To see the scope of Charles and David Koch's invisible reach into modern American life, and their influence in modern - and future - American political life especially, requires a wide lens. And you have to stand pretty far back to get it all in the picture.
In a post called "Meet Howard Rich's old friends, Charles and David Koch" (
http://www.dailykos.com/...), I offered a basic introduction to Charles, the CEO of Koch Industries, and David, the former vice presidential nominee of the National Libertarian Party, and I identified the ties that bind Rich to the Koch brothers through their work to command the Libertarian Party of the late 1970s, and their subsequent split from the party. Now, I'll set Howard Rich temporarily aside. To add some flesh to our barebones introduction of the Kochs, I've found a handful of profiles that remind us of the brothers' various interests, their support for conservative causes from free-market university research to summer camps for judges, their support for mainly Republican candidates, on-and-off investigations of their companies' environmental records, and their reach into the Bush Administration through revolving-door employees.
This follow-up, then, is taken directly from those published articles.
WHO ARE THEY?
The answer depends on who is being asked. Straight journalism tells of a ruthless band of tycoons; puff pieces such as the one published by Club for Growth President Stephen Moore in the Wall Street Journal are rife with praise usually reserved for the beatified.
Jeff Krehely, deputy director of the National Committee for Responsive Philanthropy, told Bob Williams and Kevin Bogardus of PublicIntegrity.org, "It's astounding that so few people have ever heard of a family this rich and powerful and aggressive when it comes to policy and politics." Krehely recently co-authored a study on conservative think tanks, including those funded by the Kochs. "When you talk about Koch, most folks think you are talking about the soft drink company." (PublicIntegrity.org, July 2004, reposted March 2006)
The Kochs are Charles, co-owner of Koch Industries; David, co-owner of Koch Industries and the 1980 vice presidential nominee of the National Libertarian Party; William, David's twin brother and sponsor of the winning 1992 America's Cup racing team; and Frederick, the oldest but oddly the least favored of the four brothers.
"For the Kochs, conservative and libertarian views are a family tradition. Fred Koch, who founded the company's predecessor in 1940, helped establish the ultra right-wing John Birch Society." (PublicIntegrity.org, July 2004, reposted March 2006)
Forbes Magazine spreads it more thickly. In a March 2006 feature, Daniel Fisher writes, "Fred C. Koch, the son of a Dutch immigrant who ran a newspaper in northern Texas, developed a more efficient process for converting crude oil into gasoline. Big oil companies, sensing a threat, hit him with so many patent lawsuits that he decamped for the Soviet Union and built refineries there through most of the 1930s. (There he developed a hatred for communism and was an early member of the far-right John Birch Society. "Virtually every engineer he worked with [there] was purged," Charles Koch says.) ("Mr. Big," Forbes, March 2006)
The brothers split in the 1980s - or earlier - into two camps: Charles and David in one, Bill and Frederick in the other.
"According to the Associated Press, the troubles began almost 20 years ago when David and Charles bought out the shares of two other brothers, Bill and Frederick, for $1.1 billion. Bill (David's twin) and Frederick then claimed that Charles and David had misrepresented the company's value, shortchanging them by $340 million. The dispute dragged on until last October [2000], when the U.S. Supreme Court declined to hear an appeal in the case, letting stand a lower court's decision in favor of Charles and David." (Mother Jones, March 5, 2001)
It's understatement to say that Charles and David's control of the family corporation has left them wealthy. Bob Williams and Kevin Bogardus of PublicIntegrity.org wrote in July 2004 that Charles and David are "two of the country's richest men and among the biggest backers of conservative and libertarian causes. With estimated revenue of about $40 billion last year, Koch is bigger than Microsoft, Merrill Lynch and AT&T." (PublicIntegrity.org, July 2004, reposted March 2006)
Forbes notes some missteps in passing, notable only for the multi-million-dollar losses in the footnotes of an otherwise amazingly savvy business plan. "Charles Koch has made some expensive mistakes since joining his father's engineering and pipeline company in Wichita, Kansas in 1961. There was the $50 million he lost on supertankers and crude oil in the mid-1970s. He blew $120 million more on a misguided attempt to turn Purina Mills into an integrated feed-to-steaks agribusiness in the late 1990s. Purina went bankrupt in 2000." ("Mr. Big," Forbes, March 2006)
But Forbes grants Charles forgiveness for his tenacity...
"If I get a concept in my head that I think is the way the world works, I apply it to everything," says Koch, 70, an MIT-trained engineer who discovered free-market economics in the 1960s and built a management philosophy around it. "I get burned a lot because you tend to misapply things when you do that." ("Mr. Big," Forbes, March 2006)
...and for the fact that the ends - when they have that many digits before the decimal - apparently justify the means.
