Mark Ames: Koch, Hayek & “Ideas for Sale”September 30, 2011
Yesterday, Mark Ames and Yasha Levine revealed a scoop in The Nation about Charles Koch and Nobel prize economist Friedrich Hayek’s “secret love affair with Social Security.” Newly discovered private correspondence between Koch and Hayek, while appalling and hypocritical on its face, reveals a far deeper problem: the secret corruption of ideas that, behind a “Green Curtain” of payoffs, feed into our politics and damage our democracy. You can read more about their investigation of the correspondence at The Nation’s website, and view the original correspondence Koch sent to Hayek at eXiled online.
As we lead the push to “Get Money Out,” we will also begin a new series at DylanRatigan.com called Ideas for Sale, reporting on the buying and selling of ideas behind the scenes in our country.
WATCH: Mark Ames and Yasha Levine on The Dylan Ratigan Show
Dylan: Welcome to Episode 71 of Radio Free Dylan. Today’s episode, a little different than others, in that today’s episode comes with what some are calling one of the greatest scoops ever. We are about to discuss one of the most egregious examples of money altering not just policy, but altering the fundamental manufacturing of ideas and thought going back to the 1970s. And so with no further ado, I present to you one of the two reporters to break this piece of information this week about “Ideas for Sale,” Mark Ames. And Mark, give us a little bit of a sense of what – the big picture here, ideas for sale, what is your story?
Mark: Well, in the big picture, and I’ll get to the story, the big picture is this, in order to have politics for sale and corrupted politics and corrupted ideas and to make that respectable, you need to change the environment. You need to make the environment hospitable to that kind of – those kind of creatures and so that they can thrive in a world of corruption and more money-controlled politics. And so really what I’m talking about with this story is, which is about Charles Koch, the largest funder of campaigns to kill ideas that would have us kill social security and Medicare, and Friedrich Von Hayek, the economist, who is the 20th century’s biggest free market economist. He’s the Godfather of free market economics and probably has done more to sort of propagandize about how and why social security and Medicare, if we take it, it will lead to totalitarianism, it will kill us, and so on and so forth. So basically in private, these two guys are having a private correspondence, express nothing but support – it’s a given that the programs work and that they work really well.
Dylan: But why is the idea of paying off a particular person who is like a doctor paid to promote smoking, if you will, even if they know it kills you -- why is Hayek so valuable?
Mark: Well, you need people who have the appearance of disinterested, neutral, intellectual pursuit to give credibility to rotten ideas that only make profits for people who already have most of the power and money anyway. So you need guys like that, like Friedrich Hayek, who actually was a very intelligent guy who in the ‘20s especially when he was developing these theories of knowledge and dispersal of – the dispersed nature of knowledge and so on and so forth, he came up with interesting ideas about the theory of knowledge and dispersion of information. But, you know, he ran out when the Great Depression hit, all the Laissez-faire economics ideas were disproven theories, were disproven and people didn’t know where to turn. They started turning to people like Paines and economics is kind of the most fundamental part of politics. Politics is ultimately about how you divide up wealth and power in a country. And the people who had all the money and wealth and power in the Great Depression, they didn’t want to – they would rather go down with the ship than share and make the ship run for everybody. That’s just the nature of these people and it’s the sad truth. And they needed people though who had some respectability, and Hayek had his own reasons. And I’m not going to get into a…
Dylan: The point is Hayek was highly valuable.
Mark: He came from the Aristocracy, from Austria-Hungary. He came from a country that disappeared. And he had his whatever reasons, but he decided to chauffer these guys. And there’s some – by the letters from Hayek where he even understood he was doing that and he was sort of losing his intellectual independence and power in exchange for being promoted to the top of the heap. But as I said, again, to answer your question, to promote these ideas, you can’t say, you know, Goldman-Sachs and Exxon Oil believe that you shouldn’t have Social Security or Medicare or we shouldn’t have an EPA. You need people who appear to have no personal stake in it, who are just purely pursuing an intellectual truth, but in fact are being paid under the table through the think-tank.
Dylan: And you’re saying this idea of funding think-tanks to control idea generation by billionaires originated in the ‘70s?
