New Yorker writer Jane Mayer examines the origins, rise and doNew Yorker writer Jane Mayer examines the origins, rise and dominance of a billionaire class to whom money is no object when it comes to buying powerminance of a billionaire class to whom money is no object when it comes to buying power
Lots of American industrialists have skeletons in the family closet. Charles and David Koch, however, are in a league of their own.
The father of these famous rightwing billionaires was Fred Koch, who started his fortune with $500,000 received from Stalin for his assistance constructing 15 oil refineries in the Soviet Union in the 1930s. A couple of years later, his company, Winkler-Koch, helped the Nazis complete their third-largest oil refinery. The facility produced hundreds of thousands of gallons of high-octane fuel for the Luftwaffe, until it was destroyed by Allied bombs in 1944.
In 1938, the patriarch wrote that “the only sound countries in the world are Germany, Italy and Japan”. To make sure his children got the right ideas, he hired a German nanny. The nanny was such a fervent Nazi that when France fell in 1940, she resigned and returned to Germany. After that, Fred became the main disciplinarian, whipping his children with belts and tree branches.
These are just a handful of the many bombshells exploded in the pages of Dark Money, Jane Mayer’s indispensable new history “of the billionaires behind the rise of the radical right” in the US.
A veteran investigative reporter and a staff writer for the New Yorker, Mayer has combined her own research with the work of scores of other investigators, to describe how the Kochs and fellow billionaires like Richard Scaife have spent hundreds of millions to “move their political ideas from the fringe to the center of American political life”.
Twenty years after collaborating with the Nazis, Fred Koch had lost none of his taste for extremism. In 1958, he was one of the 11 original members of the John Birch Society, an organization which accused scores of prominent Americans, including President Dwight Eisenhower, of communist sympathies.
In 1960, Koch wrote: “The colored man looms large in the Communist plan to take over America.” He strongly supported the movement to impeach chief justice Earl Warren, after the supreme court voted to desegregate public schools in Brown v Board of Education. His sons became Birchers too, although Charles was more enamored of “antigovernment economic writers” than communist conspiracies.
The father of these famous rightwing billionaires was Fred Koch, who started his fortune with $500,000 received from Stalin for his assistance constructing 15 oil refineries in the Soviet Union in the 1930s. A couple of years later, his company, Winkler-Koch, helped the Nazis complete their third-largest oil refinery. The facility produced hundreds of thousands of gallons of high-octane fuel for the Luftwaffe, until it was destroyed by Allied bombs in 1944.
In 1938, the patriarch wrote that “the only sound countries in the world are Germany, Italy and Japan”. To make sure his children got the right ideas, he hired a German nanny. The nanny was such a fervent Nazi that when France fell in 1940, she resigned and returned to Germany. After that, Fred became the main disciplinarian, whipping his children with belts and tree branches.
These are just a handful of the many bombshells exploded in the pages of Dark Money, Jane Mayer’s indispensable new history “of the billionaires behind the rise of the radical right” in the US.
A veteran investigative reporter and a staff writer for the New Yorker, Mayer has combined her own research with the work of scores of other investigators, to describe how the Kochs and fellow billionaires like Richard Scaife have spent hundreds of millions to “move their political ideas from the fringe to the center of American political life”.
Twenty years after collaborating with the Nazis, Fred Koch had lost none of his taste for extremism. In 1958, he was one of the 11 original members of the John Birch Society, an organization which accused scores of prominent Americans, including President Dwight Eisenhower, of communist sympathies.
In 1960, Koch wrote: “The colored man looms large in the Communist plan to take over America.” He strongly supported the movement to impeach chief justice Earl Warren, after the supreme court voted to desegregate public schools in Brown v Board of Education. His sons became Birchers too, although Charles was more enamored of “antigovernment economic writers” than communist conspiracies.
After their father died, Charles and David bought out their brothers’ shares in the family company, then built it into the second largest privately held corporation in America.
“As their fortunes grew, Charles and David Koch became the primary underwriters of hardline libertarian politics in America,” Mayer writes. Charles’s goal was to “tear the government out ‘at the root’.”
Another man who studied Charles thought “he was driven by some deeper urge to smash the one thing left in the world that could discipline him: the government”.
