WEBVTT - John Arnold on Why It's So Hard To Build Things in America 0:00:02.960 --> 0:00:17.200 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:19.400 --> 0:00:23.360 Hello and welcome to another episode of the Odd Lots podcast. 0:00:23.440 --> 0:00:25.840 I'm Joe Wisenthal and I'm Tracy Alloway. 0:00:26.239 --> 0:00:31.120 Tracy, we're recording this on June sixth, and yesterday we 0:00:31.240 --> 0:00:35.320 got the news of New York City Governor Kathy Hochel 0:00:35.800 --> 0:00:40.560 permanently putting a pause on a proposed congestion tax people 0:00:40.680 --> 0:00:42.960 driving into the City of Manhattan from the outer boroughs 0:00:43.040 --> 0:00:45.280 or other states. And I have to say, like reading 0:00:45.320 --> 0:00:47.440 about the whole thing like it kind of depresses me. 0:00:48.159 --> 0:00:49.880 It's crazy that story. 0:00:49.920 --> 0:00:52.080 I'm sorry, but Joe saw me kind of going off 0:00:52.080 --> 0:00:55.560 on this in an internal chat room yesterday when the 0:00:55.600 --> 0:00:59.000 news kind of filtered out. But regardless of where you 0:00:59.080 --> 0:01:03.279 sit on the ingestion pricing debate, I think we can 0:01:03.320 --> 0:01:07.560 all agree that a last minute you turn, after years 0:01:07.600 --> 0:01:11.080 and years and years of public consultation, all this matter, 0:01:11.520 --> 0:01:14.880 after the installation of the machines that we're supposed to 0:01:15.160 --> 0:01:19.120 take photos of everyone's license plate and actually get the fees, 0:01:19.560 --> 0:01:23.240 that this is not an ideal outcome to actually cancel 0:01:23.319 --> 0:01:25.960 the plans two weeks before they were supposed to go 0:01:26.000 --> 0:01:26.640 into effect. 0:01:27.120 --> 0:01:27.360 Yeah. 0:01:27.400 --> 0:01:31.360 Look, I'm a neutral journalist at a mainstream publication, so 0:01:31.440 --> 0:01:34.480 I have no opinions on policy. Ever, it is not 0:01:34.560 --> 0:01:37.280 my job. But it does seem to me that there's 0:01:37.280 --> 0:01:39.960 something wrong if you spend like probably one hundred million 0:01:40.080 --> 0:01:43.640 dollars in studies and you talk about something for sixteen 0:01:43.800 --> 0:01:46.840 years and you have all these things and then it's 0:01:46.840 --> 0:01:49.600 like at the end, it's like nah, and it's like 0:01:49.960 --> 0:01:52.680 how do we like build anything in this country? 0:01:53.120 --> 0:01:54.000 It's just surreal. 0:01:54.400 --> 0:01:56.080 Sorry, the more I think about it, the more I 0:01:56.280 --> 0:01:59.440 just like start laughing and then kind of crying as well. 0:01:59.600 --> 0:02:00.960 It's it's crazy. 0:02:01.280 --> 0:02:02.960 But of course this comes up all the time in 0:02:03.040 --> 0:02:05.960 so many episodes we do, whether it's around housing, or 0:02:05.960 --> 0:02:10.040 whether it's about electrification, or whether it's about installing offshore wind, 0:02:10.400 --> 0:02:14.160 whatever it is. It seems like there is a major 0:02:14.280 --> 0:02:17.480 problem in this country about like how long it takes 0:02:17.480 --> 0:02:20.040 to plan things, how long it takes to get permits 0:02:20.080 --> 0:02:22.840 for things, the cost of construction. The crazy thing with 0:02:22.919 --> 0:02:25.639 the congestion text, it wasn't even like a construction thing. 0:02:25.680 --> 0:02:27.920 You know, it's literally just tolls. It's not like they 0:02:27.919 --> 0:02:30.760 had like build some new bridges and you know, demolish 0:02:31.160 --> 0:02:31.880 tens of thousands. 0:02:31.919 --> 0:02:33.520 Well, they still spend a lot of money on it. 0:02:33.560 --> 0:02:35.360 But yes, I take the point. It's not like they 0:02:35.360 --> 0:02:37.920 were building a new highway that would go through you know, 0:02:38.080 --> 0:02:39.680 some neighborhoods or something like that. 0:02:39.600 --> 0:02:43.120 Right, right, It's also crazy to me anyway, I do think, like, 0:02:43.240 --> 0:02:45.280 you know, this recurring question of like why is it 0:02:45.400 --> 0:02:48.359 so hard to build stuff or just actually like take 0:02:48.400 --> 0:02:51.960 any decisive policy towards anything, seems like a real problem. 