Koch Brothers: True American Heros

On Bloomberg last night they had a documentary called Game Changers about the Koch brothers. The documentary had somewhat of a slant to it and mostly only showed the negative side of the Koch brothers (donating, Koch Industries pollution fines, their wealth) and only at the end discussed David Koch’s generous charitable donations.

As I mentioned in a previous blog post the Koch brothers tried to endow a professor at Florida State University for the economics department. I really don’t understand why so many people are offended by this. I wouldn’t say that if George Soros donated money either. If people earn the money they have the right to whatever they want with it. For other people to decide how not even spend their own money is silly. People forget that the Koch brothers are libertarians. This is the best of both worlds because you are fiscally conservative yet socially liberal. The Koch brothers should tell liberals “We are more like you than you think on some issues”.

The documentary brought up about Koch’s safety record and how they had to pay fines. People don’t seem to realize how burdensome EPA regulation is. Sometimes even if companies want to fully comply with the 66,000 pages of regulation written every year they simply can’t. I look at some of the fines Koch Industries paid and most were very minor. Also an important question to ask is “Did Koch Industries really want to pay these fines”? Koch could have used the money they paid out in fines for all sorts of capital projects that would increase shareholder value. I think many people think business want to cheat and cut corners when this is really not the case because businesses reputation means a lot to customers. To this day I still have a negative image of Jack in the Box because of an e-coli incident in 1993.

The Koch brothers have amassed an enormous sum of wealth. Their combined net worth as of 2010 was around $45 billion. Clearly, they have been increasing consumer surplus and not taking it away. One thing I didn’t realize was that the brothers own 84% of Koch industries which gives them a large incentive to make sure things are run properly especially when their net worth is on the line. Koch employs about 70,000 people as of 2009. I wonder how many bills are paid and how much wealth is created because of these two men.

David Koch in particular has been very generous with his money even though he was a playboy back in the day. The man survived prostate cancer has given hundreds of millions of dollars away to charity. For instance he gave $100 million to MIT, $100 million to the New York State Theater, $30 million to Memorial Sloan –Kettering, $25 million to M.D. Anderson, $20 million to John Hopkins School of Medicine and many more. The charitable trusts that the Koch brothers have set up also have supported many programs on PBS.

My takeaway point would be instead of people in the media vilifying the Koch brothers they should also look at the positive things they do. Creating wealth, creating jobs (something politicians never do), creating prosperity, and donating to charitable causes all are positive things. Koch Industries recently bought Georgia Pacific which makes toilet paper used in nearly every public restroom. So it looks like billionaires are doing the dirty work of cleaning up your mess.