Grubstakers - Episode 16: Koch Brothers (Part 1)

Episode Date: May 21, 2018

This week begins our Koch Brothers 2 part extravaganza! We discuss all the juicy details of that Koch family. The good, the bad, the worse, the oh wow that is terrible. Let it rip and continue to commit. It's grubstakers.

Hey everybody, welcome to Grubstakers, the podcast about billionaires. This week we're talking about the Koch brothers on a special two-part investigation. In part one, we talk about their origin stories, as well as how Fred Koch struck some lucrative deals with two gentlemen named Joseph Stalin and Adolf Hitler. We also talk about Charles and David Koch's early flirtations with the radical libertarian movement and their funding of various schools that promote southern secession. All that and more, coming up on Grubstakers. I think we disproportionately stop whites too much.

I taught those kids lessons on product development and marketing and they taught me what it was like growing up feeling targeted for your race. I am proud to be gay. I am proud to be a Republican. You know I went to a tough school in Queens and they used to beat up the little Jewish boys. You know I love having the support of real billionaires. Alright, you can stop, Andy. I've got to do the intro now. Hey everybody, welcome to a very special episode of Grubstakers. Sean P. McCarthy here, as always, with the friends.

Andy Palmer. Steve Jeffers. Yogi Poyle. And this is a special episode about the Koch brothers. You might have heard of them. And if you're a critical listener to our podcast, you might think that this is just four open micers doing Wikipedia research. And to that, I say, first of all, Andy has not been to an open mic in months. Second of all, today, it's a special episode because I read a book. Yes, that's right.

I read 460 pages of Dark Money by Jane Mayer. Wow. Yeah. And so I know a lot about the Koch brothers. So today it's not going to be two hours of frantic Googling and then plagiarizing other people's work and adding bad jokes to it. It will be one book that we're plagiarizing and adding bad jokes and audio drops to. And it's extra impressive because Sean is functionally illiterate.

He's the R. Kelly of our group in more ways than one. We're not allowed to talk about him anymore. Sean? And I was going to say, we don't have time to do research because I have spent all of my life trying to find Kurt Cobain's accusations of statutory rape to get him pulled off Spotify to annoy Andy. But so basically, we should mention, because we're going to be doing this special two-part episode on the Koch brothers, this is part one of two.

And because it is the Koch brothers, you know, they are, we might have some more liberals listening. And we would just like to welcome you if you're a new listener. And this is a podcast about how the Koch brothers are the only bad billionaires. All of the other ones are good. They're pretty great, actually. Yeah. But the Koch brothers have become kind of a fixture, you know, since Harry Reid talked about them on the Senate floor and Obama has spoken about them. And for good reason.

But they have become kind of a fixture of the liberal hatred of billionaires, and they're a very fascinating group. And I think one of the best ways to start this is just to talk about the 2016 election. Hillary Clinton and affiliated PACs spent about $1.4 billion in 2016. Trump and his PACs spent about $950 million. The Koch brothers network spent more than $889 million. So essentially, when you put those three together, you can think about the Koch brothers network as a third political party in America. You know, they have, to a great extent, co-opted the Republican Party. In fact, in I think 2015, the Republican Party has started sharing their voter data

with the Koch Brothers Network. So, I mean, it's very much a hostile takeover. Right, right. What Sean's not mentioning is that the Koch Networks, the money they spent was all from small donations. My question is, as a third political party, what's their mascot? We got the elephant, we got the donkey.

What's this group's animal? Burning teenagers. More on that later. The oil refinery their father set up in Nazi Germany. I feel like it's a dinosaur just slowly decomposing. You know, like the fox decomposing video?

Oh, yeah. Like that, but then turning into oil. Like, I think that's really what their mascot should be. Their mascot should be the polar bear and it slowly gets smaller and smaller every year. But yeah, no. So Coke Industries is the second largest

private corporation in the world. Must have sprung up overnight. In the world. And it is also one of the top 10 polluters in air, water, and climate. What? They dump more than 29 million tons of carbon dioxide into the atmosphere every year.

They are the number one toxic waste producer in the U.S. And also they own Dixie cups and brawny paper towels and shit. Yeah, Dixie cups, the cups you use when you're either dying or about to die. Or for jello shots. Jello shots? Yeah, I guess that's true too. I just like the idea of like liberal college students having jello shots

while unknowingly funneling dark money against the Obama administration. But oh, and yes, so another interesting thing is when we talk about the Koch brothers, people usually think, rightly, David and Charles Koch. They think there's just two brothers. There's actually four brothers, and we'll touch on the others briefly. But David and Charles Koch are the big names because Forbes, as of 2018, estimates each of them at net worth of about $61.8 billion.

I mean, they are extremely wealthy. And the majority of their net worth comes from each of them owns more than 40% of Coke Industries, which is, as we mentioned, the second largest private corporation in the world. I feel like those other brothers think they're just such weak idiots. Just like, I don't have $40 billion. Like, I'm not. Like, any time they use a Dixie cup, they're just like, I fucked up. Yeah, that must suck to, like, only be worth $1 billion.

