Last week, Yasha Levine and I broke our Nation magazine story on The Dylan Ratigan Show exposing free-market hypocrisy by Charles Koch and Austrian economist Friedrich von Hayek on a scale so grotesque it was hard to know whether to laugh or scream, or both. A brief recap: We revealed letters from the early-mid 1970s in which Charles Koch– the biggest funder of a four-decade-long campaign to destroy Social Security and Medicare–privately championed Social Security and Medicare in order to lure Hayek out of Austria (where he enjoyed universal health care) and into America, so that Hayek could front for Koch’s war on entitlements. Hayek was more than happy to oblige Koch, except for one problem: Hayek was privately afraid of America’s free-market health care system, so afraid that he initially turned Koch’s offer down. But as Charles Koch was to find out, Hayek was a fellow traveler in free-market hypocrisy: Back in the 1950’s, while Hayek was at the University of Chicago, the Austrian-born economist had secretly and voluntarily opted into the Social Security program, and continued paying in for 40 quarters—qualifying Hayek for Medicare and Social Security, just in time for Charles Koch’s invitation. That was great news for all, because it meant Hayek could come out and help Koch destroy Social Security and Medicare while simultaneously living off those same programs, and not worry about falling through the brutal free-market “safety net” that Hayek privately feared.
This was more than mere rank hypocrisy. This was—and is—a colossal scam played out on a public largely unaware that ideas could be corrupted and sold in respectable society in a manner as blatantly corrupt and cynical as this.
Why did Koch need Hayek to front for him? Imagine if Koch himself—a billionaire heir to his daddy’s oil fortune—went around arguing that all the non-billionaire non-heirs should drop their Medicare and Social Security for the cause of “freedom” and “personal liberty” and “empowerment”: No one would buy it.
Moreover, things were much, much different in 1973, when Koch and Hayek had those exchange of letters. Back then, no sane politician from either party would be caught dead saying the sorts of things that mainstream Republicans today are saying about these programs (“Ponzi scheme” “monstrous lie”) and mainstream Democrats are preparing to enact (“entitlement reforms” “Bowles-Simpson Commission”). It wasn’t just Democrats who fully supported those programs, so did Republicans. Nixon, for example, massively expanded both programs during his presidency; and President Eisenhower famously wrote during his term in the White House,
“Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things. Among them are H. L. Hunt (you possibly know his background), a few other Texas oil millionaires, and an occasional politician or business man from other areas. Their number is negligible and they are stupid.”
Eisenhower hadn’t imagined that the grandson of one of those “Texas oil millionaires,” Charles Koch, had a plan on how to raise their numbers from negligible to the tipping point of respectability: Corrupt ideas at their source, so that as they disseminate throughout the culture, eventually such ideas become respectable, and even “courageous” in the words of many a Sunday talk show host…and when that happens, you have an environment that Ike never imagined, in which Republican candidates Go Galt on Social Security to the cheers of the party base, while the fake-progressive Democratic Party President occupies the “reasonable” “middle-ground” on slashing those programs…leaving little or no oxygen for any politician in either party to talk about how both programs might be expanded, let alone preserved.
So Koch needed a guy like Hayek to provide respectable academic/intellectual cover for a set of ideas—equating “liberty” and “freedom” with “I can’t afford health care” and “I can’t afford to retire”—ideas whose real goal is to claw back for Koch’s ultra-rich class all of the wealth redistributed to the middle- and working-classes in the post-New Deal era.
Hayek had academic respectability; with Hayek fronting for Charles Koch, Hayek could plausibly claim that he’d arrived at this set of ideas calling for the dismantling of Social Security and Medicare not out of his own self-interest, since Hayek wasn’t ultra-rich like Koch, but rather through rigorous, disinterested intellectual pursuit of Higher Truths.
In Hayek’s 1960 work, Constitution of Liberty, he devotes an entire chapter titled “Social Security” arguing nine essential reasons why Social Security and socialized medicine will destroy freedom-loving peoples everywhere (they will lead to Soviet-style hospitals and mind-control, bring on totalitarianism, lower our life spans, etc.). And yet, as we learn from the private Koch-Hayek letters in the 1970s, even while Hayek was working onConstitution of Liberty denouncing Social Security, privately, he was paying in to the program, on a purely voluntary basis (as a foreign citizen working at the University of Chicago, Hayek had the option of declining) hoping that some day the state would take care of him, totalitarianism or no totalitarianism.