Much of what the American right has accomplished can be seen as a reaction to the upheavals of the 1960s, when big corporations like Dow Chemical (which manufactured napalm for the Vietnam War) reached the nadir of their popularity.
In 1971, corporate lawyer (and future supreme court justice) Lewis Powell wrote a 5,000-word memo that was a blueprint for a broad attack on the liberal establishment. The real enemies, Powell wrote, “were the college campus, the pulpit, the media, the intellectual and literary journals, the arts and sciences”, and “politicians”.
He argued that conservatives should control the political debate at its source by demanding “balance” in textbooks, television shows and news coverage – themes that were echoed in inflammatory speeches by Richard Nixon’s vice-president, Spiro Agnew.
“As their fortunes grew, Charles and David Koch became the primary underwriters of hardline libertarian politics in America,” Mayer writes. Charles’s goal was to “tear the government out ‘at the root’.”
Another man who studied Charles thought “he was driven by some deeper urge to smash the one thing left in the world that could discipline him: the government”.
Much of what the American right has accomplished can be seen as a reaction to the upheavals of the 1960s, when big corporations like Dow Chemical (which manufactured napalm for the Vietnam War) reached the nadir of their popularity.
In 1971, corporate lawyer (and future supreme court justice) Lewis Powell wrote a 5,000-word memo that was a blueprint for a broad attack on the liberal establishment. The real enemies, Powell wrote, “were the college campus, the pulpit, the media, the intellectual and literary journals, the arts and sciences”, and “politicians”.
He argued that conservatives should control the political debate at its source by demanding “balance” in textbooks, television shows and news coverage – themes that were echoed in inflammatory speeches by Richard Nixon’s vice-president, Spiro Agnew.
The war on liberals was so effective that practically everyone reacted to it: from the New York Times, which hired ex-Nixon speechwriter Bill Safire to “balance” its op-ed page, to the Ford Foundation, which gave $300,000 to the American Enterprise Institute (AEI) in 1972. The impact was cumulative: almost four decades later, Barack Obama was astonished by one of the first questions asked to him, by a New York Times reporter, after he became president: “Are you a socialist?”
The AEI was one of dozens of the new thinktanks bankrolled by hundreds of millions from the Kochs and their allies. Sold to the public as quasi-scholarly organizations, their real function was to legitimize the right to pollute for oil, gas and coal companies, and to argue for ever more tax cuts for the people who created them. Richard Scaife, an heir to the Mellon fortune, gave $23m over 23 years to the Heritage Foundation, after having been the largest single donor to AEI.
Next, the right turned its sights on American campuses. John M Olin founded the Olin Foudation, and spent nearly $200m promoting “free-market ideology and other conservative ideas on the country’s campuses”. It bankrolled a whole new approach to jurisprudence called “law and economics”, Mayer writes, giving $10m to Harvard, $7m to Yale and Chicago, and over $2m to Columbia, Cornell, Georgetown and the University of Virginia.
The AEI was one of dozens of the new thinktanks bankrolled by hundreds of millions from the Kochs and their allies. Sold to the public as quasi-scholarly organizations, their real function was to legitimize the right to pollute for oil, gas and coal companies, and to argue for ever more tax cuts for the people who created them. Richard Scaife, an heir to the Mellon fortune, gave $23m over 23 years to the Heritage Foundation, after having been the largest single donor to AEI.
Next, the right turned its sights on American campuses. John M Olin founded the Olin Foudation, and spent nearly $200m promoting “free-market ideology and other conservative ideas on the country’s campuses”. It bankrolled a whole new approach to jurisprudence called “law and economics”, Mayer writes, giving $10m to Harvard, $7m to Yale and Chicago, and over $2m to Columbia, Cornell, Georgetown and the University of Virginia.
The amount of spent money has been staggering. Between 2005 and 2008, the Kochs alone spent nearly $25m on organizations fighting climate reform. One study by a Drexel University professor found 140 conservative foundations had spent $558m over seven years for the same purpose.
The next step for the radical right was to support the creation of the Tea Party movement, through organizations like Americans for Prosperity, which was funded by the Kochs.
“The Heritage Foundation, the Cato Institute and Americans for Prosperity provided speakers, talking points, press releases, transportation, and other logistical support,” Mayer writes. As the writer Thomas Frank has pointed out, the genius of this strategy was to “turn corporate self-interest into a movement among people on the streets”.