I bet they, like, openly litter. And when people are like, hey, you shouldn't litter, you'd be like, trust me, my family is known for this. All right, well, so the primary method in which the Koch brothers exercise their influence over the political process are these Koch brothers' semi-annual summits. They hold them at various resorts and places like that around the country, and they've been holding two of them every year since 2003, which incidentally followed a major settlement, a prosecution of the Koch industries by the Clinton Department of Justice in 1999,

which suddenly gave them an interesting desire to be involved in the mainstream political process. But they've been holding these summits twice annually since 2003. It really, after Obama got elected, is when they really took off. According to Jane Mayer, the author of the book i wrote uh 18 more than 18 billionaires attended their january 2009 post obama summit um sean just said he wrote this book by the way i said i wrote it yeah you're like according to this book i wrote and it's like sean come on you can't dude i listen to like the tapes and i'm like is my brain melting because like last week i said like i don't remember writing this paul singer

last week i said paul singer found it the fusion gps doc instead of funded it and i'm just like i'm just like people are listening to me have a stroke not only are they listening i listen to it two to three times this is gonna be like my mom's gonna confront guys like, why didn't you see the warning signs? I don't know. They were pretty funny. Oh, we saw them. We just thought we could make money off of them.

Yeah. We wanted to see how far it would go. Today on Growth Stakers, we take it as far as this shit has ever gone. By the end, I'm going to be like, yeah, I dump 29 million tons of carbon into the atmosphere every year. And I built a oil refinery in Nazi Germany.

Bonus episode. Sean dies on mic. Here is death row. The billionaires. Nas was better than Jay-Z. That's his final words. But yes, according to this book I wrote, there were 18 billionaires. Jane Mayer's book says that there were more than 18 billionaires and many millionaires at the January 2009 post-Obama Koch Brothers Summit. They keep the guest lists and the minutes secret,

though occasionally those things have leaked out, which is where our information on these summits comes from. But to kind of understand what they do at these Koch Brothers Summits, it's kind of, as we mentioned, they are the third political party. So essentially they get all these billionaires and multimillionaires together and they say, hey, pledge X million dollars and we will distribute it throughout our affiliated networks. And they spread this out through all these different conservative action groups and think tanks such as Cato, Heritage Foundation, and then these PACs like Americans for Prosperity, you know, like Center to Protect Patients' Rights and whatever other bullshit names they come up with. But it's like investment where essentially these millionaires and billionaires have various

regulations they want to fight they have um you know things they want to stop things they want to get done and by donating to the coke network they've essentially set up a network to uh bring a political party that just consists of the millionaires and billionaires in this country into action and that spends almost as much money as the Republican and Democratic parties. Well, if I may boot in, there is an article from Time magazine from this year where they talk about the Koch brothers' most recent summit. They were given access, and they say that the summit actually was able to bring together Senator Ted Cruz, the rapper Scarface, and John Carlos, one of the Olympic medal winners who gave the Black Power salute at the podium.

At this podium or in the Olympics? In the Olympics. I think he was one of the ones in that famous picture. And so basically they had meetings where they would talk about taking these new woke stands. Like Charles Koch said, we need to be fully committed to a society in which everybody has an opportunity to make a better life for themselves. Wow. That's what we're about. And then another person said, let me be frank up front.

These elections are going to be brutally tough. They're talking about the upcoming midterms. That's from CEOo emily seidel so what are we going to do about it we've never faced a challenge like this but then it says except when we built that oil refinery for adolf hitler that was probably pretty easy to get it early the hard thing was keeping the oil coming to that because they couldn't get ukraine anyway the thing was uh making sure all of the jewish

personnel were not in the room when they met with the german executives but here's the thing so many of the most enthusiastic conversations stemmed from conversations about how the coke-based network could change communities i hate to quote hillary clinton but it takes a village said jill lynch whose family owns an iowa agriculture firm. These programs break against the images of the Koch brothers as political villains. Parentheses, former Senate Democratic Leader Harry Reid called them, quote, oligarchs during one of his many speeches against them on the Senate floor. And parentheses, and that's part of the point. The Koch brothers network has long insisted that it dallies in politics as a mean to push.

Wow. Fuck you. Time magazine. Consider the stage that brought together Cruz, Scarface and Carlos on Martin Luther King jr. Day. Each arrived to share his experiences and ideas for fighting what they broadly called inner city violence. The organizers,

the Koch backed urban specialists focus on preventing crime, keeping young people from joining gangs and, in former Bishop Omar Jawar's words, reforming urban culture. Anyways, at the bottom of this article, it says in parentheses, disclosure, Time Incorporated, Time's parent company, has agreed to be acquired by Meredith Corp in a deal partially financed by Koch Equity Development, a subsidiary of Coke Industries Incorporated. And that's when Scarface says, now as I open up my story with the blaze of your blunts and you can picture thoughts slowly up on phrases I wrote, and I can walk you through the days that I often wish that I could

save everyone, but I'm a dreamer. Have you ever seen a... Let's end it right there. I sit alone in my four-corner room staring at candles manufactured by Coke Industries. Instead of division, this event was a powerful example of bringing people together.

So basically, and this is, we're jumping ahead here, but I should give context to that article Andy wrote. According to... Jesus Christ. This article that Andy just read into the microphone, according to Jane Mayer's book, basically after the Koch networks lost in 2012, they underwent an attempt to reshape their image. And part of what they did was try to do the criminal justice reform thing where they got on board with that. Well, it wasn't just an image thing, and we'll get into that later.

Right. But just a fun little note, and again, jumping ahead, the American Legislative Exchange Council, which is because John Oliver did a segment on them. They've been called sort of a conservative bill mill, where they write thousands of bills for Republican-controlled state legislatures around the country. They are primarily an advocate for the private prison industry. And so ALEC, as it's called, was a big supporter of mandatory minimums for drug convictions and these kinds of things in the 90s.

