Charles G. Koch

Charles G. Koch
Charles G. Koch
Born November 1, 1935 (1935-11-01) (age 76)
Nationality American
Ethnicity Dutch (grandfather)[1]
Alma mater Massachusetts Institute of Technology (SB, SM(two))
Occupation chairman of the board and chief executive officer of Koch Industries, Inc.
Net worth increaseUS$22 billion (2010)[2]
Religion Roman Catholic[citation needed]
Children Chase Koch [3], Elizabeth Koch [1]
Parents Mary Robinson
Fred C. Koch
Relatives siblings Frederick R. Koch, David H. Koch and William I. Koch

Charles de Ganahl Koch (pronounced /ˈkoʊk/; born November 1, 1935) is co-owner, chairman of the board and chief executive officer of Koch Industries Inc., the second-largest privately held company by revenue in the United States according to a 2010 Forbes survey.[4] He was ranked 18th on Forbes World's Billionaires list of 2011, with an estimated net worth of $25 billion, deriving from his 42% stake in Koch Industries.[2] His brother David H. Koch, also owns 42% of Koch Industries, and serves as Executive Vice President. The brothers inherited the business from their father, Fred C. Koch, and have since expanded the business to 2,600 times its inherited size. Originally involved exclusively in the oil refining and chemical business, Koch Industries has expanded to include process and pollution control equipment and technologies, polymers and fibers, minerals, fertilizers, commodity trading and services, forest and consumer products, and ranching, producing a wide variety of well-known brands, such as Stainmaster carpet, Lycra fiber, Quilted Northern tissue and Dixie paper products.

Koch provides financial support for a number of libertarian organisations, including the Institute for Humane Studies and the Mercatus Center at George Mason University. He also co-founded the Cato Institute.

In 2007, Koch's book The Science of Success was published. The book describes his management philosophy, which is referred to as "Market-Based Management".[5]

Contents

Early life, education, and career

Koch was born and lives in Wichita, Kansas, one of four sons of Mary Robinson and Fred C. Koch;[6][7] Koch's grandfather was a Dutch immigrant who settled in West Texas.[8] Koch's academic life was spent at the Massachusetts Institute of Technology. He is a member of the Beta Theta Pi Fraternity. He received a Bachelor of Science in general engineering in 1957, a Master of Science in mechanical engineering in 1958, and a second Master of Science in chemical engineering in 1960.[6] After college, Koch started work at Arthur D. Little, Inc. In 1961 he moved back to Wichita to join his father's business, Rock Island Oil & Refining Company.[9] In 1967 he became president of the business, which was then a medium-sized oil firm.[10] In the same year, he renamed the firm Koch Industries in honor of his father.[11] By 2006, Koch Industries generated $90 billion in revenue, a growth of 2000 times over, which represents an annual compounded return of 18%.[12]

Koch has been a Director of Intrust Financial Corp. since 1982, a Director of Koch Industries Inc. since 1982, Director of Invista, and is a Director of Georgia Pacific Corp. Koch founded, or help found several organizations, including the Cato Institute, the Institute for Humane Studies and the Mercatus Center at George Mason University, the Bill of Rights Institute, and the Market-Based Management Institute.

Awards

Koch has also received the following awards:

