Monday, 13 September 2010

A case study in manipulation

Paul Sweeney: This superb, well researched article in the New Yorker by Jane Mayer is a must read for anyone interested in how world politics are being manipulated by the super rich.

Two of the wealthiest men in the world - septuagenarian brothers Charles and David Koch - are spending tens of millions funding far-right think tanks and lobbyists. They set up the the influential right wing Cato Institute think-tank in 1977, and are behind many other nfluential groupings in the US.

They are behind the Institute for Justice, which files lawsuits opposing state and federal regulations; the Institute for Humane Studies, which underwrites libertarian academics; and the Bill of Rights Institute, which promotes a conservative slant on the US Constitution and Citizens for a Sound Economy

They gave millions to established the Mecantus Center. The Wall Street Journal has called the Mercatus Center “the most important think tank you’ve never heard of,” and noted that fourteen of the twenty-three regulations that President George W. Bush placed on a “hit list” had been suggested first by Mercatus scholars, Mayer says.

Democrat Rob Stein says of Mercatus that “It’s ground zero for deregulation policy in Washington.” It holds that “grant-makers should use think tanks and political-action groups to convert intellectual raw materials into policy “products.”

Mayer says “The Kochs are longtime libertarians who believe in drastically lower personal and corporate taxes, minimal social services for the needy, and much less oversight of industry—especially environmental regulation.” Ironically, their vast wealth originated in Stalin’s Russia. Their father started his fortune when he set up oil refineries in the Soviet Union in the 1930s. He married another Mary Robinson.

Americans for Prosperity Foundation — an organization that David Koch started in 2004 - has worked closely with the Tea Party since the movement’s inception. Indeed they funded the Tea Party too. Big fans of economist Fred Von Hayek, they are “at the epicenter of the anti Obama movement” and “are out to destroy progressivism.” David Koch says he realised that “big government was bad, and imposition of government controls on our lives and economic fortunes was not good.”

Charles Koch’s approached to both business and politics has the deliberation of an engineer. “To bring about social change, requires “a strategy” that is vertically and horizontally integrated,” spanning “from idea creation to policy development to education to grassroots organizations to lobbying to litigation to political action.” The project, he admitted, was extremely ambitious. “We have a radical philosophy,” he admitted.

You can read the company's own view here. One of the Koch subsidiaries is Georgia Pacific, the huge forest company which has a manufacturing subsidiary in Ireland, making Kittensoft toilet paper and more.

The company is very active in its anti government anti- environmental and anti progressive policy influencing. In its corporate “Perspectives” only a few weeks ago, it had an article by Michael Hofmann, Koch’s Chief Risk Officer, arguing against economic stimulation and for austerity. Hofmann was fulsome in his praise for the Irish Government’s “painful” programme of austerity.

It is perhaps naïve to believe that this is the extent of the influence of Koch Industries on the Irish Government and its Depts of Finance and Enterprise, Trade and Innovation and on our policy makers.


Rory O'Farrell said...

Regardless of the rights and wrongs of the Lisbon Treaty, it reminds me of Ryanair's blatant involvement in that referendum, and how the Quinn group used their 'workers representatives' to protest in the interest of the shareholders.

Anonymous said...


Mature students unfairly hit by changes to grant scheme

Brendan Quinn said...

This story is inane. If the Koch brothers were so powerful, how did Obama get into the Oval office? Libertarian ideals would not have created the mess this country is in. The government/EU policies of interference in the market, low interest rates and easy credit created the problem.

Libertarian ideals want less government interference in these areas. The same could be said for the far left of socialist ideals being funded by extreme groups, trade unions etc. As libertarians value freedom over the demagoguery of equality at any cost, I know freedom from bureaucratic interference creates more prosperous societies than the equally poor societies of Cuba, north Korea etc. I'll leave you with a quote from Milton Friedman, "A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both."

Paul Hunt said...

@Paul Sweeney,

Many thanks for highlighting this essay. It certainly presents evidence of how the terms of debate about the role of the state and markets is being warped and perverted. But, unfortunately, it may also be used as evidence by the progressive-left that all those who do not share their views are part of a conspiracy to minimise the role of the state.

