Tag Archives: Koch Industries

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WichitaLiberty.TV: Kansas school finance and reform, Charles Koch on why he fights for liberty

In this episode of WichitaLiberty.TV: The Kansas legislature passed a school finance bill that contains reform measures that the education establishment doesn’t want. In response, our state’s newspapers uniformly support the system rather than Kansas schoolchildren. Then, in the Wall Street Journal Charles Koch explains why liberty is important, and why he’s fighting for that. Episode 39, broadcast April 20, 2014. View below, or click here to view at YouTube.

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Cronyism is welfare for rich and powerful, writes Charles G. Koch

“The central belief and fatal conceit of the current administration is that you are incapable of running your own life, but those in power are capable of running it for you. This is the essence of big government and collectivism.”

That’s Charles G. Koch writing in the Wall Street Journal. The article is Charles Koch: I’m Fighting to Restore a Free Society, and is available to read without subscription or payment. In the article, Koch explains his involvement in public affairs:

Far from trying to rig the system, I have spent decades opposing cronyism and all political favors, including mandates, subsidies and protective tariffs — even when we benefit from them. I believe that cronyism is nothing more than welfare for the rich and powerful, and should be abolished.

Koch Industries was the only major producer in the ethanol industry to argue for the demise of the ethanol tax credit in 2011. That government handout (which cost taxpayers billions) needlessly drove up food and fuel prices as well as other costs for consumers — many of whom were poor or otherwise disadvantaged. Now the mandate needs to go, so that consumers and the marketplace are the ones who decide the future of ethanol.

There, Charles Koch explains a big problem with the insidious nature of government. Even those who are opposed to government interventions in markets find themselves forced to participate in government subsidy programs. When they do, they are often label as hypocrites for accepting benefits from the government programs they oppose. Koch Industries, as a manufacturer of gasoline, blends ethanol with the gasoline it produces. Federal law requires that. Even though Koch Industries opposed subsidies for ethanol, the company accepted the payments. A company newsletter explained: “Once a law is enacted, we are not going to place our company and our employees at a competitive disadvantage by not participating in programs that are available to our competitors.” (As Koch explains in the current article, the subsidy program for ethanol has ended, but there is still the mandate requiring its use in gasoline.)

Learn how economic freedom creates prosperity and improves lives throughout the world.

Learn how economic freedom creates prosperity and improves lives throughout the world.

Walter Williams, as he often does, explains the core of the problem using his characteristically blunt imagery: “Once legalized theft begins, it pays for everybody to participate.” Williams says not only does it pay to participate, the reality is that it is often necessary to participate in order to stay in business. This is part of the treacherous nature of government interventionism: A business can be humming along, earning a profit by meeting the needs of its customers, when government radically alters the landscape. Perhaps government backs a competitor, or forces changes to business methods that have been working satisfactorily and harming no one. What is the existing business to do in response? Consent to be driven out of business, just to prove a point?

Existing firms, then, are usually compelled to participate in the government program — accepting subsidies, conforming to mandates, letting government pull the strings. This creates an environment where government intervention spirals, growing by feeding on itself. It’s what we have today.

It happens not only at the federal level, but at state and local levels. Referring to a City of Wichita incentive program for commercial real estate, Wichita developer Steve Clark said: “Once you condition the market to accept these incentives, there’s nothing someone else can do to remain competitive but accept them yourself. Like the things we’re working on with the city, now we have to accept incentives or we’re out of business.”

In Kansas, there are state income tax credit programs that award credits (economically equivalent to cash payments) to companies that meet certain requirements that were established by the legislature and are administered by bureaucrats. These corporate welfare programs, which represent cronyism, are more valuable than lower tax rates, at least to influential Kansas businesses.

All this leads to a country whose government stifles the potential of its people — or even worse, as Koch explains — causes actual and severe harm:

Instead of fostering a system that enables people to help themselves, America is now saddled with a system that destroys value, raises costs, hinders innovation and relegates millions of citizens to a life of poverty, dependency and hopelessness. This is what happens when elected officials believe that people’s lives are better run by politicians and regulators than by the people themselves. Those in power fail to see that more government means less liberty, and liberty is the essence of what it means to be American. Love of liberty is the American ideal.

Charles Koch: I’m Fighting to Restore a Free Society

Instead of welcoming free debate, collectivists engage in character assassination.

By Charles G. Koch

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.

Continue reading at Wall Street Journal (subscription not required). More about Koch Industries, including an interview with Charles Koch that covers some of these topics, is available in a recent issue of Wichita Business Journal. Click here for free access.

John Philip Sousa wrote a march honoring the Washington Post newspaper.

Washington Post out on a limb, again

John Philip Sousa wrote a march honoring the Washington Post newspaper.

John Philip Sousa wrote a march honoring the Washington Post newspaper.

It’s really astonishing to see John Hinderaker of Powerline take apart the Washington Post. I wonder if Jeff Bezos of Amazon.com is aware of what he bought last year for $250 million?

The background of the story is that the Washington Post has published an article that is demonstrably false, and for political reasons. As to why the Post has walked out on a limb too far, he writes:

Let me offer an alternative explanation of why the Washington Post published their Keystone/Koch smear:

1) The Washington Post in general, and Mufson and Eilperin in particular, are agents of the Left, the environmental movement and the Democratic Party.
2) The Keystone Pipeline is a problem for the Democratic Party because 60% of voters want the pipeline built, while the party’s left-wing base insists that it not be approved.
3) The Keystone Pipeline is popular because it would broadly benefit the American people by creating large numbers of jobs, making gasoline more plentiful and bringing down the cost of energy.
4) Therefore, the Democratic Party tries to distract from the real issues surrounding the pipeline by claiming, falsely, that its proponents are merely tools of the billionaire Koch brothers–who, in fact, have nothing to do with Keystone one way or the other.
5) The Post published its article to assist the Democratic Party with its anti-Keystone talking points.

Hinderaker also introduces to the curious story of billionaire Tom Steyer. It’s worth reading. Summing up, he concludes:

You can’t separate the reporters from the activists from the Obama administration officials from the billionaire cronies. Often, as in this instance, the same people wear two or more of those hats simultaneously. However bad you think the corruption and cronyism in Washington are, they are worse than you imagine. And if you think the Washington Post is part of a free and independent press, think again.

Continue reading at The Washington Post responds to me, and I reply to the Post.

Why would the Washington Post do this?

Keystone XL pipeline map

Keystone XL pipeline map

John Hinderaker of Powerline reports on “sheer misinformation” found in a Washington Post newspaper story concerning Koch Industries, Canadian oil sands, and the Keystone pipeline. The article, The biggest lease holder in Canada’s oil sands isn’t Exxon Mobil or Chevron. It’s the Koch brothers, is authored by Steven Mufson and Juliet Eilperin. Hinderaker concludes:

Why would the Washington Post embarrass itself by republishing a thoroughly discredited attempt to link the Koch brothers to the Keystone Pipeline? Because that is a Democratic Party talking point, and the Post is a Democratic Party newspaper. But the truth is a little worse than that.

Who is Post reporter Juliet Eilperin? Among other things, she is married to Andrew Light, who writes on climate policy for the Center for American Progress. The Center for American Progress is an Obama administration front group headed by John Podesta, who is a “special advisor” to the Obama administration. CAP’s web site, Think Progress, has carried out a years-long vendetta against the Koch brothers that has focused largely on the environment. Ms. Eilperin’s conflict in writing about environmental issues has already been a subject of controversy at the Post. The paper’s ombudsman should examine this latest example of Ms. Eilperin throwing facts to the winds in her eagerness to promote her (and her husband’s) far-left agenda.

Continue reading at Washington Post falls for left-wing fraud, embarrasses itself.

Lashing out at Charles and David Koch, falsely

From The Patriot Post:

Democrats have escalated their attacks on Charles and David Koch, who donate a significant amount of their accumulated capital to conservative groups. The charge is led by Sen. Harry Reid (D-NV), who now routinely takes to the Senate floor to angrily denounce these two private citizens. “I’m not afraid of the Koch brothers,” he thundered. “None of us should be afraid of the Koch brothers. These two multi-billionaires may spend hundreds of millions of dollars rigging the political process for their own benefit. And they may believe that whoever has the most money gets the most free speech. But I will do whatever it takes to expose their campaign to rig the American political system to benefit the wealthy at the expense of the middle class.”

A Democrat ad also recently demonized the brothers, accusing them of having an agenda to “protect tax cuts for companies that ship our jobs overseas.” That was too much even for The Washington Post’s “fact checker,” Glenn Kessler, who gave the charge a full Four Pinocchios. Specifically, Kessler says, “The ad not only mischaracterizes an ordinary tax deduction as a special ‘tax cut’ but then it falsely asserts that ‘protecting’ this tax break is part of the Koch agenda. It turns out this claim is based on a tenuous link to an organization that never even took a position on the legislation in question.” The truth didn’t stop Reid from repeating the same “tax breaks” lie.

This attack campaign is a clear sign that Democrats are very worried about November, and they’re lashing out at anyone who’s bankrolling the opposition.

More at The Democrats’ Dishonest Koch Habit and Democrats claim the Koch brothers want to “protect tax cuts for companies that ship our jobs overseas.”

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Wichita Business Journal remodels, features Charles Koch interview

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The Wichita Business Journal has, it its own words, “reinvented” itself, and starts its new life with features on Koch Industries and an extended interview with Charles Koch.

To get started, the weekly newspaper has made its complete digital edition available to read at no charge. Click here for access.

The interview with Koch is wide-ranging, covering the business interests of Koch Industries and Koch’s political involvement, detailing his relationship with Americans for Prosperity. An example quote: “When you start attacking cronyism and people’s political interests, it gets nasty.”

Pompeo responds to Washington’s attacks on Koch Industries

From the office of U.S. Representative Mike Pompeo.

Statement from Congressman Mike Pompeo on Washington’s Attacks on Koch Industries

WASHINGTON — Congressman Mike Pompeo issued the following statement on the unwarranted attacks on Koch Industries in light of the efforts to reform the Internal Revenue Service:

“The IRS’s targeting of individuals demonstrates the administration’s lawlessness at its worst. Public officials have a responsibility to uphold the Constitution and use their office to protect the rights of Americans, rather than attack them for their political advocacy. Silencing critics through government muscle, as the IRS has done, runs counter to every founding principle of the United States of America.

“Yet opponents of the House’s effort to hold the IRS accountable have doubled down and continued to attack two private citizens, Charles and David Koch, as deserving of such government abuse. Senator Reid’s attacks today from the Senate floor are reprehensible.  This cannot be tolerated — not for these two great men or for any individual who disagrees with those in power.

“The Kochs’ Wichita-based company employs close to 60,000 people in manufacturing jobs. These predominantly middle-class employees live in nearly all 50 states and are a benefit to the communities they work and live in. They are good people and good neighbors, my neighbors, and deserve protection under the law that is equal to those lawmakers who seek to marginalize them.

“The jobs created by this company are a far greater benefit to the middle class than any wasteful Washington program. We should be taking lessons from hardworking Americans in the private sector instead of continuing to play politics with people’s lives.”

Earlier today, Senate Majority Leader Harry Reid accused the Kochs of funding ads critical of the Affordable Care Act’s disastrous implementation that he claims are “completely untrue,” a claim that contradicts the thrust of most news coverage of the rollout.

For more information, contact:
JP Freire | Director of Communications and Speechwriter
Office of Congressman Mike Pompeo (R-Kansas)
107 Cannon HOB| Washington, D.C. 20515
Office (202) 225-6216 | Fax (202) 225-3489
JP.Freire@mail.house.gov

A letter to the U.S. Senate regarding the federal government shutdown

From KochFacts.com.

Dear Senator,

A great deal of what you read and hear about Koch Industries is erroneous or misleading. Indeed, there was false information presented about Koch on the Senate floor by Senate Majority Leader Reid, who claimed yesterday that Koch was behind the shutdown of the federal government in an effort to defund the Affordable Care Act or “Obamacare.” Because several of you have asked what our position is on this issue, we want to set the record straight and correct this misinformation.

Koch believes that Obamacare will increase deficits, lead to an overall lowering of standards of health care in America, and raise taxes. However, Koch has not taken a position on the legislative tactic of tying the continuing resolution to defunding Obamacare nor have we lobbied on legislative provisions defunding Obamacare.

Instead, Koch has focused on educating the public about reducing our nation’s debt and controlling runaway government spending. We believe that Congress should, at a minimum, keep to sequester-level spending guidelines, and develop a plan for more significant and widespread spending reductions in the future. We also believe that Congress should work to rein-in rampant government spending so that it becomes no longer necessary to continually raise the debt ceiling.

Congress should focus on these efforts: balancing the budget, tightening and cutting government spending, curbing cronyism, and eliminating market-distorting subsidies and mandates.

We are hopeful this sets the record straight and that in the future Senator Reid and other politicians will stop misrepresenting and distorting Koch’s positions.

Sincerely,
Philip Ellender
President, Government & Public Affairs
Koch Companies Public Sector, LLC

Cronyism is harmful to our standard of living

“The effects on government are equally distorting — and corrupting. Instead of protecting our liberty and property, government officials are determining where to send resources based on the political influence of their cronies. In the process, government gains even more power and the ranks of bureaucrats continue to swell.”

An editorial in Wall Street Journal last year written by Charles G. Koch, chairman of the board and CEO of Wichita-based Koch Industries contains many powerful arguments against the rise of cronyism. The argument above is just one of many.

Did you know that the Washington metropolitan area is one of the most prosperous? Here’s why:

Trouble begins whenever businesses take their eyes off the needs and wants of consumers—and instead cast longing glances on government and the favors it can bestow. When currying favor with Washington is seen as a much easier way to make money, businesses inevitably begin to compete with rivals in securing government largess, rather than in winning customers. … There are now businesses and entire industries that exist solely as a result of federal patronage. Profiting from government instead of earning profits in the economy, such businesses can continue to succeed even if they are squandering resources and making products that people wouldn’t ordinarily buy.

In the article, Koch makes an important observation when he defines cronyism: “We have a term for this kind of collusion between business and government. It used to be known as rent-seeking. Now we call it cronyism. Rampant cronyism threatens the economic foundations that have made this the most prosperous country in the world.”

“Rent-seeking” was always a difficult term to use and understand. It had meaning mostly to economists. But “cronyism” — everyone knows what that means. It is a harsh word, offensive to many elected officials. But we need a harsh term to accurately describe the harm caused, as Koch writes: “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.”

The entire article is available at the Wall Street Journal. Koch has also contributed other articles on this topic, see Charles G. Koch: Why Koch Industries is speaking out and Charles Koch: The importance of economic freedom.

Charles G. Koch: Corporate Cronyism Harms America

When businesses feed at the federal trough, they threaten public support for business and free markets.

By Charles G. Koch

“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.

With partisan rhetoric on the rise this election season, it’s important to remind ourselves of what the role of business in a free society really is — and even more important, what it is not.

The role of business is to provide products and services that make people’s lives better — while using fewer resources — and to act lawfully and with integrity. Businesses that do this through voluntary exchanges not only benefit through increased profits, they bring better and more competitively priced goods and services to market. This creates a win-win situation for customers and companies alike.

Only societies with a system of economic freedom create widespread prosperity. Studies show that the poorest people in the most-free societies are 10 times better off than the poorest in the least-free. Free societies also bring about greatly improved outcomes in life expectancy, literacy, health, the environment and other important dimensions.

Continue reading at The Wall Street Journal (subscription not required)

Economic freedom ads debut in Wichita

This week the Wichita Eagle reports that Charles Koch, chairman of the board and CEO of Wichita-based Koch Industries, is starting a local campaign to educate people on the benefits of economic freedom and the harm of government overreach. (Charles Koch launching Wichita campaign about economic freedom, government overreach, July 9, 2013)

So far one video advertisement is available, shown at the end of this article.

In announcing this effort, a statement at the Charles Koch Foundation reads:

“We believe the best way to promote progress and societal well-being is through free societies,” said CKF founder Charles G. Koch. “The spot was developed as part of our ongoing work to support the kind of scholarship and analysis that examines how to ensure opportunities for earned success while sharing compassion for the vulnerable.”

Koch is not shying away from important issues related to economic freedom such as the minimum wage. The common belief, fiercely held and believed by those who say they want to help the poor, is that a high minimum wage is needed. In a video on another site sponsored by the Charles Koch foundation, it is argued that “And among the least skilled, least educated workers, increases in the minimum wage significantly increase unemployment. The minimum wage may be a well-intentioned policy, but it often hurts the very workers who are in most need of our help.” The video is Does the minimum wage hurt workers? at the site Economic Freedom.

Recently Koch has contributed several articles on the importance of economic freedom and the harm of cronyism, including Charles Koch: The importance of economic freedom, and in the Wall Street Journal, Charles G. Koch: Why Koch Industries is speaking out.

Internal Revenue Service IRS logo

An IRS political timeline

Internal Revenue Service IRS logo

In the summer of 2010 President Barack Obama and his allies warned of conservative groups with “harmless-sounding names like Americans for Prosperity.” At the time, supporters of AFP like myself were concerned, but AFP saw the president’s attacks as evidence of the group’s influence.

This week Kim Strassel of the Wall Street Journal looks back at the summer three years ago in light of what we’re just starting to learn about the Internal Revenue Service under the Obama Administration. Strassel writes: “We know that it was August 2010 when the IRS issued its first ‘Be On the Lookout’ list, flagging applications containing key conservative words and issues.”

Strassel presents a timeline of events from that time. Here’s an entry that should concern everyone:

Aug. 27: White House economist Austan Goolsbee, in a background briefing with reporters, accuses Koch industries of being a pass-through entity that does “not pay corporate income tax.” The Treasury inspector general investigates how it is that Mr. Goolsbee might have confidential tax information. The report has never been released.

This same week, the Democratic Party files a complaint with the IRS claiming the Americans for Prosperity Foundation is violating its tax-exempt status.

Somehow, I’m not surprised that the Obama-controlled Treasury Department is slow in investigating allegations of misdeeds by an Obama economic adviser, even though Goolsbee hasn’t worked for Obama for some time.