  • Honorary Doctor of Science, from George Mason University, for his continued support of the economics program at GMU,
  • Honorary Doctor of Commerce from Washburn University,
  • Honorary Doctor of Laws from Babson College,
  • President's Medal from Wichita State University in 2004,
  • The Adam Smith Award from the American Legislative Exchange Council,
  • The 1999 Directors' Award for Global Vision in Energy from the New York Mercantile Exchange,
  • The 1999 Governor's Arts Patrons Award from the Kansas Arts Commission,
  • The 2000 National Distinguished Service Award from The Tax Foundation,
  • The Spirit of Justice Award from The Heritage Foundation,
  • The Entrepreneurial Leadership Award from the National Foundation for Teaching Entrepreneurship,
  • The Brotherhood/Sisterhood Award from the National Conference of Christians and Jews,
  • The Distinguished Citizen Award from the Boy Scouts of America,
  • The Free Enterprise Award from The Council for National Policy,
  • The Herman W. Lay Memorial Award from The Association of Private Enterprise Education,
  • The Distinguished Service Citation from the University of Kansas,
  • Honorary Life Member in the Washburn Law School Association,
  • The Distinguished Citizen Award from Kansas State University,
  • Induction into the Kansas Oil and Gas Hall of Fame,
  • Induction into the Wichita and Kansas Business Halls of Fame,
  • Spirit of Excellence Award from The Urban League of Wichita,
  • Outstanding Humanitarian Award from the Greater Wichita Chapter of the National Society of Fundraising Executives,
  • Wichita City Medallion,
  • Wichita State University Entrepreneur in Residence,
  • Wichita District Minority Small Business Advocate of the Year,
  • The Individual Recognition Award from the Wichita/Sedgwick County Arts and Humanities Council,
  • The Uncommon Citizen Award from the Wichita Chamber of Commerce,[citation needed]
  • The 2011 William E. Simon Prize for Philanthropic Leadership from the Philanthropy Roundtable.

Market-Based Management

Koch's business philosophy, Market-Based Management (MBM), is described in his 2007 book The Science of Success. In an interview with the Wichita Eagle,[11] he said that he was motivated to write the book by Koch Industries' 2004 acquisition of Invista, in order to give new employees a "comprehensive picture" of MBM. According to the website of the Market-Based Management Institute, which Koch founded in 2005, MBM is "based on rules of just conduct, economic thinking, and sound mental models which harnesses [sic] the dispersed knowledge of employees, just as markets harness knowledge in society. It is organized in and interpreted through five dimensions: vision, virtue and talents, decision rights, incentives, and knowledge processes."[13] In the book, Koch attempts to apply F. A. Hayek's spontaneous order theory and Austrian entrepreneurial theory, such as that of Mises and Israel Kirzner, to organizational management. T. Boone Pickens argues that Koch's business success lends credibility to the book's concept.[14]

Views and intellectual development

Koch's views are described as libertarian. He disliked George W. Bush's presidency. His favorite presidents are George Washington, Grover Cleveland, and Calvin Coolidge.[15]

He told the National Journal that his "overall concept is to minimize the role of government and to maximize the role of private economy and to maximize personal freedoms."[16] Today, he worries about too much governmental regulation, writing, "We could be facing the greatest loss of liberty and prosperity since the 1930s.".[17]

In an interview with the American Journal of Business,[9] Koch said he owes "a huge debt of gratitude to the giants who created the Austrian School [of economics]. They developed principles that enabled me to gain an understanding of how the world works, and these ideas were a catalyst in the development of Market-Based Management." In particular, he expresses admiration for Ludwig von Mises’ book Human Action, as well as the writings of Friedrich von Hayek.

Other influences on Koch include Alexis de Tocqueville,[18] Adam Smith, Michael Polanyi,[9] Joseph Schumpeter, Julian Simon, Paul Johnson, Thomas Sowell, Charles Murray, Leonard Read, and F.A. Harper.[10] Brian Doherty, author of Radicals for Capitalism, and an editor of Reason, stated Robert LeFevre was an anarchist (autarchist) figure who won Koch's approval.[19] He also read Maslow on Management.[15]

To Koch, "the short-term infatuation with quarterly earnings on Wall Street restricts the earnings potential of Fortune 500 publicly traded firms".[10] Koch also considers public firms to be "feeding grounds for lawyers and lawsuits", with regulations like Sarbanes–Oxley only increasing the earnings potential of private firms.[10]

In an interview article for the Wall Street Journal, Stephen Moore writes "Charles Koch—no surprise—disdains government and the political class."[10] Koch thinks the billionaires Warren Buffett and George Soros, who fund organizations with different ideologies, "simply haven't been sufficiently exposed to the ideas of liberty".[10] Koch thinks "prosperity is under attack" by the Obama administration and "warns of policies that 'threaten to erode our economic freedom and transfer vast sums of money to the state'".[20]

In an op-ed for the Wall Street Journal Koch said: “Government spending on business only aggravates the problem. Too many business 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 and 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.”[21]

