U.S. Post Office, Unions, and Realtor Interest Groups Give More To Politicians Than Koch Industries

What is quite amazing is when I hear that the Koch brothers and Koch brothers are influencing politics. The Koch brothers could spend $100 billion on political races however at the end of the day people will vote their own way. Votes can't be "bought".

When examining the actual data from 1989-2012 from opensecrets.org it seems as if Koch Industries is no where near the top in terms of political contributions. Anyone who watched MSNBC, read the New York Times, or listened to Ed Shultz on the radio would think otherwise. In fact Koch Industries only gave $17 million in a 23 year period. This Palm Beach Post article talks about how David Koch gives more to charity than to politics on a scale of 4-1.

I don't even hear Fox News covering the fact that unions are donating large amounts of money to politicians. Democrats and Republicans are in the same business they just have different friends.

U.S. Post Office $174 Billion Lost Since 1800

The United States Post Office (USPS) is one my favorite agencies to talk about. In an analysis I did I examined how much the USPS actually lost since 1800. I was able to get a hold of this USPS data which shows the annual expenses and revenues since 1800. When you add up the losses (not adjusted for inflation) they amount to $33 billion. I used the WestEgg inflation calculator and figured out a factor to use for every year to figure out what the yearly loss or gain would be in 2012 dollars. When you inflation adjust the cumulative amount since 1800 it comes out to be $174 billion. This figure is really understated because the U.S. Post Office doesn’t pay taxes if it buys trucks, tires, or other equipment.

In my analysis it was interesting to find that the number of post offices actually peaked in 1901 at (76,945). These days (2012) there are around 26,755 post offices. The peak year for the pieces of mail was greatest in 2006 with 213 billion pieces. What is interesting is that throughout the 1990’s the amount of mail increased even as the internet was coming around. However it wasn’t until 2002 until the number of mail pieces actually decreased. The pieces of mail will only continue to decline in the future as more people use e-mail, texting, and cell phones which are all forms of communications that are in competition with snail mail. 

If any rational person heard a government organization had lost $174 billion since being created what would they do? Most rational people would say can we improve it an economist or business person would say can we eliminate it. Meanwhile in the private sector FedEx in the past 3 years has earned over $4.6 billion in profits. UPS in this same time period has made over $9 billion.  Most rational people would ask if we really need the service. In the case of the post office it is a no brainer given we have companies like UPS, FedEx, DHL, and many more logistics companies. What is even more bizarre is that if mail was privatized it would actually increase government revenue since the added profits private companies would be making would be taxed. Also the 546,000 employees that currently work at the U.S. Post Office could apply for jobs in these private logistic companies. Private companies would hold these employees to a higher standard. For instance back in 2011 we all remember the U.S. post office employee who was caught defecating in a yard who then was placed on administrative leave (this employee would be fired immediately in the private sector).

Why not let the private sector take over an area the government can't seem to handle?

Charles Koch Institute $200,000 For Economic Freedom Ad and ThinkProgress Fails Econ 101

As you may know I am interested in covering Charles Koch and Koch Industries. I did a historical net worth of the Koch brothers from 1984-2013 here. If you would like to read all my Koch entries go here. So in this recent Wichita Eagle interview (as of right now in writing this post the Koch interview is number one on the most read stories for the Wichita Eagle). Charles Koch talks about how he wants to spread the ideas of freedom and liberty to everyone (even the poor people).  The Charles Koch Foundation will spend $200,000 on media ads to promote education on economic freedom. If there is ever a time in history to explain to people free markets and economic freedom now is the time. Koch says that “we want to do a better job of raising up the disadvantaged and the poorest in our country, rather than saying ‘Oh, we’re just fine now”. Charles Koch also talks about how licensing laws hurt poor people because often times they have limited access to capital. Koch points to driving a taxicab (which requires expensive medallions which can be tens of thousands of dollars if not hundreds of thousands). In addition to regulations that keep people out of certain industries the minimum wage also prevents people at the bottom from getting job since the minimum wage requires business owners to pay labor higher prices. The minimum wage prevents people from getting their first job which hinders not only getting a future job but doesn’t teach young people the skills they need for the “real world”.

The YouTube ad video explains that Americans earning just $34,000 are in the top 1% of income worldwide. If you do any historical analysis on this amount it put Americans making this amount in the top .1% from not only a worldwide perspective but a historical perspective as well. What would John D. Rockefeller pad for an iPhone? This ThinkProgress article points out that Charles Koch is already in the 1% and many Americans are not. ThinkProgress confuses  income and net worth. The article mentions the $34,000 which represents income (yearly) and then goes on to say that “Meanwhile, Charles and Davis Koch are the ones comfortable in the 1% with a net worth of about 1 million times that figure”. Net worth and annual income are two completely different numbers. My income could be $10,000 and my net worth can be $1 million. Net worth represents years of saved income and invested income while income represents what a person earns in one year. 