In conclusion, Strassel ties it all together and links the current IRS scandal to Washington:

These were not off-the-cuff remarks. They were repeated by the White House and echoed by its allies in campaign events, emails, social media and TV ads. The president of the United States spent months warning the country that “shadowy,” conservative “front” groups — “posing” as tax-exempt entities and illegally controlled by “foreign” players — were engaged in “unsupervised” spending that posed a “threat” to democracy. Yet we are to believe that a few rogue IRS employees just happened during that time to begin systematically targeting conservative groups? A mere coincidence that among the things the IRS demanded of these groups were “copies of any contracts with and training materials provided by Americans for Prosperity”?

This newspaper reported Thursday that Cincinnati IRS employees are now telling investigators that they took their orders from Washington. For anyone with a memory of 2010 politics, that was obvious from the start.

It’s evident that we’re just starting to uncover what’s been happening to freedom and liberty under the Obama Administration (and past presidents, too). We don’t know where this will lead, but we need to be thankful for organizations like Americans for Prosperity and others that haven’t backed down.

An IRS Political Timeline

President Obama spent months in 2010 warning Americans about the ‘threat’ to democracy posed by conservative groups, right at the time the IRS began targeting these groups.

By Kimberly A. Strassel

Perhaps the only useful part of the inspector general’s audit of the IRS was its timeline. We know that it was August 2010 when the IRS issued its first “Be On the Lookout” list, flagging applications containing key conservative words and issues. The criteria would expand in the months to come.

What else was happening in the summer and fall of 2010? The Obama administration and its allies continue to suggest the IRS was working in some political vacuum. What they’d rather everyone forget is that the IRS’s first BOLO list coincided with their own attack against “shadowy” or “front” conservative groups that they claimed were rigging the electoral system.

Below is a more relevant timeline, a political one, which seeks to remind readers of the context in which the IRS targeting happened.

Continue reading at the Wall Street Journal (subscription not required).

Charles Koch profiled in Forbes

The new issue of Forbes features a cover story on Charles and David Koch. It is very interesting and seems a balanced and fair article, but there are a few things that stand out. (Inside The Koch Empire: How The Brothers Plan To Reshape America.)

An example: “Both Kochs innately understand that — unlike the populist appeal of their fellow midwestern billionaire Warren Buffett and his tax-the-rich advocacy — their message of pure, raw capitalism is a much tougher sell, even among capitalists.”

I think the author should have written “even among business executives” rather than capitalists. That’s because Charles Koch has been outspoken about business cronyism, in September writing in The Wall Street Journal: “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.”

I would imagine that most of the business leaders seeking government subsidies and mandates consider themselves capitalists. That’s a problem.

Then: the description of “pure” capitalism as raw. I think we’re starting to realize just how raw politics and government have become. Capitalism, however, is a system based on respect for property and peaceful, beneficial exchange. Tom G. Palmer in the introduction to The Morality of Capitalism explains: “Far from being an amoral arena for the clash of interests, as capitalism is often portrayed by those who seek to undermine or destroy it, capitalist interaction is highly structured by ethical norms and rules. Indeed, capitalism rests on a rejection of the ethics of loot and grab, the means by which most wealth enjoyed by the wealthy has been acquired in other economic and political systems. … It’s only under conditions of capitalism that people commonly become wealthy without being criminals.”

Often corporations are criticized by liberals as being too focused on short-term gains, that corporate raiders buy firms, gut them, chop them up, sell off assets, lay off employees, pile on debt — you know the story as used against Mitt Romney. But look at how Koch Industries operates:

Charles spent $6 billion upfront to buy Georgia-Pacific, and rather than satisfy quarterly earnings estimates or dividend-hungry investors, he immediately directed the new division’s cash flow toward paying down the $15 billion in liabilities that it inherited. …

The Koch long-game strategy is absolute: If it makes sense to them, the Kochs stay with the plan, no matter how burdensome or how long it takes. “We buy something not to milk it but to build it, to take its capabilities and add to them, and build new businesses,” [Charles] Koch says.

That sounds like a business strategy the left should embrace, not vilify.

Another curious statement by the author: “Given their strict adherence to the principals of transparent free markets, the Kochs’ secrecy seems hypocritical.” This is curious because transparency is an attribute not often associated with advocacy for free markets. Transparency is more associated with government as a desirable goal. Charles and David Koch are private citizens, not agents of government.

There’s good news near the end of the article:

The brothers’ new political emphasis in the coming year? Fighting corporate welfare.

While Obama talks about getting rid of lobbyists, Charles says, the “only way he can achieve that stated objective is to get government out of the business of giving goodies. That’s like flies to honey,” he adds. “The first thing we’ve got to get rid of is business welfare and entitlements.”

There’s much more in the article, available at Inside The Koch Empire: How The Brothers Plan To Reshape America.

Refuting the attacks on Koch

From KochFactsTV:

What do big government politicians mean when they say, “Koch?”

Nancy Pfotenhauer of Koch Industries explains that when big government politicians say “Koch,” they’re not talking about the successful American company that employs more than 50,000 people nationwide. They’re really attacking the principles of economic freedom that Koch has advocated for more than 50 years regardless of what political party holds power.

Economic freedom means property rights protected by an impartial rule of law, the freedom to trade and exchange goods and services, sound money, and a government that promotes prosperity rather than undermine it. Economic freedom also empowers individuals not governments. That’s why entrenched politicians will rarely say the words “economic freedom.” They’d rather say, “Koch.”

But with all the pressing issues challenging our nation, shouldn’t the big government advocates in Washington be talking about something else besides us?

Koch articles draw critics, but few factual

Two large articles in the Wichita Eagle regarding Charles and David Koch of Wichita-based Koch Industries have attracted many comments, and many are not based on facts.

The two articles are The Kochs’ quest to save America and Charles Koch relentless in pursuing his goals.

A curious irony is the claim by many comment writers that Charles and David Koch want to buy America, while at the same time they are running it into the ground: “The koch bros. are funding the conversion of OUR COUNTRY into another third world country.”

Even if it was possible to buy America — whatever that means — why would someone destroy it first?

Another common thread in the comments is that Charles and David Koch didn’t complain about government spending, subsidy, regulation, etc. before President Barack Obama was elected. In fact, they have been working to promote free markets and economic freedom for many decades. Charles Koch and two others founded what became the Cato Institute in 1974, nearly four decades ago. Even earlier: A recent issue of Koch Industries Discovery newsletter contains a story titled “Don’t subsidize me.” Here’s an excerpt:

When Charles Koch was in his 20s, he attended a business function hosted by his father. At that event, Fred Koch introduced Charles to a local oilman.

When the independent oilman politely asked about the young man’s interests, Charles began talking about all he was doing to promote economic freedom.

“Wow!” said the oilman, who was so impressed he wanted to introduce the young bachelor to his eligible daughter.

But when Charles mentioned he was in favor of eliminating the government’s oil import quota, which subsidized domestic producers, the oilman exploded in rage.

“Your father ought to lock you in a cell!” he yelled, jabbing his finger into Charles’ chest. “You’re worse than a Communist!”

It seems the oilman was all for the concept of free markets — unless it meant he had to compete on equal terms.

Under oath

For more than 50 years, Charles Koch has consistently promoted economic freedom, even when it was not in the company’s immediate financial interest.

In the 1960s, Koch was willing to testify before a powerful Congressional committee that he was against the oil import quota — a very popular political measure at the time.

“I think it’s fair to say my audience was less than receptive,” recalls Koch.

Years later, Koch warned an independent energy association about the dangers of subsidies and mandates.

“We avoid the short-run temptation to impose regulatory burdens on competitors. We don’t lobby for subsidies that penalize taxpayers for our benefit.

“This is our philosophy because we believe this will produce the most favorable conditions in the long run,” Koch said.

Many comments take the company to task for accepting oil and ethanol subsidies. Koch Industries, as a refiner of oil, blends ethanol with the gasoline it produces in order to meet federal mandates that require ethanol usage. Even though Koch opposed subsidies for ethanol — as it opposes all subsidies — Koch accepted the subsidies. A company newsletter explained “Once a law is enacted, we are not going to place our company and our employees at a competitive disadvantage by not participating in programs that are available to our competitors.” (The tax credit subsidy program for ethanol has ended, but there is still the mandate for its use in gasoline.)

Regarding oil subsidies, the programs that are most commonly cited (percentage depletion and expensing of intangible drilling costs) apply to producers of oil — the companies that drill holes and pump up oil. Koch Industries doesn’t do that. The company doesn’t benefit from these programs.

Other comments charge that Koch Industries wants to end regulation so that it can pollute as much as it wants. This is another ridiculous charge not based on facts.

A statement on the KochFacts website states “recent critics have also claimed that Koch is one of the nation’s top 10 polluters. This study confuses pollution with permitted emissions, which are carefully regulated by the U.S. EPA and other agencies. The index labels as ‘polluters’ Ford Motor, General Motors, GE, Pfizer, Eastman Kodak, Sony, Honeywell, Berkshire Hathaway, Kimberly Clark, Anheuser Busch and Goodyear — corporations, like Koch companies, with significant manufacturing in the U.S. Emissions, a necessary by-product of manufacturing, are strictly monitored and legally permitted by federal, state and local governments.”

Say: Didn’t the U.S. government take over General Motors, and continues to hold a large stake in the company? And GE and Berkshire Hathaway: Aren’t those run by personal friends of Barack Obama?

The reality is that manufacturing has become much more efficient with regards to emissions, and Koch Industries companies have lead the way. One report from the company illustrates such progress: “Over the last three years, Koch Carbon has spent $10 million to enhance environmental performance, including $5 million for dust abatement at one of its petroleum coke handling facilities. These investments have paid off. In 2008, Koch Carbon’s reportable emissions were 6.5 percent less than in 2000, while throughput increased 10.4 percent.”

Even when Koch Industries does not agree with the need for specific regulations, the company, nonetheless, complies. Writing about an increase in regulation in the 2007 book The Science of Success: How Market-Based Management Built the World’s Largest Private Company, Charles Koch explained the importance of regulatory compliance: “This reality required is to make a cultural change. We needed to be uncompromising, to expect 100 percent of our employees to comply 100 percent of the time with complex and ever-changing government mandates. Striving to comply with every law does not mean agreeing with every law. But, even when faced with laws we think are counter-productive, we must first comply. Only then, from a credible position, can we enter into a dialogue with regulatory agencies to determine alternatives that are more beneficial. If these efforts fail, we can then join with others in using education and/or political efforts to change the law.”

Koch companies have taken leadership roles in environmental compliance, explains another KochFacts page: “In 2000, EPA recognized Koch Petroleum Group for being ‘the first petroleum company to step forward’ to reach a comprehensive Clean Air Act agreement involving EPA and state regulatory agencies in Minnesota and Texas. Despite fundamental policy disagreements, then-EPA Administrator Carol Browner acknowledged Koch’s cooperation. She characterized the agreement as ‘innovative and comprehensive’ and praised the ‘unprecedented cooperation’ of Koch in stepping forward ahead of its industry peers.” Browner was no friend of industry, and had a “record as a strict enforcer of environmental laws during the Clinton years,” according to the New York Times.

What may really gall liberals and Koch critics is this: They believe that a powerful and expansive government is good for the country. But what we have is a complicated machine that a company like General Electric can exploit for huge profits, all without creating things that consumers value. Charles Koch calls for an end to this, as he wrote last year in the Wall Street Journal: “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 political Left just can’t believe that anyone would write that and really mean it.

What’s wrong with Charles and David Koch?

In a column on his website, Fran Tarkenton wonders why Charles and David Koch are the targets of so much criticism. He writes: “So why do we vilify people who represent the greatness of America? Is it just because they have different political beliefs? It’s time to stop demonizing people who do things the right way and generate tremendous wealth — and value to all Americans. Those are the people we should celebrate, whether you agree with their politics or not! If we want to preserve America as the great place it is, we need more entrepreneurs, more innovators — and a free market to foster them.”

Tarkenton writes of “how poisonous our political atmosphere is.” Here’s an example: A common complaint by leftists is that Wall Street is overly focused on short-term results — the quarterly profit numbers — rather than on long-term investment and growth. Koch Industries, however, is privately held, and in a recent Wichita Eagle article, a company official said “[private ownership] allows us to focus on the long term as opposed to quarter to quarter.” You’d think liberals would be happy with a company that can afford to ignore the short term and focus on the long term, but instead they criticize Koch for not being public, wondering what it is the company has to hide.

By the way, this focus on the long term may be why since 1960 the value of Koch Industries has increased faster than the value of the broad-based S&P index of the 500 largest U.S. Companies, by a factor of 16 times.

Tarkenton several times mentions Charles and David Koch’s fight against cronyism. Contrast this with General Electric, a company headed by a friend of President Obama. A report from ProPublica shows some of the lengths that GE goes to avoid paying taxes: “General Electric’s tax department is famous for inventing ways to pay Uncle Sam less. So it should come as no surprise that its CEO, Jeff Immelt, is in the crosshairs as the new chairman of the President’s Council on Jobs and Competitiveness. … GE’s tax department is well known for its size, skill and hiring of former government officials. About 20 years ago, GE’s tax employees totaled a few hundred and were decentralized. Today, there are almost 1,000. The department’s strong suit? Reducing the taxes GE reports for earnings purposes.”

A New York Times article explains the lengths that GE went to to protect a tax loophole that it benefited from. The tax system is a major vehicle for the implementation of cronyism.

The shelters are so crucial to G.E.’s bottom line that when Congress threatened to let the most lucrative one expire in 2008, the company came out in full force. G.E. officials worked with dozens of financial companies to send letters to Congress and hired a bevy of outside lobbyists.

The head of its tax team, Mr. Samuels, met with Representative Charles B. Rangel, then chairman of the Ways and Means Committee, which would decide the fate of the tax break. As he sat with the committee’s staff members outside Mr. Rangel’s office, Mr. Samuels dropped to his knee and pretended to beg for the provision to be extended — a flourish made in jest, he said through a spokeswoman.

That day, Mr. Rangel reversed his opposition to the tax break, according to other Democrats on the committee.

The following month, Mr. Rangel and Mr. Immelt stood together at St. Nicholas Park in Harlem as G.E. announced that its foundation had awarded $30 million to New York City schools, including $11 million to benefit various schools in Mr. Rangel’s district.

Other companies that are revered by the political left play the game too. A report from the Urban-Brookings Tax Policy Center explained how Starbucks manipulated the tax system to its benefit: “By shifting paper profits among divisions, firms can reduce their overall tax liability. Such efforts will lead to unnecessary accounting and compliance costs for firms and unnecessary enforcement costs for the IRS. For example, The New York Times reported that Starbucks successfully added a provision to the bill that deems coffee roasting, but not coffee preparation, a manufacturing activity. This provision gives Starbucks a tax incentive to increase the bean prices charged to its retail outlets, making the roasting part of the business more profitable and the retail part of the business less profitable. Such efforts could decrease Starbucks’s tax bill, but serve no other discernable public policy purpose.”

What’s Wrong with the Koch Brothers?
By Fran Tarkenton

To succeed in football and in business, I worked with a lot of people. I learned how to figure out who the great people were, people who were doing the right thing, people with great ethics who I could trust and learn a lot from. I also learned how to identify people who weren’t trying to do the right thing.

It’s very important in business to be able to tell the difference, because a great mentor like Sam Walton, Bernie Marcus, or Robert Woodruff can have a monumental impact, but a bad influence can cause big problems.

This political season, there has been one business name that has been demonized and vilified above all others: the Koch brothers, Charles and David Koch of Koch Industries. They have been demonized as right-wing zealots, and I’ve even seen the work of scholars dismissed just because their organization has some connection to the Koch brothers.

The kneejerk attacks and venom that comes out whenever their names are even mentioned really bothers me, and it’s a sign of just how poisonous our political atmosphere is. I don’t know the Koch brothers personally, but I know people who do, and who know them well. And I’ve also been able to observe the things they do, and the way they conduct themselves publicly. Everything I’m seeing and hearing tells me that these are exemplary business leaders who we should be celebrating, not attacking.

Start by looking at how Koch Industries grew to become the juggernaut it is today. The family patriarch, Fred Koch, built the company on an innovative process he developed in the oil business. Then his sons grew the company the right way. They didn’t cozy up to the government for subsidies, handouts, or preferential treatment. Instead, they came up with great ideas that solved problems in the lives of people, ideas that provided real value. Their business empire was built on innovation, reinvention, and hard work, not cronyism. I greatly admire that! And they’ve donated millions to medical research and the arts, among other causes.

Now, the Koch brothers are more known for the money they spend on political activities. They fund a variety of think tanks and organizations, all dedicated to promoting free market practices and small government. And that is where they are demonized and tarred and feathered by their political opponents. But from everything I have ever seen, what is remarkable is that none of their political activities are dedicated to cronyism, setting their company up for a big windfall if it wins the debate. Rather, they are advocating for more competition, reduced barriers to entry for new players, and less connection between the board room and the DC halls of power, not a special place at the table.

The only reason for doing that is because they really believe in it. Why should we demonize people who deeply believe in something and do whatever they can to promote it? If the Koch brothers spent millions of dollars on politicians who would subsidize their products and outlaw their competitors, that would be wrong. But instead, they advocate for an end to market distortions, government interventions in the private sector, and cronyism in general. They’re not trying to get more of the government pie; they just really believe they have a vision to help America, because they love this country and the values it stands for.

The truth is that everything we have in this country is because of entrepreneurs, large and small. From the corner store up to the most successful business people — whether conservatives like the Koch brothers, liberals like Steve Jobs at Apple, or libertarians like Jeff Bezos of Amazon — the great wealth of this country comes from people helping other people by creating value. Without value, when businesspeople are just in it for themselves and don’t care about value, only about accruing benefits to themselves, everything falls apart — including the business itself! Those who do create value are the reason we have the great society we have. Since their business began, the Koch brothers have been part of the value-creating class, not the crony class of business owners.

So why do we vilify people who represent the greatness of America? Is it just because they have different political beliefs? It’s time to stop demonizing people who do things the right way and generate tremendous wealth — and value to all Americans. Those are the people we should celebrate, whether you agree with their politics or not!

If we want to preserve America as the great place it is, we need more entrepreneurs, more innovators — and a free market to foster them.

And in case you’re wondering, the Koch brothers did not approve this message.

