8 ★ FTWeekend 17 August/18 August 2019presidency owing nothing to Koch,
whose Americans for Prosperity politi-
cal advocacy group lobbied successfully
against his plans to repeal Obamacare
and levy a Border Adjustment Tax to
fund corporate tax cuts. Koch cele-
brated the new administration’s attacks
on environmental regulations, but there
can be few clearer rebukes to his free
market principles than Trump’s trade
wars, which Leonard oddly glosses over.
Is Koch’s corporate power doomed to
decline under Trump? Leonard con-
cludes that his record of adapting to vol-
atile times will see his network outlive
this administration.
Kochlandwent to press before one of
the more remarkable examples of that
adaptability. In June, Koch’s foundation
said it would fund a new think-tank to
campaign against US military adventur-
ism with George Soros, who is as loathed
on the right as Koch is on the left.
Expanding on his reasoning, Koch
wrotethis week: “For several years, we
supported efforts in partisan politics
with the goal of moving the United
States forward. The results fell far short
of what we considered acceptable.”
If this marks the sharp change in
Koch’s political engagement which he
claims, his core beliefs remain unal-
tered: in the same piece, he lamented
that both parties share “the troubling
assumption that the stroke of a politi-
cian’s pen can turn the country around”.
He seems to have more faith in his
own pen. Koch is working on a book,
says Leonard, which will try to show
that MBM is “a guidebook not just for
operating companies, but for operating
entire societies.”
At 83, Leonard gives us to believe,
Koch is more confident than ever that
we will all one day be living in Kochland.
If so, it will test how many of us share its
crown prince’s stomach for volatility.Andrew Edgecliffe-Johnson is
the FT’s US business editorI
n an unfashionable corner of the
American heartland sits a self-
effacing business leader who can
boast that his company’s book
value has grown 26 times faster
than the S&P 500 in the more than five
decades since he took control.
Guided by fundamentals rather than
fashion, he has become one of the
world’s wealthiest people by sticking to
unglamorous businesses that provide
the essentials of everyday life and bring-
ing insight to the markets in which they
are traded. Well past his 80th year, he
faces inevitable interest in succession,
but his record looks as secure as it has
ever been. His company’s credit rating is
the envy of most governments, and the
biggest question it faces is where it will
deploy its prodigious cash flow next.
The Midwestern billionaire in ques-
tion is not Warren Buffett of Omaha,
Nebraska, but Charles Koch of Wichita,
Kansas. His company,Koch Industries,
ranks just behindCargillat the top of the
list of America’s largest private compa-
nies by revenues. Yet while Buffett built
hismediareputationascapitalism’smost
avuncular guru, Koch and his brother
Davidlongenjoyedfarlowerprofiles.
That has all changed in the past dec-
ade asthe brothershave become sym-
bols of the shadowy influence that busi-
ness can have over government. Their
well-funded promotion of a bracingly
free-market brand of conservative
purity reshaped the Republican party in
their image and gave them singular
sway in Washington — at least until the
arrival of another family heir with iron
self belief: Donald Trump.
Their network of well-resourced
political action committees, think-tanks
and research institutes successfully
undermined Barack Obama’s health-
care and regulatory agenda, even as the
Kochs’ wealth doubled over his two
terms, from 2009 to 2017. That made
them synonymous with villainy for
many Democrats, prompting former
Senate majority leader Harry Reid to
dub them “power-drunk billionaires”.
While Buffett may still drive himself
to work, Charleshas ditched his sedan
for a security detail: the champion of
freedom now works behind a high wall
that he erected around his campus.
In the 52 years since their father’s
death, Charles and David have turned
the 300-person refining, pipeline and
ranching business they inherited into a
combined fortune worth more than Buf-
fett, or anyone else alive besides Ama-
zon’s Jeff Bezos. Quite how that hap-
pened is the mystery that journalist
Christopher Leonard meticulously
unravels inKochland.
Earlier books — Jane Mayer’s
Dark Moneyand Daniel Schulman’s
Sons of Wichita—have detailed Charles’s
and David’s unmatched political
influence machine and their battles
with the two brothers they bought out of
the company.
Leonard’s investigation stands out for
its dissection of the cultish ethos of acontinuous improvement and employee
autonomy derived from Koch’s theolog-
ical commitment to the theories of Lud-
wig von Mises and Friedrich Hayek,
Austrian economists who preached the
virtues of an unfettered market and the
principle that the status quo never sur-
vives. Leonard shows how Koch boiled
their thinking down into an approach to
business that is both dogmatically con-
servative and nimble enough to keep
seeking out new markets, new deals and
new consensus-challenging insights.
