Saturday, July 13. 2013
Big article in the Wichita Eagle earlier this week: Charles Koch launching Wichita campaign about economic freedom, government overreach. Koch is the billionaire who along with his brother David Koch inherited Koch Industries, the largest privately held company in America. While David Koch is cultivating his links with the power elite in New York City, Charles Koch lives in humble Wichita and runs the family company. Both Kochs are concerned citizens. They do a lot of philanthropy, but in Wichita that mostly means we have a lot of buildings reminding us who the richest guy in town is. And they spend a lot of money on politics, not just to promote their own narrow interests -- they have lawyers and lobbyists for that, not to mention Rep. Michael Pompeo and Sen. Jerry Moran -- but to share and spread their unique insights into what makes a nation rich. After all, it worked for them, so why shouldn't it work for everyone else?
OK, you may think that just because they inherited an oil company and you didn't, they had some sort of unfair advantage over you, but their real secret is that they grew up believing in the gospel of "economic freedom." (Their father, after all, was Fred Koch, who not only built their oil company but set a model for them as a big backer of the John Birch Society.) The Kochs have been pushing this line for a long time now. Their most prominent front group is called Americans for Prosperity. Given their success, and the uncontroversial cloaking they use for their message -- I mean, who in American isn't for prosperity? or economic freedom? -- you have to wonder what they're really up to. The article explains:
As near as I can tell (and I'll note that Koch wrote more about it here), Koch's notion of "economic freedom" is pretty much limited to the freedom of business owners (like himself) to run roughshod over everyone else. Nothing aggravates a boss more than the possibility that someone else can tell him "no" -- least of all the government he thinks his taxes supports. Maybe he accepts the limits of the market -- that a customer may choose not to buy, or a worker may choose not to work for him -- but if the market will bear it, he's saying government has no business butting in, and that when it does it's trampling on his economic freedom, undermining his prosperity. That much may be even be true, but then he makes an intellectual leap that is invalid: he assumes that when government limits his prosperity, it is limiting the overall prosperity of the whole nation. In other words, he is assuming that the gain that government denied him -- the gain that he should have been free to realize -- would not have come at anyone else's expense. That may indeed be the case, but much more likely isn't: with few exceptions, government regulations exist to protect someone against some possible abuse of power -- laws against fraud, for instance, or regulations against pollution (the victims of which are potentially all of us).
There is some reason to think that even Koch recognizes that some of his fellow entrepreneurs are up to no good. From the same piece:
But if he was sincere about opposing "cronyism" in Washington -- and Topeka and Wichita, where his voice is even louder -- you'd think he'd start a campaign to get the corrupting influence of money out of politics. But he's not articulating anything like that: the only time he actually knuckles down and works against "cronyism" is when it's seen as an alternative to the oil business: when it comes to stopping ethanol subsidies and wind power, he'll stand on the highest principle available. But mention a carbon tax, which is a relatively benign way of assigning an externalities cost to the conversion of fossil fuels into a gas that turns the entire planet into a greenhouse, he goes ballistic. (As Jane Mayer recently documented, Koch is the guy pushing an "anti-carbon tax pledge" among Republicans.)
Aside from his hypocrisy about cronyism, is it really true that no other company is advancing Koch's agenda? When you get down to the actual candidates that Koch puts money behind -- Pompeo and Moran are prime examples because they invested so heavily in both -- what you get is your basic "tea party" Republican, the same sort getting backing from corporate cranks all over the country. Nor for all his ideological pretensions is Koch all that much of a purist: he's happy enough with Republicans like Sam Brownback, who's squishy on wind power and absolutely nuts on abortion, and Tim Huelskamp, who's squishy on nothing and so anti-government he feels threatened by the PATRIOT ACT. He was even on board with Mitt Romney -- he sent out memos to all his employees directing them to vote Republican.
Of course, "economic freedom" is a fine slogan. I'm for it, too, but you have to put these things into a viable context. Freedom is a wonderful state, but not at someone else's expense. You can't have a viable society if everyone is allowed to do anything they think might be in their interest. Such a society would be rife with crime, fraud, deception, and chaos: conditions under which prosperity would collapse. One might assume that even Koch wouldn't go that far, but I can't assure you. (Back in the 1970s one of my jobs was to typeset reprints of Murray Rothbard books for Koch. Rothbard was so opposed to government he proposed that justice be privatized, so each and every business would have to contract with its own police, courts, etc. How this differs from mafia cartels was never clear to me. Of course, Koch's thinking may have evolved since then, but he hasn't strayed much.)
On the other hand, it certainly is the case that some government acts -- laws, regulations, discretionary enforcement -- do inhibit economic freedom for no good reason, and I would be happy to join Koch in opposing them. The main things I can think of are patents, which create artificial monopolies and encourage trolls and other parasites (including one's own lawyers). I also worry about excess concentration of corporate power, which can distort free markets even if it is well short of monopoly, and can also leads to unfair relations with employees. Interestingly, Koch himself expressed concern about "anything that reduces the mobility of labor."
