WEBVTT 00:00:00.000 --> 00:00:03.520 Imagine you've just invented, like a revolutionary 00:00:03.520 --> 00:00:06.160 piece of technology. OK. Let's say it's 1920, 00:00:06.379 --> 00:00:09.660 right? And you've developed this high -speed 00:00:09.660 --> 00:00:13.080 electric monorail. Oh, wow. Yeah. You have the 00:00:13.080 --> 00:00:15.500 blueprints, you've done the math, and you are 00:00:15.500 --> 00:00:19.420 absolutely convinced this thing can hit 160 miles 00:00:19.420 --> 00:00:22.300 per hour. Which for 1920 is just, that's unbelievable. 00:00:22.579 --> 00:00:25.160 Exactly. It could completely modernize American 00:00:25.160 --> 00:00:27.579 transportation. So you take it to the federal 00:00:27.579 --> 00:00:30.059 government. Makes sense. You show up at the agency 00:00:30.059 --> 00:00:32.820 in charge of the nation's transit expecting them 00:00:32.820 --> 00:00:35.020 to maybe, I don't know, offer you a grant or 00:00:35.020 --> 00:00:36.820 at the very least give you a hearing. Right. 00:00:36.920 --> 00:00:40.179 Hear you out. Right. Instead, after weeks of 00:00:40.179 --> 00:00:42.700 you pitching your idea, the officials in charge 00:00:42.700 --> 00:00:45.340 get so annoyed by your persistence that they 00:00:45.340 --> 00:00:48.320 literally have you legally committed to an insane 00:00:48.320 --> 00:00:50.799 asylum. It honestly sounds like a dystopian novel. 00:00:51.000 --> 00:00:53.079 I mean, the idea that a government bureaucracy 00:00:53.079 --> 00:00:55.640 could just lock up an innovator just because 00:00:55.640 --> 00:00:58.359 his ideas were disruptive to their daily routine. 00:00:58.740 --> 00:01:01.740 It's terrifying. It really is. But that actually 00:01:01.740 --> 00:01:05.640 happened in March of 1920. This inventor. named 00:01:05.640 --> 00:01:08.700 Ibn Moody Boynton, was thrown into a psychiatric 00:01:08.700 --> 00:01:11.719 institution in Washington D .C. as a, quote, 00:01:11.980 --> 00:01:15.219 lunatic. Just wild. All because he kept bothering 00:01:15.219 --> 00:01:17.439 the Interstate Commerce Commission with his monorail 00:01:17.439 --> 00:01:20.670 pitch. And that bizarre, deeply unsettling piece 00:01:20.670 --> 00:01:23.310 of history is kind of our gateway into today's 00:01:23.310 --> 00:01:25.609 deep dive. Yeah, we are looking at a massive 00:01:25.609 --> 00:01:27.709 stack of historical research today. We really 00:01:27.709 --> 00:01:30.010 are. We're detailing the life, the explosive 00:01:30.010 --> 00:01:33.030 growth, and the eventual and highly protracted 00:01:33.030 --> 00:01:34.810 death of the Interstate Commerce Commission, 00:01:35.209 --> 00:01:37.950 the ICC. Right. Tracing its whole arc from its 00:01:37.950 --> 00:01:41.049 creation back in 1887 all the way to its final 00:01:41.049 --> 00:01:44.549 abolition in 1995. So our mission today, for 00:01:44.549 --> 00:01:47.030 you listening, is to really understand the hidden 00:01:47.030 --> 00:01:49.569 machinery of the modern regulatory state and 00:01:49.569 --> 00:01:51.829 to do it without getting completely bogged down 00:01:51.829 --> 00:01:53.670 in all the legal jargon. Which is easy to do 00:01:53.670 --> 00:01:56.170 with this stuff. But to really grasp the magnitude 00:01:56.170 --> 00:01:58.069 of the ICC, you kind of have to look at it as 00:01:58.069 --> 00:02:00.790 a structural blueprint. Oh, so? Well, when it 00:02:00.790 --> 00:02:04.120 was created, the ICC wasn't just... you know, 00:02:04.439 --> 00:02:06.900 another government office added to some org chart. 00:02:07.239 --> 00:02:10.080 It was the very first independent regulatory 00:02:10.080 --> 00:02:12.599 agency in the United States. The very first one. 00:02:12.780 --> 00:02:15.199 Exactly. It essentially birthed this idea of 00:02:15.199 --> 00:02:17.599 a fourth branch of government. I mean, before 00:02:17.599 --> 00:02:20.180 1887, the structure of the republic was strictly 00:02:20.180 --> 00:02:22.620 divided. You had the executive, the legislative, 00:02:22.819 --> 00:02:24.740 and the judicial branches. Right, the classic 00:02:24.740 --> 00:02:28.479 three. Yeah. And the ICC introduced this completely 00:02:28.479 --> 00:02:31.819 new concept. a multi -headed commission designed 00:02:31.819 --> 00:02:35.580 to sit outside direct political control. Operating 00:02:35.580 --> 00:02:37.900 with this mix of rulemaking, enforcement, and 00:02:37.900 --> 00:02:41.009 adjudicative powers. all rolled into one entity. 00:02:41.449 --> 00:02:43.590 So every single time you see a federal agency 00:02:43.590 --> 00:02:45.810 regulating a part of your life today, you're 00:02:45.810 --> 00:02:47.590 essentially looking at the direct descendants 00:02:47.590 --> 00:02:49.669 of the ICC. Oh, absolutely. Like when the FCC 00:02:49.669 --> 00:02:53.110 manages broadband access, or the SEC monitors 00:02:53.110 --> 00:02:55.969 the stock market, or the FTC goes after corporate 00:02:55.969 --> 00:02:58.889 monopolies. They are all utilizing the exact 00:02:58.889 --> 00:03:00.909 administrative architecture that was invented 00:03:00.909 --> 00:03:03.550 for the ICC. They're the children of this late 00:03:03.550 --> 00:03:06.180 19th century experiment. We are going to explore 00:03:06.180 --> 00:03:09.400 how this single agency, which, by the way, was 00:03:09.400 --> 00:03:11.699 created just to keep train ticket prices fair 00:03:11.699 --> 00:03:14.219 for farmers, accidentally became a trailblazer 00:03:14.219 --> 00:03:16.020 for the Civil Rights Movement. Yeah, that pivot 00:03:16.020 --> 00:03:18.939 is incredible. It tried to micromanage the entire 00:03:18.939 --> 00:03:21.639 American economy and eventually became so toxic 00:03:21.639 --> 00:03:24.599 that it literally legislated itself into total 00:03:24.599 --> 00:03:26.919 irrelevance. The trajectory is just staggering. 00:03:27.639 --> 00:03:30.300 But to understand the end, or even the middle, 00:03:30.599 --> 00:03:33.159 We have to look at the massive economic forces 00:03:33.159 --> 00:03:35.719 that forced the U .S. government to invent this 00:03:35.719 --> 00:03:38.139 new type of regulatory body in the first place. 00:03:38.360 --> 00:03:40.159 We have to go back to the Gilded Age. We do. 00:03:40.340 --> 00:03:43.080 So let's set the stage. It's the 1880s. Grover 00:03:43.080 --> 00:03:45.740 Cleveland is president. The country is expanding 00:03:45.740 --> 00:03:49.259 rapidly westward. I want to know the why here. 00:03:49.759 --> 00:03:52.039 What was the specific spark that made Congress 00:03:52.039 --> 00:03:54.580 decide they needed a fourth branch of government? 00:03:54.819 --> 00:03:58.159 The spark was actually a furious widespread agrarian 00:03:58.159 --> 00:04:01.039 revolt. Farmers. Exactly. We're talking about 00:04:01.039 --> 00:04:03.979 intense anti -railroad agitation, predominantly 00:04:03.979 --> 00:04:06.840 driven by Western farmers, and this really influential 00:04:06.840 --> 00:04:08.759 rural organization known as the Grange Movement. 00:04:08.939 --> 00:04:11.379 Right, the Grangers. Yeah. You have to put yourself 00:04:11.379 --> 00:04:13.979 in the economic reality of an American farmer 00:04:13.979 --> 00:04:16.800 in the 1880s. I mean, there are no interstate 00:04:16.800 --> 00:04:19.339 highways. There are no commercial trucking fleets. 00:04:19.699 --> 00:04:21.420 Airplanes obviously haven't been invented yet. 00:04:21.740 --> 00:04:24.079 The railroad is the sole artery of commerce. 00:04:24.360 --> 00:04:26.899 So if you're a farmer growing wheat in Nebraska 00:04:26.899 --> 00:04:29.459 and you need to sell that wheat in Chicago, you 00:04:29.459 --> 00:04:31.680 don't have options. None. You can't just go rent 00:04:31.680 --> 00:04:34.120 a fleet of U -Hauls if the local train depot 00:04:34.120 --> 00:04:37.360 charges too much. That lack of options was the 00:04:37.360 --> 00:04:40.800 absolute crux of the crisis. The railroads possessed 00:04:40.800 --> 00:04:43.800 a level of economic power that was virtually 00:04:43.800 --> 00:04:46.939 unprecedented in human history. Wow. They were 00:04:46.939 --> 00:04:50.029 the tech giants of their day. They operated these 00:04:50.029 --> 00:04:53.790 massive capital -intensive networks that completely 00:04:53.790 --> 00:04:56.350 dictated the economic life or death of entire 00:04:56.350 --> 00:04:58.370 region. And the farmers were just at their mercy. 00:04:58.629 --> 00:05:01.569 Completely. And they had three massive systemic 00:05:01.569 --> 00:05:04.350 grievances against the railroads. First, absolute 00:05:04.350 --> 00:05:08.230 monopolistic power. Second, rampant rate discrimination. 00:05:08.790 --> 00:05:11.259 And third, deep -seated political corruption. 00:05:11.519 --> 00:05:13.500 Let's break down that rate discrimination piece 00:05:13.500 --> 00:05:15.240 first, because I think people assume monopoly 00:05:15.240 --> 00:05:18.079 just means, you know, high prices. Right. But 00:05:18.079 --> 00:05:20.500 looking at the source material, the pricing wasn't 00:05:20.500 --> 00:05:23.620 just high. It was chaotic. It was arbitrary. 00:05:24.139 --> 00:05:27.000 And it was specifically designed to punish the 00:05:27.000 --> 00:05:29.319 little guy. Arbitrary is the perfect word for 00:05:29.319 --> 00:05:32.959 it. The railroads engaged in this rampant price 00:05:32.959 --> 00:05:36.480 discrimination between similarly situated customers. 00:05:36.639 --> 00:05:40.060 How did that work? Well, They would look at two 00:05:40.060 --> 00:05:42.439 different farmers shipping the exact same volume 00:05:42.439 --> 00:05:45.660 of grain to the exact same destination and they 00:05:45.660 --> 00:05:48.379 would charge them Wildly different prices just 00:05:48.379 --> 00:05:50.800 based on who they were pretty much a massive 00:05:50.800 --> 00:05:53.279 corporate shipper like a large mining operation 00:05:53.279 --> 00:05:56.240 or a sprawling industrial farm They would secretly 00:05:56.240 --> 00:05:59.199 negotiate a massive rebate. So the railroad would 00:05:59.199 --> 00:06:01.180 charge them a fraction of the published rate 00:06:01.180 --> 00:06:03.500 Okay, so the big guys get a huge discount. Yeah 00:06:03.500 --> 00:06:06.800 and to make up for that lost revenue The railroad 00:06:06.800 --> 00:06:09.439 would then gouge the small independent farmers 00:06:09.439 --> 00:06:12.560 who had zero negotiating leverage. So the small 00:06:12.560 --> 00:06:15.800 farmer is literally subsidizing the profit margins 00:06:15.800 --> 00:06:18.100 of the massive corporation. Exactly. It's like 00:06:18.100 --> 00:06:20.600 it's like if an internet service provider charged 00:06:20.600 --> 00:06:23.100 a local mom -and -pop bakery a thousand dollars 00:06:23.100 --> 00:06:26.279 a month for basic dial -up speeds. Yeah, that's 00:06:26.279 --> 00:06:28.819 a great comparison. But then they gave a multinational 00:06:28.819 --> 00:06:31.819 tech conglomerate a secret deal for top -tier 00:06:31.819 --> 00:06:36.060 gigabit fiber for like ten bucks a month. The 00:06:36.060 --> 00:06:38.779 mom -and -pop bakery can't compete, not because 00:06:38.779 --> 00:06:41.240 their product is worse, but because the infrastructure 00:06:41.240 --> 00:06:44.360 costs are totally rigged. That analogy hits the 00:06:44.360 --> 00:06:47.019 underlying mechanism perfectly. The railroads 00:06:47.019 --> 00:06:49.220 were picking winners and losers in the American 00:06:49.220 --> 00:06:52.420 economy. But it gets even more complex when you 00:06:52.420 --> 00:06:55.120 look at geographical discrimination. Right, the 00:06:55.120 --> 00:06:57.759 long haul versus short haul problem. I saw that 00:06:57.759 --> 00:06:59.300 phrase repeated throughout the research. How 00:06:59.300 --> 00:07:01.500 did that actually work in practice? Why would 00:07:01.500 --> 00:07:04.040 a shorter trip ever cost more than a longer one? 00:07:04.279 --> 00:07:06.639 It comes down to the nature of railroad competition 00:07:06.639 --> 00:07:09.459 at the time. Let's say you want to ship a load 00:07:09.459 --> 00:07:12.019 of manufactured goods from New York to Chicago. 