Regarding government regulation, Koch has written that he expects his employees to cooperate fully with the law, regardless of personal views:

We needed to be uncompromising [with our workforce], 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 demonstrate 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.[22]

Political activities

Koch funds and supports libertarian and free-market policy and advocacy organizations such as the Cato Institute,[20] which he co-founded with Edward H. Crane and Murray Rothbard in 1977,[23] and is a board member at the Mercatus Center, a market-oriented research think tank at George Mason University. Koch was awarded an Honorary Doctorate from George Mason University in recognition of his financial support "through scholarships, faculty recruitment and research grants".[24] Since the 1980s the Koch foundations have "given more than $100 million” to such organizations, among these other conservative think tanks like the Heritage Foundation, as well as more recently funding tea party groups like Americans for Prosperity.[citation needed] Koch supported his brother's candidacy for vice president on the Libertarian Party ticket in 1980.[19] After the bid, Koch told a reporter that conventional politics "tends to be a nasty, corrupting business ... I’m interested in advancing libertarian ideas".[19] In addition to funding think tanks, Charles and David also support libertarian academics[25] and Koch funds the Charles G. Koch Summer Fellow Program through the Institute for Humane Studies which recruits and mentors young libertarians.[26] Koch also organizes twice yearly meetings[10] of Republican donors.[20]

On reason.com, Radley Balko commented that Charles and David donated a combined $20 million to the American Civil Liberties Union, a non-partisan organization, seeking to defeat the Patriot Act.[27] Such a contribution "appears to be substantially more than the Kochs have contributed to all political candidates combined for at least the last 15 years" according to Balko.[28]

Charles Koch looks upon the Tea Party movement favorably. "The way it's grown, the passion, and the intensity, was beyond what I had anticipated," he told an interviewer.[15]

New Yorker article by Jane Mayer

In the August 30, 2010, New Yorker, Jane Mayer writes that "As their fortunes grew, Charles and David Koch became the primary underwriters of hard-line libertarian politics in America."[19] The article states the Koch brothers fund a multitude of groups opposed to government in general and Obama administration policies in particular.

Responses to Mayer article

Conor Friedersdorf, writing for the Daily Dish at The Atlantic magazine, wrote that while he respected Mayer, "as best I can tell, the Koch brothers are legitimately upset by some aspects of the piece, and anyone who reads it should also look at the rebuttals from libertarians who are persuasively pushing back against some of its conclusions."[29]

Koch Industries posted an extensive reply on their website. They acknowledged funding libertarian and conservative causes,[30] but they said that there were several inaccuracies and distortions in the Mayer article, and that Mayer failed to identify alleged conflicts of interest among several people she quoted.[31] Koch Industries responded to the allegations in Mayer's article saying that "the story dredges up issues resolved long ago and mischaracterizes our business philosophy and principles, our practices and performance record, and the education efforts and policies we support."[32]

The conservative Weekly Standard also published a critical response to Mayer's article, in the form of an opinion piece by Matthew Continetti. He wrote:

Mayer drew heavily from the writings of the Center for American Progress Action Fund, the Greenpeace report, and public tax records. For several thousand words, relying on interviews with anonymous sources, Democratic operatives, a disgruntled conservative, a historian of libertarianism, and the author of “A Pagan’s Blog,” Mayer unspooled a fantastic tale of manipulation and malpractice.[15]

Matt Lewis, columnist of Politics Daily, also posted a critical response to Mayer's article:

To be sure, the Kochs have given "more than a hundred million dollars to right wing causes" (which is their right, by the way). But in the last decade, it's also worth noting the Kochs have given more than $600 million in pledged or donated money to arts, education, and medical research, including (but not limited to): New York-Presbyterian Hospital Weill Cornell: $15 million, M.D. Anderson Cancer Center: $25 million, The Hospital for Special Surgery: $26 million, Memorial Sloan-Kettering Cancer Center: $30 million, Prostate Cancer Foundation: $41 million, Deerfield Academy: $68 million, Lincoln Center's NY State Theater: $100 million, Massachusetts Institute of Technology: $139 million[33]