Mark: Exactly. Well, you know, there were think-tanks around; they were just – there were very few of them and it was a fairly steady and low sort of off radar operation until the early ‘70s when this whole assault on democracy and on the middle class, it really began in the ‘70s. And, you know, so we saw, as you already pointed out in your show, money entering politics in a major way beginning with the 1976 Supreme Court ruling. But even before then in 1971, one of the justices on that decision, Lewis Powell, in 1971 when he was still a corporate lawyer defending I believe tobacco companies I want to say, but I could be wrong. I want to say it was R.J. Reynolds. In any event, he was also a very politically active guy and he circulated the famous Powell Memo, actually Jack Anderson is the old muckraking economist was the first one to break this way back in the ‘70s. He circulated something called the Powell Memo in which he said we need to fight a war on ideas. Business are losing this war, people are distrustful or mistrustful or wary of business interests, and meanwhile all you corporations spend all your time – you know, even tobacco companies were probably funding universities, which in turn were revealing what tobacco was doing to people. And what he said is we need to stop doing that and we need to start funding scholars and ideas that promote your interests. And the result of that, and a lot of people tied directly, was in 1973, 1974, 1975, suddenly an explosion of the sorts of think-tanks that we know of today. I mean Heritage Foundation launched in ’73, ALEC was ’72, ’73, ’74, the Cato Institute actually began as the Charles Koch Foundation in 1974 then converted to the Cato Institute. So all these think-tanks that we deal with today, they all started in the ‘70s and they were in it for the long war. And look, to sell an idea, it’s not quite the same as sort of selling a product or lying about a product…
Dylan: Or even a policy.
Mark: Yeah. You need to actually change the way people think – you need to change their basic assumptions. You know, how do you get people, Americans, to storm Town Hall meetings, not even listen to a debate about healthcare or maybe we should have a public – storming, fearing for their lives because guys like Hayek, you know, laid the groundwork years ago, decades ago saying if you have the state involved in healthcare, you will become subjected to totalitarian control, you will be killed off, you will be mind-controlled, and all this crazy crap. And, you know, and with this letter revealed – let me give a little background on the letter that we – that actually Yasha Levine found…
Dylan: Which is the new – this is news of the day where we’ve buried the lead here, but the letter was, is the news which revealed the unholy alliance that you’ve been describing.
Mark: Right. I mean the letter revealed actually the scam. I mean we’ve all be sort of theorizing about it but we never had actual evidence. In private, Charles Koch, ’73 when all these think-tanks are ramping up, he wants to bring Hayek out to the Institute for Humane tudies. He’s going to begin a series of conferences and things. He’s going to start basically promoting what’s called Austrian economics. And today we all kind of know Austrian economics. That was something that Koch essentially branded at that time.
Dylan: And what was the theoretical premise of Austrian economics?
Mark: That any state programs are always either bad or…
Dylan: The state is evil.
Mark: …disastrous and the free market always leads to the best possible outcome.
Dylan: Even if the free market is completely rigged.
Mark: Yeah. And, and, you know, as that’s a reality. And so he needed Hayek who was the biggest name and the Godfather and the most respectable name promoting these sort of laissez-faire free market ideas. He’s the biggest name in the west at that time, so he wanted him to help this new branding campaign. And Hayek writes back and says I’d love to come out but I’m terrified of subjecting myself to your free market healthcare system. I just had a gallbladder surgery here in Austria. You know, Austria had free healthcare for everybody, like all other western countries with universal healthcare except America, and he said I’m afraid I’ll go bankrupt if I come out there and something happens to me. And Koch, which is really – this is another little side thing – but Koch is too cheap to say, “Look, I’ll cover you.” Instead he thinks I don’t want to cover this either because it’s too expensive, so he has his people look into whether or not when Hayek was teaching at the University of Chicago in the ‘50s, he has his people look into whether or not Hayek opted in to Social Security then at the same time that he was writing about how bad it was. And what he found out was that – there was a law passed by Truman expanding social security in 1950, and this law allowed, in 1950, it allowed non-profits and educational institutions to also opt into the program. And the funny thing is University of Chicago, which as we know is sort of the bastion of free market economics, immediately elected into the program. And then Hayek, as a foreigner but working in America, then he had his own option whether to opt in or not. And privately, secretly, he elected to opt in and he paid in a whole ten years that he was in America. And this is all revealed in these back-and-forth letters. So Charles Koch writes back and says “Great, you’re a…” – basically, great, it’s a good thing you’re a hypocrite because that means you now qualify for the same sort of wonderful state healthcare that you now receive in Austria, so there’s no reason why you can’t come out and help me destroy Social Security and Medicare for everyone. So Hayek eventually comes out.
