INTRODUCTION
A QUIET DEAL IN DIXIE
xv “the single most powerful and least understood threat to democracy today: the attempt by the billionaire-backed radical right to undo democratic governance.” !!
xvi “In 2011 and 2012, legislators in forty-one states introduced more than 180 bills to restrict who could vote and how. Most of these bills seemed aimed at low-income voters, particularly minority voters, and at young people and the less mobile elderly. As one investigation put it, “the country hadn’t seen anything like it since the end of Reconstruction, when every southern state placed severe limits on the franchise.”
xvii “the American Legislative Exchange Council (ALEC) [.] kept its elected members a secret from outsiders. It was producing hundreds of “model laws” each year for Republican legislators to bring home to enact in their states—and nearly 20 percent were going through. Alongside laws to devastate labor unions were others that would rewrite tax codes, undo environmental protections, privatize many public resources, and require police to take action against undocumented immigrants.” !!
xix-xx “This project was no longer simply about training intellectuals for a battle of ideas; it was training operatives to staff the far-flung and purportedly separate, yet intricately connected, institutions funded by the Koch brothers and their now large network of fellow wealthy donors. These included the Cato Institute, the Heritage Foundation, Citizens for a Sound Economy, Americans for Prosperity, FreedomWorks, the Club for Growth, the State Policy Network, the Competitive Enterprise Institute, the Tax Foundation, the Reason Foundation, the Leadership Institute, and more, to say nothing of the Charles Koch Foundation and Koch Industries itself. Others were being hired and trained here to transform legal understanding and practice on matters from health policy to gun rights to public sector employment. Still others were taking what they learned here to advise leading Republicans and their staffs, from Virginia governors to presidential candidates. The current vice president, Mike Pence, a case in point, has worked with many of these organizations over the years and shares their agenda.” !!
xxvi JAMES BUCHANAN “no existing political constitution contains sufficient constraints or limits [on government.] In this sense, all existing constitutions are failures”
xxxi-xxxii “Pushed by relatively small numbers of radical-right billionaires and millionaires who have become profoundly hostile to America’s modern system of government, an apparatus decades in the making, funded by those same billionaires and millionaires, has been working to undermine the normal governance of our democracy. Indeed, one such manifesto calls for a “hostile takeover” of Washington, D.C.
That hostile takeover maneuvers very much like a fifth column, operating in a highly calculated fashion, more akin to an occupying force than to an open group engaged in the usual give-and-take of politics. The size of this force is enormous. The social scientists who have led scholars in researching the Koch network write that it “operates on the scale of a national U.S. political party” and employs more than three times as many people as the Republican committees had on their payrolls in 2015. This points to another characteristic associated with a fifth column: the tactic of overwhelming the normal political process with schemes to disrupt its functioning. Indeed, this massive and well-funded force is turning the party it has occupied toward ends that most Republican voters do not want, such as the privatization of Social Security, Medicare, and education.”
PROLOGUE
THE MARX OF THE MASTER CLASS
2-3 “By 1860, two of every three of the relatively few Americans whose wealth surpassed $100,000 lived below the Mason-Dixon Line. New York at that time had fewer millionaires per capita than Mississippi. South Carolina was the richest state in the Union. The source of southern wealth was staple crops—particularly cotton—produced by enslaved men, women, and children for world markets. So matchless were the profits that more money was invested in slaves than in industry and railroads.” !!
4 “Calhoun concluded that if something must be sacrificed to square the circle between economic liberty and political liberty, it was political liberty. The planters’ will must prevail. Their property rights should trump all else. The southern delegates to America’s founding Constitutional Convention had built numerous protections for property owners, including slave owners, into the document. But that was inadequate in Calhoun’s view. He also advocated that states be able to pass whatever laws they saw fit to ensure “their internal peace and security”—in particular, “all such laws as may be necessary to maintain the existing relation between master and slaves.” That included measures to outlaw the circulation of antislavery literature. In the name of secure property, he called on the federal government to use its control of the Postal Service to enforce such prohibitions on others’ First Amendment freedom to publish and read what they liked.” !!
5 “Calhoun led a campaign in the early republic that, in the name of property and individual rights, took powers away from local authorities, on whom ordinary people had more influence, and shifted them to central state governments. Why? State government was the level that men like him could most easily control. […] Far from expressing the original intentions of the Constitution’s framers, then, Calhoun and his allies conceived a novel reshuffling of authority in the pursuit of more power for their class.”
5-6 “Where they have achieved control of state governments since 2010, the ardent advocates of liberty from the federal government have been overturning the accustomed rights of local governments and rushing through radical alterations of established law”
7 “Voters in free states wanted active government: they taxed themselves for public schools, roads to travel from place to place, canals to move their goods, and more. In the southern states, the yeomen of the backcountry, where slaves were fewer, often tried to get their governments to take up their concerns but found that “planters saw threats to their ‘property’ in any political action they did not control, even if the yeomen actually were demanding roads, schools, and other mundane services.” The irony of all this is vast […] The paralyzing suspicion of government so much on display today, that is to say, came originally not from average people but from elite extremists such as Calhoun who saw federal power as a menace to their system of racial slavery.”
