Charles G. Koch: 'Addicted' to the Cause of Economic Freedom

The businessman discusses how America can spread prosperity

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PHOENIX, ARIZ.—To hear him tell it, Charles G. Koch is "addicted" to the cause of economic freedom. It drives him, motivates him and is the impetus behind philanthropic activities that, over the last 50 or so years, can modestly be called considerable.

Tall, silver-haired and with a twinkle in his eye, Koch is the sort of man who would not seem out of place at a meeting of mid-western Rotarians. An engineer by training he is, in many respects, an average American who loves his country and wants to see it prosper. To those who follow such things closely, however, he is anything but average. As chairman of Koch Industries, one of the world's largest privately held companies, he is among the wealthiest of what it is suddenly fashionable to call "the one percent."

A dedicated philanthropist who has given away more over the course of his life than many families will make in several generations, Koch's driving passion is to find ways to foster an economic system that allows everyone to prosper, one where "everybody benefits, especially the poorest people."

[See a collection of political cartoons on the economy.]

"I studied what principles under-laid peace and prosperity and concluded the only way to achieve societal well-being was through a system of economic freedom," he says. "I became addicted to it."

For his efforts he has been attacked, scorned and demonized. In the best Saul Alinsky tradition, those who cut their teeth in the community organizing business and would now see the United States become some kind of full blown European-style welfare state have tried to make Koch a symbol for all that is wrong with America.

It is doubtful they are succeeding. While his profile has been raised considerably over the last several years it is highly unlikely that he is as yet as well-known as the "liberal robber barons" like George Soros and Warren Buffett with whom, in terms of political influence, he is often compared.

Koch, whose work has just been recognized by The Philanthropy Roundtable, a non-partisan group which awarded him its 2011 William E. Simon Prize for Philanthropic Leadership, believes it is all worth it—slings and arrows not withstanding.

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When he started his efforts back in the 1960s, "The few people who were interested in economic freedom talked about 'preserving the remnant.' That was the mentality. There wasn't anything about spreading it. When we tried to put together a seminar of academics we'd be lucky to get six free market academics. Now there are like—who knows exactly—but there are like 10,000 in the United States.

"When I started I wasn't involved in the political stuff at all because it was obvious we didn't have talent to do anything. You'd say 'Well God you ought to have a magazine.' Well, who's going to write for it? Who's going to run it? We don't have any talent," he says about the early days, which centered instead on helping young people who were interested in economic freedom develop and get careers and get active.

"That's still a big part of what we do," he says. "I think that's essential. You've got to build on things."

Up until the election of President Barack Obama, few people outside conservative political circles had probably ever heard of Charles G. Koch, even in passing. The rise of Obama changed that as supporters of economic freedom started to make a lot of noise.

"Before," he says, "they dismissed our effectiveness and referred to us as Don Quixote tilting at windmills; now we're described as the 'Master of the Universe.' People take us more seriously today. And the attacks, rather than scare people away, upset and motivate them to action."

The current political situation is, in his view, dire but not hopeless.

"We're headed toward bankruptcy and we're adding over a trillion a year in debt at one-to-one debt now and that doesn't include unfunded entitlements that, depending on what assumptions you use, are anywhere from 60 trillion to 100 trillion. We're in bad shape and something needs to be done."

[See a collection of political cartoons on the budget and deficit.]

Much of the blame for the current condition of the economy lays, Koch thinks, at the feet of the Obama administration, which is either highly incompetent or is purposefully trying to undermine the pillars of the American economy.

"You take a John Holdren (head of the White House Office of Science and Technology) who is calling for the de-development if the United States. What he's doing isn't accidental. It hurts the economy. You see in the United Nations the leaders of the climate movement say, 'This isn't really about climate—this is about redistribution.' Then you have the president call for rewarding their friends and punishing their enemies. This gets to be scary stuff. When you see their initiatives and what their doing to the economy—they are doing everything possible to reduce competition and reward certain businesses," Koch says, which leads to a reduction in competition and distorts the behavior of the marketplace.

Koch remains optimistic, but guardedly so.

"The economy can recover and people can start building things again. But what's it going to do to our culture?" he asks. "The easy way to make money is to get special political privilege. From the beginning of time business has cozied up to government and gotten restrictions on competition and subsidies and stuff," he says somewhat disdainfully. "The best way to make money is to have more economic freedom, which is why we are one of the very few large companies that are consistently for it," he says, explaining once again his basic philosophy. "Less and less we have an economy run by the consumer. The consumer chooses and you live or die in business according to that. Now I'll go get the politicians or the bureaucrats and I don't need to satisfy these 'nasty consumers' who may go against me."

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The public action he has tried to spark and which people have taken is measurable, something that fits in nicely with the trademarked "Market-Based Management" philosophy with which Koch runs all his enterprises. Though he would clearly share credit for the Tea Party's electoral successes with others, it is undeniable that its efforts have put a brake on the leftward drift of Obama's Washington. But even if the president is turned out after just one term, says Koch, there is still a lot of work to do to put the ideas of economic freedom back at the forefront of the public policy agenda.

"It's like Leonard Read used to say" 'Okay—they've scrambled the eggs. Now it's our job to unscramble them.' That's not easy. You get all these vested interests. You pass a program and get people dependent on it, making it brutal to get rid of. The key is not letting it get started," he says.

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