June 20, 2024 • 50 mins
Virtually everyone, across the ideological spectrum, has the view right now that it's too hard to build things (or get things done generally) in America. New infrastructure is thwarted by red tape and permitting. New housing is thwarted by YIMBYism. Even something that doesn't require much new construction -- like NYC's attempt to impose congestion pricing -- is difficult to get done after years and years of wrangling. What is the core problem? And what can be done to address it? On this episode, we speak with John Arnold, who started his career as an energy trader at Enron, before going on to found a highly successful energy hedge fund. Now in his role as the co-founder of Arnold Ventures, he works on policy solutions to address these key bottlenecks. We discuss how he goes about philanthropy to affect policy change, the problems he's identified, and what solutions could be put in place to improve domestic development.
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:19):
Hello and welcome to another episode of the Odd Lots podcast.
Speaker 3 (00:23):
I'm Joe Wisenthal and I'm Tracy Alloway.
Speaker 2 (00:26):
Tracy, we're recording this on June sixth, and yesterday we
got the news of New York City Governor Kathy Hochel
permanently putting a pause on a proposed congestion tax people
driving into the City of Manhattan from the outer boroughs
or other states. And I have to say, like reading
about the whole thing like it kind of depresses me.
Speaker 4 (00:48):
It's crazy that story.
Speaker 3 (00:49):
I'm sorry, but Joe saw me kind of going off
on this in an internal chat room yesterday when the
news kind of filtered out. But regardless of where you
sit on the ingestion pricing debate, I think we can
all agree that a last minute you turn, after years
and years and years of public consultation, all this matter,
(01:11):
after the installation of the machines that we're supposed to
take photos of everyone's license plate and actually get the fees,
that this is not an ideal outcome to actually cancel
the plans two weeks before they were supposed to go
into effect.
Speaker 5 (01:27):
Yeah.
Speaker 2 (01:27):
Look, I'm a neutral journalist at a mainstream publication, so
I have no opinions on policy. Ever, it is not
my job. But it does seem to me that there's
something wrong if you spend like probably one hundred million
dollars in studies and you talk about something for sixteen
years and you have all these things and then it's
like at the end, it's like nah, and it's like
(01:49):
how do we like build anything in this country?
Speaker 4 (01:53):
It's just surreal.
Speaker 3 (01:54):
Sorry, the more I think about it, the more I
just like start laughing and then kind of crying as well.
Speaker 4 (01:59):
It's it's crazy.
Speaker 2 (02:01):
But of course this comes up all the time in
so many episodes we do, whether it's around housing, or
whether it's about electrification, or whether it's about installing offshore wind,
whatever it is. It seems like there is a major
problem in this country about like how long it takes
to plan things, how long it takes to get permits
for things, the cost of construction. The crazy thing with
(02:22):
the congestion text, it wasn't even like a construction thing.
You know, it's literally just tolls. It's not like they
had like build some new bridges and you know, demolish
tens of thousands.
Speaker 3 (02:31):
Well, they still spend a lot of money on it.
But yes, I take the point. It's not like they
were building a new highway that would go through you know,
some neighborhoods or something like that.
Speaker 2 (02:39):
Right, right, It's also crazy to me anyway, I do think, like,
you know, this recurring question of like why is it
so hard to build stuff or just actually like take
any decisive policy towards anything, seems like a real problem.
Speaker 5 (02:52):
Oh.
Speaker 3 (02:52):
Absolutely, And even though this particular issue I think we
can all agree was very contentious, there.
Speaker 4 (02:58):
Are people who feel wrongly on both sides.
Speaker 3 (03:01):
There are other things that I think have more collective
public support and maybe certainly bipartisan support. So I think
most of Americans, most politicians would agree, for instance, that
housing supply is kind of a bipart is an issue now.
But even on something like that where everyone kind of
(03:21):
agrees like, yes, this is a problem, we need more supply,
we need places for people to actually live, there are
all these questions about how you actually decide where to
put those houses, and then even more controversially, how do
you fund that, Like what does support for real estate
residential real estate actually look like? Where does the financing
(03:42):
come from. How do you structure that? Is it the
form of subsidies, is it the form of incentives? Is
it public private partnerships. It just seems like there are
so many points in the process at which you can
kind of like get stuck.
Speaker 2 (03:56):
So many, so many Anyway, I'm really excited because we
do have the guest today. We're going to be speaking
with someone who is extremely interested in this topic and
sort of puts his money where his mouth is, spends
a lot of money researching and trying to think up
solutions to some of these things. We're going to be
speaking with John Arnold. He's the co chair of Arnold Ventures.
(04:17):
Prior to that, he was a famed energy trader, made
his fortune at Centaurus Energy. Prior to that, I learned
he was the recipient of the single biggest cash bonus
when he was a trader at Enron, where he was
not accused of any wrongdoing a bunch of people there
obviously were. And now he is a philanthropy co chair
Ernold Ventures, as I mentioned that, among many other things,
(04:40):
works on problems like this. In fact, they do a
lot of health, criminal justice, higher ed public finance, all
of which could probably make for a great specific episode
of the podcast. John, thank you so much for coming
on out Laws.
Speaker 5 (04:53):
It's a great honor to be on my favorite financial podcast.
Speaker 4 (04:56):
Hi, thank you.
Speaker 2 (04:57):
I'm skeptical favorite, but thank you.
Speaker 3 (05:00):
Just accept the compliments show and move on.
Speaker 2 (05:03):
We'll take it. So we're going to get into all
this permitting. And you had a great tweet yesterday. Actually
you did a little mini history of the congestion pricing
in a tweet. Starting in two thousand and seven, Mayor
proposes worded FED grant two thousand and eight, plants finalized
two thousand and eight to twenty seventeen in stalllah blah
blah blah, environmental assessment, another delay, another delay, and now
(05:26):
the indefinite delay. I want to get into all that,
but before we do, there are a lot of billionaires
who want to give away their money and have philanthropies,
et cetera. I get the impression that Arnold Ventures tries
to solve these problems sort of differently, or try to
have a novel approach to giving your money away. What
is the sort of driving philosophy behind what you do?
Speaker 5 (05:47):
Yeah, it might be good to start at the beginning
of our phone tropy efforts. My wife, Laura, and I
came out of professional careers from the private sector. I
was in energy trading for seventeen years. Kind of got
burnt out after those seven teen years. My wife was
an m and a lawyer. She kind of got burnt out.
And we had this fledgeling foundation at the time that
was doing work in mostly in K twelve reform efforts,
(06:10):
and I think a lot of people from the financial
sector kind of got involved in those efforts in the
two thousands, and then after two thousand and eight, we
got very interested in the public pension crisis that was happening.
Both the funding design and benefit design we viewed as
flawed and started working in that area. And then we
got interested in criminal justice reform, and we stepped back
(06:31):
and saw, wait a minute, the tie amongst these three
very disparate areas is that they're all related to public policy.
It's all about the rules and incentives of the systems
that drive behavior. And so we started thinking more and
more about public policy as the framework for our philanthropic
efforts and really believe that there's a shortage of philanthropy
(06:54):
focus on this very important issue of policy. We think policies,
yes it's sustainable, it's scalable, and it's structural change in
a way that maybe funding programs is not. But for
a variety of reasons, it tends to be underfunded from
the filmtharbic community. It's changing a little bit. But that
really laid us down this pathway of getting involved in
(07:15):
a number of areas of public policy, including infrastructure and
the energy and climate and housing debates.
Speaker 3 (07:22):
How do you decide what you want to look at?
Because I was searching for some of your previous projects,
and there's a lot of them. So criminal justice reform
is probably one of the ones that you're better known for,
charter schools, which you just mentioned, but there are other
things like high drug prices, expensive college textbooks, even geoengineering,
(07:45):
which I don't think a lot of billionaire philanthropists have
even begun to look into the quality of academic research.
I think that's something you've been working on as well.
But it seems like a very varied collection of interests
that you have.
Speaker 5 (08:00):
It is we kind of get drawn to issues where
there starts to be bipartisan support at least out of
a where at a suboptimal equilibrium, and so there starts
to be some political consensus of desire for change. Now
finding what the overlap is across the two parties can
be a much more challenging endeavor. So we're looking for
(08:21):
those types of issues where at least one side is
starting to move and there starts to be this political
window that's opening for reform. We're looking for areas that
have promising ideas. There's we're not necessarily going into areas
saying here's our idea. We're not the experts in it,
but we survey the field and try to find out, oh,
(08:41):
here's a promising idea. Maybe we can support this or
test this or evaluate that in an idea and I
think you know again, we're looking for areas that have
this public policy focus to it, where it's about the
rules and incentives of systems and how can we change it.
And then we have to believe that we as an
outside third party can have influence on a system, which
(09:03):
in some areas we can and some I think we've
had to turn away thinking that it's not obvious how
we can have a positive influence on those areas.
Speaker 3 (09:11):
This is going to be my next question, actually, But
once you identify an area where there either is bipartisan
support or the I guess first inklings that this could
have bipartisan support, what's the value proposition that you bring
to the table, Because just to play devil's advocate, but
you know, if both sides of the aisle are interested
(09:32):
in this and are discussing solutions, then maybe they can
figure it out on their own.
Speaker 5 (09:38):
I wish it were that easy. Yeah, I think most
of our work centers around one of three roles. The
first is providing tension in a system. So from a
economist framework, it's often areas that have a concentrated benefits
diffuse costs area. So you can think about healthcare, where
you have many companies that get one hundred percent of
(09:59):
their revenue from the system. They're very dedicated and inclined
and very motivated to be involved politically. And so some
of the strongest, if not the strongest lobbies in DC
are from the healthcare industry, whether it's pharmaceutical or hospitals
or physicians or insurers, PVMs, et cetera. And the costs
(10:19):
of the system fall to individuals, it falls to the taxpayers,
it falls to individual firms, and none of those really
have the incentive to put significant resources to counter the
weight of industry, and so we see a rule for
trying to provide proper tension into a system, and so
we're stepping in, Like when you have everybody in DC,
(10:41):
every lobbyist trying to advocate for more money into the system,
we're stepping in saying, how can you bend the cost
curve in healthcare without having any compromise on quality of care?
