36,239 --> 00:34:40,520
Speaker 5: bringing more intermittent resources onto their grid and dealing with

597
00:34:40,560 --> 00:34:44,600
Speaker 5: the reliability associated with that. They're being asked to decrease

598
00:34:44,840 --> 00:34:49,080
Speaker 5: the greenhouse gas emissions on this system. And then last,

599
00:34:49,400 --> 00:34:54,000
Speaker 5: how do you not end up with significantly higher bills

600
00:34:54,040 --> 00:34:58,960
Speaker 5: to the customer. So I said, had the utilities and

601
00:34:59,080 --> 00:35:04,120
Speaker 5: the grids only been tasked with two of those challenges,

602
00:35:04,520 --> 00:35:07,480
Speaker 5: they'd be very easy. They could probably handle three. But

603
00:35:07,800 --> 00:35:10,520
Speaker 5: doing all four at once right now, which is what

604
00:35:10,640 --> 00:35:15,120
Speaker 5: most utilities are facing, especially in Texas, has been an

605
00:35:15,320 --> 00:35:18,879
Speaker 5: enormous challenge and I think it carries enormous risks, and

606
00:35:18,960 --> 00:35:21,919
Speaker 5: that's the reason why we need to build a lot

607
00:35:21,960 --> 00:35:24,640
Speaker 5: of energy infrastructure in this country. Otherwise they're going to

608
00:35:24,640 --> 00:35:28,200
Speaker 5: be very significant broundouts and blockouts in this decade and

609
00:35:28,280 --> 00:35:29,040
Speaker 5: nobody wants that.

610
00:35:29,200 --> 00:35:33,200
Speaker 2: A rare quadrilemma that will it sounds like I want

611
00:35:33,200 --> 00:35:36,560
Speaker 2: to pivot a little bit to housing. And you know,

612
00:35:36,640 --> 00:35:39,200
Speaker 2: there are a lot of people, particularly on the internet

613
00:35:39,239 --> 00:35:41,920
Speaker 2: that you know, the MBI's and you know, permitting and

614
00:35:42,000 --> 00:35:43,960
Speaker 2: all this stuff. We've got to build more and build

615
00:35:43,960 --> 00:35:47,239
Speaker 2: more vertically and you know, let's just have one staircase

616
00:35:47,239 --> 00:35:51,200
Speaker 2: and a multifamily building instead of two, et cetera. When

617
00:35:51,200 --> 00:35:53,919
Speaker 2: you look at the overall like the cost of affordability,

618
00:35:53,920 --> 00:35:57,399
Speaker 2: whether it's rent, et cetera, how much do you attribute

619
00:35:57,719 --> 00:36:03,200
Speaker 2: of that to various regional and local permitting policies versus

620
00:36:03,320 --> 00:36:07,640
Speaker 2: other aspects of the housing economics industry that don't automatically

621
00:36:07,680 --> 00:36:09,520
Speaker 2: sort of create abundant housing.

622
00:36:10,040 --> 00:36:12,319
Speaker 5: It's a combination of the two. And I think there's

623
00:36:12,520 --> 00:36:16,640
Speaker 5: no one solution that makes housing affordable tomorrow. It's an

624
00:36:16,800 --> 00:36:21,440
Speaker 5: enormous system that even aggressive legislative changes are going to

625
00:36:21,480 --> 00:36:24,200
Speaker 5: take a lot of time to work their way through

626
00:36:24,200 --> 00:36:28,320
Speaker 5: the system. You're constrained by the supply chain of building houses,

627
00:36:28,360 --> 00:36:31,480
Speaker 5: which includes labor, includes the number of home builders, includes

628
00:36:31,560 --> 00:36:35,319
Speaker 5: kind of the financing available, etc. But I think there

629
00:36:35,360 --> 00:36:39,160
Speaker 5: is this question of does the ability to build housing

630
00:36:39,200 --> 00:36:43,640
Speaker 5: reduce housing costs? And I think you can find examples

631
00:36:43,920 --> 00:36:47,600
Speaker 5: where that might not be true. I think there are

632
00:36:47,600 --> 00:36:53,400
Speaker 5: some very narrow instances. I think Bay Area might be