00:07:12.160 --> 00:07:14.709 Okay. That's a long haul. Yeah. But because those 00:07:14.709 --> 00:07:17.689 are two massive metropolitan hubs, there are 00:07:17.689 --> 00:07:19.709 three or four different railroad companies that 00:07:19.709 --> 00:07:21.449 have tracks connecting them. So they have to 00:07:21.449 --> 00:07:24.069 fight for your business. Exactly. To win your 00:07:24.069 --> 00:07:26.290 business, those four railroads have to compete. 00:07:26.350 --> 00:07:29.170 So they slash their prices. The rate from New 00:07:29.170 --> 00:07:32.290 York to Chicago just plummets. OK, that makes 00:07:32.290 --> 00:07:34.589 sense. Competition drives down prices. That's 00:07:34.589 --> 00:07:37.649 capitalism. Right. But. Railroads have massive 00:07:37.649 --> 00:07:40.250 fixed costs. They're maintaining thousands of 00:07:40.250 --> 00:07:42.889 miles of track, paying huge crews, buying tons 00:07:42.889 --> 00:07:46.189 of coal. If they're losing money on that highly 00:07:46.189 --> 00:07:48.810 competitive New York to Chicago route, they have 00:07:48.810 --> 00:07:51.470 to make it up somewhere else. So they look for 00:07:51.470 --> 00:07:53.649 a captive audience. Precisely. They look at the 00:07:53.649 --> 00:07:56.509 rural routes. Let's say a farmer in a tiny town 00:07:56.509 --> 00:07:59.990 in Iowa wants to ship grain to Chicago. That 00:07:59.990 --> 00:08:02.649 town only have one railroad track running through 00:08:02.649 --> 00:08:06.449 it. The railroad has an absolute localized monopoly 00:08:06.449 --> 00:08:09.129 there. So they just jack up the price astronomically. 00:08:09.550 --> 00:08:11.680 Exactly. It was a completely common occurrence 00:08:11.680 --> 00:08:15.379 for a farmer shipping grain 200 miles to pay 00:08:15.379 --> 00:08:17.459 significantly more than an industrialist shipping 00:08:17.459 --> 00:08:20.360 steel 800 miles. That is infuriating. I mean, 00:08:20.360 --> 00:08:22.519 you can entirely see why the Grange movement 00:08:22.519 --> 00:08:24.819 was mobilizing. They are just being bled dry. 00:08:25.120 --> 00:08:27.579 Completely. But if this was so obviously unfair, 00:08:27.720 --> 00:08:29.620 why didn't the state governments or the local 00:08:29.620 --> 00:08:31.800 mayors step in and stop it? Because the railroads 00:08:31.800 --> 00:08:34.379 had already bought them and they did it using 00:08:34.379 --> 00:08:37.720 one of the most brilliant insidious and perfectly 00:08:37.720 --> 00:08:40.840 legal soft lobbying tactics ever invented. The 00:08:40.840 --> 00:08:43.740 free annual pass. The free annual pass. This 00:08:43.740 --> 00:08:46.679 detail fascinated me because we aren't talking 00:08:46.679 --> 00:08:49.759 about handing over briefcases full of cash and 00:08:49.759 --> 00:08:52.659 dark alleys here. This was out in the open. It 00:08:52.659 --> 00:08:55.539 was entirely institutionalized. The railroads 00:08:55.539 --> 00:08:58.460 would issue free unlimited yearly transportation 00:08:58.460 --> 00:09:02.399 passes to anyone they deemed an opinion leader. 00:09:02.620 --> 00:09:04.940 So who are we talking about? We are talking about 00:09:04.940 --> 00:09:08.779 state legislators, judges, city councilmen, newspaper 00:09:08.779 --> 00:09:11.600 editors, and even local ministers. Come ministers, 00:09:11.799 --> 00:09:14.779 that is so calculated. Isn't it? They are ensuring 00:09:14.779 --> 00:09:16.779 that the moral authority in the town can't preach 00:09:16.779 --> 00:09:18.559 a sermon against the real rude without looking 00:09:18.559 --> 00:09:21.210 like a massive hypocrite. Precisely. I mean, 00:09:21.250 --> 00:09:23.409 if the editor of the local newspaper is using 00:09:23.409 --> 00:09:25.549 his free pass to take his family on vacation 00:09:25.549 --> 00:09:27.730 to the coast every summer, he is significantly 00:09:27.730 --> 00:09:30.529 less likely to run a skating front page editorial 00:09:30.529 --> 00:09:33.129 about how the real rude's freight rates are driving 00:09:33.129 --> 00:09:35.909 local farmers into bankruptcy. Right. It functioned 00:09:35.909 --> 00:09:38.629 as a systemic muzzle on any local opposition. 00:09:38.730 --> 00:09:42.389 It really did. So the system is completely rigged. 00:09:42.830 --> 00:09:45.029 The states are powerless because their politicians 00:09:45.029 --> 00:09:47.990 are corrupted by these free passes. And even 00:09:47.990 --> 00:09:51.360 if a state did manage to pass a law, The railroad 00:09:51.360 --> 00:09:54.039 just crosses a state line where the law no longer 00:09:54.039 --> 00:09:56.419 applies. Exactly. The jurisdiction issue was 00:09:56.419 --> 00:09:59.500 huge. So the farmers finally take this to Washington, 00:09:59.500 --> 00:10:03.279 D .C., and in 1887, Congress passes the Interstate 00:10:03.279 --> 00:10:06.100 Commerce Act. Yes, signed by President Grover 00:10:06.100 --> 00:10:11.019 Cleveland. The act creates the ICC. It mandates 00:10:11.019 --> 00:10:13.539 that all shipping rates must be just and reasonable. 00:10:13.720 --> 00:10:16.860 It explicitly bans the secret rebates and that 00:10:16.860 --> 00:10:18.779 long -haul, short -haul discrimination. Right. 00:10:19.019 --> 00:10:20.899 And it establishes a five -member commission 00:10:20.899 --> 00:10:23.460 to oversee it all. And they put a really serious 00:10:23.460 --> 00:10:25.879 legal mind in charge, too. Thomas M. Cooley. 00:10:26.139 --> 00:10:28.659 Thomas M. Cooley was the perfect choice to give 00:10:28.659 --> 00:10:31.179 this brand new fourth branch some meaty credibility. 00:10:31.399 --> 00:10:34.000 He was a titan of legal scholarship. He was the 00:10:34.000 --> 00:10:35.519 former dean of the University of Michigan Law 00:10:35.519 --> 00:10:37.320 School and the chief justice of the Michigan 00:10:37.320 --> 00:10:39.960 Supreme Court. Serious credential. Very. The 00:10:39.960 --> 00:10:42.960 explicit design was to have a panel of independent 00:10:42.960 --> 00:10:45.740 experts nominated by the president and confirmed 00:10:45.740 --> 00:10:48.580 by the Senate. who would sit above the partisan 00:10:48.580 --> 00:10:51.139 fray of regular politics. But I have to stop 00:10:51.139 --> 00:10:53.879 and point out the sheer audacity of this. Yeah. 00:10:54.000 --> 00:10:56.419 You have five guys sitting at wooden desks in 00:10:56.419 --> 00:10:59.320 Washington DC and their job is to rein in the 00:10:59.320 --> 00:11:03.559 Vanderbilts, the Goulds, the Morgans, the absolute 00:11:03.559 --> 00:11:06.460 wealthiest, most ruthless corporate titans of 00:11:06.460 --> 00:11:08.659 the Gilded Age. That was a tall order. How could 00:11:08.659 --> 00:11:13.259 this tiny untested agency possibly enforce these 00:11:13.259 --> 00:11:16.000 massive new rules across a continental economy? 00:11:15.759 --> 00:11:19.139 Well, the harsh historical reality is that they 00:11:19.139 --> 00:11:21.899 couldn't. They couldn't? No. The ICC's first 00:11:21.899 --> 00:11:24.379 decade was an absolute disaster of enforcement. 00:11:24.840 --> 00:11:27.019 They were a textbook example of a toothless tiger. 00:11:27.279 --> 00:11:29.240 So Congress wrote a rule book, but they basically 00:11:29.240 --> 00:11:31.220 forgot to give the referees a whistle. Oh, they 00:11:31.220 --> 00:11:33.039 gave them a whistle. Yeah. They just didn't give 00:11:33.039 --> 00:11:34.559 them the authority to throw anyone out of the 00:11:34.559 --> 00:11:38.460 game. The foundational flaw in the 1887 Interstate 00:11:38.460 --> 00:11:41.519 Commerce Act was a severe lack of enforcement 00:11:41.519 --> 00:11:44.500 mechanisms. It was a massive gap between the 00:11:44.500 --> 00:11:46.960 grand legislative intent of Congress and the 00:11:46.960 --> 00:11:49.059 grinding legal reality of the American judicial 00:11:49.059 --> 00:11:51.820 system. Walk us through what happened when the 00:11:51.820 --> 00:11:55.220 ICC actually tried to enforce that just and reasonable 00:11:55.220 --> 00:11:58.360 clause. Let's say a group of farmers complains 00:11:58.360 --> 00:12:00.980 that a railroad is charging them triple the rate 00:12:00.980 --> 00:12:03.879 of the next town over. OK. The ICC investigates 00:12:03.879 --> 00:12:06.600 and agrees. What happens next? So following the 00:12:06.600 --> 00:12:09.220 passage of the act, the ICC would hold a hearing. 00:12:09.389 --> 00:12:11.669 review the data, and then issue an order telling 00:12:11.669 --> 00:12:14.250 the railroad to lower its maximum rate to a specific 00:12:14.250 --> 00:12:17.230 dollar amount. The railroad's response, almost 00:12:17.230 --> 00:12:19.629 universally, was to simply ignore the order. 00:12:19.769 --> 00:12:21.730 Wait, they just threw the federal order in the 00:12:21.730 --> 00:12:24.549 trash? Effectively, yes. Because under the original 00:12:24.549 --> 00:12:27.909 law, if a railroad ignored an ICC order, the 00:12:27.909 --> 00:12:30.049 ICC didn't have the power to fine them directly 00:12:30.049 --> 00:12:32.110 or shut down their operations. So what could 00:12:32.110 --> 00:12:34.429 they do? The ICC had to go to a federal court 00:12:34.429 --> 00:12:37.629 and file a lawsuit to force the railroad to comply. 00:12:37.870 --> 00:12:41.169 Ah, so the railroad just moves the fight to a 00:12:41.169 --> 00:12:43.149 venue where they have the ultimate advantage. 00:12:43.669 --> 00:12:46.769 Exactly. Infinite legal budgets. Yeah. And they 00:12:46.769 --> 00:12:51.169 deploy those legal budgets mercilessly. The railroads 00:12:51.169 --> 00:12:54.409 drag these cases out for years through endless 00:12:54.409 --> 00:12:57.610 appeals. Right. Just stall them out. Yeah. And 00:12:57.610 --> 00:12:59.669 when the cases finally reached the Supreme Court 00:12:59.669 --> 00:13:03.309 in the late 1890s, the courts dealt the ICC a 00:13:03.309 --> 00:13:05.990 series of devastating blows. What did they rule? 00:13:06.230 --> 00:13:08.509 The Supreme Court ruled that while the ICC had 00:13:08.509 --> 00:13:10.929 the power to declare an existing rate unjust 00:13:10.929 --> 00:13:14.970 or unreasonable, the 1887 law did not explicitly 00:13:14.970 --> 00:13:17.690 give the ICC the power to set a new maximum rate 00:13:17.690 --> 00:13:19.710 for the future. Wait, wait, let me make sure 00:13:19.710 --> 00:13:21.830 I understand the absurdity of that legal logic. 00:13:22.009 --> 00:13:24.350 The government agency could point at a $10 train 00:13:24.350 --> 00:13:27.269 ticket and say, that is illegal and unfair. Yes. 00:13:27.370 --> 00:13:29.370 But they couldn't say, the ticket must be $5. 00:13:29.769 --> 00:13:32.470 Exactly. They could diagnose the disease, but 00:13:32.470 --> 00:13:34.690 the courts ruled they had no legal authority 00:13:34.690 --> 00:13:38.049 to prescribe the cure. That is wild. So a railroad 00:13:38.049 --> 00:13:40.289 could have their $10 rates struck down, and the 00:13:40.289 --> 00:13:42.450 very next day they could issue a new rate of 00:13:42.450 --> 00:13:46.820 $9 .99. And the ICC would have to start the entire 00:13:46.820 --> 00:13:49.480 multi -year court process all over again. Precisely. 