Economic Freedom

Thursday, April 3rd, 2014

Charles G. Koch on Why He Fights

Charles Koch: I’m Fighting to Restore a Free Society
Instead of welcoming free debate, collectivists engage in character assassination.
http://online.wsj.com/news/articles/SB…86
By Charles G. Koch
The Wall Street Journal

I have devoted most of my life to understanding the principles that enable people to improve their lives. It is those principles—the principles of a free society—that have shaped my life, my family, our company and America itself.

Unfortunately, the fundamental concepts of dignity, respect, equality before the law and personal freedom are under attack by the nation’s own government. That’s why, if we want to restore a free society and create greater well-being and opportunity for all Americans, we have no choice but to fight for those principles. I have been doing so for more than 50 years, primarily through educational efforts. It was only in the past decade that I realized the need to also engage in the political process.

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Monday, September 10th, 2012

Charles G. Koch: Corporate Cronyism Harms America

The following article appeared in the Wall Street Journal on September 9, 2012.

“We didn’t build this business—somebody else did.”

So reads a sign outside a small roadside craft store in Utah. The message is clearly tongue-in-cheek. But if it hung next to the corporate offices of some of our nation’s big financial institutions or auto makers, there would be no irony in the message at all.

It shouldn’t surprise us that the role of American business is increasingly vilified or viewed with skepticism. In a Rasmussen poll conducted this year, 68% of voters said they “believe government and big business work together against the rest of us.”

Businesses have failed to make the case that government policy—not business greed—has caused many of our current problems. To understand the dreadful condition of our economy, look no further than mandates such as the Fannie Mae and Freddie Mac “affordable housing” quotas, directives such as the Community Reinvestment Act, and the Federal Reserve’s artificial, below-market interest-rate policy.

Far too many businesses have been all too eager to lobby for maintaining and increasing subsidies and mandates paid by taxpayers and consumers. This growing partnership between business and government is a destructive force, undermining not just our economy and our political system, but the very foundations of our culture.

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Monday, August 20th, 2012

Perspectives on Economic Freedom

The following article was published in the July 2012 Discovery Newsletter.

    Perspectives on Economic Freedom — By Charles G. Koch

In 1990, the year before the collapse of the Soviet Union, I attended an economic conference in Moscow.

Like my father during his visits to the U.S.S.R. in the early 1930s, I was astonished and appalled by what I saw.

Simple necessities, such as toilet paper, were in short supply. In fact, there was none at all in the airport bathroom stalls for fear it would be stolen. Visitors using the facilities had to request a portion of tissue from an attendant beforehand.

When I walked into one of Moscow’s giant department stores, there was next to nothing on the shelves. For those shoppers who were lucky enough to find something they actually wanted to buy, the purchase process was maddening and time-consuming.

Although the government provided universal healthcare, I never met anyone who wanted to stay in a Soviet hospital. Medical services might have been “free,” but the quality of care was notoriously poor.


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Friday, August 17th, 2012

The Importance of Economic Freedom

The following article was published in the July 2012 Discovery Newsletter.

    The Importance of Economic Freedom

Do you think the government – or anyone else – should be able to arbitrarily take away your home?

Is it okay with you if the value of your savings is cut in half due to the government’s policy of quantitative easing?

Do you mind if someone else runs up a debt for $50,551 in your name, without your permission, then leaves you on the hook to pay for it, with interest?

If you care about issues such as these, then you care about economic freedom.

That $50,551, by the way, is the portion of the federal debt owed by every citizen of the United States.

If you look at total unfunded liabilities (which includes promises made for future payments) the total is a sobering $1.05 million per citizen.


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Wednesday, August 15th, 2012

Economic freedom: a heated debate

The following article was published in the July 2012 Discovery Newsletter.

    Economic freedom: a heated debate

For more than 20 years, Flint Hills Resources’ Pine Bend Refinery has provided realistic training opportunities for rookie firefighters from area fire departments.

Government policymakers, by contrast, seem to have had much less effective training when it comes to dealing realistically with economic firestorms.

Ever since the economic meltdown that began in 2008, governments have spent trillions of borrowed and newly created money trying to avoid economic disaster.

And yet, recent reports from the European Union, Asia and the United States have confirmed ongoing problems with high unemployment, sluggish growth and – in most cases – swelling deficits. An estimated 80 percent of the world economy is now slowing.

Consequently, the debate over how to solve these problems is heating up again. Many are calling for further government intervention, especially the imposition of higher taxes and the spending of even more borrowed (or created) money.

