This past weekend, Charles Koch, chairman of the board and CEO of Koch Industries Inc., called for an end to cronyism, arguing that “business leaders recognize that their behavior is suicide, that it is suicide long term. To survive, long-term, they have to start opposing, rather than promoting, corporate welfare.”
Mr. Koch’s remarks came Saturday at a summit in California, delivered to roughly 450 attendees. Though he acknowledged that ending corporate welfare would mean a short-term loss of profit for companies, including Koch Industries, Koch emphasized that stopping cronyism was part of the overall theme of the summit, “Unleashing Our Free Society.” For him, that includes a focus on how business-government relations impact companies down the line: “Short term, taking the principled path going to cause some companies some problems, as it will Koch Industries, but long term it will allow business people to continue to own and run their businesses.”
Mr. Koch pointed to the banking industry, which he argued saw big banks take bailouts in exchange for overregulation and now sees smaller banks paying the price, as representative of how corporate welfare is creating irreversible class distinctions. “We’re headed toward a two-tiered society—a society that’s destroying opportunities for the disadvantaged and creating welfare for the rich,” Koch said. “Misguided policies are creating a permanent underclass, crippling our economy and corrupting the business community.”
While some may be surprised by Mr. Koch’s recent statements, the Charles Koch Institute routinely investigates the harmful effects of cronyism and the negative impact of corporate welfare on the U.S. economy and well-being of Americans. Earlier this summer, we brought together a panel of experts to address the threat of cronyism. We recently explored the consequences of the Export-Import Bank, and the Charles Koch Foundation supports new research into cronyism.