about the state of the country, the state of political parties, and “the current of America,” as Franklin recalled it.
Charles Koch addressed a question that had worried him since the 1970s: “Where is free capitalism at risk?”
After the crash, it seemed as if capitalism was at risk across the United States. The dominant public narrative blamed the crash on a failure of the free market and private enterprise: greedy bankers had been given free rein and taken down the economy. When it looked for a solution to the problem, the American public turned to the federal government, not the free enterprise system.
First came a giant federal bailout plan, designed and orchestrated by the Bush administration. The price tag for this bailout was placed at $700 billion. The US Treasury used taxpayers’ money to buy bad loans and rotten assets from the very banks that created them. Treasury Secretary Henry Paulson, a former Goldman Sachs executive, promoted the plan on national television, saying it was vital to stopping another Great Depression. A Republican, in other words, was made a passionate argument for government intervention on the scale of the New Deal. Surprisingly, the strongest resistance to this plan came from Paulson’s own party. Republicans in Congress voted against the bailout in September of 2008. The stock market crashed more than 700 points when they did so. The plan was eventually passed. It was seen as a last stand for the theory of laissez-faire.
Even worse, from Charles Koch’s point of view, was the election of Barack Obama to the presidency in November. Now, Democrats controlled all three branches of government. The mood of America was decidedly running against Charles Koch’s beliefs. The mood was deeply “illiberal,” as he would call it. There was clamoring for more government intervention, more regulation, and more money for entitlement programs.
What was unspoken, but what Charles Koch understood, was that all of this would also mean more taxes. In January of 2008, even before the Democratic takeover, Charles Koch warned that too many Americans were putting too much faith in government programs to solve their problems. The result was inevitable: “To support that spending, taxes will escalate,” Charles Koch had written in the company newsletter. Who was always the primary target of higher taxes in American history? The richest Americans and the largest corporations. Charles Koch happened to be sitting atop one of the largest fortunes in the world, and one of the largest private corporations in the country. The Democratic Party had been explicit in its promise to tackle concentrated wealth.
This moment was dangerous, in Charles Koch’s view. Free enterprise had not seen such a direct threat since Franklin Delano Roosevelt’s election. Roosevelt’s New Deal had hemmed in corporate America for the following thirty years. Barack Obama’s presidency promised to do the same. The comparisons were neither subtle nor hidden. On November 24, 2008, the cover of Time magazine featured a photo illustration with Barack Obama’s face superimposed onto FDR’s body, sitting in a car, smiling, complete with a long-stemmed cigarette holder. The headline read: “The New New Deal.”
The new New Deal already seemed to be in the works. Just over a month after he became president, Barack Obama passed a government stimulus package aimed at boosting economic growth. The package was valued at $787 billion and included new spending programs on infrastructure and renewable-energy programs. There was intense political energy behind these interventions. The public narrative held that a political savior had come along to tame the worst instincts of a private market run amok.
But the story that Charles Koch told his employees that night at the dinner party was very different. As he spoke to groups of employees, Charles Koch spun a story about government malfeasance, public ignorance, and increasing harm to free enterprise and prosperity. Charles Koch did not believe that markets needed to be tamed. The very fact that so many people subscribed to this belief seemed to prove that most American voters were profoundly misinformed. Even the nation’s CEOs and business leaders were delusional on this point. They refused to accept the most important, most overriding fact: the American economy was not a free enterprise system in the first place. It was not a free enterprise system when FDR was elected, and it certainly was not one now. Government control and intervention were so deeply embedded in the American way of life that people didn’t even see it anymore. People failed to understand that it wasn’t the free market that caused