Government interventionism ensnares us all

Are those who call for an end to government subsidy programs hypocrites for accepting those same subsidies? This is a common criticism, said to undermine the argument for ending government subsidy programs.

Rather, the existence of this debate is evidence of the growing pervasiveness of government involvement not only in business, but in our personal lives as well.

Recently the Wichita Eagle printed an op-ed critical of Charles G. Koch, chairman of the board and CEO of Wichita-based Koch Industries. The target of the criticism was Koch’s recent article in the Wall Street Journal titled “Corporate Cronyism Harms America” with the subtitle “When businesses feed at the federal trough, they threaten public support for business and free markets.”

Koch stated one of the problems as this: “Instead of protecting our liberty and property, government officials are determining where to send resources based on the political influence of their cronies. In the process, government gains even more power and the ranks of bureaucrats continue to swell.”

Even those who are opposed to government interventions in markets find themselves forced to participate in government subsidy programs. Referring to a recent Wichita incentive program for commercial real estate, Wichita developer Steve Clark said: “Once you condition the market to accept these incentives, there’s nothing someone else can do to remain competitive but accept them yourself. Like the things we’re working on with the city, now we have to accept incentives or we’re out of business.”

Koch Industries, as a refiner of oil, blends ethanol with the gasoline it produces in order to meet federal mandates that require ethanol usage. Even though Koch opposes subsidies for ethanol — as it opposes all subsidies — Koch accepted the subsidies. A company newsletter explained “Once a law is enacted, we are not going to place our company and our employees at a competitive disadvantage by not participating in programs that are available to our competitors.” (The tax credit subsidy program for ethanol has ended, but there is still the mandate for its use.)

Walter Williams, as he often does, recognizes the core of the problem: “Once legalized theft begins, it pays for everybody to participate.” The swelling ranks of bureaucrats preside over this.

So should people who have built businesses — large or small — sit idle as government props up a competitor that could put them out of business?

While Williams says not only does it pay to participate, the reality is that it is often necessary to participate in order to stay in business. This is part of the insidious nature of government interventionism: A business can be humming along, earning a profit by meeting the needs of its customers, when a government-backed competitor enters the market. What is the existing business to do? Consent to be driven out of business, just to prove a point?

So existing firms are often compelled to participate in the government program, accepting not only subsidy but the strings that accompany. This creates an environment where government intervention spirals, feeding on itself. It’s what we have today.

Not only does this happen in business, it also happens in personal life. I am opposed to the existence of the Social Security Administration and being forced to participate in a government retirement plan. Will I, then, forgo my social security payments when I become eligible to receive them?

If the government hadn’t been taking a large share of my earnings for many years, I’d be in a better position to provide for my own retirement. So as a practical matter, many people need their benefits, and rightly are entitled to them as a way to get back at least some of what they paid. The harmful effect is that government, by taking away some of our capacity — and reducing the initiative — to save for ourselves, creates more dependents.

(It might be a little different if our FICA contributions were in individual “lock boxes,” invested on our behalf. But that isn’t the case.)

Often those who advocate for reduced government spending are criticized when they may be awarded government contracts. But if the contracts are awarded competitively and not based on cronyism, the winning company is saving taxpayer money by providing products or services inexpensively. This is true even when the government spending is ill-advised or wasteful: If government is going to waste money, it should waste it efficiently, I suppose.

Contrast this behavior with that of some Wichita businesses and politicians. They make generous campaign contributions to city council members, and then receive millions in subsidy and overpriced no-bid contracts that bleed taxpayers. In Wichita this is called “economic development.”

As Koch Industries’ Melissa Cohlmia notes in a letter to the Wichita Eagle, Charles Koch, along with David Koch, are examples of an unfortunately small group of businessmen and women who are willing to stand up and fight for capitalism and economic freedom. It’s an important fight. As Charles Koch wrote in his recent article: “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.” The danger, he writes, is “Put simply, cronyism is remaking American business to be more like government. It is taking our most productive sectors and making them some of our least.”

Koch favors ending all subsidies

By Melissa Cohlmia, Corporate communication director, Koch Companies Public Sector

Kevin Horrigan’s commentary was misleading and a disservice to readers (“GOP acts as bellhop for corporations, Kochs,” Sept. 21 Opinion).

Yes, Koch Industries benefits from subsidies — a fact Charles Koch stated in his Wall Street Journal commentary. This is not hypocrisy, as Horrigan claimed. Rather, where subsidies exist, any company that opts out will be at a disadvantage and often driven out of business by competitors with the artificial advantage. This perverse incentive drives out companies that are in favor of sound fiscal policy and opposed to subsidies, and favors inefficient companies that are dependent on subsidies.

Koch’s long-standing position is to end to all subsidies, which distort the market and ultimately cost taxpayers billions of dollars.

Horrigan faulted Koch for not mentioning the company’s lawful contributions to “conservative politicians and causes.” Charles Koch has publicly advocated for and supported free-market causes for decades. This is a First Amendment right that people and groups across the political spectrum also exercise.

The columnist falsely claimed that Koch has funded anti-labor organizations. About 15,000 of our 50,000 U.S employees are represented by labor unions. We have long-standing, mutually beneficial relationships with these unions.

In this time when far too few speak up for economic freedom, Charles Koch challenges out-of-control government spending and rampant cronyism that undermines our economy, political system and culture. For this, he should be lauded, not vilified.

Charles Koch: The importance of economic freedom

Charles Koch, chairman of the board and CEO of Wichita-based Koch Industries, contributes the following article on the importance of economic freedom and the harm of cronyism. Another article written by him on this topic is Charles Koch: Why Koch Industries is speaking out. Koch is also the author of the book The Science of Success: How Market-Based Management Built the World’s Largest Private Company. More about the importance of economic freedom may be found at www.economicfreedom.org, a project of the Charles Koch Institute, and also at Perspectives.

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.

Reality check
My experiences in the Soviet Union underscore why economic freedom is so important for all of us.

Nations with the greatest degree of economic freedom tend to have citizens who are much better off in every way.

No centralized government, no matter how big, how smart or how powerful, can effectively and efficiently control much of society in a beneficial way. On the contrary, big governments are inherently inefficient and harmful.

And yet, the tendency of our own government here in the U.S. has been to grow bigger and bigger, controlling more and more. This is why America keeps dropping in the annual ranking of economic freedom.

Devil’s bargain
Citizens who over-rely on their government to do everything not only become dependent on their government, they end up having to do whatever the government demands. In the meantime, their initiative and self-respect are destroyed.

It was President Franklin Roosevelt who said: “Continued dependence on [government support] induces a spiritual and moral disintegration fundamentally destructive to the national fiber. To dole out relief in this way is to administer a narcotic, a subtle destroyer of the human spirit.”

Businesses can become dependents, too. If your struggling car company wants a government bailout, you’ll probably have to build the government’s car — even if it’s a car very few people want to buy.

Repeatedly asking for government help undermines the foundations of society by destroying initiative and responsibility. It is also a fatal blow to efficiency and corrupts the political process.

When everyone gets something for nothing, soon no one will have anything, because no one will be producing anything.

Cronyism
Under the Soviet system, special traffic lanes were set aside for the sole use of officials in their limousines. This worsened driving conditions for everyone else, but those receiving favored treatment didn’t care.

Today, many governments give special treatment to a favored few businesses that eagerly accept those favors. This is the essence of cronyism.

Many businesses with unpopular products or inefficient production find it much easier to curry the favor of a few influential politicians or a government agency than to compete in the open market.

After all, the government can literally guarantee customers and profitability by mandating the use of certain products, subsidizing production or providing protection from more efficient competitors.

Cronyism enables favored companies to reap huge financial rewards, leaving the rest of us — customers and competitors alike — worse off.

One obvious example of this involves wind farms. Most cannot turn a profit without the costly subsidies the government provides. Meanwhile, consumers and taxpayers are forced to pay an average of five times more for wind-generated electricity.

We see far too many legislative proposals that would subsidize one form of energy over another, penalize certain emissions from one industry but not another, or place protective tariffs that hurt consumers.

Legacies
Karl Marx famously said: “From each according to his abilities, to each according to his needs.”

The result of this approach is not equality, but rather a lowering of everyone’s standards to some minimal level.

Some people worry about the disparity of wealth in a system of economic freedom. What they don’t realize is that the same disparity exists in the least-free countries.

The difference is who is better off.

Under economic freedom, it is the people who do the best job of producing products and services that make people’s lives better.

On the other hand, in a system without economic freedom, the wealthiest are the tyrants who make people’s lives miserable.

As a result of this, the income of the poorest in the least-free countries is one-tenth of what it is in the freest.

Elected officials are often asked what they would like as their legacy. I’m never going to run for office, but I can tell you how I would answer that question.

I want my legacy to be greater freedom, greater prosperity and a better way of life for my family, our employees and all Americans. And I wish the same for every nation on earth.

Kansas and Wichita quick takes: Thursday May 17, 2012

Watchdog reporter at Pachyderm. This Friday (May 18th) the Wichita Pachyderm Club features Paul Soutar, Reporter for Kansas Watchdog, speaking on “The evolution of journalism and how the new media empowers citizens.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club. … The club has an exceptional lineup of future speakers as follows: On May 25th: Ron Estes, State Treasurer of Kansas, speaking on “A report from the Kansas Treasurer.” … On June 1st: Gary Oborny, Chairman/CEO Occidental Management and Real Estate Development, CCIM Designated member of the Storm Water Advisory Board to the City of Wichita, speaking on “What is the economic impact of EPA mandates on storm water quality in Wichita?”

Kansas senators vote for cronyism. Veronique de Rugy explains the harm of the Export-Import Bank of the United States in Why Would Anyone be Against the Export-Import Bank? “First, the Ex-Im Bank is nothing more than corporate welfare. This is an agency that is in the business of subsidizing private companies with taxpayer dollars. … An excellent paper by Cato Institute’s trade analyst Sallie James exposes just how unseemly, inefficient, and irrelevant the Export-Import Bank is. As James explains, the Bank not only picks winners and losers by guaranteeing the loans of private companies, but it also introduces unfair competition for all the U.S. firms that do not benefit from such special treatment.” The bill is H.R. 2072: Export-Import Bank Reauthorization Act of 2012. Both Kansas senators Jerry Moran and Pat Roberts voted for this bill. So did U.S. Representative Kevin Yoder of the Kansas third district. But Representatives Tim Huelskamp, Lynn Jenkins, and Mike Pompeo voted against it.

Koch = big oil? Politico: “The Koch brothers have an unlikely ally in the war of words with their liberal adversaries: the nation’s journalistic fact-checkers. Both The Washington Post’s Fact Checker blog and the nonpartisan site FactCheck.org have dinged critics of David and Charles Koch in recent weeks for referring to the billionaire brothers as Big Oil. Why? Because Koch Industries’ business interests extend well beyond the company’s involvement in petroleum refining and other oil-based operations. And while no corporate midget, the company isn’t anywhere near as big as true oil giants like ExxonMobil. ‘So even if all of Koch Industries’ revenues came from its refining business — which they do not — they would still be a fraction of the revenues of the companies that actually represent ‘Big Oil,” the FactCheck.org critique read.” More at Fact-checkers and Kochs’ ‘Big Oil’. Another example of how facts don’t get in the way of Koch critics. Or try For New York Times, facts about Kochs don’t matter.

Economic freedom. Why does the political left criticize Charles and David Koch? In the following video from last year, Koch Industries CEO and board chairman Charles G. Koch explains the principles of economic freedom, something that he and David Koch have worked to advance for many years. These principles, according to Koch, include private property rights, impartial rule of law, free trade, sound money which reduces boom and bust cycles, and a small and limited government. These principles are good for everyone, I should add, including those currently at the bottom of the economic ladder.

We aren’t Greece … yet. “Once again, Greece finds the international community questioning its ability to pay its debts. Default and an exit from the Euro Zone (or countries which share the Euro as a common currency) threatens on the horizon. Here in the U.S., we face high debts and have a lowered credit rating due to Washington’s inability to agree on deficit reduction. Just how alike are our two nations?” An infographic from Bankrupting America explains.


Bankrupting America

For Koch critics, facts aren’t part of the equation

A Saturday op-ed in the Lawrence Journal-World begins with: “What is it, or why is it, that the name Koch, particularly here in Lawrence and Kansas, seems to trigger such angry, passionate and negative responses from a certain segment of the community, particularly among some at Kansas University?”

It’s a good question. When people insert themselves into politics, there will be debate and criticism. I don’t think Charles and David Koch expect a free pass. But some of the online comments written in reaction to this op-ed show, however, that facts and reason won’t stand in the way of those who use demonization of Charles G. Koch and David H. Koch, principals of Wichita-based Koch Industries, to advance their political agendas.

Simons’ op-ed is generally accurate in its depiction of Charles and David Koch, although the company says Koch has not contributed to FreedomWorks, as is reported. But the reader comments — that’s where things really go off the mark.

Here’s a comment that is representative of many: “They would use their wealth to suppress innovation and competition. It’s another case of ‘I’ve got mine, and I want to make sure you don’t get yours.’ Why don’t they set up a loan company to encourage small businesses? Why don’t they hire more workers and give their present workers more benefits? Instead they want to buy the government, so they can control things instead of empowering others.”

As to suppressing innovation and competition: For decades the Kochs have supported free markets and competition through capitalism, which are the engines of innovation, not barriers. Last year Charles Koch, in the Wall Street Journal, strongly advocated for capitalism over cronyism. On the relationship between government and business, he wrote that too many business firms have practiced “crony capitalism”: lobbying for special favors, subsidies, and regulations to keep competitors — who may be more efficient — out of the way.

While it’s more difficult than practicing cronyism, competing in open markets assures that firms that efficiently provide goods and services that consumers demand are the companies that thrive, Koch added. It is these efficient firms that raise our standard of living. When politically-favored firms are propped up and bailed out, our economy is weakened: “Subsidizing inefficient jobs is costly, wastes resources, and weakens our economy.”

In the introduction to The Morality of Capitalism, Tom G. Palmer explains further how genuine capitalism is a system of innovation and creativity:

The term ‘capitalism’ refers not just to markets for the exchange of goods and services, which have existed since time immemorial, but to the system of innovation, wealth creation, and social change that has brought to billions of people prosperity that was unimaginable to earlier generations of human beings. Capitalism refers to a legal, social, economic, and cultural system that embraces equality of rights and ‘careers open to talent’ and that energizes decentralized innovation and processes of trial and error. … Capitalist culture celebrates the entrepreneur, the scientist, the risk-taker, the innovator, the creator. … Far from being an amoral arena for the clash of interests, as capitalism is often portrayed by those who seek to undermine or destroy it, capitalist interaction is highly structured by ethical norms and rules. Indeed, capitalism rests on a rejection of the ethics of loot and grab. … Capitalism puts human creativity to the service of humanity by respecting and encouraging entrepreneurial innovation, that elusive factor that explains the difference between the way we live now and how generation after generation after generation of our ancestors lived prior to the nineteenth century.

The charge of “I’ve got mine, and I want to make sure you don’t get yours” is often leveled against the wealthy, and for some, that may drive their policies. It’s important to know, though, that the policies of economic freedom that the Kochs have promoted are more important to poor people than the wealthy. A glance at the Economic Freedom of the World reports confirms what history has taught us: Countries with market-based and free, or relatively free, economies become wealthy. Poor countries generally do not have market-based economies and therefore little economic freedom, although the ruling class usually lives well.

There is concern that economic freedom is on the decline in America, and that our future is threatened by this.

When the writer asks “Why don’t they set up a loan company to encourage small businesses?” I wold refer them to Koch Ventures and Koch Genesis, two companies that do this.

Finally — for this writer — comes the allegation that Charles and David Koch want to buy government “so they can control things instead of empowering others.” This charge is not supported by facts and what the Kochs have actually done for decades. Institutions founded or supported by the Kochs such as Cato Institute, Mercatus Center at George Mason University, and Americans for Prosperity Foundation are dedicated to limited government and personal liberty. This, along with their support of capitalism — which, as Palmer explained above, leads to freedom, creativity, and individual empowerment for everyone.

Another comment contained “In their ‘ideal’ libertarian world they could do what they want and pollute whenever they want.” This is yet another ridiculous charge.

A statement on the KochFacts website states “recent critics have also claimed that Koch is one of the nation’s top 10 polluters. This study confuses pollution with permitted emissions, which are carefully regulated by the U.S. EPA and other agencies. The index labels as ‘polluters’ Ford Motor, General Motors, GE, Pfizer, Eastman Kodak, Sony, Honeywell, Berkshire Hathaway, Kimberly Clark, Anheuser Busch and Goodyear — corporations, like Koch companies, with significant manufacturing in the U.S. Emissions, a necessary by-product of manufacturing, are strictly monitored and legally permitted by federal, state and local governments.”

Wait a minute: Didn’t the federal government take over General Motors? And GE and Berkshire Hathaway: Aren’t those run by personal friends of Barack Obama?

The reality is that if we want the things these companies make for us, we must accept some emissions — pollution, if you will. The good news, however, is that manufacturing has become much more efficient with regards to emissions, and Koch Industries companies have lead the way. One report from the company illustrates such progress: “Over the last three years, Koch Carbon has spent $10 million to enhance environmental performance, including $5 million for dust abatement at one of its petroleum coke handling facilities. These investments have paid off. In 2008, Koch Carbon’s reportable emissions were 6.5 percent less than in 2000, while throughput increased 10.4 percent.”

Even when Koch Industries does not agree with the need for specific regulations, the company, nonetheless, complies. Writing about an increase in regulation in the 2007 book The Science of Success: How Market-Based Management Built the World’s Largest Private Company, Charles Koch explained the importance of regulatory compliance: “This reality required is to make a cultural change. We needed to be uncompromising, to expect 100 percent of our employees to comply 100 percent of the time with complex and ever-changing government mandates. Striving to comply with every law does not mean agreeing with every law. But, even when faced with laws we think are counter-productive, we must first comply. Only then, from a credible position, can we enter into a dialogue with regulatory agencies to determine alternatives that are more beneficial. If these efforts fail, we can then join with others in using education and/or political efforts to change the law.”