9 JOHN C. CALHOUN “Slavery is an institution ordained by Providence, honored by time, sanctioned by the Gospel, and especially favorable to personal and national liberty.”
9 “To Calhoun […] freedom above all concerned the free use and enjoyment of one’s productive property, without any impingement by others.” !!!
CHAPTER 1
THERE WAS NO STOPPING US
19 JOHN RANDOLPH “I am an aristocrat. I love liberty; I hate equality.” !!
23-24 “For forty years, […] the Byrd Organization had to win only about 10 percent of the potential electorate to hold on to power. […] Virginia was among the first states in the nation to outlaw the closed shop—that is, to outlaw contracts that required union membership of employees. Months before a conservative Congress passed the 1947 Taft-Hartley Act, called “the Slave Labor Act” by critics and passed over President Harry Truman’s veto, the state’s governor had signed a pioneering “right-to-work” law to weaken labor unions. If, in the face of this snare of shrewd restraints to keep them from influencing government, some citizens still managed to come together to seek change, the daily press could simply overlook it. That, too, was part of “the Virginia Way.” If collective action could not be wholly stopped, at least news of it could be buried.
That was the system of liberty that so urgently needed defense, in the eyes of those who upheld it.”
PART I
THE IDEAS TAKE SHAPE
CHAPTER 2
A COUNTRY BOY GOES TO THE WINDY CITY
42 “Where [Buchanan’s] interest and genius lay—even if you call it an evil genius—was in his intuitive grasp of the importance of trust in political life. If only one could break down the trust that now existed between governed and governing, even those who supported liberal objectives would lose confidence in government solutions.” !!
CHAPTER 3
THE REAL PURPOSE OF THE PROGRAM
46 “Du Pont so hated FDR that he had helped found the American Liberty League, in hopes of restoring an “employers’ paradise” by nipping the New Deal in the bud. But he and his corporate colleagues had muffed the job. Their arguments were so crude and self-interested that their mobilization redounded to the president’s advantage, enabling him to denounce the millionaires as “economic royalists” bent on keeping others down.”
47 “In the age of the large corporation, the notion that the economy was a realm of freedom, whereas government action was intolerable coercion, simply no longer corresponded to the facts of American life.” !!!
51 “Members of the Mont Pelerin Society initially chose to refer to themselves as “neoliberals,” to signal the way they were retooling nineteenth-century pro-market ideas; it’s the name applied to them today by critics of the policies they advocated. But the word “neoliberal” confused Americans because Democrats in the Roosevelt mold now had such a hammerlock on the word “liberal.” So some called themselves “classical liberals,” or “eighteenth- and nineteenth-century liberals.” But that had problems as well because they parted with classical liberals such as Adam Smith and John Stuart Mill on so much—not least, enthusiasm for public education. One thing all advocates of economic liberty agreed on, at least, was that they were “the right,” or the “right wing,” and against “the left” and anything “left wing.” In the split inherited from the French Revolution, in which the left upheld popular participation and equality, and the right upheld private property rights and order, those coming together in the 1950s stood on the right—and proudly.”
52 “[Eisenhower] secured the expansion of Social Security to cover more people and asked Congress to include the “millions of low-paid workers now exempted” from the minimum wage.”
53 “nothing stirs a social movement like hopes raised and then dashed” !!
CHAPTER 4
LETTING THE CHIPS FALL WHERE THEY MAY
66-67 “The importance of the economists’ case rested less on what they proposed than on how their proposals were framed to undercut the arguments of the parents and others who were saying that Virginia simply could not afford to subsidize private schools to salvage segregation. Not so, the Chicago-trained scholars countered: those who argued this way were making an accounting error by failing to consider the significant dollar value of existing school facilities. If authorities “sold all the buildings and equipment to private owners,” that would equalize the operating costs of the two systems, and the private schools would prove their inherent superiority.”
CHAPTER 5
TO PROTECT CAPITALISM FROM GOVERNMENT
75-76 “what was happening in the South until that time illustrated the probability of absolute power to corrupt absolutely. When one set of rights—those of propertied whites—rarely, if ever, had to give way to any other rights, even when the inequity they inflicted on others (such as tar-paper-covered schools for black youths) far outweighed the damage they inflicted on those with property (slightly higher taxes), a system that started out with strong protections for property rights became, over time, a system where only property rights were protected. Indeed, only white property rights at that. […]
Those who had amassed the greatest amount of property often believed that they had made the largest contribution to developing the nation, which deepened their feeling of betrayal. Now, to add insult to injury, others—activists and their allies in government—were casting these same figures as society’s villains. Indeed, those whom the propertied considered their social inferiors were refusing to submit to their rule on their terms any longer and instead offering their own ideas about fairer ways of doing things. In this expansion of freedom to others, those being challenged saw, rightly, curbs on their accustomed liberties and power. And some set out to take the shine off those who had achieved these victories—to deglorify the social movements that had won them, to recast the motivations of the government officials who rewrote the laws, and to question the value of the changes in society that these victories would produce.”