00:13:49.600 --> 00:13:52.440 It was a nightmare. That is maddening. It basically 00:13:52.440 --> 00:13:55.840 renders the entire agency performative. If they 00:13:55.840 --> 00:13:58.080 can't actually fix the prices, what were these 00:13:58.080 --> 00:14:01.059 five commissioners doing all day? Well, they 00:14:01.059 --> 00:14:04.299 pivoted. They moved to areas where they did have 00:14:04.299 --> 00:14:06.519 some undisputed authority. They actually became 00:14:06.519 --> 00:14:09.820 the primary federal investigation agency for 00:14:09.820 --> 00:14:12.799 railroad accidents. Oh, really? Yeah. They started 00:14:12.799 --> 00:14:15.620 compiling massive databases of crash statistics, 00:14:15.940 --> 00:14:18.159 looking into boiler explosions and derailments, 00:14:18.519 --> 00:14:21.659 which objectively was vital public safety work. 00:14:21.919 --> 00:14:25.009 Sure. But it wasn't the aggressive economic regulation 00:14:25.009 --> 00:14:27.370 that the Grange movement had demanded. Right. 00:14:27.429 --> 00:14:29.269 They were supposed to be the financial watchdogs, 00:14:29.309 --> 00:14:31.669 and they ended up being the crash scene investigators. 00:14:31.789 --> 00:14:33.929 Pretty much. There is a specific document in 00:14:33.929 --> 00:14:36.289 the source material from this era that I think 00:14:36.289 --> 00:14:38.629 is one of the most cynical, revealing things 00:14:38.629 --> 00:14:41.389 I've ever read. It perfectly captures how the 00:14:41.389 --> 00:14:44.250 corporate elite viewed this neutered agency. 00:14:44.590 --> 00:14:46.610 You are definitely referring to the Richard Olney 00:14:46.610 --> 00:14:49.700 letter. Yes. Listener, you need to hear the actual 00:14:49.700 --> 00:14:52.480 text of this because it is an absolute master 00:14:52.480 --> 00:14:54.960 class in corporate strategy. It really is. The 00:14:54.960 --> 00:14:59.509 year is 1892. Richard Olney is a highly connected 00:14:59.509 --> 00:15:02.110 private attorney who frequently represents railroad 00:15:02.110 --> 00:15:05.289 interests. He is writing a confidential letter 00:15:05.289 --> 00:15:07.950 to Charles Elliot Perkins, who is the president 00:15:07.950 --> 00:15:10.350 of the massive Chicago, Burlington, and Quincy 00:15:10.350 --> 00:15:13.570 Railroad. A very powerful man. Very. And Perkins 00:15:13.570 --> 00:15:17.009 is furious that the ICC exists and wants to lobby 00:15:17.009 --> 00:15:19.950 Congress to abolish it. Olney writes back and 00:15:19.950 --> 00:15:21.929 essentially tells him to calm down because the 00:15:21.929 --> 00:15:24.149 ICC is the best thing that ever happened to them. 00:15:24.330 --> 00:15:28.230 And Olney's exact phrasing is chillingly precise. 00:15:28.529 --> 00:15:30.990 Here's what Olney wrote, quote, the commission 00:15:30.990 --> 00:15:33.950 is or can be made of great use to the railroads. 00:15:34.269 --> 00:15:36.490 It satisfies the popular clamor for a government 00:15:36.490 --> 00:15:38.490 supervision of the railroads, while at the same 00:15:38.490 --> 00:15:41.029 time, that supervision is almost entirely nominal. 00:15:41.210 --> 00:15:43.529 Nominal supervision is a devastating indictment. 00:15:43.950 --> 00:15:46.450 What Olney is explaining to the railroad president 00:15:46.450 --> 00:15:49.940 is the concept of regulatory theater. He is saying, 00:15:50.019 --> 00:15:53.720 look, if we abolish the ICC, the farmers will 00:15:53.720 --> 00:15:56.600 riot and Congress might pass a law with actual 00:15:56.600 --> 00:15:59.919 teeth. But if we keep the ICC around, the public 00:15:59.919 --> 00:16:01.860 thinks they are being protected. Right. They 00:16:01.860 --> 00:16:04.580 see the official seal and feel safe. Exactly. 00:16:04.639 --> 00:16:06.940 They see a federal building with an eagle on 00:16:06.940 --> 00:16:09.039 the seal and they assume someone is watching 00:16:09.039 --> 00:16:12.220 out for them. Meanwhile, the agency has no actual 00:16:12.220 --> 00:16:15.340 power and we can continue operating our monopolies 00:16:15.340 --> 00:16:17.539 exactly as we always have. It's the ultimate 00:16:17.539 --> 00:16:20.580 shield. The watchdog isn't just toothless. The 00:16:20.580 --> 00:16:23.299 burglar is literally feeding the watchdog steak 00:16:23.299 --> 00:16:25.440 so the homeowners stay asleep. That's a great 00:16:25.440 --> 00:16:27.500 way to put it. And this raises a massive question 00:16:27.500 --> 00:16:29.460 about the psychological impact of government. 00:16:29.940 --> 00:16:31.860 I mean, when a regulatory body is created with 00:16:31.860 --> 00:16:34.460 immense fanfare, promising to level the playing 00:16:34.460 --> 00:16:36.860 field, but actually functions as a buffer to 00:16:36.860 --> 00:16:38.940 protect corporate monopolies from public anger, 00:16:39.460 --> 00:16:42.519 it breeds a deep systemic cynicism. And that 00:16:42.519 --> 00:16:45.659 cynicism eventually boiled over. Congress eventually 00:16:45.659 --> 00:16:47.620 realized the charade just couldn't continue. 00:16:47.879 --> 00:16:50.279 The agrarian populist movement was gaining massive 00:16:50.279 --> 00:16:52.639 political traction. The courts had completely 00:16:52.639 --> 00:16:55.039 humiliated the ICC, and the federal government 00:16:55.039 --> 00:16:56.960 decided they needed to stop playing games. So 00:16:56.960 --> 00:16:59.679 what did they do? They decided to hand the ICC 00:16:59.679 --> 00:17:02.379 a legislative sledgehammer. Which kicks off the 00:17:02.379 --> 00:17:05.220 second major era in our deep dive. From roughly 00:17:05.220 --> 00:17:09.480 1906 to 1935, the ICC transforms from this mocked 00:17:09.480 --> 00:17:12.539 toothless tiger into an absolute bureaucratic 00:17:12.539 --> 00:17:15.700 behemoth. Oh, yeah. They start absorbing jurisdiction 00:17:15.700 --> 00:17:18.299 over the American economy at a terrifying pace. 00:17:18.619 --> 00:17:20.619 The expansion is breathtaking. It starts with 00:17:20.619 --> 00:17:23.880 a tightening of safety regulations. The 1893 00:17:23.880 --> 00:17:27.119 Railroad Safety Appliance Act, which was further 00:17:27.119 --> 00:17:31.079 strengthened in 1903 and 1910, gave the ICC supreme 00:17:31.079 --> 00:17:33.559 jurisdiction over railroad safety technologies, 00:17:34.319 --> 00:17:36.799 completely preempting state laws. They mandated 00:17:36.799 --> 00:17:39.759 automatic couplers and air brakes, which genuinely 00:17:39.759 --> 00:17:42.289 saved thousands of lives. But the real shift 00:17:42.289 --> 00:17:44.269 in economic power came with the Hepburn Act of 00:17:44.269 --> 00:17:46.789 1906. How did the Hepburn Act solve the problem 00:17:46.789 --> 00:17:48.769 of the Supreme Court constantly striking down 00:17:48.769 --> 00:17:51.589 the ICC's orders? Congress simply rewrote the 00:17:51.589 --> 00:17:55.009 law to be airtight. The Hepburn Act explicitly, 00:17:55.210 --> 00:17:58.589 unquestionably authorized the ICC to set maximum 00:17:58.589 --> 00:18:01.309 railroad rates. The legal ambiguity was gone. 00:18:01.390 --> 00:18:04.569 So no more loopholes? None. If the ICC said the 00:18:04.569 --> 00:18:08.109 rate from Chicago to Omaha was $5, it was $5, 00:18:08.509 --> 00:18:10.609 and the burden of proof shifted to the railroads 00:18:10.609 --> 00:18:13.420 to prove why it shouldn't be. So they finally 00:18:13.420 --> 00:18:15.539 get the power to fix the prices. But they didn't 00:18:15.539 --> 00:18:18.240 stop at trains, did they? Not even close. The 00:18:18.240 --> 00:18:20.980 HEPRON Act expanded the ICC's regulatory umbrella 00:18:20.980 --> 00:18:23.799 to cover bridges, terminals, ferries, sleeping 00:18:23.799 --> 00:18:26.200 car companies, express shipping companies, and 00:18:26.200 --> 00:18:29.039 even oil pipelines. We oil pipelines. I have 00:18:29.039 --> 00:18:31.920 to jump in here. How does an agency created specifically 00:18:31.920 --> 00:18:34.880 because farmers were mad at grain shipping rates 00:18:34.880 --> 00:18:37.779 suddenly get jurisdiction over the booming petroleum 00:18:37.779 --> 00:18:39.460 industry? It seems like a stretcher. It feels 00:18:39.460 --> 00:18:41.700 like a massive leap in scope. It was a leap. 00:18:41.680 --> 00:18:44.740 But a calculated one. Congress realized that 00:18:44.740 --> 00:18:47.059 oil pipelines functioned exactly like railroads. 00:18:47.539 --> 00:18:50.039 They were massive, capital -intensive infrastructure 00:18:50.039 --> 00:18:53.400 projects that effectively created regional monopolies. 00:18:53.839 --> 00:18:56.799 Standard oil. Exactly. John D. Rockefeller's 00:18:56.799 --> 00:18:59.200 standard oil was using its control of pipelines 00:18:59.200 --> 00:19:02.859 to crush competing refineries. Congress saw the 00:19:02.859 --> 00:19:05.960 ICC as their new all -purpose hammer for any 00:19:05.960 --> 00:19:08.039 infrastructure monopoly. So they threw pripe 00:19:08.039 --> 00:19:10.440 lines into the mix. And then four years later, 00:19:10.740 --> 00:19:13.339 they tossed telecommunications onto the pile. 00:19:13.440 --> 00:19:17.599 Yes. The Mann -Elkins Act in 1910. This act finally 00:19:17.599 --> 00:19:20.500 put the nail in the coffin of the long haul versus 00:19:20.500 --> 00:19:22.500 short haul fare discrimination we talked about 00:19:22.500 --> 00:19:25.079 earlier. Oh, good. But crucially, it expanded 00:19:25.079 --> 00:19:28.180 the ICC's jurisdiction to include the regulation 00:19:28.180 --> 00:19:30.579 of telephone, telegraph and wireless companies. 00:19:30.640 --> 00:19:33.519 Oh, wait. For a period of time, the ICC was regulating 00:19:33.519 --> 00:19:36.000 the physical movement of goods and the electronic 00:19:36.000 --> 00:19:37.720 movement of information across the continent. 00:19:38.019 --> 00:19:40.900 Okay, giving an agency this much power is one 00:19:40.900 --> 00:19:43.940 thing. But how a bureaucracy chooses to exercise 00:19:43.940 --> 00:19:46.039 that power is where things usually go off the 00:19:46.039 --> 00:19:47.680 rails. Definitely. And we have to talk about 00:19:47.680 --> 00:19:49.960 the Valuation Act of 1913. When I read this section 00:19:49.960 --> 00:19:51.660 of the research, I actually had to read it twice 00:19:51.660 --> 00:19:54.039 because the sheer scale of the bureaucratic hubris 00:19:54.039 --> 00:19:57.279 is just mind boggling. The Valuation Act is widely 00:19:57.279 --> 00:19:59.740 considered one of the most extreme examples of 00:19:59.740 --> 00:20:03.019 administrative bloat in early 20th century history. 00:20:03.099 --> 00:20:05.950 It's nuts. The logic behind it. from a purely 00:20:05.950 --> 00:20:08.710 academic standpoint, almost makes sense. The 00:20:08.710 --> 00:20:11.250 ICC was tasked with setting rates that allowed 00:20:11.250 --> 00:20:13.650 the railroads to earn a fair return on their 00:20:13.650 --> 00:20:15.710 investments. Right. Because the Constitution 00:20:15.710 --> 00:20:18.009 says you can't just seize private property, so 00:20:18.009 --> 00:20:19.670 the government has to let the railroads make 00:20:19.670 --> 00:20:22.269 some profit. Correct. But the ICC bureaucrats 00:20:22.269 --> 00:20:24.630 asked themselves, how do we calculate a fair 00:20:24.630 --> 00:20:27.190 percentage of profit if we don't know the actual 00:20:27.190 --> 00:20:30.529 mathematical value of the company? Oh, no. The 00:20:30.529 --> 00:20:32.690 railroads claimed their networks were worth billions. 00:20:33.329 --> 00:20:35.569 The populace claimed the railroads were inflating 00:20:35.569 --> 00:20:38.170 those numbers to justify high ticket prices. 00:20:38.569 --> 00:20:40.990 So the ICC decides they need to find the objective 00:20:40.990 --> 00:20:44.289 true value of every railroad in America. Yes. 00:20:44.809 --> 00:20:48.210 In 1913, Congress passed the Valuation Act, ordering 00:20:48.210 --> 00:20:51.390 the ICC to organize a massive new Bureau of Valuation. 