Thursday, August 16, 2012

Charles Koch: Why We Fight For Economic Freedom



I enjoy talking about Charles, David, William Koch, even a family history. Charles Koch recently wrote a letter that was published in Koch Industry’s July Discovery magazine here. The article talks about when Charles visited Russia in 1990 (formerly known as the Soviet Union) he quickly noticed how many shortages there were. I actually did a research project for one of my MBA courses where I shortages of products when the country was rationing products. Not only did the rationing lead had to study Russia and why a company should open business there (I ended up picking Wal-Mart). In my research I remember reading about to shortages if you could actually find food it was priced much higher than you could find elsewhere.

Also he points out that even though the country had “free” healthcare but the quality was very poor compared to standards of the United States. He then goes on to discuss how the Soviet Union is a prime example of why economic freedom is important. Also people who depend on government are not as free as they think because as Charles points out “Citizens who over-rely on their government to do everything not only become dependent on their government, they end up having to do whatever the government demands.  In the meantime, their initiative and self-respect are destroyed”. Charles Koch and understands the welfare system. As Thomas Sowell would say Democrats want to help the poor while they are poor, while Republicans want to help the poor from stop being poor.

Not only do people ask for handouts but companies and industries also ask for handouts. Companies don’t directly ask for handouts however they may get special treatment that other companies don’t get. For instance farmers enjoy subsidies (which represents only a handful of farmers) meanwhile they artificially increase the price of crops that go into many different products we use. If we got rid of these subsidies the prices of inputs like corn, cotton, sugar, and wheat would not only decrease but any end product that used these inputs would also decrease which would save Americans billions of dollars per year. The people who are truly hurt by these subsidies are the poor and even middle class families who see food prices increase because the government enjoys subsiding farmers. If a business cannot meet the needs of their customers they should be forced to go out of business. As Milton Friedman use to say business is a profit and loss system. The profits encourage wise behavior while the losses force people to realize reality is not optional.

Charles Koch also points out that disparity not only exists in America but even in other countries that have dictators. He is absolutely right. In these countries you have a small class of people who are really rich because the government can hand out favors or blocks certain people from entering (modern day Russia seems to be like this with various oligopolies) while the vast majority of people have a lower standard of living. The United States is much more transparent than most developed countries but still has issues from time to time with this.

I was a little sad to here that Mr. Koch is not seeking political office like his brother did in 1980 on the libertarian ticket with Ed Clark. What Mr. Koch seems to understand is that economic freedom does in fact create economic prosperity. I am not sure why this is so hard for many people to understand. When discussing his legacy Mr. Koch says “I want my legacy to be greater freedom, greater prosperity and a better way of life for my family, our employees and all Americans.  And I wish the same for every nation on earth.” Mr. Koch has done a great job of creating jobs, running a company, and helping spread the word of limited government with its main ingredient of liberty. I just wish now he would write an autobiography so we could learn more about this great individual!

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