All the while, Koch Industries has had a representative sitting on the board of ALEC. Charles Koch has given them a half a million dollar loan in 97, donated a lot of money. So just the point is like, wow, they're such philanthropists. Yes. The point is like,

well, they like came around to advocate for like criminal reform, which is mainly meant to like shield white collar criminals like themselves. They are also like big funders of the mass incarceration in the United States and total hypocrites. And Jane Mayer also gives the example, like in part of their imagery branding, they like opened up one of their seminars by quoting Martin Luther King Jr., which is always hilarious

because they just kind of ignore his support for, you know, nationalized health care and a job guarantee and all that. But anyways, we're jumping ahead. I would like to start. I have a dream that every market will be free from interference. Black and white children can play together on an unregulated playground

with sharp metal edges. I have a dream that no corporation will be held accountable when its employees die of leukemia. I have a dream of a Dixie Cup on every corner from here to Virginia. But so anyway, so I want to start kind of at the beginning, which is... It's like two miles from the Lincoln Memorial. It's not that far, but it would be good for their bottom line.

It'd be a lot of Dixie Cups. It'd be a lot of, yeah. So to kind of go back in time a bit um so steve actually was finding that the cokes have been rich for like six generations yeah at least since the time of uh fred coke's grandfather so right that'd be six right there okay so yeah you were saying he was like a rich shipbuilder in europe or at least a somewhat rich shipbuilder. Before they immigrated from the Netherlands. Yeah, so they immigrated from the Netherlands. And I believe

it was, what, Charles Koch's great-grandfather that immigrated? And he was a newspaper man. Extra, extra, read all about it! Or he ran a newspaper, that is. I believe in Kansas. But it was Charles Koch's father, fred coke who really became uh fabulously wealthy that that explains why every news article that comes out of kansas about the

coke brothers is just one long fellating oh yeah like bootlickers paradise yeah it turns out when uh the fourth and fifth richest people in the world are uh and the second largest private corporation in the world is incorporated in your state it sometimes distorts politics a little bit within the state these guys are so old money that they're actually like semi-partners of family and Friends LLC. Fred is like a joint founder. Your mama is so old money. How old money is she? I don't know. I couldn't finish that one. I want to say that Koch brothers are

missing a great opportunity. There's this picture from 2009 of a German woman who decided to jump into a polar bear enclosure in the Berlin Zoo. And they ruthlessly mauled her. She survived, but the image on this Telegraph article is pretty scary. And if they want to fight back against these polar bear loving hippies. Yeah. Video of the polar bear owning a German lady.

I mean, to be fair, it's a zoo polar bear, right? Yeah. They attack people in the wild in the 90s. They got to. In the 90s? Yeah, I went to the bear mauling Wikipedia page and I couldn't find anything. Andy Palmer on the research as always.

It's mostly brown bears. Okay, Andy, what the fuck is this all about, huh? The white polar bears never attack anything, but the brown bears are always attacking people? What are you, a coke brother? Because of the cokes, when you looked for the polar bears, the extent of their range, it just says the 90s what if that's like andy's like auditioning for like a job as like

a coke pr person where he's like yeah we're getting rid of the polar bears have you seen what they did to this woman it's woke like clap emoji kill clap emoji all clap emoji white clap emoji bears i just love it's like well we have a lot of brown and black bear attacking people, but not a lot of polar. But with CGI, we can paint these black and brown bears white. Let's get a million-dollar grant from the Kochs to try and stratify bear attacks by race and make it look like bears are primarily killing women in POCs

and just be like, it is the duty of us to destroy these bears. Otherwise, yeah, only straight white male bros want to keep bears alive. This is an issue to no one but the bros. Your mama is so old money

when she spreads her legs confederate dollars fall out. How about that? It's a little wordy, but I like it. Thanks. Anyways. I have a dream that white and black polar bears can attack people equally. No segregation by attack.

All right. So Fred Koch, Charles and David Koch's father, is really the guy who makes the money for the family. He studies chemical engineering, and he comes up with a new method of oil refining. This is, I believe, back in the 1920s. In school, he comes up with a new method, and he tries to ship it to the major oil companies, but they're very dismissive of him at the time. So he kind of gets embittered. And eventually what he does in 1930,

he goes to the Soviet Union under Joseph Stalin, and he helps them set up their first oil refineries. So he makes multiple trips to the Soviet Union from 1930 onward and helps them set up their various oil refineries, which later become, you know, the heart of the rapidly industrializing Soviet Union, which, again, ironic because he becomes an ardent anti-communist later in life. This was back in the USSR. Yes.

Well, really what he was mad about was that Stalin betrayed the revolution. Yes. He was a Tr betrayed the revolution. Yes. He was a Trotskyite. Yes. And he never forgave Stalin for putting a pickaxe through his head. Trotskyite. That's something an ultra-leftist would call a Trotskyist. But so the fun thing, Charles Koch, or sorry fred coke uh the grandfather would

later tell or the father would later tell friends that his greatest regret in life was helping the soviet union build up their industrial capacity which is funny because he also helped nazi germany um so basically he uh eventually uh either gets kicked out i believe he gets kicked out he also helped Nazi Germany. So basically, he eventually either gets kicked out. I believe he gets kicked out. But is he saying his biggest regret is helping the Soviets because they eventually helped beat the Nazis

and he's like, I could have made more money had the Nazis won? I could have made more. Is that the intent? He who makes one dollar saves the whole world Entire I've been too lazy to cut up the Schindler's List drops For Andy but I promise you they're coming