And it is a very lonely position because you know,
again there's not much incentive.
Speaker 2 (10:58):
For others to do this.
Speaker 5 (11:00):
And a second aspect we get involved in is the
development and piloting of new ideas. I was talking about.
You know, we survey a field and try to see
what are academics, what do practitioners, what are their ideas
as to how the system could be performing better, and
do they need resources in order to kind of more
fully develop the idea or even start to test the idea.
(11:23):
And then the third area we often get involved in
is evaluation. And I think this is a very underfunded
aspect of public policy, is trying to figure out what
works what doesn't. And this includes what programs work and
what policies work. And I think that's led to some
surprising findings over the years that things that seem obvious
(11:44):
that they should be productive, should be efficient, turn out
to have counterproductive aspects to them, and you might not
be a good policy or a good program.
Speaker 2 (11:55):
What's an example of that, something that everyone thoughts like, yeah,
let's do this, and then when you actually looked at
the results, no, it didn't.
Speaker 5 (12:03):
This is a small one, but I think it's very tilling.
Is there was a program that was started, I think
it was in the eighties or nineties of a Scared
Straight where the idea was, let's take high school students
who were kind of starting on the pathway of misbehavior
that people thought they might be going into criminally justice
(12:25):
involves individuals and will take them into prisons in jails
and show them how horrible it is in these places
and try to quote unquote scare them straight. And you know,
this program went on for a number of years, got
federal funding, state funding, and then someone came around and
did an evaluation and they did a RCT you know,
(12:46):
put some people through the program, some people not, and
it turned out after the fact that those that had
gone through the program actually you know, committed more crimes
than those that didn't and so you know, kind of
had this theoretical background, but when you actually apply in practice,
you often get very different results than what the theory said,
or there are unintended consequences of those programs that are
(13:09):
very hard to think about in advance.
Speaker 2 (13:26):
One of the debates I see online a lot is
whether it's productive from like a political standpoint, to sort
of always talking about worst case scenarios. And there's a
lot of people it's like, oh, yeah, when you're talking
about say climate, always air on the worst situation. And
then there's other peoples like, no, let's actually talk about
what the most likely situation is or whatever. And I
find this sort of an interesting, interesting sidetrack.
Speaker 3 (13:50):
Absolutely, I've seen that argument before that if you're always
focused on the worst case, then you're never going to
do anything much less get out of bed in the morning.
Speaker 4 (13:58):
But John, I wanted to.
Speaker 3 (13:59):
Ask you as well, in addition to the evidence based approach,
there's something else that you do that's a little bit
different to a lot of other philanthropic organizations, and that
is the actual structuring of the company. So Arnold Ventures.
I think you have different aspects of the organization, but
one big part of it is structured as a limited
(14:20):
liability company versus say a charitable foundation or a donor
advised fund. And I'm really curious why you decided to
take that approach because to date, there aren't that many
billionaires that have gone down that route. Zuckerberg is probably
the big exception there. But how did you decide to
(14:41):
take that line? In terms of organizational structure.
Speaker 5 (14:44):
Part of this was a realization that research alone doesn't
pass laws, and that we had to have the political
know how and advocacy and comm strategies tied directly into
our five H one C three work, charitable work, the
research focus, and so we created these two arms. Over
(15:05):
the years, we had our C three and we had
our C four. They have different tax treatment, and so
we had to have this Chinese wall between the two,
and it became very annoying because we had some employees
that were with the C three and some that were
with the C four. Now we're very strongly advocate that
we want to put more research and more evidence based
findings into government, into policy, and so trying to combine
(15:28):
those organizations had a lot of synergy. And so what
we did was we brought all employees up into this
LLC and we could knock down the Chinese Wall. There
was a few kind of negative tax consequences from that,
but in the grand scheme it wasn't that significant, and
we thought the benefits from having one organization where employees
could both be experts on the research as well as
(15:52):
sit and talk with policy makers to advocate for better policy,
was the better approach.
Speaker 2 (15:58):
Let's get into some of the the infrastructure and policy
questions that we let off with. You know, we're talking
about this congestion pricing seventeen years was about to go
into effect, finally delayed at least in definitely two weeks
before it was about to go into effect. When you
look at a story like this and you watch it
and you see how long it enfolds and then never happens.
(16:19):
Is this being replicated across the country on smaller scales
all the time that we don't see because they're not
as big. And as you look at situation after a situation,
what do these have in common? I mean, this wasn't
even an infrastructure project, which blows my mind. It was
just basically increasing the tolls. But what's really going on
here that it's so hard to get a policy like
(16:39):
this past.
Speaker 5 (16:40):
You're right, that is not an infrastructure project, but it
was very illustrative and similar to the timeframe and journey
that many infrastructure projects in the US are now facing.
And maybe we start back with and the environmental framework
for this country really got started in this three year
period between nineteen seventy and nineteen seventy three under Republican
(17:02):
Richard Nixon, with bipartisan support, and this was the creation
of the EPA. It was the creation of NEPA, the
Clean Air Act, Clean Water Act, and Endangered Species Act,
and even today, that's really the framework that most of
the environmental law is based upon. And those were enacted
for good reasons and have been very effective policies as
(17:26):
a whole. If you think back before nineteen seventy, there
were a lot of environmental disasters in this country, from
the Cuyahuga River catching on fire, to the smog that
you saw in la in Houston and Pittsburgh, to the
oil spill in Santa Barbara, and so there was a
reason why there was broad both voter support and bipartisan
(17:47):
support for this and it's had good impact over the years,
but it's changed, and I'd say starting at the turn
of this century, although that's not a hard turn, but
two things happened. One was that the courts started becoming
more aggressive about interpretation of these laws and made it
harder and harder for developers to build things. The second
(18:10):
was that opponents to projects became smarter about how to
utilize the laws to stall and ultimately cancel many projects.
And one example of that is instead of filing all
your objections to a project at the same time and
let them be heard simultaneously, what opponents started doing was
(18:31):
file one opposition. You know, wait a couple of years,
is that chugged through the court system. When that got reconciled,
then file your next claim and then do your next claim.
And so a process that should have taken two years
to hear the oppositions and the complaints about it ends
up taking ten years to do it. And that does
several things right, and it greatly increases the cost to
(18:53):
the developer to do it. It increases the time to
bring these important infrastructure projects to the market, and it's
just provides this kind of general sense of malaise that's
developed across both the end users of these infrastructure projects
as well as the developers.
Speaker 3 (19:13):
So I know you spent a lot of time in
DC as part of your philanthropic push, But when you're
talking to politicians or other policy makers, or maybe even
court officials or people from the judiciary, is there a
recognition that this is an issue now, that it is
harder to build things, or that it just takes longer.
Speaker 5 (19:36):
Absolutely, And I think the passage of the IRA really
changed the discussion around permitting. And I think, you know,
there was a growing sense around the difficulties that the
environmental framework we're creating for projects, but then the IRA
passed this kind of deregulation or this desire to look
(19:57):
at the kind of environment process was historically a Republican
one or a conservative one, right, And then the IRA
passes and the CBO scores the environmental provisions at I
think three hundred and ninety one billion dollars, and then
as the private sector and as environmental orgs spent time
with that law and started thinking about what does this
(20:21):
actually mean. You started hearing numbers that were actually in
excess of a trillion dollars. And this was kind of
a secret that was going around the environmental community was
don't tell anybody but this is a trillion dollars of
new spending on environmental projects because they were modeling this
on spreadsheets. And then the reality sets in and the
(20:42):
reality is that modeling things on spreadsheets versus actually building
physical infrastructure is two radically different things. And so then
the next twelve months was about holy cow, like, we
need to change and make it easier to build, because
instead of trying to stall and cancel projects, in order
(21:03):
to have an energy transition in this country, we need
to build a lot of things. And so there's a
lot of energy infrastructure that needs to get built. Now.
The same rules that we're making it difficult to build
clean energy infrastructure were also making it difficult to build
traditional oil and gas infrastructure. And so today the Mountain
Valley Pipeline, which has gotten very famous because of the
(21:25):
discussions over the past couple of years, is very near completion.
But there's no other interstate pipeline that's in development after that,
and the developers have pretty much given up because you've
now had three major pipelines that ended up getting canceled
or very significant delays. That has greatly affected the economic
(21:45):
outcomes of those projects, and so developers are saying, we
don't know what the rules are anymore to build these projects,
and so we're not even going to start because we've
seen three instances where they became financial albatrosses. And all
this was happening on the energy side at the same
time time that the housing side really started to pick up,
and this was coming from a lot of this originated
(22:06):
in California, which the lot of well known stories about
the difficulty of building housing, especially a workforce housing in California,
and there started to be the creation of a YMBI
movement and real questions about what are all these hurdles
that are in the way of development, and that helped
to spur this whole movement around the abundance agenda. And
(22:30):
so all these things are coming together and we see
that there is now great political will from both sides politically,
but also includes a lot of the environmental groups who
had traditionally worked to kill projects and delay projects are
now realizing they need to find projects to support.
Speaker 2 (22:49):
So let's drill deeper into this because we actually recently
did an interview with the CEO of ORSTED Americas and
slow permitting for offshore wind was one of the bottlenecks
that he cited. I saw you've done something with a
sort of like more advanced power lines so that clean
energy in one part of the country can be distributed
(23:11):
to other parts of the country, et cetera. But what
are the sort of specific issues that arise in permitting
or maybe what are the specific types of reforms that
would be necessary so that this trillion dollars can actually
get spent in some sort of relatively efficient manner that
produce it good, Like, what are the actual issues that
play here?