00:20:51.970 --> 00:20:54.190 Their mission was to physically assess the value 00:20:54.190 --> 00:20:56.730 of every single piece of railroad property in 00:20:56.730 --> 00:20:58.990 the United States. Let's ground this in reality 00:20:58.990 --> 00:21:01.769 for a second. Consider the physical scale of 00:21:01.769 --> 00:21:05.130 the United States in 1913. Huge. The railroad 00:21:05.130 --> 00:21:07.210 network stretched from the harbors of New York 00:21:07.210 --> 00:21:09.589 to the deserts of Arizona to the logging camps 00:21:09.589 --> 00:21:12.029 of the Pacific Northwest. And the government 00:21:12.029 --> 00:21:14.480 decided they were going to count Every single 00:21:14.480 --> 00:21:17.460 railroad tie. Every single one. Every spike. 00:21:17.980 --> 00:21:20.759 Every mile of steel track. Every wooden depot. 00:21:21.140 --> 00:21:24.299 Every water tower. Every steam locomotive. Every 00:21:24.299 --> 00:21:27.400 switching yard. They tried to physically inventory 00:21:27.400 --> 00:21:29.980 a continental empire to figure out what a train 00:21:29.980 --> 00:21:32.859 ticket should cost. To pull this off, the ICC 00:21:32.859 --> 00:21:35.819 had to hire an absolute army of civil engineers, 00:21:36.160 --> 00:21:39.180 accountants, and field inspectors. They sent 00:21:39.180 --> 00:21:41.460 teams out into the wilderness with clipboards, 00:21:42.019 --> 00:21:43.799 surveying equipment, and adding machines. I just 00:21:43.799 --> 00:21:46.099 picture guys in suits hiking into the mountains. 00:21:46.220 --> 00:21:48.039 Pretty much. They were measuring the depth of 00:21:48.039 --> 00:21:50.019 the gravel ballast under the tracks in the middle 00:21:50.019 --> 00:21:52.420 of Montana. It's like if the government today 00:21:52.420 --> 00:21:54.740 decided that before they could regulate internet 00:21:54.740 --> 00:21:57.559 prices, they needed to deploy federal agents 00:21:57.559 --> 00:22:00.400 to individually appraise every single server 00:22:00.400 --> 00:22:03.400 in every Amazon data center. Yeah, trace every 00:22:03.400 --> 00:22:06.700 mile of deep sea fiber optic cable. Right. And 00:22:06.700 --> 00:22:09.380 calculate the exact depreciation curve in millions 00:22:09.380 --> 00:22:13.220 of cooling fans. It is an impossible task. How 00:22:13.220 --> 00:22:15.460 long did this actually take? The evaluation process 00:22:15.460 --> 00:22:18.819 continued for almost 20 years. 20 years! That 00:22:18.819 --> 00:22:20.700 means by the time you finish counting the rail 00:22:20.700 --> 00:22:23.119 cars in California, the ones you counted in New 00:22:23.119 --> 00:22:25.119 York have rusted away and been replaced three 00:22:25.119 --> 00:22:28.079 times over. The data is structurally obsolete 00:22:28.079 --> 00:22:31.039 the moment you write it down. Exactly. The economy 00:22:31.039 --> 00:22:34.279 is dynamic. A bureaucracy moves at a crawl. By 00:22:34.279 --> 00:22:36.680 the time the ICC finally began publishing these 00:22:36.680 --> 00:22:39.599 massive multi -volume valuation reports in the 00:22:39.599 --> 00:22:42.920 1930s, the entire transportation landscape had 00:22:42.920 --> 00:22:45.279 changed. I mean, we had cars by then. The automobile 00:22:45.279 --> 00:22:47.519 had been invented, the Great Depression had hit, 00:22:47.579 --> 00:22:50.420 and the meticulously calculated true value of 00:22:50.420 --> 00:22:53.900 a 1913 steam engine was completely irrelevant. 00:22:54.720 --> 00:22:56.980 Historians and economists universally agree that 00:22:56.980 --> 00:23:00.180 this two -decade massively Evaluation Project 00:23:00.180 --> 00:23:02.880 was of practically zero use in actually setting 00:23:02.880 --> 00:23:05.619 fair rates. It was a monument to administrative 00:23:05.619 --> 00:23:08.700 waste, but the expansion era wasn't just wasteful. 00:23:08.779 --> 00:23:11.279 It actually had severe immediate consequences 00:23:11.279 --> 00:23:14.440 for the broader economy. It did. Let's talk about 00:23:14.440 --> 00:23:17.710 the panic of 1907. Because the research suggests 00:23:17.710 --> 00:23:20.849 the ICC's new rate -setting powers directly contributed 00:23:20.849 --> 00:23:23.890 to a massive financial crisis. How does capping 00:23:23.890 --> 00:23:27.130 a train ticket price crash Wall Street? It comes 00:23:27.130 --> 00:23:29.670 down to the mechanics of corporate finance and 00:23:29.670 --> 00:23:32.250 unintended consequences. When the Hepburn Act 00:23:32.250 --> 00:23:36.609 passed in 1906, the ICC immediately began aggressively 00:23:36.609 --> 00:23:38.890 enforcing strict limitations on railroad rates. 00:23:39.569 --> 00:23:41.490 They capped the revenue the railroads could bring 00:23:41.490 --> 00:23:44.380 in. Okay. But at the same time, the cost of labor 00:23:44.380 --> 00:23:47.839 and materials, steel, coal, wages was rising. 00:23:48.079 --> 00:23:49.859 So the railroad's expenses are going up, but 00:23:49.859 --> 00:23:52.259 the government legally forbids them from raising 00:23:52.259 --> 00:23:54.640 their prices to cover those expenses. Their profit 00:23:54.640 --> 00:23:56.839 margins get squeezed. They don't just get squeezed. 00:23:56.900 --> 00:23:59.900 They collapse. Now, in the early 20th century, 00:24:00.240 --> 00:24:02.519 railroad securities, the corporate bonds issued 00:24:02.519 --> 00:24:04.759 by the railroads to fund their expansion, were 00:24:04.759 --> 00:24:06.980 the bedrock of the American financial system. 00:24:06.980 --> 00:24:10.160 Wow. Major trust companies and banks held massive 00:24:10.160 --> 00:24:13.089 portfolios of railroad bonds. as their primary 00:24:13.089 --> 00:24:15.490 secure assets. Because everyone assumed the railroads 00:24:15.490 --> 00:24:17.130 would always make money. They were the blue chip 00:24:17.130 --> 00:24:20.029 stocks of the era. Exactly. But when investors 00:24:20.029 --> 00:24:23.210 realized the ICC's new price controls meant the 00:24:23.210 --> 00:24:25.329 railroads could no longer generate enough profit 00:24:25.329 --> 00:24:28.309 to guarantee those bond payments, the value of 00:24:28.309 --> 00:24:31.289 railroad securities plummeted. The bonds depreciated 00:24:31.289 --> 00:24:33.900 drastically. And when the bonds lose their value, 00:24:34.319 --> 00:24:36.180 the balance sheets of the major banks holding 00:24:36.180 --> 00:24:39.380 those bonds suddenly look toxic. Precisely. The 00:24:39.380 --> 00:24:41.339 banks no longer had the capital reserves they 00:24:41.339 --> 00:24:44.160 thought they had. This massive depreciation in 00:24:44.160 --> 00:24:47.220 railroad securities was a major direct contributing 00:24:47.220 --> 00:24:50.319 factor in triggering the panic of 1907. That's 00:24:50.319 --> 00:24:52.579 incredible. A liquidity crisis swept through 00:24:52.579 --> 00:24:55.920 Wall Street. Banks failed and the broader economy 00:24:55.920 --> 00:24:59.180 suffered a severe contraction. The agency created 00:24:59.180 --> 00:25:01.339 to protect the American economy from instability. 00:25:02.080 --> 00:25:04.619 inadvertently engineered a financial panic by 00:25:04.619 --> 00:25:06.940 failing to understand the complex interconnected 00:25:06.940 --> 00:25:09.799 nature of capital markets. It is the ultimate 00:25:09.799 --> 00:25:12.839 cautionary tale of heavy -handed price controls. 00:25:13.559 --> 00:25:16.619 And yet, the ICC's response to this wasn't to 00:25:16.619 --> 00:25:20.640 back off, was it? By 1935, they look at the emerging 00:25:20.640 --> 00:25:23.140 trucking and bus industries, and they demand 00:25:23.140 --> 00:25:26.180 control over those, too. Yes. The Motor Carrier 00:25:26.180 --> 00:25:29.059 Act of 1935 brings interstate trucking and bus 00:25:29.059 --> 00:25:32.299 lines under the ICC's jurisdiction. The logic 00:25:32.299 --> 00:25:35.220 was that if the ICC only controlled trains, they 00:25:35.220 --> 00:25:36.839 couldn't actually control the transportation 00:25:36.839 --> 00:25:38.779 market because shippers would just switch to 00:25:38.779 --> 00:25:41.680 trucks. Right. So the bureaucracy had to absorb 00:25:41.680 --> 00:25:44.099 the competing technology to maintain its grip. 00:25:44.480 --> 00:25:47.660 As the ICC gathered all this unprecedented power 00:25:47.660 --> 00:25:50.640 over decades, their internal culture really shifted. 00:25:50.839 --> 00:25:53.539 They started attempting these massive utopian 00:25:53.539 --> 00:25:55.759 social and economic engineering projects. Yeah, 00:25:55.779 --> 00:25:57.799 they really did. And this brings us back to the 00:25:57.799 --> 00:25:59.940 wild anecdotes we touched on at the start of 00:25:59.940 --> 00:26:03.000 the deep dive, the Ripley Plan and the inventor 00:26:03.000 --> 00:26:05.720 in the asylum. These stories perfectly illustrate 00:26:05.720 --> 00:26:08.099 the mindset of a bureaucracy that has convinced 00:26:08.099 --> 00:26:10.720 itself that it possesses the omniscience to manage 00:26:10.720 --> 00:26:13.259 a continental economy from a desk in Washington. 00:26:13.480 --> 00:26:16.019 Right. Let's examine the Ripley Plan first. OK, 00:26:16.059 --> 00:26:19.279 so after World War I, in the Transportation Act 00:26:19.279 --> 00:26:22.640 of 1920, Congress directed the ICC to prepare 00:26:22.640 --> 00:26:26.269 a master plan to consolidate all the hundreds 00:26:26.269 --> 00:26:28.309 of independent railway properties in the United 00:26:28.309 --> 00:26:31.390 States into a limited number of massive systems. 00:26:31.609 --> 00:26:33.670 They want to forcibly merge the industry. Why? 00:26:33.849 --> 00:26:36.450 Because the ICC was tired of having to set different 00:26:36.450 --> 00:26:39.430 rates for strong, profitable railroads and weak, 00:26:39.609 --> 00:26:42.390 failing railroads. They thought, hey, if we just 00:26:42.390 --> 00:26:44.369 force all the strong companies to absorb the 00:26:44.369 --> 00:26:46.710 weak companies, we'll have a uniform system that 00:26:46.710 --> 00:26:49.329 is much easier for us to regulate. So they hire 00:26:49.329 --> 00:26:52.329 an academic to draw the map. Yes. They hired 00:26:52.329 --> 00:26:55.319 William Z. Ripley. a prominent professor of political 00:26:55.319 --> 00:26:57.680 economy at Harvard University. Naturally. Between 00:26:57.680 --> 00:27:01.140 1920 and 1923, Professor Ripley sat in an office 00:27:01.140 --> 00:27:04.059 and drafted a master plan for the American economy. 00:27:04.279 --> 00:27:07.819 In 1929, the ICC published it as the complete 00:27:07.819 --> 00:27:10.240 plan of consolidation. What did this professor's 00:27:10.240 --> 00:27:12.259 map actually look like? How do you carve up the 00:27:12.259 --> 00:27:14.759 United States? He proposed consolidating the 00:27:14.759 --> 00:27:17.680 entire sprawling industry into just 21 regional 00:27:17.680 --> 00:27:20.940 railroads, plus about 100 specific terminal operations. 00:27:21.279 --> 00:27:23.460 He was playing corporate matchmaker on a staggering 00:27:23.460 --> 00:27:26.380 scale. He was literally drawing lines on a map, 00:27:26.700 --> 00:27:28.819 declaring that the Boston and Maine railroad 00:27:28.819 --> 00:27:32.589 must merge with the Delaware and Hudson. He mandated 00:27:32.589 --> 00:27:35.569 that the mighty Baltimore and Ohio Railroad had 00:27:35.569 --> 00:27:38.730 to absorb the Reading Railroad and half of the 00:27:38.730 --> 00:27:42.049 Moonin Railroad. Just, just dictating it. Yeah, 00:27:42.069 --> 00:27:44.269 he told the Union Pacific they were now paired 00:27:44.269 --> 00:27:47.089 with the Kansas City Southern. It is staggering 00:27:47.089 --> 00:27:50.440 hubris. You have a Harvard professor and a panel 00:27:50.440 --> 00:27:52.759 of bureaucrats looking at a map and casually 00:27:52.759 --> 00:27:55.359 deciding the fate of billions of dollars of private 00:27:55.359 --> 00:27:57.980 enterprise. They're ignoring corporate cultures, 00:27:58.380 --> 00:28:01.220 existing debt structures, deeply ingrained rivalries, 00:28:01.519 --> 00:28:04.099 just completely overriding market. You two companies 00:28:04.099 --> 00:28:06.559 will marry, you will share this track, because 00:28:06.559 --> 00:28:08.720 it makes our regulatory models run smoother. 