People I like how that's our tease on this podcast Listen Schindler's List drops guys They're coming in hot I am an essential worker Alright well so He eventually They're coming in hot. I am an essential worker. All right. Well, so he eventually, this is how he first really makes his money,

is helping the Soviet Union under Stalin set up these oil refineries. But by 1935, he's persona non grata with the Soviet Union. There have been various purges and these kinds of things. So he moves from the Soviet Union to, in 1935, he goes into a joint venture with Nazi Germany. Fred Koch does. He helps Nazi Germany set up an oil refinery in Hamburg in 1935. And Jane Mayer describes this very well in her book. Basically, it was in a joint venture with an American Nazii sympathizer named william rhodes davis uh and william rhodes davis basically like he was an ardent nazi who lobbied like various nazi officials to let him

set up this oil refinery uh and apparently like he met with one of them and opened with a heil hitler salute to try and like impress the guy for uh how much he was a radical Nazi. And eventually this American, William Rhodes Davis, actually has a personal meeting with Hitler because he's been trying to convince Hitler's advisors to go along with his oil refinery. And so finally he gets a face-to-face with Hitler and pitches him, and Hitler's like,

hell yeah, let's do this. So Hitler approves it, and then it cuts through all the layers of bureaucracy. And theniam rhodes davis say what you will but they got things done william rhodes davis goes to his partner fred coke and they set up the uh hamburg oil refinery which was a uh again so basically as we mentioned fred coke came up with this new method of refining oil so they take raw crude and they run it through this oil refinery and then they have functional gasoline, functional oil. And this, of course, this oil refinery in Hamburg was a big part of the Nazi war machine and, you know, provided the fuel that German tanks used when they were running through France in 1940. But just kind of like fun things about this.

The Hamburg oil refinery that Fred Koch set up was destroyed by American bombers in 1944. The Allies had been bombing it relentlessly since 1940. And more than 42,000 German civilians were killed in Hamburg over the course of bombing this oil refinery. And, you know. There was also the firestorm that incinerated people and melted them into asphalt. This wasn't really a fun fact at all. Well, the fun fact is that Charles Koch publishes a book called Secrets to Success. What if he took credit for making the asphalt that people in Hamburgurg got melted into during the firebombing

oh excuse me charles coke uh published a book called the science of success oh thank god in which the skull science of success the racial science of success the eugenics of success what's white is what's right. Charles Koch publishes a book called The Science of Success, where he briefly mentions that his father worked for the Soviet Union, but for some reason does not mention that his father worked for Nazi Germany and visited the country multiple times. Though the cover of his book is the work will set you free sign at Auschwitz. Deep cut.

But yes, so. Not really a deep cut. That's pretty known, I think. That gives a lot of context to the interview he did with Mike Rowe about the importance of hard work. Yeah. Not all jobs are dirty. Some of them you feel clean on the inside, even though the world becomes dirtier. But so Fred Koch, by 35, he's traveling, I think, like at least a couple times annually.

I don't know the exact number of trips, but he makes a lot of trips to Nazi Germany in order to oversee this refinery, though as the war breaks out, of course, he steps away. But interesting fact from the Jane Mayer book is that, um, the nurse that Fred Koch hires to raise, um, Frederick Koch is the oldest child and Charles Koch is the second oldest. The nurse that, uh, he hires to raise them is a literal Nazi.

Oh really? In the sense that, um, she, uh, well, first she puts them on a very strict disciplinary regime where like Frederick Koch, the son and Charles Koch would both have to like defecate every morning. And she would like watch them and make them defecate and then hit them if they didn't defecate.

And Jane Mayer gets a little Freudian and kind of speculates this set up. Charles Koch's later absolute hate for all forms of government authority and regulators and his desire to be in complete control of everything. Yeah, that makes sense. If someone told me a shit as a kid and they got mad if I didn't, I probably would hate everyone too. Is this where the making people watch porn thing came from?

We'll get to that later. But so, this nurse was, when i say she was a literal nazi she was a german lady who would speak german to them and she left the family in 1940 because she was so euphoric that hitler had invaded france that she had to fly back to germany and be with the nazi regime so charles Koch was raised by two literal Nazis. I like how there's a two-week conversation that's like, hey, listen, I like

working for you guys. You know, your family's great. I mean, I gotta roll back. Have you seen the newsreel? You know, I need to be there for that shit. Listen, I mean, America's fun and all, but not enough swastikas.

You know, I just really want to be around my people, you know? Look, they gave me this new job at Dachau Concentration Camp. I need more Lebensbronk. I need more Lebensbronk. You know what I understand? I hate the commies too. They bilked me out of the contract. I think he actually did accuse the Soviet Union of like screwing him over on financial stuff.

They made him a multimillionaire, the Soviet Union under Stalin did. So once the American army got into the war they he stopped going back but do you think that his ties to uh nazi germany as well as other businessmen is part of the reason why america didn't go into the war as quickly as they did could that be a possible connection do you see what i'm saying yeah well i mean like this is kind of a separate issue i would argue um u.s public opinion was wide wildly against intervening in the war because of the experience of the first world war so franklin roosevelt himself was kind of in favor of intervention but had to kind of like gently steer the american public into it and then like

in 1940 he ran for re-election saying we wouldn't get involved in the war and then of course we did after pearl harbor and so like certainly the American business community had big ties to Hitler. You know, we'll talk about IBM on their role in computer technology for cataloging things. It's only like 5 a.m. Yeah, now we're not going to get hired to replace Nick Mullen. What are you going to do? For those who don't listen, so to Comptown, Nick Mullen, the host of Comptown, a very funny comedian, he tweeted about IBM's role in the Holocaust and then later got a commercial with IBM.

