History

Limousines and Blow for All

Miami’s “modern-day” transit system was born in the midst of the so-called cocaine wars, when Colombian cartels, small-time Cuban dealers and the hopelessly corrupt Miami PD all took turns gracing the front pages of local newspapers. As the city reeled from shocking acts of violence, millions of dollars flowed into the ‘regular’ economy from the inconceivably profitable drug trade. Bankers, real estate developers, brokers, lawyers. Everybody who was anybody was reaping the benefits and the signs of conspicuous wealth, that came to define Miami’s image around the world, took root.

Contrasting with the Ferraris and Corvettes sprouting like weeds on Miami’s new suburban home driveways, tens of thousands of Cuban refugees were crossing the Florida Straits and getting crammed into hastily-erected tents under I-95. The Mariel boat lift instantly produced a new demographic, which would shape the politics of Miami-Dade County for the next 35 years.

Enormous concrete columns were raised parallel to South Dixie Highway as construction began on an elevated rail system, harboring great promise for the rapidly growing metro. Almost four decades later, that hope would turn out to be as fleeting as a basuco high. Ronald Reagan derided the federally-funded Metrorail during a visit to the city in 1985, quipping that it would have been cheaper to buy everyone in Miami a limousine, instead. The criticism was in line with the radical right wing ideologues who surrounded Reagan and harbored deep contempt for government spending, so long as it benefited others.

Dade County Metropolitan Transit Authority Bus at the Fleet Carrier Co. facility in Pontiac, MI 10-02-1980| Photo Credit: John Papas

Just three years earlier, Reagan was in Miami heaping praise on the results produced by a massive swell of federal law enforcement personnel to fight his war on drugs, which he had declared officially in National Security Decision Directive 221. The special South Florida task force created to wage it and headed by former CIA director and Vice President, George H.W. Bush, established Miami as the home base for federal counter drug operations. Posing in front of seized narcotics and a cache of weapons, Reagan called the dramatic expansion of law enforcement and intelligence assets in Miami a “brilliant example of working federalism”.

The DEA, already boasting a heavy presence in the region, added 60 new agents, 10 supervisors and 3 intelligence analysts. The FBI, which had until then remained on the periphery of drug trafficking cases, was given “concurrent jurisdictional powers” with the DEA and its director became the “general supervisor” of the war on drugs. 43 new agents were added to it’s payroll in South Florida. Similarly, the Coast Guard, the Customs Service, the Bureau of Alcohol, Tobacco and Firearms, the IRS and several other agencies transferred dozens of personnel to Miami. Even the U.S. Treasury recruited 20 new analysts to handle cases of money laundering.

At that point, the Iran-Contra scandal had yet to break into mainstream consciousness and the role top officials of his administration were playing in the tons of cocaine moving through Miami was still an unfathomable conspiracy theory. But, by the time Oliver North and his Chief of Staff, Edwin Meese III, were sitting in front of Congress divulging as little as they possibly could about the covert coke-for-guns operation they’d been running with help from the CIA, Miami’s new political class was fully ensconced as the petty vice royalty of the new spook colony.

A Traitor at the Orange Bowl

Miami’s political future was born at the Orange Bowl on a cloudy day in 1962, where President John F. Kennedy, his wife Jackie and 40,000 people attended a ceremony to welcome back the surviving members of Brigade 2506, who had been captured, imprisoned and eventually repatriated to the United States by Fidel Castro after the Bay of Pigs fiasco. Made up of more than 1,100 Cuban army defectors, volunteer exiles and a few mobsters recruited and trained by the CIA, several Brigade members boycotted the event. They blamed Kennedy for the operation’s failure after he refused to provide air cover to the counterrevolutionaries and from that moment on, Miami’s Cuban exile community would close ranks and become the most reactionary, right-wing political base in the country.

The very mention of John F. Kennedy would henceforth be proscribed in every household from the sprawling burbs of Kendall to Little Havana, where a monument in honor of the fallen at the Bay of Pigs stands and is the site of an annual commemoration when its not held at the posh Biltmore Hotel in Coral Gables, Florida. Likewise, Kennedy’s policies along with anything the Democratic Party put forward would also be shot down on principle rather than any consideration of the merits.

The Kennedys honoring Brigade 2506 survivors at the Orange Bowl in Miami,
Florida on December 29, 1962

The same year the Brigade Commander, Pepe San Román, handed Kennedy a folded Brigade 2506 flag at the Orange Bowl, Kennedy had delivered his Special Message to Congress on Transportation. In it, he announced his intentions to deal with what he called the “chaotic patchwork” of “obsolete legislation” that was encumbering the nation’s various transportation systems, pledging drastic federal intervention to resolve the “inefficiencies, inequities and other undesirable conditions” that prevailed around the country, which was suffering under a disjointed network of private systems teetering on the edge of bankruptcy.