633
00:36:53,480 --> 00:36:55,920
Speaker 5: one of those where if you build another one hundred

634
00:36:56,000 --> 00:36:58,520
Speaker 5: units of housing, does that just create more jobs than

635
00:36:58,600 --> 00:37:02,319
Speaker 5: create more demand for house? That's true in this very

636
00:37:02,400 --> 00:37:06,080
Speaker 5: narrow sense if you're just looking at one community doing

637
00:37:06,120 --> 00:37:09,240
Speaker 5: a thing, and I think that brings back this broader

638
00:37:09,320 --> 00:37:12,880
Speaker 5: question of you know, what's the role and responsibility of

639
00:37:12,920 --> 00:37:18,600
Speaker 5: an individual town or city on building workforce housing. And

640
00:37:18,680 --> 00:37:22,040
Speaker 5: I think what the kind of game theory will show

641
00:37:22,280 --> 00:37:26,800
Speaker 5: is every community wants the community next door to build

642
00:37:26,800 --> 00:37:31,080
Speaker 5: that house. They want to maintain their sense of community.

643
00:37:31,680 --> 00:37:34,720
Speaker 5: They don't want change, you know, kind of the status

644
00:37:34,800 --> 00:37:38,839
Speaker 5: quo bias kicks in and everybody says like, yes, we

645
00:37:38,880 --> 00:37:42,400
Speaker 5: need more affordable housing, more workforce housing, more housing in general,

646
00:37:43,000 --> 00:37:46,919
Speaker 5: build it next town over. Now, if every town says that,

647
00:37:47,600 --> 00:37:50,239
Speaker 5: then you got a problem. And this is why I

648
00:37:50,239 --> 00:37:52,920
Speaker 5: think there's a role for the states to step in.

649
00:37:52,960 --> 00:37:55,520
Speaker 5: And this is what you've seen in California where we

650
00:37:55,680 --> 00:37:59,520
Speaker 5: can't count on individual towns and cities to solve this

651
00:37:59,600 --> 00:38:03,240
Speaker 5: problem on their own because the incentives just don't align

652
00:38:03,520 --> 00:38:07,400
Speaker 5: with the needs of people of society. But from the

653
00:38:07,440 --> 00:38:10,319
Speaker 5: bigger picture from the state of California, they're looking in

654
00:38:10,440 --> 00:38:15,240
Speaker 5: saying the economic vitality of our state is dependent upon

655
00:38:16,040 --> 00:38:19,360
Speaker 5: getting more people to come to the state and not

656
00:38:19,520 --> 00:38:23,400
Speaker 5: just have this aging population that creates a lot of

657
00:38:23,400 --> 00:38:27,640
Speaker 5: problems with workforce and with the needs of aging populations,

658
00:38:28,360 --> 00:38:32,400
Speaker 5: and so it is vital to the economic vitality in

659
00:38:32,520 --> 00:38:35,239
Speaker 5: order to build more housing in California, and therefore there

660
00:38:35,280 --> 00:38:39,600
Speaker 5: needs to be state rules and mandates and incentives that

661
00:38:39,680 --> 00:38:40,640
Speaker 5: get you to that answer.

662
00:38:41,320 --> 00:38:43,920
Speaker 3: I'm going to play like I guess a bonus round

663
00:38:44,160 --> 00:38:47,000
Speaker 3: of odd lots type stuff where I just ask you

664
00:38:47,040 --> 00:38:49,880
Speaker 3: about various things that have come up on the podcast

665
00:38:49,920 --> 00:38:54,920
Speaker 3: as problematic before and going back to Texas ties, I

666
00:38:54,920 --> 00:38:57,719
Speaker 3: feel like I have to ask the Jones Act, is

667
00:38:57,760 --> 00:39:02,120
Speaker 3: that something that you would ever consider getting interested in.

