Voices of Freedom

Voices of Freedom

Capitalism:  A Moral Philosophy?

“Our elected officials would do well to remember that the most prosperous countries are those that allow consumers-not governments-to direct the use of resources.”

                                                                                                Charles Koch

More than once in my zeal to promote my latest idea in the marketplace, I have found myself in an awkward position-you know the proverbial “mouth in motion before the brain is engaged”  phenomenon.

The day I “discovered” Koch Industries was one of those times.  As an independent retailer owner in a small town, I had purchased some   convenience store/gas stations in a neighboring community.  Always dreaming about ways to increase customer traffic and build sales and loyalty, I had begun to think about gas pumps and grocery stores-together.

Characteristic of my personality and temperament, I began to act on the hunch that this might work.  One of my managers suggested I call Koch Industries and float the idea-he knew they were in the refinery business and might be a contact for fuel.

Without further adieu (or research for that matter), a conference call was held with Koch’s fuel marketing team.  As conference calls go, the cordial executive introduced me as a retailer with an idea to tie gas and grocery together and I was off to the races.  After about thirty minutes, I took a breath, and the question was posed, “Gary, do you know anything about Koch Industries.?”

The pit in my stomach told me I had done it again.  Ah, no, not really.  Just that they are in the oil refining business.  The very polite moderator went on to give me the stats on Koch and I felt like a fool.  As I began to apologize, one of the others on the call stopped me in mid-sentence with this, “We’ve been researching this for a year and in 30 minutes you just articulated our entire business plan off the top of your head.”  The call ended with a simple question, “How soon can you be in Wichita?”

Koch Industries-at the time was the second largest privately held company on the North American Continent at roughly 30 billion dollars in annual revenues. Rather than chiding me for my audacity and presumption, they offered me a consulting contract for the next two years.  True to Koch’s philosophy, belief in the power of an idea arising out of economic necessity in a free society is a much better risk than a bureaucratic mandate.

Of course Koch Industries is in the news of late.  Often touted by the left as a potential conspirator against the government, has consistently followed their commitment  to  ”support only policies,” as Charles Koch says in a WSJ opinion published March 1, 2011, ” that enhance true economic freedom.”

It’s a stubborn principle which seems to keep coming up.  Statistics show that society consistently benefits-at all levels-from greater economic freedom.   Freedom from excessive taxation and regulation by the government leads to more opportunities for the businessman or entrepreneur to try new ideas to promote their business.

Charles Koch, the CEO of Koch Industries says it like this in the preface to his 2007 book, “The Science of Success.”

 “Through my work in building a great company and my study to identify the principles that lead to prosperity and societal progress, I encountered the ideas of …good thinkers which fit my observations in the natural world.  I learned that prosperity is only possibly in a system where property rights are clearly and properly defined and protected, people are free to speak, exchange and contract, and prices are free to guide beneficial action”

In other words, freedom to succeed involves the risk of failure.   If the product doesn’t sell, it is not the right product.  Period.   If an idea is a good one, it will succeed; if it isn’t it should be changed.

Whether or not one agrees with Koch’s philosophy of free market economics and a smaller, smarter government, it is hard to argue with the numbers.  Roughly 12 years after I first “met” Koch Industries, they have grown to become the largest privately held company on the planet and 80 billion dollars in sales, providing upwards of 50,000 US based jobs.

In a world where both Republicans and Democrats have failed to address the issues necessary to succeed in balancing the budget, Koch industries continues to invest in a “variety of intellectual and political causes working to address these problems and provide sustainable solutions.”  In a word, to create incentive and opportunities to create wealth rather than to heap a crippling tax burden on the productive members of society.

I experienced this first hand some twelve years ago as an independent retailer

with an idea-the Koch brothers put their money where their philosophy lies..

Just one more voice in the fan club of freedom.