Koch companies have taken leadership roles in environmental compliance, explains another KochFacts page: “In 2000, EPA recognized Koch Petroleum Group for being ‘the first petroleum company to step forward’ to reach a comprehensive Clean Air Act agreement involving EPA and state regulatory agencies in Minnesota and Texas. Despite fundamental policy disagreements, then-EPA Administrator Carol Browner acknowledged Koch’s cooperation. She characterized the agreement as ‘innovative and comprehensive’ and praised the ‘unprecedented cooperation’ of Koch in stepping forward ahead of its industry peers.” Browner was no friend of industry, and had a “record as a strict enforcer of environmental laws during the Clinton years,” according to the New York Times.

These types of facts are not relevant to many of those who left comments to the Journal-World piece. To the political left, the facts must not be allowed get in the way of a useful political narrative.

Koch Industries and Koch brothers are assets to state

By Dolph C. Simons, Jr., Lawrence Journal-World.

What is it, or why is it, that the name Koch, particularly here in Lawrence and Kansas, seems to trigger such angry, passionate and negative responses from a certain segment of the community, particularly among some at Kansas University?

… The answer to the question at the beginning of this column is that the Kochs are conservatives, some would say “ultra conservatives.” They support organizations such as the Cato Institute, Citizens for a Sound Economy, Americans for Prosperity and Freedom Works. Their critics have been quick to try to fault them for supposedly funneling money to the tea party movement. Some say the brothers have given more than $100 million to these conservative organizations.

Charles and David Koch have been the lightning rods for liberal, anti-conservative forces in this country, and it is that likely liberal-leaning faculty members and administrators at KU, as well as at many other universities, have been critical of the Kochs in order to keep peace with their staffs.

The sad, phony or hard-to-understand part of this situation is that the two Koch brothers attribute the success of their family-owned business to the guiding principles espoused by their market-based management philosophy.

… Charles and David Koch have championed limited government, economic freedom and personal liberty and they have challenged excessive government spending. Their financial giving efforts — political and charitable, both personal and through their company and foundations — all have been lawful.

This being the case, it would seem KU officials, as well as other state officials, should be trying to work with Koch Industries, Charles and David Koch and their foundations on ways to benefit the university and the state. They should be trying to embrace the Kochs rather than acting as if they were pariahs.

Continue reading at Koch Industries and Koch brothers are assets to state.

Kansas and Wichita quick takes: Friday March 30, 2012

Lee Fang: wrong again. “At 9 a.m. on Tuesday, March 27, 2012, when most civic-minded Americans were focused on the historic Supreme Court oral arguments about Obamacare, Lee Fang, a left-wing blogger for the liberal Republic Report blog, was posting yet another diatribe attacking Charles and David Koch. As usual, Fang’s piece stretches, distorts, ignores and misstates the facts.” So starts Cleta Mitchell writing in the Daily Caller piece Who’s paying Lee Fang and other left-wing bloggers to attack the Kochs? Readers should not be surprised that Fang is wrong again — it’s become his calling card. The political left doesn’t care, as long as Fang keeps up his attack on Charles and David Koch. Concludes Mitchell: “Fang, of course, gets away with making completely false statements because he sprinkles the Koch name as a negative modifier for every other noun in his blog, and the apparent rule is that there is no concern for facts or truth when a liberal attacks the Kochs. After reading Fang’s drivel, glancing at the Republic Report and United Republic websites and reading about their mission of getting money out of politics and exposing truth and corruption and all of that, here’s my question: Where do these sites get their money? And why don’t they publicly disclose their donors? Fang’s post and these projects are simply part of the massively well-funded liberal attack machine that is designed to vilify the Kochs and intimidate prospective conservative donors into staying on the sidelines. Indeed, Fang is hoping to intimidate all donors to conservative causes and organizations. … Whenever conservatives demonstrate the will and the resources to fight liberal orthodoxy, liberals become hysterical. The left tolerates diversity except when it comes to diversity of opinion. These ongoing attacks on the Kochs are outrageous and won’t stop until liberals have cut off conservative groups’ funding and silenced conservative voices. That isn’t likely to happen.”

Action on sustainability. Next week the Sedgwick County Commission takes up the issue of whether to participate in a HUD Sustainable Communities Regional Planning Grant. Coverage of the last discussion the commission had on this matter is at Sedgwick County considers a planning grant. So that citizens may be informed on this issue, Americans for Prosperity, Kansas is holding an informational event on Monday April 2, from 7:00 pm to 8:30 pm at Spangles Restaurant, corner of Kellogg and Broadway. (Uh-oh. If the Kansas Jayhawks make it to the NCAA basketball title game, the television broadcast starts at 8:00 pm.) The meeting is described as follows: “On April 4, 2012 at 9:00 am on the 3rd floor of the Sedgwick County Courthouse, the Sedgwick County Commission will be holding a public hearing to consider approval of Sedgwick County’s participation as the fiscal agent on behalf of the Regional Economic Area Partnership (REAP) Consortium with an ‘in-kind’ commitment of $120,707 to implement a Regional Plan for Sustainable Communities Grant for South Central Kansas. Public comment will be invited. Learn about the Sustainable Communities Plan for South Central Kansas. Find out how you can get involved in this issue as a citizen. Consider testifying before the County Commission. Consider attending the Commission meeting as an interested citizen.” … For more information on this event contact John Todd at john@johntodd.net or 316-312-7335, or Susan Estes, AFP Field Director at sestes@afphq.org or 316-681-4415.

Economic fascism. From Independent Institute: “On Friday, March 16, President Obama signed an executive order on national defense that amends and updates the executive branch’s sweeping powers over energy, transportation, human resources, and raw materials. ‘It shows plainly that private control of economic life in the United States, to the extent that it survives, exists solely at the president’s pleasure and sufferance,’ writes Independent Institute Senior Fellow Robert Higgs. ‘Whenever he chooses to put into effect a full-fledged operational fascist economy, controlled from his office, he has the statutory power to do so; all he has to do is to murmur the words ‘national defense’ and give the order.’ … Obama’s executive order sets no new precedent, Higgs notes. It’s just the latest in a string of edicts authorizing central economic planning that dates back at least to the Defense Production Act of 1950, a wartime statute that was never repealed after its passage during the Korean War. It’s also a classic example of how wars create new government powers that don’t go away after peace resumes.”

Immigration. From LearnLiberty.org, a project of Institute for Humane Studies: “Is it true that immigration raises the U.S. unemployment rate? Is it true that immigration affects U.S. income distribution? The conventional wisdom says that both of these things are true. However, economist Antony Davies says there is evidence to suggest that they are not. Looking at the data, there is no relationship between the rate of immigration and the unemployment rate, nor is there a relationship between the rate of immigration and income inequality. Further, there is evidence to suggest that immigrants actually create more American jobs.”

Left-wing sincerity exposed

It’s often alleged by the political left that conservative and libertarian activists are nothing more than Astroturf, meaning false or fake grassroots activism. The charge is that the activists are duped into — or paid for — engaging in political activism. Which makes the following video from the Koch Industries Koch Facts site all the more interesting. Here’s the description of the video on YouTube:

“Robert Greenwald’s Brave New Foundation is paying people like Jesse Lava to make harassing phone calls to Koch Industries as part of their ‘Koch Brothers Exposed’ propaganda videos. But when he fails to properly hang up the phone, Jesse’s true character is revealed.”

It’s worth clicking below to view this video that’s one and one-quarter minutes in length:

Obama fundraising on anti-Koch obsession

Are Americans tired of hearing that this year’s election is all about an obsession with defeating President Barack Obama? For those who know that Obama took a bad economic situation and implemented policies that made it worse — yes, we want to defeat the current president. The president’s election campaign, however, turns that concern for the future of our country into “obsession” and uses it to raise money. As is often the case, the target of a recent fundraising letter is Charles G. Koch and David H. Koch, who are principals of Wichita-based Koch Industries. While the letter attacks the Kochs for “jacking up prices at the pump” the real reason why liberals don’t care for them is for their unwavering support for the causes of economic freedom, free markets, and limited government that Charles and David Koch have advocated for very many years.

By the way, I’ve never heard an answer to this question: If oil companies have the power to “jack up” gasoline prices, why do they let the price go down, as it often does? And why is the price not higher than it is?

Fortunately for America, the Koch brothers and Koch Industries do not back down from these attacks. Following, the company responds.

Mr. Jim Messina
Campaign Manager
Obama for America

Dear Mr. Messina:

Because every American has the right to take part in the public discourse on matters that affect the future of our country, I feel compelled to respond directly about a fundraising letter you sent out on February 24 denouncing Koch. It is both surprising and disappointing that the President would allow his re-election team to send such an irresponsible and misleading letter to his supporters.

For example, it is false that our “business model is to make millions by jacking up prices at the pump.” Our business vision begins and ends with value creation — real, long-term value for customers and for society. We own no gasoline stations and the part of our business you allude to, oil and gas refining, actually lowers the price of gasoline by increasing supply. Either you simply misunderstand the way commodities markets work or you are misleading your supporters and the rest of the American people.

Contrary to your assertion that we have “committed $200 million to try to destroy President Obama,” we havestated publicly and repeatedly since last November that we have never made any such claim or pledge. It is hard to imagine that the campaign is unaware of our publicly stated position on that point. Similarly, Americans for Prosperity is not simply “funded by the Koch brothers,” as you state — rather it has tens of thousands of members and contributors from across the country and from all walks of life. Further, our opposition to this President’s policies is not based on partisan politics but on principles. Charles Koch and David Koch have been outspoken advocates of the free-market for over 50 years and they have consistently opposed policies that frustrate or subvert free markets, regardless of whether a Democrat or a Republican was President.

f the President’s campaign has some principled disagreement with the arguments we are making publicly about the staggering debt the President and previous administrations have imposed on the country, the regulations that are stifling business growth and innovation, the increasing intrusion of government into nearly every aspect of American life, we would be eager to hear them. But it is an abuse of the President’s position and does a disservice to our nation for the President and his campaign to criticize private citizens simply for the act of engaging in their constitutional right of free speech about important matters of public policy. The implication in that sort of attack is obvious: dare to criticize the President’s policies and you will be singled out and personally maligned by the President and his campaign in an effort to chill free speech and squelch dissent.

This is not the first time that the President and his Administration have engaged in this sort of disturbing behavior. As far back as August, 2010, Austan Goolsbee, then the President’s chief economic advisor, made public comments concerning Koch’s tax status and falsely stated that the company did not pay income tax, which triggered a federal investigation into Mr. Goolsbee’s conduct that potentially implicated federal law against improper disclosure of taxpayer information. Last June, your colleagues sent fundraising letters disparaging us as “plotting oil men” bent on “misleading people” with “disinformation” in order to “smear” the President’s record. Those accusations were baseless and were made at the very same time the president was publicly calling for a more “civil conversation” in the country.

It is understandable that the President and his campaign may be “tired of hearing” that many Americans would rather not see the president re-elected. However, the inference is that you would prefer that citizens who disagree with the President and his policies refrain from voicing their own viewpoint. Clearly, that’s not the way a free society should operate.

We agree with the President that civil discourse is an American strength. That is why it is troubling to see a national political campaign apparently target individual citizens and private companies for some perceived political advantage. I also hope the President will reflect on how the approach the campaign is using is at odds with our national values and the constitutional right to free speech.

Sincerely,
Philip Ellender
President, Government & Public Affairs
Koch Companies Public Sector, LLC

This letter was originally published at KochFacts.com.

‘Occupy Koch town’ ignores the facts

By Melissa Cohlmia. A version of this appeared in the Wichita Eagle.

I’ve lived in Wichita nearly all my life and know what a welcoming community this is. But with protesters arriving here this week to “speak out” against my employer, Koch Industries, it’s unlikely the red carpet will be rolled out for them given their unfounded attacks and nasty resentment of this company.

The protesters are occupying “Koch Town” because, in their own words, they want to tell our shareholders, “No Keystone XL Pipeline.” If that is their goal, the protesters have the wrong address, like so many who perpetuate the false claim that Koch is behind the Keystone XL Pipeline project. For the record, one more time, we are not.

Protesting Koch means protesting the livelihoods of 2,700 Kansans and 50,000 Americans who are employed by Koch companies. In these tough economic times, these jobs have provided our employees financial security during the recession and ensuing painful, slow recovery. Koch companies employ tens of thousands in manufacturing products Americans want and need — things like fiber for carpeting, clothing and air bags; building and consumer products; and petroleum-based products and building-block chemicals that make our lives better and provide much-needed energy. These are the kinds of jobs that create a robust manufacturing sector, which America needs in order to stay competitive.

Protesting Koch also means protesting the many ways Koch companies and our employees contribute to the community. As the protesters visit our city, we invite them to take notice of the Koch Orangutan Exhibit at the Sedgwick County Zoo or the Koch Habitat Hall at Great Plains Nature Center. If they prefer something less wild, they can visit the Koch Aquatic Center at the YMCA. Or if they want to see something more creative, they could spend time at the Koch Family Sculpture Garden at the Wichita Center for the Arts. Maybe they could bowl a few frames for the Koch-sponsored “Bowl for Kids’ Sake” event to benefit Big Brothers Big Sisters.

I am proud to work for Koch. As director of corporate communication, I’ve read and heard much about this company and its shareholders that is dishonest, distorted and derogatory. And while we continue to try to bat down the falsehoods, as quickly as we quash one, another rears its ugly head. As Winston Churchill once said, “A lie gets halfway around the world before the truth has a chance to get its pants on.”

I ran my own small business and experienced the ups and downs that come with breaking out on my own. I met demands from customers, made profit, and put it toward my family and the causes I believed in. When I decided to join Koch, it was in part because of the values of this company – honesty, integrity, respect, a focus on real value creation. I saw that I could participate in an enterprise that was hard at work improving people’s lives on a larger scale. Since coming to Koch, I have never been asked to veer from these values.

So, protesters, as you visit Wichita, you’ll notice we’re friendly, patriotic, and proud of our work ethic and community spirit. We won’t shout back unless it’s at a basketball game at Wichita State’s Charles Koch Arena. And we’re proud of Koch Industries and our fellow employees because this company makes a positive difference in our lives and our community.

Melissa Cohlmia is director of corporate communication for Koch Companies Public Sector, LLC and a Wichitan.

Occupy Koch Town protestors ignore facts

Below, Paul Soutar of Kansas Watchdog provides more evidence that the campaign against Wichita-based Koch Industries regarding their alleged involvement in the Keystone XL pipeline is not based on facts. Besides this article, U.S. Representative Mike Pompeo of Wichita has also written on this issue in The Democrats continue unjustified attacks on taxpayers and job creators.

Another inconvenient fact is that if the Canadian oil is not sold to the U.S., it will be sold to and consumed in China. If we are concerned about greenhouse gas emissions leading to climate change, it should be noted that it doesn’t matter where the greenhouse gases are produced. The effect is worldwide. But as we know, the radical environmental movement cares nothing for facts in their war on capitalism and human progress.

Facts Refute Environmentalist Claims About Keystone XL Pipeline

By Paul Soutar. Originally published at Kansas Watchdog.

Protesters are gathering on the Wichita State University campus this weekend for a Sierra Club-sponsored Occupy Koch Town protest against the Keystone XL oil pipeline and Koch Industries, Inc. Koch and its subsidiaries are involved in a wide array of manufacturing, trading and investments including petroleum refining and distribution.

Many Keystone XL opponents have focused on Koch, claiming its Flint Hills Resources Canada subsidiary’s status as an intervener in the regulatory approval process in Canada proves Koch is a party to the pipeline project. Keystone XL would carry petroleum from Canadian oil sands to the U.S. Gulf coast.

In a Jan. 25 House Energy and Commerce Committee hearing, California U.S. Rep. Henry Waxman, D-District 30, demanded that the Koch brothers, Charles and David, or a representative of Koch Industries appear before the committee to explain their involvement in the pipeline.

Philip Ellender, president of Koch Cos. Public Sector, which encompasses legal, communication, community relations and government relations, responded to Waxman on a Koch Industries website:

Koch has consistently and repeatedly stated (including here, here, here, and here) that we have no financial interest whatsoever in the Keystone pipeline. In addition, this fact has been verified by TransCanada’s CEO here.

Russ Girling, CEO of TransCanada, owner and builder of the Keystone pipelines, addressed criticism of the pipeline and supposed collusion with the Koch brothers in a Nov. 1 conference call to discuss TransCanada’s earnings. “I can tell you that Koch (Industries Inc.) isn’t a shipper and I’ve never met the Koch brothers before.”A March 2010 document from Canada’s National Energy Board (NEB) approving the pipeline does not mention Koch or its subsidiary, Flint Hills Resources Canada, on any of its 168 pages.

The report does note that on June 16, 2009, TransCanada Corporation became the sole owner of the Keystone Pipeline System, acquiring ConocoPhillips’ interest in the pipeline.

A map of the existing Keystone and planned Keystone XL pipelines shows that Koch’s two refineries in the 48 contiguous states at Pine Bend, Minn., and Corpus Christi, Texas, are not on or near the pipeline routes. Koch also has a refinery in North Pole, Alaska.

Koch does have substantial interests in Canadian oil though, including the thick oil sands mined in Alberta. Those interests are precisely why Flint Hills Resources Canada requested intervener status in the pipeline approval process in 2009.

Flint Hills’ application to Canada’s National Energy Board for intervener status said, “Flint Hills Resources Canada LP is among Canada’s largest crude oil purchasers, shippers and exporters, coordinating supply for its refinery in Pine Bend, Minnesota. Consequently, Flint Hills has a direct and substantial interest in the application.”

Critics have claimed that statement is a smoking gun proving Koch is a party to the pipeline or will benefit from its construction.

Greg Stringham, Canadian Association of Petroleum Producers (CAPP) vice president of markets and oil sands, told KansasWatchdog, “Their intervention itself is not a trigger that says aha, they have a commercial interest or are a shipper on this pipeline.”

The US Legal, Inc. definitions website says an intervener is, “A party who does not have a substantial and direct interest but has clearly ascertainable interests and perspectives essential to a judicial determination and whose standing has been granted by the court for all or a portion of the proceedings.”

US Legal, Inc. provides free legal information, legal forms and help with finding an attorney for the stated purpose of breaking down barriers to legal information.