0:02:52.120 --> 0:02:52.280 Oh. 0:02:52.360 --> 0:02:56.000 Absolutely, And even though this particular issue I think we 0:02:56.080 --> 0:02:59.000 can all agree was very contentious, there. 0:02:58.880 --> 0:03:01.440 Are people who feel wrongly on both sides. 0:03:01.639 --> 0:03:05.960 There are other things that I think have more collective 0:03:06.080 --> 0:03:10.360 public support and maybe certainly bipartisan support. So I think 0:03:10.680 --> 0:03:14.960 most of Americans, most politicians would agree, for instance, that 0:03:15.080 --> 0:03:18.560 housing supply is kind of a bipart is an issue now. 0:03:18.840 --> 0:03:21.920 But even on something like that where everyone kind of 0:03:21.919 --> 0:03:25.360 agrees like, yes, this is a problem, we need more supply, 0:03:25.600 --> 0:03:28.720 we need places for people to actually live, there are 0:03:28.800 --> 0:03:32.240 all these questions about how you actually decide where to 0:03:32.280 --> 0:03:35.840 put those houses, and then even more controversially, how do 0:03:35.880 --> 0:03:39.880 you fund that, Like what does support for real estate 0:03:40.000 --> 0:03:42.880 residential real estate actually look like? Where does the financing 0:03:42.920 --> 0:03:44.960 come from. How do you structure that? Is it the 0:03:44.960 --> 0:03:48.120 form of subsidies, is it the form of incentives? Is 0:03:48.120 --> 0:03:51.440 it public private partnerships. It just seems like there are 0:03:51.520 --> 0:03:54.360 so many points in the process at which you can 0:03:54.440 --> 0:03:55.920 kind of like get stuck. 0:03:56.600 --> 0:03:59.280 So many, so many Anyway, I'm really excited because we 0:03:59.360 --> 0:04:02.040 do have the guest today. We're going to be speaking 0:04:02.080 --> 0:04:05.960 with someone who is extremely interested in this topic and 0:04:06.040 --> 0:04:08.800 sort of puts his money where his mouth is, spends 0:04:08.840 --> 0:04:11.480 a lot of money researching and trying to think up 0:04:11.720 --> 0:04:14.240 solutions to some of these things. We're going to be 0:04:14.280 --> 0:04:17.520 speaking with John Arnold. He's the co chair of Arnold Ventures. 0:04:17.920 --> 0:04:22.080 Prior to that, he was a famed energy trader, made 0:04:22.080 --> 0:04:25.560 his fortune at Centaurus Energy. Prior to that, I learned 0:04:25.600 --> 0:04:28.320 he was the recipient of the single biggest cash bonus 0:04:28.360 --> 0:04:30.560 when he was a trader at Enron, where he was 0:04:30.600 --> 0:04:33.640 not accused of any wrongdoing a bunch of people there 0:04:33.760 --> 0:04:37.159 obviously were. And now he is a philanthropy co chair 0:04:37.320 --> 0:04:39.919 Ernold Ventures, as I mentioned that, among many other things, 0:04:40.040 --> 0:04:43.240 works on problems like this. In fact, they do a 0:04:43.279 --> 0:04:46.760 lot of health, criminal justice, higher ed public finance, all 0:04:46.800 --> 0:04:49.520 of which could probably make for a great specific episode 0:04:49.560 --> 0:04:52.200 of the podcast. John, thank you so much for coming 0:04:52.240 --> 0:04:52.880 on out Laws. 0:04:53.360 --> 0:04:56.360 It's a great honor to be on my favorite financial podcast. 0:04:56.520 --> 0:04:57.240 Hi, thank you. 0:04:57.440 --> 0:04:59.640 I'm skeptical favorite, but thank you. 0:05:00.960 --> 0:05:03.000 Just accept the compliments show and move on. 0:05:03.360 --> 0:05:06.240 We'll take it. So we're going to get into all 0:05:06.279 --> 0:05:09.200 this permitting. And you had a great tweet yesterday. Actually 0:05:09.560 --> 0:05:13.560 you did a little mini history of the congestion pricing 0:05:13.920 --> 0:05:16.719 in a tweet. Starting in two thousand and seven, Mayor 0:05:16.800 --> 0:05:20.120 proposes worded FED grant two thousand and eight, plants finalized 0:05:20.160 --> 0:05:22.560 two thousand and eight to twenty seventeen in stalllah blah 0:05:22.600 --> 0:05:26.840 blah blah, environmental assessment, another delay, another delay, and now 0:05:26.920 --> 0:05:28.919 the indefinite delay. I want to get into all that, 