Charles Koch’s new book reveals little about political operations

Charles Koch’s second book, which became available for sale Tuesday, will once again irritate his political enemies by revealing next to nothing about his extensive political operations.

With his brother David, Charles has for years been a dominant force in America, and one of the bigger donors to Republican candidates. In his spare time from running Koch Industries as its CEO, he and David created a layered and mostly secret apparatus of nonprofit and other organizations to influence elections. And yet he says nothing in “Good Profit” about why, where and how much he and David spend to defeat Democrats.

He writes that he got 153 death threats in the year 2014 alone. That’s one of the few allusions he makes to being one of the two “Koch brothers” regularly vilified in editorials, columns and liberal-tilting cable broadcasts.

He writes frankly about some things liberals denounce him for: He describes in some detail how Koch Industries has accepted government tax breaks and ethanol manufacturing subsidies, even though he and David denounce “corporate welfare.” He did this to keep Koch competitive, he said.

He advocates repeatedly for “creative destruction,” where his company relentlessly searches for opportunities to dismiss under-performing employees, close or sell plants no longer of value to Koch, and redefine company operations in disruptive innovation. After all, he writes: 93 of the original 100 top Forbes companies are gone. For businesses, “the ground is always crumbling beneath our feet,” he writes.

Businesses that continue to be unprofitable, he writes, should be restructured, sold or shut down rather than rely on government subsidies or protective laws.

“Although I do not want to minimize the stress and fear that often accompanies loss of employment, virtually everyone would be better off if those people were employed where they could be more productive.”

He defines self-interest as a power for good.

“It is not a question of whether or not there should be self-interest, because the opposite of self-interest is extinction,” he writes. “The essential question is how to channel that self-interest for the general good.”

Channeling it means letting markets and not government decide things. And so, he writes, though many people denounce high CEO pay, it is a good thing, “at least for those companies not supported by government.”

“But why would anyone want to limit good profit when it benefits us all?” he asks.

Still, some passages of “Good Profit: How Creating Value for Others Built One of the World’s Most Successful Companies” will surprise people in politics and probably also in the corporate world.

Charles Koch inherited a company that was worth $21 million in 1961 and made it worth $100 billion now. He wants to spread prosperity to all, he says. So this book, the successor to his 2007 book “The Science of Success,” is mostly a clear and often engaging primer on how to run a successful corporation. The most vilified people in this Koch message are not liberals or Barack Obama, but fellow corporate CEOs.

He critiques how publicly traded companies do business, wedding themselves to quarterly earnings reports that may keep stock prices satisfactory but diminish creativity and long-term earnings. “I’d counsel any entrepreneur to do everything possible to keep her company private, no matter how big it grows.”

Most corporations are run top-down, he writes, and this stifles creativity. He criticizes many of the standard practices of modern businesses: how employees are paid, evaluated, coached, trained, rewarded, hired and fired.

He critiques himself: Koch’s attempts to buy and sell oil tankers cost millions during the OPEC crisis in the 1970s. So did Koch’s acquisition of Purina Mills in the 1990s.

He writes about what critics have vilified him for the most: the deaths of Danielle Smalley and Jason Stone, two Lively, Texas, teenagers who died in a Koch-owned pipeline fire in August 1996.

“Koch was at fault and readily admitted it,” he writes. “What happened was unacceptable and caused the death of two innocent teenagers and enormous pain to their families and community.”

“That was one of my darkest days on the job.”

He mocks himself. As a teenager, he was so hard to handle that he attended eight schools by the time he graduated from a military school his frustrated father assigned to him.

He got expelled from there for drinking beer on his way back from spring break, he writes. Reinstated, he risked expulsion again. “I crossed the line again by attempting to bang the head of the cadet captain – who was also the star running back of the football team – against my window.”

After MIT, where he earned two master’s degrees in chemical and nuclear engineering, he eventually took over his father’s company, made many changes and demands – and was mortified to learn at a Koch-owned plant he visited one day that engineers, instead of doing engineering work, were busily drawing charts. They had heard that he liked to look at charts. “The joke among our employees in the oilfields was that ‘Koch’ stood for “Keep Ol’ Charlie Happy.”

He quotes from Einstein, Edison, Adam Smith – and the Buddha.

And lastly: The man whom many regard as liberal philosophy’s most formidable enemy confesses – at the length of an entire page – to being a fan of movies made by Britain’s Monty Python comedy troupe.

He draws business lessons from the absurd and fatal witch trial in “Monty Python and The Holy Grail.” He offer’s an MIT engineer’s critique of the disgusting scene in “The Meaning of Life” where fat Mr. Creosote blows up after eating a thin wafer mint.

“Monty Python films are often brilliant expositions,” Koch writes, “of the disastrous consequences when people don’t use reality-based mental models to guide their actions.”

This story was originally published October 14, 2015 at 8:15 PM with the headline "Charles Koch’s new book reveals little about political operations."