Early on in “Kochland,” a detail-packed, incisive look into the modern worlds of American commerce and politics, author Christopher Leonard makes one thing clear: The name of his subject, billionaire Charles Koch, rhymes not with “Swatch,” as in former New York City Mayor Ed Koch, but with “smoke,” as if it were the popular cola drink.
That pronunciation is certainly fitting, given the hazy scrim that has long shielded Koch, his company Koch Industries and his political organizations, including Americans for Prosperity, from public scrutiny.
Leonard puts it this way:
“Even though his influence is felt throughout Koch Industries, and throughout America’s political system, Charles Koch remains a remarkably opaque figure. He prizes his privacy and cherishes secrecy.”
Or as he quotes Koch saying, “The whale that comes above sea level gets harpooned.” In other words, remain anonymous and stay out of sight if you want to avoid enemies and get things done.
But in “Kochland,” which went on sale Tuesday, Leonard goes a long way toward lifting the veils surrounding Koch to correct and expand the public record.
As Leonard makes clear, Koch has had his share of ups and downs over the years. But his net worth — $53.5 billion as of last year — shows that his blend of libertarian politics and business acumen has led to far more successes than failures. In battles with unions, government agencies, liberals in Washington, even members of his own family for control of his burgeoning empire, Koch’s long-term perspective has helped him survive and thrive.
With tentacles in a large variety of businesses, Leonard concludes: “Koch’s operations span the entire landscape of the American economy. The company’s story is the story of America’s energy system, of its blue-collar factory workers, of millionaire derivatives traders, corporate lobbyists, and private equity deal makers. To examine Koch is to examine the modern American economy.”
And the Koch empire has been fueled by what Leonard calls “a cultural bias toward maximizing profits and abetted by a general disdain for government.”
But although Koch and his company have been largely successful, they have stumbled from time to time. One of their worst episodes ran straight through St. Louis and the acquisition of Purina Mills, the nation’s largest animal feed maker.
The company had a bad year in 1996, making it a prime takeover target for Koch — and a reluctant one. “The company had a storied history in St. Louis,” Leonard writes, “and a legacy of independent leadership. Senior executives at the firm weren’t instantly seduced by the idea of being owned by an energy company out of Wichita.”
Purina Mills’ leadership thought the Koch way of doing business would clash with what Leonard calls “the Danforth culture,” the example set by generations of a family that was Missouri’s “equivalent of royalty, having mastered all three important realms of Midwestern civic life: business, church, and politics.”
In his usual way, Koch didn’t want to mesh his way of doing business with Purina’s — he wanted to take over. But as Leonard notes, “Purina executives didn’t swallow it. They didn’t think it was necessary to erase their mental pathways and start anew under Charles Koch’s tutelage.”
The clash led to the departure of several Purina Mills executives, and Koch’s lack of understanding of Purina’s business resulted in a rare failure for the company. In 1999, Purina Mills filed for bankruptcy, and Koch Industries was forced into a round of layoffs. The debacle portrayed the company and its eponymous leader in a way he never wanted to see again. In 2001, Purina Mills, which is separate from Nestlé Purina PetCare Co., was purchased by Land O’Lakes Inc.
Koch preferred to be known, if he was known at all, for his acronym-laden business philosophy, led by MBM, or Market-Based Management. Leonard says Koch calls the credo “a blueprint for achieving prosperity and freedom. It is equally applicable to business ventures, personal habits, and national government. Adherence to the creed is nonnegotiable for anyone who remains at Koch Industries.”
As a result, he adds, “employees become more than employees; they become citizens of an institution with its own vocabulary, its own incentives, and its own goals in the world. The financial success of Koch Industries only reinforces the idea that what they are doing is right and that the tenets of MBM are indeed the key to proper living.”
That philosophy is in line with what Leonard calls Koch’s overall view of how the world works:
“He realized that there were not two separate spheres of American life: the public sphere of government action and the private sphere of business enterprise. Instead, there was only one tangled web of a nation’s political economy, the deeply interlaced workings of government policy and corporate structures. One intimately affected the other.”
In many ways, “Kochland” is as sprawling as the company and the family it covers. Leonard, a former Associated Press reporter in St. Louis and a graduate of the University of Missouri journalism school, does his best to personalize the abstract, mixing mini-profiles with broader discussions of Koch’s business and government dealings. The details may be a bit overwhelming at times, but the overall picture comes through loud and clear.
And with Koch now in his 80s, and a pivotal presidential election coming up, the billionaire is clearly concerned about the legacy he will leave behind.
“He had been building a political network with a reach and influence that was arguably stronger than any other in corporate America,” Leonard writes. “Only the CEO of Koch Industries could call upon a massive lobbying operation, an army of grassroots activists, a donor network with contributions in the billions of dollars and a universe of political front groups and donor vehicles nearly impossible for outsiders to map.”
In 2016, two political upstarts drew differing reactions from Koch. In Missouri, a Koch-affiliated group donated $50,000 to “A New Missouri,” a so-called “dark money” group formed by allies of Eric Greitens to support his bid for governor, according to tax filings discovered by the Post-Dispatch.
Greitens won, but is now gone, of course. Koch has been less supportive of the winning candidate for the race for the White House, Leonard writes, and a 2020 political battle is shaping up. Leonard writes that everything Donald Trump “stood for was a threat to Charles Koch’s entire political project. Donald Trump’s presidency had the potential to destroy everything Charles Koch had built.”
But in marked contrast to the man who wanted to thwart Koch’s libertarian vision, Leonard adds, “Charles Koch possessed an attribute that seemed to elude Donald Trump — he possessed almost limitless patience, and a time horizon that was measured in decades.”
And now, according to the Boston Globe, Koch is teaming up with another politically savvy billionaire, George Soros, in an effort to champion what the Globe calls “an approach to the world based on diplomacy and restraint rather than threats, sanctions, and bombing.” That kind of dynamic libertarian-liberal duo could have a big impact on the world stage.
With such variables in play, will Koch’s philosophy and financial prowess prevail at the ballot box? Based on the portrait of power that Leonard paints in “Kochland,” the upcoming showdown could be epic. Stay tuned.
Dale Singer retired in 2017 after 45 years as a reporter and editor in St. Louis. He lives in west St. Louis County.