79 “The Calculus of Consent claimed to show that simple majority voting thus “tend[ed] to result in overinvestment in the public sector.” […]
Interestingly, these conclusions issued from purely abstract thought experiments, not from any research on political practice. […] Majority rule ought not to be treated as a sacred cow. It was merely one decision-making rule among many possibilities, and rarely ideal. It tended to violate the liberty of the minority, because it yoked some citizens unwillingly to others’ goals. […] Only if a measure gained unanimous consent, they argued, could it honestly be depicted as “in the public interest.”” !!!
81 “When John C. Calhoun made his case for minority veto power like that which Buchanan and Tullock were advocating, Madison made clear in unequivocal language that he rejected it, saying that to give “such a power, to such a minority, over such a majority, would overturn the first principle of free government, and in practice necessarily overturn the government itself.””
82 “the interest of powerful Virginians in advancing a more sophisticated Dixie interpretation of the Constitution was hard to miss for anyone with ambition and like inclinations.”
84 ““We can learn a great deal from Lenin and the Leninists,” suggested Murray Rothbard, the Manhattan-based talent scout for the Volker Fund, in 1961. He did not mean to suggest violent revolution, he clarified, but that the leaders of the Bolshevik revolution had an unrivaled grasp of strategy and tactics. A Leninist approach for the current cause, Rothbard argued, called for the “advancement of the ‘hard core’ of libertarian thought and libertarian thinkers,” from which all else would in time flow.”
CHAPTER 6
A COUNTERREVOLUTION TAKES TIME
88 “Democracy, especially as it became more inclusive, kept causing trouble for the men who wanted economic liberty—trouble that illuminates for us why they later adopted the strategy they did.” !!
94 “The clash polarized the campus: as the advocates of the Golden Rule founded an interracial group, the defenders of the right to discriminate built a chapter of Young Americans for Freedom (YAF) […] Hundreds of critics signed a petition, started by Leon Dure, against “any rule that would dictate to groups or persons where they may or may not go,” on the grounds that “individual liberty is a higher good than racial equality.””
CHAPTER 7
A WORLD GONE MAD
103 “[Buchanan] believed that, in the short term, repression was the only appropriate immediate answer to the spreading student unrest. Despite “my long-held libertarian principles,” he said, looking back, “I came down squarely on the ‘law-and-order’ side” of things. He heaped praise upon one administrator who showed the “simple courage” to smash the student rebellion on his campus with violent police action.” !!
104-105 “The problem with the university, according to Buchanan and Devletoglou, began with its distinctive structural features: “(1) those who consume its product [students] do not purchase it [at full-cost price]; (2) those who produce it [faculty] do not sell it; and (3) those who finance it [taxpayers] do not control it.”
Having obtained the university’s services for “free,” or close to it, the customer had little reason to value them—or the faculty, administrators, and facilities at his disposal. “Is it to be wondered that he treats the whole university setting with disrespect or even contempt?” asked the coauthors. Indeed, having little of his own money at stake, the student was in an ideal position to disrupt the university whenever he or she chose to do so, even to demand that changes be made to it, without paying any personal price. So, too, the faculty “producers” bore no personal cost for the disruption and damage: tenure insulated them. It was “one of the root causes of the chaos,” in fact, for job security meant that faculty members had no driving motivation to stand up to the radical students. They had more reason to be coconspirators, or at least passive observers of the upheaval.
Finally, owing to a management structure that divorced investment and ownership from control, university administrators misunderstood who their true bosses were. They tended to be “prisoners of their faculty,” allowing faculty rather than shareholders to set policy (a situation as perverse to the authors as workers’ control in industry would be). Equally peculiar in the authors’ minds was that “taxpayers and alumni,” by which they presumably meant donating alumni, “unlike investing stockholders,” paid scant attention to “the results obtained by management,” even though their money sustained the institutions.
The cure flowed from the diagnosis. Students should pay full-cost prices, and universities should compete for them as customers. Taxpayers and donors should organize “as other stockholders do” to monitor their investments. “Weak control” by governing boards must end. As agents of the taxpayers (in the case of California, those who had elected Governor Reagan), the boards should enforce order in the enterprise—for example, by adopting “a policy stating that all students arrested in campus demonstrations should be summarily expelled.”
Only measures modeled on corporate understandings of responsibility and order would work. Indeed, in the end, the problem was public ownership itself, which left no one clearly in charge and no one with the kind of direct personal incentives for maintenance that came from strictly defined property rights. “Think how much differently,” the coauthors nudged, faculty and administrators would react to student occupations of their offices if those offices were more like their own homes: if “they should be required to rent, lease, or purchase office facilities from the universities.” Then they might find their spines and stop paying “ransom.””
106 “Buchanan’s former colleague William Breit seconded the call for a “system of full tuition charges supplemented by loans which students must pay out of their future income.” The point was not merely parsimony to save taxpayer money. Privately, Gordon Tullock and Jim Buchanan discussed the social control function of denying a liberal arts education to young people from lower-income families who had not saved to pay for it.” !!