God Bless America

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Wall Street Journal – March 1, 2011

Why Koch Industries Is Speaking Out

Crony capitalism and bloated government prevent entrepreneurs from producing the products and services that make people’s lives better.

By CHARLES G. KOCH

Years of tremendous overspending by federal, state and local governments have brought us face-to-face with an economic crisis. Federal spending will total at least $3.8 trillion this year-double what it was 10 years ago. And unlike in 2001, when there was a small federal surplus, this year’s projected budget deficit is more than $1.6 trillion.

Several trillions more in debt have been accumulated by state and local governments. States are looking at a combined total of more than $130 billion in budget shortfalls this year. Next year, they will be in even worse shape as most so-called stimulus payments end.

For many years, I, my family and our company have contributed to a variety of intellectual and political causes working to solve these problems. Because of our activism, we’ve been vilified by various groups. Despite this criticism, we’re determined to keep contributing and standing up for those politicians, like Wisconsin Gov. Scott Walker, who are taking these challenges seriously.

Both Democrats and Republicans have done a poor job of managing our finances. They’ve raised debt ceilings, floated bond issues, and delayed tough decisions.

In spite of looming bankruptcy, President Obama and many in Congress have tiptoed around the issue of overspending by suggesting relatively minor cuts in mostly discretionary items. There have been few serious proposals for necessary cuts in military and entitlement programs, even though these account for about three-fourths of all federal spending.

Yes, some House leaders have suggested cutting spending to 2008 levels. But getting back to a balanced budget would mean a return to at least 2003 spending levels-and would still leave us with the problem of paying off our enormous debts.

Federal data indicate how urgently we need reform: The unfunded liabilities of Social Security, Medicare and Medicaid already exceed $106 trillion. That’s well over $300,000 for every man, woman and child in America (and exceeds the combined value of every U.S. bank account, stock certificate, building and piece of personal or public property).

The Congressional Budget Office has warned that the interest on our federal debt is “poised to skyrocket.” Even Federal Reserve Chairman Ben Bernanke is sounding alarms. Yet the White House insists that substantial spending cuts would hurt the economy and increase unemployment.

Plenty of compelling examples indicate just the opposite. When Canada recently reduced its federal spending to 11.3% of GDP from 17.5% eight years earlier, the economy rebounded and unemployment dropped. By comparison, our federal spending is 25% of GDP.

Government spending on business only aggravates the problem. Too many businesses 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 or 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.

The purpose of business is to efficiently convert resources into products and services that make people’s lives better. Businesses that fail to do so should be allowed to go bankrupt rather than be bailed out.

But what about jobs that are lost when businesses go under? It’s important to remember that not all jobs are the same. In business, real jobs profitably produce goods and services that people value more highly than their alternatives. Subsidizing inefficient jobs is costly, wastes resources, and weakens our economy.

Because every other company in a given industry is accepting market-distorting programs, Koch companies have had little option but to do so as well, simply to remain competitive and help sustain our 50,000 U.S.-based jobs. However, even when such policies benefit us, we only support the policies that enhance true economic freedom.

For example, because of government mandates, our refining business is essentially obligated to be in the ethanol business. We believe that ethanol-and every other product in the marketplace-should be required to compete on its own merits, without mandates, subsidies or protective tariffs. Such policies only increase the prices of those products, taxes and the cost of many other goods and services.

Our elected officials would do well to remember that the most prosperous countries are those that allow consumers-not governments-to direct the use of resources. Allowing the government to pick winners and losers hurts almost everyone, especially our poorest citizens.

Recent studies show that the poorest 10% of the population living in countries with the greatest economic freedom have 10 times the per capita income of the poorest citizens in countries with the least economic freedom. In other words, society as a whole benefits from greater economic freedom.

Even though it affects our business, as a matter of principle our company has been outspoken in defense of economic freedom. This country would be much better off if every company would do the same. Instead, we see far too many businesses that paint their tails white and run with the antelope.