The next step for the radical right was to support the creation of the Tea Party movement, through organizations like Americans for Prosperity, which was funded by the Kochs.
“The Heritage Foundation, the Cato Institute and Americans for Prosperity provided speakers, talking points, press releases, transportation, and other logistical support,” Mayer writes. As the writer Thomas Frank has pointed out, the genius of this strategy was to “turn corporate self-interest into a movement among people on the streets”.
The last element of this multi-pronged campaign saw the direct investment of hundreds of millions of dollars in political campaigns at every level, from president to city councillor. In 1996, a last-minute $3m campaign of attack ads against Democrats in 29 races, a campaign which may have been financed by the Kochs, was considered outrageous and extravagant. But after the disappearance of virtually all restrictions on campaign contributions – another result of rightwing lobbying and the supreme court’s Citizens United decision – $3m is now a tiny number.
In the 2016 elections, the goal of the Koch network of contributors is to spend $889m, more than twice what they spent in 2012.
Four years ago, because Obama had the most sophisticated vote-pulling operation in the history of American politics, and a rather lackluster opponent, a Democratic president was able to withstand such a gigantic financial onslaught. This time around, it’s not clear that any Democrat will be so fortunate.
In the 2016 elections, the goal of the Koch network of contributors is to spend $889m, more than twice what they spent in 2012.
Four years ago, because Obama had the most sophisticated vote-pulling operation in the history of American politics, and a rather lackluster opponent, a Democratic president was able to withstand such a gigantic financial onslaught. This time around, it’s not clear that any Democrat will be so fortunate.
Even corporate America wants campaign finance reform to stop crony capitalism
by Zephyr Teachout
Zephyr Teachout, a candidate for governor in New York in 2014, is an associate professor at Fordham Law School and the author of Corruption in America: From Ben Franklin's Snuff Box to Citizens United. Follow her on Twitter: @ZephyrTeachout
A new study backed by big business argues that lobbying is harming the American economy – and proposes regulation to address the problem
Political corruption is eating our democracy out from the inside. Most Americans know that. But democratic and economic health can’t be easily disentangled. As it diminishes our public sphere and drowns out the myriad of citizen voices, it also sucks the energy and vitality from our economy. This causes pain to business owners.
According to a recent report from the Committee on Economic Development, an old, white-shoe non-partisan organization that came out of the aftermath of World War II (and was a booster for the Marshall Plan), the United States economy is increasingly represented by crony capitalism, not competitive capitalism.
Lobbyists and privately funded elections have, according to the CED: “exerted an important toll on the US economy”. They propose banning registered lobbyists from raising money for federal candidates and officeholders, and implementing strict revolving door policies.
Crony capitalism, the report details, leads to “rent-seeking through subsidies or taxes that benefit vested interests at the expense of others, rather than the pursuit of profit through socially and economically productive behavior”.
What is most striking about the report is who is behind it. The CEO of CED is former Romney supporter Steve Odland. A former top lobbyist for PepsiCo, a republican called Larry Thompson – someone I never thought I’d agree with – is endorsing the single most important structural reform in America: publicly financed elections.
Thompson is the Co-Chair of CED’s Sustainable Capitalism Subcommittee, a driver in the release of the report. Paul Atkins, another member of the CED board (and the sustainable capitalism subcommittee) was a Bush-appointed SEC Commissioner who opposed rules constraining hedge funds.
“Campaign finance reform could free elected officials from their dependence on private campaign funding. Such funding is seen as an important reason why elected officials might bend their views on policy issues away from the public interest” the report said.
I disagree with a big part of the report. I don’t think we should reduce the corporate tax rate. But the crony capitalism argument is right on point, and the most striking thing about the report is its full-throated endorsement of a public financing model. And, the report persuasively shows how our current model reduces competitiveness of the economy “by favoring insiders over outsiders” and “continues to sap vitality” out of our economic life.
We haven’t always had this problem. Until the 1980s, candidates spent a fraction of their time talking to donors; just a few weeks a year, a little more right before an election. True, they’d fund raise from the wealthy interests, as they do now, but it was a minuscule part of their job: policy and constituent services were the heart of the work.