The 'exceptionalism' of the US doesn't help, because the 'right' there emcompasses a broad spectrum and often divides on an instinctive isolationism. There is a clear distinction between libertarians who want small government period and the neo-cons who want small government everywhere except when it comes to the projection of US economic and military power, the pampering of favoured industries and the bailing out of capitalism when it experiences one of its periodic bouts of serious and damaging instability. Unlike the Kochs in this essay, most of the super-wealthy elite tend to support the neo-cons and finance the useful idiots in academia and the lobbyists that support and advance the cause. But there is a neo-con/libertarian conflict that is tearing the Republican Party apart and, though they might gain in the election this Novemeber, this should provide Obama with a second term. Unfortunately though, this combination of wealth, media ownership and the financing of politcial lobbying generates a thrust and vigour that informs right-wing ideologues everywhere.

It poses a challenge for those of us who, like the late Tony Judt, believe that the raging beast of capitalism may be shackled to produce economically and socially useful outcomes, but unfortunately most of those on the progressive-left tend to confuse the real agenda with the warped language it which it is expressed and throw the baby out with the bathwater.

Anonymous said...

Shocking stats from the latest issue of Monthly Review

58% of all income growth in the US between 1976 and 2007 went to the top 1% of the population. The top 0.01% or 15000 households had 1.7% of all income in 1976 and 6.04% by 2007. By 2004 the top 1% of wealthholders in the US held 42% of all financial and real assets, the most unequal distribution since the 20s. The top quintile held 93% of such assets

Paul Hunt said...

These stats are the reflection of the continuous decline in labour's share of national income - and it is common throughout the developed economies (particularly the Anglo-Saxon ones). It started seriously during Reagan's two terms and continued under Bush I. Clinton was unable to arrest it and he finally succumbed to overwhelming pressure from the neco-cons, the super wealthy elites and the useful idiots of freshwater economists to torch effective financial regulation. Bush II put the icing on the cake for the "haves and have mores" and this combination of greed, lobbying, academic support and campaign financing by the wealthy has had a global impact and gotten us into the current mess.

Rory O'Farrell said...

@ Anonymous
A nice article for you regarding income shares.

@ Brendan Quinn

Surely the point isn't necessarily whether Obama wins or not, but what the results would be if millions weren't pumped in by the Koch brothers.

Its true that trade unions fund Labour parties, but that is completely out in the open (and trade union members can refuse to have their money go to a particular party).

paul sweeney said...

I think Rory's point is the pertinent one - we need transparency not manipulation. There seems to be so many deeply conservative think tanks like Cato in the US which deeply influence mainstream media.

Another point - too often what appears to be in the interests of business ultimately can destroy it. For example the deep ties between a certain political party and the construction/property sectors here, its over generous tax breaks and no state regulation of lending - Crash!
And so many good people hurt.

Paul Hunt said...

"..too often what appears to be in the interests of business ultimately can destroy it."

This looks like another take on the fundamental Marxian insight that capitalism is both inherently unstable and continuously mutates. But would you prefer to minimise its economic scope and supplant it as much as possible by the state or seek to shackle it to produce economcially and socially useful outcomes?

Paul Hunt said...

This comment by 'seafoid' on (followed by a comment by me) is very relevant here:

"The problem about the neoliberal trick of taking money away from the masses and giving it to the top 1% in the form of bonuses and financial windfalls is that ultimately the business sector doesn’t have enough consumers with enough spare cash to buy the products that drive consumption and hence economic growth . That’s the position the US now finds itself in. The top 20% own 93% of all financial and real assets. The rest kept up via debt and cheap Chinese imports for a few years but that tide has gone out. There could never have been a subprime boom and crisis without the massive increase in inequality which preceded it."




This is probably the most succinct description of the fundamental problem confronting developed economies. The impact has been marginally less severe in Europe because its social model protects a larger number of insiders.

I have only one quibble. Although neo-liberal has become the accepted label, this came about through an alliance of neo-cons, large corporations and the super-wealthy elite (and the think-tanks, useful idiot academics, sections of the media, lobbyists and politicians it finances)."