PART II
IDEAS IN ACTION
CHAPTER 8
LARGE THINGS CAN START FROM SMALL BEGINNINGS
116-117 “The more [Buchanan] thought about what the new approach should be, the more he felt that the answer lay in organization, in connecting like thinkers and linking them to funders who could help them create enough surrogates to spread the message across the country from varied locations, yet as with one voice. The reality had to be faced—and might even prove useful: most citizens knew little about government. Gordon Tullock called it “rational ignorance”: the individual voter had scant effect on outcomes, so why bother to follow politics closely? Busy with other matters, “they devote relatively little time and effort in acquiring information about social policy alternatives”; rather, “they accept what they are told” by news sources they trust. And so it was incumbent on the cause to change what they were hearing and from whom. His vision was to start by converting people of power in domains that mattered: politics, business, the media, and the courts. […]
It was essential, therefore, to pull together the like-minded and seed a new crop of surrogates who could be “indoctrinated” with intellectually compelling arguments and then “mobilized, organized, and directed” to spread them in a strategic manner. […] “conspiratorial secrecy is at all times essential.””
119-121 “In a series of confidential documents, Buchanan spelled out to Larry what he envisioned doing with this money to shape “the way people think about government” with “a ‘sound’ perspective.” Some of it would be used for the “training of teachers for the community colleges” throughout the South. That was a clever way to reach much larger numbers than attended universities—and influence ambitious students of modest means, uncontaminated by the hated eastern establishment, who would likely go on to work for regional corporations or even become entrepreneurs themselves.
As for the national project, Buchanan planned it with meticulous care. To be effective, he projected, his counterforce could “only be staffed by members of the intelligentsia in the highest standing.” Such people existed in decent numbers but often lacked authority in their own institutions. His program would identify these individuals and give them the resources they needed to push back credibly on the other side’s ideas.
Also key to his plan was the creation of a small Founders Group of about ten; these men would generate what he called the Blue Book to reach another two hundred people through their own personal contacts. The centerpiece of the operation would be a Society of Fellows that would include political leaders and possible donors, along with scholars. (His notes to himself read: “use quasi-academic jargon with formalities, but not academic criteria for selection.”) As a student of incentive structures, Buchanan looked to create a big monetary prize—one to rival the Nobel Prize in Economic Sciences, then just a few years old and without any Mont Pelerin Society winners—to enhance the allure of working for “individual freedom.” (“Get Nixon commitment here,” read his notes. Remaining were such strategic questions as “How is respectability to be established and maintained? How much hypocrisy is necessary? How much internal criticism is to be allowed?”) The key thing moving forward was to maintain secrecy, with outsiders kept in the dark. […]
Buchanan doubted that business leaders could be approached directly to fund the cause, because few were likely to see value in a long-term intellectual project. The best way to reach them was “through political leaders” who saw the need and could persuade them.” !!
123-124 “Like Buchanan, and with his guidance early on, Manne transformed a weakness into a strategic asset. Unable to secure a post in a top law school in his early years, he instead persuaded the aspiring presidents of a string of lesser schools to let him re-create their programs in his image. It was easy to transform new or low-ranked law schools: with their shallow institutional roots, they had no encrusted traditions or committed alumni to block the way, and any improved ranking would appear exponential to administrators itching to ascend the ladder. Because the law schools depended entirely on tuition, without cushioning endowments, they were also especially susceptible to outside funders. Moreover, graduates of his kind of program were sure to appeal to corporate personnel departments and donors in a way that ordinary law school alumni would not.
Indeed, also like the economist, the law professor was a canny solicitor of corporate contributors. When he tapped companies for support, Manne avoided their public relations departments, the usual source of gifts, which were often stocked by employees interested in social responsibility, and instead approached their general counsels, defenders of the core enterprise, who tended to be ensconced in the top executive suites and more likely to see the world as he did. General counsels were only too aware of how corporations were faring in court battles with public interest plaintiffs. As Manne recounted in one interview, “a law school especially designed to serve the needs with which these men are familiar could strike a responsive chord that many other law schools do not.” His own approach, he said, was “really like sales work, calling on people face to face, offering your product and seeing if you could interest them.””
CHAPTER 9
NEVER COMPROMISE
132 BALDY HARPER “Government in the United States is now taking from persons’ incomes an amount equivalent to the complete enslavement of 42 million persons. Compare that figure, and the concern about it, with the figure of 4 million privately-owned slaves in the United States at the outbreak of the War Between the States!” LOL
135 “That sense of intellectual and even ethical superiority to others may help explain why Charles Koch bypassed Milton Friedman to make common cause with the more uncompromising James Buchanan.”
137 “more than anything else, it was Buchanan’s and Koch’s shared commitment to school privatization at every level that started a collaboration that deepened over the next two decades.”
138-139 “In 1976, over a weekend of discussion as Koch’s guest in Vail, Colorado, Rothbard explained to his host how a Lenin-like libertarian strategy might work. The Russian revolutionary had once said of the ranks of the revolutionary party, “Better fewer, but better.” To create a sound, disciplined movement, Rothbard explained, preparing a “cadre” must be the top priority. What his admiring biographer, a foot soldier himself, summed up as “the general flakiness and counterculturalism” of so many libertarians had had its day, Rothbard told Koch. The survivalist-like stocking up on beans and science fiction novels to last years of exile, with backpacks at the ready to rush for the hills if the statists came, the visions of colonizing remote islands or even of other planets: all that had to go. A new seriousness was needed. It was time for the revolutionary cause to orient itself to Middle America.”