After he was gunned down in Dallas, his successor, Lyndon Johnson followed through with the slain leader’s wishes and passed the Urban Mass Transit Act, which created the UMTA (Urban Mass Transportation Agency) opening up the federal government’s coffers to local county and city governments around the country to start buying up the failing private systems and operate their own public transit authorities.

The Radical Base

Dade County would take advantage of the opportunity in the early 70’s, when it took the federal grant and formed the Metro Dade Transportation Agency. In 1976, it applied for and later got $1.25 Billion in federal money to build the Metrorail system. But, by then, a largely unknown but powerful group of private interests were mounting a nation-wide movement against all forms of federal spending, public institutions and democracy itself. One of the leading minds of this movement was then promoting his business-friendly theories of law at the University of Miami and conspiring with one of the richest men in the country about how best to destroy the threats to “free market” economics.

One of the devices used to this end was the Cato Institute, a radical conservative think tank designed to promote policies that play into the larger goals of its de facto founder and largest benefactor, Charles Koch, along with his billionaire-class friends. Just one among dozens of similar foundations and front groups created by the American fossil fuel oligarch, Cato Institute’s anti-communist framing of practically every discussion of public assets was catnip to Miami’s Cuban exile community and helped shape much of their political views. Whatever the Koch-network wanted, Miami Cubans were easily brought on board simply because it meant rebuking the bearded protagonist of all their nightmares.

In 1991, the Koch-funded Cato Institute published its Cato Policy Analysis No. 162, entitled “False Dreams and Broken Promises: The Wasteful Federal Investment in Urban Mass Transit” which claimed to reveal the “cold hard lesson” of subsidized public transit systems around the United States over the previous two and a half decades since the creation of the Urban Mass Transportation Administration. The libertarian think tank puts forward 9 “myths” that support federal subsidies of public transit and proceeds to ‘debunk’ them.

Many of the same tropes our City and County officials use to cut transit funding are present in Cato’s analysis. The old con that people only use public transit “when they have no other reasonable choice” and constant cries of declining ridership are weaved together with barbs against unionized transit workers and feeble attempts to undermine the environmental benefits of mass transit; the latter two being mainstays of Koch-network propaganda, which continues to be deployed against public transit.

The attacks against Miami’s public transit began almost from its inception, but it wasn’t until the leaders of the radical Cuban base were fully ensconced in power that concerted efforts to undermine, sabotage and ultimately re-privatize it began in earnest. Their rise to the top of Miami politics was not the result of an organic process, but rather the product of an allegiance with powerful elements in the intelligence community and an identification with the existing, and racially oppressive power structure that ruled the city.

White Baton

Racial inequality in Miami has been historically high and it was openly so even in the post-civil rights 60’s and 70’s, before the Cuban emigres started to figure prominently in the political and social ranks.

The defunct Miami PD was notoriously racist and routinely engaged in brutal beatings of Blacks, who were considered less than human by the mostly White police department, recruited mainly from Southern Georgia’s “cracker” population. Things in Miami came to a head in 1968 during the Republican national convention, which was being hosted at the Fontainebleau Hotel in Miami Beach. The nation-wide race riots that gripped the country did not spare Miami and the added component of Spanish-speaking Latinos forming an increasingly larger proportion of the population made the Miami PD the “last bastion of white, Southern bigots”.

Mayor Maurice A. Ferré of Miami in November 1983, after winning
a sixth two-year term in a runoff election. Miami’s first
Hispanic mayor, he served from 1973 to 1985.
– Miami Herald | Photo Credit: Al Diaz

This was an image problem, which contemporary city leaders had to deal with and led then Miami City Manager, Mel Reese, to look for a police chief who could transform the ingrained racist culture of a police department required to deal with an increasingly diverse community. The city commissioned the International Association of Chiefs of Police to initiate a national search for suitable candidates. When none of the proposed names came through, Reese traveled in secret to Tucson, Arizona to try to recruit the “dean of American Police”, Bernard Garmire.

Garmire had earned national acclaim due to his progressive approach to police management. He was the first chief of police to require his officers to attend college courses and had successfully overseen the growth of the Tucson police department from 157 to 450 officers in just the span of four years. By the time Reese paid him a visit, Garmire was a widely recognized member of the law enforcement community and a deputy director of US Customs in Arizona.

Colleagues at the International Association of Chiefs of Police warned him not to take Reese’s job offer, informing him of the Miami PD’s terrible reputation and how the infamous Miami chapter of the Fraternal Order of Police had launched a $10,000 investigation into his background. Garmire ended up taking Reese’s very generous package, which included an executive retirement plan and a 50% salary increase. He became Miami’s Chief of Police on June 15, 1969.

