The Koch brothers' hellscape utopia is here: A business reporter divulges the 'secret history' of the conservative empire
Traditionally, politics is the study of the affluent and the influential. Charles Koch and his recently deceased brother David are extreme examples of that truism. Each of the Koch brothers had an estimated net worth in excess of $50 billion. Through their various political projects, they wield great power over American politics and society.
On issues ranging from tax policy to the environment as well as labor and trade laws, the Kochs have advanced a far-right libertarian agenda that views the social safety net as something to be destroyed and democracy as the enemy. In their view, every area of human life should be subjected to the destructive whims of predatory capitalism.
Because so much attention is now focused on the Trump regime, the average American has little if any understanding of how the Koch brothers have shaped their day-to-day lives.
For many liberals and progressives the Koch brothers and their agents are bogeymen and human monsters. But for Republicans the Koch brothers have often been fairy godfathers and financial patrons.
How did the Kochs and their political network amass so much power and influence over American life? How did their “market-based management” philosophy allow them to amass enormous fortunes, and also to conceptualize and execute a remarkably effective set of long-term political strategies?
The Koch brothers’ father was one of the founders of the John Birch Society, which is now almost forgotten but was once immensely influential on the American right-wing. How did that background influence his sons’ worldview and life goals?
What are the specific public policies that the Kochs and their networks have advanced to transform the United States into a right-wing libertarian dystopia where unrestrained corporate power rules over every aspect of public and private life? How is Charles Koch now seeking to hide his extreme right-wing agenda through public relations subterfuge and support for prison reform and other "progressive" programs?
In his mind, is Charles Koch a hero or a villain?
Of course, people in their own minds have a story that they are doing the right thing and that they are heroes. Without question that is true in the case of Charles Koch. He has this whole Midwestern personality, humble shtick. When I met him at his corporate headquarters. it was quite an experience. It is very hard to get access to Charles Koch.
I was emailed a security code on my phone. I held it up to this red screen to scan it and the steel gates opened in the 10-foot-tall wall that surrounds the Koch Industries headquarters. I drove down along the road and security escorted me up to the office and I finally walked into Charles Koch's CEO suite. He then stands up and looks at me and says, "Chris, you didn't have to wear a tie to talk to me." In response to your question, Charles Koch would say, "I'm nothing like a hero. I'm just a guy trying to do a job."
But it is very clear that when you study his rhetoric, what he writes, the speeches he gives and what he tells other people, that Charles Koch he is a playing a large role in saving the world and making America a better place. Charles has an extremely rigid view in his head about how the world should function, how society should be shaped, the way that the United States should be doing things. He has been executing a plan to make his vision come into being. He has been doing this for 50 years. In Charles Koch’s view, he may not explicitly see himself as a “freedom fighter” but he certainly imagines himself as someone advancing the cause of freedom.
What is Charles Koch’s personal energy and manner like? Is his folksiness affected and false?
His energy is genuinely calm, methodical and warm. He doesn't laugh a lot. The man I met was very much how the people working for him described — a very low-key, self-effacing person. But do not misunderstand who he is. Charles Koch has a spine of steel. The prologue of my new book “Kochland” is called “The Fighter” and that's exactly how I see Charles Koch. He was one of four boys raised by this super-wealthy industrialist, Fred Koch, in Wichita, Kansas. Fred Koch made the boys literally box with each other and fight. You see this dynamic of each one of the brothers trying to out-compete the other for their father’s attention.
From a very young age Charles Koch has been both intensely competitive and intensely convinced in his own view of the world. Charles Koch absolutely believes that he has discovered the blueprint for how to run a company and a country. Charles Koch will not back down when he's asked to compromise.
Charles Koch does not come across as a predator. He is not arrogant. He doesn't yell at people. He doesn't slam his fist on the desk when things go wrong. But Charles Koch is implacable. He's immovable in his vision and if you try to push him off it he is going to fight back extremely hard. There are repeated examples of where people challenge Charles Koch and and he stands his ground and fights.
What is Charles Koch’s vision of the world? What would America be like if he got his way?
He has largely expressed his vision of the world as he wants it to exist by how he has organized his own corporation. The book is called “Kochland.” That title is intentional. Koch’s corporation is an institution, an island of sorts. It's like a world all its own where — and this is not hyperbole — everybody speaks their own language. The people in Koch’s sphere subscribe to an extremely detailed management philosophy — that also, by the way, functions as a life philosophy — called "market-based management." Charles Koch has turned Koch Industries into a small-utopian type of free-market world that he wants to see everywhere. What is Charles Koch’s big-picture view of America? What is his view of the world? He describes himself as a "classic liberal."
Fred Koch was the co-founder of the John Birch Society, which was a secret society convinced that the American federal government was a Communist front group, essentially. They actually believed that Communists had infiltrated the federal government. The Birchers thought these Communists were “stealing” liberty. Fred Koch and the Birchers also believed that labor unions were a thuggish force that were also stealing liberty. Of course this had a profound influence on Charles Koch’s thinking. But he took it in a different direction when he goes to college and starts studying the work of the Austrian economists such as Friedrich Hayek and Ludwig von Mises.