140 “Once Crane agreed to lead the training institute, all that was lacking was a name, which Rothbard eventually supplied: it would be called the Cato Institute. The name was a wink to insiders: while seeming to gesture toward the Cato’s Letters of the American Revolution, thus performing an appealing patriotism, it also alluded to Cato the Elder, the Roman leader famed for his declaration that “Carthage must be destroyed!” For this new Cato’s mission was also one of demolition: it sought nothing less than the annihilation of statism in America.”
141 MURRAY ROTHBARD “We came to realize, that, as the Marxian groups had discovered in the past, a cadre with no organization and with no continuous program of ‘internal education’ and reinforcement is bound to defect and melt away in the course of working with far stronger allies.”
141-142 “With a permanent staff and a stable of rotating scholar visitors, Cato could generate nonstop propaganda against this ruling class. Buchanan played a crucial role in such propaganda, for Cato’s arguments generally followed analyses provided by his team. Koch, meanwhile, provided new resources as the cadre brought in recruits with ideas for new ways to advance the cause. They would then be indoctrinated in the core ideas to assure their radical rigor, all of this held together with the gravy train opportunities Koch’s money made available as they pushed their case into the media and public life. The libertarian vanguard, Rothbard taught, could “guide the peoples to the proper path.”
With enough gestures to the nation’s founding fathers, even Leninist libertarianism could be made to look appealingly all-American, like a restoration rather than the revolution it was. But Cato would be unbending in its advocacy, whether for taking an axe to taxes, revoking government regulation, ending social insurance, or presenting unfettered personal liberty as the answer to all problems. In that early purity, Cato often shocked the nation’s conservatives, as when it criticized American military intervention in other countries and called for legalizing drugs, prostitution, and other consensual sex. That unique stance, its first president said, made it “the think tank for yuppies”—those who liked social freedom with their economic liberty, and never caught on to where all this was headed.
Cato had no need to compromise because it was funded by one of the richest men in the world. Indeed, compromise, Koch had made clear, was the kiss of death. And when their patron spoke, the grantees listened. “It could seem almost comic, this sudden injection of enormous wealth into a small movement,” recalled one participant, “this bizarre gravitational shifting as Planet Koch adjusted everyone’s orbits.” Apparently no one confronted the import of the incentive structure at the outset, for libertarians steadfastly refused to acknowledge wealth as a form of power, but the sheer amount of money Charles Koch was giving would affect all the players in time. “Employees of single-donor nonprofits,” said a disenchanted one who left, “follow the moods and movements of their benefactor like flowers in the field, their faces turned toward the sun.”” !!
147 “because candidates faced no limits on how much they could contribute to their own races, they could run David Koch for vice president on the ticket with Clark. In the end, Koch contributed $2 million to the $3.5 million campaign. The ticket drew more than nine hundred thousand votes, 1 percent of the overall turnout, much better than any libertarian electoral effort had ever achieved.
But even that small success at the polls came at a troubling cost. Clark so compromised libertarian principle to win votes that he split the fledgling party. Murray Rothbard, as usual the most scathing guardian of orthodoxy, condemned the candidate’s campaign promises as “treacle.” His ceaseless carping so irritated Charles Koch, who was becoming more pragmatic about tactics if not about his endgame, that Rothbard found himself fired from Cato. He fumed at a libertarian institution being run “like a corporation, where orders are given, dissidents are fired, etc.” Never having held a normal job in his lifetime of advocating unalloyed capitalism, he seemed gobsmacked by the experience of being treated as just another hired hand who could be let go at the whim of his boss. Rothbard’s pleas went unheeded.” LOL
150-151 “even as the theorist projected exploitive motives onto others, it was Buchanan’s own understanding of his fellow humans and their relations in society that was truly predatory. “Each person seeks mastery over a world of slaves,” he intoned, clarifying that in his view every man desired maximum individual personal freedom of action for himself—and controls “on the behavior of others so as to force adherence with his own desires.” As the political theorist S. M. Amadae has painstakingly and luminously shown, Buchanan was breaking with the most basic ethical principles of the classical liberalism he claimed to revere, of the market order as a quest for mutual advantage based on mutual respect. Instead, he was mapping a social contract based on “unremitting coercive bargaining” in which individuals treated one another as instruments toward their own ends, not fellow beings of intrinsic value. He was outlining a world in which the chronic domination of the wealthiest and most powerful over all others appeared the ultimate desideratum, a state of affairs to be enabled by his understanding of the ideal constitution.”
151 JAMES BUCHANAN “Despotism may be the only organizational alternative to the political structure that we observe.”
152 GEORGE STIGLER “If in fact we seek what many do not wish, will we not be more successful if we take this into account and seek political institutions and policies that allow us to pursue our goals?”
152 “One “possible route” Stigler suggested for achieving the desired future was “the restriction of the franchise to property owners, educated classes, employed persons, or some such group.”” !!!