Speaker 5 (23:31):
Yeah, this applies not only to clean energy, but to
all energy infrastructure and kind of all linear infrastructure. You
think about linear infrastructure, which includes rail and highways and transportation,
transmission pipelines. All these things have gotten very very difficult
to build in the twenty first century. So the question
(23:53):
is kind of what to do, and that's where things
often kind of start to bog down. There's been kind
of extensive negotiations between Senator Mansion and Senator Brosso in
the Senate, and they've been reported days away from potentially
releasing a bill that it starts to address this. And
the framework that they've mentioned would do a lot of things,
(24:14):
and I think The question is that oil and gas
has traditionally had exceptions on some of the environmental framework,
and so everybody talks about NEPA and the categorical exemptions
that certain industries have from the NEPA process, and so
oil and gas has a lot of exemptions from that.
Clean energy generally doesn't. So things like geothermal, the transmission
(24:39):
that's necessary to unlock the wind and solar resource, and
then even things like sighting of wind turbines all end
up tied up in a lot of environmental process that
either stall or make them uneconomic. And so the question
is that do you bring clean energy down and make
it at an equal basis to oil gas and make
(25:01):
everything easier to build, or if we do nothing, and
oil and gas is becoming harder and harder to build
and everything across the energy spectrum becomes very difficult to build.
So going back to what are the specifics, one is
what is the role between federal and state on trying
(25:21):
to permit things? And so there's this inherent tension between
needs of society and the preferences of a community. Right,
we need energy, we need transportation, mining, workforce, housing, et cetera. Right,
but individual neighborhoods usually prefer that that be built somewhere else,
and so the question is what's the right tension in
(25:42):
that system between society versus the community, And that really
boils down to federal versus state and local. And so
the question that needs to be addressed is, especially on
a lot of these linear infrastructure projects, where are projects
of national signs diifficants that need the ability for the
(26:02):
federal government to come in and permit it because it's
of national strategic interest. A second issue is around these
judicial reforms and again allowing these objections to come in,
allow them to be heard, but that the opponents to
projects need to present those objections in a timely manner,
and the courts need to hear those objections and rule
(26:25):
on them in a tiny manner. And the agencies need
to respond to anything that's coming out of Lowe's rulings
in a timely manner. And I think kind of the
combination of those two things is really what the permitting
reforms are looking like.
Speaker 3 (26:55):
So I have two questions on permitting reform, and the
first one is if we agree that speed of build
out is important here in addition to actually freeing up
the financing.
Speaker 4 (27:08):
Then why didn't the.
Speaker 3 (27:08):
IRA just include permitting reform from the beginning? And then secondly,
you know you mentioned NIPA, the National Environmental Policy Act.
What do we give up in permitting reform because you know,
I imagine a lot of these rules and regulations exist
for a reason, and so I would also think there
(27:31):
would be some sort of trade off in maybe liberalizing
some of those rules.
Speaker 5 (27:36):
Yeah, let me start with the second question, and that's
it's about balancing the interests of the system. And so
the United States has gone through a history where it
just built everything and barreled through neighborhoods. And I think
Robert Moses in the forties and fifties was the great
example of this. And on one hand, he got a
(27:56):
lot of things built. On the other hand, he barreled
through neighbor hood's created a lot of pain and a
lot of inequitable outcomes, particularly amongst the poor and minority groups.
And so that's not the right way to do it.
But I think there's growing consensus that where we are today,
where it's very very difficult to build anything, is also
(28:17):
gone too far in the other extreme. So again it's
about balance neighborhoods and communities need to be heard. Objections
need to be heard and litigated. We need to find
the best way to do these projects. But we can't
let perfect be the enemy of the good. And a
lot of these times, like we need to build stuff,
we need to build transportation infrastructure, we need to build housing,
(28:40):
we need to build energy infrastructure, there's going to be
trade off with every project. No project is going to
be perfect, and so the question is what's the right
standard with regards to you Why weren't these in the
IRA bill And that was just you know, the congressional
rules about what could be part of reconciliation and pass
with fifty votes versus requiring sixty And the parliamentarian ruled
(29:04):
that permitting reform was not a financial issue and therefore
needed sixty votes, needed regular order, and so Senator Mansion,
as part of the negotiation, came to an agreement with
Leader Schumer that Schumer would bring to the floor a
permitting reform bill in the future, and that came very close.
(29:26):
Senator Mansion realized that it didn't have the sixty votes,
and so it never actually came to the floor, but
discussions and negotiations have been continuing ever since.
Speaker 2 (29:36):
You know, I'm very fascinated by this idea that many
problems come down to one extremely motivated but small opposition.
Whether it's a community, whether it's the one percent of
people on Long Island who get into the city via car,
whatever it is, that they end up having more cloud
or influence in a way than a bunch of other
(29:56):
people who don't even really know about the project, or
don't think about it, or can't see it's tangible impacts
on something like permitting reform at the national level. Who
are the interests as you've identified them, making some of
these votes harder to get to the floor or get
to sixty votes.
Speaker 5 (30:10):
So the environmental organizations are doing a lot of soul
searching today. I would say I've talked to a lot
of them, and it's not correct to put them all
into one grouping. There's a wide variety of them that
have varying views on this. And so you get some
very kind of moderate ones who are done the modeling
(30:32):
and realize that in order to get to a lower
carbon future, we're going to have to build a lot
and that requires changing some of the environmental framework. And
then you have some groups, you know, particularly you know
with the environmental justice community, who have very legitimate concerns
about how infrastructure has been built in the past and
(30:53):
are highly reluctant to make the process easier because they
are scared that things are going to be built in
the same way that they have in the past and
don't trust the system. And again, like there's good reason
why they should be skeptical of this, but I think
that's kind of across that spectrum. The environmental communities trying
(31:13):
to figure out what to do, and there has been
a lot of discussion, I will say in this community.
I again have been parts of a lot of these discussions,
and I think the trick is, how do you find
a bill that gets support from the majority of the
environmental community and also has support from industry and they
(31:35):
get sixty votes And the reality is, you know, it
has to get Republican votes as well as Democratic votes,
and so it has to make everything easier to build.
It cannot be a bill that just focuses on clean energy. Again,
it's impossible to virtually impossible to build an interstate pipeline today. Yeah,
there's the pause on LG export permitting that has the
(31:58):
industry up and armed, and so a bill that is
a compromise bill is going to make building energy infrastructure
across the board easier.
Speaker 3 (32:10):
So I love talking to you about specific examples. And
I know you're based in Texas, and of course you
have an energy trading background. So I feel like we
would be remiss if we didn't ask for your thoughts
on the Texas power grid in particular, And if that's
something that has come up on your radar, either by
dint of your interest in policy or the mere fact
(32:33):
that you are in Texas and maybe you have experienced
some of the issues that have sprung up from various
problems in the past couple of years.
Speaker 5 (32:40):
I've thought about it, and I've been part of some
of the problems that have developed. The goals of the
energy system are how do you make energy affordable, reliable,
sustainable to the environment, and secure. Now, on the energy security,
that's less of a concern for the United States because
of the quantities and diversity of the energy resource within
(33:03):
our boundaries. So now we think about reliability versus affordability
and environmental sustainability, and at times you can find things
that don't have trade offs in that, but sometimes there
are trade offs, and so one of the trade offs
is reliability versus affordability. Do you want to build a
system that's four nines reliable or five nines reliable and
(33:26):
there's a cost difference to doing so. And so different
communities really we're talking about in different states and different
INERK regions URCOT versus PGAM, for instance, have come to
different preferences on that spectrum. And I think Texas being
Texas has always prioritized being low cost, and as part
(33:48):
of that there's a tradeoff on some of the reliability issues.
It's been exacerbated by the enormous power demand growth that
we've seen in URKOT, so it's struggling just to keep
up with the system, and utilities now across the nation
are starting to face some of these similar challenges. There
(34:08):
was this fifteen year period roughly from two thousand and
seven to twenty twenty two, where load growth across the
nation was relatively flat. That kind of hid. There were
some areas that were growing like Texas slash Orcot. There
were some areas where load was actually contracting as energy
efficiency gains were happening. But utilities are now facing load
(34:30):
growth kind of across the board. So they're being asked
to deal with that, They're being asked to deal with
bringing more intermittent resources onto their grid and dealing with
the reliability associated with that. They're being asked to decrease
the greenhouse gas emissions on this system. And then last,
how do you not end up with significantly higher bills
(34:54):
to the customer. So I said, had the utilities and
the grids only been tasked with two of those challenges,
they'd be very easy. They could probably handle three. But
doing all four at once right now, which is what
most utilities are facing, especially in Texas, has been an
(35:15):
enormous challenge and I think it carries enormous risks, and
that's the reason why we need to build a lot
of energy infrastructure in this country. Otherwise they're going to
be very significant broundouts and blockouts in this decade and
nobody wants that.
Speaker 2 (35:29):
A rare quadrilemma that will it sounds like I want
to pivot a little bit to housing. And you know,
there are a lot of people, particularly on the internet
that you know, the MBI's and you know, permitting and
all this stuff. We've got to build more and build
more vertically and you know, let's just have one staircase
and a multifamily building instead of two, et cetera. When
(35:51):
you look at the overall like the cost of affordability,
whether it's rent, et cetera, how much do you attribute
of that to various regional and local permitting policies versus
other aspects of the housing economics industry that don't automatically
sort of create abundant housing.
Speaker 5 (36:10):
It's a combination of the two. And I think there's
no one solution that makes housing affordable tomorrow. It's an
enormous system that even aggressive legislative changes are going to
take a lot of time to work their way through
the system. You're constrained by the supply chain of building houses,
which includes labor, includes the number of home builders, includes
(36:31):
kind of the financing available, etc. But I think there
is this question of does the ability to build housing
reduce housing costs? And I think you can find examples
where that might not be true. I think there are
some very narrow instances. I think Bay Area might be
(36:53):
one of those where if you build another one hundred
units of housing, does that just create more jobs than
create more demand for house? That's true in this very
narrow sense if you're just looking at one community doing
a thing, and I think that brings back this broader
question of you know, what's the role and responsibility of
an individual town or city on building workforce housing. And
(37:18):
I think what the kind of game theory will show
is every community wants the community next door to build
that house. They want to maintain their sense of community.