ThinkProgress then goes on to argue that Charles Koch is wrong in wanting to get rid of the minimum wage since apparently raising the minimum wage to $9 per hour would add $48 billion in economic growth. Studies like these never take into account incentives. Yes, if I took everyone making minimum wage and used a "multipler" it by a higher wage and then factored in a Keynesian multiplier I would arrive at $48 billion, however in the real world firms and small businesses would simply fire workers, reduce hours worked by hourly employees, and or find ways around the minimum wage (which isn’t taken into account). Why stop at $9 per hour. $20, $30, or even $50/hour sound pretty good yet I don’t hear anyone arguing for that as the minimum wage. The problem is people are paid for their value not what we think someone ought to be paid. Productive people are paid more. If someone can only produce $5 of value per hour why do we mandate a business should be forced to pay them $7 per hour. Why don’t we force producers of milk to sell their products at $2/gallon? 

Berkshire Hathaway and U.S. Government Pollute More Than Koch Industries

One thing that constantly bothers me is when people claim how much Koch Industries pollutes. People forget Koch Industries is one of the largest energy companies in the world. One study that people on the left always love pointing to is a University of Massachusetts Index called Greenhouse Polluters 100 Index. What is fascinating is that U.S. government is #4 on the list and Warren Buffett's Berkshire Hathaway is #5.  If you add the percentage from both the U.S. government and Berkshire Hathaway is it over 2.2% of all greenhouse gas emissions. Koch Industries comes in at #27 and only has 0.36%. Now if people were complaining on principle wouldn't liberals be just as made about the pollution generated by the U.S. government and Berkshire Hathway as they are about Koch Industries? Berkshire Hathaway is mainly in the insurance business (they also own Dairy Queen and Star Furniture) and still generate more pollution than the "oil conglomerate" Koch Industries.

Actually Koch Industries has been reducing their pollution over time. This is from the May 2013 Koch Industries Discovery magazine.

"Since 1997, Flint Hills Resources’ refineries have reduced average per-barrel criteria air emissions by 76 percent. In 2004, FHR earned a Clean Air Award from the U.S. Environmental Protection Agency for reduced flaring and emissions.  In 2000, FHR refineries averaged almost  two hours of flaring per day. In 2012,  flaring at Pine Bend Refinery totaled just six-and-a-half hours for the entire year. As for other Koch companies, at Georgia-Pacific, sulfur dioxide emissions have been reduced by almost half since 2000. Total suspended solids in wastewater have been cut by 38 percent since 2005."

Even if you don't believe this is true Koch Industries since January 2009 has won close to 750 awards for safety and environmental excellence. What is even more amazing is that Koch Industries Pipeline earlier this year announced they went 8 million working hours (11 years) incident free.

Charles Koch: Playing Scrabble, Pilates, and Wall-Street Deals

Source: Koch Industries

In a recent Wall-Street Journal article Charles Koch and Koch Industries talked about how the company these days don’t mind minority stakes in companies instead of purchasing whole companies (the last large merger for Koch was when they purchased Georgia Pacific in 2005. The company bought preferred stock in American Greetings Corporation in order to help the company go private. Koch Industries probably saw a good return (the media would interpret this story as “Koch Industries Controls How People Say I Love You”). Koch also paid $1.5 billion for just a 44% stake in Guardian Industries (glass maker).  In another WSJ article Mr. Hagerty discusses just how Koch got into the glass business. Koch actually was examining Guardian Industries for 7-8 years. Koch Industries actually looks at roughly 100 deals at any given time. Guardian didn’t want to go public after their owner died and Koch was interested in the company so Koch installed one of their executives to become CEO.  Guardian creates energy efficient glass (energy conservation sounds green to me) and supplies the glass screens that are used in cell phones.

In another article written by James Hagerty of the Wall-Street Journal Koch Industries says they don’t attempt hostile takeovers of companies. Koch Industries does get a lot of calls from people who need capital who don’t know anyone on Wall-Street. Koch Industries doesn’t get into businesses just because the margins are good. This might be due to their view about creating long term value for customers. Koch Industries actually exited the gas station business years ago when they learned running a convenience store really wasn't that convenient.  Charles Koch points out that being private is better because this way the company doesn’t have to always try to explain their actions to outside investors. There is some truth to this as public companies are frequently covered by analysts who can make a stock move a large amount on just a small bit of information. As Charles Koch said in this interview back in 2007 if a company “misses quarterly earnings projections by a penny, and their stock goes down 10 percent”.  In fact Charles Koch admits in this interview that if Koch Industries had been a public company he would have been fired long ago.

In this WSJ article (again by Hagerty) Charles Koch talks about the possibility of playing scrabble. What is interesting is that Charles Koch at the age of 77 still goes to work and keeps himself productive. According to Koch he wants to work every day and exercise his mind. He gets up early at 6:30 A.M. and is working by 7:30 A.M. (he no longer drives himself to work). Koch does do a lot of reading and in this article back from 1994 he was reading 3 hours a day. Koch also spends time working out on the elliptical, lifting weights, and even does Pilates. What I found interesting was Koch use to run 30 miles a week (about 4 miles a day). He says he was pushing himself too hard and his knees gave out (he actually had both of his knees replace according to this profile done by The Wichita Eagle last year). The interesting part of the interview is when Koch asks what he should be doing with his time. The interviewer suggests that Koch play scrabble and Koch responds by saying “That’d be something!”. I personally would suggest Mr. Koch write an autobiography in order to explain how he became successful and so historians don’t write their own history about Charles Koch and Koch Industries. 

Bonus: Notice Charles Koch on his bookshelf have books from Dr. Walter E. Williams and Thomas Sowell