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Thursday, May 10th, 2012
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Tuesday, March 1st, 2011

Why Koch Industries Is Speaking Out

The following article appeared in the Wall Street Journal on March 1, 2011.

Years of tremendous overspending by federal, state and local governments have brought us face-to-face with an economic crisis. Federal spending will total at least $3.8 trillion this year—double what it was 10 years ago. And unlike in 2001, when there was a small federal surplus, this year’s projected budget deficit is more than $1.6 trillion.

Several trillions more in debt have been accumulated by state and local governments. States are looking at a combined total of more than $130 billion in budget shortfalls this year. Next year, they will be in even worse shape as most so-called stimulus payments end.

For many years, I, my family and our company have contributed to a variety of intellectual and political causes working to solve these problems. Because of our activism, we’ve been vilified by various groups. Despite this criticism, we’re determined to keep contributing and standing up for those politicians, like Wisconsin Gov. Scott Walker, who are taking these challenges seriously.

Both Democrats and Republicans have done a poor job of managing our finances. They’ve raised debt ceilings, floated bond issues, and delayed tough decisions.

In spite of looming bankruptcy, President Obama and many in Congress have tiptoed around the issue of overspending by suggesting relatively minor cuts in mostly discretionary items. There have been few serious proposals for necessary cuts in military and entitlement programs, even though these account for about three-fourths of all federal spending.

Yes, some House leaders have suggested cutting spending to 2008 levels. But getting back to a balanced budget would mean a return to at least 2003 spending levels—and would still leave us with the problem of paying off our enormous debts.

Federal data indicate how urgently we need reform: The unfunded liabilities of Social Security, Medicare and Medicaid already exceed $106 trillion. That’s well over $300,000 for every man, woman and child in America (and exceeds the combined value of every U.S. bank account, stock certificate, building and piece of personal or public property).

The Congressional Budget Office has warned that the interest on our federal debt is “poised to skyrocket.” Even Federal Reserve Chairman Ben Bernanke is sounding alarms. Yet the White House insists that substantial spending cuts would hurt the economy and increase unemployment.

Plenty of compelling examples indicate just the opposite. When Canada recently reduced its federal spending to 11.3% of GDP from 17.5% eight years earlier, the economy rebounded and unemployment dropped. By comparison, our federal spending is 25% of GDP.

Government spending on business only aggravates the problem. Too many businesses have successfully lobbied for special favors and treatment by seeking mandates for their products, subsidies (in the form of cash payments from the government), and regulations or tariffs to keep more efficient competitors at bay.

Crony capitalism is much easier than competing in an open market. But it erodes our overall standard of living and stifles entrepreneurs by rewarding the politically favored rather than those who provide what consumers want.

The purpose of business is to efficiently convert resources into products and services that make people’s lives better. Businesses that fail to do so should be allowed to go bankrupt rather than be bailed out.

But what about jobs that are lost when businesses go under? It’s important to remember that not all jobs are the same. In business, real jobs profitably produce goods and services that people value more highly than their alternatives. Subsidizing inefficient jobs is costly, wastes resources, and weakens our economy.

Because every other company in a given industry is accepting market-distorting programs, Koch companies have had little option but to do so as well, simply to remain competitive and help sustain our 50,000 U.S.-based jobs. However, even when such policies benefit us, we only support the policies that enhance true economic freedom.

For example, because of government mandates, our refining business is essentially obligated to be in the ethanol business. We believe that ethanol—and every other product in the marketplace—should be required to compete on its own merits, without mandates, subsidies or protective tariffs. Such policies only increase the prices of those products, taxes and the cost of many other goods and services.

Our elected officials would do well to remember that the most prosperous countries are those that allow consumers—not governments—to direct the use of resources. Allowing the government to pick winners and losers hurts almost everyone, especially our poorest citizens.

Recent studies show that the poorest 10% of the population living in countries with the greatest economic freedom have 10 times the per capita income of the poorest citizens in countries with the least economic freedom. In other words, society as a whole benefits from greater economic freedom.

Even though it affects our business, as a matter of principle our company has been outspoken in defense of economic freedom. This country would be much better off if every company would do the same. Instead, we see far too many businesses that paint their tails white and run with the antelope.

I am confident that businesses like ours will hire more people and invest in more equipment when our country’s financial future looks more promising. Laying the groundwork for smaller, smarter government, especially at the federal level, is going to be tough. But it is essential for getting us back on the path to long-term prosperity.

Mr. Koch is chairman and CEO of Koch Industries, Inc. He’s the author of “The Science of Success: How Market-Based Management Built the World’s Largest Private Company” (Wiley, 2007).

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