They don't want change, you know, kind of the status
quo bias kicks in and everybody says like, yes, we
(37:38):
need more affordable housing, more workforce housing, more housing in general,
build it next town over. Now, if every town says that,
then you got a problem. And this is why I
think there's a role for the states to step in.
And this is what you've seen in California where we
can't count on individual towns and cities to solve this
(37:59):
problem on their own because the incentives just don't align
with the needs of people of society. But from the
bigger picture from the state of California, they're looking in
saying the economic vitality of our state is dependent upon
getting more people to come to the state and not
just have this aging population that creates a lot of
(38:23):
problems with workforce and with the needs of aging populations,
and so it is vital to the economic vitality in
order to build more housing in California, and therefore there
needs to be state rules and mandates and incentives that
get you to that answer.
Speaker 3 (38:41):
I'm going to play like I guess a bonus round
of odd lots type stuff where I just ask you
about various things that have come up on the podcast
as problematic before and going back to Texas ties, I
feel like I have to ask the Jones Act, is
that something that you would ever consider getting interested in.
Speaker 5 (39:03):
As a longtime listener of the podcast, I can attest
to the number of times as has come up. It's
one where I don't see the political viability and really
stayed away. Say more, unions are very much against repeal
of the Jones Act, and I think there is a
sense that we need a shipbuilding industry for national defense purposes,
(39:25):
for unforeseen events in the future, and therefore in order
to have one, you have to kind of subsidize one
because we are not competitive building ships in America visa
v rest of the world. So therefore we can either
create large subsidies or mandates and we've chosen to do
the latter and create this mandate that any intra US
(39:48):
shipping has to be on a US flag vessel kind
of built in the US, and therefore we have some
resemblance of a shipbuilding industry in the country.
Speaker 2 (39:57):
Would we have more success we paired that mandate with
subsidies or maybe just like a big public program or
using the Navy or whatever to just construct more Jones
Act compliance ships.
Speaker 5 (40:10):
It would be difficult. I mean a lot of things.
Now the federal government has decided just to subsidize mm hmm.
And again, like you can either use sticks or carrots
in order to change behavior. And you know, Ira was
a great example where ninety nine percent of the provisions
and there are carrots. There's a methane fee that's a stick.
But on the Jones Act, it's tended to be on
(40:32):
the stick side. Given where the federal debt and death
sit are and the long term risks associated with that,
I'm not a strong advocate of doing more subsidies to industry.
Speaker 2 (40:44):
I just have one more question, but can you tell
us about cross state baseball card trading arbitrage.
Speaker 5 (40:53):
Turns out people in New York and Canada like hockey
cards much more than people in Texas. Okay, at least
in the late eighties early nineties. I was a baseball
card collector when I was twelve, thirteen, fourteen, and you know,
it was never really that into the individual cards, but
was very interested in the business of cards.
Speaker 2 (41:15):
I just like, it's just so perfect. It's like, go
on into like billionaire energy trader. I wasn't really interested
in the players or whatever, but got really interested in
the business and pricing of cards. But go on, go on,
tell it, tell us the rest.
Speaker 5 (41:27):
Yeah, yeah, and so yeah, this was kind of a
little boom period that happened late eighties early nineties in
the sports card industry. Kind of very much a bubble
ended up being created. But there was a time when
prices were very volatile. There was rising prices in general,
but most importantly, there was kind of information asymmetries and
(41:51):
so kind of what a lot of the dealers knew
was just their local market. You know, the Texas Rangers
baseball cards would sell better in Dallas than hockey cards
would sell in Dallas, and so they priced them as such.
And meanwhile you found other markets that were you had
the inverse and so I kind of created almost geographic
(42:15):
arbitrage and had figured out a way through some of
the early bulletin boards on the Internet of being able
to be on top of what both national pricing was
as well as regional pricing disparities kind of across the
sports card market. And as I was in high school,
(42:35):
this was kind of my evening and weekend job to
make a few bucks, and it ended up being pretty profitable.
Speaker 3 (42:43):
Geographic disparities. It sounds a bit like energy trading and
the grid.
Speaker 5 (42:47):
It's a lot like energy trading.
Speaker 3 (42:50):
I have just one more question, and it relates to,
I guess a sort of provocative point, but an important
one and one that I'm sure you've addressed before. But
I think it's fair to say that there is some
public distrust of billionaires getting into policy making, and we
(43:10):
can maybe go into why that that's happened. But I'm
sure you might reply that your sort of evidence based
approach maybe differentiates you from some others. But even when
you're taking a more rigorous scientific methodology to addressing some
of these large scale problems in the American economy and
(43:32):
you're looking at all the evidence, it feels like there's
still a question over who gets to decide. I guess
what evidence matters. And this is maybe where you get
into questions of unfairness or the idea of like why
do billionaires get to say that this is the thing
that we should be looking at, other thing we should
be paying attention to. What would be your response to
(43:52):
those sort of criticisms.
Speaker 5 (43:54):
So I think it's a very fair take and that
we need to think about what our role is in
society and why, because we have resources, you know, why
do we get to play in some of these areas.
And I think about the counterfactual and that again, a
lot of our role we see is providing tension systems
(44:15):
that if we were not involved in the healthcare system,
in higher ed system, in infrastructure and criminal justice and
electoral reform and energy and all these areas, the ones
who would have the political power, the ones who would
be funding the lobbies and have the political strategy, would
solely be in some cases those with an economic incentive
(44:41):
of the system. And so the one thing we bring
is that we don't have financial incentive or financial conflict
on things that we're advocating for, whereas almost everybody else
in DC or a state legislature who's out there lobbying.
The reason they are paying a lobbyist, the reason they're
(45:01):
investing that money is exactly because they have a financial
stake in the system that they're trying to protect. And
so we're providing that tension in the system. And we
are not the ultimate arbiters, right the politicians. The political
system decides, but they should have all the facts. Whenever
the politician, whenever the policy makers are making the decisions
(45:26):
are passing laws, they should get kind of the full
scope and have as much information as they can. And
I think that's what our role is.
Speaker 2 (45:34):
John Arnold, so great to have you. Really appreciate you
taking the time. Thank you for coming on odd Law.
Speaker 4 (45:40):
Great.
Speaker 2 (45:40):
Thank you, Tracy. I found that to be a great conversation.
I feel like this idea of like interest asymme tree
is sort of at the heart and it's obvious in
(46:02):
some sense, but it's like as a sort of framework
to think about the difficulty in doing things, like a
very useful idea. You know, I on a day to
day basis, I wasn't really thinking that much about the
congestion pricing thing. But I'm sure that the representatives of
you know, the various neighborhoods in Long Island where you
(46:23):
might have a lot of working class commuters or people
in trades having to come in on their vans, were
extremely motivated by this particular question.
Speaker 3 (46:32):
Oh absolutely, you know. The thing I thought was interesting
was the example of the filings against proposed sites and
the idea that I think everyone has this like sense
that things have become more complex, and there might be
various reasons behind it, but one of them surely has
to be that people are getting better every day at
(46:55):
just dealing with the existing system, and so you see
things like more sophisticated legal strategies where instead of unloading
a bunch of protestations or counterclaims against one particular project
at one moment in time, you get that slow drip
process of filings which ends up gumming up the system.
(47:16):
And it is reasonable to say, like, I don't think
we've seen a good response to those more sophisticated strategies
that are aimed at gaming the system.
Speaker 2 (47:26):
Tracy, have you ever seen that website wtf happened in
nineteen seventy one.
Speaker 3 (47:33):
I've never looked at it, but I've heard of it.
Speaker 2 (47:35):
So it's like basically this whole thing of like life
started getting more expensive and a bunch of stuff going downhill.
And the conceit of the website is that nineteen seventy
one is when Nixon took us off the gold standard,
and so it's like, oh, if we only returned to gold,
then you know, all these lines would go in the
other direction. But I think it's also very interesting that
(47:57):
that was exactly also the time when and some of
these big NIPA and other related permitting things first started
getting kicked into gear that three years that he identified
nineteen seventy to nineteen seventy three. And I would just
put forth that if you are very sort of like
obsessed with the idea that a bunch of things started
(48:17):
changing in nineteen seventy, maybe do with something on the
monetary side, but it might also be worth looking into
how policies that affected the cost of construction, cost of energy,
et cetera also changed during that exact time.
Speaker 3 (48:29):
You know, you need Joe, you need John Arnold to
spend a bunch of money rigorously testing the theory that
nineteen seventy one changed everything.
Speaker 2 (48:38):
Or he could just buy the website and just changed
the entire premise of the website. So a bunch of
people go there and get different ideas.
Speaker 4 (48:44):
That too, All right, shall we leave it there.
Speaker 2 (48:46):
Let's leave it there.
Speaker 3 (48:47):
This has been another episode of the All Thoughts podcast.
I'm Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 2 (48:53):
I'm Joe Wisenthal. You can follow me at the Stalwart.
Follow our guest John Arnold, He's at John Arnold FND.
I think that stands for a foundation. Follow our producers
Carmen Rodriguez at Carmen Arman, dash Ol Bennett at Dashbot
and Kilbrooks at Kilbrooks. And thank you to our producer
Moses Ondem. More odd Loots content go to Bloomberg dot
com slash odd Lots, where we have transcripts, a blog
(49:15):
and a newsletter and you can chaut about all of
these topics twenty four to seven in the discord with
fellow listeners Discord dot gg slash odd Lots.
