Charles Koch
Courtesy Charles Koch

Charles Koch: 'We Are Doling Out Welfare for the Wealthy'

Nov 11, 2015
Ideas
Charles G. Koch is chairman and CEO of Koch Industries Inc., and the author of the recently released book, Good Profit: How Creating Value for Others Built One of the World’s Most Successful Companies.

According to a New York Times poll released earlier this year, most Americans believe only the wealthy and well-connected can get ahead these days, leaving everyone else to fall farther behind.

I find this very disturbing – because they are right.

For most of this nation’s history, our country has been characterized by opportunity, upward mobility and personal freedom. But today, America is hurtling headlong in the opposite direction, away from a free society and towards a two-tiered society.

Consequently, our country is increasingly divided between the “haves” and the “have-nots.” As the gulf between these two gets larger, we are creating a permanent underclass while doling out welfare for the wealthy.

Stopping and reversing this disastrous trend is one of the greatest challenges of our time, but we can overcome it if we agree to fight for the principles of a free society.

I have devoted most of my life to this cause. For more than 50 years, I have sought to understand the principles that make free societies the most successful at enabling widespread well-being for everyone – especially the least advantaged. These principles include dignity, respect, tolerance, equality before the law, free speech and free markets, and individual rights.

If we want to create greater well-being and opportunity for all Americans, we must re-establish these principles. The benefits will be incalculable, flowing to people at every level of society – not just the politically connected.

To achieve this vision, we must undo decades of misguided policies that tend to fall into two broad categories: barriers to opportunity for the many and special treatment for the few.

The list of barriers to opportunity is long, affecting millions of Americans. Consider just a few examples.

Our criminal justice system can be profoundly unjust towards non-violent and low-level offenders, ripping apart families and entire communities. Fixing our criminal system could reduce the overall poverty rate as much as 30 percent, dramatically improving the quality of life throughout society.

Occupational licensing is another barrier. Governments at every level – local, state and federal – have prevented the creation of nearly three million jobs and inhibited entrepreneurship, harming low-income communities the most.

Compounding these problems is an educational system that too often serves special interests rather than students’ interests.

These are only a few of the barriers put in place by government that prevent hardworking Americans from pursuing their dreams and improving their lives.

The wealthy and well-connected face no such challenges. Quite the contrary, they frequently use government to enrich themselves at others’ expense.

In a free and fair society, the role of business is to provide products and services that make people's lives better. This creates a win-win situation for customers and companies alike, generating what I call “good profit.”

But that’s not how many businesses act today. They aren’t benefitting themselves by benefitting others – they’re benefitting themselves by harming others. They believe that securing government handouts is more lucrative than making a product or service that improves people’s lives.

The tax code alone contains $1.5 trillion in exemptions and special-interest carve-outs. The federal government also uses direct subsidies, grants, loans, mandates, bailouts, loan guarantees, no-bid contracts and more to help the lucky few with the most lobbyists.

Overall, according to George Mason University's Mercatus Center, corporate welfare in Washington, D.C. costs more than $11,000 per person in lost gross domestic product every year—$3.6 trillion lost to special favors for special interests.

And that doesn’t count the anti-competitive or innovation-stifling federal rules and regulations which cost businesses an additional $1.9 trillion. This money could have been used to create jobs, raise wages, grow the economy and benefit the least advantaged.

What we can’t calculate are the innovations that were prevented that could have improved people’s lives.

In short, allowing government to pick the economy’s winners and losers is harming the many while helping the few. No wonder a 2012 Rasmussen poll found that 68 percent of Americans “believe government and big business work together against the rest of us.”

They do, and everyone suffers from it in countless ways. This pursuit of “bad profit” undermines our liberties, creates welfare for the wealthy, corrupts the business community and cripples economic growth.

The solution is clear: Government must stop creating barriers to opportunity for so many Americans, especially the least advantaged. We must end government's ability to enrich the well-connected few.

Instead, we must fight for principles that enable everyone to find fulfillment and success, and a level playing field where all are treated equally.

Such principles made America the envy of the world. And it’s these principles which we need to promote and defend so that everyone can experience the benefits of a free society.

Charles Koch is chairman and CEO of Koch Industries Inc., and the author of the recently released book, Good Profit: How Creating Value for Others Built One of the World’s Most Successful Companies.


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