Criticism by Obama administration

Charles, along with his brother, David, have been criticised by members of the Obama administration for their political spending. In August 2010, economist Austan Goolsbee, an administration official, falsely accused Koch Industries of paying no corporate income tax during a background briefing he delivered to reporters.[15] In a September 23, 2010 op-ed in The Washington Post, Obama senior adviser David Axelrod accused Americans for Prosperity of being a "front group" that was "hijacking our elections" by "promot[ing] Republican candidates who support their right-wing agenda and corporate interests."[34] The article also compared the brothers unfavorably to past robber barons.[citation needed]

Praise by Obama administration

With the criticism has also come praise from the Obama administration for companies owned by the Koch Brothers. In Fall of 2010, Koch-owned Flint Hills Resources built an agreement between the EPA and the Texas Commission on Environmental Quality in a regulation dispute.[35] "The EPA under President Obama has also praised Koch subsidiaries Georgia-Pacific and Invista for their cooperation with the agency. Georgia-Pacific even won an award from the EPA in 2009.".[36]

Praise by Searle Freedom Trust

Kimberly O. Dennis, of the Searle Freedom Trust, a libertarian foundation, suggests that the Kochs are acting against their economic interest in promoting "getting government out of the business of running the economy. If they were truly interested in protecting their profits, they wouldn’t be spending so much to shrink government; they’d be looking for a bigger slice of the pie for themselves. Their funding is devoted to promoting free-market capitalism, not crony capitalism."[37]

Philanthropy

Koch has given money to support public policy research focused on "developing voluntary, market-based solutions to social problems."[38] He has given to the Bill of Rights Institute, a non-profit that educates teachers, students, and others about the Bill of Rights.[38][39] He has also given to the Youth Entrepreneurs Kansas, an organization that teaches business skills to at-risk youth in Kansas schools,[40] and to the Berkeley Earth Surface Temperature project, a scientific effort to compile an open database of the Earth's surface temperature records.[41]

In 2008, Koch was included in Businessweek's list of top 50 American givers. Between 2004-2008, Koch gave $246 million, focusing on "libertarian causes, giving money for academic and public policy research and social welfare around strict conservative ideals".[42]

In 2011, Koch was awarded the William E. Simon Prize for Philanthropic Leadership. The award honors "the ideals and principles which guided William E. Simon’s giving, including personal responsibility, resourcefulness, volunteerism, scholarship, individual freedom, faith in God, and helping people to help themselves."[43]

Personal life

As of 2010, Koch was worth approximately $21.5 billion according to the Forbes 400 list.[6] Koch "rarely grants media interviews and prefers to keep a low profile".[11] Koch has been married to his wife Liz for 38 years[44] and has two children.[19]Charles and his three brothers have all suffered from prostate cancer.[45]

TIME 100 Most Influential of 2011

TIME magazine included Charles and David Koch among the most influential of 2011. According to the magazine, the list includes "activists, reformers and researchers, heads of state and captains of industry." The article touts the brothers commitment to free-market principles, the growth and development of their business, their passion for philanthropy, and their support for liberty minded organizations and political candidates.[46]