Hayek got his socialized-medicine wish; and Koch got his Hayek. Today, “Austrian Economics” is a branded version of austere free-market economics that owes its success to its rich rightwing sponsors. Once considered crackpots and corporate frauds, today these economists are responsible for framing the way we talk about politics—and they owe it all to Charles Koch and a handful of his fellow ‘Bagger Barons on the right.
This is how crazy ideas are seeded, cultivated, and distributed, particularly since the explosion of right-wing think-tanks in the 1970s, coinciding with the explosion of money in politics.
Thanks to the Koch brothers’ long-term investments into ideas that directly benefit them and promote their vision of a return to the Harding-Coolidge Era—and thanks to their mandarins like Hayek—today, corrupt politicians don’t fear promoting a blatantly pro-plutocratic, anti-middle-class, anti-99-percenter politics.
Which brings me to a recent story in the New Yorker by Jane Mayer about an up-and-coming right-wing minigarch named Art Pope, a North Carolina dime-store magnate who has learned the Charles Koch the myriad advantages of investing into ideology—a strategy that Charles has variously called “The Science of Liberty” or “Market-Based Management.”
So far, Pope’s strategy seems to be a success. Martin Nesbitt, the Democratic leader in the State Senate, says, “Art Pope set out to buy power, and it’s working.” He believes that Pope’s forces, by redrawing the political districts, are setting the stage to control the state for the next decade. Nesbitt says, “I don’t hold anyone’s political views against them. But any time you have the takeover we did, with the influence of money and absolute power, you have to worry. It’s a blue state that has a Democratic governor, and voted for Obama in 2008, but in two years they turned it into a red state, all because of their money.”
Art Pope, director of the Koch-founded “Americans For
I first came across the Pope family name only a few weeks ago while Yasha and I were preparing our Koch-Hayek article. The letters that Levine discovered came from the Friedrich von Hayek Papers at Stanford University’s Hoover Institute. To get permission to quote from those letters for our article, we had to contact the man in charge of the Hayek papers, Bruce Caldwell, a professor of economics at Duke University in North Carolina. I looked up Caldwell’s name just to see who he was and to find out what to expect, and that’s when I came across the Pope family name.
Caldwell is the director of Duke U.’s “Center for the History of Political Economy,” a project founded in 2008 with money from the Pope family foundation.
What makes this a little scary is that it means that our understanding of the history of economics—a field whose political importance can’t be overstated—is funded by one of the most radical, and ambitious far-right oligarchs in the country. History—that’s another BIG area of interest for the top .01%ers. It’s not just “Ideas for Sale” but “History For Sale” too.
To make matters worse, George Soros just pledged a hefty chunk of money to the Pope economic-history program. So now the all-important study of the history of economics, the history of how wealth and power are divided and allocated, is caught in a tug-of-war between oligarch clans, and our minds and the major premises of how we understand things are the inevitable collateral damage. Thanks to Soros, the program has the appearance of objectivity—since under our warped understanding of “balance” today, Soros “balances” out Pope. We’re not even part of the weights and measurements anymore.
Meanwhile, Art Pope has been successfully copying the Charles Koch playbook for power and wealth in North Carolina and beyond—it’s a strategy that focuses on much more than just growing a business or bribing politicians for specific policy changes or legislation. Koch—and Pope—invest into changing the ideological environment to make it far more oligarch-friendly. Thanks to Pope’s investments into economics departments in North Carolina’s highly-reputable public (and private) universities, today the Republican Party rules North Carolina for the first time in a century. And it’s not the Republican Party of your father’s day—or of the Reconstruction Era. This is the Koch-Pope Republican Party, the rankest, meanest, pro-plutocrat version of the Republican Party imaginable:
Even some North Carolinians associated with Jesse Helms think that Pope has gone too far. Jim Goodmon, the president and C.E.O. of Capitol Broadcasting Company, which owns the CBS and Fox television affiliates in Raleigh, says, “I was a Republican, but I’m embarrassed to be one in North Carolina because of Art Pope.” Goodmon’s grandfather A. J. Fletcher was among Helms’s biggest backers, having launched him as a radio and television commentator. Goodmon describes Pope’s forces as “anti-community,” adding, “The way they’ve come to power is to say that government is bad. Their only answer is to cut taxes.”
Yep, Pope’s free-market radicalism is too evil even for the Jesse Helms Fan Club, the new squishy moderates in this Pope-ified political environment.
Thanks to Pope’s investments into ideas, North Carolina’s politics have been transformed from the mind up, from ideas generated in universities, to the level of public politics and policy. It’s sort of like global warming: With climate change, some species will thrive in the altered environment (jellyfish and algae, for example) and some will die out (polar bears, coral reef).