Speaker 3 (49:23):
And if you enjoy odd Lots, if you want us
perhaps to do an episode on why everything started going
wrong in nineteen seventy one, then please leave us a
positive review on your favorite podcast platform. And remember, if
you are a Bloomberg subscriber, you can listen to all
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do is connect your Bloomberg account with Apple Podcasts. In
(49:45):
order to do that, just find the Bloomberg channel on
Apple Podcasts and follow the instructions there. Thanks for listening
in
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:19):
Hello and welcome to another episode of the Odd Lots podcast.
Speaker 3 (00:23):
I'm Joe Wisenthal and I'm Tracy Alloway.
Speaker 2 (00:26):
Tracy, we're recording this on June sixth, and yesterday we
got the news of New York City Governor Kathy Hochel
permanently putting a pause on a proposed congestion tax people
driving into the City of Manhattan from the outer boroughs
or other states. And I have to say, like reading
about the whole thing like it kind of depresses me.
Speaker 4 (00:48):
It's crazy that story.
Speaker 3 (00:49):
I'm sorry, but Joe saw me kind of going off
on this in an internal chat room yesterday when the
news kind of filtered out. But regardless of where you
sit on the ingestion pricing debate, I think we can
all agree that a last minute you turn, after years
and years and years of public consultation, all this matter,
(01:11):
after the installation of the machines that we're supposed to
take photos of everyone's license plate and actually get the fees,
that this is not an ideal outcome to actually cancel
the plans two weeks before they were supposed to go
into effect.
Speaker 5 (01:27):
Yeah.
Speaker 2 (01:27):
Look, I'm a neutral journalist at a mainstream publication, so
I have no opinions on policy. Ever, it is not
my job. But it does seem to me that there's
something wrong if you spend like probably one hundred million
dollars in studies and you talk about something for sixteen
years and you have all these things and then it's
like at the end, it's like nah, and it's like
(01:49):
how do we like build anything in this country?
Speaker 4 (01:53):
It's just surreal.
Speaker 3 (01:54):
Sorry, the more I think about it, the more I
just like start laughing and then kind of crying as well.
Speaker 4 (01:59):
It's it's crazy.
Speaker 2 (02:01):
But of course this comes up all the time in
so many episodes we do, whether it's around housing, or
whether it's about electrification, or whether it's about installing offshore wind,
whatever it is. It seems like there is a major
problem in this country about like how long it takes
to plan things, how long it takes to get permits
for things, the cost of construction. The crazy thing with
(02:22):
the congestion text, it wasn't even like a construction thing.
You know, it's literally just tolls. It's not like they
had like build some new bridges and you know, demolish
tens of thousands.
Speaker 3 (02:31):
Well, they still spend a lot of money on it.
But yes, I take the point. It's not like they
were building a new highway that would go through you know,
some neighborhoods or something like that.
Speaker 2 (02:39):
Right, right, It's also crazy to me anyway, I do think, like,
you know, this recurring question of like why is it
so hard to build stuff or just actually like take
any decisive policy towards anything, seems like a real problem.
Speaker 5 (02:52):
Oh.
Speaker 3 (02:52):
Absolutely, And even though this particular issue I think we
can all agree was very contentious, there.
Speaker 4 (02:58):
Are people who feel wrongly on both sides.
Speaker 3 (03:01):
There are other things that I think have more collective
public support and maybe certainly bipartisan support. So I think
most of Americans, most politicians would agree, for instance, that
housing supply is kind of a bipart is an issue now.
But even on something like that where everyone kind of
(03:21):
agrees like, yes, this is a problem, we need more supply,
we need places for people to actually live, there are
all these questions about how you actually decide where to
put those houses, and then even more controversially, how do
you fund that, Like what does support for real estate
residential real estate actually look like? Where does the financing
(03:42):
come from. How do you structure that? Is it the
form of subsidies, is it the form of incentives? Is
it public private partnerships. It just seems like there are
so many points in the process at which you can
kind of like get stuck.
Speaker 2 (03:56):
So many, so many Anyway, I'm really excited because we
do have the guest today. We're going to be speaking
with someone who is extremely interested in this topic and
sort of puts his money where his mouth is, spends
a lot of money researching and trying to think up
solutions to some of these things. We're going to be
speaking with John Arnold. He's the co chair of Arnold Ventures.
(04:17):
Prior to that, he was a famed energy trader, made
his fortune at Centaurus Energy. Prior to that, I learned
he was the recipient of the single biggest cash bonus
when he was a trader at Enron, where he was
not accused of any wrongdoing a bunch of people there
obviously were. And now he is a philanthropy co chair
Ernold Ventures, as I mentioned that, among many other things,
(04:40):
works on problems like this. In fact, they do a
lot of health, criminal justice, higher ed public finance, all
of which could probably make for a great specific episode
of the podcast. John, thank you so much for coming
on out Laws.
Speaker 5 (04:53):
It's a great honor to be on my favorite financial podcast.
Speaker 4 (04:56):
Hi, thank you.
Speaker 2 (04:57):
I'm skeptical favorite, but thank you.
Speaker 3 (05:00):
Just accept the compliments show and move on.
Speaker 2 (05:03):
We'll take it. So we're going to get into all
this permitting. And you had a great tweet yesterday. Actually
you did a little mini history of the congestion pricing
in a tweet. Starting in two thousand and seven, Mayor
proposes worded FED grant two thousand and eight, plants finalized
two thousand and eight to twenty seventeen in stalllah blah
blah blah, environmental assessment, another delay, another delay, and now
(05:26):
the indefinite delay. I want to get into all that,
but before we do, there are a lot of billionaires
who want to give away their money and have philanthropies,
et cetera. I get the impression that Arnold Ventures tries
to solve these problems sort of differently, or try to
have a novel approach to giving your money away. What
is the sort of driving philosophy behind what you do?
Speaker 5 (05:47):
Yeah, it might be good to start at the beginning
of our phone tropy efforts. My wife, Laura, and I
came out of professional careers from the private sector. I
was in energy trading for seventeen years. Kind of got
burnt out after those seven teen years. My wife was
an m and a lawyer. She kind of got burnt out.
And we had this fledgeling foundation at the time that
was doing work in mostly in K twelve reform efforts,
(06:10):
and I think a lot of people from the financial
sector kind of got involved in those efforts in the
two thousands, and then after two thousand and eight, we
got very interested in the public pension crisis that was happening.
Both the funding design and benefit design we viewed as
flawed and started working in that area. And then we
got interested in criminal justice reform, and we stepped back
(06:31):
and saw, wait a minute, the tie amongst these three
very disparate areas is that they're all related to public policy.
It's all about the rules and incentives of the systems
that drive behavior. And so we started thinking more and
more about public policy as the framework for our philanthropic
efforts and really believe that there's a shortage of philanthropy
(06:54):
focus on this very important issue of policy. We think policies,
yes it's sustainable, it's scalable, and it's structural change in
a way that maybe funding programs is not. But for
a variety of reasons, it tends to be underfunded from
the filmtharbic community. It's changing a little bit. But that
really laid us down this pathway of getting involved in
(07:15):
a number of areas of public policy, including infrastructure and
the energy and climate and housing debates.
Speaker 3 (07:22):
How do you decide what you want to look at?
Because I was searching for some of your previous projects,
and there's a lot of them. So criminal justice reform
is probably one of the ones that you're better known for,
charter schools, which you just mentioned, but there are other
things like high drug prices, expensive college textbooks, even geoengineering,
(07:45):
which I don't think a lot of billionaire philanthropists have
even begun to look into the quality of academic research.
I think that's something you've been working on as well.
But it seems like a very varied collection of interests
that you have.
Speaker 5 (08:00):
It is we kind of get drawn to issues where
there starts to be bipartisan support at least out of
a where at a suboptimal equilibrium, and so there starts
to be some political consensus of desire for change. Now
finding what the overlap is across the two parties can
be a much more challenging endeavor. So we're looking for
(08:21):
those types of issues where at least one side is
starting to move and there starts to be this political
window that's opening for reform. We're looking for areas that
have promising ideas. There's we're not necessarily going into areas
saying here's our idea. We're not the experts in it,
but we survey the field and try to find out, oh,
(08:41):
here's a promising idea. Maybe we can support this or
test this or evaluate that in an idea and I
think you know again, we're looking for areas that have
this public policy focus to it, where it's about the
rules and incentives of systems and how can we change it.
And then we have to believe that we as an
outside third party can have influence on a system, which
(09:03):
in some areas we can and some I think we've
had to turn away thinking that it's not obvious how
we can have a positive influence on those areas.
Speaker 3 (09:11):
This is going to be my next question, actually, But
once you identify an area where there either is bipartisan
support or the I guess first inklings that this could
have bipartisan support, what's the value proposition that you bring
to the table, Because just to play devil's advocate, but
you know, if both sides of the aisle are interested
(09:32):
in this and are discussing solutions, then maybe they can
figure it out on their own.
Speaker 5 (09:38):
I wish it were that easy. Yeah, I think most
of our work centers around one of three roles. The
first is providing tension in a system. So from a
economist framework, it's often areas that have a concentrated benefits
diffuse costs area. So you can think about healthcare, where
you have many companies that get one hundred percent of
(09:59):
their revenue from the system. They're very dedicated and inclined
and very motivated to be involved politically. And so some
of the strongest, if not the strongest lobbies in DC
are from the healthcare industry, whether it's pharmaceutical or hospitals
or physicians or insurers, PVMs, et cetera. And the costs
(10:19):
of the system fall to individuals, it falls to the taxpayers,
it falls to individual firms, and none of those really
have the incentive to put significant resources to counter the
weight of industry, and so we see a rule for
trying to provide proper tension into a system, and so
we're stepping in, Like when you have everybody in DC,
(10:41):
every lobbyist trying to advocate for more money into the system,
we're stepping in saying, how can you bend the cost
curve in healthcare without having any compromise on quality of care?
And it is a very lonely position because you know,
again there's not much incentive.
Speaker 2 (10:58):
For others to do this.