Stringham said anyone — business, organization or individual — can be an intervener in NEB regulatory proceedings as long as they can show some potential impact, good or bad, from the proposed action. “Then they make a decision whether they’re going to actively engage through evidence and cross examination or whether they’re just there for interest, to get materials and monitor the situation.”

Market interest

Like Koch, Stringham said CAPP is an intervener in the pipeline approval process, because the pipeline will have a direct impact on the Canadian oil market. Stringham said:

The fact that it’s an intervention for interest does not mean that there is a financial ownership or shipping interest. It’s really to make sure that they understand what’s going on in the process and that they have some connection to the project that can be either positive and beneficiary or potentially negative to them. That’s why I believe Koch has intervened in this process.

The Canadian pipeline company Enbridge, Inc.; Marathon Oil Corp. and Britain’s oil giant BP are also among the 29 interveners in the pipeline application. So is the environmental activist organization Sierra Club.

Keystone XL would compete with the Enbridge pipeline that carries the thick bitumen oil from Hardisty, Alberta, for delivery to Koch’s Pine Bend, Minn., refinery. If supplies prove insufficient for both pipelines, Stringham said, Koch could be at a competitive disadvantage since it is not a shipper on the Keystone pipelines.

The National Energy Board’s approval document noted:

Keystone XL shippers have indicated that they are seeking competitive alternatives, and by providing access to a new market, Keystone XL would be expanding shipper choice. The Board places considerable weight on the fact that Keystone XL shippers have made a market decision to enter into long-term shipping arrangements negotiated through a transparent competitive process. New pipelines connecting producing regions with consuming regions change market dynamics in ways that cannot easily be predicted.

Political motivation

On Feb.10, 2011 Reuters published an Inside Climate News article that started the Koch-Keystone explosion. The third paragraph put a political spin on the Koch claims.

What’s been left out of the ferocious debate over the pipeline, however, is the prospect that if President Obama allows a permit for the Keystone XL to be granted, he would be handing a big victory and great financial opportunity to Charles and David Koch, his bitterest political enemies and among the most powerful opponents of his clean economy agenda.

Former U.S. Solicitor General Theodore Olsen, in a Wall Street Journal op-ed, highlighted the political dimension of attacks on the Kochs and recent attempts to compel their testimony before Congress.

When Joseph McCarthy engaged in comparable bullying, oppression and slander from his powerful position in the Senate, he was censured by his colleagues and died in disgrace. “McCarthyism,” defined by Webster’s as the “use of unfair investigative and accusatory methods to suppress opposition,” will forever be synonymous with un-Americanism.

In this country, we regard the use of official power to oppress or intimidate private citizens as a despicable abuse of authority and entirely alien to our system of a government of laws. The architects of our Constitution meticulously erected a system of separated powers, and checks and balances, precisely in order to inhibit the exercise of tyrannical power by governmental officials.

Market and environmental realities

Canada produces about 2.7 million barrels of oil per day with about 1.6 million going to the United States. “About a million of that comes from the oil sands,” Stringham said. “All of that moves through the existing pipeline systems.”

Two Kansas refineries, the Holly Frontier refinery in El Dorado and National Cooperative Refinery Association’s facility in McPherson, refine Canadian oil, including from oil sands, delivered over existing pipelines.

With or without the Keystone XL, oil from Canada’s oil sands will continue to go to markets, according to Stringham. “We have been investigating a number of alternatives. Keystone XL clearly is the most direct route to get to the gulf coast and that’s why the market really spoke up and said this is what we want,” he said.

In a 2010 op-ed in the National Journal, Charles T. Drevna, president of American Fuel & Petrochemical Manufacturers, presciently said, “Canada’s leaders have made clear that if the U.S. won’t buy their oil, they won’t abandon development of their oil sands. Instead, they have said they will ship Canadian oil across the Pacific to China and other Asian nations. That will result in America having to import more oil from other countries. Sending Canadian oil to Asia would actually increase global greenhouse gas emissions, according to a 2010 study by Barr Engineering.”

The Barr study, Low Carbon Fuel Standard “Crude Shuffle” Greenhouse Gas Impacts Analysis (pdf), concluded that transporting oil to Asia for refining would mean not just a lost opportunity for the U.S., but increased greenhouse gas emissions because of transportation by ship instead of by pipeline and less stringent refinery emission standards.

TransCanada has said it will continue to seek approval of the Keystone XL and work is proceeding on alternatives to Keystone XL, Stringham said. “There are other pipeline routes being investigated by Enbridge and BP and a number of others as well to move this oil,” he said.

He said Canada’s oil market is looking at diverse opportunities beyond the United States. “We are looking to the West Coast, which could move it on to tankers. We looked at Asia, it is one of the options, but once it gets to the West Coast, it can also move to the California market,” he said.

Stringham said a proposal for Enbridge to build a pipeline carrying oil to the West Coast has more than 4,000 interveners.

Occupy Koch Town promotional materials say they’ll also protest against the Kansas Policy Institute. KPI helped launch KansasWatchdog.org in 2009 but is no longer affiliated with this site.

The Democrats continue unjustified attacks on taxpayers and job creators

The following article by U.S. Representative Mike Pompeo, a Republican who represents the Kansas fourth district, including the Wichita metropolitan area, explains — yet again — how ridiculous it is for President Barack Obama and others to attack Wichita-based Koch Industries on the Keystone XL pipeline issue. Pompeo explains that Koch has no financial interest in the pipeline, what “intervenor” status means, and who really stands to benefit if the pipeline is not built. Pompeo hints at who it is, but I’ll be more direct: Warren Buffet. A news article that explains how Warren will personally benefit from blocking the Keystone XL pipeline is Buffett’s Burlington Northern Among Pipeline Winners.

The Democrats continue unjustified attacks on taxpayers and job creators

By U.S. Representative Mike Pompeo

The President and his allies, including those in Congress, have shown what a nasty, personal, and abusive re-election campaign we are about to experience. A recent sideshow in my committee in Congress provides yet another clear and shocking example.

A recent letter from Representatives Henry Waxman and Bobby Rush, both Democrats, demanded a live witness and testimony from “a representative of Koch Industries” at a hearing on the Keystone XL pipeline, scheduled to be held just two days later. The frivolous nature of the request is proven by that plainly unreasonable deadline. But the partisan tactics go far beyond that.

Even if Koch Industries had a financial interest in the Keystone XL pipeline, what possibly could be wrong with that? Perhaps more importantly, under what circumstances would such an interest be worthy of a congressional inquisition? Charles Koch and David Koch, co-owners of Koch Industries, are citizens, taxpayers, entrepreneurs, and employers. Their companies employ nearly 50,000 people in the U.S. alone. The company maintains its headquarters in the district I represent, employing 2,600 great Kansans. The company and its employees are among the most hard-working and generous in our community. The company has never been bailed out by the American taxpayers. And given that Americans are desperate for jobs, we should be begging entrepreneurs to look for new opportunities, not attacking them simply because their companies might make a profit.

The facts are clear: Koch Industries does not have a financial stake in the pipeline — why, therefore, should its officials become part of the all-too-familiar congressional committee circus? The facts are straightforward and a matter of public record. Koch Industries has repeatedly stated that it does not have a financial stake in the pipeline: It does not own the pipeline, it has no role in the pipeline’s design, it is not one of the shippers who have signed contracts to use the pipeline, and it will not build the pipeline.

Democrats dug deep for some excuse to attempt to haul Koch officials in for a public flogging. What did they find? A 2009 attempt by a Koch subsidiary to obtain “intervenor” status in a Canadian legal proceeding, in order to track the approval process for the pipeline. Wishing to know the fate of the pipeline, and having an interest in whether or not the pipeline is built — as thousands of frustrated American workers and consumers do — obviously does not amount to a financial interest in the pipeline’s construction. Indeed, the Sierra Club of Canada applied to “intervene” in the same proceeding. Notably, no one has alleged that Congress should investigate the Sierra Club’s interest in the pipeline project. So the “intervenor” ploy is a patent sham, and provides no basis for harassing Koch Industries.

It is also difficult to believe that Members of Congress really think that a particular company’s asserted financial interest in a project is, or should be, relevant to the merits of that project. It becomes still harder to believe, given the decision to target only Koch Industries and the Kochs — and no other company or individual. Doubtless many companies and individuals stand to benefit, or to be harmed, depending on whether President Obama’s decision to delay the pipeline is allowed to stand. News accounts have mentioned a number of those who might reap financial windfalls from the pipeline’s demise, including at least one of President Obama’s most prominent supporters and donors. (Hint: His secretary was the President’s highly visible prop at the State of the Union address.) But two congressmen directed their attention exclusively toward the Kochs, who — as successful businessmen and outspoken critics of the President’s job-killing, statist programs — have been targets for the Administration and its allies for many months.

Indeed, the very first line of President Obama’s very first campaign advertisement for the 2012 election attacks the Koch brothers. And liberal blogs and publications have published countless slanted pieces on Koch Industries, heavy on innuendo and light on facts. The Obama Administration has long been criticized for maintaining a de facto “enemies list” of its perceived political opponents, whether they are respected Supreme Court Justices, disfavored reporters, or private citizens who just want to keep their own doctors. The Democrats’ obsession with the Kochs as a political target is, indeed, additional evidence of a truly Nixonian approach to politics. That the Obama Administration and its allies use private citizens as symbols to be attacked and vilified is both unfair and deeply threatening to our civic life and the rule of law.

America deserves better from its elected officials. To be sure, the serious challenges facing the country often generate heated discussion and disagreement. But there is no justification for Democrats who want to haul American citizens before Congress for the exclusive purpose of political abuse. Congressional hearings should not be hijacked by naked political opportunism; legitimate business creators should not be vilified; and Congress should focus on the many policy questions before it, rather than wasting time in an illegitimate pursuit of the Administration’s perceived “enemies.”

Mr. Pompeo represents the Fourth Congressional District of Kansas. He serves on the House Committee on Energy and Commerce, as well as the Subcommittee on Energy and Power. A version of this article appeared at Politico.

On Charles and David Koch, Obama channels Nixon

“Richard Nixon maintained an ‘enemies list’ that singled out private citizens for investigation and abuse by agencies of government, including the Internal Revenue Service. When that was revealed, the press and public were outraged. That conduct will forever remain one of the indelible stains on Nixon’s presidency and legacy.”

Now President Barack Obama is running the same type of campaign against Charles G. Koch and David H. Koch, who are principals of Wichita-based Koch Industries.

This is the conclusion of Theodore B. Olson, former solicitor general of the United States. He presently represents Koch Industries. His op-ed in today’s Wall Street Journal (Obama’s Enemies List) lays out the harmful effects of the president’s campaign against Charles and David Koch.

Olson calls for all Americans to respond and oppose the president’s actions, writing “Whoever may be the victim of such abuse of governmental authority, the press and public almost invariably unify with indignation against it. If a journalist, labor-union leader or community organizer on the left can be targeted today, an academic or business person on the right can be the target tomorrow. If we fail to stand up against oppression from one direction, we abdicate the moral authority to challenge it when it comes from another.”

Why is Obama so opposed to Charles and David Koch? For one thing, they run a successful business that provides over 50,000 private-sector jobs. For some reason, that goes against the president’s grain. He’d rather have 50,000 government jobs, or at least jobs in corporations that cower in response to his bullying tactics. The Kochs, thankfully, don’t.

Another reason must be the unwavering support for the causes of economic freedom, free markets, and limited government that Charles and David Koch have advocated for over four decades. See Charles G. Koch: Why Koch Industries is speaking out.

Obama’s Enemies List

David and Charles Koch have been the targets of a campaign of vituperation and assault, choreographed from the very top.
By Theodore B. Olson

How would you feel if aides to the president of the United States singled you out by name for attack, and if you were featured prominently in the president’s re-election campaign as an enemy of the people?

What would you do if the White House engaged in derogatory speculative innuendo about the integrity of your tax returns? Suppose also that the president’s surrogates and allies in the media regularly attacked you, sullied your reputation and questioned your integrity. On top of all of that, what if a leading member of the president’s party in Congress demanded your appearance before a congressional committee this week so that you could be interrogated about the Keystone XL oil pipeline project in which you have repeatedly — and accurately — stated that you have no involvement?

Consider that all this is happening because you have been selected as an attractive political punching bag by the president’s re-election team. This is precisely what has happened to Charles and David Koch, even though they are private citizens, and neither is a candidate for the president’s or anyone else’s office.

Continue reading at The Wall Street Journal (subscription not required).

For Koch Industries, New York Times’ vendetta is never-ending

For those who pay attention, it is astonishing to witness the non-stop, over-the-top efforts of liberal mainstream media like the New York Times to discredit Wichita-based Koch Industries and its principals Charles G. Koch and David H. Koch. They have been non-stop advocates for limited government, free markets, and economic freedom for many years, and this is something the political left just can’t stand. Following is a letter from Melissa Cohlmia of Koch Companies Public Sector, LLC to Arthur S. Brisbane, the Times’ public editor, or readers’ representative. The letter was originally published at KochFacts.com.

Mr. Arthur Brisbane
Public Editor
New York Times

Dear Mr. Brisbane:

We have been observing coverage about us in the Times over the last year that appears in many cases driven by a political agenda and in others so gratuitous that it stretches the bounds of newsworthiness to absurd lengths. You will recall that we brought a number of these specifics to your attention last April and May. Since that time, there have been more than 50 articles in the paper critical of Koch (zero that are positive) written by some 41 different Times authors. You were gracious to offer a continued dialogue on the matter and two such pieces that appeared over the weekend prompt us to reach out again.

The first, by art critic Anthony Tommasini, complained about our support for the arts, compared us to the deposed King Ludwig of 19th-Century Bavaria and the Renaissance Medicis and therefore urged that the situation “would seem to make the performing arts a natural focus for the Occupy activists.”

The second piece, appearing in the “Ethicist” column by Ariel Kaminer, applauded a reader for keeping her granddaughter away from a performance of “The Nutcracker” because we donated to the production. “Tolerance has its limits” Ms. Kaminer explained, and “Tchaikovsky makes strange bedfellows.”

In other words, Times writers apparently must perform contortions so bent-over-backward that it involves medieval references and politicizing children’s Christmas ballets, all to squeeze a disparagement about Koch into their copy. My question to you is: if the paper is going to be indulging a hostile approach that is this far-fetched, then don’t we deserve some explanation from editors for the sheer frequency and the underlying purpose?

Readers themselves might wonder if they’ll soon read moral circumspection about the many performing arts or left-leaning institutions supported by the Sulzberger family, which owns the paper. Doubtful, it would seem. (And never mind at all the Sulzberger family’s role in building the New York Stock Exchange, stifling the Times’ unions, giving golden parachutes to underperforming executives, and other such activity the paper lately characterizes as “the one percent”).

When we last interacted, you explained that we could “expect the Times to continue to cover Kochs’ activities rather closely, as your organizations’ activities have acquired quite a high profile.” I’m troubled that this is a kind of circular logic — the Times is covering Koch because Koch is being covered — and tells readers little about the thinking and motives of the Times’ apparent fixation with us.

Let me reiterate that these are far from the only such examples. In October, a Times dining critic commenting about what protestors prefer to eat wrote, “Unlike the Tea Party, funded as it is by wealthy reactionaries like the Koch Brothers, ‘Occupy’ is sustained by energy, frustration … pizza and apples paid for by supporters or donated by farmers.” In November, one of your columnists denounced where we choose to live, saying, “even when oligarchs clearly get their income from heartland, red-state sources, where do they live? OK, one of the Koch brothers still lives in Wichita; but the other lives in New York.” And though the group Americans for Prosperity has tens of thousands of members, supporters, and co-founders, it is routinely described specifically as a project of ours.

As one of your predecessors once pointed out, the Times is a liberal newspaper. We understand that and have been documenting the often irrational and cynical ways in which left-wing groups have targeted us. But if the Times is going to take part in that bandwagon and go to lengths so far afield from legitimate news coverage, then it ought to have the integrity to acknowledge it.

We would be grateful if you could look into the examples we’ve cited and the larger point. We look forward to hearing your thoughts.

Kansas and Wichita quick takes: Friday December 9, 2011

Ethanol subsidy. According to Wichita Eagle reporting, the head of an ethanol trade group says the subsidy for ethanol will likely disappear after January 1, but the change might be good for the industry. It has to do with image, said the speaker. The subsidy the speaker mentioned is in the form of a tax credit, and is one of the programs that would be eliminated by proposed legislation introduced by U.S. Rep. Mike Pompeo of Wichita. His bill would end tax credits for all forms of energy. … The production tax credit is just one of three government interventions that benefit ethanol. Besides the tax credit, we should also ask for the end of mandates for ethanol use, and an end to the tariff on imported ethanol. We also need to ask for the end of interventions aimed at benefiting the cellulosic ethanol industry, like the $132.4 million loan guarantee for such a plant in Kansas.

Cronyist Warren Buffet. “Warren Buffett’s MidAmerican Energy Holdings company has agreed to buy a giant, 550-megawatt photovoltaic farm currently under construction in San Luis Obispo County for $2 billion, giving a huge boost to the solar industry that could spur investment by other major players.” Concludes John Hinderaker of Powerline Blog: “Meanwhile, I am warming up to the idea that Warren Buffett should pay more in taxes. I would settle for just getting his federal subsidies back.” More at Crony Capitalism, Episode #…What Are We Up To Now?

Natural gas subsidies for Pickens. While on the topic of energy and harmful subsidies, Timothy P. Carney of the Washington Examiner provides an update on H.R. 1380: New Alternative Transportation to Give Americans Solutions Act of 2011, or NATGAS act. The bill provides a variety of subsidies, implemented through tax credits, to producers and users of natural gas. The goal is to promote the use of natural gas as the fuel the nation uses for transportation. … Carney explains the personal financial of the bill’s backer, energy investor T. Boone Pickens. He holds options on 15 million shares of a company known as Clean Energy Fuels. These options expire on December 28th, and their value would skyrocket if the NATGAS bill can pass by then. … Carney notes the opposition to this bill from Wichita-based Koch Industries. As a large producer of fertilizer, the price of a key input — natural gas — would likely increase if NATGAS passes. But we all ought to worry about increases in the price of fertilizer, which would like lead to higher grocery prices. These price increases harm low income families hardest.