668
00:39:03,080 --> 00:39:07,120
Speaker 5: As a longtime listener of the podcast, I can attest

669
00:39:07,160 --> 00:39:10,200
Speaker 5: to the number of times as has come up. It's

670
00:39:10,239 --> 00:39:12,560
Speaker 5: one where I don't see the political viability and really

671
00:39:12,600 --> 00:39:16,960
Speaker 5: stayed away. Say more, unions are very much against repeal

672
00:39:17,040 --> 00:39:18,960
Speaker 5: of the Jones Act, and I think there is a

673
00:39:19,040 --> 00:39:25,080
Speaker 5: sense that we need a shipbuilding industry for national defense purposes,

674
00:39:25,520 --> 00:39:29,600
Speaker 5: for unforeseen events in the future, and therefore in order

675
00:39:29,640 --> 00:39:33,200
Speaker 5: to have one, you have to kind of subsidize one

676
00:39:33,280 --> 00:39:37,040
Speaker 5: because we are not competitive building ships in America visa

677
00:39:37,120 --> 00:39:40,359
Speaker 5: v rest of the world. So therefore we can either

678
00:39:40,400 --> 00:39:44,520
Speaker 5: create large subsidies or mandates and we've chosen to do

679
00:39:44,680 --> 00:39:48,439
Speaker 5: the latter and create this mandate that any intra US

680
00:39:48,520 --> 00:39:51,359
Speaker 5: shipping has to be on a US flag vessel kind

681
00:39:51,400 --> 00:39:54,680
Speaker 5: of built in the US, and therefore we have some

682
00:39:54,800 --> 00:39:57,280
Speaker 5: resemblance of a shipbuilding industry in the country.

683
00:39:57,440 --> 00:40:01,600
Speaker 2: Would we have more success we paired that mandate with

684
00:40:02,080 --> 00:40:04,799
Speaker 2: subsidies or maybe just like a big public program or

685
00:40:04,880 --> 00:40:08,760
Speaker 2: using the Navy or whatever to just construct more Jones

686
00:40:08,840 --> 00:40:10,400
Speaker 2: Act compliance ships.

687
00:40:10,160 --> 00:40:14,040
Speaker 5: It would be difficult. I mean a lot of things.

688
00:40:14,080 --> 00:40:17,520
Speaker 5: Now the federal government has decided just to subsidize mm hmm.

689
00:40:17,640 --> 00:40:19,760
Speaker 5: And again, like you can either use sticks or carrots

690
00:40:20,080 --> 00:40:23,640
Speaker 5: in order to change behavior. And you know, Ira was

691
00:40:23,680 --> 00:40:26,360
Speaker 5: a great example where ninety nine percent of the provisions

692
00:40:26,360 --> 00:40:29,360
Speaker 5: and there are carrots. There's a methane fee that's a stick.

693
00:40:29,840 --> 00:40:32,440
Speaker 5: But on the Jones Act, it's tended to be on

694
00:40:32,640 --> 00:40:35,759
Speaker 5: the stick side. Given where the federal debt and death

695
00:40:35,840 --> 00:40:38,799
Speaker 5: sit are and the long term risks associated with that,

696
00:40:39,440 --> 00:40:43,719
Speaker 5: I'm not a strong advocate of doing more subsidies to industry.

697
00:40:44,600 --> 00:40:48,120
Speaker 2: I just have one more question, but can you tell

698
00:40:48,200 --> 00:40:54,360
Speaker 2: us about cross state baseball card trading arbitrage.

699
00:40:53,800 --> 00:40:57,080
Speaker 5: Turns out people in New York and Canada like hockey

700
00:40:57,080 --> 00:41:00,000
Speaker 5: cards much more than people in Texas. Okay, at least

701
00:41:00,200 --> 00:41:04,120
Speaker 5: in the late eighties early nineties. I was a baseball

702
00:41:04,120 --> 00:41:08,200
Speaker 5: card collector when I was twelve, thirteen, fourteen, and you know,

703
00:41:08,239 --> 00:41:10,840
Speaker 5: it was never really that into the individual cards, but

704
00:41:11,040 --> 00:41:15,520
Speaker 5: was very interested in the business of cards.