See also

References

  1. ^ a b "Koch, Charles (1935)". New Netherland Project. http://www.nnp.org/nni/Publications/Dutch-American/kochc.htm. 
  2. ^ a b Charles Koch profile page. Forbes.com. Retrieved April 2011.
  3. ^ Mr. Big Forbes.com. Retrieved November 2011.
  4. ^ The Top 10, America's Largest Private Companies Forbes.com. Retrieved April 2011.
  5. ^ The Science Of Success www.kochind.com. Retrieved April 2011.
  6. ^ a b c "The 400 Richest Americans". Forbes. http://www.forbes.com/profile/charles-koch. "Massachusetts Institute of Technology, Bachelor of Arts / Science Massachusetts Institute of Technology, Master of Science Son of Koch Industries founder Fred C. Koch (d. 1967), MIT grad who invented method of refining gasoline from heavy oil. Took refining innovation to Soviet Union 1929; returned home 1930s. Sons Frederick, Charles, David and William inherited Koch Industries after father's death; Charles and David bought out William and Frederick for $1.3 billion in 1983." 
  7. ^ "FMK Foundation History". Fmkfoundation.org. http://www.fmkfoundation.org/history.asp. Retrieved 2010-08-29. 
  8. ^ Daniel Fisher (26 February 2007). "Koch's Laws". Forbes. http://www.forbes.com/2007/02/26/science-success-management-lead-ceo-cz_df_0226kochbookreview.html. Retrieved 16 November 2010. 
  9. ^ a b c "Twenty Questions for Charles Koch". American Journal of Business (Muncie) 24 (1): 15–8. Spring 2009. http://www.bsu.edu/mcobwin/majb/?p=584. 
  10. ^ a b c d e f g Stephen Moore (May 6, 2006). "The Weekend Interview with Charles Koch: Private Enterprise". The Wall Street Journal: p. A.8. http://online.wsj.com/article/SB114687252956545543.html?mod=googlenews_wsj. 
  11. ^ a b c Phyllis Jacobs Griekspoor (4 March 2007). "Charles Koch: His philosophy and his company". Wichita Eagle. http://www.charleskoch.com/newsroom/news_releases_details.aspx?id=904. 
  12. ^ Mark Skousen (4 March 2007). "Business Bookshelf: A Short Course In Long-Term Value". The Wall Street Journal: p. D.8. 
  13. ^ What is MBM? www.mbminstitute.org. Retrieved April 2011.
  14. ^ Schor, Elana (16 May 2011). "In Right's Energy-Subsidy Clash, Shades of Koch vs. Pickens". New York Times (New York Times). http://www.nytimes.com/gwire/2011/05/16/16greenwire-in-rights-energy-subsidy-clash-shades-of-koch-94124.html. Retrieved 19 May 2011. 
  15. ^ a b c d e Continetti, Matthew (April 4, 2011). "The Paranoid Style in Liberal Politics". The Weekly Standard. http://www.weeklystandard.com/articles/paranoid-style-liberal-politics_555525.html?page=2. 
  16. ^ National Journal (May 16, 1992)
  17. ^ The Top 10 Forbes Asia October 19, 2009.
  18. ^ Koch, Charles, The Science of Success, p. 57
  19. ^ a b c d e Jane Mayer (August 30, 2010). "Covert Operations: The billionaire brothers who are waging a war against Obama". The New Yorker. http://www.newyorker.com/reporting/2010/08/30/100830fa_fact_mayer. Retrieved 2010-09-07. 
  20. ^ a b c Kate Zernike (25 October 2010). "Secretive Republican Donors Are Planning Ahead". The New York Times. http://www.nytimes.com/2010/10/20/us/politics/20koch.html. 
  21. ^ Koch, Charles (3/1/11). "Why Koch Industries Is Speaking Out". Wall Street Journal. http://online.wsj.com/article/SB10001424052748704288304576170974226083178.html. Retrieved 4/15/11. 
  22. ^ Koch, Charles, The Science of Success, p. 45.
  23. ^ "25 Years at Cato". http://www.cato.org/pubs/papers/25th_annual_report.pdf. Retrieved 2009-07-10. 
  24. ^ Charles Koch receives honorary degree from George Mason University www.kochind.com. Retrieved April 2011.
  25. ^ Brian Doherty (2008). Radicals for Capitalism: A Freewheeling History of the Modern American Libertarian Movement. PublicAffairs. p. 410. ISBN 1586485725. "One longtime Koch lieutenant characterized the overall strategy of Koch's libertarian funding over the years with both a theatrical metaphor and an Austrian capital theory one: Politicians, ultimately, are just actors playing out a script. The idea is, one gets better and quicker results aiming not at the actors but at the scriptwriters, to help supply the themes and words for the scripts—to try to influence the areas where policy ideas percolate from: academia and think tanks. Ideas, then, are the capital goods that go into building policy as a finished product—and there are insufficient libertarian capital goods at the top of the structure of production to build the policies libertarians demand." 
