Charles Koch: In Relentless Pursuit of Free-Markets

Posted by: on Dec 23, 2014 | One Comment

Charles de Ganahl Koch succeeded to his father’s modest oil company in 1967 – Rock Island Oil and Refining. In the subsequent three decades, he managed to turn the company into a large shiny coin that became known as the mighty Koch Industries. This was a trading company with diversified petroleum products, having an annual income of over $40 billion in 2014. It stands as the second-largest private company in America, which includes Flint Hills Refineries, Koch Minerals and Koch Ventures, under its wing. Charles Koch is widely known for his “Market-Based Management” philosophy of leadership, which is followed even in his company. Employees are urged to act and work like potential entrepreneurs within the sets of an organisation. Apart from being a successful businessman, he is amongst the most noteworthy contributors of the political libertarian principals. Charles Koch and his brother David Koch are examples of the new generation of billionaires. They are willing to spend enormous amounts of money to bring home the concept of free markets and politics to the younger generation.


Early Life and Education

Born in Kansas, he continues to live there to date. He was one of the four sons of Mary and Fred Chase Koch. He showed promise of being a bright student at school, and got admission into the Massachusetts Institute of Technology, where he graduated in 1957 with a specialisation in general engineering as a part of his Bachelor of Science degree. He went on to receive his Masters of Science in both mechanical and chemical engineering in 1958 and 1960, respectively.

Professional Success

After his education, Koch started working at Arthur D Little, Inc. However, he was unable to continue and returned to Wichita in 1961 to work at his father’s Rock Island Oil & Refining Company. In 1967, he took over the business and renamed it Koch Industries, honouring his father’s work. The business rose to the billion dollar level and according to the Forbes’ Top 400 list in 2014, Koch was worth approximately $41.3 billion.

Market-Based Management and Intellectual Views

Market-Based Management is the business philosophy that he follows to date. And Koch discusses it at length in his 2007 book, The Science of Success. He was motivated to write the book for his employees to give a “comprehensive picture” of the philosophy that was followed within the company.

In his view, Charles Koch is a libertarian. He has drawn great inspiration from American presidents like George Washington, Calvin Coolidge and Grover Cleveland. When the corporate welfare programme was introduced under President Bush, he strongly opposed it saying, “Overall concept is to minimize the role of government and to maximize the role of private economy and to maximize personal freedoms… We could be facing the greatest loss of liberty and prosperity since the 1930s.”

Political and Philanthropic Contributions

As stated earlier, he advocates libertarian thought and has played a key role in the setting up of organisations like Cato Institute in 1977, in partnership with personalities like Murray Rothbard and Edward H Crane. Organisations like this follow his free-market ideology and aim to open the younger generation to the idea of such an economy. Koch is also a member of the board at Mercatus Center, which is a “think-tank” at George Mason University, motivated towards market research. In addition to funding numerous such “think-tanks,” he has been encouraging libertarian academics since the early 1990s. The Charles G Koch Summer Fellow Program of the Institute for Humane Studies was initiated and funded by him, with the purpose of mentoring self-described young libertarians.

1 Comment

  1. Dale F. McCarty
    March 27, 2015

    I stated writing this piece on my birthday, March 6, 2015, and the more I research and learn the more ticked off I become. I intend to address several issues which must be corrected if we want to leave our young people with a nation that will endure, a place where our decedents can enjoy the freedoms we have, a place our founding fathers would see the wisdom they embedded into our constitution. We are no longer a nation of the people, for the people, and by the people. We now have an aristocracy based on wealth and political power.

    First: I would propose that someone start a grass roots group called A Revolution Of Ballets, Not Of Bullets. We could use the acronym (AROBNOB) as a rallying cry. Another title I’ve considered is the People’s Party, it would be the direct antithesis of the Tea Party.

    The goal of our group would be to prepare the citizens for the coming revolution. We can make it happen by ensuring everyone understands how our current Income Tax system is cheating the bottom ninety percent of income earners while the top ten percent keep getting richer. In his book Perfectly Legal, David Cay Johnston, the Pulitzer Prize winning reporter for the “New York Times,” offers a graph on page thirty-eight which shows that from the year 1970 to the year 2000 the bottom ninety percent of households filing income tax returns lost 0.1% in spendable income, adjusted for inflation. During that same period the super rich, the top 13,400 households, saw their spendable income rise from $3,641,285 to $23,969,767, for an increase of 558.3% in spendable income, adjusted for inflation. While I have seen no studies more recent I am sure things have not become better, probably worse. The chart below shows the same information for the different groups.

    Bottom TOP
    Year 90% 90% – 95% 95% – 99% 99% – 99.5% 99.5% – 99.9% 99.9% – 99.99% 0.1%
    1970 $27,060 $ 80,148 $115,472 $202,792 $317,582 $722,480 $3,641,285
    2000 $27,035 $103,860 $168,067 $384192 $777,450 $3,049,226 $23,969,767
    % -0.1% +29.6% +54.2% +89.5% +144.8% + 322.0% +553.8%

    The line beginning with the % symbol indicates the gain or loss of income from the year 1970 to the year 2000. This chart was taken from David Cay Johnston’s book, Perfectly Legal, I would strongly urge everyone to read it to understand why AROBNOB is needed.

    In 1968 when Bobby Kennedy was running for the presidency he stated, “A revolution is coming, a revolution which will be peaceful if we are wise enough, compassionate if we care enough; successful if we are fortunate enough. But a revolution is coming whether we will it or not. We can affect its character, we cannot alter its inevitability.”
    I agree wholeheartedly with his use of the term inevitability

    We need to flood the voting booths with people who are aware of how the common man is being cheated. It is my opinion that the Occupy Wall Street was just the opening salvo and if something is not done about income inequality it won’t be long. South American countries were in a constant state of revolution because the wealth of the countries were held by a few and the masses lived in poverty, not totally unlike America is quickly becoming.