CHAPTER 10
A CONSTITUTION WITH LOCKS AND BOLTS
155 “The military officers who led the coup concluded that, once in power, not only did they have to reverse the gains that had been made under elected governments, but they also wanted to find a way to ensure that Chileans never again embraced socialism, no matter how strong the popular cries for reform. The solution they came up with was to rewrite the nation’s constitution to forever insulate the interests of the propertied class they represented from the reach of a classic democratic majority.”
155 “it was Buchanan who guided Pinochet’s team in how to arrange things so that even when the country finally returned to representative institutions, its capitalist class would be all but permanently entrenched in power. The first stage was the imposition of radical structural transformation influenced by Buchanan’s ideas; the second stage, to lock the transformation in place, was the kind of constitutional revolution Buchanan had come to advocate. Whereas the U.S. Constitution famously enshrined “checks and balances” to prevent majorities from abusing their power over minorities, this one, a Chilean critic later complained, bound democracy with “locks and bolts.”” !!!
159-160 “the wicked genius of Buchanan’s approach to binding popular self-government was that he did it with detailed rules that made most people’s eyes glaze over. In the boring fine print, he understood, transformations can be achieved by increments that few will notice, because most people have no patience for minutiae. But the kind of people he was advising can hire others to make sure that the fine print gets them what they want. The net impact of the new constitution’s intricate rules changes was to give the president unprecedented powers, hobble the congress, and enable unelected military officials to serve as a power brake on the elected members of the congress. A cunning new electoral system, not in use anywhere else in the world and clearly the fruit of Buchanan’s counsel, would permanently overrepresent the right-wing minority party to ensure “a system frozen by elite interests.” To seal the elite control, the constitution forbade union leaders from belonging to political parties and from “intervening in activities alien to their specific goals”—defined solely as negotiating wages and hours in their particular workplaces. It also barred advocating “class conflict” or “attack[ing] the family.” Anyone deemed “antifamily” or “Marxist” could be sent into exile, without access to an appeal process.”
164 “The year after the Mont Pelerin Society celebrated in the resort city of Viña del Mar, Chile’s economy went into a tailspin, contracting by more than 14 percent. The devastation was so bad that, despite the dangers, a broad-based opposition emerged among workers, students, and homemakers that shook the regime as nothing else had to date. The causes of the crisis were not only internal; the world economy also stumbled that year. But the economic model urged by the society’s thinkers and implemented by their local colleagues made it especially disastrous. Chile’s now unregulated banks engaged in reckless lending that threatened to sink the entire economy when the reckoning arrived. […]
Among those hardest hit were those who had invested their life savings in the new individual retirement accounts in corporate mutual funds that failed.”
165 LOIS HECHT OPPENHEIM”Whereas in 1970, only 23 percent of the population was classified as poor or indigent, by 1987 that proportion had reached 45 percent—almost half—of the population”
165 LOIS HECHT OPPENHEIM “Precarious and low-income work [became] the staple for over 40 percent of the Chilean labor force”
167 “A nation that once stood out as a middle-class beacon in Latin America now has the worst economic inequality it has seen since the 1930s—and the worst of the thirty-four member states in the Organization for Economic Cooperation and Development (OECD).”
167 “The imposition of nationwide school “choice” had dire effects as well. Pupil performance diverged sharply, owing to “increased sorting” by income, which naturally took place with the voucher system. Meanwhile, college tuition costs now equal 40 percent of the average household’s income, making a higher education in Chile the most expensive on the planet, relative to per capita income.”
CHAPTER 11
DEMOCRACY DEFEATS THE DOCTRINE
169 “[George Mason University]—or rather, members of its economics department and law school—created the research and design center of a right-wing political movement determined to undo the modern democratic state.” !!!
175 “The budget director, it turned out, had failed to make clear to the president and his political advisers—much less to the American people—that the colossal Kemp-Roth tax cut, as it came to be known, would necessitate tearing up the social contract on a scale never attempted in a democracy. To this day, it is unclear how such a consequential misunderstanding occurred. Was it that the electoral wing of the Republican right had for so long racially coded “special interests” and “government spending” that they genuinely failed to realize that slashing on this scale would hurt not only poor blacks but also the vast majority of white voters, among them many millions of Republican voters? However it happened, it spelled the end of the libertarian dream of lasting change under Reagan.”
182 “Many liberals then and since have tended to miss this strategic use of privatization to enchain democracy, at worst seeing the proposals as coming simply from dogma that preferred the private sector to the public. Those driving the train knew otherwise. Privatization was a key element of the crab walk to the final, albeit gradual, revolution—the ends-justify-the-means approach that allowed for using disingenuous claims to take terrain that would make the ultimate project possible.” !!!
184-185 “Like Buchanan, Manne rejected the idea of open searches for the best talent, in favor of hiring kindred thinkers, all white men who felt “underappreciated” at other schools.”
CHAPTER 12
THE KIND OF FORCE THAT PROPELLED COLUMBUS
193 “both Buchanan and Koch understood viscerally: that the enduring impediment to the enactment of their political vision was the ability of the American people, through the power of their numbers, to reject the program. What was holding the movement back now became clear: the lack of a strategy to break that power, or at least to debilitate it, the very approach Buchanan had spent a lifetime thinking about and designing. […]
In the near term, it had to have two components. First, it had to create a pathway from here to there that could be executed in small, piecemeal steps that on their own polled well enough with the American people that they could win passage without raising the public’s ire. But each step had to connect back to the previous step and forward to the next one so that when the entire path was laid, all the pieces would reinforce the route to the ultimate destination. By then it would be too late for the American public to cry foul.