00:28:08.880 --> 00:28:11.039 And the reality of the free market completely 00:28:11.039 --> 00:28:13.880 rejected this academic exercise. Almost immediately 00:28:13.880 --> 00:28:16.519 after the plan was published in 1929, the Great 00:28:16.519 --> 00:28:18.759 Depression hit. Oh, perfect timing. Yeah. Many 00:28:18.759 --> 00:28:21.900 smaller, weaker railroads went bankrupt. Of the 00:28:21.900 --> 00:28:24.859 major lines that survived, the strong ones absolutely 00:28:24.859 --> 00:28:27.640 refused to be shackled to the failing ones just 00:28:27.640 --> 00:28:29.559 because a government pamphlet said they had to. 00:28:29.759 --> 00:28:32.059 Because in reality, a strong company's board 00:28:32.059 --> 00:28:34.579 of directors isn't going to deliberately bankrupt 00:28:34.579 --> 00:28:37.160 their own shareholders to save an inefficient 00:28:37.160 --> 00:28:41.019 competitor just to make the ICC's map look aesthetically 00:28:41.019 --> 00:28:44.210 pleasing. Exactly. The railroads resisted furiously, 00:28:44.730 --> 00:28:46.690 the economic realities on the ground shifted 00:28:46.690 --> 00:28:49.750 daily, and the ICC's grand vision completely 00:28:49.750 --> 00:28:52.599 crumbled. Finally, Congress had to admit defeat. 00:28:53.220 --> 00:28:55.400 They formally repudiated the Ripley plan with 00:28:55.400 --> 00:28:58.200 the Transportation Act of 1940, and the entire 00:28:58.200 --> 00:29:01.140 top -down consolidation idea was scrapped. So 00:29:01.140 --> 00:29:03.720 they failed spectacularly at corporate matchmaking. 00:29:04.180 --> 00:29:07.000 But the story of Ibn Moody Boynton, the monorail 00:29:07.000 --> 00:29:10.180 inventor, is where the ICC's behavior crosses 00:29:10.180 --> 00:29:12.920 the line from bureaucratic overreach into something 00:29:12.920 --> 00:29:16.049 genuinely dark. Let's delve back into that. Boynton's 00:29:16.049 --> 00:29:18.309 story is a profound warning about the psychological 00:29:18.309 --> 00:29:21.329 rigidity of entrenched bureaucracies. So in 1920, 00:29:21.589 --> 00:29:23.809 Ibn Moody Boynton had developed the Boynton Bicycle 00:29:23.809 --> 00:29:26.190 Railroad. As we mentioned, it was an innovative 00:29:26.190 --> 00:29:28.289 electric light rail system running on a single 00:29:28.289 --> 00:29:30.130 track. And he had working prototypes, right? 00:29:30.369 --> 00:29:32.829 He did. Proponents of the technology claimed 00:29:32.829 --> 00:29:35.670 it could achieve speeds of up to 160 miles an 00:29:35.670 --> 00:29:38.029 hour, which would have completely superseded 00:29:38.029 --> 00:29:40.950 traditional heavy steam train travel. It is the 00:29:40.950 --> 00:29:43.759 1920 equivalent of pitching a hyperloop. Boynton 00:29:43.759 --> 00:29:46.400 knows the ICC controls all transportation in 00:29:46.400 --> 00:29:49.099 America, so he goes to them to get his technology 00:29:49.099 --> 00:29:53.109 adopted. Yes. And he was persistent. According 00:29:53.109 --> 00:29:56.210 to the sworn testimony of the ICC's own chief 00:29:56.210 --> 00:29:59.009 clerk, Boyne became virtually a daily visitor 00:29:59.009 --> 00:30:01.970 at the ICC headquarters in Washington. He was 00:30:01.970 --> 00:30:04.609 constantly seeking meetings, constantly pushing 00:30:04.609 --> 00:30:07.210 the commission to evaluate and adopt his proposal. 00:30:07.450 --> 00:30:09.869 And how does this multi -headed independent agency, 00:30:10.009 --> 00:30:12.789 which was ostensibly created to foster and protect 00:30:12.789 --> 00:30:15.869 American commerce, respond to a persistent innovator? 00:30:15.990 --> 00:30:17.829 They didn't assign an engineer to review his 00:30:17.829 --> 00:30:19.789 math. They didn't tell him to go build a test 00:30:19.789 --> 00:30:22.380 track. No. In March of 1920, officials of the 00:30:22.380 --> 00:30:25.480 ICC coordinated with local authorities and literally 00:30:25.480 --> 00:30:28.220 had even Moody Boynton committed to a psychiatric 00:30:28.220 --> 00:30:30.599 institution in Washington, D .C. The government 00:30:30.599 --> 00:30:33.099 agency in charge of transportation locked an 00:30:33.099 --> 00:30:35.519 inventor in an asylum. On what medical grounds? 00:30:35.920 --> 00:30:38.960 That is the most disturbing part. ICC officials 00:30:38.960 --> 00:30:40.900 later stated on the record that they had him 00:30:40.900 --> 00:30:43.319 committed because he was, quote, worrying them 00:30:43.319 --> 00:30:45.980 to death with his constant promotion of the bicycle 00:30:45.980 --> 00:30:48.220 railroad. worrying them to death. That is the 00:30:48.220 --> 00:30:50.920 actual historical quote. It is. They didn't claim 00:30:50.920 --> 00:30:53.019 he was violent. They didn't claim he was a danger 00:30:53.019 --> 00:30:55.500 to himself. He was simply a nuisance to their 00:30:55.500 --> 00:30:58.559 administrative routine. He challenged their paradigm. 00:30:59.319 --> 00:31:02.420 Bureaucracies, by their very nature, crave stability, 00:31:02.759 --> 00:31:06.059 predictability and order. They exist to manage 00:31:06.059 --> 00:31:08.500 the status quo. Right. When someone walks in 00:31:08.500 --> 00:31:10.700 off the street with an idea that threatens to 00:31:10.700 --> 00:31:13.140 render the entire existing infrastructure obsolete, 00:31:13.839 --> 00:31:16.279 the bureaucracy doesn't view that as an opportunity. 00:31:16.539 --> 00:31:19.400 They view it as an attack. They pathologized 00:31:19.400 --> 00:31:21.960 his innovation. It perfectly illustrates how 00:31:21.960 --> 00:31:24.519 ordinary citizens often feel when dealing with 00:31:24.519 --> 00:31:26.960 impenetrable government systems today. You bring 00:31:26.960 --> 00:31:29.259 a new way of doing things, and the machine tries 00:31:29.259 --> 00:31:31.740 to grind you down. Did Boynton ever get out? 00:31:31.880 --> 00:31:34.680 He did, thankfully. He fought back from inside 00:31:34.680 --> 00:31:37.859 the institution. Based on his own highly coherent 00:31:37.859 --> 00:31:41.099 testimony, and with the crucial high -level intervention 00:31:41.099 --> 00:31:43.019 of a Massachusetts congressman named William 00:31:43.019 --> 00:31:46.240 S. Green, Boynton won his release on May 28, 00:31:46.700 --> 00:31:50.319 1920. He spent roughly two months locked in an 00:31:50.319 --> 00:31:52.900 asylum simply for pitching a train to the train 00:31:52.900 --> 00:31:56.079 commission. While the ICC was busy drawing fantasy 00:31:56.079 --> 00:31:58.900 maps and swatting away eccentric inventors, the 00:31:58.900 --> 00:32:01.039 timeline of American history was moving forward. 00:32:01.519 --> 00:32:03.779 And the agency found itself inadvertently thrust 00:32:03.779 --> 00:32:06.099 into the center of the greatest moral and social 00:32:06.099 --> 00:32:09.359 struggle of the 20th century. The ICC, almost 00:32:09.359 --> 00:32:11.819 entirely by accident, became a pioneer in the 00:32:11.819 --> 00:32:14.599 civil rights movement. It is a remarkable historical 00:32:14.599 --> 00:32:17.339 pivot, and it highlights the unforeseen consequences 00:32:17.339 --> 00:32:20.210 of centralized power. It is vital to state clearly 00:32:20.210 --> 00:32:22.470 upfront racial integration, social justice, and 00:32:22.470 --> 00:32:24.769 civil rights were never the primary focus of 00:32:24.769 --> 00:32:27.369 the ICC's legislative mandate. The commissioners 00:32:27.369 --> 00:32:29.990 were economists, lawyers, and logistics managers. 00:32:30.809 --> 00:32:33.029 But because the Constitution grants the federal 00:32:33.029 --> 00:32:36.230 government power over commerce that crosses state 00:32:36.230 --> 00:32:38.930 lines, and because passenger travel is explicitly 00:32:38.930 --> 00:32:42.950 defined as commerce, the ICC was letally forced 00:32:42.950 --> 00:32:46.289 to confront Jim Crow. This is where we see the 00:32:46.289 --> 00:32:48.390 legal mechanics of the Constitution doing some 00:32:48.390 --> 00:32:52.230 really unexpected, profound heavy lifting. Civil 00:32:52.230 --> 00:32:54.990 rights leaders looked at the board, saw the southern 00:32:54.990 --> 00:32:57.650 courts were heavily biased, and brilliantly realized 00:32:57.650 --> 00:32:59.849 they could use the federal economic regulatory 00:32:59.849 --> 00:33:02.950 framework of the ICC to dismantle segregation. 00:33:03.230 --> 00:33:05.829 They turned a logistics agency into a civil rights 00:33:05.829 --> 00:33:08.650 battleground. It's genius. Let's trace the timeline. 00:33:08.839 --> 00:33:11.200 because it builds a steady drumbeat of legal 00:33:11.200 --> 00:33:13.980 victories that precede and parallel the broader, 00:33:14.059 --> 00:33:16.079 more fainous events of the civil rights movement. 00:33:17.119 --> 00:33:20.279 The strategy really gains traction in April 1941 00:33:20.279 --> 00:33:22.819 with a case called Mitchell v. United States. 00:33:22.859 --> 00:33:24.859 OK, what happened there? A black congressman 00:33:24.859 --> 00:33:27.839 from Illinois, Arthur Mitchell, paid for a first 00:33:27.839 --> 00:33:30.349 -class train ticket. When the train crossed into 00:33:30.349 --> 00:33:33.009 Arkansas, he was compelled by the conductor to 00:33:33.009 --> 00:33:36.009 leave the first -class car and ride in a segregated, 00:33:36.250 --> 00:33:39.250 dilapidated second -class car. So Mitchell complains 00:33:39.250 --> 00:33:41.869 to the ICC, right? And what does the ICC say? 00:33:42.170 --> 00:33:45.410 The ICC initially dismissed his complaint. They 00:33:45.410 --> 00:33:47.730 were very reluctant to interfere with Southern 00:33:47.730 --> 00:33:50.589 social customs. But Mitchell took it to the Supreme 00:33:50.589 --> 00:33:53.009 Court. Good for him. And the Supreme Court ruled 00:33:53.009 --> 00:33:55.710 that compelling a passenger who paid for a first 00:33:55.710 --> 00:33:57.789 -class ticket to ride in second -class conditions 00:33:57.789 --> 00:34:01.490 was fundamentally unjust and a direct violation 00:34:01.490 --> 00:34:03.930 of the Interstate Commerce Act's ban on discrimination. 00:34:04.809 --> 00:34:07.089 They forced the ICC to reverse this order. So 00:34:07.089 --> 00:34:09.570 the Supreme Court forces the ICC to recognize 00:34:09.570 --> 00:34:11.760 that if you pay the first -class rate you get 00:34:11.760 --> 00:34:14.260 the first -class seat, regardless of race, purely 00:34:14.260 --> 00:34:16.760 because to do otherwise is bad business practice 00:34:16.760 --> 00:34:18.960 under the regulatory framework. It's an economic 00:34:18.960 --> 00:34:21.219 argument achieving a moral victory. Exactly. 