Koch’s currency, in Washington as in
Wichita, is information. Years before
the age of “big data”, he was investing in
early computers to ensure that his com-
pany could suck in more details about
each of its markets than any rival. That
information advantage has enabled the
company to push into loosely adjacent
businesses from pig-feed to energy
derivatives. But does MBM work? Leon-
ard’s measured book does not offer a
simple verdict, but he makes clear that
its aggressive focus on pushing profits
forward has contributed to some of
Koch Industries’ darkest moments.
Integrity is MBM’s first “guiding prin-
ciple”, but Leonard makes a persuasive
case that the pressure it put on employ-
ees helps explain the company’s record
of regulatory fines, criminal charges and
sometimes fatal industrial accidents.
At one lucrative refinery near Minne-
apolis, for example, he notes that engi-
neers were not a profit centre, so often
found their requests for spending on
maintenance ignored. Stopping
machines for repairs would interrupt
output, so managers left little margin
for environmentally devastating error.
After one such lapse caused the release
of ammonia-tainted wastewater, Koch
Industries ended up pleading guilty in
1999 to criminal violations of environ-
mental laws. Costly breaches elsewhere
in the company’s regulated businesses
were “abetted by a general disdain for
government,” Leonard adds.Koch Industries now preaches
“10,000 per cent compliance”, urging
staff to abide by 100 per cent of the regu-
lations 100 per cent of the time. It helps,
of course, if it has had a hand in watering
down those rules.
“To examine Koch [Industries] is to
examine the modern American econ-
omy,” Leonard writes. That economy is
not just skewed to favour big, connected
companies, he says; it now works best
for those businesses that can exploit
complexity, in politics as in markets.
Koch has made it his business to under-
stand the tax codes and regulations he
loathes more closely than anybody else.
His sweeping strategy for getting
other Americans to see governments
and markets as he does offers the moststriking example of his ability to play
the very long game. It began in 1974,
Leonard explains, after Nixon created
theEnvironmental Protection Agency
and capped prices in the oil industry.
Determined to overhaul a Republican
party that he saw as ideologically bank-
rupt, Koch set out a multipronged
approach spanning education, media
outreach, litigation and lobbying. He
has barely needed to change it since
then, except in scale.
Koch may havegrasped sooner than
most how broken the US political
system has become, but his instinct has
been to ensure it remains so, as long
as its complexities still work to his
advantage. Yet for all his insights, he did
not seeTrump coming and could not
bring himself to back the “drain the
swamp” populist in the 2016 election.
As a result, Trump started hisIts aggressive focus on
pushing profits forward
has contributed to some ofKoch’s darkest moments
Kochland: The Secret
History of Koch
Industries and Corporate
Power in America
by Christopher Leonard
Simon & Schuster $35, 704 pagesA
venomous war over ident-
ity is raging within the
Catholic media on both
sides of the Atlantic. What
is authentic Roman Catho-
licism? Is it strict adherence to the
church’s teachings, especially on mar-
riage and sexual morals? Or is it a more
liberal approach, kind to human weak-
ness, quick to forgive and forget?At
stake is the future impetus of Catho-
licism’s moral authority: at 1.3bn, the
world’s largest Christian community.
The traditionalists and progressives
are currently clashing over the causes of
clerical sexual abuse, deemed by most
Catholics to be the biggest crisis in the
church since the Reformation. The tra-
ditionalists insist that the root cause is
gay men in the priesthood. The liberals,
however, blame traditionalist “clerical-ism”, including a sense of entitlement
and enforced celibacy.
But according to Stephen Bullivant, a
specialist in “social-scientific” studies of
religion at St Mary’s University, Lon-
don, the biggest crisis in the church is
the rate at which members are lapsing.
Along with the collapse of vocations,
these are leading to the closure of
churches and the rapid decline of once
vibrant, expanding parishes. In the US,
only 15 per cent of cradle Catholics
attend weekly mass; and 35 per cent of
them no longer admit to Catholic ident-
ity. In the UK, the figures are worse:
only 13 per cent attend weekly mass and
37 per cent say they no longer believe in
religion of any kind.
Among an adult US population of
250m, there are 87m cradle Catholics,
30m of whom have lapsed. In the UK, in
an adult population of 50m, there are
7.2m cradle Catholics, of whom 3.2m are
lapsed.Mass Exodussupplies similar
global figures, demonstrating attrition
within many western countries, espe-
cially in Germany, where 216,078 mem-
bers left the church last year. Mean-
while, the largest Catholic communitiesare to be found in the developing world.
Latin America is home to 43 per cent of
the faithful, and yet the church there is
beset with its own problems, not least a
lack of priests and proselytising by rival
Protestant evangelical groups.