705
00:41:15,760 --> 00:41:18,040
Speaker 2: I just like, it's just so perfect. It's like, go

706
00:41:18,200 --> 00:41:21,480
Speaker 2: on into like billionaire energy trader. I wasn't really interested

707
00:41:21,520 --> 00:41:24,160
Speaker 2: in the players or whatever, but got really interested in

708
00:41:24,200 --> 00:41:26,480
Speaker 2: the business and pricing of cards. But go on, go on,

709
00:41:26,560 --> 00:41:27,399
Speaker 2: tell it, tell us the rest.

710
00:41:27,520 --> 00:41:31,040
Speaker 5: Yeah, yeah, and so yeah, this was kind of a

711
00:41:31,080 --> 00:41:35,040
Speaker 5: little boom period that happened late eighties early nineties in

712
00:41:35,160 --> 00:41:38,440
Speaker 5: the sports card industry. Kind of very much a bubble

713
00:41:38,520 --> 00:41:41,759
Speaker 5: ended up being created. But there was a time when

714
00:41:42,200 --> 00:41:46,600
Speaker 5: prices were very volatile. There was rising prices in general,

715
00:41:47,040 --> 00:41:51,200
Speaker 5: but most importantly, there was kind of information asymmetries and

716
00:41:51,239 --> 00:41:54,800
Speaker 5: so kind of what a lot of the dealers knew

717
00:41:55,280 --> 00:41:59,240
Speaker 5: was just their local market. You know, the Texas Rangers

718
00:41:59,239 --> 00:42:02,959
Speaker 5: baseball cards would sell better in Dallas than hockey cards

719
00:42:03,000 --> 00:42:06,280
Speaker 5: would sell in Dallas, and so they priced them as such.

720
00:42:07,320 --> 00:42:11,200
Speaker 5: And meanwhile you found other markets that were you had

721
00:42:11,200 --> 00:42:15,160
Speaker 5: the inverse and so I kind of created almost geographic

722
00:42:15,239 --> 00:42:18,640
Speaker 5: arbitrage and had figured out a way through some of

723
00:42:18,719 --> 00:42:23,080
Speaker 5: the early bulletin boards on the Internet of being able

724
00:42:23,160 --> 00:42:26,840
Speaker 5: to be on top of what both national pricing was

725
00:42:26,880 --> 00:42:31,319
Speaker 5: as well as regional pricing disparities kind of across the

726
00:42:31,560 --> 00:42:35,120
Speaker 5: sports card market. And as I was in high school,

727
00:42:35,520 --> 00:42:38,400
Speaker 5: this was kind of my evening and weekend job to

728
00:42:39,440 --> 00:42:42,719
Speaker 5: make a few bucks, and it ended up being pretty profitable.

729
00:42:43,360 --> 00:42:46,480
Speaker 3: Geographic disparities. It sounds a bit like energy trading and

730
00:42:46,520 --> 00:42:47,080
Speaker 3: the grid.

731
00:42:47,280 --> 00:42:49,080
Speaker 5: It's a lot like energy trading.

732
00:42:50,000 --> 00:42:54,319
Speaker 3: I have just one more question, and it relates to,

733
00:42:54,760 --> 00:42:58,239
Speaker 3: I guess a sort of provocative point, but an important

734
00:42:58,280 --> 00:43:02,400
Speaker 3: one and one that I'm sure you've addressed before. But

735
00:43:02,520 --> 00:43:04,480
Speaker 3: I think it's fair to say that there is some

736
00:43:04,719 --> 00:43:10,759
Speaker 3: public distrust of billionaires getting into policy making, and we

737
00:43:10,760 --> 00:43:14,680
Speaker 3: can maybe go into why that that's happened. But I'm

738
00:43:14,719 --> 00:43:18,720
Speaker 3: sure you might reply that your sort of evidence based

739
00:43:18,920 --> 00:43:23,560
Speaker 3: approach maybe differentiates you from some others. But even when

740
00:43:23,600 --> 00:43:28,560
Speaker 3: you're taking a more rigorous scientific methodology to addressing some

741
00:43:28,680 --> 00:43:32,160
Speaker 3: of these large scale problems in the American economy and

742
00:43:32,239 --> 00:43:34,200
Speaker 3: you're looking at all the evidence, it feels like there's

743
00:43:34,200 --> 00:43:38,320
Speaker 3: still a question over who gets to decide. I guess

