Episode Transcript
Speaker 0 00:00:00 Hello everyone. And welcome to the 93rd episode of the Atlas society asks. My name is Jennifer on June Grossman. My friends call me JAG. I'm the CEO of the Atlas society. We are the leading nonprofit organization, introducing young people to the ideas of Iran in fun, creative ways like graphic novels and animated videos. Today, we are joined by a time friend and an eminent Rees within the Liberty movement, Bob pool, before I even get introducing Bob, I wanted to remind all of you who are watching us on zoom, Facebook, Instagram, Twitter, LinkedIn, YouTube. Please use the comment section type your questions in. We will get to as many of them as we can. So Bob pool is widely recognized as the father of the privatization movement in the United States and abroad an MIT trained engineer. He has advised administrations both domestically and internationally on privatization reform and transportation policy, who co-founded the reason foundation back in 1978 and ran its operations for over two decades. His books include cutting back city hall, uh, frequently stated as a touchstone for the furniture administration's privatization efforts in the UK. Also a think tank for Liberty, which is the story of reason and rethinking America's highways, which explores the history of, and possibly better future for our highway and infrastructure. Bob, welcome again. Thank you so much for joining us. Thanks for
Speaker 1 00:01:57 Having me, Chad. It's really a pleasure to be here.
Speaker 0 00:02:00 So, uh, let's start with you. Um, we know about your accomplishments, but tell us, where did you grow up? Uh, what were your early influences and how did transportation and infrastructure of all things become your obsession and the focus of your life's work?
Speaker 1 00:02:21 I had no idea any of that would happen. Uh, I grew up in a working class suburb of Miami, Florida, and my dad worked for Eastern airlines. And, uh, so, uh, aviation was part of my growing up. Uh, this was before deregulation. Uh, flying was very expensive, but we had company passes, everybody that was a perk of working for an airline and still is I think. And we, so we took vacations always by air, mostly by air. And, uh, uh, it was just great then of course the price is so high. Um, there were only about 50% of the seats filled on most flights. So we always got good seats. It was great growing up that way. Also my hobbies, it turns out were transportation. I had bottled train layout in my bedroom. I built plastic model, airplanes and ships, uh, and, and I love cars.
Speaker 1 00:03:12 I always enthralled when new cars came out and, uh, uh, so were all my friends. I mean, there's something that we've, that we just took a big shine to. And, uh, so I guess that, that steered me into engineering most likely. Um, but, uh, I thought I was going to be just an engineer doing engineering. I never thought that public policy would be what I'd end up doing, but, uh, my interest in ideas and, and political philosophy blossomed, um, at MIT, basically starting with the course, uh, a required course called modern Western ideas and values, uh, two semesters worth and, uh, reading about the enlightenment in particular really, uh, it, it prepared my way for reading on brand, uh, you know, the idea that ideas of rationality and of, of discarding, uh, doctrines and, and, and, uh, strangled mental strangle holds that happened that had been held on people before the enlightenment, uh, really was just breakthrough to see.
Speaker 1 00:04:19 And, uh, I was involved politically, uh, the goal of student Goldwater movement, uh, in 1964, we had the largest, uh, campus school border group, uh, in, in new England, uh, at MIT. And I was the director of, uh, literature. And the founder was Dave Nolan, who later went on a classmate later, went on to found the libertarian party and became a lifelong friend. So everybody practically everybody in that group, uh, although it was nominally conservative were budding libertarians. So almost all of them had right. Apple shrug. Then when they found out that I had, and he said, God, you gotta be kidding. You've got to read this. And so in the summer of 64 or working at a summer job with the telephone company in Miami, I carried around the paperback book, read it at lunchtime or read it when I got home and read it that whole summer. And it, wow. It really inspired me to, uh, to dream about somehow working with ideas and, and making this a freer country. I had no thought of how I would ever do such a thing. Um, and, uh, got a job. My first job out of school was working at Sikorsky aircraft. So I was in a, there was aviation again, but, uh, uh, it, it worked out. It's amazing how things do sometimes.
Speaker 0 00:05:37 Well, you know, given your engineering background, um, aviation model trains, I mean, all of that must have really, uh, made Atlas truck a total. I mean, even it's more of a, um, revelation for you because I mean, it wasn't just that he was a novel that, uh, was lionizing entrepreneurs. And, uh, but it, it was, I mean, who wrote novels about trains and planes?
Speaker 1 00:06:12 So it made me something of a feminist, uh, because of seeing Dagny Taggart running the railroad. Uh, even though she didn't have the title, uh, was very eyeopening for me. And then, uh, I, after I read Betty for dance, a feminine, the feminine mystique the next summer on my summer vacation. And, uh, it, it really, and, and, and modesty blaze thrillers, uh, oh yeah, yeah,
Speaker 0 00:06:42 Those are classics, very underrated. Um, I would love to see, you know, because they're also, uh, within the aesthetic of romantic realism, um, just these, uh, this heroic character doing crazy things, kind of like, uh, you know, Charlie's angels, which is why I, and Rand also found that as one of her favorite, uh, her television series, but getting back to a, another book, which is the subject of this, uh, this interview, uh, rethinking American America's highways, a 21st century vision for better infrastructure. Um, you make the argument that quote our 20th century model, overly politicizes highway investment decisions, short-changing maintenance, and often investing in projects whose costs exceed their benefits. Uh, so where, you know, you, you have a, quite a historical sweep in, in the book. So maybe just kind of contextualize us a little bit, where in, when did we go wrong with our approach to infrastructure? Uh, you know, roads are always the thing where people said without government or limited government, but my roads, like what would we do without the road? So,
Speaker 1 00:08:18 So I find it ironic to be somebody who places the calling for privatization of, of, of the least of the highways. Uh, but no, the, the actual, the first highways in America were turnpike private turnpikes, and that's documented in the book. There were thousands of them, mostly in the Northeast and on into the Midwest. So there was a later era in California and Nevada also. Um, but, uh, those kind of went out of business when the railroads came along, uh, railroads, uh, got places faster than cause those were, those turnpikes were for horse strong vehicles. And so railroads really spelled them pretty much the dummies of those early, when we started having automobiles of paved roads, uh, the, it would have been nice to have, uh, toll rooms, but, uh, uh, states invented per gallon gas taxes as a user feeding. And it was, and the money in every state was dedicated solely to building and maintaining highways.