"You should be so lucky as to get burned the way Charles Koch did. During the 38 years he has been running Koch Industries, the company has grown more than a hundred times in value, to an estimated $30 billion, compared with a thirteenfold increase in the S&P 500 index." ("Mr. Big," Forbes, March 2006)
It is strange and unexplained why the traditionalist Fred Koch chose to turn the reins of his company over to Charles rather than to his oldest son, Frederick. But Forbes charts the young Charles's and David's rapid ascents for us.
"Charles started his career working for Arthur D. Little Inc., the management consulting pioneer. `It was like graduate school but better,' he says. He returned to Wichita after his father threatened to sell the business and took control after Fred's death in 1967. His brother David runs a chemical equipment business out of New York City." ("Mr. Big," Forbes, March 2006)
"The family business Charles inherited consisted of an engineering firm, part-interest in a Minnesota refinery, a crude-oil-gathering pipeline in Oklahoma and some cattle ranches. Koch was intrigued by free market theories of economists like Friedrich Hayek and Ludwig von Mises and saw the newly renamed Koch Industries as a platform for experimentation." ("Mr. Big," Forbes, March 2006)
In an even more saccharine profile than the Forbes report, Stephen Moore introduces us to "Charles Koch. Philosopher, engineer, self-trained economist, libertarian activist, philanthropist--and the CEO of Koch Industries, a $60 billion, 80,000-employee empire, which just recently became the largest and most profitable privately held company in America. But you've probably never heard of it." (Wall Street Journal, May 2006) Moore is the president of the arch-conservative Club for Growth, the anti-tax machine whose "Club for Growth State Action" arm is run by none other than Howard Rich.
Moore also sits on the Wall Street Journal editorial board. And he is enamored of Charles Koch's humility. "Neither Charles Koch nor his firm are household names. Mr. Koch (pronounced "coke") has managed to live in relative obscurity despite being one of the richest men on the planet, with a net worth estimated at $14 billion. He is a man of modesty who craves none of the fame or public adulation that seems to preoccupy other members of the billionaires' club. (Wall Street Journal, May 2006)
But one cannot hide one's light under a bushel, Moore finds, humility aside. "Yet celebrity seems to intrude. On the day I visit the company's Kansas headquarters, his office is atwitter over a recent issue of Forbes magazine featuring the world's billionaires. The issue includes a glossy photo of Charles Koch smiling contentedly, and right below him on the page is a picture of a slightly better known titan: Oprah. Running in company like that is bound to bump up Mr. Koch's public profile--whether he likes it or not." (Wall Street Journal, May 2006)
In Moore's reading of the Charles Koch story, Charles "became the reluctant president of the family business, then a $177 million, medium-sized oil firm. He recalls: "My father threatened that he was going to sell the company if I wouldn't come back home to Kansas from the East Coast and run it." (Wall Street Journal, May 2006)
But like Forbes's Fisher, Moore returns, breathless, to the bottom line. "Nearly four decades later, that family company is a global conglomerate with net annual sales that exceed the GDP of many small nations, and it includes a diverse range of businesses supplying everything from jet fuel to plastic, asphalt to beef, toilet paper to lumber. It owns many familiar brand names such as Dixie cups, Stainmaster carpet and Brawny paper towels. The firm's financial performance numbers have been positively gaudy, with a rate of return on investment that has outpaced the Standard & Poor's 500 at least tenfold under Mr. Koch's stewardship." (Wall Street Journal, May 2006)
Moore reveres Charles Koch's up-from-bootstraps intellectual journey from mere son of privilege to deep thinker on all things economic. "Mr. Koch is immersed in the ideas of liberty and free markets. Whereas the bookshelves of most of America's leading CEOs are stocked with pop corporate management and "how to succeed" books, Mr. Koch's office is a wall-to-wall shrine to writings in classical economics, or, as he calls it, `the science of liberty.' The authors who have had the most profound influence on his own political philosophy include F.A. Hayek, Ludwig von Mises, Joseph Schumpeter, Julian Simon, Paul Johnson and Charles Murray. Mr. Koch says that he experienced an intellectual epiphany in the early 1960s, when he attended a conference on free-market capitalism hosted by the late, great Leonard Reed. (Wall Street Journal, May 2006)
(In the interest of time, we will let pass the biographies of Charles Koch's heroes, particularly Charles Murray, author of "The Bell Curve," which drew some connection between intellectual development and race.)
