Earlier this year, Charles Koch, CEO of Koch Industries and libertarian billionaire, wrote an
Op-Ed for the Wall Street Journal, in which he described the gist of his philosophy: anti-collectivism, anti-government, and a laissez faire capitalism. He also criticized the “character assassinations” that he feels he's been subjected to by the left. And, like a true CEO, described the wonderful environmental record Koch Industries has had in recent years, while leaving out its pitiful safety and environmental history.
As a politician speaks, he writes: “A truly free society is based on a vision of respect for people and what they value. In a truly free society, any business that disrespects its customers will fail, and deserves to do so. The same should be true of any government that disrespects its citizens.”
Koch’s declarative words seem logical and sound on the surface. Words that the majority of people, including liberals, could get behind. Businesses that don't respect people, like the giant banks that brought the world to its knees, should fail, according to Koch. This is hardly controversial in todays anti-Wall Street climate. Corporate welfare, or what libertarians like Mr.Koch call crony capitalism, is the antithesis of democracy.
But there are problems with Mr.Koch’s assumptions that lie deep within his philosophy. According to him, “any business that disrespects its customers will fail.” But this presumption, a sort of maxim in Koch’s world, is based on a false view of human nature. There is no doubt that some businesses may fail if they “disrespect” their customers. And in a truly free society, a company like AIG would have failed. Unfortunately, his theory is based on the false assumption that consumers and investors are completely rational beings. The most common example of human irrationality is the historical reoccurrence of economic bubbles, fueled by what Alan Greenspan once called, irrational exuberance. It seems that either human beings have a sort of returning amnesia, or we are simply, as a whole, irrational in the marketplace.
Another reason why disrespecting customers will not always result in failure, comes from giant conglomerates, like Koch Industries, who have their hands in just about every product, its impossible to keep track. From fossil fuels to paper towels to building products to diapers to chemicals to printing paper, etc. Are consumers expected to have a list of what products are made by an ethically responsible company, by a company who “respects” them. If a giant corporation, like Koch Industries, or countless other conglomerates, disrespect the customer by, say, destroying the environment, will the consumers all of a sudden stop buying their products? Maybe in the libertarian’s dreamworld, where all consumers are well informed and care about these issues, rather than getting the best deal. But not in reality.
This is not to say that consumers are completely indifferent and immoral towards what they buy. According to a nielsen study, an increasing number of consumers are willing to spend more money on products if they are made from a socially responsible company. This is positive, but the problem of corporations having a hand in everything remains.
To say that any business who disrespects its customers will fail is antiquated and dogmatic. It was more accurate when Adam Smith wrote The Wealth of Nations in 1776, as was his invisible hand metaphor. But times have changed, and the complexity of the market and globalized world has made both arguments obsolete.
Mr.Koch’s starry-eyed argument also fails to mention people who are not customers, and whether their rights are to be respected by a business. Are businesses only expected to respect buying customers? It makes sense that Mr.Koch would think this way, with Koch Industries having a dreadful historical record on the environment and safety. Charles’ famous management style, Market Based Management (which is trademarked), challenges the normal hierarchal structure seen in corporations. In this form of management, every employee is thought of as an entrepreneur, and are rewarded or punished based on actual value that they bring to the company. The bottom line, not the manager, rules.
This free market approach created a very reckless environment back in the 90’s, where people feared for their job if they were not bringing immediate value to the company. Kenoth Whistine, a pipeline manager who resigned in 1994, recalled showing a supervisor an exposed pipeline that could be potentially dangerous. The supervisor shrugged it off, telling Whistine he “needed to understand that money spent on certain projects could make a lot more money than on other projects, and that they could come back and pay off a lawsuit from an incident and still be money ahead.” In other words, if someone was hurt, or even killed, they would still be making more money. Profit over people.
In 1996, this carelessness caught up to the company. In Texas, an old and unmanaged pipeline leaking butane into the air created a cloud of gas, invisible to the eye. This pipeline had been taken offline a few years earlier, but due to demand, and the potential millions to me made, it was brought back and cheaply repaired, leaving many corroded areas unattended. On the day of the leak, two teenagers, Danielle Smalley and Jason Stone, unknowingly tried to start their car in the area, and set off the flammable cloud with a simple ignition spark. They were both incinerated. So much for people.
A Dangerous Myth...
This brings me to a central and dangerous part of the Kochian ideology, an ideology that they spend hundreds of millions of dollars propagating. This is the myth of self-regulation. The idea that a unregulated society, without any governmental intervention, would create a sort of utopia where all companies, like Koch Industries, would self regulate with the know-all guidance of customers.