Speaker 1 00:09:15 And that was not too bad of a model. Uh, today we have electronic toll collection, so it's cheap and easy to do, but they didn't have that, uh, them, uh, but the turning point came with the, with the interstate system, uh, cause Congress was not really involved other than a little bit of subsidy for post roads, which is in the constitution. Uh, when, when the, the inspiration for the interstate highways was the Pennsylvania turnpike, limited access, no stoplights, no, no places, you know, you had, you had to get on at certain places. And so for the much safer divided highway, and by the time Congress got around to legislating in 1955, which failed in 1956, which, which succeeded, there were a dozen or more, uh, financed, uh, toll roads that became grandfathered into the interstate highway, the Ohio turnpike, the Indiana toll road, Boston, Massachusetts turnpike, New York throughway.
Speaker 1 00:10:11 All those were already in existence by the time the interstate programs authors, but what CA and Eisenhower wanted it to be a toll road system like those. But when people crunch the numbers of the south, didn't have enough Southwest way, lower population and low, low economy. And much of the west would not have had enough business in the early years to pay enough tolls to finance the totals. So they ended up coming up with our global adopts, the fuel tax model that the states have and say, create a dedicated highway trust fund that money would only be spent to build and maintain the interstates well that worked for awhile. But, uh, uh, as that has neater states got built and costs more, they had to raise, uh, gas tax rates that were federal to several times and the money rolled in faster than, than it was being spent.
Speaker 1 00:11:05 So Congress started at, well, what else can we do with this money? There was no chance they were going to stop collecting it when the interstates were finished. Uh, so every, every four years or so, they added new things that could be that the money could be spent it today over 25% of the highway trust fund goes to non highway things, mass transit, and the biggest part, uh, but also sidewalks, bike paths, things that are inherently the vocal. So the federal program and in the last 12 years or so, uh, Congress has re has decided they can't raise the federal gas tax any higher. It stayed at 18 cents a gallon since, uh, it's over 20 years now. And so instead they keep want to keep on spending more each year. So they use general fund money, which means it's not user pays, uh, to pop up the highway trust one so they can spend as much as they want to do. So that system really is, has turned out to be a very bad system. Um, and it's gotten even worse. Uh, it's, it's bad at the state level too, because most states divert some fraction anywhere from maybe 5% to, in some states, more than 50% of the gas taxes to other, mostly other transportation things. Although in Texas, a big, big chunk of it goes for public schools.
Speaker 1 00:12:24 So you have all these bizarre things. And then the legislators, uh, which have to make every year a decision on how to spend highway money, the money they get from the feds and the money they collect. Um, every legislator wants a project in his, in his or her district that they can say, look, what I brought you would cut a ribbon. Uh, maintenance is not sexy. There's no ribbon cutting operators. So maintenance tends to get underfunded, which is why many states we have hundreds or even a few thousand, uh, bridges that are, that are, uh, a bad condition. And, uh, and they're not spending enough. They, they get many states get further behind every year. Um, the backlog of deferred maintenance on bridges and on major highways is true. Uh, but it varies greatly by state. Some are much more responsible, but the ongoing temptations for, for legislators to skimp on maintenance and do ribbon cutting opportunities. So that is a broken system.
Speaker 0 00:13:21 Interesting. So, you know, as you mentioned, we're currently financing highways with per gallon gas taxes. Uh, what happens when cars continue to increase in their, in their food fuel efficiency or, you know, use other forms of energy?
Speaker 1 00:13:40 Well, what's happened. We reckon I was on a committee of the transportation research board in about 2006, that was convened to look at this problem, even though, you know, electric cars were just a gleam in people's eyes at that point. And we concluded for the long-term. This is probably not going to be viable, to be of continued, rely on this and that in the short term, we ought to be encouraging more toll roads and more toll lanes. Uh, but longer-term term we'll have to come up with a replacement. And then Congress appointed a national commission that might my colleague, Adrian Moore, at least the foundation served on the book that 15 or 16 different kinds of user fee mechanisms concluded that a per mile charge would be the best and fairest way could do. And so a recent foundation that it was a founding member of an organization called the mileage based user fee Alliance.
Speaker 1 00:14:31 That's now I think 10 or 12 years old, and it has fostered research. And, uh, Congress has provided some grant money for state deities to do pilot projects, testing out a per mile charges. And we've learned a whole lot from those things. People have a lot of fears that this is going to be a kind of gizmo in the car that tracks every place you go and violate your privacy. And that's a bad thing to have in government's hands. I agree. That's something we should not do, but we're learning ways to do it and to protect privacy in some of these state level projects. And so I've done a lot of work reason is doing a series of state specific studies on how to transition from gas taxes to per mile ways that will try to lead to the vision in my book of highways becoming more like a utility.