Speaker 5 (11:00):
And a second aspect we get involved in is the
development and piloting of new ideas. I was talking about.
You know, we survey a field and try to see
what are academics, what do practitioners, what are their ideas
as to how the system could be performing better, and
do they need resources in order to kind of more
fully develop the idea or even start to test the idea.
(11:23):
And then the third area we often get involved in
is evaluation. And I think this is a very underfunded
aspect of public policy, is trying to figure out what
works what doesn't. And this includes what programs work and
what policies work. And I think that's led to some
surprising findings over the years that things that seem obvious
(11:44):
that they should be productive, should be efficient, turn out
to have counterproductive aspects to them, and you might not
be a good policy or a good program.
Speaker 2 (11:55):
What's an example of that, something that everyone thoughts like, yeah,
let's do this, and then when you actually looked at
the results, no, it didn't.
Speaker 5 (12:03):
This is a small one, but I think it's very tilling.
Is there was a program that was started, I think
it was in the eighties or nineties of a Scared
Straight where the idea was, let's take high school students
who were kind of starting on the pathway of misbehavior
that people thought they might be going into criminally justice
(12:25):
involves individuals and will take them into prisons in jails
and show them how horrible it is in these places
and try to quote unquote scare them straight. And you know,
this program went on for a number of years, got
federal funding, state funding, and then someone came around and
did an evaluation and they did a RCT you know,
(12:46):
put some people through the program, some people not, and
it turned out after the fact that those that had
gone through the program actually you know, committed more crimes
than those that didn't and so you know, kind of
had this theoretical background, but when you actually apply in practice,
you often get very different results than what the theory said,
or there are unintended consequences of those programs that are
(13:09):
very hard to think about in advance.
Speaker 2 (13:26):
One of the debates I see online a lot is
whether it's productive from like a political standpoint, to sort
of always talking about worst case scenarios. And there's a
lot of people it's like, oh, yeah, when you're talking
about say climate, always air on the worst situation. And
then there's other peoples like, no, let's actually talk about
what the most likely situation is or whatever. And I
find this sort of an interesting, interesting sidetrack.
Speaker 3 (13:50):
Absolutely, I've seen that argument before that if you're always
focused on the worst case, then you're never going to
do anything much less get out of bed in the morning.
Speaker 4 (13:58):
But John, I wanted to.
Speaker 3 (13:59):
Ask you as well, in addition to the evidence based approach,
there's something else that you do that's a little bit
different to a lot of other philanthropic organizations, and that
is the actual structuring of the company. So Arnold Ventures.
I think you have different aspects of the organization, but
one big part of it is structured as a limited
(14:20):
liability company versus say a charitable foundation or a donor
advised fund. And I'm really curious why you decided to
take that approach because to date, there aren't that many
billionaires that have gone down that route. Zuckerberg is probably
the big exception there. But how did you decide to
(14:41):
take that line? In terms of organizational structure.
Speaker 5 (14:44):
Part of this was a realization that research alone doesn't
pass laws, and that we had to have the political
know how and advocacy and comm strategies tied directly into
our five H one C three work, charitable work, the
research focus, and so we created these two arms. Over
(15:05):
the years, we had our C three and we had
our C four. They have different tax treatment, and so
we had to have this Chinese wall between the two,
and it became very annoying because we had some employees
that were with the C three and some that were
with the C four. Now we're very strongly advocate that
we want to put more research and more evidence based
findings into government, into policy, and so trying to combine
(15:28):
those organizations had a lot of synergy. And so what
we did was we brought all employees up into this
LLC and we could knock down the Chinese Wall. There
was a few kind of negative tax consequences from that,
but in the grand scheme it wasn't that significant, and
we thought the benefits from having one organization where employees
could both be experts on the research as well as
(15:52):
sit and talk with policy makers to advocate for better policy,
was the better approach.
Speaker 2 (15:58):
Let's get into some of the the infrastructure and policy
questions that we let off with. You know, we're talking
about this congestion pricing seventeen years was about to go
into effect, finally delayed at least in definitely two weeks
before it was about to go into effect. When you
look at a story like this and you watch it
and you see how long it enfolds and then never happens.
(16:19):
Is this being replicated across the country on smaller scales
all the time that we don't see because they're not
as big. And as you look at situation after a situation,
what do these have in common? I mean, this wasn't
even an infrastructure project, which blows my mind. It was
just basically increasing the tolls. But what's really going on
here that it's so hard to get a policy like
(16:39):
this past.
Speaker 5 (16:40):
You're right, that is not an infrastructure project, but it
was very illustrative and similar to the timeframe and journey
that many infrastructure projects in the US are now facing.
And maybe we start back with and the environmental framework
for this country really got started in this three year
period between nineteen seventy and nineteen seventy three under Republican
(17:02):
Richard Nixon, with bipartisan support, and this was the creation
of the EPA. It was the creation of NEPA, the
Clean Air Act, Clean Water Act, and Endangered Species Act,
and even today, that's really the framework that most of
the environmental law is based upon. And those were enacted
for good reasons and have been very effective policies as
(17:26):
a whole. If you think back before nineteen seventy, there
were a lot of environmental disasters in this country, from
the Cuyahuga River catching on fire, to the smog that
you saw in la in Houston and Pittsburgh, to the
oil spill in Santa Barbara, and so there was a
reason why there was broad both voter support and bipartisan
(17:47):
support for this and it's had good impact over the years,
but it's changed, and I'd say starting at the turn
of this century, although that's not a hard turn, but
two things happened. One was that the courts started becoming
more aggressive about interpretation of these laws and made it
harder and harder for developers to build things. The second
(18:10):
was that opponents to projects became smarter about how to
utilize the laws to stall and ultimately cancel many projects.
And one example of that is instead of filing all
your objections to a project at the same time and
let them be heard simultaneously, what opponents started doing was
(18:31):
file one opposition. You know, wait a couple of years,
is that chugged through the court system. When that got reconciled,
then file your next claim and then do your next claim.
And so a process that should have taken two years
to hear the oppositions and the complaints about it ends
up taking ten years to do it. And that does
several things right, and it greatly increases the cost to
(18:53):
the developer to do it. It increases the time to
bring these important infrastructure projects to the market, and it's
just provides this kind of general sense of malaise that's
developed across both the end users of these infrastructure projects
as well as the developers.
Speaker 3 (19:13):
So I know you spent a lot of time in
DC as part of your philanthropic push, But when you're
talking to politicians or other policy makers, or maybe even
court officials or people from the judiciary, is there a
recognition that this is an issue now, that it is
harder to build things, or that it just takes longer.
Speaker 5 (19:36):
Absolutely, And I think the passage of the IRA really
changed the discussion around permitting. And I think, you know,
there was a growing sense around the difficulties that the
environmental framework we're creating for projects, but then the IRA
passed this kind of deregulation or this desire to look
(19:57):
at the kind of environment process was historically a Republican
one or a conservative one, right, And then the IRA
passes and the CBO scores the environmental provisions at I
think three hundred and ninety one billion dollars, and then
as the private sector and as environmental orgs spent time
with that law and started thinking about what does this
(20:21):
actually mean. You started hearing numbers that were actually in
excess of a trillion dollars. And this was kind of
a secret that was going around the environmental community was
don't tell anybody but this is a trillion dollars of
new spending on environmental projects because they were modeling this
on spreadsheets. And then the reality sets in and the
(20:42):
reality is that modeling things on spreadsheets versus actually building
physical infrastructure is two radically different things. And so then
the next twelve months was about holy cow, like, we
need to change and make it easier to build, because
instead of trying to stall and cancel projects, in order
(21:03):
to have an energy transition in this country, we need
to build a lot of things. And so there's a
lot of energy infrastructure that needs to get built. Now.
The same rules that we're making it difficult to build
clean energy infrastructure were also making it difficult to build
traditional oil and gas infrastructure. And so today the Mountain
Valley Pipeline, which has gotten very famous because of the
(21:25):
discussions over the past couple of years, is very near completion.
But there's no other interstate pipeline that's in development after that,
and the developers have pretty much given up because you've
now had three major pipelines that ended up getting canceled
or very significant delays. That has greatly affected the economic
(21:45):
outcomes of those projects, and so developers are saying, we
don't know what the rules are anymore to build these projects,
and so we're not even going to start because we've
seen three instances where they became financial albatrosses. And all
this was happening on the energy side at the same
time time that the housing side really started to pick up,
and this was coming from a lot of this originated
(22:06):
in California, which the lot of well known stories about
the difficulty of building housing, especially a workforce housing in California,
and there started to be the creation of a YMBI
movement and real questions about what are all these hurdles
that are in the way of development, and that helped
to spur this whole movement around the abundance agenda. And
(22:30):
so all these things are coming together and we see
that there is now great political will from both sides politically,
but also includes a lot of the environmental groups who
had traditionally worked to kill projects and delay projects are
now realizing they need to find projects to support.
Speaker 2 (22:49):
So let's drill deeper into this because we actually recently
did an interview with the CEO of ORSTED Americas and
slow permitting for offshore wind was one of the bottlenecks
that he cited. I saw you've done something with a
sort of like more advanced power lines so that clean
energy in one part of the country can be distributed
(23:11):
to other parts of the country, et cetera. But what
are the sort of specific issues that arise in permitting
or maybe what are the specific types of reforms that
would be necessary so that this trillion dollars can actually
get spent in some sort of relatively efficient manner that
produce it good, Like, what are the actual issues that
play here?
Speaker 5 (23:31):
Yeah, this applies not only to clean energy, but to
all energy infrastructure and kind of all linear infrastructure. You
think about linear infrastructure, which includes rail and highways and transportation,
transmission pipelines. All these things have gotten very very difficult
to build in the twenty first century. So the question
(23:53):
is kind of what to do, and that's where things
often kind of start to bog down. There's been kind
of extensive negotiations between Senator Mansion and Senator Brosso in
the Senate, and they've been reported days away from potentially
releasing a bill that it starts to address this. And
the framework that they've mentioned would do a lot of things,
(24:14):
and I think The question is that oil and gas
has traditionally had exceptions on some of the environmental framework,
and so everybody talks about NEPA and the categorical exemptions
that certain industries have from the NEPA process, and so
oil and gas has a lot of exemptions from that.