00:34:21.840 --> 00:34:25.119 Then the strategy moves to buses. In June 1946, 00:34:25.579 --> 00:34:27.619 you have Morgan v. Virginia, where the Supreme 00:34:27.619 --> 00:34:30.199 Court strikes down state laws requiring segregation 00:34:30.199 --> 00:34:33.519 on interstate buses. Using the same logic. Again, 00:34:33.719 --> 00:34:36.670 the reasoning was primarily economic. Forcing 00:34:36.670 --> 00:34:39.230 a bus driver to stop and rearrange all the passengers 00:34:39.230 --> 00:34:41.889 by race every time the vehicle crossed a state 00:34:41.889 --> 00:34:45.369 line was deemed an unconstitutional burden on 00:34:45.369 --> 00:34:48.030 interstate commerce. Wow. And then they tackle 00:34:48.030 --> 00:34:51.670 the dining cars. Yes. In June 1950, Henderson 00:34:51.670 --> 00:34:54.610 v. United States, a black passenger with a first 00:34:54.610 --> 00:34:56.650 -class ticket was denied service in the dining 00:34:56.650 --> 00:34:59.510 car because the single table, conditionally reserved 00:34:59.510 --> 00:35:02.230 for black passengers, was occupied by white passengers 00:35:02.230 --> 00:35:04.429 and the curtain was drawn. I want to highlight 00:35:04.429 --> 00:35:07.030 the ICC's initial reaction to the Henderson case 00:35:07.030 --> 00:35:09.949 because it shows how deeply resistant the bureaucracy 00:35:09.949 --> 00:35:12.829 was to taking a stand. Right. The ICC's initial 00:35:12.829 --> 00:35:15.469 ruling was to try and pass the buck. They ruled 00:35:15.469 --> 00:35:18.050 that the railroads racist policy was merely an 00:35:18.050 --> 00:35:20.170 error in judgment on the part of an individual 00:35:20.170 --> 00:35:22.630 dining car steward. Unbelievable. They tried 00:35:22.630 --> 00:35:25.369 to treat systemic racism as a localized customer 00:35:25.369 --> 00:35:27.909 service failure. But the Supreme Court struck 00:35:27.909 --> 00:35:30.699 that down, too. finding that the published systemic 00:35:30.699 --> 00:35:33.400 policies of the Southern Railway itself violated 00:35:33.400 --> 00:35:35.960 the Interstate Commerce Act. The ICC keeps trying 00:35:35.960 --> 00:35:37.980 to dodge the issue, and the Supreme Court keeps 00:35:37.980 --> 00:35:40.679 forcing them back into the ring. But the truly 00:35:40.679 --> 00:35:43.860 landmark moment, the case where the ICC itself 00:35:43.860 --> 00:35:46.159 finally changes its internal legal paradigm, 00:35:46.400 --> 00:35:49.619 happens in the 1950s. It involves a woman named 00:35:49.619 --> 00:35:52.639 Sarah Keys. Listener, this is a story that should 00:35:52.639 --> 00:35:55.199 be taught in every history class. The Sarah Keys 00:35:55.199 --> 00:35:57.840 case is a master class in legal perseverance. 00:35:58.360 --> 00:36:02.179 The date is August 1st, 1952. Private Sarah Keys, 00:36:02.400 --> 00:36:04.659 a member of the Women's Army Corps, is traveling 00:36:04.659 --> 00:36:07.400 in full military uniform on a bus from New Jersey 00:36:07.400 --> 00:36:10.300 to North Carolina. Okay. During a stop, the driver 00:36:10.300 --> 00:36:11.900 ordered her to give up her seat in the front 00:36:11.900 --> 00:36:13.880 of the bus to a white Marine and move to the 00:36:13.880 --> 00:36:16.840 back. She refused. She was arrested, held overnight, 00:36:16.980 --> 00:36:19.440 and fined. A woman serving her country in uniform 00:36:19.440 --> 00:36:21.460 is arrested for sitting in a seat she paid for. 00:36:21.659 --> 00:36:23.659 So she files a formal complaint with the ICC, 00:36:23.880 --> 00:36:25.739 challenging the fundamental separate but equal 00:36:25.739 --> 00:36:28.820 doctrine in bus segregation. And she is represented 00:36:28.820 --> 00:36:31.119 by an absolutely brilliant civil rights lawyer 00:36:31.119 --> 00:36:34.139 named Dovey Johnson Roundtree. Roundtree's strategy 00:36:34.139 --> 00:36:37.159 was audacious. They file the complaint against 00:36:37.159 --> 00:36:40.019 the Carolina Coach Company. Now remember the 00:36:40.019 --> 00:36:42.690 timeline. This is unfolding right around the 00:36:42.690 --> 00:36:44.889 time the Supreme Court is deciding Brown v. Board 00:36:44.889 --> 00:36:48.909 of Education in 1954, which famously struck down 00:36:48.909 --> 00:36:51.989 separate but equal in public schools. How does 00:36:51.989 --> 00:36:55.349 the ICC react to the Syracuse complaint? Do they 00:36:55.349 --> 00:36:57.349 see the writing on the wall with Brown v. Board? 00:36:57.550 --> 00:37:01.070 Not initially. The initial ICC reviewing commissioner 00:37:01.070 --> 00:37:04.110 assigned to the case declined to accept it. The 00:37:04.110 --> 00:37:06.070 commissioner made a highly compartmentalized 00:37:06.070 --> 00:37:08.809 legal argument. He stated that the Brown decision 00:37:08.809 --> 00:37:11.070 only applied to public institutions like state 00:37:11.070 --> 00:37:13.570 -funded schools and did not preclude segregation 00:37:13.570 --> 00:37:15.610 in a private business such as a bus company. 00:37:16.110 --> 00:37:18.489 So the bureaucracy's instinct is to build a wall 00:37:18.489 --> 00:37:21.030 around their jurisdiction. Yes, the schools must 00:37:21.030 --> 00:37:23.210 integrate, but we govern private commerce and 00:37:23.210 --> 00:37:25.210 private businesses can do what they want. But 00:37:25.210 --> 00:37:27.449 Debbie Johnson -Rountree refused to accept that 00:37:27.449 --> 00:37:29.889 dismissal. She understood the massive implications 00:37:29.889 --> 00:37:32.489 of the Commerce Clause. She aggressively petitioned 00:37:32.489 --> 00:37:35.789 for a full on -bank review by the entire 11 -person 00:37:35.789 --> 00:37:38.329 commission to the ICC. She argued that the logic 00:37:38.329 --> 00:37:40.829 of Brown, that separate is inherently unequal, 00:37:41.150 --> 00:37:43.570 must apply to interstate travel. And against 00:37:43.570 --> 00:37:46.269 all odds, she wins the room. She wins a decisive 00:37:46.269 --> 00:37:50.250 victory. Yeah. On November 7, 1955, in the case 00:37:50.250 --> 00:37:53.269 of Syracuse v. Carolina Coach Company, the full 00:37:53.269 --> 00:37:57.349 ICC explicitly and formally banned bus segregation 00:37:57.349 --> 00:38:00.030 in interstate travel. Incredible. This was a 00:38:00.030 --> 00:38:02.909 monumental ruling. It officially extended the 00:38:02.909 --> 00:38:05.780 moral and legal logic of Brown v. Board of Education 00:38:05.780 --> 00:38:08.380 out of the classroom and injected it directly 00:38:08.380 --> 00:38:10.480 into the realm of private businesses operating 00:38:10.480 --> 00:38:13.460 across state lines. I really want you listening 00:38:13.460 --> 00:38:15.800 to this to consider what this means in the broader 00:38:15.800 --> 00:38:18.530 context of history. The battle for civil rights 00:38:18.530 --> 00:38:20.610 wasn't just fought in the streets or at lunch 00:38:20.610 --> 00:38:22.630 counters or in the high -profile Supreme Court 00:38:22.630 --> 00:38:25.530 chambers. It was fought in the dusty filing cabinets 00:38:25.530 --> 00:38:28.090 and obscure administrative hearing rooms of a 00:38:28.090 --> 00:38:31.050 railroad regulatory agency. It's like discovering 00:38:31.050 --> 00:38:33.849 a loophole in the IRS tax code and using it to 00:38:33.849 --> 00:38:36.530 achieve a massive human rights victory. It's 00:38:36.530 --> 00:38:39.210 finding the lever of power wherever it is hidden 00:38:39.210 --> 00:38:41.570 and pulling it with everything you have. It was 00:38:41.570 --> 00:38:43.989 incredibly strategic and it paved the way for 00:38:43.989 --> 00:38:47.099 further action. In 1960, the Supreme Court ruled 00:38:47.099 --> 00:38:49.980 in Boynton v. Virginia that segregation in the 00:38:49.980 --> 00:38:52.420 actual bus terminal buildings was also illegal. 00:38:52.590 --> 00:38:54.829 under the Interstate Commerce Act. And finally, 00:38:55.010 --> 00:39:00.050 on September 23, 1961, at the heavy direct insistence 00:39:00.050 --> 00:39:02.230 of Attorney General Robert F. Kennedy, who was 00:39:02.230 --> 00:39:03.750 dealing with the violence around his Freedom 00:39:03.750 --> 00:39:08.030 Riders, the ICC issued sweeping definitive new 00:39:08.030 --> 00:39:10.469 rules. They finally put some teeth into it. Yes. 00:39:10.869 --> 00:39:13.690 They mandated that all interstate buses display 00:39:13.690 --> 00:39:16.449 a physical certificate stating that seating is 00:39:16.449 --> 00:39:20.219 without regard to race, color, creed. national 00:39:20.219 --> 00:39:23.440 origin and it had to explicitly say it was by 00:39:23.440 --> 00:39:24.960 order of the Interstate Commerce Commission. 00:39:25.119 --> 00:39:28.460 It is an incredible, undeniable legacy. The ICC 00:39:28.460 --> 00:39:31.079 was a vital instrument in dismantling Jim Crow 00:39:31.079 --> 00:39:33.579 and transportation. But historical narratives 00:39:33.579 --> 00:39:36.280 are rarely simple. Even as the ICC was making 00:39:36.280 --> 00:39:38.659 these landmark rulings on human dignity, the 00:39:38.659 --> 00:39:40.820 actual economic foundation of the agency, the 00:39:40.820 --> 00:39:42.719 core reason it was created to protect consumers 00:39:42.719 --> 00:39:45.639 back in 1887, was rotting from the inside out. 00:39:45.820 --> 00:39:47.659 It was. The economists were starting to look 00:39:47.659 --> 00:39:50.139 hard at the data, and they realized the ICC had 00:39:50.139 --> 00:39:52.719 become deeply, structurally corrupted. The civil 00:39:52.719 --> 00:39:54.940 rights victories were a triumph of using the 00:39:54.940 --> 00:39:57.780 regulatory machinery for good, but the economic 00:39:57.780 --> 00:40:01.139 machinery itself was fundamentally broken. Which 00:40:01.139 --> 00:40:03.559 brings us to a crucial concept in public policy, 00:40:04.239 --> 00:40:07.260 the era of the cartel, the rise of the critics, 00:40:07.659 --> 00:40:10.340 and the theory of regulatory capture. This is 00:40:10.340 --> 00:40:12.300 where the economists enter the narrative, and 00:40:12.300 --> 00:40:14.820 they are absolutely ruthless in their assessment 00:40:14.820 --> 00:40:17.679 of the ICC. We need to talk about Milton Friedman, 00:40:17.800 --> 00:40:20.599 the Nobel Laureate, and his son, David D. Friedman. 00:40:20.829 --> 00:40:23.190 What did they see happening under the hood of 00:40:23.190 --> 00:40:25.510 this agency? Let's start with Milton Friedman's 00:40:25.510 --> 00:40:28.389 analysis He looked at the long arc of the ICC 00:40:28.389 --> 00:40:31.349 and identified it as the textbook classic case 00:40:31.349 --> 00:40:33.630 of regulatory capture regulatory capture, right? 00:40:33.730 --> 00:40:35.829 it's an economic theory that describes a deeply 00:40:35.829 --> 00:40:38.869 cynical cycle a Regulatory agency is created 00:40:38.869 --> 00:40:41.610 by public demand to act in the public interest 00:40:41.610 --> 00:40:44.110 to protect the people from a powerful industry 00:40:44.110 --> 00:40:47.789 But over time the agency gets co -opted or captured 00:40:47.789 --> 00:40:50.510 by the very industry. It is supposed to be regulating 00:40:50.670 --> 00:40:53.070 How does that actually happen? How does the watchdog 00:40:53.070 --> 00:40:55.849 become the guard dog for the burglar? It happens 00:40:55.849 --> 00:40:58.949 through a slow alignment of interests. The general 00:40:58.949 --> 00:41:02.130 public, the farmers who protested in the 1880s, 00:41:02.409 --> 00:41:04.769 eventually go back to their lives. They aren't 00:41:04.769 --> 00:41:07.630 paying daily attention to the ICC. But the railroad 00:41:07.630 --> 00:41:11.329 executives, their entire profit margin depends 00:41:11.329 --> 00:41:13.869 on what the ICC does. So they dedicate all their 00:41:13.869 --> 00:41:16.920 resources to it. Exactly. So the railroads hire 00:41:16.920 --> 00:41:19.380 the best lawyers, the best lobbyists, and they 00:41:19.380 --> 00:41:22.440 engage with the ICC every single day. Eventually, 00:41:22.619 --> 00:41:25.059 a revolving door develops. The people working 00:41:25.059 --> 00:41:27.699 at the ICC come from the railroad industry, and 00:41:27.699 --> 00:41:29.739 when they leave the ICC, they go back to the 00:41:29.739 --> 00:41:32.980 railroad industry. So the culture merges. Precisely. 