Speaker 1 00:15:28 You know, we have investor on utility electric utilities and water utilities. We have municipal and state run liquor and water utilities. Uh, the I'd rather have the investor owned ones, but both of them are much better than the way we run highways. Uh, you pay user fees to your water supplier or your electric supplier or your telephone supplier based on exactly what you've use, not more, uh, and the money all goes to, to build and maintain those systems far different from how we do pathways. So if we can, we have an opportunity a once in a once in a century opportunity with the need to transition away from the gas tax to do it in a way that fosters highway utilities. And that's one of the things we were looking hard on, on trying to get across, and I'm giving talks at conferences on this and, uh, uh, hope we're making headway.
Speaker 0 00:16:22 So, uh, know interesting that Biden chose infrastructure and roads as really kind of the signature priority for his first, hopefully last, but, uh, for, for his to, to begin his administration. Um, do you see some of those same kinds of limitations in terms of, uh, a politicized approach or, you know, is it just pretty much the, the usual,
Speaker 1 00:17:00 Well, the bill, the bill that passed is very much a mixed bag. Uh, it, it, it refinanced it refunded the ongoing highway and federal highway transit program with the increase in money. That's all being paid for by putting it on the federal credit card, meaning increases the national debt. Um, and it has, uh, uh, big new what are called discretionary programs. I mean, most highway spending, uh, traditionally goes out by formulas that are advised by Congress and the states collect the federal gas tax, send it to Washington, and then Congress divvies it up by 40 a month based on population and roads and so forth. Well, this, this bill, the bipartisan bill that was passed, uh, has expanded, uh, formula programs, but also has a huge increase in the programs at the USD OT itself gets to decide what the money is for set the criteria.
Speaker 1 00:17:55 And it turns out the USDA under the Biden administration is not very pro highways. Uh, they actually set out a memo to all state. DOTC saying, you know, we know the formula programs allow you to add lanes to highways and to build more new highways, but we want you to spend the money, um, fixing the existing highways and adding, adding bike paths and sidewalks and things like that, and prance it and not expanding highway capacity. And this created a huge furor. I wrote about it in my newsletter. I did an interview with Bob Byer magazine about it, and, uh, it created a firestorm with Republican governors writing to, uh, to Congress and the DOP with many members of the Senate bi-partisan Senate members who crafted the bill saying, wait, dut is way out of line trying to tell states and basically hinting that if they, uh, if they go ahead and do what they want to do with, uh, adding to highway capacity, uh, they're going to have to face all kinds of environmental rigmarole, so forth, but if they spend it the way we want, uh, those projects will get an easier, uh, pass.
Speaker 1 00:19:09 So this is, this is not very good. Uh, why do you think they took that approach? Is it just because there was an ideological commitment, uh, on, uh, various transit and environmental groups that highways are inherently bad because cars pollute and they put out CO2 in addition to traditional pollutants, and therefore we need to stop building high rates, boots. Okay. If we maintain them once we got, but there should not be any more capacity. And even there's even a provision in the bill that was watered down by the Senate, but that provides grant money for those cities that wish to start looking at tearing down, uh, interstates that were built through cities, that disrupted neighborhoods. So that was, you know, 50 years ago, uh, those same people aren't there. Um, but there's money set aside to do that. So, you know, way, uh, very big aspects of the infrastructure bill were anti highway for people or not.
Speaker 1 00:20:13 Uh, and you wouldn't know that from, from the, from the media talking about this and so many stories that this is basically a highway and bridges spill, well, highway bridges are about 10% of the total of the total new money, but lots of other stuff is infrastructure to them. And there's money for broadband infrastructure in rural areas, uh, which is probably not very cost-effective there's money for, uh, uh, led, led pipe removal and water systems. You know, these are not bad things, but they're not what people traditionally think of in infrastructure bill in people's minds is a highway in Bridgeville. And it's very much,
Speaker 0 00:20:53 Well now I want, I know we've got a lot of Bob Poole fans, uh, that are here, um, watching us and, uh, that are on our cha chat thread there. So I want to encourage all of you, um, to take advantage of this type in a question, say hi to Bob. Um, but, uh, ask group and ask about Rand timeline. We're going to get to that a little bit later about our infrastructure, about reason and the incredible, uh, story and example there. But, um, another issue though that I wanted to ask you about, uh, is one, that's also bedeviled the Biden administration, that's supply chain interruptions. Um, are any of these challenges aggravated by problems with our approach to infrastructure? Or is it something entirely?
Speaker 1 00:21:49 Well, I mean, this is a very, it's a, it's a multi-part, there's no one thing that the administration or anybody else could do to solve it. Um, and you have, uh, partly because of the, all the stimulus bills, uh, people spent, they couldn't go to restaurants, they couldn't go to movies, they couldn't go to sports events. So they bought things for their houses. Uh, they bought new refrigerators, they bought, uh, thick fixer up things. And so this increase in demand for products, uh, and either raw raw materials or the actual products came from Asia. Most of it. So you have this huge increase in the demand for things being shipped, uh, on in containers, uh, to the United States, ports are overloaded. Can't handle this. Um, partly the, uh, dock workers are homesick with COVID. Uh, but it's partly, it's just no way. There's not enough space to store the containers until they can be hauled.