0:05:29.240 --> 0:05:32.320 but before we do, there are a lot of billionaires 0:05:32.360 --> 0:05:35.120 who want to give away their money and have philanthropies, 0:05:35.160 --> 0:05:38.320 et cetera. I get the impression that Arnold Ventures tries 0:05:38.400 --> 0:05:42.240 to solve these problems sort of differently, or try to 0:05:42.480 --> 0:05:44.760 have a novel approach to giving your money away. What 0:05:44.880 --> 0:05:47.080 is the sort of driving philosophy behind what you do? 0:05:47.560 --> 0:05:50.000 Yeah, it might be good to start at the beginning 0:05:50.040 --> 0:05:52.760 of our phone tropy efforts. My wife, Laura, and I 0:05:52.800 --> 0:05:55.599 came out of professional careers from the private sector. I 0:05:55.680 --> 0:05:57.920 was in energy trading for seventeen years. Kind of got 0:05:57.920 --> 0:06:01.080 burnt out after those seven teen years. My wife was 0:06:01.080 --> 0:06:03.760 an m and a lawyer. She kind of got burnt out. 0:06:03.880 --> 0:06:06.880 And we had this fledgeling foundation at the time that 0:06:07.000 --> 0:06:10.479 was doing work in mostly in K twelve reform efforts, 0:06:10.520 --> 0:06:12.160 and I think a lot of people from the financial 0:06:12.200 --> 0:06:14.680 sector kind of got involved in those efforts in the 0:06:14.720 --> 0:06:17.880 two thousands, and then after two thousand and eight, we 0:06:18.320 --> 0:06:21.839 got very interested in the public pension crisis that was happening. 0:06:21.920 --> 0:06:25.160 Both the funding design and benefit design we viewed as 0:06:25.200 --> 0:06:27.760 flawed and started working in that area. And then we 0:06:27.839 --> 0:06:31.000 got interested in criminal justice reform, and we stepped back 0:06:31.040 --> 0:06:34.440 and saw, wait a minute, the tie amongst these three 0:06:34.640 --> 0:06:38.160 very disparate areas is that they're all related to public policy. 0:06:38.320 --> 0:06:41.000 It's all about the rules and incentives of the systems 0:06:41.040 --> 0:06:44.920 that drive behavior. And so we started thinking more and 0:06:44.920 --> 0:06:48.880 more about public policy as the framework for our philanthropic 0:06:48.920 --> 0:06:54.040 efforts and really believe that there's a shortage of philanthropy 0:06:54.080 --> 0:06:59.159 focus on this very important issue of policy. We think policies, 0:07:00.080 --> 0:07:03.880 yes it's sustainable, it's scalable, and it's structural change in 0:07:03.920 --> 0:07:07.719 a way that maybe funding programs is not. But for 0:07:07.800 --> 0:07:10.040 a variety of reasons, it tends to be underfunded from 0:07:10.080 --> 0:07:13.240 the filmtharbic community. It's changing a little bit. But that 0:07:13.280 --> 0:07:15.840 really laid us down this pathway of getting involved in 0:07:15.880 --> 0:07:19.920 a number of areas of public policy, including infrastructure and 0:07:19.960 --> 0:07:21.880 the energy and climate and housing debates. 0:07:22.560 --> 0:07:24.760 How do you decide what you want to look at? 0:07:24.840 --> 0:07:29.160 Because I was searching for some of your previous projects, 0:07:29.160 --> 0:07:32.160 and there's a lot of them. So criminal justice reform 0:07:32.280 --> 0:07:34.960 is probably one of the ones that you're better known for, 0:07:35.320 --> 0:07:37.920 charter schools, which you just mentioned, but there are other 0:07:38.000 --> 0:07:45.200 things like high drug prices, expensive college textbooks, even geoengineering, 0:07:45.280 --> 0:07:48.040 which I don't think a lot of billionaire philanthropists have 0:07:48.280 --> 0:07:52.400 even begun to look into the quality of academic research. 