And then the Comptown fans made IBM aware of his previous dates and cost him more than $50,000. Let's have him on for the IBM episode. I'm sure he'll be thrilled to talk about it. Yeah, you know that time you could have made almost six figures for an hour's worth of work, but a bunch of assholes on the internet thought it would be funny to ruin that for you. I mean, it would have been five figures just with taxes in general, so what's that talk about?

And that's what the Koch brothers are standing up against. That's right, that's right. But anyways, that was a separate conversation, but yes, American industrialists were a big part of Hitler's rise to power and his rearmament. You know, As we said, Nazi Germany was entirely committed to government spending for the purposes

of rearmament, and this oil refinery that, again, made Fred Koch fabulously rich, was part of the Nazi German rearmament and absolutely provided fuel for the German tanks, German planes, everything. So, yeah. And if you thought Fred Koch maybe moderated his views in later years,

I have a pleasant surprise for you. Fred Koch, of course, was one of the 11 original members of the John Birch Society, which was founded in 1958. The John Birch Society is, interestingly enough, set up by a guy named Robert Welsh Jr., who was a founding member of the company that made Thin Mints. Basically, they had a candy company, and then he used his fortune to pursue radical right-wing causes. And so the John Birch Society, for those not familiar with it, they're named after i

believe a cia agent named john birch who was killed in the korean war and they say this was the first american killed by communism what yeah so they're a radical anti-communist organization and uh just to give you some perspective on how radical they are uh they can do 360s on the skateboard. Radical dude. They also believe that President Eisenhower was a communist. They believe the Republican president who kept the New Deal in place

and overthrew the democratically elected president of Iran was a communist sympathizer because he wasn't hard right enough for them. And so Fred Koch becomes one of the original 11 members of the John Birch Society. He's a big funder of it. And he self-publishes a pamphlet in 1960 called A Businessman Looks at Communism.

And Fred Koch, again, Charles and David Koch's father believed that in this pamphlet he says that communists are mobilizing blacks to take over America and of course this is you know shortly after Brown v. Board of Education which took place in Kansas where they lived or the original case

came from a Kansas school district so desegregation was a big issue at the time in the fifties. And, uh, many members of the John Birch society, including Fred Koch, believed that desegregation was a communist plot.

And if I can just quote from what, uh, Fred Koch wrote in this pub, in this pamphlet, a businessman looks at communism. He says, quote, the colored man looms large in the communist plot to take over america

and he also says that welfare is a secret plot to lure blacks to cities where they will launch a quote vicious race war so uh you know uh a man who uh his biggest regret in life is funding the soviet union and uh vicious race war in the cities hey that's that's the fucking gambit here that's what they're saying man yeah it turns out when you uh don't let people starve to death it's a plot to formulate a vicious race war i'm reading an article of theirs on uh new world order approaching fast oh is this a modern John Birch Society? Yeah, this is on their website. And here's a sentence from it.

Democracy, remember, has been described as two wolves in a sheep voting on what's for dinner. Yeah, the John Birch Society is still around today. And so actually, Charles Koch, who we'll get to shortly. But Charles Koch learned a lot from the John Birch Society when he set up his network. His father brought him to these John Birch Society meetings and, you know, tried to, like, impart the influence on him. And so Charles Koch, again, according to Jane Mayer's book, basically what he learned from the John Birch Society was, first, secrecy was paramount because the John Birch Society, again, as a radical anti-communist group that thought the U.S. government was infiltrated by communists and these sorts of things, and segregation was a communist plot, etc., they knew that it was important to protect their members' identities and not allow public disclosure of who funds them, who's involved.

And so Charles Koch learned from that when he set up his network. But the other big thing he learned was the John Birch Society was, I don't know the current And so Charles Koch learned from that when he set up his network. the candy fanatic, was able to essentially entirely control the John Birch Society, where you can set up these private, quote-unquote, non-profits that you still exercise absolute control over, and Charles would actually emulate that structure exactly when he set up the libertarian think tank, the Cato Institute, in 1974. So basically, he learned those kinds of lessons from the John Birch Society, though he himself, again, according to Jane Mayer, was kind of turned off by some of the conspiratorial thinking. Yeah, well, you know, one of the first campaigns

of the John Birch Society was to get the U.S. out of the United Nations. The global power elites view the U.N. as their main vehicle for establishing, step by step, a socialistic global government controlled by themselves. Now more than ever, we need to get out of the UN and remove the UN from the United States.

We would like to preemptively thank the John Birch Society for their help in our research for the Rothschilds episode. But yeah, so the John Birch Society, conspiratorial, but a big influence on Charles Koch's thinking. And Charles Koch was kind of, he becomes essentially the alpha of the four brothers.

Yeah, I mean, like as Jane Mayer describes it, when they're growing up, Charles is kind of like the one in charge. Though Frederick, so just to kind of go through the four brothers, because as we mentioned, there are four brothers. So Frederick Koch is the oldest. Charles Coke is the second oldest. And then David and Bill Coke are twins, and they're the youngest. Here's—I found probably the best way to describe them. Charles is Groucho. He's considered the funny one, always with the wise cracks.