Speaker 1 00:22:46 The railroads got overwhelmed, uh, containers stack up in rail yards and places where they shouldn't be, they don't get shipped back. Uh, so there's all these moving parts that make this an interesting, enormous problem. And it's going to have to be worked out step by step. And the few things that, uh, the Biden administration has tried to do, um, haven't made any real difference. I mean, uh, they, they told the ports of LA and long beach, well, you need to go to 24 hour shifts. Well, the truckers who have to take the containers have nowhere that's open to take the containers to in the night. I mean, it's true that, uh, the ports in Asia, mostly 24 7, the ports of big ports in Europe are mostly 24 7, but they have an institutions that have adapted to that over many, many, many years, probably decades. We don't have that here.
Speaker 1 00:23:35 And we don't, I don't think we have any 24, 7 ports. So you it's, you can't just wave your hand and say, uh, you know, keep it open 24 hours. And because there's no place for the drivers to take the containers to that are open at midnight. So that's, that's something that maybe we'll get to that in a few years. Um, but it's not going to solve the immediate problem. And fortunately, the backlog of ships that are anchored that was over, it was 115, about a month ago off the ports of LA and long beach has now down into the seventies. They don't have room in the Harbor they're way out, uh, you know, 50 or 70 miles out. Uh, just, uh,
Speaker 0 00:24:16 Yeah, I've been seeing it. I've, I've lived here in Malibu for 20 years. Never ever see any, any ship, anything out, uh, at least this, this far up, but it's, it's been a little pitcher ask to have all of these container ships, something, something different, but, um, definitely
Speaker 1 00:24:37 One good thing did come out of this. The port of long beach had some kind of rule that containers stacks could only be cut to two containers high because it blocked people's views. I don't know if any point you should be a good drive past the port of Oakland. You see these mountains of containers. It's part of LA is who this was a completely artificial ridiculous thing that did get changed because they had to have space for the containers at long beach.
Speaker 0 00:25:04 So, uh, you have been, uh, probably evaluating following, um, various governors on transportation, of course, various administrations, various transportation secretaries. So looking back, maybe you could tell us who, uh, who has historically done the best, what administration made the most progress on, uh, transportation and infrastructure, um, best secretary of transportation and, and, uh, how would you grade, uh, secretary?
Speaker 1 00:25:45 Okay, well at the federal level, the best secretary of trade we ever had was Mary Peters. Uh, the second term of the George W. Bush administration, she put together a team of brilliant people, all of whom I got to know, and I'm still friends with all of them. Uh, they did very innovative things. Uh, there was one time when Congress, uh, didn't earmark money for some meat some year, and there was money that came, came, became available to DLT. And so Mary Peters and her team figured out a grant program to, uh, incentivize, uh, cities to, uh, put in price, variably priced in the market, priced the congestion relief lanes. And it's something that I had worked on for years. This is the first time there was a concerted effort at the federal government to really get, get them, to do it. And, uh, and I, I played a little part in, in being informal advisor on, on, on some of that. And I actually then got to work with Florida DDOT, uh, help them write their proposal, uh, which one, one of those grants and implemented the first express toll lanes in, in Florida, in Miami on 9 95, which was very good. Every time we drive to Miami on the Lou, my wife calls it the Bob lane.
Speaker 0 00:27:00 So I have to say, I was just in Miami two weeks ago. And traffic was, It looks like they're doing some construction, but,
Speaker 1 00:27:12 Well, there's a major interchange being reconstructed I 95 and a, and the dolphin and toll road and a major arterial all come together. And that, that interchange called golden plates has just grown like topsy. It was never designed to be what it is. It has more than twice the amount of traffic that it was ever, uh, capable of doing without huge backlogs. And even the price lanes, the price lanes are not allowed to charge a full market clearing price. So they get backed up in the afternoon rush hour or two because of that congestion at that bottleneck interchange. But that, that one, that one is not being resigned. But one that further down closer to downtown Miami, uh, is being rebuilt. It's about an $800 million project, and it's taking about four years, but it will be much, much better when that's done.
Speaker 0 00:28:02 Yeah, well, I mean, it's also kind of a price of, of success with, uh, so many people moving
Speaker 1 00:28:12 Huge success story as a state it's VOT has been very, very good. Uh, it has a master plan to have express toll lanes and all four major areas. Uh, there's always pushback on you. Can't always get all the projects in that you want to, but, uh, they're working hard to Miami area, Tampa, Orlando, and Jacksonville all have express lane projects in place and others in the planning stages. So I forwarded to your T is, has been a very good Texas tot until the legislature cracked down on towing. A populist Republicans in Texas, uh, have controlled the legislature and the governor's office for the last decade and stopped what was over over 10 billion of private investment in express toll lanes, mostly in, in Dallas and Houston areas. And it's all been on hold. Uh, since the legislature changed to be a popular street publican that that's anti toll and, uh, very distressed distressing. Um,
Speaker 0 00:29:15 We can give some, uh, um, unvarnished your unvarnished take on this question from Manny Vega on Facebook, asking about Texas, Texas toll roads, keep rising in price, even though local transportation authorities promise that the price should have gone down by now, have you studied whether this is this management or otherwise?