744
00:43:38,680 --> 00:43:42,040
Speaker 3: what evidence matters. And this is maybe where you get

745
00:43:42,040 --> 00:43:45,279
Speaker 3: into questions of unfairness or the idea of like why

746
00:43:45,280 --> 00:43:48,040
Speaker 3: do billionaires get to say that this is the thing

747
00:43:48,120 --> 00:43:50,080
Speaker 3: that we should be looking at, other thing we should

748
00:43:50,080 --> 00:43:52,719
Speaker 3: be paying attention to. What would be your response to

749
00:43:52,840 --> 00:43:54,239
Speaker 3: those sort of criticisms.

750
00:43:54,960 --> 00:43:57,920
Speaker 5: So I think it's a very fair take and that

751
00:43:58,360 --> 00:44:01,120
Speaker 5: we need to think about what our role is in

752
00:44:01,160 --> 00:44:05,840
Speaker 5: society and why, because we have resources, you know, why

753
00:44:05,840 --> 00:44:07,680
Speaker 5: do we get to play in some of these areas.

754
00:44:08,239 --> 00:44:12,000
Speaker 5: And I think about the counterfactual and that again, a

755
00:44:12,040 --> 00:44:15,320
Speaker 5: lot of our role we see is providing tension systems

756
00:44:15,600 --> 00:44:20,320
Speaker 5: that if we were not involved in the healthcare system,

757
00:44:20,400 --> 00:44:24,040
Speaker 5: in higher ed system, in infrastructure and criminal justice and

758
00:44:24,280 --> 00:44:28,120
Speaker 5: electoral reform and energy and all these areas, the ones

759
00:44:28,160 --> 00:44:31,080
Speaker 5: who would have the political power, the ones who would

760
00:44:31,120 --> 00:44:35,320
Speaker 5: be funding the lobbies and have the political strategy, would

761
00:44:35,520 --> 00:44:40,240
Speaker 5: solely be in some cases those with an economic incentive

762
00:44:41,000 --> 00:44:44,080
Speaker 5: of the system. And so the one thing we bring

763
00:44:44,520 --> 00:44:50,040
Speaker 5: is that we don't have financial incentive or financial conflict

764
00:44:50,680 --> 00:44:55,520
Speaker 5: on things that we're advocating for, whereas almost everybody else

765
00:44:55,600 --> 00:44:59,320
Speaker 5: in DC or a state legislature who's out there lobbying.

766
00:44:59,400 --> 00:45:01,719
Speaker 5: The reason they are paying a lobbyist, the reason they're

767
00:45:01,760 --> 00:45:05,360
Speaker 5: investing that money is exactly because they have a financial

768
00:45:05,400 --> 00:45:08,480
Speaker 5: stake in the system that they're trying to protect. And

769
00:45:08,520 --> 00:45:12,480
Speaker 5: so we're providing that tension in the system. And we

770
00:45:12,520 --> 00:45:15,960
Speaker 5: are not the ultimate arbiters, right the politicians. The political

771
00:45:16,000 --> 00:45:21,480
Speaker 5: system decides, but they should have all the facts. Whenever

772
00:45:21,600 --> 00:45:26,080
Speaker 5: the politician, whenever the policy makers are making the decisions

773
00:45:26,080 --> 00:45:29,640
Speaker 5: are passing laws, they should get kind of the full

774
00:45:29,680 --> 00:45:32,840
Speaker 5: scope and have as much information as they can. And

775
00:45:32,920 --> 00:45:34,160
Speaker 5: I think that's what our role is.

776
00:45:34,760 --> 00:45:37,680
Speaker 2: John Arnold, so great to have you. Really appreciate you

777
00:45:37,760 --> 00:45:40,160
Speaker 2: taking the time. Thank you for coming on odd Law.

778
00:45:40,360 --> 00:45:40,640
Speaker 4: Great.

779
00:45:40,800 --> 00:45:56,920
Speaker 2: Thank you, Tracy. I found that to be a great conversation.