As influenced by those thinkers and others, Charles Koch subscribes to a view that basically the only way you can organize society is around a voluntary market exchange system. Government is a type of state-sanctioned thievery. Koch believes that the federal government is intervening in the free market and stealing money through coercion from one group of people and giving it to another. Koch believes that it is not the government which has sovereign power in a society, but rather price which has that ultimate authority.
For example, Charles Koch believes that Medicare puts a fake price on health care. That is destructive, toxic and must be done away with. In Koch’s view, the United States should have a federal government that is basically scaled back to the size of what it was in 1776. I am not sure what Koch believes the federal government should do, besides protect property rights.
Would there be a social safety net? What about civil rights protections for nonwhites and other marginalized groups?
I only had an hour with Charles Koch. Therefore, I had to build my analysis based on information from people who've worked with him for 30 years, in addition to people who have been Charles’s friends. I interviewed his son. I've also interviewed hundreds of Koch Industries employees. Here is my conclusion.
Charles Koch is not a villain. He cares about people who are sick. He cares about people who are disabled and suffering. I truly think it is his immovable view, however, that the solution to the problem is never government.
For Charles Koch, a social safety net or a specific policy such as Medicare is only creating a massive distortion in the free market. Koch and others who subscribe to similar social theories believe that such distortions will only hurt people in the long run. I know from interviewing former Koch Industries executives that they would say that the solution to social problems in America are churches. The churches are there to provide philanthropy. Government intervention is some type of “coercion.” I believe that Charles Koch would say that helping sick and other people in need must be voluntary.
What about the dysfunctions of the market and negative market externalities?
Let’s consider market externalities. There is a basic concept in economics that a company is not going to do more than it has to do. So, if a company generates mercury as a byproduct of manufacturing and it can put that poison in a river for free, it will do so. A society must put a price on the pollution to assert some type of discipline over a company’s harmful behavior. There are so many levels where a libertarian vision of society falls apart. Libertarianism instantly breaks down when you start dealing with the real world. That is my personal view. I try to keep my views out of the book and just focus on Charles Koch’s beliefs and what his political network is doing.
There's no question that if a voluntary exchange system created actual widespread prosperity and abundance, we would not even be having this conversation about the Kochs, the market and pollution. In the United States from the Civil War up until the early 1930s this country experimented with letting the government not intervene in the market by ceding big corporations the latitude to do what they wanted.
That era was a capitalistic free-fire zone. It was horrible. People did not keep the money they earned. People were dying in factories. There was child labor. Pollution was everywhere. The political system was almost destroyed by corruption. Roosevelt’s New Deal reforms were a corrective against that. The government intervened. For 40 years the economy grew and there was more prosperity for most Americans.
Charles Koch was a guest on a recent episode of the Tim Ferriss Show. Ferriss has a podcast audience of millions. Koch’s ideas about life and productivity and success are going to be internalized by many of Ferriss’ listeners, and others as well. One would have to assume Koch will be doing more public appearances as a hedge against your new book.
Around 2013, Charles Koch hired a brand-new public relations team and they are quite good. They come from a background of working for tobacco companies. This PR team knows how to tell a good story. That is why there is this much more public-facing and public-friendly version of Koch Industries being shown to the world, and all this language about “innovation” and “entrepreneurship.” Charles Koch wrote a book that was released in 2015 where he talks in all those vague terms because he cannot get into much detail about “market-based management” because he does not want to give away the secret of his success and how the company makes so much money.
I have talked to the people who work at Koch Industries. The people who work in the trading division are breathtakingly brilliant. They told me the actual strategy of what Koch does, and how he and the company make so much money. What they shared is much more interesting than what Charles Koch is comfortable putting in a book or talking about on a podcast.
He's done several interviews like that podcast one, and you don't get to the real or most interesting part of his life and business theories. Koch makes it clear that market-based management is a philosophy that governs how you work, how you organize a country, how you live your personal life.
The people who work for his company think that Charles Koch is a hero for sticking his neck out to fight the “liberal political establishment” in America. They are completely behind his mission to scale back government and remake society.
How would you explain to the average person the power and reach of Charles Koch’s political power?
The Koch network is more powerful today than it's ever been. Charles Koch’s political power is only going to grow. Here's the issue, though. They operate in a certain space where government is actually happening. When I started this book, I thought the chapters on politics would be a lot about super-PACs and campaign contributions, but that's not where the action is. All of the action begins the day after the election. Koch is targeting the infrastructure of American political power where things actually get done: the state legislatures, the court system, the federal appeals court system and, of course, the big center of power in Congress. The Koch network is also working the enormous administrative state which includes OSHA, the EPA and the Commodity Futures Trading Commission.
This is the world where Charles Koch is operating every single day to influence public policy. What happened with Trump and the Republicans' recent “tax reforms” is an example of the power that the Koch network possesses. Those tax reforms were a huge, monumental, generational story that Koch had a tremendous influence on. But few people in the general public or elsewhere really understood that, because so much of the news media focuses on “red team” vs “blue team.” Some of what Charles Koch fought for and won in term of tax cuts that benefited his businesses led directly to the massive budget deficit the federal government is now experiencing. This too is part of the right wing’s plan, where they create huge federal deficits to then justify cutting Social Security, Medicare and the entire social safety net.