Second, and as important, because some of those piecemeal steps, no matter how prettified, could not be fully disguised, where necessary they had to be presented to the American public as the opposite of what they really were—as attempts to shore up rather than ultimately destroy—what the majority of Americans wanted, such as sound Medicare and Social Security programs. For such programs, the framing should be one of the right’s concern to “reform” the programs, to protect them, because without such change they would go bankrupt—even though the real goal was to destroy them. For both men, the ends justified whatever means seemed necessary, although those means should remain technically within the law.”
195 “To name just one index of how successful Manne had been: by 1990, more than two of every five sitting federal judges had participated in his program—a stunning 40 percent of the U.S. federal judiciary had been treated to a Koch-backed curriculum.” !!!
204 “When [Buchanan] died in 2013, neither Koch nor Fink, nor Cowen nor Meese, bothered to attend his memorial service. Why should they? His days of his usefulness to them had passed.”
PART III
THE FALLOUT
CONCLUSION
GET READY
209 CHARLES K. ROWLEY “Far too many libertarians have been seduced by Koch money into providing intellectual ammunition for an autocratic businessman.”
209-210 “Watching how Koch commandeered the Cato Institute for his “crude” plan to speed up the libertarian conquest of America by using the very governmental apparatus that libertarians had long criticized made [Rowley] angry. He saw, too, that Koch had “no scruples concerning the manipulation of scholarship”; he wanted Cato’s output to aid his cause, period. When a few veteran libertarian board members and staff raised questions, he replaced them with his own people, who now included the kind of “social conservatives” and political party figures who were once anathema to libertarians.”
210 “[Koch’s proxy army] was operating on more fronts through more ostensibly separate organizations than ordinary mortals could easily follow. It was occupying the Republican Party, using the threat of well-funded primary challenges to force its elected officials to do the cause’s bidding or lose their seats. It was pushing out radical right laws ready to bring to the floor in every state through the American Legislative Exchange Council (ALEC). It was selling those laws through the seemingly independent but centrally funded and operationally linked groups of the State Policy Network. It was leveraging the anger of local Tea Party groups to move the legislative agenda of Americans for Prosperity and FreedomWorks. Its state affiliates were energizing voter turnout with deceitful direct mail campaigns. Its elected allies were shutting down the federal government; in effect, using its employees and the millions who rely on it as hostages to get what they otherwise could not”
210-211 LOUIS BRANDEIS “we must make our choice. We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.”
212 “People who failed to foresee and save money for their future needs, Buchanan wrote in 2005, “are to be treated as subordinate members of the species, akin to . . . animals who are dependent.””
220 “At midcentury, the former slave states of the South led the nation in passing antiunion right-to-work laws, with only a smattering of imitators elsewhere, mostly in places of sparse population. Yet between 2012 and 2016, guided by Buchanan’s ideas and pushed by the Koch-funded organizations ALEC, the SPN, and Americans for Prosperity, four former free states passed such laws: Indiana, Michigan, Wisconsin, and West Virginia.”
220 “The new antiunion rules unfurled first by Governor Scott Walker in Wisconsin in 2011 are more devilishly lethal in their cumulative impact than anything the cause had theretofore produced. Their elaborate precision evoked the analogous changes in Chilean labor law instituted in the Pinochet era with Buchanan’s input. In the new Wisconsin, public employees would no longer be allowed to negotiate working conditions and benefits, only wages (with those held to the rate of inflation). Each contract would be only a year in duration, thus draining staff time and energy away from addressing the concerns of existing members and from organizing new members in order to prepare for now back-to-back annual negotiations. Unions would lose the right to have dues deducted from members’ paychecks and instead have to chase down individuals who did not pay. And, in a final slap, with the unions no longer able to do anything of substance for their members, they would face recertification elections each year. No wonder Walker boasted that “we dropped the bomb.” His approach cut in half, over just five years, the share of public employees who belong to unions.”
221 RUTH ROSEN “Who will care for America’s children and the elderly, [now that two-thirds of mothers with children under six are in the workforce, yet] market fundamentalism—the irrational belief that markets solve all problems—has succeeded in dismantling so many federal regulations, services and protections?” !!
221-222 “The Koch team, led by Cato, continues to push the Pinochet model of individual investment accounts, a model for which they have won the support of many Republican elected officials. But in reality, that model proved so disastrous that after the dictatorship ended, a nearly universal consensus emerged on bringing back key elements of social insurance. The system of individual accounts proved a huge boon to the financial corporations that received the automatic deductions from workers’ paychecks. The companies exploited that access mercilessly, achieving an average annual profit rate of more than 50 percent over a five-year period, thanks, not least, to their taking between a quarter and a third of workers’ contributions as fees.” !!!