David's Chico, the sleazy urbanite and the lovable con man. Frederick is Zeppo. He left the family business, and no one really cares about him. And Bill is Harpo, because he mostly communicates using horns and whistles. So which one stood up to the Nazi governess the most? Would it be Charles? Groucho? It was kind of the...

Groucho Cope? We all remember that wacky Marx Brothers movie where they're helping put fuel in the Panzer tanks and it keeps coming out of the other side and spouting out of the top. Lots of slapstick. That movie's called Jew Soup. Ukrainian Crackers.

That's a great band name, by the way. If you need a band name, Ukrainian Crackers, I'm all for that. A night at Treblinka. Anyway, if you want to, here's Charles explaining their political philosophy. Charles Koch.

I don't know what they have to say. It makes no difference anyway. Whatever it is, I'm against it. No matter what it is or who commenced it, I'm against it. That's libertarianism. That's from Duck Soup, right? I believe... Or Horse Feathers.

Okay. Anyways. R. Okay. Anyways. R.I.P. Groucho. Anyways, so... The John Birch Society... And here's David Koch. Whatever it is, I don't like it. The John Birch Society is very influential on Charles Koch.

And so, as we mentioned, Charles Koch is the second oldest, but he becomes the alpha, essentially. Jane Mayer describes him as like bullying the other brothers and really influencing their thinking and these kinds of things. Bullying being telling them when to poop in the morning and then hitting them if they don't. Well, he learned it from Ellsberg. Yeah, not quite that. But so basically what happens is Charles Koch goes to MIT.

He gets a BS in general engineering in 57, an MS in nuclear engineering in 1958, a second MS in chemical engineering, 1960. And I'm sure it did not hurt that his father was on the board of trustees at MIT. So, you know, merit-based. Then he got an MFA from the new school. He's really good at analyzing the power of dance. I want to talk a bit about Charles Koch's kind of political awakening, as it were.

What happens is there's... Whatever it is, I'm against it. There's a free market organization set up in 1957 called the Freedom School. And this is... What a great name, the Freedom School.

Right. How could you be against that? It's the Freedom School. And again, could you be against that? It's the Freedom School. And again, I owe this research to Jane Mayer, but she says the founder of this was a guy who, in the 1940s, set up a self-actualization movement called the Mighty I Am that was basically like a cult, and it whipped audiences into a frenzy by having them chant Annihilate Them in response to the names Franklin Roosevelt

and Eleanor Roosevelt. What? So basically, the speaker would get up and be like, Franklin Roosevelt, and then they would all be like, Annihilate Them! And, you know, so this gives you kind of an idea of their views on the New Deal and these kinds of things.

But the founder of this sets up an organization called the Freedom School in 1957. And I believe in the early 1960s, Charles Koch attends this. And he convinces his other three brothers into also attending it. David Koch kind of follows Charles' lead, and then Bill Koch does as well, but Frederick Koch doesn't really get into it. He thinks the Freedom School is kind of a cult.

And if you were wondering why, there were two faculty members at the Freedom School, one of whom was a Holocaust denier. A group of teachers in 1959 visited the freedom school and described it as proposing reducing the bill of rights to one right quote the right to own property again a credit to jane mayer for this she also said that the freedom school preached that the civil

war should not have been fought the south should have been allowed to secede, because human beings should be allowed to sell themselves into slavery if they want to. That sounds like a choice. Wow. So basically, oh, and Freedom School also at this point in time had no black students, and the founder said it's because, quote, some of our students and teachers are segregationists.

Oh my God. And this is, Charles Koch as late as I believe 1999 said that this organization was profoundly influential on his thinking, though he and David later distanced themselves from the founder for obvious reasons. I wonder why. I wonder why that happened.

But because in the Freedom School in the 60s, that is when Charles Koch first read Frederick Hayek and Ludwig von Mises, the conservative economists that are basically like you know the free market should decide everything all government control is like slavery and these kinds of things. That's a

Nobel Prize winner Frederick Hayek right? Though Hayek did actually say though it's like not mentioned as much he actually did believe the poor should have a minimum standard of living. But again, this part always gets glossed over, much like kind of the way conservatives talk about Adam Smith, where they ignore all the inconvenient points that he made and focus entirely on free markets decide everything correctly. Oh, the invisible hand that he talked a lot about in one sentence?

Basically. Charles Koch becomes a big funder of the Freedom School. And what really launches Charles Koch's so-called philanthropic career is that after he graduates, his father wants him to come back and take over Koch Industries. Fred Koch does. So he does come back to kansas charles coke does and he sends himself into a period of deep study like i think he like reads tons of books in like the 60s

and again attends the freedom school and this is where he finds these conservative economists and he read quote like a demon okay according to david coke, that's no nice way to talk about von Mises. Like a Demon, the extended title, touched for the very first time. All right, so he reads Like a Demon, and he goes into a... It's not a book, it's how much he read. He goes into a deep period of study,

and in 1967, their father, the avowed Nazi and John Byrd Society member, whose greatest regret was funding the Soviet Union, RIP, he dies in 1967. But before that, Charles proposed to, apparently, buy two trucking companies. And his father, before he went on a safari in Africa, apparently, was preoccupied with how much money he needed to save to pay his federal death taxes. So he told Charles to buy only one,

but Charles bought both. And Fred was furious. He met him at the airport and he would barely talk to him. The only thing he'd say was, quote, son, I've been trying to save enough money to pay my death taxes and you're going out and just wasting it it's a great father-son dynamic right there this is the worst my heart just break fred coke said this is the worst thing since the german army stopped at moscow

my fuel wasn't enough to get them there. Goddamn Russian winter. But so interesting topic on the death taxes. So basically, and again, credit to Jane Mayer. She did the research for this episode, at least my research. She quotes the Koch family as setting up what is called a charitable trust foundation, and this is a way of shielding Fred Koch's inheritance from the death tax. So basically, in 1967, when Fred Koch dies, Koch Industries is making about $177 million annual revenue, and that's in 1967 dollars. David Coke later said that his father gave him a $300 million inheritance.