Back to Moore, who continues his reverie. "Mr. Koch is by training a scientist, with master's degrees from MIT in nuclear and chemical engineering. Despite his business success, he has no MBA or formal management training. Mr. Koch sees that as an advantage. `Being an engineer, I realized there's an objective reality that helps one understand the rules and conditions that improve the human condition,' he says. `Laws and principles that facilitate the advancement of peace, prosperity and social progress are as immutable as the laws that work in science. . . . Politicians often come up with misguided policy solutions,' he continues, `because they suffer from Hayek's 'fatal conceit' and believe they can violate basic laws of economics. They are just as misguided as the man who jumps out the 14th floor of a building convinced that he can repeal the law of gravity." (Wall Street Journal, May 2006)
You should read Moore's text for yourself, if only to learn who had "what Maslow called a 'peak experience'," and why. (Wall Street Journal, May 2006)
WHERE DO THE KOCHS SPEND THEIR PROFITS?
"Koch money subsidizes the mass production of bad ideas," according to Thomas Franks in What's the Matter with Kansas? Franks adds that this includes zany free market policies which serve to starve government while making businesses more profitable. (Elizabeth Rathbun, Blog for Oregon, November 11, 2005)
"The brothers have made no secret that they feel such principles should be adopted by government and society at large, and have spent millions of dollars of their money to help make it happen." (PublicIntegrity.org, July 2004, reposted March 2006)
"David Koch says he supports the think tanks and advocacy groups to achieve the goals of limiting the role of government and maximizing the private sector to maximize personal freedoms. "I am trying to support different approaches to achieve those objectives," he told the National Journal. "It's almost like an investor investing in a whole variety of companies." (PublicIntegrity.org, July 2004, reposted March 2006)
"Although it is both a top campaign contributor and spends millions on direct lobbying, Koch's chief political influence tool is a web of interconnected, right-wing think tanks and advocacy groups funded by foundations controlled and supported by the two Koch brothers." (PublicIntegrity.org, July 2004, reposted March 2006)
"Among those groups are some of the country's most prominent conservative and libertarian voices including the Cato Institute, the Reason Foundation, Citizens for a Sound Economy and the Federalist Society. All regularly beat the drum in official Washington for the causes the Kochs hold dear--minimal government, deregulation, and free market economics." (PublicIntegrity.org, July 2004, reposted March 2006)
"All of those groups are libertarian or conservative, pushing heavily for deregulation of industries and minimal government. They are also highly effective, particularly since Republicans took over the White House and Congress. The largest recipient of the Koch's policy influence grants is George Mason University, which has received more than $23 million from the family's foundations between 1985 and 2002, according to the National Committee for Responsive Philanthropy. The Fairfax, Va.-based school hosts several Koch funded institutes and think tanks. Richard Fink, a director and executive vice president at Koch, serves on the university's board of visitors. An economics professor at the university, he helped found another Koch-funded think tank called Citizens for a Sound Economy in the mid-1980s. One of the groups housed at GMU is the Institute for Humane Studies, which offers scholarships to students interested in libertarian and free-market ideas. Charles Koch has provided major funding for this group and the institute's scholarships are named for him. The institute's outstanding alumni award is also named for him. On its Web site, the institute says its "perspective is that individual well-being, prosperity, and social harmony" are fostered by "as much liberty as possible" and "as little government as necessary."
"Another Koch group housed at GMU is the Mercatus Center. Koch family money was used to support Mercatus in the mid-1980s and still finances the organization today. Charles Koch and Richard Fink are on the Mercatus board of directors. Situated at GMU's Law School in Arlington, Va., Mercatus defines itself as `an education, research and outreach organization.' `Outreach' in Mercatus's case includes an intense lobbying blitz of the federal government, including Capitol Hill breakfasts and luncheons hosted by deregulation scholars. Mercatus has been effective in its political goals--and those of Koch Industries." (PublicIntegrity.org, July 2004, reposted March 2006)
Let's recap the short list of the Kochs' pet causes:
THE CATO INSTITUTE, the libertarian think tank co-founded by Charles in 1977 and still funded by Koch foundations, and on whose board David still holds a seat.
THE TAX FOUNDATION, a think tank rescued financially by the Kochs in 1989, and which awarded Charles its Distinguished Service Award in 2000. The two points are likely unconnected.
THE INSTITUTE FOR JUSTICE, the libertarian legal foundation begun with "seed money" from Charles in 1991 and supported by the Koch brothers since then.
THE FOUNDATION FOR RESEARCH ON ECONOMICS AND THE ENVIRONMENT, which hosts free seminars for federal judges at a ranch near Big Sky, Montana, funded by Koch family foundations.
THE FEDERALIST SOCIETY, a social society for up-and-coming judges, conservative attorneys who will one day be judges, and interns who will one day be conservative attorneys. Charles Koch "provides substantial funding to this group, which says its purpose is to create a `conservative and libertarian intellectual network that extends to all levels of the legal community'."