I am confident that businesses like ours will hire more people and invest in more equipment when our country’s financial future looks more promising. Laying the groundwork for smaller, smarter government, especially at the federal level, is going to be tough. But it is essential for getting us back on the path to long-term prosperity.

Mr. Koch is chairman and CEO of Koch Industries, Inc. He’s the author of “The Science of Success: How Market-Based Management Built the World’s Largest Private Company” (Wiley, 2007).

As printed in The Wall Street Journal

Voices of Freedom

The Common Sense of Thomas Paine

“The sun never shone on a cause of greater worth”

                                                                                                                                    ….from Common Sense

Although I remember learning about Paine and his contribution to the American Revolution at its inception, I can honestly say I knew little of his life and work beyond the pamphlet, Common Sense.  And to be quite honest, until my wife started quoting him in our frequent discussions about Founding Principles and the early history of America, I hadn’t even read much more than the introduction! Once I got a real dose of his thinking, however, I realized I wanted more.  As a result, I decided he was another voice to be part of this series.

As I started reading about Paine, it became clear that it was more than being at the right place at the right time which set him apart from the chorus of voices heralding the cause of liberty and justice on the American continent in the mid 1700s.  His philosophy was in sync with the leaders of the fomenting rebellion and he had a way of communicating his ideas in a manner which resonated with the ordinary laborer as well.  Although a newcomer on the scene (he emigrated from England in November of 1774), he embraced the cause of the Americans as if he were one of them.

Thomas Paine was a writer of only modest reputation as a young man in England.  Many have speculated as to what happened once he arrived in America.  One biographer says it this way:

“…he contributed essays, poems and scientific reports (in his new career as a journalist in America), and like many a fortunate immigrant before and since, he wrote as if reborn, his words manifesting a phenomenal sense of renewal, elation, and possibility.”[i]

Far from being just another impassioned writer, however, Paine was dogged in his determination to stay on message.  In this movement toward independence, it was his radical notion that the foundation or the root of the ideas which fueled the fire of revolution could not simply reflect the “corrupt models of the old world…..it was the opportunity for beginning the world anew.”[ii] 

For all the thoughts and ideas of his contemporaries about the nature of his success, I find Paine’s explanation most satisfying.  He attributed the effect of Common Sense[iii][iv] not to its content or style, per se, but to its audience.  In his mind, the American people were the stuff of a successful revolution because of the qualities and values they had embraced and now embodied as individuals in a unique cultural milieu.  In his words:

“…here the value and quality of liberty, the nature of government, and the dignity of man were known and understood and the attachment of Americans to these things produced the American revolution as almost a natural result.”[v]

When Ronald Reagan quoted Thomas Paine in his acceptance speech in July of 1980, these were the thoughts and ideas he was connecting to concerning the “power to start the world all over again.”  The power is in the people of this country; it always has been and it always will be.  Whenever the government and the individuals or parties in power forget this fact and stray too far, it as if we can be sure someone will rise to the occasion and lead the way back to where we started.  I believe it is this phenomenon that is driving the Tea Party movement and others like it in America today.

If this is true about the American people, then Paine is an important voice to hear and to heed.  I’m not calling for revolution, but I ;am calling for a return to our roots.   Paine has been called a radical; I have been called radical; maybe you have, too.  But when I looked up the word radical, I found something I didn’t expect.  The definition has suffered from the evolution of language, but the derivation points to the word radix which is Latin for root.  Essentially, a radical is one who returns to the root of the idea or problem and argues from that posture.  Think of that image up against the one of a progressive looking for change for the sake of change. Hmmmm.

Paine had the courage in Common Sense to call for Americans to stop and think about the simple categories of right and wrong.  He began the pamphlet with a statement on moral relativism which would be a great subject for a debate on a high school debate team.  To him, society, circumstance and the mood of the moment do not determine our actions.  It is truth which is the final arbiter of any debate.

