Kochland Author Christopher Leonard Talks Corporate Power, the Koch Brothers, and Their “Outsized Influence over Policy”

Christopher Leonard, author of ‘Kochland’.

Charles and David Koch are well known for their libertarian politics and influence over the Republican Party.  But as journalist Chris Leonard shows in his new book, Kochland: The Secret History of Koch Industries and Corporate Power in America, how the Kochs built their business empire is in many ways just as compelling of a story, especially for those focused on the role of corporate power in today’s economy.

The result of a six-year investigation, Kochland tells the mostly unknown and ironic story of how Koch Industries became perhaps the most powerful private company in America largely by exploiting the opportunities for monopoly created by government environmental regulation. Open Markets spoke with Christopher Leonard about his findings.

OMI: How did you get interested in Koch Industries and what drew you to this research?

Leonard: Back in 2011, I was a business reporter at the Associated Press, and I had all of these pressing concerns with corporate power and income inequality. I wondered why our economy could grow but middle-class workers didn’t really get ahead, and why corporations have more influence over our public policy than they have had in 100 years. I just had this “aha” moment in late 2011 when I realized I could explore all of this by telling the story of Koch Industries.

OMI: Throughout your research, did you find instances in which Koch Industries wielded its power to capture market share?

Leonard: Let’s look at the most important business to Koch Industries, which is oil refining. The United States hasn’t built a new oil refinery since 1977. And not only have we not had new entrants, but the ownership of the existing refineries consolidated dramatically during the 1990s. So, fewer and fewer people own the machinery that is at the head of our entire energy system.

Interestingly enough, the reason this is happening is because of the regulatory sprawl of the Clean Air Act. … Congress did not mean to stifle new competitors. But what happened is that the big incumbent players manipulated the rules and gamed the system because they’re the ones who could afford the attorneys and the lobbyists to do it. And they have managed to sit on top of their incumbent position and reap some of the highest oil refining profits in the world. This is just one example of how the incumbent, entrenched players benefit from a lack of competition and monopoly power to reap supernormal profits.

OMI: Historically, what are some of the most significant moments for Koch Industries?

Leonard: The first one that comes to mind is the moment in 2009 when Barack Obama was elected. Charles Koch’s network makes a pivotal move when they flush money into their group called Americans for Prosperity. This is a nationwide network of volunteers and employees. It’s a boots-on-the-ground field army. What this means is when Koch opposes policy, it owns and operates one of the largest lobbying operations in the United States. Those lobbyists can identify the exact political terrain Koch needs to influence, and then with Americans for Prosperity, Koch can deliver busloads of angry voters from around the country to very targeted congressional offices. That moves policy. That controls policy. And I think that’s one of the most instrumental moves they ever made.

OMI: How did Koch Industries undermine labor unions?

Leonard: Koch is on the forefront of this fight, which I think is one of the most important fights going on in the United States. Since the 1960s, Charles Koch has absolutely detested labor unions. He has vehemently fought the labor unions within his own company, but more importantly has flooded money into the bigger picture fight to undermine and destroy organized labor in the United States. For example, Wisconsin, of all states, passed a right to work law under Scott Walker. Koch played a big role with Americans for Prosperity in pushing for that. So, it’s a multi-tiered, multi-decade effort to undermine labor union power wherever possible. And Koch is not alone in doing this. This is corporate America’s agenda at large.

OMI: What are some of the messages that you hope your readers take away from the book?

Leonard: That Charles Koch has been saying from the beginning: politics and economics are not different subjects. They are not separate fields. The reality of our political and economic system is intertwined like one strand of DNA. The functioning and shape of our economic life doesn’t happen by accident. It is not handed down from heaven. These are all decisions that we make about how to structure our government and our political system.