(PublicIntegrity.org, July 2004, reposted March 2006)
On the topic of where the Kochs spend their money, what says Moore of Club for Growth and the Wall Street Journal editorial page? Reveries, more reveries, and for good reason (which is parenthesized quaintly by the profile's author; watch for it, dear reader). "Charles Koch - no surprise - disdains government and the political class. He has invested tens of millions of dollars into free-market think-tanks and political activist groups (including several founded by this author). He's disgusted with the runaway federal budget under the Republicans, and he proposes that `every new law should be subject to the question: Will it strengthen the culture of prosperity?' Won't about 90% of the laws fail that test? `Yes, that's exactly what I mean,' he replies. `But the problem isn't the people in government, it's the system - the incentives are perverse." (Wall Street Journal, May 2006)
"Mr. Koch's latest crusade to spread the ideas of liberty has been his sponsorship of a twice-yearly conference that gathers together many of the most successful American entrepreneurs, from T. Boone Pickens to former Circuit City CEO Rick Sharp. The objective is to encourage these captains of industry to help fund free-market groups devoted to protecting the fragile infrastructure of liberty. That task seems especially critical given that so many of the global superrich, like George Soros and Warren Buffett, finance institutions that undermine the very system of capitalism that made their success possible. Isn't this just the usual rich liberal guilt, I ask. `No,' he says, `I think they simply haven't been sufficiently exposed to the ideas of liberty.' (Wall Street Journal, May 2006)
Moore continues, "Sounds as though Messrs. Soros and Buffett would benefit more from sitting down with Charles Koch than I would. For my part, after listening to this natural-born teacher exalt the superiority of free markets and the boundless wealth that they can create..." OKAY, that's really quite enough from him.
If we might, a few lines specifically on the Cato Institute, introduced to us here by David Boaz (pronounced bows, but more often mispronounced bow-az), who is helpfully its executive vice president to President Ed Crane. Careful readers will recognize Crane as the mentor to Charles and David from their days exploring the takeover of the National Libertarian Party, who left the shell of the Libertarian Party to collapse upon itself in surprise, and who re-opened the Libertarian Party under a hundred different names as think tanks, foundations and special-mission committees.
In a 1997 interview with Brian Lamb, president of C-SPAN and host of C-SPAN Booknotes, Boaz shed a little light on Cato.
Lamb is a lion in the interview. "What is the Cato Institute?" he asks. "How big is the Cato Institute? Who owns Reason magazine? Are there different kinds of people involved in the Reason Foundation than are involved in the Cato Foundation? Cato is set up how? Who runs it?"
It wasn't quite like that but Lamb did ask all those questions. And here's what we glean from the responses of Boaz - most importantly that Cato and its people DON'T GET INVOLVED IN POLITICS, no matter what you read at DailyKos:
Cato's a Washington-based think tank devoted to the ideas of individual liberty, free markets, limited government and peace. (And peace, he says. I'm quoting without the quotations marks here, readers.) It has a budget of $8 million, a board of about a dozen people, about 50 staff members, about 60 "adjunct scholars," and about 10 policy directors "who direct our work in the area of constitutional studies, fiscal policy, environmental issues and so on." It publishes about 10 books and 30 studies a year. It's supported by (note the absence of the word "Koch") "contributors, about 12,000 people who become Cato sponsors and support us financially."
"And, of course, at the Cato Institute, we're not supposed to get involved in politics."
Ahem.
(Booknotes Interview of David Boaz, January 1997)
Then there's this note from Elizabeth Rathbun at Blog for Oregon from November 11, 2005. "Cato," Rathbun writes, "is funded by big oil, including Koch to distort the facts and confuse people about the science behind global warming. Patrick Michaels is often cited as Cato's top expert who refutes that humans have contributed to global warming."
Well, that's a different look at the place.
In Part II of this series, we'll ask which political candidates, parties and causes are supported by the Kochs while the kind folks at Cato are not involved in politics. And we'll ponder what else, besides making money by the mint-load, the Kochs are known for.
Then there's the little issue of their purchase of Georgia-Pacific, and later a trivia quiz question: Among the many aspects of this particular inquiry, what do the states of Maine and Oregon have in common?
Reading is fundamental. To learn more about these and other topics, visit your local library, or log onto the Internet and click on these important links, which lead to the end-noted references throughout today's post. You'll be glad you did.
http://www.motherjones.com/...
http://www.publicintegrity.org/...
http://www.forbes.com/...
http://www.opinionjournal.com/...
http://www.buildernewsmag.com/...
http://www.newsbull.com/...
http://www.wweek.com/...
http://www.mediatransparency.org/...
Hurry, before the NSA shuts them down. Judge Anna Diggs Taylor can't be everywhere, all the time.