224 TYLER COWEN ““It might be possible for ‘irrationally held’ views to in fact support good policies,” particularly if the cause were to enlist insights from “cognitive science and perhaps evolutionary biology.” Knowledge of just how vulnerable humans are to hardwired drives that resist reasoned evidence, it seemed, might prove helpful in getting voters to unwittingly enable an “unpopular” agenda.65
Changes under way in the media offered still more promise for the cause. Television’s new fixation on private peccadilloes, as seen in the Clinton era, could leave citizens jaded and suspicious, thus sowing helpful mistrust of government (although some caution was in order, as the “cynicism may undercut some of the values needed to sustain a free society”). The emerging Internet, for its part, “appears especially well suited for rumor, gossip, and talk of conspiracy.”” !!
226 “intergenerational mobility—the ability of young people to move up the economic ladder to achieve a social and financial status better than that of their parents, which was once the source of America’s greatest promise and pride—has plummeted below that of all peer nations, with the possible exception of the United Kingdom.”
226 “Alfred Stepan and Juan J. Linz, recently approached the puzzle of U.S. singularity in another way: they compared the number of stumbling blocks that advanced industrial democracies put in the way of their citizens’ ability to achieve their collective will through the legislative process. Calling these inbuilt “majority constraining” obstacles “veto players,” the two scholars found a striking correlation: the nations with the fewest veto players have the least inequality, and those with the most veto players have the greatest inequality. Only the United States has four such veto players. All four were specified in the slavery-defending founders’ Constitution: absolute veto power for the Senate, for the House, and for the president (if not outvoted by a two-thirds majority), and a Constitution that cannot be altered without the agreement of two-thirds of the states after Congress. Other features of the U.S. system further obstruct majority rule, including a winner-take-all Electoral College that encourages a two-party system; the Tenth Amendment, which steers power toward the states; and a system of representation in the unusually potent Senate that violates the principle of “one person, one vote” to a degree not seen anywhere else. […] What makes the U.S. system “exceptional,” sadly, is the number of built-in vetoes to constrain the majority.” !!
227 “In the dream vision of the apparatus Charles Koch has funded to carry out Buchanan’s call for constitutional revolution, it would be all but impossible for government to respond to the will of the majority unless the very wealthiest Americans agree fully with every measure. The project has multiple prongs.
One is a vast legal shift, also anchored at GMU; it illuminates how quietly executed changes in legal rules can bind citizens as never before. In 2015, the New York Times headlined an investigative report, “Arbitration Everywhere, Stacking the Deck of Justice.” The journalists’ intensive research revealed “a far-reaching power play by American corporations” to include in the extensive fine print of applications for, say, employment, credit cards, cell phone service, medical practices, or long-term care, language to which exhausted and unwitting consumers routinely agree without reading. That language prevents the signers from participating in class action lawsuits over corporate malpractice and compels them to accept mandatory arbitration in a system in which the corporations in question write the rules and choose the decision-makers. That is: the contracts take away citizens’ constitutional right to sue in court, proclaiming their signatures as consent.”
228-229 “after years of criticizing “judicial activism” by the Supreme Court for greater equity, Koch grantees are now making, as one Cato publication puts it, the Case for an Activist Judiciary to secure economic liberty.
To advance their constitutional revolution, the donor network has pumped hitherto unheard-of sums into state judicial races. While media attention has focused on the impact of Citizens United on the presidential and congressional races, the opening of the spigots in state judicial races may prove more consequential over the decades ahead as corporate donors invest in those they believe will interpret the Constitution and the laws in their favor. The Republican majorities that are rushing through “radical reform” know that citizens of their states are likely to turn to the only branch of government left that might blunt the blows. That is why the large donors have invested so heavily in judicial races: to elect judges who will allow the revolution to go forward.” !!!
229-230 JEFFREY TOOBIN ““Roberts’ narrow conception of the Commerce Clause is now the law of the land”—and an invitation to legal challenges to other federal legislation and programs.”
230 “As the push for aggressive judicial activism on behalf of economic liberty illustrates, for all the small-government rhetoric, the cadre actually wants a very strong government—but a government that acts only in a way they deem appropriate.” !!!
230 “Pushed by State Policy Network affiliates and guided by ALEC-affiliated legislators, GOP-controlled states have been passing what are called preemption laws that deny localities the right to adopt policies that depart from the model being imposed by the network-dominated state legislatures.”
230 “the cause understands that, as in the 1950s, corporate and conservative interests can make their will felt most easily in state governments—and are more likely to be challenged successfully by the citizenry at the federal and local levels—partly because state affairs are less well monitored by the people and the press.” !!
231 “If the cadre has its way, in fact, and its allied legislators continue to comply, a nation that stands at 138th of 172 democracies in the world in voter turnout will have even fewer people participating in the political process.”
232-233 “The public choice way of thinking, one sage critic warned at the time James Buchanan was awarded the Nobel Prize in Economic Sciences, is not simply “descriptively inaccurate”—indeed, “a terrible caricature” of how the political process works. It also constitutes an insidious attack on the very “norm of public spiritedness” so crucial to shaping good government policy and ethical conduct in civic life. That is to say, public choice theory was wrong in its explanations, and would be toxic if believed by the public or its representatives.” !!
234 CHARLES KOCH “Playing it safe is slow suicide.”