Dylan: Two things. One, we’ve reached out to the Koch Brothers for comment on all of this; we await their response. We’ll put them down for unavailable I suppose a day from now. Right now, however, I wanted to give them the time obviously to respond to this information that you and Yasha have brought forward. I want to bring up another rhetorical issue with you, Mark. You keep talking about how the free market and laissez-faire ideas don’t work. I take issue with that as you might anticipate on the assertion that the reason that the free market is so disastrous right now is primarily because of the auction nature of their policy-making, which is rigging all those markets, from trade to – which is not to say, by the way, that I’m in favor of, again, social security or in favor of free market healthcare. I am not, but I think that it is important, just as important as it is not to glorify the free market, I think it is equally important not to demonize it but to understand that it is in this case easily manipulated when your government is for sale.
Mark: Dylan, I completely agree with you on that, and, you know, I – I mean, it’s tough for me because I have never – I have a gag reflex thinking about socialism, general socialism. As an American or from my generation or whatever, and I’m not saying that it doesn’t work at all, but what is the free market – everything are rules set up by people and so, you know, there’s – when you get into this theoretical sort of abstract Utopian version of the free market or Utopian version of socialism, they’re both disastrous. We just have to recognize the reality is that both of them have people involved. A person who works for the government is not inherently better or worse than a person who works in a non-government sector.
Dylan: Right. And free market is only as good as the visibility and price integrity of that market.
Mark: I mean, I think you could say this. I think under certain circumstance, the free market works much better from our experience, from our cultural experience, under circumstances where it gets out of control, where they can control…
Dylan: Rig it.
Mark: …both the rules and the referees and everything. It winded up becoming the biggest disaster of anything.
Dylan: That’s the best characterization I know. What happens from here? So in other words, you have just revealed this information, we are already in a Get Money Out campaign, tens of thousands, it will soon be hundreds of thousands of people who will pushing the money in politics issue to the center of the 2012 presidential election. You and Yasha Levine over at eXiled have now in the context of that cacophony of energy that’s building around this issue have introduced clear evidence of direct manipulation, not just of policy, but truly a philosophical thought inside of politics, and you’ve exposed the scam or hypocrisy inside of that – the New York Times, the Atlantic, obviously MSNBC here, myself, are all sort of engaging with you to better understand this story. Well at some point, I think hear something from the Koch Brothers in response, wouldn’t you think?
Mark: Ah, we’ll see. I expect smears. I thought The Nation website seemed to come under a bit of attack. It seems to have been down twice so far. Brad DeLong even commented on his blog.
Dylan: That also could just be a lot of traffic. I’ll tell ya…
Mark: Could be, could be.
Dylan: So don’t let the conspiracy theorists get the better of you.
Mark: Well, you know, the thing is I’ve been attacked a lot in the past…
Dylan: You can’t say you’re paranoid if you’re right.
Mark: I’m a little bit paranoid, and sometimes paranoid people are right as Kissinger’s dad. And I worked…
Dylan: Fair enough, fair enough.
Mark: [cross-talking 14:18] and, you know, that’s just the rule. Not the rule, but that’s just how they play it. They play tough. They play hardball. And that’s fine.
Dylan: But so what happens from here? Regardless of whatever, what can the people listening to this, what can those of us involved with the Get Money Out undertaking, those of us that want it, what can we do to help bring your story more visibility and advance and really lean on this conversation?
Mark: Well, look, here’s the thing because this isn’t just about – I mean, we’re zeroing in on some areas of this that have not, I don’t think, been exposed, so people haven’t thought about it much because Yasha and I have experience in Russia, so some things are a little more apparent to us I think than people here. But really we’re at this point where, and it’s very unusual I think for America where the dominate ideas and ideology that work, you know, for a period of time and then became very pervert and corrupted and then ultimately led to the crash and then this point that we’re in now. Those ideas are failed. They’re failing us now, they failed us over the past several years, and unlike, for example, the dominate liberal ideas and ideology that were failing as the ‘70s went on, and then these people came in with a new set of ideas, it seems like America usually has – can turn to a new body of ideas because we’re constantly sort of innovating an innovative culture. But we find ourselves at a point now where we have no other ideas. And one of the reasons why we don’t – I mean, Obama – you know, I have a lot of problems with Obama, but one of his problems was that there was no other body of thought, no other sort of counter ideology that had been fleshed out. And what we all find – we all sort of know what needs to be done, where to go, but we don’t – there’s not actually a body of work, there’s not a theory or an ideology or set of ideas that we all sort of know and say “Yeah, this works and that doesn’t because of that.” So he just fell back on the same rotten ideas and the same rotten people who are at the head of those ideas. And I think what we need to do is we need to sort of first of all find out why we can’t think our way out of this mess. Why we don’t have…
Dylan: Because we have an auction government that’s being bought. What’s the next question?