Planning grant to be topic of meeting. On Monday December 12th Americans for Prosperity Foundation will feature Sedgwick County Commission Member Richard Ranzau speaking on the topic “The $1.5 million dollar Regional Economic Area Partnership (REAP) HUD Sustainable Development Planning Grant: Economic Development or Economic Destruction?” Some background on this item may be found at Sedgwick County considers a planning grant. This free event is from 7:00 pm to 8:30 pm at the Lionel D. Alford Library located at 3447 S. Meridian in Wichita. The library is just north of the I-235 exit on Meridian. For more information on this event contact John Todd at john@johntodd.net or 316-312-7335, or Susan Estes, AFP Field Director at sestes@afphq.org or 316-681-4415.

Tilting at wind turbines. “Switching from conventional sources of electricity like coal and natural gas to renewables like wind and solar, our elected leaders tell us, will reduce pollution, advance renewable technology and spark a green jobs revolution. Is renewable energy really a green pathway to a brighter economic future? Or is it nothing more than a heavily subsidized impossible dream?” Reason TV takes a look at wind energy in the video Tilting at Wind Turbines: Should the Government Subsidize Renewable Energy? Locally, Wichita Mayor Carl Brewer promotes manufacturing of wind power machinery as good for Wichita’s economic development, and Kansas Governor Sam Brownback supports renewable energy standards for Kansas.

Kansas and Wichita quick takes: Wednesday November 23, 2011

Standing up for fundamental liberties. A particularly troubling objection that those who advocate for liberty face is that we want to deny freedom and liberty to others — as if the quantity of liberty is fixed, and I can have more only if you have less. This is the type of false accusation that leftists make against Wichita-based Koch Industries. In this excerpt from the company’s Koch Facts page, the work that Koch does to advance liberty for everyone is explained: “Throughout Koch’s long-standing record of public advocacy, we have been strong and steadfast supporters of individual liberties and freedoms. These values permeate all that we do as a company and every part of our public outreach. We help fund public and school-based educational programs across the country in an effort to increase citizens’ understanding of the relationship between economic liberty and democracy. We support voter registration efforts in the communities where we live and work, and for our tens of thousands of employees. We support civil rights programs through numerous organizations. We also help build entrepreneurial initiatives that foster the fundamental reality that economic freedom creates prosperity for everyone, especially the poor, in our society. … For many years, we have directly contributed to Urban League, Andrew Young Foundation, Martin Luther King Center, Latin American Association, 100 Black Men, Morehouse College, United Negro College Fund, and dozens of other worthy organizations pursuing similar civic missions. We founded and continue to support Youth Entrepreneurs in schools throughout Kansas, Missouri and Atlanta. This year-long course teaches high school students from all walks of life the business and entrepreneurial skills needed to help them prosper and become contributing members of society. … Many of the attacks against Koch in recent months are cynical posturing at best and deliberate falsehoods divorced from reality at worst. For proof, look no further than the false claim from groups like SEIU that we are somehow trying to suppress the right to vote. … Our freedom as individual Americans relies on the ability to hold the government accountable through the direct exercise of voting rights and the exercise of other individual liberties. We are unwavering in our commitment to these rights and we stand firmly behind our track record in defending them.”

Private property saved the Pilgrims. At Thanksgiving time, the Economic Freedom Project reminds us how an early American experiment with socialism failed miserably, and how private property rights and free enterprise saved the day. See So, Is That My Corn or Yours?

Did Grover Norquist derail the Supercommittee? To hear some analysts, you’d think that Grover Norquist of Americans for Tax Reform is responsible for no deal emerging from the United States Congress Joint Select Committee on Deficit Reduction (the “Supercommittee”). It’s ATR’s pledge to not increase taxes that is blamed, so they say. All members of the Kansas Congressional Delegation except Kevin Yoder signed the pledge. Paul Jacob is thankful for Norquist and that a tax increase was averted.

Drive-through petition signing. From Americans for Prosperity, Kansas: The Wichita area chapter of the free-market grassroots group Americans for Prosperity (AFP) and other local groups have been working to collect signatures for a petition to put the hotel guest tax ordinance to a public vote. Volunteers will be collecting signatures this weekend during a “drive-thru” petition signing Friday, Saturday and Sunday at two Wichita hotels. Wichita activists are continuing their efforts to collect signatures for a petition to put the hotel guest tax ordinance to a public vote. Registered voters simply drive up to the listed locations and volunteers will bring a petition out to them. The times are from 9:00 am to 5:00 pm Friday and Saturday (Nov. 25 and 26), and 12:00 noon to 5:00 pm Sunday (Nov. 27). The locations are Wichita Inn East (8220 E. Kellogg Dr.) and Best Western Airport Inn (6815 W. Kellogg/US-54).

Job creation. Governments often fall prey to the job creation trap — that the goal of economic development is to create jobs. We say this today in Wichita where several labor union leaders appeared before the Sedgwick County Commission to encourage the county to grant a subsidy to Bombardier Learjet. The labor leaders, naturally, pleaded for jobs. To them, and to most of our political and bureaucratic leaders, the more jobs created, the better. Our business leaders don’t do any better understanding the difference between capitalism and business. In his introduction to the recently-published book The Morality of Capitalism, Tom G. Palmer writes: “Capitalism is not just about building stuff , in the way that socialist dictators used to exhort their slaves to ‘Build the Future!’ Capitalism is about creating value, not merely working hard or making sacrifices or being busy. Those who fail to understand capitalism are quick to support ‘job creation’ programs to create work. They have misunderstood the point of work, much less the point of capitalism. In a much-quoted story, the economist Milton Friedman was shown the construction on a massive new canal in Asia. When he noted that it was odd that the workers were moving huge amounts of earth and rock with small shovels, rather than earth moving equipment, he was told ‘You don’t understand; this is a jobs program.’ His response: ‘Oh, I thought you were trying to build a canal. If you’re seeking to create jobs, why didn’t you issue them spoons, rather than shovels?” … After describing crony capitalism — the type practiced in Wichita, Sedgwick County, and Kansas, with deals like the complete funding by taxpayers of the Bombardier LearJet facility, Palmer explains: “Such corrupt cronyism shouldn’t be confused with ‘free-market capitalism,’ which refers to a system of production and exchange that is based on the rule of law, on equality of rights for all, on the freedom to choose, on the freedom to trade, on the freedom to innovate, on the guiding discipline of profits and losses, and on the right to enjoy the fruits of one’s labors, of one’s savings, of one’s investments, without fearing confiscation or restriction from those who have invested, not in production of wealth, but in political power.”

Experts. David Freedman and John Stossel discuss experts, our reliance on them, the political advocacy that’s often involved, and how often experts are wrong.

Kansas and Wichita quick takes: Monday October 31, 2011

Wichita City Council. The Wichita City Council this week considers two items of interest. Spirit AeroSystems will ask for $15 million in IRBs. Spirit will purchase the bonds itself. It will receive a property tax exemption for ten years and exemption from sales tax. No dollar amount is given for the value of the exemptions. … Then, Southfork Investment LLC, a group headed by Jay Maxwell, is asking for the formation of a new tax increment financing (TIF) district. This item, if the council approves, will set December 6 as the date for a public hearing. The vote to form the district would be taken then. … According to city documents, the project is near 47th Street South and I-135. It is planned for 50 acres and one million square feet of retail, hotel, restaurants and office space. For comparison, Towne East Square has slightly less than 1.2 million square feet of space. There will be a medical park on an additional 22 acres. … It appears that all the TIF financing will be pay-as-you go, which is a recent revision to the Kansas TIF law. No bonds would be sold. Instead, the increment in property tax would be refunded to the developer as it is paid. There’s also a joining of TIF and special assessments, where TIF revenue will be used to pay special assessment taxes. … Only a simply majority vote is needed to form the TIF district after the December 6 public hearing. There will have to be redevelopment plans approved after that, and those require a two-thirds majority. Sedgwick County and USD 259, the Wichita public school district each may pass ordinances objecting to the formation of the district. Sedgwick County did that regarding the Save-A-Lot TIF last year, and that project went ahead, despite the claims of the developer that TIF was necessary. USD 259 Superintendent John Allison has recently stated that the school district would not be participating in the formation of TIF districts in the future, as they lose revenue. This will be the first test of that. In 2008 John Todd and I testified that the district should not agree to the formation of a TIF district because of the lost revenue. Officials assured us that the Kansas school finance formula held them harmless, and it didn’t matter if a TIF district was formed. … There will also be a community improvement district (CID) with an additional sales tax of one cent per dollar. … As always, the agenda packet is available at Wichita city council agendas.

Crony capitalism. The Occupy Wall Street protests, as well as the group that protested against Koch Industries on Saturday, seem to be opposed to capitalism. Their efforts would be better directed against business specifically, or crony capitalism in particular. There’s a huge difference. Capitalism is a system of absolute respect for property rights and free exchange in free markets. As Tom G. Palmer wrote in his introduction to the recently-published book The Morality of Capitalism, “Indeed, capitalism rests on a rejection of the ethics of loot and grab.” … As for free markets and enterprise Milton Friedman explained that business is not always in favor: “The great virtue of free enterprise is that it forces existing businesses to meet the test of the market continuously, to produce products that meet consumer demands at lowest cost, or else be driven from the market. It is a profit-and-loss system. Naturally, existing businesses generally prefer to keep out competitors in other ways. That is why the business community, despite its rhetoric, has so often been a major enemy of truly free enterprise.” Even one liberal New York Times columnist realizes this, as did Nicholas D. Kristof when he recently wrote “But, in recent years, some financiers have chosen to live in a government-backed featherbed. Their platform seems to be socialism for tycoons and capitalism for the rest of us. They’re not evil at all. But when the system allows you more than your fair share, it’s human to grab. That’s what explains featherbedding by both unions and tycoons, and both are impediments to a well-functioning market economy.” Kristof goes on to explain that capitalism means the freedom to fail as well as succeed: “Capitalism is so successful an economic system partly because of an internal discipline that allows for loss and even bankruptcy. It’s the possibility of failure that creates the opportunity for triumph. Yet many of America’s major banks are too big to fail, so they can privatize profits while socializing risk.” … While most want more regulation on Wall Street and banks, I think that it’s impossible for government to write effective regulations. Instead, markets — if allowed to work — provide the most effective regulation: if you fail, you fail. It’s as simple as that. But George W. Bush gave a bailout, and Barack Obama has followed along. The Dodd-Frank banking regulations, for example, make “too big to fail” an explicit policy.

Kansas pensions. Do we know the true magnitude of Kansas’ unfunded pension problem? Do we want to know? Perhaps not, writes Paul Soutar at Kansas Watchdog: “Even though taxpayers in the rest of America eventually may find out what public pensions really cost them, Kansas school accounting practices and the way school retirement is funded may let school districts avoid reporting the true cost of district employee pensions. Some estimates show the unfunded actuarial liability of the Kansas Public Employees Retirement System will more than double from its current official $8.3 billion based on optimistic assumptions to more than $20 billion using the more realistic calculations.” The full story is School Districts May Get to Dodge Accounting Rules on Pensions . … State Budget Solutions, in a recent report (Report reveals aggregate state debt exceeds $4 trillion) made similar findings, writing that our unfunded pension liability is $21.8 billion, well over twice as high as the numbers used by most official sources. The difference: “The AEI figures estimate how large public pension liabilities would be if states used private sector market-valuation methods.” In other words, the real world.

Global economics to be discussed in Wichita. This week’s meeting (November 4th) of the Wichita Pachyderm Club features Chris Spencer, Vice President, Regional Sales Manager Oppenheimer Funds, speaking on “Goliath vs Goliath — The global battle of economic superpowers.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club Upcoming speakers: On November 11th: Sedgwick County Commission Members Richard Ranzau and Jim Skelton, speaking on “What its like to be a new member of the Sedgwick County Board of County commissioners?” … On November 18th: Delores Craig-Moreland, Ph.D., Wichita State University, speaking on “Systemic reasons why our country has one of the highest jail and prison incarceration rates in the world? Are all criminals created equal?” … On November 25th there will be no meeting.

Progress, or not. Today’s Wichita Eagle carries a letter that laments the jobs lost due to self-serve checkout lanes, online bill payment, online banking, and online reservation services. Concluding, the letter asks readers to “consider how many jobs could be saved if all of us stopped demanding immediate service or answers.” This reminded me of a recent column by Donald J. Boudreaux, commenting on similar remarks by U.S. Rep. Barbara Lee (D-CA). He wrote: “Fred Barnes reports in the Weekly Standard that you refuse to use computerized checkout lanes at supermarkets (“Boneheaded Economics,” Oct. 24). As you — who are described on your website as ‘progressive’ — explain, ‘I refuse to do that. I know that’s a job or two or three that’s gone.’ Overlooking the fact that you overlook the lower prices on groceries made possible by this labor-saving technology, I’ve some questions for you: Do you also avoid using computerized (‘automatic’) elevators, riding only in those few that still use manual elevator operators? Do you steer clear of newer automobiles equipped with technologies that enable them to go for 100,000 miles before needing a tune-up? I’m sure I can find for you, say, a 1972 Chevy Vega that will oblige you to employ countless mechanics. Do you shun tubeless steel-belted radial tires on your car — you know, the kind that go flat far less often than do old-fashioned tires? No telling how many tire-repairing jobs have been destroyed by modern technology-infused tires. Do you and your family refuse flu shots in order to increase your chances of requiring the services of nurses and M.D.s — and, if the economy gets lucky and you and yours get seriously ill, also of hospital orderlies and administrators? Someone as aware as you are of the full ramifications of your consumption choices surely takes account of the ill effects that flu shots have on the jobs of health-care providers. You must, indeed, be distressed as you observe the appalling amount of labor-saving technologies in use throughout our economy. It is, alas, a disturbing trend that has been around for quite some time — since, really, the invention of the spear which destroyed the jobs of some hunters.”

Business and politics. We often hear that government should be run like a business. But the two institutions are entirely different, explains Burton Folsom: “The differences between business and politics, however, is where our focus needs to be. In business, you hire people with your profits to make and sell your product. With those jobs, your employees earn money, spend money, and thereby create other jobs by their demand for houses, cars, iPhones, and household products. Wealth expands, new entrepreneurs get new ideas for products to make, and, if society is free, it becomes prosperous. In politics, you do hire people to run your campaigns and your administration once you’re in office; you do sometimes dole out jobs to build highways, snoop on business, or run the IRS. But almost all of those jobs require other people’s money (i.e. tax dollars) to continue. They take money out of the economy. For example, the jobs created by the Justice Department to check on the trading practices of corporations, the jobs created by the agriculture department to interact with farmers, or the thousands of jobs created to bring trillions of tax dollars each year to Washington are all jobs that take wealth out of the private sector. Looked at this way, the jobs created in business are the productive jobs, the ones that create wealth and give us the thousands of choices we enjoy in breakfast cereal, cars, clothes, and houses. By contrast, each job created in the political class subtracts a job that could be continued or created in the private sector.” … More at The Difference between Business and Politics.

The politically-motivated attack on Koch Industries

Investor’s Business Daily and The Atlantic have provided more context to the politically-motivated article in Bloomberg Markets criticizing Wichita-based Koch Industries. We find that the more scrutiny the Bloomberg article receives, the worse it looks.

The Investor’s op-ed makes the observation that anyone who reads the article must come to: “Indeed, throughout the entire story you find the Kochs taking steps to bring corporate behavior back in line, not only with the law but with their own stringent ethical standards.”

Later, the authors point out the politics behind the attack on Koch: “The long hit piece, as Daniel Indiviglio writes in the Atlantic, managed to find ‘eight instances of alleged misconduct by a giant multinational over the span of 63 years.’ In nearly every case, Koch itself took steps to correct the problems. Putting it in context, Indiviglio then Google-searched a comparable company, finding eight serious instances of misconduct — we’re talking fines and settlements for fraud and bribery — over 11 years. That company would be GE, whose CEO Jeffrey Immelt heads President Obama’s jobs council and seems to see regulation as opportunities for businesses to profit. We await that Bloomberg investigation.”

In his piece for The Atlantic, Indiviglio writes: “According to Bloomberg, 14 reporters around the globe worked for six months on the story. What did they turn up? Really, shockingly little. And what’s worse: from the very outset, the reporters’ bias against the Koch brothers is utterly clear.”

On the bias and lack of context, he writes: “To further attempt to sway the reader before explaining the facts, the reporters reveal the following fact that someone not familiar with politics and lobbying might find shocking: ‘Koch Industries has spent more than $50 million to lobby in Washington since 2006.’ My reaction to reading this was, ‘$50 million? That’s it?’ That might sound like a lot, but let’s compare that to, say, General Electric. Over the same period, GE has spent more than $136 million lobbying, according to the Center for Responsive Politics.”

After running through the eight issues in the Bloomberg piece, Indiviglio concludes: “Obviously, Koch Industries did make mistakes. It likely regrets those mistakes: the penalties, fines, and lawsuits that resulted cost the firm many millions of dollars. This is more a problem with big multinational corporations than a problem specific to Koch, however. When you’ve got subsidiaries around the world, strong, flawless oversight is difficult and very expensive.”

Underlying this article (and others like it) and its criticism is the advocacy of Charles Koch and David Koch for free markets and economic freedom — something the political left is opposed to.

But it’s not only the political left — liberals and progressives — that oppose the positions that Charles and David Koch advocate. Much of the business community, like General Electric, thrive on the crony capitalism the Kochs oppose, and have opposed for many years. As Charles Koch wrote earlier this year in the Wall Street Journal: “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.”

Powerline on Bloomberg, Koch Industries

The recent piece by Bloomberg Markets on the purported faults of Koch Industries is being revealed as another example of the politically-motivated slash-and-burn pieces that have become common at media outlets with a liberal political agenda.

