Wednesday, September 11, 2013

Libertarian fantasies: Life without the Constitution

You can have your own theories but you can't have your own facts.

Charles Koch doesn't seem to agree with this maxim. He wants to have his own theories and back them up with his own facts as well. In 2012, Koch stated that only countries with economic freedom can create widespread prosperity. He says the poorest people in the most-free societies are 10 times better off than the poorest in the least free.

This is probably true, but there's no way to prove that the poor are better off because of economic freedom. The most-free economic societies, as determined by a subjective formula, are also among the richest, including Hong Kong, Singapore and Australia. The poorest countries are countries truly devoid of economic assets of any kind: North Korea, Zimbabwe, Eritrea, Cuba. The poor in the most wealthy countries are undoubtedly better off than those in the poorest. For one thing, the richest countries have a social safety net that cares for the poor.

Koch also fails to note that the Heritage Foundation, which makes up this list of most-free countries annually, has received support from Koch of up to $500,000 a year. So Koch is able to buy a think tank to support his controversial views. He hasn't received a good return on his investment, however, since the theory of most-free economies proved nothing at a cost of over a million dollars.

Koch claims that the U. S. government, by its subsidies, has forced the cost of energy up. Energy from wind energy, he says (without attribution), has been pushed up 5 times. The U.S. Energy Information Agency (EIA), on the other hand, estimates the cost of wind-generated energy from new plants at approximately the same as energy from new coal plants. EIA's estimate includes subsidies for wind and the cost of building the power plants.

Koch is just flat wrong about what he calls “cronyism”, which is where the government picks winners in the economic marketplace. He's wrong because many of the most important U.S. industries were started by “cronyism”. The railroads were started by government subsidies in the decades after the Civil War. The demand the railroads created for steel and coal boosted those industries as well. WWI gave great impetus to the airline industry, which went from the fragile biplanes built by the Wright Brothers to planes that could fly higher, faster, and with greater maneuverability. These planes were financed by the government.

The jet engine, rocket-propelled flight, and advanced telemetry came out of WWII, along with the electronic computer, which was developed by the government to help target powerful, longer ranged cannon shells. During the Cold War, the U.S. developed guided missiles and miniaturized guidance systems that put a man on the moon. These miniaturized systems were refined into silicon chips that made America the world leader in computers and electronic technology for decades. The internet was designed by government projects to keep communications open during a nuclear attack. In fact, one could easily argue that the problem with American technology after the development of the world-wide web was that the government was not spending enough money on research and development of the kind that Koch calls crony capitalism.

Koch ignores the pollution caused by coal, here as elsewhere. He apparently believes that air pollution, not to mention greenhouse gas production, should not be considered as a factor in choosing between wind or fossil fuels. The fact that Koch Industries buys petroleum coke, a particularly dirty fuel, and sells it to China, proves that China's air pollution problems are less important to Koch than company profits. Koch insists in the same post that trouble begins when “companies take their eyes off the needs and wants of consumers”. Koch Industries hasn't considered the “needs and wants” of Chinese consumers when it sells dirty fuel to them, or the health of residents of Detroit and Windsor, Ontario, when Koch Industries dumps a heap of petroleum coke 40 feet high on a city block beside the Detroit River.

Koch's agenda is astonishing. He wants to abolish the federal government.

Subsidies and mandates are just two of the privileges that government can bestow on politically connected friends. Others include grants, loans, tax credits, favorable regulations, bailouts, loan guarantees, targeted tax breaks and no-bid contracts. Government can also grant monopoly status, barriers to entry and protection from foreign competition.1

Two of the powers Koch mentions (tax credits, targeted tax breaks) rely directly on the government's ability to tax, granted by Article I, Section 8, of the U.S. Constitution. One of the main reason the Constitution was ratified in the first place was that the central government under the Articles of Confederation had no power to tax. Without the power to tax, the federal government will be powerless to do anything. Even a standing army would be out of the question. All the powers would devolve to the states.

The sovereign states would have much more power, of course, if they chose to use it. Those states which choose to follow the libertarian principles of Koch will likely have very weak governments. Government services would be minimal. Social safety nets would be nonexistent. These states would most likely be the southern and mountain states that currently vote reliably Republican.

The other states would continue to have strong governments with social services. They would be wealthier, because they would not have their federal taxes redistributed to the poorer states, as they do now.

Koch would also repeal the commerce clause of the Constitution, which permits the government regulation of business. This clause was used to prevent private businesses from discriminating against minorities. Repeal of the commerce clause would end civil rights in this country, or rather, in the new countries that would be organized from the former red states.

Koch would not oppose such a move, even though it would mean the return of segregation and Jim Crow laws. Koch gives tens of millions of dollars to his various charities, he has seldom, if ever, given a dime to a charity that benefits minorities or supports civil rights. His views on this subject are clear.

Koch ends his post on “corporate cronyism” by announcing that

If America re-establishes the proper role of business in society, all kinds of benefits will accrue. Our economy will rebound. Our liberties will be restored. And when President Obama tells an entrepreneur “You didn’t build that,” everyone will know better.

If Koch's plan to suppress the taxation and commerce clauses of the Constitution were successful, only giant corporations could afford to conduct business in America because they are the only ones that could afford to build the roads, pipelines, and electrical lines that would be necessary to build anything. We are indeed fortunate that Koch's array of fake grassroots organizations with their phony statistics and well-paid shills has not yet succeeded. Do not believe this man. He wishes us all ill.

1Charles Koch, Corporate Cronyism Harms America, Wall Street Journal, Sept. 9, 2012,

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