0:07:52.440 --> 0:07:54.880 I think that's something you've been working on as well. 0:07:54.920 --> 0:07:59.080 But it seems like a very varied collection of interests 0:07:59.120 --> 0:07:59.640 that you have. 0:08:00.280 --> 0:08:03.000 It is we kind of get drawn to issues where 0:08:03.040 --> 0:08:07.120 there starts to be bipartisan support at least out of 0:08:07.120 --> 0:08:10.360 a where at a suboptimal equilibrium, and so there starts 0:08:10.400 --> 0:08:14.280 to be some political consensus of desire for change. Now 0:08:14.320 --> 0:08:18.000 finding what the overlap is across the two parties can 0:08:18.040 --> 0:08:21.480 be a much more challenging endeavor. So we're looking for 0:08:21.680 --> 0:08:24.040 those types of issues where at least one side is 0:08:24.040 --> 0:08:26.680 starting to move and there starts to be this political 0:08:26.800 --> 0:08:30.640 window that's opening for reform. We're looking for areas that 0:08:30.800 --> 0:08:35.680 have promising ideas. There's we're not necessarily going into areas 0:08:35.720 --> 0:08:39.400 saying here's our idea. We're not the experts in it, 0:08:39.600 --> 0:08:41.839 but we survey the field and try to find out, oh, 0:08:41.880 --> 0:08:44.440 here's a promising idea. Maybe we can support this or 0:08:44.480 --> 0:08:48.040 test this or evaluate that in an idea and I 0:08:48.080 --> 0:08:51.080 think you know again, we're looking for areas that have 0:08:51.160 --> 0:08:54.200 this public policy focus to it, where it's about the 0:08:54.280 --> 0:08:57.040 rules and incentives of systems and how can we change it. 0:08:57.360 --> 0:08:59.600 And then we have to believe that we as an 0:08:59.600 --> 0:09:03.319 outside third party can have influence on a system, which 0:09:03.400 --> 0:09:05.720 in some areas we can and some I think we've 0:09:05.720 --> 0:09:08.280 had to turn away thinking that it's not obvious how 0:09:08.280 --> 0:09:10.400 we can have a positive influence on those areas. 0:09:11.000 --> 0:09:12.880 This is going to be my next question, actually, But 0:09:13.200 --> 0:09:17.120 once you identify an area where there either is bipartisan 0:09:17.200 --> 0:09:20.960 support or the I guess first inklings that this could 0:09:20.960 --> 0:09:25.880 have bipartisan support, what's the value proposition that you bring 0:09:26.000 --> 0:09:29.320 to the table, Because just to play devil's advocate, but 0:09:29.440 --> 0:09:32.240 you know, if both sides of the aisle are interested 0:09:32.280 --> 0:09:36.040 in this and are discussing solutions, then maybe they can 0:09:36.080 --> 0:09:37.240 figure it out on their own. 0:09:38.440 --> 0:09:41.440 I wish it were that easy. Yeah, I think most 0:09:41.480 --> 0:09:44.760 of our work centers around one of three roles. The 0:09:44.800 --> 0:09:48.359 first is providing tension in a system. So from a 0:09:48.440 --> 0:09:53.520 economist framework, it's often areas that have a concentrated benefits 0:09:53.760 --> 0:09:57.560 diffuse costs area. So you can think about healthcare, where 0:09:57.600 --> 0:09:59.600 you have many companies that get one hundred percent of 0:09:59.600 --> 0:10:04.040 their revenue from the system. They're very dedicated and inclined 0:10:04.080 --> 0:10:07.679 and very motivated to be involved politically. And so some 0:10:07.760 --> 0:10:11.000 of the strongest, if not the strongest lobbies in DC 0:10:11.440 --> 0:10:15.559 are from the healthcare industry, whether it's pharmaceutical or hospitals 0:10:15.640 --> 0:10:19.600 or physicians or insurers, PVMs, et cetera. And the costs 0:10:19.640 --> 0:10:23.760 of the system fall to individuals, it falls to the taxpayers, 0:10:23.800 --> 0:10:27.160 it falls to individual firms, and none of those really 0:10:27.200 --> 0:10:31.400 have the incentive to put significant resources to counter the 0:10:31.440 --> 0:10:34.760 weight of industry, and so we see a rule for 0:10:34.960 --> 0:10:38.520 trying to provide proper tension into a system, and so 0:10:38.640 --> 0:10:41.520 we're stepping in, Like when you have everybody in DC, 0:10:41.800 --> 0:10:46.480 every lobbyist trying to advocate for more money into the system, 0:10:46.800 --> 0:10:49.160 we're stepping in saying, how can you bend the cost 0:10:49.160 --> 0:10:53.560 curve in healthcare without having any compromise on quality of care? 0:10:54.120 --> 0:10:56.599 And it is a very lonely position because you know, 0:10:56.720 --> 0:10:59.200 again there's not much incentive. 0:10:58.760 --> 0:10:59.560 For others to do this. 0:11:00.240 --> 0:11:03.560 And a second aspect we get involved in is the 0:11:03.640 --> 0:11:07.080 development and piloting of new ideas. I was talking about. 