00:41:33.260 --> 00:41:35.360 Friedman argued that the existing railroad interests 00:41:35.360 --> 00:41:38.079 quickly realized it was much cheaper and far 00:41:38.079 --> 00:41:41.019 more profitable to control the ICC than to try 00:41:41.019 --> 00:41:43.219 and compete in a ruthless free market. Oh, that 00:41:43.219 --> 00:41:45.659 makes sense. They use the ICC's regulations, 00:41:46.119 --> 00:41:48.679 the very rules designed to stop them, to erect 00:41:48.679 --> 00:41:51.460 massive barriers to entry, strengthen their monopolistic 00:41:51.460 --> 00:41:53.920 control, and legally prevent new competition 00:41:53.920 --> 00:41:56.440 from emerging. Let's use an analogy to clarify 00:41:56.440 --> 00:41:59.019 this mechanism. It's like a town that builds 00:41:59.019 --> 00:42:02.000 a massive dam to protect a village from a flooding 00:42:02.000 --> 00:42:05.260 river. The dam is run by a government agency. 00:42:05.360 --> 00:42:08.679 But over time, the private water company buys 00:42:08.679 --> 00:42:11.860 off the dam operators. And soon, the operators 00:42:11.860 --> 00:42:14.199 aren't using the dam to stop floods, they are 00:42:14.199 --> 00:42:16.579 using the dam to artificially restrict the water 00:42:16.579 --> 00:42:19.199 supply, causing a drought in competing villages 00:42:19.199 --> 00:42:21.559 so the private water company can charge a premium 00:42:21.559 --> 00:42:24.219 for bottled water. The tool of protection becomes 00:42:24.219 --> 00:42:27.309 a weapon of monopoly. That is exactly the mechanism. 00:42:27.730 --> 00:42:30.130 And David D. Friedman explicitly expanded on 00:42:30.130 --> 00:42:32.989 this by looking at how the ICC handled emerging 00:42:32.989 --> 00:42:36.090 technologies. He argued that the ICC essentially 00:42:36.090 --> 00:42:38.610 served as a government -enforced cartelizing 00:42:38.610 --> 00:42:41.010 agent for the railroads. The cartelizing agent. 00:42:41.010 --> 00:42:43.409 Meaning they forced everyone to collude on high 00:42:43.409 --> 00:42:45.570 prices. How did they do that with the trucking 00:42:45.570 --> 00:42:48.929 industry? Remember back in 1935, the ICC expanded 00:42:48.929 --> 00:42:51.409 its buffet of power by taking over interstate 00:42:51.409 --> 00:42:53.869 trucking and bus lines. According to the critics, 00:42:53.889 --> 00:42:55.940 we have to look at why they took over trucking. 00:42:56.159 --> 00:42:58.099 They didn't do it to protect the consumer from 00:42:58.099 --> 00:43:00.059 bad truck drivers, they did it to protect the 00:43:00.059 --> 00:43:03.260 railroads from the trucks. In the 1930s, trucks 00:43:03.260 --> 00:43:05.639 were new, they were nimble, they didn't have 00:43:05.639 --> 00:43:07.739 massive infrastructure costs like maintaining 00:43:07.739 --> 00:43:10.400 steel rails, and they were aggressively undercutting 00:43:10.400 --> 00:43:13.019 the railroads on freight prices. The railroads 00:43:13.019 --> 00:43:14.940 were terrifying. So the railroads go to their 00:43:14.940 --> 00:43:18.119 captured agency, the ICC, and ask for help. Yes, 00:43:18.599 --> 00:43:22.159 and the ICC's response was to use its authority 00:43:22.360 --> 00:43:24.880 to force the trucking companies to raise their 00:43:24.880 --> 00:43:28.599 rates. They actively denied licenses to new trucking 00:43:28.599 --> 00:43:30.980 companies who wanted to offer cheaper routes. 00:43:31.119 --> 00:43:33.860 That is insane. They artificially inflated the 00:43:33.860 --> 00:43:36.739 cost of shipping by truck, specifically to prevent 00:43:36.739 --> 00:43:38.760 them from undercutting the railroad's outdated 00:43:38.760 --> 00:43:40.380 business model. Wait, I want to make sure the 00:43:40.380 --> 00:43:42.880 listener grasps the absurdity of this. If I'm 00:43:42.880 --> 00:43:46.079 a farmer or a manufacturer in 1940 and I want 00:43:46.079 --> 00:43:48.119 to ship my goods by truck because the truck is 00:43:48.119 --> 00:43:50.320 faster and significantly cheaper, the federal 00:43:50.320 --> 00:43:52.670 government steps in and says, No, that is illegal. 00:43:53.190 --> 00:43:55.269 The truck driver must charge you more money so 00:43:55.269 --> 00:43:57.110 that you are forced to consider using the more 00:43:57.110 --> 00:43:59.510 expensive, slower train so that the railroad 00:43:59.510 --> 00:44:02.309 company doesn't go bankrupt. You have grasped 00:44:02.309 --> 00:44:04.969 it perfectly. They were deliberately propping 00:44:04.969 --> 00:44:08.269 up an obsolete technology by punishing the innovative 00:44:08.269 --> 00:44:11.210 one. And the American consumer paid the price 00:44:11.210 --> 00:44:13.989 in hidden inflation on every single shipped good. 00:44:14.809 --> 00:44:17.670 The illusion of regulation is highly, highly 00:44:17.670 --> 00:44:20.300 profitable for the regulated. Okay, my mind is 00:44:20.300 --> 00:44:22.480 completely blown because this takes us all the 00:44:22.480 --> 00:44:25.880 way back to Richard Olney in 1892, the letter 00:44:25.880 --> 00:44:28.320 we discussed earlier. Olney told the president 00:44:28.320 --> 00:44:30.400 of the railroad that the commission satisfies 00:44:30.400 --> 00:44:32.760 the popular clamor while being of great use to 00:44:32.760 --> 00:44:34.860 the railroads. He wasn't just being cynical. 00:44:35.059 --> 00:44:37.139 He was engineering the capture from day one. 00:44:37.420 --> 00:44:39.760 He predicted the Milton Friedman thesis over 00:44:39.760 --> 00:44:42.679 80 years before Friedman published it. only saw 00:44:42.679 --> 00:44:44.619 the architectural flaw from the beginning. And 00:44:44.619 --> 00:44:47.820 by the 1970s, the economic damage caused by this 00:44:47.820 --> 00:44:50.420 cartel behavior became mathematically impossible 00:44:50.420 --> 00:44:53.280 to ignore. The criticism of the ICC was mounting 00:44:53.280 --> 00:44:55.539 to a fever pitch. And uniquely, it was coming 00:44:55.539 --> 00:44:57.659 from all sides of the political spectrum. That 00:44:57.659 --> 00:45:00.059 is rare. Usually, agencies have partisan defenders. 00:45:00.420 --> 00:45:03.940 Not the ICC in the 70s. You had critics on the 00:45:03.940 --> 00:45:06.099 political left, including consumer advocates 00:45:06.099 --> 00:45:09.659 like Ralph Nader, who saw the ICC as a bloated 00:45:10.460 --> 00:45:13.179 inefficient corporate capture bureaucracy that 00:45:13.179 --> 00:45:15.219 was stifling progress and hurting the working 00:45:15.219 --> 00:45:17.400 class. And on the right. And you had critics 00:45:17.400 --> 00:45:19.480 on the political right, the free market economists 00:45:19.480 --> 00:45:23.239 who saw it as a massive, unnatural interference 00:45:23.239 --> 00:45:25.679 in capitalism that was destroying market efficiencies. 00:45:25.960 --> 00:45:28.119 When both the progressive left and the free market 00:45:28.119 --> 00:45:30.519 right look at your agency and agree that it is 00:45:30.519 --> 00:45:34.340 an unmitigated disaster, your days are severely 00:45:34.340 --> 00:45:37.039 numbered. Which brings us to the final chapter. 00:45:37.289 --> 00:45:40.190 the slow dismantling and the eventual abolition 00:45:40.190 --> 00:45:42.670 of the ICC. But you can't just flip a switch 00:45:42.670 --> 00:45:44.809 and turn off 100 -year -old bureaucracy. How 00:45:44.809 --> 00:45:47.369 does it actually die? It dies through a slow 00:45:47.369 --> 00:45:50.150 process of legislative amputation. It's a death 00:45:50.150 --> 00:45:52.710 by a thousand cuts. As we mentioned, Congress 00:45:52.710 --> 00:45:54.710 actually started stripping away peripheral powers 00:45:54.710 --> 00:45:57.429 quite early. Right, like the telecom stuff. Exactly. 00:45:58.050 --> 00:46:01.210 In 1934, they realized regulating telegraphs 00:46:01.210 --> 00:46:03.389 and trains together was absurd. So they took 00:46:03.389 --> 00:46:06.110 telecommunications away and gave it to the newly 00:46:06.110 --> 00:46:09.030 created Federal Communications Commission. Then 00:46:09.030 --> 00:46:12.789 in 1970, jurisdiction over rail safety, the crash 00:46:12.789 --> 00:46:15.329 investigations and equipment standards, was transferred 00:46:15.329 --> 00:46:17.590 to the Federal Railroad Administration under 00:46:17.590 --> 00:46:19.690 the newer Department of Transportation. So they 00:46:19.690 --> 00:46:22.940 are slowly losing limbs. But the real death blow, 00:46:23.219 --> 00:46:25.239 the strike to the heart of their economic power, 00:46:25.579 --> 00:46:28.239 comes with the massive deregulation wave of the 00:46:28.239 --> 00:46:31.260 1970s and 1980s. What changed in the political 00:46:31.260 --> 00:46:33.880 calculus? The physical reality of the American 00:46:33.880 --> 00:46:36.139 transportation network was collapsing. Despite 00:46:36.139 --> 00:46:38.539 all the ICC's protectionist cartel behavior, 00:46:39.139 --> 00:46:41.360 the railroads were going bankrupt anyway. Companies 00:46:41.360 --> 00:46:43.900 like Penn Central filed for historic bankruptcies. 00:46:44.059 --> 00:46:46.440 So the protection didn't even work? No. The tracks 00:46:46.440 --> 00:46:48.599 were literally falling apart because the regulations 00:46:48.599 --> 00:46:51.679 were so stifling, so slow and so rigid that the 00:46:51.679 --> 00:46:53.500 railroads couldn't adapt to the modern logistics 00:46:53.500 --> 00:46:55.739 market. They couldn't secure capital to rebuild. 00:46:56.039 --> 00:46:58.219 The micromanagement finally choked the patient 00:46:58.219 --> 00:47:01.059 to death. So Congress has to step in and apply 00:47:01.059 --> 00:47:03.960 a defibrillator. They start torching the 1887 00:47:03.960 --> 00:47:07.349 rulebook. Precisely. We see a series of massive, 00:47:07.349 --> 00:47:10.130 sweeping deregulation bills. It starts with the 00:47:10.130 --> 00:47:12.510 Railroad Revitalization and Regulatory Reform 00:47:12.510 --> 00:47:16.429 Act of 1976, known as the 4R Act, which began 00:47:16.429 --> 00:47:19.130 loosening rate controls. But the fatal double 00:47:19.130 --> 00:47:22.170 punch lands in 1980. First, the Motor Carrier 00:47:22.170 --> 00:47:25.179 Act of 1980. massively deregulates the trucking 00:47:25.179 --> 00:47:27.320 industry, allowing new companies to enter the 00:47:27.320 --> 00:47:30.059 market and compete on price. Then, later that 00:47:30.059 --> 00:47:33.340 year, the Stagger's Rail Act of 1980 essentially 00:47:33.340 --> 00:47:36.000 strips the ICC of its day -to -day control over 00:47:36.000 --> 00:47:38.170 the railroads. Let's explain what the Staggers 00:47:38.170 --> 00:47:40.730 Act actually did on the ground. Before 1980, 00:47:40.869 --> 00:47:42.829 if a railroad wanted to lower a price to win 00:47:42.829 --> 00:47:45.230 a shipping contract or if they wanted to start 00:47:45.230 --> 00:47:47.030 running trains on a rural route that was losing 00:47:47.030 --> 00:47:49.289 money, what did they have to do? Before Staggers, 00:47:49.510 --> 00:47:51.429 they had to file an application with the ICC, 00:47:51.789 --> 00:47:53.769 endure months or sometimes years of public hearings, 00:47:54.070 --> 00:47:56.630 face protests from competitors, and beg for permission. 00:47:57.030 --> 00:48:00.010 It paralyzed business decisions. And after Staggers? 