780
00:45:57,040 --> 00:46:00,480
Speaker 2: I feel like this idea of like interest asymme tree

781
00:46:00,600 --> 00:46:02,600
Speaker 2: is sort of at the heart and it's obvious in

782
00:46:02,640 --> 00:46:05,280
Speaker 2: some sense, but it's like as a sort of framework

783
00:46:05,360 --> 00:46:08,680
Speaker 2: to think about the difficulty in doing things, like a

784
00:46:08,760 --> 00:46:12,680
Speaker 2: very useful idea. You know, I on a day to

785
00:46:12,760 --> 00:46:15,920
Speaker 2: day basis, I wasn't really thinking that much about the

786
00:46:15,960 --> 00:46:20,600
Speaker 2: congestion pricing thing. But I'm sure that the representatives of

787
00:46:20,800 --> 00:46:22,960
Speaker 2: you know, the various neighborhoods in Long Island where you

788
00:46:23,040 --> 00:46:25,480
Speaker 2: might have a lot of working class commuters or people

789
00:46:25,480 --> 00:46:28,359
Speaker 2: in trades having to come in on their vans, were

790
00:46:28,400 --> 00:46:32,400
Speaker 2: extremely motivated by this particular question.

791
00:46:32,480 --> 00:46:35,440
Speaker 3: Oh absolutely, you know. The thing I thought was interesting

792
00:46:35,840 --> 00:46:40,480
Speaker 3: was the example of the filings against proposed sites and

793
00:46:40,520 --> 00:46:43,520
Speaker 3: the idea that I think everyone has this like sense

794
00:46:43,600 --> 00:46:46,960
Speaker 3: that things have become more complex, and there might be

795
00:46:47,040 --> 00:46:50,000
Speaker 3: various reasons behind it, but one of them surely has

796
00:46:50,080 --> 00:46:54,960
Speaker 3: to be that people are getting better every day at

797
00:46:55,000 --> 00:46:58,640
Speaker 3: just dealing with the existing system, and so you see

798
00:46:58,680 --> 00:47:03,919
Speaker 3: things like more sophisticated legal strategies where instead of unloading

799
00:47:04,080 --> 00:47:08,800
Speaker 3: a bunch of protestations or counterclaims against one particular project

800
00:47:08,840 --> 00:47:12,520
Speaker 3: at one moment in time, you get that slow drip

801
00:47:12,640 --> 00:47:16,000
Speaker 3: process of filings which ends up gumming up the system.

802
00:47:16,480 --> 00:47:19,520
Speaker 3: And it is reasonable to say, like, I don't think

803
00:47:19,560 --> 00:47:23,920
Speaker 3: we've seen a good response to those more sophisticated strategies

804
00:47:23,920 --> 00:47:25,640
Speaker 3: that are aimed at gaming the system.

805
00:47:26,160 --> 00:47:30,279
Speaker 2: Tracy, have you ever seen that website wtf happened in

806
00:47:30,360 --> 00:47:31,719
Speaker 2: nineteen seventy one.

807
00:47:33,200 --> 00:47:35,560
Speaker 3: I've never looked at it, but I've heard of it.

808
00:47:35,600 --> 00:47:38,759
Speaker 2: So it's like basically this whole thing of like life

809
00:47:38,840 --> 00:47:42,040
Speaker 2: started getting more expensive and a bunch of stuff going downhill.

810
00:47:42,160 --> 00:47:46,200
Speaker 2: And the conceit of the website is that nineteen seventy

811
00:47:46,239 --> 00:47:48,800
Speaker 2: one is when Nixon took us off the gold standard,

812
00:47:49,160 --> 00:47:51,840
Speaker 2: and so it's like, oh, if we only returned to gold,

813
00:47:52,040 --> 00:47:53,719
Speaker 2: then you know, all these lines would go in the

814
00:47:53,719 --> 00:47:57,200
Speaker 2: other direction. But I think it's also very interesting that

815
00:47:57,200 --> 00:48:00,640
Speaker 2: that was exactly also the time when and some of

816
00:48:00,680 --> 00:48:05,200
Speaker 2: these big NIPA and other related permitting things first started

817
00:48:05,200 --> 00:48:08,200
Speaker 2: getting kicked into gear that three years that he identified