0:11:07.280 --> 0:11:09.640 You know, we survey a field and try to see 0:11:09.720 --> 0:11:13.000 what are academics, what do practitioners, what are their ideas 0:11:13.040 --> 0:11:16.719 as to how the system could be performing better, and 0:11:16.800 --> 0:11:19.360 do they need resources in order to kind of more 0:11:19.400 --> 0:11:22.240 fully develop the idea or even start to test the idea. 0:11:23.040 --> 0:11:25.000 And then the third area we often get involved in 0:11:25.080 --> 0:11:28.280 is evaluation. And I think this is a very underfunded 0:11:28.400 --> 0:11:32.120 aspect of public policy, is trying to figure out what 0:11:32.200 --> 0:11:35.880 works what doesn't. And this includes what programs work and 0:11:35.920 --> 0:11:40.400 what policies work. And I think that's led to some 0:11:40.440 --> 0:11:44.120 surprising findings over the years that things that seem obvious 0:11:44.160 --> 0:11:48.319 that they should be productive, should be efficient, turn out 0:11:48.360 --> 0:11:52.640 to have counterproductive aspects to them, and you might not 0:11:52.800 --> 0:11:55.440 be a good policy or a good program. 0:11:55.600 --> 0:11:58.720 What's an example of that, something that everyone thoughts like, yeah, 0:11:58.800 --> 0:12:01.160 let's do this, and then when you actually looked at 0:12:01.160 --> 0:12:03.000 the results, no, it didn't. 0:12:03.280 --> 0:12:05.360 This is a small one, but I think it's very tilling. 0:12:05.720 --> 0:12:09.720 Is there was a program that was started, I think 0:12:09.720 --> 0:12:13.120 it was in the eighties or nineties of a Scared 0:12:13.200 --> 0:12:17.200 Straight where the idea was, let's take high school students 0:12:17.200 --> 0:12:20.880 who were kind of starting on the pathway of misbehavior 0:12:20.960 --> 0:12:25.280 that people thought they might be going into criminally justice 0:12:25.320 --> 0:12:28.959 involves individuals and will take them into prisons in jails 0:12:29.280 --> 0:12:32.400 and show them how horrible it is in these places 0:12:32.760 --> 0:12:37.000 and try to quote unquote scare them straight. And you know, 0:12:37.080 --> 0:12:39.440 this program went on for a number of years, got 0:12:39.440 --> 0:12:42.800 federal funding, state funding, and then someone came around and 0:12:42.840 --> 0:12:46.120 did an evaluation and they did a RCT you know, 0:12:46.200 --> 0:12:48.560 put some people through the program, some people not, and 0:12:48.600 --> 0:12:51.200 it turned out after the fact that those that had 0:12:51.200 --> 0:12:54.679 gone through the program actually you know, committed more crimes 0:12:54.679 --> 0:12:57.160 than those that didn't and so you know, kind of 0:12:57.160 --> 0:13:01.520 had this theoretical background, but when you actually apply in practice, 0:13:02.000 --> 0:13:05.319 you often get very different results than what the theory said, 0:13:05.520 --> 0:13:09.360 or there are unintended consequences of those programs that are 0:13:09.480 --> 0:13:11.000 very hard to think about in advance. 0:13:26.200 --> 0:13:28.679 One of the debates I see online a lot is 0:13:29.120 --> 0:13:32.480 whether it's productive from like a political standpoint, to sort 0:13:32.480 --> 0:13:35.439 of always talking about worst case scenarios. And there's a 0:13:35.480 --> 0:13:37.079 lot of people it's like, oh, yeah, when you're talking 0:13:37.080 --> 0:13:40.760 about say climate, always air on the worst situation. And 0:13:40.800 --> 0:13:43.160 then there's other peoples like, no, let's actually talk about 0:13:43.400 --> 0:13:45.920 what the most likely situation is or whatever. And I 0:13:45.960 --> 0:13:49.520 find this sort of an interesting, interesting sidetrack. 0:13:50.000 --> 0:13:52.679 Absolutely, I've seen that argument before that if you're always 0:13:52.720 --> 0:13:55.360 focused on the worst case, then you're never going to 0:13:55.440 --> 0:13:57.720 do anything much less get out of bed in the morning. 