Mark: Well, we need to – the next question is – personally, from a journalist point of view, I want to find out more. I want to find out about our history. I want to find out really how we got to this point, and that’s partly what you’re doing, too. And I know that you are – you’re not just criticizing or exposing, you’re also trying to move it forward. You have an amendment where you want to actually – you’re getting political, which is great, and it needs to be done. And, you know, I’m completely with you on that, and I want to do whatever I can to help that. But as a journalist, what I want to do is find out how did we get to this point. And from what I’m finding and what I believe and my research with Yasha in the last couple of years is that part of – a big part of the problem, and this wouldn’t be possible without corrupting the ideas, without being able to think our way out of it. And if you were to ask me, I think we need to figure out a way to regulate and scale back on a massive scale the PR industry and the think-tank industry. Because what they’re doing is planting real thought.
Dylan: Right. The people that pay truth distorters.
Mark: Exactly, exactly. And they’re unregulated and they corrupt everything and they don’t even allow us to hold a rational conversation.
Dylan: Which goes to my frustration as feeling like I’ve having walked out of the financial world or if you’re in the sports world where at least you can’t argue who won last night, you would could who by, all of sudden we’re in this world where there are no facts and no math and you say one thing and they say – you say blue and they say red, and you’re like, “Well, this isn’t really a conversation is it?”
Mark: It’s bizarre and insane and retarded and it drives me crazy, but, you know, unfortunately we also have to deal with realities. We have some really warped realities about our discourse, but you do have – you know, if you – there was one reason, frankly, why I went to Russia and did a newspaper out there because I could sort of just do things my own way and the rest of us were out there and even write about America without even paying attention. But once you’re here and you’re inside, you know, the conversation as they call it, you do have to be aware of and somewhat work within as bad as they are and as rotten as they are, because the reality is the discourse here. And you can’t change the framing of the discourse, I don’t think, until you start really going back again to where it all started going wrong, how it went wrong, and then you can start trying to figure out ways to fix it and ask some serious questions. I mean, would it be restricting free speech or something if you did start to try to regulate the think-tank industry and the PR industry, or is that a tradeoff you’re ready to make? I mean, what’s more important, democracy or corporate free speech so on and so forth. Those are serious questions, actually. They don’t even want us to raise those questions.
Dylan: Yep. Well, they are being raised regardless of what anybody might want. Mark, you’re part of the reason that is happening. Congratulations again, not just to you, but to your partner, Yasha Levine, who I know found the actual letters at the library there at Stanford; hats off to him. If you want to see the story, you can go to the Nation’s website where they are carrying it. You’ll see other, the Atlantic, the New York Times, and of course, Mark and Yasha’s own property at the eXiled. Are you guys going to be doing more on the concept of “Ideas for Sale?”
Mark: Yes. I’d like to follow-up on it. I’d like to do it with you guys, as well. This is something we’ve been, Yasha and I have both been sort of really digging into for a while, and I’ve got to admit, it’s been kind of couple years of researching and getting to know this and it’s starting to really pay off now I think in understanding this part of our history. And so yeah, we want to follow-up. I’d like to follow-up even early next week. There’s a lot more to write about, not just Hayek’s part of it, Hayek and the free market part, but sort of all the ideas and even our history, which has also been – we don’t even really know our recent history.
Dylan: Ultimately what we’re speaking to is the base distortion of ideas and facts in policy through the corruption of money in politics. Mark, congrats again. Thank you very much. We’ll talk to you next week on the program and here on the web. Ladies and gentlemen, Mark Ames, a true muckraker in the 21st century with his partner Yasha Levine; do check out their journalism. And we will talk to you next time on Radio Free Dylan.