While the clerical abuse scandals have
boosted defections, Bullivant reveals,
through a wealth of fascinating testimo-
nies, a wide span of reasons for the mass
disaffiliation. Informants who defected
from the 1970s tend to cite the bans on
birth control, sex before marriage,
divorce and homosexuality. Boredom
with church services, dislike of post-
Vatican II happy-clappy liturgy, com-
bine with scepticism about doctrine,Mass Exodus:
Catholic
Disaffiliation
in Britain and
America since
Vatican II
by Stephen Bullivant
Oxford University
Press £25, 336 pageshe writes with admirable verve and wit,
with telling quotes from informants,
including writers such as the novelist
Anthony Burgess and the philosopher
Terry Eagleton. He is, alas, discreet
about how changing relationships with
the church might affect Catholic voting
intentions in America. Exit polls going
back to 2004 reveal that a majority of
Catholics support the winners of presi-
dential elections, and by nearly thesame margin as the electorate as a
whole. In the 2016 election Catholics not
only backed Donald Trump, but gave
him a larger share of their votes than the
total body of voters.
The defections, along with the increas-
ingly antagonistic liberal-traditionalist
divide, might well affect the outcome of
the 2020 US election.Abortion, capital
punishment (recently denounced by
the pope), same-sex marriage, LGBT
issues, opposition to which once defined
Catholic identity, now find Catholics
deeply, heatedly, divided, both reli-
giously and politically.
Professor Bullivant’s “social-scien-
tific” account of the state of the Catholic
Church is a welcome contrast to the par-
tisan antagonisms of Catholic journal-
ism and pulpit prejudices. Yet what, in
the light of “social-science”, are the pros-
pects for a reversal of the exodus? That
would mean a different kind of book,
and one the current pope might find
extremely useful.John Cornwell is director of the Science &
Human Dimension Project at Jesus College,
CambridgeCrisis in the Catholic Church
The sex abuse scandal is just
one part of the problem facing
the church amid an exodus of
members, writesJohn CornwellThe Wichita
power man
Essay|How did Charles Koch
turn the family business into
one of America’s richest?
A new book meticulously
unravels his approach, writes
Andrew Edgecliffe-Johnson
From main: the Wichita
headquarters of
Koch Industries;
chief executive Charles
Koch in June— Polaris/Eyevine; APKochland: The SecretMass Exodus:
Catholic
Disaffiliation
in Britain and
America since
Vatican II
by Stephen Bullivant
Oxford University
Press £25, 336 pagesdislike of particular pastors, bad experi-
ences in the confessional box; rejection
of the afterlife. And, on top of all this, the
paedophile priest scandals.
A significant number of dropouts,
particularly among women, Hispanics
and African-Americans in the US,
include those who felt let down by the
church in an hour of need. The latter
constituency often abandon Catho-
licism for another Christian denomin-
ation or even religion. In the US, some 15
per cent of disaffiliates have gone to
other Christian groups, 2 per cent to
other, non-Christian, religions, and 17
per cent to no religion.
The last pope, Benedict XVI, often
declared that it was better to have a
smaller church that would pass on the
faith undiluted. Pope Francis, however,
seeks to bring back the lapsed by being
non-judgmental: he talks of the church
as a “field station” for the spiritually
weak and injured.Asked about the sta-
tus of gay Catholics, he said: “Who am I
to judge?”There are no signs, as yet, that
his approach is turning the tide.
While Bullivant gives us ample facts
and statistics, particularly from the US,Ending Clergy Abuse members
protest in Rome in February— AFPcompany he calls “Charles Koch’s pri-
vately controlled free-market utopia”.
Better than any previous account, it also
shows how seamlessly Koch’s worldview
ties together his business and political
activities. That outlook was shaped by
his father, a founder of the rightwing
John Birch Society, and his own disdain
for state intervention — from FDR’s New
Deal to the Clean Air Act signed by Rich-
ard Nixon early in Koch’s career running
regulatedenergyoperations.
Leonard also picks out three defining
traits that have done the most to build
the Koch fortune and guide his political
spending: an ability to think in decades
rather than quarters; a knack for turn-
ing the complexity that others run away
from to his advantage; and a calm talent
for seeing opportunity in periods of
extreme volatility.
Kochlandis, first and foremost, a por-
trait of how Charles’s personal obses-
sions have shaped the familybusiness.
His older brother Fred Jr is barely men-
tioned. David, who owns as much of the
company as Charles but retired last year
for health reasons, is a secondary char-
acter, highlighted mostly for his Liber-
tarian political career. Bill, who as a
child stabbed his twin brother David
with a sword, plays a more vivid role,
pursuing through the boardroom, the
media and the courts the brothers he
once reported to and later claimed had
cheated him in buying out his stake.
But those stories have been told
elsewhere, and Leonard makes clear
that what holds together this $110bn-
revenue conglomerate spanning deriv-
atives trading, pipelines, Dixie Cups
and Brawny paper towels is Charles, a
secrecy-prizing “fighter” who rules his
company with complete authority.
His tool for doing so is a creed of his
own invention called Market Based
Management, which is drilled into every
recruit in training sessions that Leonard
likens to induction ceremonies for a
secret society. “MBM” is a philosophy ofРЕ
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