So, again, and he split his inheritance equally among his four sons. They would later fight for it and have legal battles, which we'll get into later. But the point here is they set up this charitable trust, and because of the way tax... I think Charles and David had this discussion about the contract. Well, I don't know. It's all right. That's in every contract. That's what they call a sanity clause. You can't fool me. There ain't no sanity clause.

R.I.P. Okay, so they set up what was called a charitable Trust for the Koch Foundation now basically the way Tax law was structured is that they can pass On the entire inheritance Shield it from taxation As long as the trust Donates the interest that it occurs

To non-profit organizations For 20 years and this is what Really sets off Charles and later David Koch on their quote unquote philanthropy because they have this charitable trust where they have to donate all of the interest from it to charitable organizations in order to shield their inheritance from taxation. So Charles Koch becomes a founder, sorry, becomes a funder of the previously mentioned Freedom School. And he is able to count this as charitable giving because this radical segregationist organization

is an educational school. So, and then he later repeats the model with the Cato Institute found at 1974. But the point is, because they were able to shield their father's money from taxation through a charitable trust, they later realized they could weaponize philanthropy into basically creating the entire libertarian movement and this was around the time that uh charles got engaged to liz right uh yes i believe so i think that was something uh will you marry me did he leave you any money answer the second question first all right well so anyways um charles coke uh um he he's a big funder of the freedom school and uh at this point he's kind of into the radical libertarian philosophy but this really picks up in the 1970s with the founding of the epa under president Nixon, and Koch Industries starts getting involved in some legal and regulatory battles. What? The EPA has a problem with the Koch Industries?

Believe it or not, it is a major producer of, I think the number one producer of toxic waste in the country. I mentioned that on top. Well, did you know that the EPA is full of unelected bureaucrats who are enforcing their will on uh these innocent individuals uh all these people like coke industries what um actually we should uh uh before i jump ahead here i do want to talk a bit about frederick coke um because there is a story in the book that I read as research. Guys, Sean read a book.

460 pages. He had notes. There's a story in there. So basically, the oldest brother, Freddie or Frederick, Coke. Zeppo. He's rumored to be gay, but he personally denies it. As you can imagine. So he's very sad? Their father,

he's like, no, I'm horribly depressed. I am not gay. You took the bait. The story in Jane Mayer's book is essentially this. Before their father dies, Charles Koch comes up with a plot to try and steal Frederick's share of the company. What he does is, I believe, Charles and one of his friends visit Frederick's apartment, I think in the West Village at the time, this is in the 1960s, and find compromising evidence that supposedly shows that he is gay. And then they invite him into a board meeting of their division of Koch Industries

without telling him what's up. And then once they're gathered there, Charles leads the other two brothers in confronting Frederick about his homosexuality and saying that he will tell their father if he doesn't sell his shares in the company to them. And Frederick storms out of the meeting, and he later says, Frederick later tells a biographer that this blackmail attempt didn't work

because he is not gay. But, interestingly enough, while all of his brothers got engineering degrees, Freddie attended Harvard and studied playwriting at the Yale School of Drama. Oh, well. So not to stereotype, but who knows. But also in their unguarded moments, the other Koch brothers will admit that Frederick was

the funniest. Frederick was a big fixture at the Algonquin Roundtable in the 1920s. But yes, so and we should mention Frederick is the only brother, I believe, who is not a billionaire. He is still a multimillionaire. But what happens is in 1983, after protracted fights about this and that direction of the company, David Koch follows Charles' lead, the Alpha brother, and they go off in one direction. And what happens is Frederick and Bill Koch sell their stock in the company. Again, their father divided it equally between the four of them.

They sell their stock to David and Charles Koch in 1983 for about $800 million. Bill Koch and Frederick Koch would later sue the other brothers, saying that they had undervalued the company and hid material information from them and these kinds of things. Because, again, you know, the other two Koch brothers are now worth 60 billion dollars each because it is a hugely profitable company, partly because that conversation with something like this. You want I should steal? Oh, no, no.

It's not stealing. Well, then I couldn't do it. Yeah, but Frederick's gay. I mean, he would have spent money on all this gay stuff. I mean, like, you know, who wants to hang out with a dude that's gay? You know what I mean?

Who wants to hang out with a dude who buys art not to launder money? But so anyways, the point is Bill Koch later goes on to become the founder and president of Oxbow Energy Group, which is another kind of energy company. It's an energy drink? Yeah. It's not as big as Koch Industries, but Bill Coke, Forbes does put him at $1.8 billion net worth as of 2018. So Bill

Coke is a billionaire, but not nearly to the extent of the other Cokes, whereas Frederick Coke merely settles to having being worth hundreds of millions of dollars. Goes to say, you know, if you suck dick, you're going to be paid less eventually. Fun story about Bill Coke, he would spend $65 million to win the less eventually. Fun story about Bill Koch. He would spend $65

million to win the America's Cup in yachting in 1992 because, you know, skill sport. And he won by pulling a fish out of his pants and throwing it at his competitor. It is funny to me. As an avid Magic the Gathering player people sometimes complain that it's a pay to win game

but it's like it's not quite yachting where you can just spend 65 million dollars to win the highest honor in yachting if you spent 65 million on Magic could you be the best Magic player in the world probably I could certainly be the most annoying.