Koch Industries itself has debunked the reporting in the piece on its KochFacts.com site. Others have too. John Hinderaker of Powerline Blog has a series of pieces that detail problems with the Bloomberg article. It’s a lot to read, as the Bloomberg article itself is lengthy. Here’s an excerpt from the first of three parts that reveals the political nature and motivation of Bloomberg:

Bloomberg’s article offers a pastiche of five or six incidents which took place over a period of decades, are completely unrelated, and were selected by Bloomberg simply because they can be used to put Koch in a bad light. Bloomberg says that “Koch’s history of flouting rules covers more than two decades,” but what that actually means is that Bloomberg had to go back a quarter century to find a handful of examples where Koch had a regulatory problem. (Actually, one of the instances cited by Bloomberg goes back to the Truman administration.) The same attack could be made against any large manufacturing company. Let’s take just one example.

General Electric is the Obama administration’s favorite U.S. company (with the possible exception of “green” energy sinkholes like Solyndra). Yet everything Bloomberg wrote about Koch Industries could just as easily have been written about G.E. G.E.’s foreign subsidiaries have done business in Iran, and G.E., like Koch, has publicly noted that its subsidiaries’ dealings with Iran were legal. Likewise, employees of one or more G.E. companies paid bribes to obtain business in Iraq, and just last year, G.E. paid a $23.4 million fine as a result. And G.E. has had environmental problems, like–to name just a few–contaminating the Hudson and Housatonic Rivers with PCBs, along with the Coosa River Basin, and releasing dimethyl sulfate, chlorine, 1, 1, 1, -trichloroethane, ammonia, and toluene from its silicone manufacturing plant in Waterford, New York. G.E. has had product liability problems, including claims of wrongful death that were, tragically, justified. And, while Bloomberg makes a laughable price-fixing claim against Koch, G.E. was in fact a party to one of the most famous price-fixing conspiracies of all time.

So, is Bloomberg’s story titled “The Secret Sins of General Electric”? Or, in the online version, “General Electric Flouts Law With Secret Iran Sales?” Of course not. G.E. is generally identified with the Democratic Party. Does anyone seriously doubt that Bloomberg wanted to do a hit piece on Koch Industries solely because that company’s owners are prominent conservatives? Of course not.

The three Powerline articles are here:

Bloomberg Whiffs, Part 1: “So the supposedly explosive charge that Bloomberg chose to headline–Koch ‘flout[ed] the law’ and acted ‘in defiance of a U.S. trade ban’ is simply false. Koch did no such thing; what is more, unlike hundreds of other American companies, it has voluntarily gone beyond the requirements of the law and has, in more recent years, prohibited all subsidiaries from doing business in Iran.”

Bloomberg Whiffs, Part 2: “The Koch subsidiary’s termination of Mrs. Egorova-Farines was held to be amply justified. But Bloomberg didn’t want you to know any of that. Bloomberg, motivated by political animus against the Koch brothers, wanted you to get the impression that she was a heroic whistle-blower who was fired for lifting the lid on another employee’s improper payments. This is the sort of dishonesty that pervades the entire hit piece.”

Bloomberg Whiffs, Part 3: “Like all too many ‘whistle-blowers,’ Ms. Barnes-Soliz was a poor employee who, anticipating termination, asserted false claims against her employer in order to set up a lawsuit. The criminal prosecution that resulted was far from the triumphant vindication that Bloomberg portrays; on the contrary, the prosecutor overreached and his case collapsed when it was tested in court, to the extent that the federal government pleaded for a settlement in which the Koch employees it had persecuted agreed not to sue it for malicious prosecution.”

In his conclusion, Hinderaker wrote: “This is a story from which one can learn a great deal. First, don’t take news accounts of noble whistle-blowers and evil corporations at face value. The truth is usually much different from what is implied by liberal reporters. Second, reporters like those at Bloomberg who write on such topics are generally ill-suited to the task. Typically, they know little about business, let alone the complex legal and environmental compliance issues that were involved here. Worse, they generally don’t know how to research effectively, and — to be blunt — aren’t very diligent. So if someone hands them a story that fits their political preconceptions, they swallow it hook, line and sinker.”

Greenpeace and allies again attack Koch Industries

Last week saw the release of two reports criticizing Koch Industries for its opposition to heavy-handed regulation of the chemical industry. Greenpeace released a report with highly charged words in its title: “Toxic Koch: Keeping Americans at Risk of a Poison Gas Disaster.” Other articles commenting on this were highly sensational, such as this example: “Do the Koch Brothers Want a Toxic Disaster?”

Koch Industries has responded to these articles in a response on KochFacts.com website. Among many facts, we can see that Koch companies have received 386 safety awards and 28 environmental awards just since President Obama took office.

Much of the Greenpeace report criticized Koch for its opposition to H.R. 2868, the Chemical and Water Security Act of 2009. Koch and most of the chemical industry instead favored continuation of Chemical Facility Anti-Terrorism Standards, a set of less intrusive standards that have been effective.

Greenpeace characterizes the regulatory measures in H.R. 2868 as so mild that it can’t imagine why anyone would object. At issue is a concept known as “Inherently Safer Technology” or IST. If passed into law or regulation, regulators could require manufacturers to substitute alternative processes, in the name of safety. That, however, poses many problems, as explained below.

The Greenpeace report contains an economic analysis of what H.R. 2868 might do to the economy. This bill passed the House of Representatives, but not the Senate. The report estimates that the cost of IST would be slightly less than $1 billion per year. The analysis concludes that the extra costs of IST regulation would eliminate jobs, but the extra spending on IST would add roughly the same number of jobs. The net impact is therefore zero.

But we shouldn’t infer that a net loss of zero jobs means no economic harm is done. There will be dislocation, as the people who gain jobs won’t likely be the people who lost jobs.

But most importantly, this extra cost is spent paying for something that isn’t a problem. The Greenpeace report concedes there have been no attacks on U.S. chemical plants since the terrorist attacks of 9/11. The reports says various terrorists would like to conduct such attacks. That’s hardly news. What is news is that, for whatever reason, they haven’t succeeded.

It’s true that the words “Inherently Safer Technology” don’t appear in H.R. 2868. But in an explanatory document produced by Greenpeace, we see the bill isn’t as mild as Greenpeace claims: “If a facility disagrees with the DHS’s finding they have 120 days to appeal and the DHS must consult with a wide range of experts and those expert recommendations must be included in any order to implement safer chemical processes.” (emphasis added)

That sounds like heavy-handed regulation and the implementation of IST. Or maybe it’s just wishful thinking on Greenpeace’s part. At any rate, once initiated these regulatory regimes have a way of growing, often far exceeding the intent of Congress when it passed the legislation creating the initial regulation.

But that’s the goal of the political left: Regulation. And if they can accomplish this goal while at the same time beating up on Koch Industries, the chemical industry, the oil industry, and capitalism in general, so much the better for them. Underlying the quest of Greenpeace and its allies is a hatred of capitalism, hated so much that they will do whatever it takes to discredit and defeat its proponents and practitioners.

The problems with Inherently Safer Technology regulation

A document titled Final Report: Definition for Inherently Safer Technology in Production, Transportation, Storage, and Use supplies some useful information about IST:

IST’s are relative: A technology can only be described as inherently safer when compared to a different technology, including a description of the hazard or set of hazards being considered, their location, and the potentially affected population. A technology may be inherently safer than another with respect to some hazards while being inherently less safe with respect to others, and may not be safe enough to meet societal expectations.

IST’s are based on an informed decision process: Because an option may be inherently safer with regard to some hazards and inherently less safe with regard to others, decisions about the optimum strategy for managing risks from all hazards are required. The decision process must consider the entire life cycle, the full spectrum of hazards and risks, and the potential for transfer of risk from one impacted population to another.

This hints at the difficulty in regulating complex processes such as manufacturing. There may be many tradeoffs to make. An an example, a process might use a toxic catalyst. It would seem that eliminating its use would lead to greater safety.

But: the tradeoff. Eliminating the use of the catalyst would mean the company has to increase the temperature and pressure of the process, two factors that increase risk. The end result might be a process with more risk than the original process.

At a committee hearing in 2009, Senator Susan M. Collins gave another example of how IST might force more hazardous trucks on highways:

According to one water utility located in an isolated area of the Northwest, if Congress were to force it to replace its use of gaseous chlorine with sodium hypochlorite, then the utility would have to use as much as seven times the current quantity of treatment chemicals to achieve comparable water quality results. In turn, the utility would have to arrange for many more bulk chemical deliveries, by trucks, into the watershed. The greater quantities of chemicals and increased frequency of truck deliveries would heighten the risk of an accident resulting in a chemical spill into the watershed. In fact, the accidental release of sodium hypochlorite into the watershed would likely cause greater harm to soils, vegetation and streams than a gaseous chlorine release in this remote area.

In its discussion on IST, the “Final Report: Definition for Inherently Safer Technology in Production, Transportation, Storage, and Use” report notes the tradeoffs that are commonplace:

IST options can be location and release scenario dependent, and different potentially exposed populations may not agree on the relative inherent safety characteristics of the same set of options. For example, two options for handling a toxic gas might be receiving the material in ten, 1-ton cylinders or one, 10-ton truckloads. To a population several miles from the site, the 1-ton cylinders would be inherently safer because the maximum potential release size is smaller and less likely to expose them to a hazardous concentration of the gas. However, operators, who would now have to connect and disconnect 10 cylinders for every 10 tons of material used, instead of a single truck, would consider the truck shipments to be inherently safer. Thus, evaluation of IST options can be quite complex, and dependent on the local environment. There is currently no consensus on either a quantification method for IST or a scientific assessment method for evaluation of IST options.

We need to consider also who is in the best position to judge the relative risks: government bureaucrats, or the operators of the plant. The view of government regulators is that any risk is bad, and through technology — IST in this example — we can eliminate risk.

But this ignores the tradeoffs involved, as illustrated above. It also ignore the costs of these regulations in their attempt to lessen risk, notwithstanding the economic analysis commissioned by Greenpeace.

A common response we see in the media — certainly we see it from the political left and attack groups like Greenpeace as well as government regulators — is that greedy plant owners will use whichever method is cheapest, so as to produce the greatest profit.

This ignores the fact that there are laws and regulations already in place. It ignores the fact that market forces give plant operators a huge incentive to operate safely, for their own safety, the safety of the employees they can’t operate without, and the safety of the surrounding communities. Besides the potential loss of human life, unsafe plants expose their operators to huge economic costs. Besides being liable for damage and loss of life due to accidents, unsafe workplaces have to pay employees more to work there. Insurers charge higher rates for unsafe plants they believe present a high risk of having to pay claims.

Contrary to Buffet, government spending is not good

Recently wealthy investor Warren Buffet has been in the news for his advocacy of higher taxes. But is government — politics, in other words — the best way to allocate resources?

In a statement on the KochFacts website, Charles Koch disagrees with Buffet:

As part of the public discourse on government overspending and fiscal irresponsibility, Charles Koch offered the following public response to media queries on the topic: “Much of what the government spends money on does more harm than good; this is particularly true over the past several years with the massive uncontrolled increase in government spending. I believe my business and non-profit investments are much more beneficial to societal well-being than sending more money to Washington.”

We have to wonder if Buffet is really sincere about the wisdom of sending money to government. As I noted a few years ago, Buffet is giving most of his fortune to charity. In this way, he avoids the estate, or inheritance, tax. If Buffet really thinks inheritance taxes are good, he should keep his wealth and let the government tax it when he dies, like others have to.

Or, as many have noted, Buffet is free to give as much as he wants — right now — to the federal government.

But as it turns out, even the super wealthy don’t have much money when compared to the needs of government. Buffet’s fortune, the third largest in the world, would pay for just 12 days of federal government borrowing. Not total spending — just the new debt the U.S. government accumulates in less than two weeks.

Pickens: It’s all about me, and MSNBC doesn’t notice

Appearing on the MSNBC morning program Morning Joe, energy investor T. Boone Pickens let us know that despite his no-nonsense business-like approach to supporting what he believes to be in America’s best interests, it’s really all about him and what profits him. But program hosts Joe Scarborough and Mika Brzezinski didn’t catch that.

Pickens appeared on the program to gain support for legislation he is seeking to pass through Congress. His bill is H.R. 1380: New Alternative Transportation to Give Americans Solutions Act of 2011, commonly referred to as the NAT GAS act. The bill would provide payments in the form of tax credits to encourage the use of natural gas as a transportation fuel.

Host Scarborough said “It makes so much sense.” At the end of the segment, Brzezinski pleaded “Do us a favor. Please don’t give up.”

Never once did either host bring up the facts that Daniel Indiviglio cites in his coverage for The Atlantic. Mike Barnicle was on the show but wasn’t helpful in this regard, either.

The problem is this, according to Indiviglio: “At no point during the nine-minute interview on MSNBC did Pickens mention that he stands to make a significant financial gain if the bill he’s promoting succeeds and natural gas usage expands.”

Pickens knows how to present his case in the best possible light, picking and choosing which fact to present, and which to stretch or ignore. He criticizes Koch Industries for its opposition to the bill. Koch has explained its opposition to subsidies for natural gas as a transportation fuel, just as it opposes all subsidies. In a statement on its Viewpoint website, Dr. Richard Fink, Executive Vice President of Koch Industries, explained the harm of government intervention, writing “Koch has consistently opposed subsidies that distort markets. We maintain that the marketplace, while not perfect, is the best mechanism for allocating resources to consumers. People deciding what fuels to purchase, instead of the government, is best for consumers and our country. Likewise, if natural gas vehicles are truly advantageous and economically efficient, then consumers will demand that they be developed without political mandates that exhaust more taxpayer dollars.”

Pickens went on to criticize Koch for accepting subsides for ethanol production. Koch Industries, as a refiner of oil, blends ethanol with gasoline it produces in order to meet federal mandates on ethanol usage. Even though Koch opposes subsidies for ethanol, Koch accepts the subsidies. A company newsletter explains: “Once a law is enacted, we are not going to place our company and our employees at a competitive disadvantage by not participating in programs that are available to our competitors.”

So the criticism of Koch by Pickens is unfounded. Now I wouldn’t really expect the program hosts to be aware of this, but they must have been aware that Pickens will profit, probably handsomely, if the NAT GAS act passes.

In his coverage Indiviglio writes: “Essentially, Pickens criticizes Koch for preferring government subsidies to benefit Koch Industries. But is Pickens’ motivation for natural gas subsidies really any different?”

It is different in an important way. Koch, as explained above, participates in a subsidy program that is available to all similarly situated companies. At the same time the company calls for its end for reasons of principle that the company and its owners have supported for many years. Pickens, on the other hand, wants to create a new program with new subsidies and new expansion of government intervention into free markets.

Besides this, when you listen to Pickens, you realize it’s all about him and what he wants. “We have 250 million vehicles in America. So I’m going to take eight million heavy duty trucks — that’s it — and that will do it.” And then “I want a billion dollars a year for five years.”

Large decisions about our country’s energy future shouldn’t be made by one person, or even by Congress and the president. We need to let the dynamic discovery process of markets harness and organize the tremendous diverse power of the human mind and reveal to us the best energy solutions.

Kansas and Wichita quick takes: Friday July 1, 2011

This Week in Kansas. On this week’s edition of the KAKE Television public affairs program This Week in Kansas, Ken Ciboski (Associate Professor of Political Science at Wichita State University), John D’Angelo (Arts & Cultural Services Manager for the City of Wichita), and myself join host Tim Brown for a discussion of arts and government funding in Kansas. This Week in Kansas airs in Wichita and western Kansas at 9:00 am Sundays on KAKE channel 10.

Kansas taxes. A short report produced by Americans for Prosperity, Kansas shows some of the reasons why economic growth in Kansas has been sluggish: “Kansas’ state and local tax burden continues to be amongst the highest in the region.” Kansas has fewer private sector jobs than it did ten years ago. And in what should be a grave cause for alarm, Kansas was the only state to have a net loss of private sector jobs over the last year. … A table of figures illustrates that although Oklahoma kept its sales tax rate low and constant while Kansas increased its rate, tax revenue increased much more in Oklahoma. Download the report at AFP-Kansas Income Tax Policy Primer.

Wichita sales tax. Speaking of sales tax and its harmful effect, Wichita seems to want to raise its rate. Proposals have been floated for a sales tax for economic development in general, for increased transit (bus) service, for drainage projects, and for downtown projects. Boosters cite the Intrust Bank Arena as an example of a successful project paid for by a sales tax that disappeared as promised. That’s despite the dreams of Sedgwick County Commissioner Tim Norton: “Then, as that tax was nearing its end, Norton ‘wondered … whether a 1 percent sales tax could help the county raise revenue.’ (‘Norton floats idea of 1 percent county sales tax,’ Wichita Eagle, April 4, 2007)” … Boosters of the arena promote it as a financial success, and there was the presentation to the county of a check for $1,116,442 as its share of the arena’s earnings. This figure, however, does not represent any sort of “profit” or “earnings” in the usual sense. In fact, the introductory letter that accompanies these calculations warns readers that these are “special-purpose financial statements” and “are not intended to be a presentation in conformity with accounting principles generally accepted in the United States of America.” In particular, Commissioner Karl Peterjohn has warned that these figures — and the monthly “profit” figures presented to commissioners — do not include depreciation expense. That expense is a method of recognizing and accounting for the large capital cost of the arena. In April the County released that number, and I believe it has not been reported by any news media. That may be because the number is pretty big — $4.4 million, some four times the purported “earnings” of the arena. … Without honest discussion of numbers like these, we make decisions based on incomplete and false information. Don’t look for many local government leaders and officials to talk about this number, and certainly not the Wichita Eagle editorial page.

Koch criticism backfires — again. For those who follow the issue, it’s no surprise that Lee Fang, a reporter for the liberal think tank Canter for American Progress has come out with another attack on Charles and David Koch. Mark Hemingway of the Weekly Standard reports on this effort: “Think Progress reporter Lee Fang has a long history of being spectacularly wrong. However, there’s a seemingly unending thirst for his breathless demonization of the Koch brothers and other rants about corporate greed among the low IQ end of the liberal spectrum.” Fang disagrees with a recent U.S. Supreme Court decision, and he lambasts the litigators who brought the suit as “heavily financed by right-wing corporate money, particularly from Koch Industries and Walmart.” He also criticizes organizations for not dislosing their donors. Hemingway notes this: “In the case of the Koch brothers, they have been outspoken philosophical libertarians for decades. Their support of free speech over onerous campaign laws is entirely consistent and should not be surprising. However, in the case of Wal-Mart Fang is also astoundingly hypocritical. Because you know who else is a ‘Walton-Funded Group’? Lee Fang’s employer.” And the secret donations that Fang rails against so passionately? Hemingway again: “You know who else accepts ‘secret donations from individuals and corporations’? That’s right — the Center for American Progress.” … For another example of Fang’s reporting, see ThinkProgress and Lee Fang: wrong again.