Here is Mayer’s account of how Art Pope bought North Carolina’s ideas, and how that transformed into political power:
Bob Hall, the Democracy North Carolina director, sees Pope’s involvement in education as part of a long-term strategy. “It’s about how you shape the future,” Hall says. “It’s one thing to build a building, another to shape a generation’s minds. That’s what they’re after—ideology. Pope is pushing a world view, not just a business deal.” Hall notes that, because the state legislature appoints the university trustees, “Pope’s got trustee influence now, too.” In fact, the General Assembly recently placed Fred Eshelman, the founding director of Real Jobs NC, on the university system’s board of governors. The husband of another Pope functionary, meanwhile, was just appointed to the state’s public-television board.
Chris Fitzsimon, of NC Policy Watch, says of Pope, “You practically need a flow chart to keep track of this guy.” Fitzsimon, a former journalist, often appears in the North Carolina media as an ideological counterweight to the Pope network. But Fitzsimon says that “you’d need a Marxist, not a wishy-washy liberal,” to provide true balance to the views promoted by the Pope network. “He’s moved the whole damn fulcrum of debate in the state to the right.”
So how did Art Pope get his ideas and his strategy for power? Pope himself credits the Cato Institute–founded by Charles Koch (and originally named “The Charles Koch Foundation” until 1977), and yes, Friedrich von Hayek:
He read academic papers on free-market economics, and credits a summer program run by the Cato Institute, to which he has since given money, for immersing him in the writings of conservative icons such as Friedrich August Hayek and Ayn Rand.
So Koch’s investment into Hayek and Cato is paying off in ways we’re just beginning to understand.
Looking forward to next year and beyond, North Carolinans from both sides of the aisle are gloomy as Hell, as pessimistic as any conquered peoples, as the conclusion to Mayer’s article shows:
Pope is widely expected to pour more money into North Carolina for the 2012 elections. Carter Wrenn, the longtime Republican campaign adviser, says, “I’d guess Art will be a player. I’d be amazed if he decided to just drop it and go to the beach.” Gary Pearce, the former executive director of the North Carolina Democratic Party, says of Pope, “I’d guess the governorship will be his next move. He’ll try to elect a Republican governor. That’s the only thing he doesn’t have now.” McCorkle, speaking of next year’s elections, expresses worry: “The Democrats have become flabby and undisciplined. On our side, we really don’t have anyone like Art Pope. It’s a real problem.” Whatever Pope’s next move, Nina Szlosberg-Landis, the Democratic activist, predicts, “we’re just seeing the beginning of it all. Corporate money is taking over. People are going to wake up in a whole new state, and maybe a whole new country.”
Nothing would please Pope more. When asked about 2012, he said, “Yes, I’m going to support my side. I really do believe in the marketplace of ideas. I really do believe that my philosophies and theories that I support, classical liberalism, will prevail over arguments for socialism and the growth of government.” He added that if his opponents disagreed they could fund their own side: “I welcome the competition.”
Pope is one guy who’s full of Hope for the future, because he understands, like Scarface did, and like Charles Koch taught him, that “first you get da ideology, then you get da power.”
(Incidentally, for the Koch Cartel’s reaction, here is Cato Institute Executive VP David Boaz, a lifelong house-servant to the Koch Brothers, doing his best to mock Mayer‘s article and anyone else who doesn’t slavishly bow before Art Pope’s riches.)
Reading Mayer’s article, it’s easy to feel hopeless about the future, hopeless about how far behind the other 99% of this country is. But just remember one thing: The Soviet Union collapsed on its own failed ideology. It collapsed like a fragile house of cards. The same thing could happen here, as the failed ideas lose their power over us. You can’t PR away joblessness, debt-slavery and failure this massive. It happened in a far more tightly-controlled environment than ours. It can happen here too. You’d be surprised. So will they.
Would you like to know more? Watch Levine and Ames on the Dylan Ratigan Show discuss Koch, Hayek and “Ideas for Sale.” If you want to do something about it, start by signing up for Ratigan’s “Get Money Out” campaign, now over 100,000 strong! And get your ass to one of the Occupy protests!
Also, check out the original complete letter from Charles Koch to Hayek obtained exclusively by Yasha Levine, in which Koch hard-sells Social Security and Medicare’s wonderful benefits to the free-market guru. Read Koch personally inserting a government Social Security brochure as part of his pro-welfare-state pitch.
Mark Ames is the author of Going Postal: Rage, Murder and Rebellion from Reagan’s Workplaces to Clinton’s Columbine.