I could have the best Instagram presence. It would just be me shredding black lotuses. I would love if there was a Coke presence in Magic the Gathering tournament. One of the brothers was a bit avid.

Apparently Martin Shkreli was in part of his publicity stunt threatening to buy up Black Lotuses and other super rare magic cards just to piss off the community. And that's really what got him 12 years in prison. Y'all can't fuck with magic players.

You know, we have... I don't want to talk out of school, but a lot of federal judges come to the tournaments. Really? No. Not to the best of my knowledge all right so i found um a quote from uh bill koch after the uh yacht race okay yeah so i guess really what's happening here is after Charles Koch is influenced by the Freedom School and the John Birch Society, and again, he gets his brothers to attend, David Koch in particular really becomes an acolyte of this philosophy as well. But he is by the 70s a dyed-in-the-wool libertarian, radical libertarian. In every sense of the word, he believes the only thing the government should do is protect

property rights. And so what happens is... Whatever it is, I don't like it. What happens in the 70s and then 80s, the Koch brothers essentially create the modern libertarian movement in the sense that David Koch in 1980 runs for vice president

on the libertarian ticket. And they do that in order to skirt campaign finance laws where David Coke can just spend infinite amount of money on the Libertarian Party because he's an actual candidate instead of an outside donor at this point. But so what we really kind of want to... And they won by a landslide, right? Yes. The smartest investment money can buy but so in 1974 um charles coke sets up the

cato institute uh with uh murray rothbard the conservative economist who i believe believes there should be a functioning market for child for children in a perfect libertarian society so in 1974 charles coke ed crane who we'll talk about next week, and Murray Rothbard set up the Cato Institute. The Cato Institute is a nonprofit with private stockholders controlled entirely by Charles Koch and a board of directors controlled by Charles Koch. And Ed Crane is the first president of the libertarian Cato think tank. But according to one insider that Jane Mayer quotes, he would always call Wichita, Wichita, Kansas, and run things by Charles first. So Charles Koch funds this think tank and essentially uses it as an ideological production line where Jane Mayer talks about this, where Charles Koch follows the Frederick Hayek model of production, where essentially they use their money to produce think tanks that create ideas,

and then scholars that go out and advocate for those ideas, and then eventually politicians and media people to implement those ideas. You know, those are a lot of words for just propaganda. Yes. Like, that's a lot of words for we're gonna make some shit up and people are gonna talk about it like that's crazy right well yogi do you have a nobel prize i guess not i actually uh have an audio clip from um uh charles it's something he said to david while he was giving a speech uh while he was running

for president vice talk fast i see a man in the crowd with a rope. Alright, so here's the quote from Murray Rothbard. He says in The Ethics of Liberty that a parent should not have legal obligation to feed, clothe, or educate his children, since such obligations would entail positive acts coerced upon the parents and depriving the parent of his rights so essentially he believed in abortion at 16 years old um the parent therefore may murder or mutilate his child and the law properly outlaws a parent from doing so but the parent should have

the legal right to oh the parent may not murder or mutilate his child, but the parent should have the legal right to not feed the child, i.e. allow it to die. Yes. He continues. Murray Rothbard continues. If a parent may own his child, then he may also transfer the ownership to someone else. What?

He may give the child out for adoption, or he may sell the rights to the child in a voluntary contract. In short, we must face the fact that a purely free society will have a flourishing free market in children. He does acknowledge superficially

this sounds monstrous and inhumane, but closer thought... Superficially. In a certainane, but closer thought will reveal the superior humanism of such a market. That is why Estonia has adopted Murray Rothbard as its national mascot because of their underground child sex slavery market. That is actually the most humane and free thing possible. It's the freest market. But yes, economist Murray Rothbard, who you just heard from, was a co-founder of the Cato Institute, along with Ed Crane and Charles Koch.

And Murray Rothbard was later forced out by Charles Koch. As we mentioned, Charles controls everything about the Cato Institute. And he later had disparaging things to say about Charles Koch, essentially that he ran Cato Institute like a dictatorship. So, yeah. And I guess we'll kind of leave it. That was not a free market of ideas? Turns out it wasn't.

No, it is a free market because the idea with the most money rises to the top. But we're kind of leaving it here. So next week, if you'll turn back in, we'll give you a bit of a preview of what we're going to be talking about. They run... Next week on Grubstakers. Next week on Grubstakers, the Koch brothers run for president on the Libertarian ticket in 1980. David Koch runs for vice president. They fund the Libertarian Party and they pour money into Libertarian causes. But after the

Clinton administration investigates them, they become heavy funders of the Republican Party and that later is kicked into high gear by Citizens United where they become a third political party unto themselves. So we'll talk all about their interactions with Obama, their influence on George W. Bush, and, you know, the people that they've killed, including employees and residents of small towns where they have dumped horrific benzene pollution. So all that and more coming up next week on part two of the Koch brothers. And with that, I'm Yogi Paiwal. I'm Andy Palmer.

I'm Sean McCarthy. Steve Jeffers. Toodles. Bye. Thanks for listening. Auf Wiedersehen.