Tension on debt ceiling issue. In The Wall Street Journal Kimberly Strassel writes that the current debt and spending crisis may lead to an end to farm subsidies, something she described as a “sacred federal spending cow:” “For decades, the House and Senate agriculture committees have been the last redoubts of congressional bipartisanship, liberals and conservatives united in beating back any outside attempts to cut off tens of billions annually for price supports, crop insurance, weather assistance, conservation handouts and nutrition programs. The last real stab at reform was the mid-1990s Freedom to Farm bill. Most of the changes were obliterated by subsequent bailouts and new spending.” … She describes how Arizona Congressman Jeff Flake got a limit of farm subsidies through the Appropriations Committee, but House Agriculture Committee Chairman Frank Lucas used a maneuver to block Flake’s proposal. So much for that effort at reform, blocked by a Republican. Lucas’ website promotes a conservative message, with one post criticizing bailouts. But not for farmers, it seems. … Wichita’s Mike Pompeo is mentioned: “Mr. Pompeo is waiting to see what debt package emerges and says his vote will depend on whether it contains real ‘structural’ reform. But he also tells me he doesn’t intend to let parochial interests cloud his decision. ‘I came here to be a small-government guy every day, and not just when it is spending cuts in somebody else’s district,’ he says.” … Although not mentioned in this article, Tim Huelskamp, who represents the Kansas first district, has been upfront in discussing the need to reduce or eliminate farm subsides, and so far, many farmers seem to be accepting of that. Huelskamp’s district, which covers all of western Kansas (and more), is usually second on the list of congressional districts in terms of total farm subsidies received. For 2009, that figure was $369 million.

Stossel: The Money Hole. A recent episode of John Stossel’s television program is now available on the free hulu service by clicking on The Money Hole. Writes Stossel in his introduction to the show: “We will soon spend ourselves into oblivion. But finally … movement! Budget slashing proposals from Paul Ryan, the Republican Study Committee, Ron Paul, Rand Paul and even Tim Pawlenty! But politicians and real people across the spectrum still resist change. What should government do? What’s its role? What have other countries done? The Money Hole tackles that.”

Greenwald and Sanders try to defend Social Security, slam Charles and David Koch

Are the free market critics of Social Security a shadowy “echo chamber” seeking to end the system for the benefit of the rich, or sounding a fact-based alarm that government and its supporters dispute and don’t want you to hear?

According to a short video by Robert Greenwald, it’s the first choice. But examination of the claims made will lead us to the opposite conclusion, and you’ll wonder why Greenwald has any credibility.

The video features U.S. Senator from Vermont Bernie Sanders, who describes himself as a democratic socialist. He describes Social Security as a federal program that has been “enormously successful,” so right away we need to take issue with Sanders. Social Security a success? If creating a system where millions of people are dependent on government for their retirement income is a successful program, the government has done just that. What has been the result? As George Reisman recently wrote: “Not surprisingly, in the conviction that the government was now providing for people’s old age, the rate of saving in the United States has declined precipitously over the years, falling all the way to zero in some years.”

We’ve transitioned from savers to government dependents. For a socialist like Sanders, that may very well have been his goal. He certainly can’t be unhappy with the results.

Right after this, the video shows images and names of think tank organizations that are funded in part by Charles Koch and/or David Koch, with Sanders claiming these organizations spread “disinformation” about Social Security. The information generated by these think tanks is truthful, however, and an important antidote to a huge whopper of a lie Sanders will spread later on.

(At this point one might be tempted to ask: What is the interest of the Charles and David Koch in reforming Social Security? John Hinderaker in his Powerline article A Less Than Magnificent Obsession answers this question when he writes: “… does it make any difference to the Kochs’ company, Koch Industries, whether the retirement age is 65 or 68? I can’t imagine why it would. Likewise, the brothers themselves are both billionaires. Whether Social Security is or is not reformed makes zero difference to them personally.” I would say, however, that Charles and David Koch have long advocated for liberty and economic freedom for everyone, and since Social Security is contrary to that, this could explain their interest.)

A huge focus of the video is raising the retirement age. It’s repeated over and over — so as to scare viewers. As John Hinderaker notes at Powerline, it’s been done before: “proposals to raise the age of Social Security eligibility have been a bipartisan staple of reform proposals for decades. … The bipartisan Bowles-Simpson Commission, which was appointed by President Obama, recommended increasing the age of eligibility.”

It’s important to note that the Social Security retirement age is simply the age at which one can begin receiving benefits. Contrary to the claims of Sanders in this video, it doesn’t mean that everyone has to keep working until that age. Over the course of a working career, isn’t it possible for someone to save enough to cover the several years between when they decide to quit working and when they’re eligible for Social Security? Or will we let the government — people like Sanders — tell us how long we must work?

Sanders also says that older people need to retire and get out of the workforce to make way for younger workers to take their jobs. This is an example of the fallacy — followed by nearly all on the political Left, it seems — of believing that the economy is a fixed size, and that one person can have income only if someone else gives up theirs.

Perhaps the most dangerous lie of Sanders is his claim that Social Security has a $2.6 trillion surplus available to pay future benefits. He’s referring to the Social Security trust fund. Here, Sanders is correct one on level: The system has collected that much more than it has needed to pay benefits, forming the balance referred to in the trust fund. That money has been lent to other federal government agencies, and they spent it all. So while Federal Agency X may owe the trust fund $50 billion, the only way that agency can repay the trust fund is by borrowing or increasing taxes. (Less spending might be another way, but that’s a difficult goal, and we’d be taxed the same for a lower level of services — a tax increase by another name.) See Social Security trust fund: a problem in disguise.

Sanders dismisses private retirement accounts as risky and dangerous: “You may lose all your retirement savings when you get old.” While true, any reasonable investment strategy designed for the long term has little chance of that happening. Unless, of course, one gets greedy and invests everything in a company like Enron — greed of that type being something Sanders rails against.

Saving on one’s own, however, isn’t what leftists like Bernie Sanders have in mind. Far better for him, Democrats, and big-government Republicans that people remain dependent on government for their retirement security. Once people save and gain some wealth of their own, they find that they can thrive very nicely without a nanny state government. They find themselves wishing they could have saved more throughout their working lives, rather than making forced contributions to a government retirement plan that’s now broke. Even if not broke, most people would be in a much better position if they could have kept their own and their employers’ payroll tax contributions for their own investment.

Finally, Sanders makes a major point of “huge campaign contributions” made to advance the interests of Charles and David Koch. Hinderaker chases down some of the actual numbers, and finds that contributions from Koch Industries PAC are sometimes less than what a single labor union has contributed.

In the end, I’m sure that Sanders said something that’s true in this video. But I can’t bear to watch it again to try and spot it.

Here’s my video response:

Kansas and Wichita quick takes: Wednesday May 25, 2011

The failure of American schools. The Atlantic: “Who better to lead an educational revolution than Joel Klein, the prosecutor who took on the software giant Microsoft? But in his eight years as chancellor of New York City’s school system, the nation’s largest, Klein learned a few painful lessons of his own — about feckless politicians, recalcitrant unions, mediocre teachers, and other enduring obstacles to school reform.” Key takeway idea: “As a result, even when making a lifetime tenure commitment, under New York law you could not consider a teacher’s impact on student learning. That Kafkaesque outcome demonstrates precisely the way the system is run: for the adults. The school system doesn’t want to change, because it serves the needs of the adult stakeholders quite well, both politically and financially.” … Also: “Accountability, in most industries or professions, usually takes two forms. First and foremost, markets impose accountability: if people don’t choose the goods or services you’re offering, you go out of business. Second, high-performing companies develop internal accountability requirements keyed to market-based demands. Public education lacks both kinds of accountability. It is essentially a government-run monopoly. Whether a school does well or poorly, it will get the students it needs to stay in business, because most kids have no other choice. And that, in turn, creates no incentive for better performance, greater efficiency, or more innovation — all things as necessary in public education as they are in any other field.” … Overall, an eye-opening indictment of American public schools.

Professors to Koch Brothers: Take your green back. In The Wall Street Journal Donald Luskin takes a look at what should be a non-controversy: A gift by the Charles G. Koch Charitable Foundation to Florida State University to endow a program to study the foundations of prosperity, social progress, and human well-being — at the Stavros Center for the Advancement of Free Enterprise and Economic Education. (Sounds like a good match.) Writes Luskin: “Then there’s the donors. One of the donors, according to the two professors, is known for his ‘efforts to influence public policy, elections, taxes, environmental issues, unions, regulations, etc.’ Whom might they be referring to? Certainly not George Soros — there’s never an objection to that billionaire’s donations, which always tend toward the political left. No, it’s Charles and David Koch, owners of Koch Industries.” … Critics say the gift is an assault on academic freedom. Luskin counters: “The issue at FSU isn’t that the university has bargained away its academic freedom. The problem is that FSU has exercised its academic freedom in a way that the political left disapproves of. As [FSU College of Social Sciences] Mr. Rasmussen put it to the St. Petersburg Times: ‘If somebody says, ‘We’re willing to help support your students and faculty by giving you money, but we’d like you to read this book,’ that doesn’t strike me as a big sin. What is a big sin is saying that certain ideas cannot be discussed.”

History and legacy of Kansas populism. Recently Friends University Associate Professor of Political Science Russell Arben Fox delivered a lecture to the Wichita Pachyderm Club that was well-received by members. Now Fox has made his presentation available on his blog In Media Res. It’s titled The History and Legacy of Kansas Populism. Thank you to Professor Fox for this effort, and also to Pachyderm Club Vice President John Todd, who arranges the many excellent programs like this that are characteristic of the club.

Federal grants seen to raise future local spending. “Nothing is so permanent as a temporary government program.” — Nobel Laureate Milton Friedman (The Yale Book of Quotations, 2006) Is this true? Do federal grants cause state and/or local tax increases in the future after the government grant ends? Economists Russell S. Sobel and George R. Crowley examine the evidence and find the answer is yes. The conclusion to their research paper Do Intergovernmental Grants Create Ratchets in State and Local Taxes? Testing the Friedman-Sanford Hypothesis states: “Our results clearly demonstrate that grant funding to state and local governments results in higher own source revenue and taxes in the future to support the programs initiated with the federal grant monies. Our results are consistent with Friedman’s quote regarding the permanence of temporary government programs started through grant funding, as well as South Carolina Governor Mark Sanford’s reasoning for trying to deny some federal stimulus monies for his state due to the future tax implications. Most importantly, our results suggest that the recent large increase in federal grants to state and local governments that has occurred as part of the American Recovery and Reinvestment Act (ARRA) will have significant future tax implications at the state and local level as these governments raise revenue to continue these newly funded programs into the future. Federal grants to state and local governments have risen from $461 billion in 2008 to $654 billion in 2010. Based on our estimates, future state taxes will rise by between 33 and 42 cents for every dollar in federal grants states received today, while local revenues will rise by between 23 and 46 cents for every dollar in federal (or state) grants received today. Using our estimates, this increase of $200 billion in federal grants will eventually result in roughly $80 billion in future state and local tax and own source revenue increases. This suggests the true cost of fiscal stimulus is underestimated when the costs of future state and local tax increases are overlooked.” … An introduction to the paper is here.

Debt observed as sold. New U.S. Representative Tim Huelskamp, who represents the Kansas first district, recently observed the Bureau of Public Debt electronically sell debt obligations of the United States of America. In a press release, the Congressman said: “In a matter of minutes, I observed the United States sell $30.4 billion more in debt. The ease with which this transaction was done reminded me that it is just too simple for Washington to acquire, buy, sell and trade debt.” As to the upcoming decision as to whether to raise the ability of the U.S. to borrow: “As Congress considers yet another increase in the debt limit, the only responsible option that exists is to put America on a path to fiscal responsibility with clear limits on spending. Democrats say they want a debt limit increase that is ‘clean’ without any of the budget cuts we have proposed. Yet, they have offered no plan to eliminate annual trillion-dollar deficits. There is nothing ‘clean’ about increasing the limit without tackling the massive deficits and ever-increasing debt. … With nearly one-half of the nation’s debt held by foreign countries, including more than $1.1 trillion by China, our national security is threatened as well. Too many of our freedoms and liberties are threatened when Americans owe trillions of dollars to nations who put their interests before ours.”

Pickens criticism illustrates divide between free markets and intervention

Last week’s criticism by energy investor T. Boone Pickens of U.S. Representative Mike Pompeo, a Wichita Republican serving his first term, continues to illustrate the difference between those who believe in economic freedom and free markets, and those — like Pickens — who invest in politicians, bureaucrats, and the hope of a government subsidy.

Pickens is pushing H.R. 1380: New Alternative Transportation to Give Americans Solutions Act of 2011, or NAT GAS act. The bill provides a variety of subsidies, implemented through tax credits, to producers and users of natural gas. The goal is to promote the use of natural gas as the fuel the nation uses for transportation.

In his op-ed in the Wichita Eagle, Pickens was critical of Pompeo for his stance in favor of free markets and in opposition to subsidies. His criticism, however, was inconsistent and contradictory. Further, Pompeo’s position on this issue is clear, as part of a resolution he introduced reads: eliminate existing energy subsidies.

There was another target of Pickens’ criticism. He didn’t mention the company by name, but there were several thinly-veiled references to Wichita-based Koch Industries. Charles Koch and his brother David Koch have emerged as prominent defenders of economic freedom and the freedom and prosperity it generates. Charles Koch, in particular, has been outspoken in his criticism of the type of subsidies that Pickens seeks. Koch’s op-ed, also in the Wichita Eagle and on Koch Industries website at Advancing economic freedom, was pointed in its criticism of corporate welfare: “Our government made a point of reforming its welfare policies for individuals but not for corporations. … Unfair programs that favor certain companies — such as the current well-intentioned but misguided suggestion that the natural-gas industry should receive enormous new subsidies — don’t just happen. They are promoted, in large part, by those seeking to profit politically, rather than by competing in a market where consumers vote with their wallets.”

In a statement on the company’s Viewpoint website, Dr. Richard Fink, Executive Vice President of Koch Industries, continued to explain the harm of government intervention, saying “Koch has consistently opposed subsidies that distort markets. We maintain that the marketplace, while not perfect, is the best mechanism for allocating resources to consumers. People deciding what fuels to purchase, instead of the government, is best for consumers and our country. Likewise, if natural gas vehicles are truly advantageous and economically efficient, then consumers will demand that they be developed without political mandates that exhaust more taxpayer dollars.”

Fink continues, “We do not question T. Boone Pickens’ intentions or integrity in this debate. We recognize his experience in the energy markets and take him at his word that he thinks this is a good idea. However, we believe history has demonstrated over and over that these subsidies end up undermining the long term prosperity of the country. For these principled reasons, we oppose this bill to give tax incentives to buyers and makers of natural gas-powered vehicles and related infrastructure. We also consistently oppose subsidies for all other fuels whether or not we benefit from them.”

Pickens would probably object to the use of the term “subsidy,” as the legislation he pushes grants “credits,” a term that sounds fairly benign. Timothy P. Carney, writing in the Washington Examiner, provides an explanation of the difference: “Pickens draws two dividing lines in the piece: tax credit vs. grant, and permanent versus temporary. A temporary subsidy is certainly better than an indefinite or permanent one. The tax credit question is trickier. Many free-market champions support every tax break ever proposed (Ron Paul, for instance). Other free market types (like me, probably) think that tax credits act as subsidies which distort the market, and ultimately lead to tax hikes on others. One of the bad things about tax credits is that they reward businesses for following political signals rather than market signals, but they do it in a way that allow the beneficiaries, like Pickens, to act as if they’re not on the public dole. Sure, a tax credit (most of the time) isn’t a handout, but the favored product (like ethanol or natural gas) only succeeds because its competition is taxed at high rates. So tax credits are the socially acceptable form of corporate welfare.” (emphasis added)

While Carney usually gets things just right, I’ll disagree with him that the question of tax credits is tricky: They have the same economic effect as a grant or subsidy. They engineer the behavior the government wants. But Carney is right about the confusing appearance of tax credits, allowing them to be “the socially acceptable form of corporate welfare.” Unless we really think about it, that is.

In any discussion of Pickens and natural gas, we must recognize that he is an investor in gas and another energy technology related to gas: wind power. In 2008 Pickens ordered 667 wind turbines worth $2 billion from General Electric with plans to build a large wind power plant in Texas. Wind power is highly dependent on government subsidy, with supporters claiming the industry will be devastated unless Congress continues to renew the subsidies.

At one time Pickens wanted to use wind power to generate electricity, and the natural gas saved would be used to power transportation. But there’s another relationship between wind power and gas, and it stems from the unreliability and variability of wind power. It’s difficult to quickly adjust the output of most power plants. But natural gas turbine plants are an exception. Kansas recently saw one of its major electric utilities complete a new natural gas power plant. The need for the plant was at least partly created by its investment in wind: A document produced by Westar titled The Greenhouse Gas Challenge noted the “Construction of the 665 MW natural gas-fired Emporia Energy Center, providing the ability to efficiently follow the variability of wind generation.” In another document announcing a request for a rate increase it stated “Our Emporia Energy Center is excellent for following the variability of wind production.”

At the time of these investments by Pickens and Westar, the price of natural gas was high. Now it is low — so low, and the prospects for future low prices certain enough that Pickens has abandoned his wind farm projects. Even with all the subsidy granted to wind power, it’s cheaper to generate electricity with gas.

(Pickens has been left with many wind turbines he can’t use. According to the Wall Street Journal: “He’s hoping to foist them on ratepayers in Canada, because that country has mandates that require consumers to buy more expensive renewable electricity.” In other words, relying on some other country’s government intervention to relieve him of his mistake.)

So we see Pickens moving from one government-subsidized industry — wind power — to another: the subsidized market for natural gas-powered vehicles he hopes to create. The distinction between political entrepreneurs and market entrepreneurs couldn’t be clearer.