How is Charles Koch trying to use America’s schools, especially colleges and universities, to disseminate his ideology?
Charles Koch uses higher education as a vehicle to promote his views. He is paying money to endow these university chairs and research centers to promote his free-market libertarian point of view. Koch wants to mainstream free-market extremism and then generate the data to support his ideology and long-term plan. Charles Koch and his network would also like to do away with the public education system. They see it as another one of these highly “distortive” systems that ultimately only increases the tax burden on wealthier Americans. Charles Koch and his allies want private education and not public education in America.
What type of citizen does Charles Koch want to create in his schools?
I can tell you almost exactly what he would say: to create principled entrepreneurs. Every little student should be a principled entrepreneur, a solo unit and not part of a cohesive group. For Koch, it is the solo performing unit who is going to try to excel. Schools should cultivate their talent, help them innovate, make money and be more successful. Survival of the fittest. Some students make it, some don't. Some succeed, some don't.
The Koch brothers have become involved in "criminal justice reform." Some liberals and progressives are enamored by what the Kochs are doing on that issue, and may lack a critical perspective about how the Kochs are trying to create more surplus labor to drive down wages. Their ideology does not allow for altruism. Profits are always more important than people. Am I being unfair in my analysis?
They developed a terrible reputation, public relations-wise, particularly after Jane Mayer's article in the New Yorker where the Koch network’s surreptitious political activities were exposed. They fired almost the entire public relations team around 2013 and brought in a new group of people with a more sophisticated outlook.
Let's consider their criminal justice reform efforts, which really started during that timeframe. I've looked through Koch's lobbying disclosure forms going back to the 1980s. Criminal justice reform was essentially not there.
Charles Koch is a hardcore libertarian. So if you have somebody come and say, "Look, you could invest in this space of criminal justice reform. It dovetails with your views that government should be limited, and it has the net effect of changing the public image of the Koch political network."
I can't tell you how many people have come up to me and said things such as, "The Koch brothers are bipartisan, right? They're not really Republican. They're kind of in the middle." That belief is an outgrowth of how Charles and David Koch invested a few million dollars into this criminal justice reform element, and it obscures the larger mission, which again is a very libertarian, anti-government — not small government — society-wide political project.
Did Charles Koch have an epiphany at some point in his life where he said to himself, "I'm going to be a great man of history"?
He grew up in a mansion in Wichita, Kansas, with three brothers and a father who was, to put it in the kindest sense, an overbearing man. Fred Koch was driving his sons hard. He had power. Fred Koch had conflicts with Charles. Charles Koch openly talks about that fact. Charles Koch was sent off to go work at a ranch over the summer. I truly believe that over the period of 50 years that Charles Koch has been CEO, it's like he is proving who he really is. I don't think Charles Koch had an epiphany one night. This all happened slowly. It accumulates in your character. His anti-government beliefs were instilled in him as a child.
Charles Koch is a profoundly competitive, profoundly driven man who is a builder. He has shown that he can build one of the largest corporations in the United States. He basically outpaced his father in every accomplishment his father ever made. That is what motivates Charles Koch, much more than earning the next dollar.
Are you afraid of the repercussions that may come from writing this book? Charles Koch is a very powerful person.
No, not at all. Not to sound too naïve or corny, but this is the United States of America. We have a free press. I consider myself a very old-school reporter. Before the book came out, I gave Koch Industries 260 pages of fact-checking memos. I told them everything critical that was going to be in my book. I gave them a full, fair chance to respond to it. To their credit they engaged in that process.
If “Kochland” was made into a movie what genre would it be?
“Kochland” would be a drama. It is a panoramic view of the American economic and political system today. That's what I loved about this story. That's why I wanted to write the book. At one point you the reader or viewer are hanging out with these blue-collar labor union people and you're learning about their experience of America. The next part of the story you're at Koch's derivatives trading floor in Houston, where you're watching how this world works by looking over the shoulder of a guy who was a Koch employee, who used to make 50 grand a year but then he gets transferred to trading natural gas derivatives and now he's making $4 million a year. It is all mind-blowing.
Then instantly the camera is in the corporate lobbying office in Washington, and you're meeting these lobbyists who are shaping public policy and you see how the actual machinery and gears of government work. And then, hovering over the whole picture there is this figure of Charles Koch, who's got this very firm view of how the world ought to work. The company Charles Koch built is his mini-utopia. It's “Kochland” and he's fueling the action.
I truly would like the readers of “Kochland” to see how complicated America’s economic and political system really is. There is so much going on beneath the surface, beyond horse-race politics and the 24/7 news cycle. That is where the real action is. It would warm my heart if people walked away from the book with that new perspective. I would also love it if readers understood that the shape of the economy is not incidental or organic. It is absolutely formed by humans and by policy choices, such as those made by Charles Koch.