It's Kochland—We're Just Living in It

It’s an understatement to say that U.S. politics are a mess right now. Intensifying party polarization, political violence, ideological factionalization—none of it bodes well for America, and none of it shows signs of abating anytime soon. The drivers of all this political turmoil are, of course, too numerous and complex to list—but one prevailing element is deep-seated economic insecurity, especially among those left behind by a rapidly changing economy. But how did wealth flow to the top 1% in this country? Why have labor unions been crippled? And while we're at it, why does the United States have no comprehensive climate plan at a time when it’s more urgent than ever?

A book written by former New America Fellow Chris Leonard uncovers the answer to many of these questions. Set in the heart of the midwest, Kochland follows the ascendancy of Koch Industries, one of the largest privately held businesses in the United States. Helmed for the last 50 years by CEO and majority shareholder Charles Koch, the Koch name is rarely stamped on any of its products or companies—but the company has a hand in nearly everything we use, from toilet paper, to lycra, to oil. It’s no exaggeration to say that Koch has fundamentally altered the Republican Party and successfully dismantled, blocked, and delayed environmental regulation—or that it’s shaped America to reflect its own image.

To understand this shadowy behemoth and its founders, I interviewed Chris Leonard. An edited transcript of our conversation is below.

What drew you to write this book?

Back in 2011, I was a business reporter in St. Louis and finishing my first book, which is focused on the meat industry and the monopolies in that business. I had these issues I really wanted to write about—what was going on in the American economy, growing income inequality, corporate influence over politics. And I really just had this ‘aha’ moment that this institution, Koch Industries, would be the perfect vehicle to talk about that. I’ve found it helpful to tackle big social issues by writing about specific institutions: It gives you people to write about and a beginning, middle, and end to a story—and a way to explore these issues where it's not just an academic disquisition or something. So I realized, oh, if I write about Koch Industries, I can write about all this stuff I'm concerned about, primarily because the company is so wildly diverse. I mean, it's like this huge canvas that I could paint on. This company is enormous. Its annual sales are bigger than that of Facebook, Goldman Sachs, and U.S. Steel combined.

And it's not just the size of the company that makes it really important—it's the scope of what it does. It's embedded in our entire economic system, from the energy sector, to manufacturing, to high finance, to corporate lobbying. So this one company could give me a way to write about all of these things. I could have characters who are working at a factory and belong to a labor union. I could have characters who are lobbyists in Washington, D.C., a block from the White House, who are shaping public policy. I could write about people who are working on a derivatives trading desk and making $4 million a year in these abstract high-end markets. So, yeah, it was just this ‘aha’ moment. I was like, “Koch. Perfect. That'll be the subject.”

What's your personal opinion of the Kochs, and did it change as you were writing the book?

My opinions changed a lot as I reported this book, because it really did start as an empty vessel in the sense that, you know, the two people behind this institution are Charles and David Koch. They were really like political cartoons, the evil Koch brothers who are manipulating politics and own all these oil refineries—they weren't real people at all. And frankly, I was more interested in the institution and the story it would tell. But as I started reporting, I started learning mostly about Charles Koch. That was one of the biggest things I learned—that David Koch was really a side player. He wasn't that important to the story—it was really Charles Koch.

My opinion of Charles Koch is, first of all, he’s a deeply impressive strategic thinker. And I didn’t grasp just how deep and sophisticated that thinking was inside the organization. I thought, “Oh, they own some oil refineries, of course they're rich.” I didn't get it at all. I mean, it was mind-blowing to learn how competent, sophisticated, strategic, and analytical these people really are. It’s even changed the way I view institutions and think strategically. These are human beings who have their benefits and their deep flaws—just like all of us. The difference is that they're extraordinarily powerful and rich. So all these things get amplified.

The problematic part of this guy and the story is that Charles Koch is a very rigid ideologue. He believes he’s figured out the blueprint for how to organize human society. And the thing is, he is absolutely rigid and uncompromising in his view that this is how the world needs to be. Politically, for example, he's worked really hard to reshape American politics to align with his vision. And that uncompromising ideological view can create a lot of problems—I think it's fair to say that they have really damaged a lot in American politics. The key example is they’ve played a really vital role in radicalizing big parts of the Republican Party; I mean, they invested a lot of money in driving out moderate Republicans and essentially burning down what could be considered the moderate wing of the Republican Party. And they did it with a view toward making the Republicans more libertarian. And we can talk about this, but what they ended up getting at the end of the day was Trumpism and America First nationalism. They're not the only ones that did that, but they played a role. So, my opinion of these people is that they're a lot smarter than people give them credit for, and they're very ideological.

Your book zooms in and out on different perspectives of the Kochs. Sometimes it's from the inside, with individuals who work for the Kochs; sometimes it's looking at the Kochs from the outside. Why did you decide to pursue that particular narrative style?

From the beginning, I knew I wanted to write a story that swept across the landscape of all these different parts of the American economy. So I knew that there'd be a lot of characters, and one of the things I really wanted to do is have these shifting perspectives between different levels of power—the blue-collar people, their bosses, the owners, the outside politicians who attacked Koch, and those who were supported by Koch.

"Charles Koch is a very rigid ideologue. He believes he’s figured out the blueprint for how to organize human society."

And what I realized, as I started writing, is that while this institution has existed for 50 years, the people who inhabit it come and go. So I ended up structuring it was through what I call fishbowl narratives. So, one chapter will look at a labor dispute at an oil refinery in 1972, and you're going to be there on the ground like it's a movie, and there are going to be all these main characters in the story. And when it's over, you're not going to meet any of those characters again—but the institution itself will move on, and you see that this was actually just a part of this larger history. So I studded the overall narrative with these fishbowl narratives, and the connective tissue that held it all together was the growth and lifespan of the institution itself, Koch Industries.

