The power of the American oligarchs

17 September 2016

9:00 AM

17 September 2016

9:00 AM

Talk about plutocracy and oligarchy has become commonplace in America, as the billionaire class grows ever richer and seemingly more arrogant. But do today’s super-rich constitute a threat to American democracy?

Jane Mayer thinks they do, particularly when their money is employed by fanatics like Charles and David Koch and other like-minded tycoons to upend the social order. In Dark Money, Mayer describes a sophisticated right-wing political movement, largely operating through individual proxies and front groups, that seeks a kind of coup d’état, albeit one with libertarian objectives designed to reduce the power of the state as opposed to seizing it. So secretive and centrally organised is this reactionary cabal that it invites comparisons with the Marxist left. And indeed, two of its chief ideologues, the late Irving Kristol and Michael S. Joyce, were inspired early in their lives, respectively, by Leon Trotsky and Antonio Gramsci.

It’s true that wealthy Americans have been snarling for a long time about personal income taxes, an issue so contentious that Congress was obliged to pass a constitutional amendment in 1913 to institutionalise the practice. Hatred of Franklin Roosevelt’s New Deal and its policies of wealth redistribution added to the anti-tax rancour among the wealthy, yet under Dwight Eisenhower’s pro-business Republican administration, the top marginal income tax rate remained at a historic high of 91 per cent.

Partly in response to the growing welfare state, two important radical fringe groups appeared in the late 1950s, Robert Welch’s John Birch Society and Robert LeFevre’s Freedom School. Fred Koch, the family patriarch, was a charter member of Welch’s group, and he indoctrinated his sons with his anti-government passions. The irony was not lost on Fred that he made his initial fortune helping to build oil refineries in Stalin’s Soviet Union, and there’s some evidence that he regretted it, though his later work in Hitler’s Germany didn’t cause equivalent pangs of conscience.

Fred Koch found fascism much more to his liking than communism, though he misunderstood the point of Hitler’s commitment to government-supported public works and to building up the military. Mayer quotes a late 1938 letter in which Fred called Germany, Italy and Japan ‘the only sound countries in the world’. In contradiction to his own and his sons’ later hatred of government intervention in the economy, Fred argued that

when you contrast the state of mind of Germany today with what it was in 1925 you begin to think that perhaps this course of idleness, feeding at the public trough, dependence on government, etc. with which we are afflicted is not permanent and can be overcome.

Hitler, like Roosevelt, put a lot of unemployed people to work using deficit spending, anathema to the free-market obsessions of Fred Koch and his ilk.

The two most ambitious of Fred’s sons took some of their dad’s crackpot thinking to heart, but they refined it to stay in tune with the times. Influenced by Friedrich Hayek’s ultra-liberal theories, they borrowed what turned out to be a more important idea from the famous economist involving public-relations tactics. Hayek evidently came up with the ingenious notion of using think tanks as a ‘disguised political weapon’, which he confided to the British libertarian Antony Fisher. As Mayer writes, Hayek believed ‘politicians were prisoners of conventional wisdom’, so running for office was a waste of time. To more effectively push ‘what were then [1950] outlandish free market ideas’, disinterested-sounding political operatives would have to engage in ‘an ambitious and somewhat disingenuous public relations campaign’. What better cover than ‘“a scholarly institute” that would wage “a battle of ideas”’?

Out of this kernel grew a vast network of private, non-profit institutes, chaired professorships, and scholarships promoting the Koch brothers’ anti-New Deal, anti-tax programme. Grouped within the absurdly named League to Save Carthage, by the late 1970s, ‘Enormously wealthy right-wing donors had transformed themselves from the ridiculed, self-serving “economic royalists” of FDR’s day into the respected “other side” of a two-sided debate.’

As a result, a sum amounting to hundreds of millions of dollars has found its way into the pockets of a group of opinion leaders including the likes of Andrew Roberts, who bragged in these pages about his recent $250,000 prize for ‘innovative thinking’ from the Bradley Foundation of Milwaukee. Harry Bradley was a John Bircher who, according to Mayer, ‘was a devoted follower’ of Dr Frederick Schwarz, a Jewish convert to Christianity whose contempt for Karl Marx’s Jewish origins equalled his contempt for communism itself. For his part, Mayer relates, Bradley considered the American federal government and worldwide communism as the ‘two major threats’ to human ‘freedom’. Even so, over the years, Bradley’s electronics company benefitted from hugely lucrative military contracts awarded by the federal government.

Mayer’s book is strongest when she reports on the pathos of the right-wing billionaire class, for there is something almost pitiful about its paranoia. In their view of the world, the Kochs and their fellow rich — most of whom inherited large amounts of family money — are constantly hounded and beleaguered by envious leftists working on behalf of the undeserving poor. The Koch brothers and Richard Mellon Scaife do seem to have suffered from genuine deprivation — of parental love.

Mayer is less convincing, however, when she writes about the Kochs’ aggressive entry into electoral politics in the wake of the Supreme Court’s 2010 Citizens United decision, when campaign spending limits were essentially eliminated. She would have us believe that right-wing money was crucial in helping the Republicans take the House in 2010, and the Senate in 2014, but too often she sounds like an apologist for the Democrats and President Obama. She acknowledges, but barely, that Obama disappointed his most ardent supporters by repeatedly caving in (Mayer says ‘reluctantly’) to Republican blackmail and failing to deliver on his promises to reform Wall Street and a blatantly unfair tax code. As Mayer notes, the Kochs ultimately had little to fear from Obama, since their personal fortunes tripled ‘from $14 billion apiece in 2009 to $41.6 billion apiece in March 2015’. Although her reporting is certainly thorough, she understates what I think should have been a main point: Obama’s failure to counterattack, his appeasement of congressional Republicans, and his fundraising from rival, more liberal millionaires and billionaires, which discouraged voter turnout from the left. According to Mayer’s narrative, the President and his advisers were taken by surprise that so much right-wing money was pouring into the enemy camp.

More surprising to me is that Obama’s close personal adviser Valerie Jarrett invited Koch Industries general counsel Mark Holden to the White House in July 2015 for the first in a series of meetings about criminal justice reform — just the sort of photo- op needed to burnish the Koch brothers’ philanthropic image, which had been damaged by Mayer’s 2010 exposé in the New Yorker. This sounds as much like oligarchy as anything else in Mayer’s book.

The post The power of the American oligarchs appeared first on The Spectator.

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