    Second: The people are fed up with the dysfunctional group we have in Washington today, hence the need for term limits, or, as I’ve heard it expressed elsewhere, “Throw the bums out!” Let your representatives know you will vote against anyone who opposes term limits.

    Third: After we’ve, “Thrown the bums out,” we need to elect representatives who will pass a national usury law, and while they are at it, they should include in that law language to prohibit predatory lenders, such as the pay check/title loan bandits. I can remember when these guys were Mafia members, called loan sharks, same loans, same attitude only back then if the borrower didn’t pay the loan sharks had someone to break his knee caps, whereas today the courts do the job for them and it’s considered business as usual.

    According to the Consumer Finance Protection Bureau the majority of the people who borrow from payday lenders, fifty-eight percent, receive monthly government benefits, including Supplemental Security Income, Social Security Disability, or Retirement benefits and if they are entitled to these funds it means they are disabled or retired. Not exactly what could be called wealthy.

    Fourth: If the young people today knew how they were being screwed over we might not be able to hold them back. I’ve found that the average debt for each kid earning a bachelor’s degree is $30,000, and that’s unconscionable. At Duke University tuition for the 2015/2016 year tuition has been set at $49,157. I’m sure Duke would argue the money was needed to provide a world class education and that statement is also ridiculous. Mike Krzyzewski the basketball coach is paid $9,682,032 per year. That is equals the total tuition of 322 students. I can’t imagine the president of a university being paid over a million Dollars per year, much less a coach. In forty of the fifty states the highest paid public official is a coach, twenty-six coach football, thirteen coach basketball and one coaches both. I think we live in a twisted society when coaches are paid more than governors.

    I think we should emulate the Denmark system of education. The Education Index, published with the UN’s Human Development Index in 2008, based on data from 2006, lists Denmark’s approval rating of their educational system as ninety-nine point three percent, among the highest in the world, tied for first with Australia, Finland and New Zealand.

    Literacy in Denmark is approximately ninety-nine percent for both men and women. Almost all educational institutes in Denmark are free. This tuition free system applies to all students who were born in Denmark, including the Faroe Islands and Greenland, who hold a permanent resident visa, who hold a humanitarian visa, from countries in the Nordic Council, and from countries in the European Economic Area or European Union. Not only is there no tuition, all Danish citizens are offered monthly financial aid, which in U. S. dollars would be equal to $496.00 per month if the student lives with their parents or guardians, and about $997.00 per month if the student lives on their own. Low interest government loans are also available to Students up to $510.00 per month, which must be paid back upon the completion of their education.

    Those opposing a free education system ask, “Why should I pay for somebody else’s education, what are the advantages to me?” While a free education is certainly an advantage to the person who receives a degree, it is also an advantage to the country. I believe such a system would end the exporting of good jobs to overseas companies, lower the crime rate, and end the shortage of trained people such as nurses and doctors,

    Fifth: The United States needs universal health care coverage. A study, conducted at Harvard Medical School and Cambridge Health Alliance, found that uninsured, working-age Americans have a forty percent higher risk of death than privately insured counterparts. Nearly 45,000 annual deaths are associated with the lack of health insurance, according to a study published by the American Journal of Public Health. Previous estimates from the Institute of Medicine and others had put that figure near 18,000. While the Harvard Medical School and Cambridge Health Alliance are both considered to be liberal institutions the Institute of Medicine is not.

    Conservatives argue the figures are inflated to which I reply, “Okay, let’s imagine the figure of 18,000 is twice what it should be. Is 9,000 early deaths acceptable in the richest country in the world?” To anyone who answers yes I can only say, “You’re kidding.”

    I can point to a personal experience that illustrates the idiocy of our system. Some friends invited me and my wife to a fund raiser. There would be a spaghetti supper, dancing, and items would be raffled. When we arrived we discovered the fund raiser was for a young woman of about thirty-five. She and her husband were there with their three children who looked to be between six and thirteen years old. She needed a serious heart operation within six months or the prognosis was she would die. The couple had inquired everywhere for assistance and with a second mortgage they were fifty-thousand dollars short, hence the fund raiser. That night her friends raised a little over three thousand dollars. I ask you, in the richest country in the world why should someone’s life depend upon friends having fund raisers?

    I read in the paper of another man who had lost his job and with it his health insurance. A few years later he developed a serious cancer and without treatment his prognosis was also six months to a year. No job, no money, no insurance so our system would have let the man die, except he had a plan. He walked into a bank handed the teller a note which said, “This is a hold-up. Give me five dollars.” Then he showed her a pistol. She gave him the money, he handed her the pistol, and told her, “Call the police, I’ll sit over here and wait.” The pistol wasn’t loaded, the police took him away, he pled guilty to bank robbery because as a convict the state would have to pay for his treatment. To me that is bull crap when a man must give up his freedom to receive treatment.

    The United States is the only world leader that does not consider the health of its citizens a major priority, yet in our national arrogance we think they have it wrong and we are the only country in the world who has it “right”. Bear in mind that when it comes to expenditures on health care the United States ranks second, only France spends more and yet our medical system is ranked thirty-seventh in the world while France is ranked first.

    Christopher Rosenmeier, Ph D. wrote an article which appeared in the Denver Post on September 3, 2009. He is a scholar of modern Chinese literature and is currently a post-doctoral fellow at the University of Cambridge. He spent most of his adult life in Denmark and estimates the United States could save over one trillion dollars a year on paper work with a healthcare system patterned after the Denmark system.


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