818
00:48:08,280 --> 00:48:11,799
Speaker 2: nineteen seventy to nineteen seventy three. And I would just

819
00:48:12,160 --> 00:48:14,880
Speaker 2: put forth that if you are very sort of like

820
00:48:15,200 --> 00:48:17,280
Speaker 2: obsessed with the idea that a bunch of things started

821
00:48:17,320 --> 00:48:20,080
Speaker 2: changing in nineteen seventy, maybe do with something on the

822
00:48:20,120 --> 00:48:23,360
Speaker 2: monetary side, but it might also be worth looking into

823
00:48:23,600 --> 00:48:27,200
Speaker 2: how policies that affected the cost of construction, cost of energy,

824
00:48:27,239 --> 00:48:29,719
Speaker 2: et cetera also changed during that exact time.

825
00:48:29,920 --> 00:48:32,600
Speaker 3: You know, you need Joe, you need John Arnold to

826
00:48:32,719 --> 00:48:36,640
Speaker 3: spend a bunch of money rigorously testing the theory that

827
00:48:36,719 --> 00:48:39,000
Speaker 3: nineteen seventy one changed everything.

828
00:48:38,800 --> 00:48:40,879
Speaker 2: Or he could just buy the website and just changed

829
00:48:40,920 --> 00:48:42,719
Speaker 2: the entire premise of the website. So a bunch of

830
00:48:42,760 --> 00:48:44,280
Speaker 2: people go there and get different ideas.

831
00:48:44,360 --> 00:48:46,239
Speaker 4: That too, All right, shall we leave it there.

832
00:48:46,280 --> 00:48:47,000
Speaker 2: Let's leave it there.

833
00:48:47,200 --> 00:48:49,960
Speaker 3: This has been another episode of the All Thoughts podcast.

834
00:48:50,040 --> 00:48:52,920
Speaker 3: I'm Tracy Alloway. You can follow me at Tracy Alloway.

835
00:48:53,120 --> 00:48:55,719
Speaker 2: I'm Joe Wisenthal. You can follow me at the Stalwart.

836
00:48:55,960 --> 00:49:00,080
Speaker 2: Follow our guest John Arnold, He's at John Arnold FND.

837
00:49:00,719 --> 00:49:03,200
Speaker 2: I think that stands for a foundation. Follow our producers

838
00:49:03,280 --> 00:49:06,560
Speaker 2: Carmen Rodriguez at Carmen Arman, dash Ol Bennett at Dashbot

839
00:49:06,560 --> 00:49:09,440
Speaker 2: and Kilbrooks at Kilbrooks. And thank you to our producer

840
00:49:09,480 --> 00:49:12,560
Speaker 2: Moses Ondem. More odd Loots content go to Bloomberg dot

841
00:49:12,560 --> 00:49:15,120
Speaker 2: com slash odd Lots, where we have transcripts, a blog

842
00:49:15,200 --> 00:49:17,560
Speaker 2: and a newsletter and you can chaut about all of

843
00:49:17,560 --> 00:49:19,960
Speaker 2: these topics twenty four to seven in the discord with

844
00:49:20,080 --> 00:49:23,360
Speaker 2: fellow listeners Discord dot gg slash odd Lots.

845
00:49:23,680 --> 00:49:26,359
Speaker 3: And if you enjoy odd Lots, if you want us

846
00:49:26,400 --> 00:49:29,359
Speaker 3: perhaps to do an episode on why everything started going

847
00:49:29,360 --> 00:49:32,200
Speaker 3: wrong in nineteen seventy one, then please leave us a

848
00:49:32,239 --> 00:49:36,120
Speaker 3: positive review on your favorite podcast platform. And remember, if

849
00:49:36,160 --> 00:49:38,560
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850
00:49:38,560 --> 00:49:41,759
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851
00:49:41,760 --> 00:49:45,279
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852
00:49:45,400 --> 00:49:47,880
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853
00:49:47,960 --> 00:50:07,840
Speaker 3: Apple Podcasts and follow the instructions there. Thanks for listening

854
00:50:01,040 --> 00:50:01,080
Speaker 3: in