Speaker 1 00:29:38 Well, most of the toll roads in Texas, our express toll lanes that were privately financed or some are state finance and the rates there have to go up there. The purpose of them is to be essentially a market clearing price, a price that will, that will guarantee that you go at least 45 miles per hour during rush hour. And if, if a, if a dollar, a mile toll doesn't do it, maybe a dollar 20 will do it. It's trial and error. And those tolls are reset in real time. On most of those planes, they're reset every five minutes based on the actual traffic flow. And, uh, so that I can't quarrel with the car with that policy. Now, there are some toll roads, um, uh, run by state agencies, um, that have to keep up. They're, they're building more, uh, toll roads because of Texas is growing so by leaps and bounds.
Speaker 1 00:30:36 And it's expensive today to build a lane mile of interstate quality road costs three times as much in real terms, as it costs in the 1960s, when the interstates were first being built. Now that's partly because of environmental regulations. It's partly because of litigation. That's permitted by the clean air act and the national environmental policy act. Uh, but those are, and the cost of materials, uh, concrete, asphalt steel, all those things have gone up a lot too in the decades since then. So, uh, if you're going to have the state and able to keep growing, but I had expanding highway system in pace with its population, you have to pay what it costs today. And if it's financed by tolls, that means the toll rates. So, uh, even though, you know, those toll rights, let's say in Dallas Fort worth, it's the, uh, um, uh, what is it called? It's called originally the Dallas north tollway. It's, it's a, it's a toll organization that, um, has a system. And so the totals from each of the roads go to pay the costs of the entire system. So as they're adding new legs, the initial traffic on leg B may not quite cover it at the first year. So it's, it's fine financed by the revenues from all the systems. And so that's why the rates have to go up across the board to pay for the growth of the overall system that's needed for the whole Metro area.
Speaker 0 00:32:06 As, uh, someone we know says 10, 10, Stoffel,
Speaker 1 00:32:13 Exactly. This is what they cost. Now, if we could somehow reform NEPA the national environmental policy act so that every citizen group under the sun could have a cause to file suit against a new highway project and delay things out for 10 or 12 years. And the prenatal, the price goes up all that time of, of labor and materials and so forth. If we reformed that, uh, and you don't have that kind of, of citizen litigation obstacle endlessly, you don't have it in France. You don't have it in Italy. You do have it in Germany and to some extent in the UK, but if we were to reform, which I don't see any near-term hope of doing, but, uh, that, that would make some difference. And in holding down on the cost increases of highways. But, um,
Speaker 0 00:33:02 We've got another question here, uh, from Anna Flanagan on Facebook, I'm going to ask you the question, let you answer it while I get a little backup power for the studio here. Um, Anna Anna asks, what do you make about the failure of protecting railroads in places like LA and San Francisco from being looted?
Speaker 1 00:33:29 Uh, that is a horrible situation. Uh, it's a failure of, of, uh, I think it's politically correct lefty district attorneys, uh, who did not file charges, uh, against looting and, and, uh, uh, this kind of thing. I mean, the epidemic of looting stores shoplifting in San Francisco is, and the whole San Francisco bay area. It's just unbelievable. It's worse than San Francisco. They have a da there and a legal change that, uh, shoplifting, I think up to $999 is now a misdemeanor and they will not, uh, uh, prosecute misdemeanors of that sword. Uh, so it's an invitation to shoplifting gangs and the gangs that you see, you two have all seen. I'm sure the photos of the rail corridor. So leading from the ports, uh, Alameda corridor, rail corridor, uh, that's a lifeline for the ports of LA and long beach to get cargo to games. Those are being looted all the time, uh, through a failure of law enforcement and a failure of prosecution. Uh, and, uh, we don't see that happening hardly any place except California, but it's it's epidemic.
Speaker 0 00:34:45 All right. Well, I noticed you didn't give a grade to who to judge.
Speaker 1 00:34:51 Well, I, I, uh, all right. I, I don't want to be too harsh because he's only been there for less than a year, unfortunately does not have a transportation background. Mary Peters, for example, uh, was I think she ran the DOD in Arizona where she's from that she ran the federal highway administration, and then she was appointed to be secretary of transport. She was eminently qualified, knew transportation at all levels, uh, in every mode. Uh, Pete was a mayor of a small city and, uh, was apparently a competent mayor, but, uh, city streets and sidewalks and nothing to do with what the federal world is supposed to be in transportation. And so he comes, I think, with a background that really fit the position, unfortunately, and I seemed, I think the scene as a passive, uh, politically attractive appointment, uh, for a democratic administration that, uh, is trying to Curry favor with its progressive wing.
Speaker 1 00:35:54 And, uh, as the first, I guess, the first gay cabinet member, uh, wow. What a big, big thing to do, and just like appointing the first black female Supreme court justice. Well, I mean, it's fine if you get somebody who's really qualified, but, uh, um, I think the qualifications for the DOD secretary in this case were, were pretty, pretty meager. So we could, we can give him the benefit of the doubt and see how it all turns out a lot, depends on the staff that are supporting, and actually the acting administrator of federal highway administration responsible for that memo to the state. DRTs unfortunately, uh, came from Massachusetts DLT. So at least does have a state DOD background. So she may turn out to be a better, uh, a more qualified, uh, person than the man running the whole USDA T
Speaker 0 00:36:48 All right, we're going to, uh, to start getting more into some questions, uh, about reason and Liberty movement and your, um, perspective on that. Uh, but, uh, as a transitional, one kind of spans both of the subjects is Elon Musk is a controversial figure in some libertarian circles, um, for accepting government subsidies. But, uh, I have been of the opinion that he seems much more like a, uh, Hank Reardon for his innovations with electric vehicles, tunnel technology space travel. So I don't know if you have a,
Speaker 1 00:37:32 That's my view entirely. He's a big hero. I've read several books about him. Uh, I, I watched just about, uh, well, Seth, the Falcon nine launches recovers are so routine now, but I don't watch those anymore, but, uh, when the first star ship lots, I'm going to be watching that just eagerly and probably in tears, uh, at what a triumph that thing is. I mean, he, he has a heat with, with Jeff Bezos coming up, uh, as in good second place invented reusable launch vehicles, which is the first step toward real commercialization of space for goods and people and space expiration, making it affordable it by comparison to the massive costs of, of NASA development, uh, with traditional aerospace contractors, uh, I mean, innovation, innovation, innovation is just spectacular Tesla too. I mean, I don't, I don't own a Tesla and I don't like the big, big touch screen.