Clean energy generally doesn't. So things like geothermal, the transmission
(24:39):
that's necessary to unlock the wind and solar resource, and
then even things like sighting of wind turbines all end
up tied up in a lot of environmental process that
either stall or make them uneconomic. And so the question
is that do you bring clean energy down and make
it at an equal basis to oil gas and make
(25:01):
everything easier to build, or if we do nothing, and
oil and gas is becoming harder and harder to build
and everything across the energy spectrum becomes very difficult to build.
So going back to what are the specifics, one is
what is the role between federal and state on trying
(25:21):
to permit things? And so there's this inherent tension between
needs of society and the preferences of a community. Right,
we need energy, we need transportation, mining, workforce, housing, et cetera. Right,
but individual neighborhoods usually prefer that that be built somewhere else,
and so the question is what's the right tension in
(25:42):
that system between society versus the community, And that really
boils down to federal versus state and local. And so
the question that needs to be addressed is, especially on
a lot of these linear infrastructure projects, where are projects
of national signs diifficants that need the ability for the
(26:02):
federal government to come in and permit it because it's
of national strategic interest. A second issue is around these
judicial reforms and again allowing these objections to come in,
allow them to be heard, but that the opponents to
projects need to present those objections in a timely manner,
and the courts need to hear those objections and rule
(26:25):
on them in a tiny manner. And the agencies need
to respond to anything that's coming out of Lowe's rulings
in a timely manner. And I think kind of the
combination of those two things is really what the permitting
reforms are looking like.
Speaker 3 (26:55):
So I have two questions on permitting reform, and the
first one is if we agree that speed of build
out is important here in addition to actually freeing up
the financing.
Speaker 4 (27:08):
Then why didn't the.
Speaker 3 (27:08):
IRA just include permitting reform from the beginning? And then secondly,
you know you mentioned NIPA, the National Environmental Policy Act.
What do we give up in permitting reform because you know,
I imagine a lot of these rules and regulations exist
for a reason, and so I would also think there
(27:31):
would be some sort of trade off in maybe liberalizing
some of those rules.
Speaker 5 (27:36):
Yeah, let me start with the second question, and that's
it's about balancing the interests of the system. And so
the United States has gone through a history where it
just built everything and barreled through neighborhoods. And I think
Robert Moses in the forties and fifties was the great
example of this. And on one hand, he got a
(27:56):
lot of things built. On the other hand, he barreled
through neighbor hood's created a lot of pain and a
lot of inequitable outcomes, particularly amongst the poor and minority groups.
And so that's not the right way to do it.
But I think there's growing consensus that where we are today,
where it's very very difficult to build anything, is also
(28:17):
gone too far in the other extreme. So again it's
about balance neighborhoods and communities need to be heard. Objections
need to be heard and litigated. We need to find
the best way to do these projects. But we can't
let perfect be the enemy of the good. And a
lot of these times, like we need to build stuff,
we need to build transportation infrastructure, we need to build housing,
(28:40):
we need to build energy infrastructure, there's going to be
trade off with every project. No project is going to
be perfect, and so the question is what's the right
standard with regards to you Why weren't these in the
IRA bill And that was just you know, the congressional
rules about what could be part of reconciliation and pass
with fifty votes versus requiring sixty And the parliamentarian ruled
(29:04):
that permitting reform was not a financial issue and therefore
needed sixty votes, needed regular order, and so Senator Mansion,
as part of the negotiation, came to an agreement with
Leader Schumer that Schumer would bring to the floor a
permitting reform bill in the future, and that came very close.
(29:26):
Senator Mansion realized that it didn't have the sixty votes,
and so it never actually came to the floor, but
discussions and negotiations have been continuing ever since.
Speaker 2 (29:36):
You know, I'm very fascinated by this idea that many
problems come down to one extremely motivated but small opposition.
Whether it's a community, whether it's the one percent of
people on Long Island who get into the city via car,
whatever it is, that they end up having more cloud
or influence in a way than a bunch of other
(29:56):
people who don't even really know about the project, or
don't think about it, or can't see it's tangible impacts
on something like permitting reform at the national level. Who
are the interests as you've identified them, making some of
these votes harder to get to the floor or get
to sixty votes.
Speaker 5 (30:10):
So the environmental organizations are doing a lot of soul
searching today. I would say I've talked to a lot
of them, and it's not correct to put them all
into one grouping. There's a wide variety of them that
have varying views on this. And so you get some
very kind of moderate ones who are done the modeling
(30:32):
and realize that in order to get to a lower
carbon future, we're going to have to build a lot
and that requires changing some of the environmental framework. And
then you have some groups, you know, particularly you know
with the environmental justice community, who have very legitimate concerns
about how infrastructure has been built in the past and
(30:53):
are highly reluctant to make the process easier because they
are scared that things are going to be built in
the same way that they have in the past and
don't trust the system. And again, like there's good reason
why they should be skeptical of this, but I think
that's kind of across that spectrum. The environmental communities trying
(31:13):
to figure out what to do, and there has been
a lot of discussion, I will say in this community.
I again have been parts of a lot of these discussions,
and I think the trick is, how do you find
a bill that gets support from the majority of the
environmental community and also has support from industry and they
(31:35):
get sixty votes And the reality is, you know, it
has to get Republican votes as well as Democratic votes,
and so it has to make everything easier to build.
It cannot be a bill that just focuses on clean energy. Again,
it's impossible to virtually impossible to build an interstate pipeline today. Yeah,
there's the pause on LG export permitting that has the
(31:58):
industry up and armed, and so a bill that is
a compromise bill is going to make building energy infrastructure
across the board easier.
Speaker 3 (32:10):
So I love talking to you about specific examples. And
I know you're based in Texas, and of course you
have an energy trading background. So I feel like we
would be remiss if we didn't ask for your thoughts
on the Texas power grid in particular, And if that's
something that has come up on your radar, either by
dint of your interest in policy or the mere fact
(32:33):
that you are in Texas and maybe you have experienced
some of the issues that have sprung up from various
problems in the past couple of years.
Speaker 5 (32:40):
I've thought about it, and I've been part of some
of the problems that have developed. The goals of the
energy system are how do you make energy affordable, reliable,
sustainable to the environment, and secure. Now, on the energy security,
that's less of a concern for the United States because
of the quantities and diversity of the energy resource within
(33:03):
our boundaries. So now we think about reliability versus affordability
and environmental sustainability, and at times you can find things
that don't have trade offs in that, but sometimes there
are trade offs, and so one of the trade offs
is reliability versus affordability. Do you want to build a
system that's four nines reliable or five nines reliable and
(33:26):
there's a cost difference to doing so. And so different
communities really we're talking about in different states and different
INERK regions URCOT versus PGAM, for instance, have come to
different preferences on that spectrum. And I think Texas being
Texas has always prioritized being low cost, and as part
(33:48):
of that there's a tradeoff on some of the reliability issues.
It's been exacerbated by the enormous power demand growth that
we've seen in URKOT, so it's struggling just to keep
up with the system, and utilities now across the nation
are starting to face some of these similar challenges. There
(34:08):
was this fifteen year period roughly from two thousand and
seven to twenty twenty two, where load growth across the
nation was relatively flat. That kind of hid. There were
some areas that were growing like Texas slash Orcot. There
were some areas where load was actually contracting as energy
efficiency gains were happening. But utilities are now facing load
(34:30):
growth kind of across the board. So they're being asked
to deal with that, They're being asked to deal with
bringing more intermittent resources onto their grid and dealing with
the reliability associated with that. They're being asked to decrease
the greenhouse gas emissions on this system. And then last,
how do you not end up with significantly higher bills
(34:54):
to the customer. So I said, had the utilities and
the grids only been tasked with two of those challenges,
they'd be very easy. They could probably handle three. But
doing all four at once right now, which is what
most utilities are facing, especially in Texas, has been an
(35:15):
enormous challenge and I think it carries enormous risks, and
that's the reason why we need to build a lot
of energy infrastructure in this country. Otherwise they're going to
be very significant broundouts and blockouts in this decade and
nobody wants that.
Speaker 2 (35:29):
A rare quadrilemma that will it sounds like I want
to pivot a little bit to housing. And you know,
there are a lot of people, particularly on the internet
that you know, the MBI's and you know, permitting and
all this stuff. We've got to build more and build
more vertically and you know, let's just have one staircase
and a multifamily building instead of two, et cetera. When
(35:51):
you look at the overall like the cost of affordability,
whether it's rent, et cetera, how much do you attribute
of that to various regional and local permitting policies versus
other aspects of the housing economics industry that don't automatically
sort of create abundant housing.
Speaker 5 (36:10):
It's a combination of the two. And I think there's
no one solution that makes housing affordable tomorrow. It's an
enormous system that even aggressive legislative changes are going to
take a lot of time to work their way through
the system. You're constrained by the supply chain of building houses,
which includes labor, includes the number of home builders, includes
(36:31):
kind of the financing available, etc. But I think there
is this question of does the ability to build housing
reduce housing costs? And I think you can find examples
where that might not be true. I think there are
some very narrow instances. I think Bay Area might be
(36:53):
one of those where if you build another one hundred
units of housing, does that just create more jobs than
create more demand for house? That's true in this very
narrow sense if you're just looking at one community doing
a thing, and I think that brings back this broader
question of you know, what's the role and responsibility of
an individual town or city on building workforce housing. And
(37:18):
I think what the kind of game theory will show
is every community wants the community next door to build
that house. They want to maintain their sense of community.