00:48:00.349 --> 00:48:02.969 After the Staggers Act. Railroads were suddenly 00:48:02.969 --> 00:48:05.969 allowed to negotiate confidential, dynamic pricing 00:48:05.969 --> 00:48:08.570 contracts directly with shippers based on market 00:48:08.570 --> 00:48:11.110 demand. They were allowed to quickly abandon 00:48:11.110 --> 00:48:14.269 highly unprofitable rural branch lines. And what 00:48:14.269 --> 00:48:16.489 was the result? Did the sky fall like the Grange 00:48:16.489 --> 00:48:19.610 movement predicted a century earlier? The opposite 00:48:19.610 --> 00:48:22.449 happened. Politicians like Senator Fred R. Harris 00:48:22.449 --> 00:48:25.750 of Oklahoma had strongly advocated for abolishing 00:48:25.750 --> 00:48:27.730 the commission, arguing the free market would 00:48:27.730 --> 00:48:29.730 save the industry, and they were right. Really? 00:48:29.929 --> 00:48:31.909 The railroad industry experienced a massive, 00:48:32.329 --> 00:48:35.369 unprecedented renaissance. Without the ICC micromanaging 00:48:35.369 --> 00:48:37.530 their balance sheets, railroads became profitable 00:48:37.530 --> 00:48:40.349 again. They reinvested billions into track maintenance 00:48:40.349 --> 00:48:43.050 and new locomotives. Freight rates adjusted for 00:48:43.050 --> 00:48:45.570 inflation actually plummeted for consumers because 00:48:45.570 --> 00:48:48.110 efficiency skyrocketed. The cure to the crisis 00:48:48.110 --> 00:48:50.969 was simply removing the agency that was ostensibly 00:48:50.969 --> 00:48:54.130 managing it. By the 1990s, the Stagger's Act 00:48:54.130 --> 00:48:56.809 had proven so successful that the ICC was left 00:48:56.809 --> 00:48:59.750 as a hollowed out ghost of its former self. It 00:48:59.750 --> 00:49:02.250 had almost no real economic power left to wield. 00:49:02.710 --> 00:49:04.829 So what was the final nail in the coffin? The 00:49:04.829 --> 00:49:09.019 end came in December 1995. Congress passed the 00:49:09.019 --> 00:49:12.619 ICC termination act. After 108 years of continuous 00:49:12.619 --> 00:49:15.780 operation, the agency was finally officially 00:49:15.780 --> 00:49:19.639 abolished. The final chair, a woman named Gail 00:49:19.639 --> 00:49:22.000 McDonald, oversaw the administrative process 00:49:22.000 --> 00:49:24.199 of shutting off the lights and locking the doors. 00:49:24.579 --> 00:49:28.460 It's kind of sad in a weird way. It is. But like 00:49:28.460 --> 00:49:31.280 any complex bureaucracy, the ICC didn't completely 00:49:31.280 --> 00:49:33.780 evaporate into thin air. It was more of an organ 00:49:33.780 --> 00:49:36.159 donation. Right, because even in a deregulated 00:49:36.159 --> 00:49:38.599 market, you still need some foundational oversight. 00:49:38.840 --> 00:49:41.000 You can't have complete anarchy regarding corporate 00:49:41.000 --> 00:49:43.420 mergers or safety data. Exactly. The government 00:49:43.420 --> 00:49:45.900 still needed a referee, just not a dictator. 00:49:46.440 --> 00:49:49.699 So the ICC's few remaining vital functions, like 00:49:49.699 --> 00:49:51.480 reviewing major corporate mergers to prevent 00:49:51.480 --> 00:49:54.320 absolute monopolies or finalizing the legal abandonment 00:49:54.320 --> 00:49:56.659 of railroad lines, were transferred to a brand 00:49:56.659 --> 00:49:59.380 new, significantly smaller, and much weaker agency 00:49:59.380 --> 00:50:02.340 called the Surface Transportation Board, or STB. 00:50:02.440 --> 00:50:04.059 And what happened to the trucking oversight? 00:50:04.380 --> 00:50:06.699 The licensing and safety registration of motor 00:50:06.699 --> 00:50:08.940 carriers was transferred to the Federal Highway 00:50:08.940 --> 00:50:11.719 Administration. Eventually, that function was 00:50:11.719 --> 00:50:13.739 spun off into the Federal Motor Carrier Safety 00:50:13.739 --> 00:50:17.269 Administration, the FMCSA. And this administrative 00:50:17.269 --> 00:50:19.690 organ donation leads to a detail that I absolutely 00:50:19.690 --> 00:50:22.150 love because I guarantee that you, the listener, 00:50:22.210 --> 00:50:24.070 have seen this but perhaps never understood what 00:50:24.070 --> 00:50:27.190 you were looking at. Oh, the trucks. Yes. If 00:50:27.190 --> 00:50:29.429 you are ever driving down the interstate today 00:50:29.429 --> 00:50:31.929 and you pass an 18 -wheeler, I want you to look 00:50:31.929 --> 00:50:34.530 at the side door of the cab. You will see a number 00:50:34.530 --> 00:50:37.469 printed there that says USDOT followed by a string 00:50:37.469 --> 00:50:41.809 of digits. That USDOT number is the direct visible 00:50:41.809 --> 00:50:44.650 ghost of the ICC. That is a brilliant connection 00:50:44.650 --> 00:50:48.039 to make. Before the ICC was abolished, they issued 00:50:48.039 --> 00:50:50.679 specific identification numbers to every trucking 00:50:50.679 --> 00:50:52.900 company they licensed, which were printed as 00:50:52.900 --> 00:50:55.739 ICCMC followed by the carrier's numbers. And 00:50:55.739 --> 00:50:57.920 then they just swapped it out. When the ICC was 00:50:57.920 --> 00:51:00.699 terminated in 1995 and the Department of Transportation 00:51:00.699 --> 00:51:03.860 took over, USDOT numbers simply replaced the 00:51:03.860 --> 00:51:07.059 old ICCMC numbers. So every piece of freight 00:51:07.059 --> 00:51:09.760 moving on the highway today carries the genetic 00:51:09.760 --> 00:51:13.579 marker of an 1887 railroad law. Those numbers 00:51:13.579 --> 00:51:16.420 are critical infrastructure. They allow the government 00:51:16.420 --> 00:51:19.360 to track carrier identification, audit safety 00:51:19.360 --> 00:51:22.219 records, and coordinate complex logistics across 00:51:22.219 --> 00:51:25.219 state lines. The infrastructure of commerce still 00:51:25.219 --> 00:51:27.920 requires oversight. It just operates under a 00:51:27.920 --> 00:51:31.280 different, somewhat more rational name now. but 00:51:31.280 --> 00:51:34.119 its administrative DNA permanently infected the 00:51:34.119 --> 00:51:36.500 entire structure of the federal government, which 00:51:36.500 --> 00:51:39.199 brings us to the ultimate lasting legacy of the 00:51:39.199 --> 00:51:41.539 Interstate Commerce Commission. When historians 00:51:41.539 --> 00:51:44.159 look back at this 108 year experiment, what is 00:51:44.159 --> 00:51:47.119 the final verdict? The legacy is that the ICC 00:51:47.119 --> 00:51:50.099 was the definitive blueprint for the modern administrative 00:51:50.099 --> 00:51:52.840 state. It proved to Congress that you could create 00:51:52.840 --> 00:51:56.179 a full time permanent regulatory body made up 00:51:56.179 --> 00:51:59.599 of appointed experts who theoretically had no 00:51:59.599 --> 00:52:01.900 partisan political ties to the industries they 00:52:01.900 --> 00:52:03.980 regulated. Right. They weren't elected politicians 00:52:03.980 --> 00:52:06.059 subject to the whims of the ballot box. They 00:52:06.059 --> 00:52:08.139 were career administrators. And once Congress 00:52:08.139 --> 00:52:10.619 saw the blueprint, they copied it relentlessly. 00:52:10.900 --> 00:52:13.500 They used the ICC model. to create the Federal 00:52:13.500 --> 00:52:16.500 Trade Commission in 1914, the Federal Communications 00:52:16.500 --> 00:52:18.420 Commission and the Securities and Exchange Commission 00:52:18.420 --> 00:52:21.719 in 1934, the National Labor Relations Board in 00:52:21.719 --> 00:52:24.639 1935, and the Consumer Product Safety Commission 00:52:24.639 --> 00:52:28.219 in 1975. It's everywhere. All of these powerful 00:52:28.219 --> 00:52:31.739 entities were modeled directly on the ICC's structure 00:52:31.739 --> 00:52:34.460 of a multi -headed independent commission with 00:52:34.460 --> 00:52:37.199 staggered terms. Its influence even crossed the 00:52:37.199 --> 00:52:39.710 globe. If you look at the Constitution of Australia, 00:52:40.130 --> 00:52:42.309 it actually provides for an interstate commission 00:52:42.309 --> 00:52:45.329 that was explicitly directly modeled after the 00:52:45.329 --> 00:52:48.190 American ICC. It is the template for modern governance. 00:52:48.409 --> 00:52:50.349 But the source material notes something really 00:52:50.349 --> 00:52:52.250 profound about that blueprint today. And I want 00:52:52.250 --> 00:52:54.150 to leave you, the listener, with this final thought 00:52:54.150 --> 00:52:56.789 to mull over. In recent decades, the United States 00:52:56.789 --> 00:52:59.010 government has essentially stopped creating independent 00:52:59.010 --> 00:53:02.449 commissions like the ICC. The multi -headed independent 00:53:02.449 --> 00:53:05.389 model has gone completely out of fashion in Washington. 00:53:05.769 --> 00:53:09.230 Yes. If you look at the major regulatory agencies 00:53:09.230 --> 00:53:12.670 created since the 1970s, agencies with massive 00:53:12.670 --> 00:53:15.369 power over your daily life, like the Occupational 00:53:15.469 --> 00:53:18.309 Safety and Health Administration, OSHA, or the 00:53:18.309 --> 00:53:20.849 Transportation Security Administration, the TSA, 00:53:21.369 --> 00:53:23.269 or the Environmental Protection Agency, the EPA. 00:53:23.800 --> 00:53:26.800 They aren't run by a bipartisan panel of five 00:53:26.800 --> 00:53:29.380 independent commissioners serving staggered terms. 00:53:29.519 --> 00:53:31.739 No, they're not. They are usually headed by a 00:53:31.739 --> 00:53:34.559 single person, an administrator, who is directly 00:53:34.559 --> 00:53:37.719 appointed by and answers directly to the president 00:53:37.719 --> 00:53:40.199 of the United States. They are structured as 00:53:40.199 --> 00:53:42.360 executive divisions, not independent branches. 00:53:42.659 --> 00:53:44.840 Anne, I want you to really think about what that 00:53:44.840 --> 00:53:47.400 structural shift means for the country. We missed 00:53:47.400 --> 00:53:49.699 away from regulatory bodies that were intentionally 00:53:49.699 --> 00:53:51.980 designed to be isolated from the shifting winds 00:53:51.980 --> 00:53:54.340 of presidential elections. that were meant to 00:53:54.340 --> 00:53:56.800 be cold, calculated, and somewhat immune to public 00:53:56.800 --> 00:53:59.059 pressure. We have replaced them with agencies 00:53:59.059 --> 00:54:01.320 that are directly tied to the whims of the Oval 00:54:01.320 --> 00:54:03.440 Office, where the enforcement of safety rules 00:54:03.440 --> 00:54:05.860 or environmental standards can change drastically 00:54:05.860 --> 00:54:08.480 the moment a new president is inaugurated. It 00:54:08.480 --> 00:54:11.500 is the central unresolved tension of the modern 00:54:11.500 --> 00:54:13.840 administrative state. Which system is actually 00:54:13.840 --> 00:54:16.730 better? Exactly. As you navigate the countless 00:54:16.730 --> 00:54:18.989 rules that govern your life today, the safety 00:54:18.989 --> 00:54:21.030 standards at your workplace, the environmental 00:54:21.030 --> 00:54:23.130 regulations on your car, the security lines at 00:54:23.130 --> 00:54:25.829 the airport, ask yourself, is it better for a 00:54:25.829 --> 00:54:28.309 powerful regulator to be completely independent, 00:54:28.869 --> 00:54:31.070 operating like an untouchable panel of experts? 00:54:31.550 --> 00:54:34.110 Or is it better for them to be completely accountable 00:54:34.110 --> 00:54:37.090 to the politicians we elect, subject to the messy, 00:54:37.190 --> 00:54:40.210 volatile realities of a democracy? There is no 00:54:40.210 --> 00:54:43.610 easy answer. But the ghost of the ICC, that very 00:54:43.610 --> 00:54:46.190 first clunky, over -engineered, massively flawed 00:54:46.190 --> 00:54:48.269 gear in the machinery of government, is watching 00:54:48.269 --> 00:54:50.869 us as we continually try to figure it out. Thank 00:54:50.869 --> 00:54:52.590 you so much for joining us on this deep dive. 00:54:52.929 --> 00:54:54.670 Keep questioning the hitter structures around 00:54:54.670 --> 00:54:56.789 you. Keep looking for the history in the everyday. 00:54:57.150 --> 00:54:58.309 And we will see you next time.