  26. ^ "Charles G. Koch Summer Fellow Program". Institute for Humane Studies at George Mason University. http://www.theihs.org/node/456. Retrieved 2010-09-10. "The Charles G. Koch Summer Fellow Program combines a paid public policy internship with two career skills seminars and weekly policy lectures. You’ll gain real-world experience, take a crash course in market-based policy analysis, and hone your professional skills. The intensive ten-week program begins in June and includes a $1,500 stipend and a housing allowance." 
  27. ^ Prominent Social Presence New York Social Diary. December 2, 2008.
  28. ^ Koch Brothers Right Wing Conspiracy to undermine the Patriot Act Reason.com. Balko,Radley. February 25, 2011.
  29. ^ The Koch Brothers Profiled TheAtlantic.com, Aug. 30, 2010. Retrieved 2011-01-31.
  30. ^ Koch Industries webpage, "Koch Facts" section Accessed 2011-01-31.
  31. ^ Holden, Mark V. (September 28, 2010). "Letter to Lynn B. Oberlander". http://www.kochind.com/files/Response%20to%20The%20New%20Yorker.pdf. Retrieved 31 January 2011. 
  32. ^ "Koch Industries Responds to New Yorker Claims". newsmax. newsmax. http://www.newsmax.com/InsideCover/koch-industries-new-yorker/2010/08/26/id/368519. Retrieved 27 April 2011. 
  33. ^ Lewis, Matt. "Koch Brothers Donate to Charity as well as 'Right Wing Causes'". Politics Daily. http://www.politicsdaily.com/2010/09/02/koch-brothers-give-more-to-charity-than-to-right-wing-causes/. Retrieved 16 April 2011. 
  34. ^ Axelrod, David (23 September 2010). "The election campaigners we can't see". The Washington Post. http://www.washingtonpost.com/wp-dyn/content/article/2010/09/22/AR2010092204665.html. 
  35. ^ "Flint Hills leads the way toward EPA resolution". Corpus Christi Caller Times. 10/28/2010. http://www.caller.com/news/2010/oct/28/flint-hills-leads-way-toward-epa-resolution/. Retrieved 4/15/2011. 
  36. ^ Warren, Michael. "Koch Brothers Receive Praise From Obama Administration". The Weekly Standard. http://www.weeklystandard.com/blogs/koch-brothers-receive-praise-obama-administration_552650.html. Retrieved 4/15/2011. 
  37. ^ Dennis, Kimberly O. (November 15, 2010). "Democrats Can’t Blame the Koch Brothers (However Much They Might Want To)". National Review Online. http://www.nationalreview.com/corner/253323/democrats-cant-blame-koch-brothers-however-much-they-might-want-kimberly-o-dennis. Retrieved 31 January 2011. 
  38. ^ a b "About Charles G. Koch". Charles G. Koch Foundation. February 2009. http://www.cgkfoundation.org/about/charles-g-koch/. 
  39. ^ "Bill of Rights Institute". Media Matters for America. http://mediamattersaction.org/transparency/organization/Bill_of_Rights_Institute. 
  40. ^ "Youth Entrepreneurs Kansas". Charles G. Koch Foundation. http://www.kochfamilyfoundations.org/ProjectsYEK.asp. 
  41. ^ BEST donors, accessed 3/25/11
  42. ^ "The 50 Top American Givers". Bloomberg Businessweek. http://images.businessweek.com/ss/08/11/1124_biggest_givers/41.htm. Retrieved 27 April 2011. 
  43. ^ "2011 William E. Simon Prize". Philanthropy Roundtable. Philanthropy Roundtable. http://www.philanthropyroundtable.org/content.asp?contentid=815. Retrieved 29 April 2011. 
  44. ^ "About Charles G. Koch". Charles G. Koch Charitable Foundation. http://www.cgkfoundation.org/about/charles-g-koch/. Retrieved 19 December 2010. 
  45. ^ "Donor aims to 'lick' illness that he has battled for 15 years". The Chronicle of Philanthropy. http://www.ncrp.org/news-room/news-2008/122-a-personal-stake-in-giving/. Retrieved 16 October 2011. 
  46. ^ Ferguson, Andrew (21 April 2011). "The 2011 TIME 100". TIME. http://www.time.com/time/specials/packages/article/0,28804,2066367_2066369_2066324,00.html. Retrieved 22 April 2011. 

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