0:13:58.000 --> 0:13:59.080 But John, I wanted to. 0:13:59.080 --> 0:14:03.359 Ask you as well, in addition to the evidence based approach, 0:14:03.840 --> 0:14:06.640 there's something else that you do that's a little bit 0:14:06.960 --> 0:14:11.240 different to a lot of other philanthropic organizations, and that 0:14:11.400 --> 0:14:15.360 is the actual structuring of the company. So Arnold Ventures. 0:14:15.440 --> 0:14:18.640 I think you have different aspects of the organization, but 0:14:18.760 --> 0:14:20.760 one big part of it is structured as a limited 0:14:20.800 --> 0:14:26.760 liability company versus say a charitable foundation or a donor 0:14:26.920 --> 0:14:30.720 advised fund. And I'm really curious why you decided to 0:14:30.800 --> 0:14:34.640 take that approach because to date, there aren't that many 0:14:34.680 --> 0:14:38.320 billionaires that have gone down that route. Zuckerberg is probably 0:14:38.560 --> 0:14:41.400 the big exception there. But how did you decide to 0:14:41.400 --> 0:14:44.360 take that line? In terms of organizational structure. 0:14:44.120 --> 0:14:47.720 Part of this was a realization that research alone doesn't 0:14:48.040 --> 0:14:51.960 pass laws, and that we had to have the political 0:14:52.600 --> 0:14:57.560 know how and advocacy and comm strategies tied directly into 0:14:57.600 --> 0:15:01.080 our five H one C three work, charitable work, the 0:15:01.160 --> 0:15:04.960 research focus, and so we created these two arms. Over 0:15:05.000 --> 0:15:06.680 the years, we had our C three and we had 0:15:06.680 --> 0:15:09.000 our C four. They have different tax treatment, and so 0:15:09.040 --> 0:15:11.160 we had to have this Chinese wall between the two, 0:15:11.840 --> 0:15:14.440 and it became very annoying because we had some employees 0:15:14.440 --> 0:15:16.520 that were with the C three and some that were 0:15:16.520 --> 0:15:20.960 with the C four. Now we're very strongly advocate that 0:15:21.000 --> 0:15:24.160 we want to put more research and more evidence based 0:15:24.240 --> 0:15:28.520 findings into government, into policy, and so trying to combine 0:15:28.520 --> 0:15:31.760 those organizations had a lot of synergy. And so what 0:15:31.760 --> 0:15:34.000 we did was we brought all employees up into this 0:15:34.360 --> 0:15:36.960 LLC and we could knock down the Chinese Wall. There 0:15:37.040 --> 0:15:40.160 was a few kind of negative tax consequences from that, 0:15:40.760 --> 0:15:44.520 but in the grand scheme it wasn't that significant, and 0:15:44.560 --> 0:15:48.360 we thought the benefits from having one organization where employees 0:15:48.400 --> 0:15:51.840 could both be experts on the research as well as 0:15:52.480 --> 0:15:56.200 sit and talk with policy makers to advocate for better policy, 0:15:56.680 --> 0:15:57.520 was the better approach. 0:15:58.160 --> 0:16:01.880 Let's get into some of the the infrastructure and policy 0:16:02.200 --> 0:16:04.640 questions that we let off with. You know, we're talking 0:16:04.640 --> 0:16:08.280 about this congestion pricing seventeen years was about to go 0:16:08.320 --> 0:16:11.920 into effect, finally delayed at least in definitely two weeks 0:16:11.960 --> 0:16:14.720 before it was about to go into effect. When you 0:16:14.760 --> 0:16:16.520 look at a story like this and you watch it 0:16:16.560 --> 0:16:18.880 and you see how long it enfolds and then never happens. 0:16:19.400 --> 0:16:23.080 Is this being replicated across the country on smaller scales 0:16:23.120 --> 0:16:25.240 all the time that we don't see because they're not 0:16:25.280 --> 0:16:28.320 as big. And as you look at situation after a situation, 0:16:28.760 --> 0:16:30.880 what do these have in common? I mean, this wasn't 0:16:30.880 --> 0:16:33.320 even an infrastructure project, which blows my mind. It was 0:16:33.360 --> 0:16:37.040 just basically increasing the tolls. But what's really going on 0:16:37.120 --> 0:16:39.640 here that it's so hard to get a policy like 0:16:39.680 --> 0:16:40.120 this past. 0:16:40.760 --> 0:16:43.200 You're right, that is not an infrastructure project, but it 0:16:43.240 --> 0:16:48.280 was very illustrative and similar to the timeframe and journey 0:16:48.360 --> 0:16:51.600 that many infrastructure projects in the US are now facing. 