They don't want change, you know, kind of the status
quo bias kicks in and everybody says like, yes, we
(37:38):
need more affordable housing, more workforce housing, more housing in general,
build it next town over. Now, if every town says that,
then you got a problem. And this is why I
think there's a role for the states to step in.
And this is what you've seen in California where we
can't count on individual towns and cities to solve this
(37:59):
problem on their own because the incentives just don't align
with the needs of people of society. But from the
bigger picture from the state of California, they're looking in
saying the economic vitality of our state is dependent upon
getting more people to come to the state and not
just have this aging population that creates a lot of
(38:23):
problems with workforce and with the needs of aging populations,
and so it is vital to the economic vitality in
order to build more housing in California, and therefore there
needs to be state rules and mandates and incentives that
get you to that answer.
Speaker 3 (38:41):
I'm going to play like I guess a bonus round
of odd lots type stuff where I just ask you
about various things that have come up on the podcast
as problematic before and going back to Texas ties, I
feel like I have to ask the Jones Act, is
that something that you would ever consider getting interested in.
Speaker 5 (39:03):
As a longtime listener of the podcast, I can attest
to the number of times as has come up. It's
one where I don't see the political viability and really
stayed away. Say more, unions are very much against repeal
of the Jones Act, and I think there is a
sense that we need a shipbuilding industry for national defense purposes,
(39:25):
for unforeseen events in the future, and therefore in order
to have one, you have to kind of subsidize one
because we are not competitive building ships in America visa
v rest of the world. So therefore we can either
create large subsidies or mandates and we've chosen to do
the latter and create this mandate that any intra US
(39:48):
shipping has to be on a US flag vessel kind
of built in the US, and therefore we have some
resemblance of a shipbuilding industry in the country.
Speaker 2 (39:57):
Would we have more success we paired that mandate with
subsidies or maybe just like a big public program or
using the Navy or whatever to just construct more Jones
Act compliance ships.
Speaker 5 (40:10):
It would be difficult. I mean a lot of things.
Now the federal government has decided just to subsidize mm hmm.
And again, like you can either use sticks or carrots
in order to change behavior. And you know, Ira was
a great example where ninety nine percent of the provisions
and there are carrots. There's a methane fee that's a stick.
But on the Jones Act, it's tended to be on
(40:32):
the stick side. Given where the federal debt and death
sit are and the long term risks associated with that,
I'm not a strong advocate of doing more subsidies to industry.
Speaker 2 (40:44):
I just have one more question, but can you tell
us about cross state baseball card trading arbitrage.
Speaker 5 (40:53):
Turns out people in New York and Canada like hockey
cards much more than people in Texas. Okay, at least
in the late eighties early nineties. I was a baseball
card collector when I was twelve, thirteen, fourteen, and you know,
it was never really that into the individual cards, but
was very interested in the business of cards.
Speaker 2 (41:15):
I just like, it's just so perfect. It's like, go
on into like billionaire energy trader. I wasn't really interested
in the players or whatever, but got really interested in
the business and pricing of cards. But go on, go on,
tell it, tell us the rest.
Speaker 5 (41:27):
Yeah, yeah, and so yeah, this was kind of a
little boom period that happened late eighties early nineties in
the sports card industry. Kind of very much a bubble
ended up being created. But there was a time when
prices were very volatile. There was rising prices in general,
but most importantly, there was kind of information asymmetries and
(41:51):
so kind of what a lot of the dealers knew
was just their local market. You know, the Texas Rangers
baseball cards would sell better in Dallas than hockey cards
would sell in Dallas, and so they priced them as such.
And meanwhile you found other markets that were you had
the inverse and so I kind of created almost geographic
(42:15):
arbitrage and had figured out a way through some of
the early bulletin boards on the Internet of being able
to be on top of what both national pricing was
as well as regional pricing disparities kind of across the
sports card market. And as I was in high school,
(42:35):
this was kind of my evening and weekend job to
make a few bucks, and it ended up being pretty profitable.
Speaker 3 (42:43):
Geographic disparities. It sounds a bit like energy trading and
the grid.
Speaker 5 (42:47):
It's a lot like energy trading.
Speaker 3 (42:50):
I have just one more question, and it relates to,
I guess a sort of provocative point, but an important
one and one that I'm sure you've addressed before. But
I think it's fair to say that there is some
public distrust of billionaires getting into policy making, and we
(43:10):
can maybe go into why that that's happened. But I'm
sure you might reply that your sort of evidence based
approach maybe differentiates you from some others. But even when
you're taking a more rigorous scientific methodology to addressing some
of these large scale problems in the American economy and
(43:32):
you're looking at all the evidence, it feels like there's
still a question over who gets to decide. I guess
what evidence matters. And this is maybe where you get
into questions of unfairness or the idea of like why
do billionaires get to say that this is the thing
that we should be looking at, other thing we should
be paying attention to. What would be your response to
(43:52):
those sort of criticisms.
Speaker 5 (43:54):
So I think it's a very fair take and that
we need to think about what our role is in
society and why, because we have resources, you know, why
do we get to play in some of these areas.
And I think about the counterfactual and that again, a
lot of our role we see is providing tension systems
(44:15):
that if we were not involved in the healthcare system,
in higher ed system, in infrastructure and criminal justice and
electoral reform and energy and all these areas, the ones
who would have the political power, the ones who would
be funding the lobbies and have the political strategy, would
solely be in some cases those with an economic incentive
(44:41):
of the system. And so the one thing we bring
is that we don't have financial incentive or financial conflict
on things that we're advocating for, whereas almost everybody else
in DC or a state legislature who's out there lobbying.
The reason they are paying a lobbyist, the reason they're
(45:01):
investing that money is exactly because they have a financial
stake in the system that they're trying to protect. And
so we're providing that tension in the system. And we
are not the ultimate arbiters, right the politicians. The political
system decides, but they should have all the facts. Whenever
the politician, whenever the policy makers are making the decisions
(45:26):
are passing laws, they should get kind of the full
scope and have as much information as they can. And
I think that's what our role is.
Speaker 2 (45:34):
John Arnold, so great to have you. Really appreciate you
taking the time. Thank you for coming on odd Law.
Speaker 4 (45:40):
Great.
Speaker 2 (45:40):
Thank you, Tracy. I found that to be a great conversation.
I feel like this idea of like interest asymme tree
is sort of at the heart and it's obvious in
(46:02):
some sense, but it's like as a sort of framework
to think about the difficulty in doing things, like a
very useful idea. You know, I on a day to
day basis, I wasn't really thinking that much about the
congestion pricing thing. But I'm sure that the representatives of
you know, the various neighborhoods in Long Island where you
(46:23):
might have a lot of working class commuters or people
in trades having to come in on their vans, were
extremely motivated by this particular question.
Speaker 3 (46:32):
Oh absolutely, you know. The thing I thought was interesting
was the example of the filings against proposed sites and
the idea that I think everyone has this like sense
that things have become more complex, and there might be
various reasons behind it, but one of them surely has
to be that people are getting better every day at
(46:55):
just dealing with the existing system, and so you see
things like more sophisticated legal strategies where instead of unloading
a bunch of protestations or counterclaims against one particular project
at one moment in time, you get that slow drip
process of filings which ends up gumming up the system.
(47:16):
And it is reasonable to say, like, I don't think
we've seen a good response to those more sophisticated strategies
that are aimed at gaming the system.
Speaker 2 (47:26):
Tracy, have you ever seen that website wtf happened in
nineteen seventy one.
Speaker 3 (47:33):
I've never looked at it, but I've heard of it.
Speaker 2 (47:35):
So it's like basically this whole thing of like life
started getting more expensive and a bunch of stuff going downhill.
And the conceit of the website is that nineteen seventy
one is when Nixon took us off the gold standard,
and so it's like, oh, if we only returned to gold,
then you know, all these lines would go in the
other direction. But I think it's also very interesting that
(47:57):
that was exactly also the time when and some of
these big NIPA and other related permitting things first started
getting kicked into gear that three years that he identified
nineteen seventy to nineteen seventy three. And I would just
put forth that if you are very sort of like
obsessed with the idea that a bunch of things started
(48:17):
changing in nineteen seventy, maybe do with something on the
monetary side, but it might also be worth looking into
how policies that affected the cost of construction, cost of energy,
et cetera also changed during that exact time.
Speaker 3 (48:29):
You know, you need Joe, you need John Arnold to
spend a bunch of money rigorously testing the theory that
nineteen seventy one changed everything.
Speaker 2 (48:38):
Or he could just buy the website and just changed
the entire premise of the website. So a bunch of
people go there and get different ideas.
Speaker 4 (48:44):
That too, All right, shall we leave it there.
Speaker 2 (48:46):
Let's leave it there.
Speaker 3 (48:47):
This has been another episode of the All Thoughts podcast.
I'm Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 2 (48:53):
I'm Joe Wisenthal. You can follow me at the Stalwart.
Follow our guest John Arnold, He's at John Arnold FND.
I think that stands for a foundation. Follow our producers
Carmen Rodriguez at Carmen Arman, dash Ol Bennett at Dashbot
and Kilbrooks at Kilbrooks. And thank you to our producer
Moses Ondem. More odd Loots content go to Bloomberg dot
com slash odd Lots, where we have transcripts, a blog
(49:15):
and a newsletter and you can chaut about all of
these topics twenty four to seven in the discord with
fellow listeners Discord dot gg slash odd Lots.
Speaker 3 (49:23):
And if you enjoy odd Lots, if you want us
perhaps to do an episode on why everything started going
wrong in nineteen seventy one, then please leave us a
positive review on your favorite podcast platform. And remember, if
you are a Bloomberg subscriber, you can listen to all
of our episodes absolutely ad free. All you need to
do is connect your Bloomberg account with Apple Podcasts. In
(49:45):
order to do that, just find the Bloomberg channel on
Apple Podcasts and follow the instructions there. Thanks for listening
in
Hosts And Creators
Joe Weisenthal
Tracy Alloway
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