Speaker 1 00:38:31 Um, and I don't trust the automation, which I think was developed with, uh, with some flaws, but I still did an extremely innovative vehicle and it's paving the way it's a model for the entire electric vehicle industry, uh, that is learning from what Tesla has done. So I taking advantage of the fact that the government is willing to subsidize people to buy electric vehicles and that he can get credits from, from, uh, companies that are starting out making vehicles that don't sell, uh, you know, he can get credit. So they make some of their money on that. But, you know, those, he didn't invent. He didn't ask for those parts. He didn't invent them. He's an entrepreneur running a company. If that's, if the law provides that, uh, like, you know, he's not a libertarian. So I can't say I, I hope I wouldn't take them if I were, if I were as big of an innovator, an entrepreneur as heat. Uh, but I can't really fault him for, for, for doing that, not given what he's given the world in these incredible, uh, breakthroughs.
Speaker 0 00:39:36 Yeah. Agreed. I don't quite understand the vitriol that comes with
Speaker 1 00:39:40 And that we have, there are so few real heroes now. It's so wonderful to have a few like these us and Musk. Uh,
Speaker 0 00:39:50 So, uh, speaking of, of, of mosque, um, and this technology, how far do you think we are away from self-driving trucks and what do you anticipate would be the,
Speaker 1 00:40:02 Yeah, I have written up like Google believe that that trucks are going to be the first viable application of vehicle automation, partly because, uh, it's, the model that's likely to be occur is, is the automation will be for the long haul, um, limited access to interstate highways and comparable roads. Uh, the local traversing and getting off the highway will probably be done by it for a long time by a human driver, getting to a distribution center to deliver the goods. Um, but the, the highway park is relatively easy by comparison. It's a, it's a, an operational domain that doesn't have children running out and dogs chasing balls and all the construction debris and so forth. It's a very, uh, benign environment for an automated truck. And the potential of this is enormous in terms of improving the productivity. Railroads operate they're slow, slower than trucks, but they operate 24 hours a day.
Speaker 1 00:41:04 Uh, truck drivers have have federal rules. They have to stop and get eight hours of rest. So trucks do not operate 24 7, uh, trucks and operate 24 7 non the long haul. Uh, that'd be much more competitive with railroads and the cost relative cost of goods for go down. People always say, oh well, but this is going to put all kinds of drivers out of work. Well, there happens to be an odd chronic massive shortage, particularly of long haul over the road truck drivers. The turnover rate in some years at some major companies is 70, 80% annually. This is very hard jobs for people being away from home. If you change to a model where the human drivers are mostly doing local runs and the automation is doing the long haul, uh, you will have a much better chance of having satisfied to put you can be home every night with their families instead of on the road.
Speaker 1 00:42:03 Uh, most of their, most of their lives. Um, this second thing is going to be a benefit to everybody in trucking as this comes up. And I think we are, we are, we have vehicles now operating in Texas, uh, between Houston and Austin and, uh, uh, and in Arizona on, on, uh, reasonably long distance routes, they all, they're still operating with a safety driver on board, but they can, they're doing it autonomous in that being, that'd be those benign environments. So we're, it's a question of, of, uh, of getting the, you know, legalization, uh, demonstrating the case that it's safe enough to be, to be allowed without the safety driver on board. Now, I, one of the things that may make that more viable is to have real time supervision from a, from an office where are drivers, uh, virtual, you know, drivers who are able to, we're able to take over control, if something goes wrong and painfully parked the truck, maybe the automate, maybe the automation do that, but it may not be able to do it in every circumstance.
Speaker 1 00:43:09 So the ability to have a remote driver able to step in when needed, maybe that's kind of thing that's needed in the early ears of this, but I think we're probably five years away from some of this being real with no drivers on board and 10 years away from it being large. And a major part of the industry is going to be it's much further away than personal vehicles that can operate under any kind of, and you notice that starting in Texas and Arizona, where there's no snow, so is hard for the outfit, the, uh, AI, uh, to deal with, uh, and for the sensors to see through and so forth. Uh, the road markings aren't clear often. So, uh, cars to be a ubiquitous personal vehicle have to basically operate in almost any environment, operational design domain, uh, and that is a much, much harder problem to solve.
Speaker 1 00:44:07 So a lot of predictions, five years ago, about how soon all this was going to be happening, we're just fans completely fanciful. Uh, the people in AI didn't realize how difficult this was going to be and how expensive the sensors were going to be. And there's still a lot of fights going on over whether camera type things can, can do all it's needed, or you need LIDAR. And this one that, and the other thing, and none of that is settled. So it's going to be a long years away. And there's a question of, uh, what's, who's going to be, what kind of insurance is there going to be for fully autonomous personal vehicles? Are they going to be owned by individuals? Are they going to be leased by fleets to individuals or to, uh, to operators like, like Uber and Lyft and so forth where the fleet can take the legal responsibility? If, if something goes wrong with the automation, it's very clear cut and you don't have a legal question of is it is the vehicle owner, dry individual driver who maybe somehow was at fault and you could get hugely complicated, legal things out of that. And I don't think the insurance industry wants is, is set up to handle that in that fashion.