0:16:52.200 --> 0:16:55.479 And maybe we start back with and the environmental framework 0:16:55.640 --> 0:16:58.200 for this country really got started in this three year 0:16:58.240 --> 0:17:02.520 period between nineteen seventy and nineteen seventy three under Republican 0:17:02.600 --> 0:17:06.480 Richard Nixon, with bipartisan support, and this was the creation 0:17:06.800 --> 0:17:10.800 of the EPA. It was the creation of NEPA, the 0:17:10.840 --> 0:17:13.960 Clean Air Act, Clean Water Act, and Endangered Species Act, 0:17:14.359 --> 0:17:17.080 and even today, that's really the framework that most of 0:17:17.119 --> 0:17:21.840 the environmental law is based upon. And those were enacted 0:17:21.920 --> 0:17:26.600 for good reasons and have been very effective policies as 0:17:26.640 --> 0:17:30.320 a whole. If you think back before nineteen seventy, there 0:17:30.320 --> 0:17:32.680 were a lot of environmental disasters in this country, from 0:17:32.720 --> 0:17:36.320 the Cuyahuga River catching on fire, to the smog that 0:17:36.400 --> 0:17:39.919 you saw in la in Houston and Pittsburgh, to the 0:17:39.960 --> 0:17:43.520 oil spill in Santa Barbara, and so there was a 0:17:43.560 --> 0:17:47.080 reason why there was broad both voter support and bipartisan 0:17:47.160 --> 0:17:51.040 support for this and it's had good impact over the years, 0:17:51.359 --> 0:17:53.960 but it's changed, and I'd say starting at the turn 0:17:54.000 --> 0:17:57.280 of this century, although that's not a hard turn, but 0:17:57.440 --> 0:18:00.800 two things happened. One was that the courts started becoming 0:18:00.880 --> 0:18:05.560 more aggressive about interpretation of these laws and made it 0:18:05.600 --> 0:18:09.720 harder and harder for developers to build things. The second 0:18:10.000 --> 0:18:13.439 was that opponents to projects became smarter about how to 0:18:13.560 --> 0:18:19.320 utilize the laws to stall and ultimately cancel many projects. 0:18:19.760 --> 0:18:23.000 And one example of that is instead of filing all 0:18:23.040 --> 0:18:26.600 your objections to a project at the same time and 0:18:26.680 --> 0:18:30.679 let them be heard simultaneously, what opponents started doing was 0:18:31.160 --> 0:18:34.200 file one opposition. You know, wait a couple of years, 0:18:34.240 --> 0:18:38.000 is that chugged through the court system. When that got reconciled, 0:18:38.320 --> 0:18:41.359 then file your next claim and then do your next claim. 0:18:41.400 --> 0:18:44.080 And so a process that should have taken two years 0:18:44.119 --> 0:18:47.720 to hear the oppositions and the complaints about it ends 0:18:47.800 --> 0:18:50.520 up taking ten years to do it. And that does 0:18:50.560 --> 0:18:53.399 several things right, and it greatly increases the cost to 0:18:53.480 --> 0:18:57.280 the developer to do it. It increases the time to 0:18:57.320 --> 0:19:01.520 bring these important infrastructure projects to the market, and it's 0:19:01.680 --> 0:19:05.680 just provides this kind of general sense of malaise that's 0:19:05.880 --> 0:19:11.160 developed across both the end users of these infrastructure projects 0:19:11.200 --> 0:19:12.399 as well as the developers. 0:19:13.359 --> 0:19:15.400 So I know you spent a lot of time in 0:19:15.600 --> 0:19:19.400 DC as part of your philanthropic push, But when you're 0:19:19.680 --> 0:19:24.480 talking to politicians or other policy makers, or maybe even 0:19:24.680 --> 0:19:28.439 court officials or people from the judiciary, is there a 0:19:28.600 --> 0:19:32.719 recognition that this is an issue now, that it is 0:19:33.000 --> 0:19:35.959 harder to build things, or that it just takes longer. 