I’m a liberal capitalist. I believe very deeply in capitalism, but with rules and referees. Just like I don’t believe that football should be played without rules and referees, I don’t think that business should be played without rules and referees.

The True Story of Capitalism

But, there’s a nasty strain of business today that calls itself capitalism and it’s really bad for you, bad for me and bad for America. It’s also not really capitalism, because it’s only successful by breaking the rules and buying the refs.

You might have heard about these two brothers, these two sinister creeps, named the Koch Brothers. They own Koch Industries, and, they were featured in this long, extensively researched article in Rolling Stone, that painted a picture of the Koch Brothers as seriously the most evil business people you’ve ever seen. The Koch boys have $40,000,000,000. Each. They own the second largest privately owned company in the country. They own almost the entire infrastructure of how we turn oil into stuff that we use. They make real contributions to the country, but are those contributions good? I mean, that’s the question right? Do we need these guys?

Some of the things that came out in this article that you and I have talked about on the radio many times is how they made their money. How they actually made their money is very different from how they say they made their money. The Koch boys are the very embodiment of the rot in our country that keeps our main streets down, and that rot is the difference between how business works, and how wealth gets accumulated, and the story of how business works and how wealth gets accumulated. Because they’re very different. See, you and I are taught and tricked into believing that great men — and some women — come forward with an idea and a drive and initiative and brilliance, and they rise up with the power of their own bootstraps to make something — as long as rules and regulations and referees don’t get in their way. And you and I are taught and tricked to think that’s how great businesses get started. That great people do it all on their own because they’re great, and the rest of us need them or we’re not going to have jobs and we’re all going to die at the hands of terrorists. And, really, that’s not how it works.

Here’s how it really works. Somebody does something good. Yes, absolutely. Somebody does something good, and then somebody else does something good, and then somebody else does something good. And then they say, “Wait a second. Wouldn’t it be better if we got together, and we did something good together? Let’s build a road. Or a bridge.”

Then, they each do more good things using the roads and bridges they built together. Then, they say to each other, “There’s somebody else over there doing bad things. Let’s make a rule that they can’t do that bad thing, because they’re hurting us, and they’re not being fair. So let’s come up with a rule about how we all have to treat each other, and how we all have to do business.” Then they can all obey the rules and discipline the ones who don’t.

Then they say, “Okay, you know what we need? We need help. We need people to help us with what we want to do, so let’s make some schools, where people can get trained. But, we need to pay for those schools, so let’s all pay for the schools together. And when we make those schools, people will get training, and we’ll have people — new people — who we can hire to help us do great things.”

And then they say, “Hey, I know someone who needs what you’re selling. Let me help you sell to my friend.”

And then, later, because they have money, they say, “Gosh, I think we’d like to go out to eat.”

Somebody is able to start a restaurant, and, because they’ve made money and are able to drive on the roads they built together, they go into that restaurant and eat. Then, they tip the waitress and the waitress takes the tip, goes home and buys books for her kid, and the kid goes to the school that they all pay for, and that kid grows up and does something great or comes to work for them and does something great. That’s how it works.

The Story of “Koch Brother Capitalism”

The trouble is, the Koch boys and their enablers and dealers tell us tall tales of great men who are born and achieve great things in the wild of the “free market”, with no rules, help or advantage. And, that’s a total lie. Here’s what really happened.

The Koch boys’ ride started in the beginning of the 20th century, when their grandfather, Harry Koch, was a newspaperman in Texas, who invested in some railroads and made some money. He also fought against Social Security. Then, Harry’s kid, Fred, the Koch boys’ father, went to public school and became an engineer. After college, he partnered with somebody who had left a company that had invented a new way to make oil into stuff.

Fred and his partner basically stole what that company had invented, made a few tweaks to it, and went into business using the stolen invention under a contract they got through friends of Fred’s father. But then, they got sued for stealing the invention. So, Fred went to the Soviet Union and started working for Joseph Stalin, building equipment to turn Soviet oil into other stuff. And that’s where he made his money. Then, he came back to the United States and used his money from communist government contracts to grow his American operations and promote policies against both communists and government contracts.

Fred had four sons and two of those sons, Charles and David, became the “Koch Brothers”. They took over the business in the sixties, and they began to steal. There’s no other way around it. They began to steal.

They bought oil from Native Americans on Native American lands, and when they measured the oil to pay the Native Americans for it, they told the Native Americans that they had taken less oil than actually did. At trial, one witness said the stolen oil made up 25% of their profits.

They stole in other ways, too. They rigged lotteries for oil producing land. They bullied people. They dumped things into the environment. They didn’t keep their pipelines safe, and people died. Today, their company makes $400,000,000 a year. The Koch boys are worth $40,000,000,000 each, and a lot of it, they “earned” by cheating and stealing.

So, the question is, are they are real business people? I mean, are they real? I know that they’ve made a fortune. I know that they’re worth more than you and me and just about everybody put together, but are they a real business?

You know, one of the big things they do is pump their toxic waste into the water and into the air. And they don’t pay for it. We pay for it. And, they say they shouldn’t have to pay for it, because they’re great men doing great things, so we need to get out of their way. One of their own henchmen admitted that if they had to pay the tax on the toxic crap they belch out into the air and water, the business may not be profitable.

If we actually charged them the costs that they impose on us, would they really be profitable? And, if they’re not really profitable, are they really a business we should look up to? Are they real capitalists? Or are they just cheaters, who are stealing from the rest of us in health and in costs and in land? Think about this; As we hear about great men who have built great industries and great fortunes, consider what would happen if they actually had to play by the rules; if they actually had to comply with the law. You see, the Koch boys don’t want any rules or laws, and they’re trying to buy this country — and they’ve done a great job of it, so far — so that the rules and laws don’t apply to them. But, if they had rules and laws to follow — actually follow — and tax to pay for the pollutants that they foist on the rest of us, would they actually stay in business? Would they actually survive? And if they wouldn’t actually survive, or they wouldn’t be profitable, are they real capitalists?

If you agree that cheating and stealing to profitability isn’t real capitalism, then join me in the fight to save capitalism from the phony capitalists.

Also, check out our interview with John Paul Rollert, professor of Business Ethics at the University of Chicago, Booth School of Business for more discussion on how the Koch Brothers are destroying true capitalism!