Of course, given that his statement immediately followed his complaint about the minimum wage, he may only be concerned with the downward mobility of labor. Otherwise, were we to take his statement at face value, we might decide that there was a need for more government intervention. For instance, one thing that would make labor more mobile would be to make education freely available (and not just the cost of education but a stipend to live on). That way, when new job opportunities open up, people can (relatively painlessly) flock to them. Another would be to make it easy to move from one place to another with more job opportunities. Nor should be labor mobility be limited to changing jobs. We should also encourage workers to go into business: by reducing the entry cost, by making it easier for new businesses to raise capital, by reducing and/or buffering the risks of failure. These are all examples where greater "labor mobility" would result in workers finding more productive jobs, and that in turn would directly add to the prosperity of the nation -- as well as the more equitable distribution of the nation's wealth.
But that sort of "labor mobility" isn't something the private sector can ever be expected to do on its own. Businesses see labor as an expense: something to be squeezed, automated, or outsourced. Only some benign charitable organization could deliberately decide to systematically improve the upward mobility of labor, and for all practical purposes that means government. Of course, a given government may be unwilling to help workers -- indeed, ours has largely been captured by corporate interests that differ little in this regard from the Koch brothers. But if you posited a real democracy, where every voter is free and able to understand and advance his or her self-interest, the government they would elect would work toward greater and more widespread prosperity, and it would do something much like what I just described.
The biggest intellectual con job of the last few decades is the notion that business owners are "job creators" and we should cater to their every whim else they withdraw even the paltry jobs they currently offer. There is much more to this than taxes, but tax policy offers a clear example of what happens when we follow their prescriptions. Government, at least in theory, belongs to all of the people, and serves all of the people, whereas companies belong to the tiny (and mostly rich) fraction that owns them. When we cut taxes on the rich, as we've done repeatedly since 1999 -- Clinton's big tax cut on capital gains, followed by all the Bush cuts, then the Obama cuts -- the rich keep (and accumulate) more and we (via the government) get less. And when government revenues decline, so do services -- starting with those that serve the poorest, least powerful people among us.
In Koch's Kansas this same dynamic has been carried out to even greater extremes: Brownback has cut the income tax and carved out a complete exemption for "small business" income (Koch's $40 billion empire is privately held, so it qualifies, as does the real estate and gambling fiefdom of Wichita's other billionaire); meanwhile sales taxes, which are paid by the "takers" Romney complained so about, the 47% of Americans who don't make enough money to owe income taxes on, have increased. This is supposed to make Kansas friendlier to business -- to increase our "economic freedom," to use the Koch parlance. The net result so far is that education is becoming more expensive and other services scarcer. Meanwhile, any business that will consider moving to Kansas will insist on kickbacks from a shrinking pie, and nearly every business in the country is enjoying that race to the bottom.
Boeing, for instance, left Wichita because they were getting sweeter deals in Texas and South Carolina. Pizza Hut moved to Colorado to take advantage of another sweetheart deal. Even Koch has played that game, threatening to move their headquarters to Houston unless the public provide direct air connections. But at least they're still here: nearly every other important company that was built here has either moved out or sold out -- Beech, Cessna, Lear Jet, and others have just become profit centers for global capital, which has no community interest in Wichita.
The thing I find most striking about the Kochs isn't how narrow-minded and ultimately destructive their ideology is, but how naturally they come by it. They were born rich and sheltered, moving straight into the company throne, and yet they think they earned every cent of it, going so far as to complain about "the culture of dependency" that those who weren't born rich like them are mired in. It's part of human nature to assume that other folks are pretty much like yourself. Still, it's remarkable that anyone so unique would be unaware that they're not the ideal template for the rest of the world.
"Economic freedom" works great for the Kochs. But it's not the be-all, end-all answer for everything. It's a part, possibly just a small one, but only if you get past the rest of the claptrap they spout. And all the money they put behind it just gives the lie away. They have to propagandize their ideology because you won't believe it otherwise. And they think they can because they have all that money, plus utter contempt for democracy and nearly all of the people it represents.
Here's a shorter version that approaches what I wanted to say in a slightly different way: a "letter to the editor" by Jack E. Niblack, published in the Wichita Eagle today:
I can certainly understand Charles Koch's frustration with and disdain for an economic and political system that has only allowed him to become a multibillionaire ("Charles Koch to launch Wichita ad campaign," July 10 Eagle). I've no doubt that were it not for ill-conceived, shortsighted, and unnecessary rules and regulations that make it more difficult for Koch's companies to pollute our air and water, demand that meters used to determine how much oil his companies are extracting from Native American lands be calibrated, and require him to pay workers, at a minimum, the lavish sum of $7.25 per hour, he would have attained the status of multitrillionaire. Perhaps he would then be more successful at buying national elections. He's already been quite successful at the state level.
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