0:19:36.320 --> 0:19:40.679 Absolutely, And I think the passage of the IRA really 0:19:40.760 --> 0:19:44.159 changed the discussion around permitting. And I think, you know, 0:19:44.160 --> 0:19:48.679 there was a growing sense around the difficulties that the 0:19:48.800 --> 0:19:52.760 environmental framework we're creating for projects, but then the IRA 0:19:52.920 --> 0:19:57.520 passed this kind of deregulation or this desire to look 0:19:57.640 --> 0:20:03.280 at the kind of environment process was historically a Republican 0:20:03.320 --> 0:20:05.600 one or a conservative one, right, And then the IRA 0:20:05.760 --> 0:20:10.200 passes and the CBO scores the environmental provisions at I 0:20:10.200 --> 0:20:12.920 think three hundred and ninety one billion dollars, and then 0:20:13.200 --> 0:20:17.520 as the private sector and as environmental orgs spent time 0:20:17.560 --> 0:20:20.919 with that law and started thinking about what does this 0:20:21.000 --> 0:20:24.840 actually mean. You started hearing numbers that were actually in 0:20:24.920 --> 0:20:27.119 excess of a trillion dollars. And this was kind of 0:20:27.119 --> 0:20:30.439 a secret that was going around the environmental community was 0:20:30.640 --> 0:20:33.320 don't tell anybody but this is a trillion dollars of 0:20:33.440 --> 0:20:37.879 new spending on environmental projects because they were modeling this 0:20:38.000 --> 0:20:42.439 on spreadsheets. And then the reality sets in and the 0:20:42.520 --> 0:20:46.760 reality is that modeling things on spreadsheets versus actually building 0:20:46.920 --> 0:20:52.000 physical infrastructure is two radically different things. And so then 0:20:52.040 --> 0:20:55.399 the next twelve months was about holy cow, like, we 0:20:55.520 --> 0:20:58.879 need to change and make it easier to build, because 0:20:58.880 --> 0:21:03.440 instead of trying to stall and cancel projects, in order 0:21:03.440 --> 0:21:05.560 to have an energy transition in this country, we need 0:21:05.600 --> 0:21:09.080 to build a lot of things. And so there's a 0:21:09.119 --> 0:21:12.240 lot of energy infrastructure that needs to get built. Now. 0:21:12.280 --> 0:21:14.600 The same rules that we're making it difficult to build 0:21:14.920 --> 0:21:18.159 clean energy infrastructure were also making it difficult to build 0:21:18.280 --> 0:21:22.560 traditional oil and gas infrastructure. And so today the Mountain 0:21:22.640 --> 0:21:25.119 Valley Pipeline, which has gotten very famous because of the 0:21:25.160 --> 0:21:28.720 discussions over the past couple of years, is very near completion. 0:21:29.320 --> 0:21:33.679 But there's no other interstate pipeline that's in development after that, 0:21:34.400 --> 0:21:37.600 and the developers have pretty much given up because you've 0:21:37.600 --> 0:21:40.920 now had three major pipelines that ended up getting canceled 0:21:41.000 --> 0:21:45.520 or very significant delays. That has greatly affected the economic 0:21:45.600 --> 0:21:48.240 outcomes of those projects, and so developers are saying, we 0:21:48.320 --> 0:21:51.359 don't know what the rules are anymore to build these projects, 0:21:51.400 --> 0:21:54.040 and so we're not even going to start because we've 0:21:54.080 --> 0:21:57.560 seen three instances where they became financial albatrosses. And all 0:21:57.600 --> 0:21:59.800 this was happening on the energy side at the same 0:21:59.840 --> 0:22:03.520 time time that the housing side really started to pick up, 0:22:03.560 --> 0:22:06.320 and this was coming from a lot of this originated 0:22:06.320 --> 0:22:10.120 in California, which the lot of well known stories about 0:22:10.119 --> 0:22:14.960 the difficulty of building housing, especially a workforce housing in California, 0:22:15.000 --> 0:22:17.679 and there started to be the creation of a YMBI 0:22:17.760 --> 0:22:22.240 movement and real questions about what are all these hurdles 0:22:22.600 --> 0:22:25.600 that are in the way of development, and that helped 0:22:25.600 --> 0:22:30.240 to spur this whole movement around the abundance agenda. And 0:22:30.359 --> 0:22:33.200 so all these things are coming together and we see 0:22:33.240 --> 0:22:38.719 that there is now great political will from both sides politically, 0:22:39.440 --> 0:22:42.240 but also includes a lot of the environmental groups who 0:22:42.240 --> 0:22:46.600