As he developed his philosophy and ideas in the work which followed on the heels of Common Sense, one can see a sophistication of sorts– a reflective, thoughtful and passionate voice in the making.  At the end of 1776 as the Continental Army struggled to maintain the ranks due to discouragement and impending despair, he sat in the candlelight by a campfire in Washington’s camp with pen and ink and paper stretched over a drum head to write these words:

“These are the times that try men’s souls.  The summer soldier or the sunshine patriot will, in this crisis,  shrink back from the service of their country; but he that stands it now deserves the love and thanks of man and woman.  Tyranny, like hell, is not easily conquered; yet we have this consolation with us….that the harder the conflict, the more glorious the triumph.  What we obtain too cheap, we esteem too lightly.…it is dearness only that gives every thing its value.  Heaven knows how to put a proper price upon its goods; and it would be strange indeed if so celestial an article as FREEDOM should not be highly rated”[vi]

As Washington read these words to the troops on Christmas Eve 1776, the revolution was reignited.  The next day, much to the surprise of the Hessian soldiers on guard in Trenton, out of the fog on the Jersey shore of the Delaware River, emerged the Continental Army.  And the rest, of course, is history.

To conclude this introduction to Paine and his work, it could be said that, above all, he believed in the natural rights of man.  He develops this philosophical idea in a later work entitled The Rights of Man. [vii] I find his discussion of the difference between natural or inherent rights to be resonant of the foundation of the Declaration of Independence and the US Constitution.  No government has the power to confer civil rights on its citizens, no matter how benevolent that bequest may be.  Instead man has certain rights by virtue of his humanity which are conferred (if by anyone), by his Creator.  Therefore, they are a possession to be protected rather than a gift or a benefit to be given or taken away.

Whether  a Christian or just a Deist, he certainly had a firm faith in the Providence of a transcendent  God who ordered the universe.  To me, THAT is Common Sense to believe in!

You can believe what you choose, But you will be judged by what you choose to believe

                                                                                                                                                                John Henry Neumann

This statement always stops me in my tracks.  My paraphrase?  Beliefs have consequences.   What kinds of beliefs and choices am I referring to?

To begin with, anything from personal life choices to a political philosophy, from how to spend money to how to prioritize my time would be on the list.  Certainly, what I think about spiritual issues, morality and truth would be significant.

Now, I think most people would agree that beliefs have consequences.  What a person believes directly affects the choices made and those choices are subject to some form of judgment or evaluation.

On the political scene,  what’s going on in Washington and out here in North Dakota—is not only a war of ideologies, but a crisis of conscience as well.  On the one hand, there are those who believe that the government is better equipped to run our lives than we are.   Leaders elected by the people aren’t really accountable for what they decide to do.  They believe tax increases and more spending are the solution to huge deficits and high unemployment—even if history and their constituents disagree.

On the other hand, there are those who believe they have a moral obligation or mandate to carry out the wishes of those who put them in office.   They act on the premise set before the American people in  her  founding documents—this is a government of, by and for the people.  If the electorate has asked for no new taxes or unnecessary new spending, then every effort must be made to comply with their requests.

In between these two ideological poles are a group of lawmakers and officials who call themselves one thing and make decisions which reflect a philosophy which is quite different.

What the American people witnessed as an unpopular piece of legislation was rammed through both houses of Congress last year is an example of this crisis of conscience—and the outcome!

The members of Congress may have exercised their  freedom—Believe what you choose.  What happened at the ballot box was the judgment which ensued—You will be judged by what you choose to believe.

I believe that the platform of the Republican party is a reflection of the values and principles that this country was founded upon; many of the ideas presented in this platform form the basis for my choice to be a Republican.

Given the response to the majority party in the 2010 elections, I have a hunch there are others like me—others who expect those who align themselves with a party to believe what the party stands for and act accordingly.

I think the people in America—AND IN ND– are awake, watching and ready to act.