Now, due to a set of cultural changes and Supreme Court cases like Citizens United v FEC, the dominant job of many Congress members is to raise money. What that means is that politics has become dominated by policy priorities that serve certain business interests. In most places in the country, you can’t be taken seriously as a candidate without first becoming a professional courtier to big money interests that serve certain companies.
These dynamics build upon each other in a toxic way: companies lobby more, create closer relationships through revolving doors and embed themselves in Washington’s social life. In turn, those companies that are embedded get more and more favors, pushing out the smaller companies, and rewarding cronyism instead of innovation.
The report proposes the solution that has been working in New York City since its full implementation in 2009: small donor contributions matched in multiples by a state fund. The multiple-match program frees up candidates to represent people, instead of particular business interests. And it makes it less tempting for business to replace their research and development with lobbying.
Dependence on private money to run campaigns causes pain to Republicans and Democrats alike – and business owners. It’s time we did something about it. And public financing of elections should be the first step.
by Zephyr Teachout
Zephyr Teachout, a candidate for governor in New York in 2014, is an associate professor at Fordham Law School and the author of Corruption in America: From Ben Franklin's Snuff Box to Citizens United. Follow her on Twitter: @ZephyrTeachout
A new study backed by big business argues that lobbying is harming the American economy – and proposes regulation to address the problem
Political corruption is eating our democracy out from the inside. Most Americans know that. But democratic and economic health can’t be easily disentangled. As it diminishes our public sphere and drowns out the myriad of citizen voices, it also sucks the energy and vitality from our economy. This causes pain to business owners.
According to a recent report from the Committee on Economic Development, an old, white-shoe non-partisan organization that came out of the aftermath of World War II (and was a booster for the Marshall Plan), the United States economy is increasingly represented by crony capitalism, not competitive capitalism.
Lobbyists and privately funded elections have, according to the CED: “exerted an important toll on the US economy”. They propose banning registered lobbyists from raising money for federal candidates and officeholders, and implementing strict revolving door policies.
Crony capitalism, the report details, leads to “rent-seeking through subsidies or taxes that benefit vested interests at the expense of others, rather than the pursuit of profit through socially and economically productive behavior”.
What is most striking about the report is who is behind it. The CEO of CED is former Romney supporter Steve Odland. A former top lobbyist for PepsiCo, a republican called Larry Thompson – someone I never thought I’d agree with – is endorsing the single most important structural reform in America: publicly financed elections.
Thompson is the Co-Chair of CED’s Sustainable Capitalism Subcommittee, a driver in the release of the report. Paul Atkins, another member of the CED board (and the sustainable capitalism subcommittee) was a Bush-appointed SEC Commissioner who opposed rules constraining hedge funds.
“Campaign finance reform could free elected officials from their dependence on private campaign funding. Such funding is seen as an important reason why elected officials might bend their views on policy issues away from the public interest” the report said.
I disagree with a big part of the report. I don’t think we should reduce the corporate tax rate. But the crony capitalism argument is right on point, and the most striking thing about the report is its full-throated endorsement of a public financing model. And, the report persuasively shows how our current model reduces competitiveness of the economy “by favoring insiders over outsiders” and “continues to sap vitality” out of our economic life.
We haven’t always had this problem. Until the 1980s, candidates spent a fraction of their time talking to donors; just a few weeks a year, a little more right before an election. True, they’d fund raise from the wealthy interests, as they do now, but it was a minuscule part of their job: policy and constituent services were the heart of the work.
Now, due to a set of cultural changes and Supreme Court cases like Citizens United v FEC, the dominant job of many Congress members is to raise money. What that means is that politics has become dominated by policy priorities that serve certain business interests. In most places in the country, you can’t be taken seriously as a candidate without first becoming a professional courtier to big money interests that serve certain companies.
These dynamics build upon each other in a toxic way: companies lobby more, create closer relationships through revolving doors and embed themselves in Washington’s social life. In turn, those companies that are embedded get more and more favors, pushing out the smaller companies, and rewarding cronyism instead of innovation.
The report proposes the solution that has been working in New York City since its full implementation in 2009: small donor contributions matched in multiples by a state fund. The multiple-match program frees up candidates to represent people, instead of particular business interests. And it makes it less tempting for business to replace their research and development with lobbying.
Dependence on private money to run campaigns causes pain to Republicans and Democrats alike – and business owners. It’s time we did something about it. And public financing of elections should be the first step.