Speaker 0 00:45:23 Well, we got a lot more questions here about Musk, about trucks, uh, about tolls, but I did want to also jump over to our other topic. Um, and this is, tell us about the origins of this book. It's a little bit of a memoir as well.
Speaker 1 00:45:46 It is. Yeah. Uh, well actually a senior official that I knew from the Mary Peters of the OT, uh, asked me why was the title IX tape suggesting he should write a book about his experience there? And he said, well, what are you going to write your book? Oh, maybe I shouldn't write a book, but it still didn't kick until my MIT reunion. When I was asked to give a talk to my class mates at that reunion 50th reunion, and believe it or not about my unusual career, they had picked out five people who had non traditional engineering careers. And so I had to create this elaborate presentation, and I thought of all the things that I had done as an entrepreneur starting recent foundation, probably different than, than most starters of public policy think tanks and put together this 56, 50 or 60 slide presentation. And I thought, gee, maybe that could make the basis for a book for, so I decided to do it.
Speaker 1 00:46:47 And when, when reason's 50 reasons, magazine's 50th anniversary was coming was a few years away from that point. And I suggested David, what if I wrote a book? And he said, my God do it, do it, and do it in time for the 1500. How am I going to do it in that time? I was finishing up the Highwoods book. Wow. And so I had the final stages of one book and the start of the other, and somehow got a, both done and published. Uh, uh, and so that was really the origin inside, decided to try the story. How did I get to this presents only the first chapter to this position, uh, of, of discovering the fledgling reason magazine that Lanny Friedlaender started in 19 eight. I was a student at Boston university and, and, uh, uh, I discovered through a little classified ad and subscribed in its first year.
Speaker 1 00:47:38 It was mimeographed. Uh, he was obviously an objectivist served sort of influenced by under the name of the magazine, the things he wrote about what he said. Uh, he persuaded me to write an article for, uh, issue with the second year. And didn't tell me that he was switching to offset print type setting and offset printing. And the first issue that had that was the issue with my article, uh, calling for airline deregulation called, which he titled fly the frenzied skies after the airlines. So slogan. And I saw that, I thought, oh my God, this is amazing. I did this. And, and I, so I decided I would continue writing. And then the Freeman from, uh, from foundation of economic education reprinted, the article reason that those days had 400 subscribers, the Friedman had about 40,000. And I started with, from the frame. And I started getting letters from professors, from people in government about that article.
Speaker 1 00:48:38 And you know, this, this could be powerful if it's done at a larger scale. And so when, when Lanny Freelander started up, you know, running out of money and calling me and calling my new friend, teaboard McCann, uh, in Santa, but I'll do it in Santa Barbara. By that time, uh, T-Bird was getting his PhD in philosophy. Objectivists philosopher. We became friends and decided if we would try to take reason off, off land his hands, because he couldn't, he was out of money and had a subscription liability. And so we came up with this plan and to get rounded up our wives and, and, uh, and, uh, Manny Clawson or a lawyer in Los Angeles who Tibor had met and was a bonafide libertarian with background at the university of Chicago. He was part of the staff of, of, uh, of the journal, a libertarian journal that was there.
Speaker 1 00:49:30 So we created reason enterprises to do the magazine as a hobby business. And we somehow had enough naive, good luck that we built the circulation to 10,000 in seven years. Uh, thanks in part to Nathaniel Branden, helping by letting us use this mailing list. After we persuaded him that we were not having ruckus and we were responsible people. And, uh, and he gave us an interview, the first interview that, uh, that he had given anyone after the, his split breaks over years ago with nine grand. So that created a big buzz, and we got lots of new subscribers from that, but by the time, uh, 1977 came around, uh, Cato Institute was being started and they were going to do two magazines with big funding from the Koch brothers. And we decided, I said, look, we, we cannot go on as a hobby business. We either have to figure out a way to raise money and put this on a professional full-time basis.
Speaker 1 00:50:28 And I need to get paid if I was going to run it, which I de factor was anyway. Um, and so that was the mental creation reason foundation. And we found an angel investor and open an office in Santa Barbara. And, uh, somehow it worked, we made some big mistakes and, uh, but the biggest, biggest success thing was moving to LA in 1970, uh, uh, in 1986, um, after, uh, starting in 78 in Santa Barbara, because that put us on the map. And then, uh, LA times, all of a sudden took us seriously, wrote an article about our moving to LA. We did a monthly lunch events in downtown LA and the reporters came and business people came, we did annual banquets. All of a sudden we were, we were a real thing then, and it made it different. So I tell all that story in the book.
Speaker 1 00:51:20 And then I tell then I confess that as, as an entrepreneur, I ran it at very close to the line, uh, focusing on growth and did not build any reserves. And, uh, so we, we were in very bad shape in years, where there was a recession and my successor, David, not who we were very fortunate to recruit, um, was focused. Full-time on growing recent foundation and growing the financial base and has done an incredible job of building the organization. We have, I think, close to a year's budget, uh, in the bank earning interest on, in invested in stocks and so forth, and a little bit of Bitcoin and, um, and, and major grant programs that are multi-year and so forth. So, uh, he's and it's thanks to, to David's, uh, skill in growth and fundraising to, we bought a building in LA and paid off the mortgage in three years, opened an office and a full-time office in DC, and, um, raised our presence in DC and, uh, started reason TV, which was suggested to us by drew Carey, uh, who had been a reason reader and fan for years, and, uh, thought, uh, we should have a presence in, in the visual media and helped us find producers and, and, uh, educated us on what it takes to produce video and started the first, uh, 20 documentaries that it produced.