But I also got lucky. I didn't even know this going in, but the figure of Charles Koch ends up being the thread that's there the whole time. I mean, the guy has been CEO for the entire 50 years. So, narratively, that gave me a good way to hold it all together and make people feel like there's consistency.

What's interesting about Charles Koch is that he’s an intellectual—he's constantly trying to learn more about the world. And yet, he denies climate science—he thinks it's a government conspiracy. It's just paradoxical to me that this person can hold those two beliefs at once. Do you think that can be reconciled?

This is one of the biggest, most unsatisfying and frustrating obstacles in the whole book. You've described it perfectly—it's a paradox. I've submitted questions on climate change to Charles Koch for years, and they would not let me talk to him about it. They would not give me an audience with him. So I can't directly put to him, “Hey, you've got three master's degrees in engineering from M.I.T., including a master's degree in nuclear engineering. You understand heat transfer and atmospheric science. There's no question about it. So how can you be doing what you're doing and also claim to be a moral person?” Because an argument can be made that they're totally disregarding a dramatic emergency that’s really going to harm a lot of people.

I can't answer the paradox at all. I can only show the footprint of what they've done, which is that they've played an almost unparalleled role in delaying regulation on greenhouse gas emissions since the ’90s. And at the same time, they’re a rigorous, analytical, data-driven, scientific company. So I can show you that paradox is in high tension, and I just can't explain why Charles Koch acts the way he does.

What I can tell you is that this is, for all its globe-spanning reach and scope, a very insular company. I mean, the corporate headquarters is literally surrounded by a 10-foot tall wall. It's a walled fortress, and the people who get drawn into the institution are ideologically homogeneous. So Charles Koch's views on a lot of things are not challenged in a day-to-day way, and when you're in that kind of environment, I think it's easy to minimize things you disagree with or that might contradict what you believe.

"Our country now resembles Koch Industries in a lot of key ways."

And all I can say is that regulating greenhouse gas emissions is a tremendous economic threat to the business. They’ve been telling themselves this story that the science is fake, and then some of their public statements are very wishy-washy—"Well, we think it's real, but maybe it's not as bad as people say. Sure, humans contribute to it. But how much do they really contribute to it? And well, okay, it is a problem. But you know what? The markets can fix it. And if the government tries, it only creates a problem." All of it is very, very murky, and it's hard to pin down what they actually believe.

Do you think that there's anything that could ultimately motivate them to change their stance and trajectory on climate? Do you think they would ever look back— either the Kochs or their successors—and regret their actions?

It will be interesting to see what future generations of leadership at Koch believe when they look back. Charles Koch has run this company since 1967; the only person who can fire Charles Koch is Charles Koch. There is no questioning him, in a very fundamental way—you can complain and [voice your opinion], but he's the guy in charge. When he leaves the company, there will be room to reexamine some of this stuff. Maybe people will say they're wrong.

But … inertia really matters. They are deeply invested in the fossil fuel system to the tune of billions of dollars in assets, trillions of dollars of future revenue over decades. That doesn't just go away. They can't reinvent Koch tomorrow as a sustainable energy company. So there's always going to be that pressure to keep burning fossil fuels and emitting greenhouse gases. That pressure is going to be there for years, and in terms of how they reckon with their political activities around this … We'll see what happens after Charles Koch leaves.

So you don’t think Koch could rebrand itself as a renewable energy company and be just as successful as it is now?

It's hard to envision … They got rich beyond most people's wildest imagination because they owned fossil fuel businesses that were embedded in the heart of the entire economy. You can't move without using their product, and the whole system is built around protecting the role of fossil fuels. That's how they became multi-billionaires. If they had been renewable energy entrepreneurs, it's hard to envision that they could have become that powerful—their power is derived from the fact that Charles Koch was born owning shares in a company that ran pipelines and natural gas plants and oil refineries. It's sort of like the power flowed from the industry they were in, not that their power made the industry what it is. So, you know, there are people just as smart as Charles Koch who are in the solar panel business, but it's so much harder to make that flourish. So, yeah, I have a very dark view of the whole thing. I just don't know if they could have made it any different, and I don't see a world where they pivot to renewable energy.

At the end of the book, you talk about how Charles Koch is starting to write a book based on his business principles and Market-Based Management—and how it could provide a model for American society. It’s very, very ominous—what are your predictions for what happens next?

Even in 2007, Charles Koch released a book called The Science of Success. It talks about how Market-Based Management can be used to run a company, run your personal life, run a nation. He has always thought this is literally the blueprint for how human society ought to be run. So I'm not surprised at where he is now in his philosophy, but when I heard that this is the topic of his next book—how we can organize all of America around Market-Based Management—it's still pretty stunning.

The book is called Kochland because this institution is like its own little world. I mean, these people speak the same language. They subscribe to the same philosophy. They have the same incentives. It's "Kochland"—a little microcosm. Charles Koch has been patiently working since the 1970s to reshape America to reflect his views—to make us Kochland. And, as I talk about it at the end of the book, our country now resembles Koch Industries in a lot of key ways. The gains go to the owners—the top small group of people—and the rest of us are kind of spinning our wheels. We have this belief that, essentially, government is worthless and destructive, and we need to rely more and more on market forces to organize programs and provide services to people. So we're coming to reflect Kochland more and more, at least in parts of our society.

There's a huge backlash against it, but what's next? I mean, this company is going to be huge and influential for decades, and Charles Koch's game plan is still in its early phases. They're still working to push back government, limit government, create a dominant role for market forces in our country, and make it much more libertarian.