Chief Garmire did his level best to root out racist attitudes and professionalize the Miami Police Department, but was met with fierce resistance at every turn. As his efforts to improve relations between his charges and the community at large failed, morale deteriorated. When Reese, who was his only support in Municipal government, was replaced after the 1974 elections, Garmire’s days were numbered.

38-year old Maurice Ferré was inaugurated as the city’s first Cuban Mayor and rapidly took the side of Miami PD’s old guard versus his Chief of Police. Ferré would run Garmire out of town after a grand jury was convened, that put him on the spot to answer questions about the city’s crime rate. The Mayor then organized public hearings at Miami City Hall to address Garmire’s supposed “malfeasance” based on the grand jury’s report, itself reliant on testimony of dissidents within his own police department. The renowned police man resigned before the third hearing and blamed his enemies at city hall and his department for causing his wife’s stroke.

The old “cracker” guard would take the young Cuban recruits under their wing, showing them how things were done in the Magic City. Just six years later, the brutal murder of Arthur McDuffie at the hands of Miami police officers would set off the most violent riots in the city’s short history. The fatal blows, it was determined, were delivered by the only Cuban among the 7 officers indicted and subsequently acquitted of the heinous act of police brutality.

Pinko Commie Transit

Racism in Miami is a more nuanced affair than most other parts of the country, but it is prevalent nonetheless and is a pivotal issue in its public transit system; intertwined with the problems that plague it and with the County’s continual efforts to privatize it.

Many African Americans came to Miami in the 50’s and 60’s escaping pernicious Jim Crow laws in their home states and took the only jobs that were available to them: bus drivers and teachers. All the “good” private sector jobs were still reserved for the White majority, but the public sector, which was facing pressures from new Civil Rights legislation, offered these rural folk the employment opportunities they otherwise lacked.

Just when LBJ’s Kennedy-inspired UMTA started buying up bankrupt private transit agencies around the country, Miami’s bus drivers and public school teachers began to unionize and demand a better standard of living. In the late 60’s, thousands of new transit jobs came online and transformed the economics of South Florida’s Black workers, which resulted in the creation of a small professional class of African Americans, not only in Miami but in many other Southern cities with public transit systems.

The promise represented by the creation of MDTA and all it entailed for the city’s economic development was soon beset by internal sabotage by the agency’s director in league with County officials who engaged in a campaign to privatize the system and bust the TWU Local 291 union, whose workforce operated the buses and the recently completed Metrorail.

Downtown business leaders met with the then Chair of the Transportation Committee, Clara Oesterle to discuss ways to “fix” public transit and concluded that reducing worker wages and phasing out the County’s obligation to maintain a transit system were the answers. Oesterle and a fellow Commissioner then met with the largest private transit management company in the world, ATE, to go over potential privatization scenarios. One month later, the Commission launched a Blue Ribbon Task Force on Transportation with Oesterle and MDTA Executive Director, Joe Fletcher, and Chamber of Commerce officers on the Committee.

Miami-Dade Police confront a rock hurling crowd as President Jimmy Carter meets with community leaders in Lliberty City soon after the 1980 McDuffie riots in Liberty City, Miami. – Miami Herald | Photo Credit: Al Diaz

The Blue Ribbon Task Force’s recommendations, issued in May of the following year, included a 20% reduction in wages, forcing the union to strike and replace vacancies with new employees, a drastic reduction in bus service and a 33% spike in bus fares. The union issued its own report, in which it revealed manipulation and distortion of statistics by the Blue Ribbon Task Force and called it a “crude attempt by Dade’s business leaders to embroil the County Commission in a union-busting venture, remove control of MDTA from the accountability of voters and elected officials, and hand over a valuable public asset to special business interests.”

The Set Back

The only thing that saved Miami’s public transit from being completely privatized at that time was the bomb that was about to drop when nearly a third of the city’s infamous police force were discovered to be stealing cocaine shipments, confiscated cash and murdering the people they were supposed to be bringing to justice in the city’s “cocaine wars”. The sensational case of the Miami Seven, so called, exploded onto the national and international stage.

The half-dozen Little Havana midnight shift officers caught trafficking in stolen narcotics proved to be a microcosm of the rampant corruption in the city. The whole affair threw a tourist-dependent South Florida into damage control mode and it would be a few years until the stench of the real-life Miami Vice saga would fade. In 1989, not long after the Miami Seven trial, Alex Marrero, the officer who had been acquitted of murder in the Arthur McDuffie case ten years before was caught in the Everglades burning incriminating documents.

But, something even more devastating to Miami’s freshman political classed happened that year: The Berlin Wall came down and the imminent break-up of the Soviet Union undermined the entire basis for the ongoing Cuban embargo, which besides starving Cubans on the island, maintained a robust anti-Castro media industry in Miami, not to mention the very premise of their presence in American politics. Barely three years later, a catastrophic hurricane would further change the dynamics of the city, even convincing a few of the hard core Cuban political club of the benefits of a working public transit system.