Speaker 1 00:52:50 So, uh, it's been, uh, a great show. Uh, after that I was, I was the startup entrepreneur and David was the, the builder, uh, and, uh, recent is in very solid shape. But today I think we have, uh, something like 80 staff. I, I can't really keep I'm on the board still, but I can't keep track of, of the staff. I don't know, half of the staff, uh, personally, um, and the budget is it's, I think it's 15 or 16 million, uh, uh, it's uh, it's uh, it was, it was five when I, when I stepped down and David me, so, and the reserves, it's just fabulous. Well,
Speaker 0 00:53:29 I can tell you for someone who is running a much smaller Liberty organization, this is just kind of a good, kind of a good blueprint. I would highly recommend it to anyone out there, particularly in the Liberty space and in the nonprofit management space, even more generally because of the tremendous growth, it's not just of the magazine and its subscription, how you guys have kept pace with these, uh, disruptions and, um, communication technology. And, uh, and then of course also, you know, the really unique work that you do. I mean, we were talking before. I was like, is there anybody else doing like transportation?
Speaker 1 00:54:12 All right, well, it's not like it's transportation, it's school choice, it's public pension reform, criminal justice reform, uh, all these programs and all of them, David David not calls it, using the DNA that I created of being pragmatic libertarians, not trying to change policy. You don't start by trying to make everybody libertarian. You focus on why the status quo is doing poorly, how a privatized type or market type solution is better in its own terms. It certainly advances our worldview definitely and builds the case for a more freer society, but you don't sell it on. People have to be libertarians in order to buy the policy. And that pragmatic libertarian approach, uh, has been a key, I think, to the success of all of our programs and being willing to work with, we don't take any government money, never have and never will, but we call the, the motivated people in the public sector that want our advice.
Speaker 1 00:55:15 We call them our customers, and we're happy to have them as customers, uh, mayor Steve Goldsmith through privatized 50 served public services in Indianapolis when he was mayor and got written up, got national awards. One of, one of my star pupils, uh, Daniel who's now the head of, of, uh, of Purdue university, um, was, was helped on Mitch Daniels on Steve Goldsmith's barrel, uh, program. He became the director of OMB under George W. Bush. And then he became governor of Indiana and privatized the Indiana toll road with help from me. And so, I mean, we've got customers like that, that, uh, we are very proud to have, and it's not the traditional
Speaker 0 00:56:05 Literally where the rubber meets the road. Okay. I've got three more minutes. I absolutely, I'm not going to let you go without asking you about Heinlein. Um, and the, uh, that, how you discovered that he was a reason fan and how that led to
Speaker 1 00:56:28 First, I grew up reading Heinlein. So he was the one who started laid the basis for my becoming a libertarian individualism questioning authority, strong, uh, creator type, being able to accomplish things. Uh, then, uh, in the early days of reason enterprises, uh, right out of, out of my house. So the postal service requires a street address. So the street address was there. I got a Christmas card from, from Jenny Heinlein when you're saying how much they enjoyed the magazine and Robert saved them. So I started a regular postal mail correspondence with her, hoping to get an interview with Highline for the magazine. Well, that turned out to be there at a policy that some interviews had gone bad, but she said, but we'd loved, happy, happy to have you visit. So needless to say was not that far from Santa Barbara to Santa Cruz. So we planned a vacation trip to go there and were invited to spend the afternoon for the swimming pool, got a tour of the house that, that Robert design.
Speaker 1 00:57:31 And we were pleasant enough that we'll be invited to stay for dinner and had a lovely dinner talking about all kinds of things. And, uh, before we left, he, uh, asked if I had any of his books. And of course I had a box of first additions that I had bought that I hope to autograph. I brought them inside, uh, treasures that I will never park with. Uh, but it was a great experience. And he, he really did love recent magazine and, and save the issue so that, uh, it's one of the many, uh, psychic rewards that I got for all the years of hard work and close to the line, uh, things and things that failed and so forth was getting to meet heroes like that. Margaret Thatcher to be on the stage with lady Thatcher after she was no longer prime minister and ask her questions from the audience, uh, and, and to talk with her, have her autograph, my copy of Downing street years, uh, reception before that banquet. I mean, these things are values that there's no, there's no money value you could attach to those. So it's rewards for, uh, for hard work and having good ideas
Speaker 0 00:58:42 And, and the tremendous love and esteem, um, that so many of us feel for you, uh, for reason, um, and, uh, for the continued wonderful work that you're doing, I want to recommend everyone go out and get a copy of the think tanks, uh, on Amazon. And, um, also rethinking America's highways. I have, I have not only read this, but I have reviewed it on Amazon. So you can go and check that out, make sure to sign up for, uh, go to reason website, sign up for their email updates, follow them on social media. And perhaps I'll even see some of you at the next reason retreat, which is coming up in Nashville. Look forward to seeing you Bob and Lou there, and congratulations, and thank you again for giving this time to us and for giving us this incredible example to follow. Thanks. Bye.