This myth has been pounded into a great percentage of American heads in recent years, like a sort of religious doctrine, ahistorical and contrary to evidence, but faithfully believed by millions. It is an idea that America and the rest of the world had already disowned in the early twentieth century, after the little regulated gilded age produced immense inequality, monopolies, hazardous working and living conditions, unsafe products, and environmental harm.
But since the neoliberal revolution came along in the 80’s, the libertarian idea of slashing all government regulation and letting the “invisible hand” guide everyone into a sort of paradisiacal society has become widespread. And its not surprising, libertarianism, like communism, is a very attractive ideology on paper. It provides more responsibility to the people, and gets the bureaucratic government out of our lives. This individualistic nature makes it particularly attractive to Americans.
Many people, liberals and libertarians alike, are tired of the corporate welfare that has formed in this country. But their solutions are very different. Liberals believe the first step in separating big business from big government is to eliminate the skyrocketing amount of money going into the political campaigns today. Requiring all political campaigns to be publicly funded seems like a proper first step. On the other hand, conservatives believe that government should simply be destroyed and the market liberated.
There are many problems with the conservative option, as we have seen from examining Mr.Koch’s own company. Lets forget about the extreme inequality and anti-competitive nature that comes along with no regulation, and just focus on the misdeeds that Charles‘ company thrives at. Koch Industries has not taken government regulation or the safety of human beings very seriously in the past. As in such a massive conglomerate, profit was more important than people, and many were hurt in the process. Even with regulation, Koch Industries did its best to avoid any compliance and covered up accidents, like oil spills, many times. And, as we have seen, people died from their negligence. With this in mind, does anyone truly believe they would start “respecting people” when the government got out of their way? Would they all of a sudden start caring about the environment and begin self-regulating themselves?
Well, no, of course not. Anyone with a brain knows this. But who needs a brain when you have billions of dollars? It is already well known how much David and Charles spend on their propaganda. They have created libertarian think tanks like Cato Institute to inject their fallacies into mainstream culture and academia. They have formed different political advocacy groups like Americans for Prosperity, to help elect their very own political puppets. The non-profit, Freedom Partners, closely tied to the Koch Brothers, is a chamber of commerce that raised $256 million in 2012, to raise public awareness of “important societal and economic issues,” i.e. free market dogma.
They also run annual seminars promoting their free market views. Very important people in the government, such as Paul Ryan, Antonin Scalia, Clarence Thomas, Bobby Jindal, Jim DeMint, and propagandists like Glen Beck and Rush Limbaugh, have attended. And then there is the countless millions they have donated to their puppet politicians, like Scott Walker and Mitt Romney. They have also funded other myths that help their profit rate, like the denial of climate change, which could prevent much needed regulation in the industry, being that Jim Inhofe, the most nutty of deniers, will be taking over at the environmental senate committee.
There is truly no limit to what these brothers can do, with their combined wealth being over eighty billion dollars. If they wanted people to believe that Barack Obama was a Reptilian, they could certainly do it. So its not at all surprising that this idea of self regulation has become a sort of maxim in the heads of people who listen to Glen Beck and Rush Limbaugh every day. This myth is very advantageous to big corporations who would rather spend money buying more pipelines than keeping their old pipelines in good shape.
I do believe that Charles Koch, deep down, understands that an unregulated society is bad for the people and good for the corporations (himself). He is too smart not to. He writes things like “A truly free society is based on a vision of respect for people and what they value” for PR purposes. But behind the facade of free market dogma, he is simply a modern social darwinist. As Andrew Carnegie praised Herbert Spencer (A prominent theorist of social darwinism in the late nineteenth century), Charles and David Koch praise philosophers like Ludwig Von Mises, Ayn Rand, and F.A. Hayek (although Hayek has been unfortunately misrepresented by conservatives, as he saw the necessity of government programs and regulation).
And their movement is going strong. This radical right wing philosophy is popular with conservatives, and more importantly, with many young people. To the Koch’s, its not about making more money, its about spreading their “survival of the fittest” ideology. An ideology that has risen from its grave, where it belongs, to haunt us with a past full of inequality and abuse, greeting the present with a mask of sincerity.
It takes a lot of money to sell myths, money the Koch’s and other billionaires are willing to spend. Many liberals like to call the Koch Brothers evil billionaires, or greedy billionaires, but in reality, they are much worse, they are fanatic billionaires.