Aftermath

The devastation left behind by hurricane Andrew was as clear as it was heartbreaking under the jet blue, cloudless sky that taunted Miami the day after it tore through the area. Never before had a storm of this magnitude hit Florida or any other place, for that matter. The hurricane’s track had been misjudged and had made landfall further south and west than initially predicted. Official death tolls are missing thousands of migrant farmers who perished in Homestead, but whose dubious legal status left them unaccounted for.

In the sprawling suburbs of unincorporated Miami-Dade County, the shoddy building practices of unscrupulous real estate developers were exposed by the ferocious storm, as the roofs of entire mid-luxury home developments were blown away. FP&L discovered just how fragile their infrastructure really was and power remained down for months in large swaths of the County. With gas shortages to boot, the absence of a genuine transit system was made apparent to everyone.

Four years later, a new proposal for transit expansion was brought to the ballot box and this time, the people voted for it in overwhelming numbers. The result, however, was worse than the first go around, producing only a short extension of the Metrorail to the airport and a completely unnecessary, and hugely expensive terminal to go with it; a terribly designed boondoggle of epic proportions, that took over ten years to complete.

Once the memory of Andrew faded, the County Commission started humming an old tune and pointing to declining ridership of a system they refused to improve in any significant way, as an excuse to implement service cuts throughout Miami-Dade. But, the public’s desire for an expanded transit system was slowly becoming unassailable and no politician running for a seat in County or City government could ignore it.

The pressure has been increasing over the years and has, by now, become the single most important political issue in Miami. It will define the upcoming election for County Mayor, an office occupied for the past ten years by a man with no scruples who has shown no compunction about lying directly to the people of the County.

Total Control

Koch Industries’ interlocking web of companies, foundations and front groups touch everything from the plastic cups you put out at parties, the gasoline you pump into your car, the votes you cast at the ballot box and even the wages your employer is willing to pay you. In short, this privately held enterprise, owned by two brothers, exerts arguably more influence over your life than the government they and their network of like-minded billionaires have been trying to undermine for over forty years.

Through theft, deception and secrecy the Koch’s have built a capitalist juggernaut and infiltrated the institutions of democracy in order to propagate its plutocratic designs upon the country; availing itself of a fringe political ideology rooted in the antebellum South, they have wrought environmental devastation, eviscerated the middle class and have managed to shift the political discourse in America to favor their self-serving, radical free-market policies.

Despite appeals to notions of liberty and so-called “sound economics”, at the core of the Koch business philosophy is little more than a justification for rapacious greed and a pathological inability to share. Those of us downstream from their unimaginable wealth are left to deal with the consequences of their massive, unchecked and wounded egos. But, it is only by dispensing with the pseudo-academic, quasi-legal arguments crafted by the purveyors of Koch’s proto-fascist gestalt, that we can begin to see the contours of their totalitarian dream.

Spiking the Water

In April 2014, the city of Flint, Michigan switched its water supply from Lake Huron to the contaminated Flint River. By June people were dying from a Legionnaires-associated disease caused by bacteria found in the water supply. The crisis became a national scandal as more people got sick even as municipal leaders claimed the water was safe to drink.

Five years later, Flint is still reeling. A fact recognized by the city’s new Mayor, Karen Weaver, who swept into office on a wave of anger and resentment. “It’s a community that’s still dealing with the trauma and the aftermath”, she told the New York Times “of having been poisoned at the hands of the government.”

But, the government was actually the first victim of this tragedy. Hidden in the depths of the rancid waters that killed twelve people and sickened nearly a hundred more, none other than the Kochtopus and its vast political influence machine thrashed about.

In the state of Michigan, it exerted considerable influence in the governor’s office through the Koch-funded and Koch-staffed think tank, Mackinac Center, which had been pushing for legislation that would place any community facing a “financial emergency” under direct state control and, in turn, hand over extraordinary powers to emergency managers. Among the powers accorded to these unelected bureaucrats was selling off local resources to private companies, outsourcing services and changing municipal suppliers at will.

True to the words of one state governor, who stated unequivocally, “When the Mackinac Center speaks, we listen”, their legislative recommendation made it into law and many cities were placed under this regime. More than half of the state’s black voters would come to be governed by such managers. The one assigned to oversee Flint made the fateful decision to switch the city’s water supply to “save money”.

Mind of the Kochtopus

The vital role Koch played in the Flint water crisis received little, if any, media attention because, as in this case, most of their machinations are carefully concealed behind front-groups, innocuous-sounding foundations and ostensibly noble causes.

Koch
AP Photo/David Zalubowski – Charles Koch and son Chase – June 29, 2019

Charles Koch began building this network, dubbed “Kochtopus” for its monstrous reach and multiple tentacles, almost as soon as he took the reins of Koch Industries in the 1970’s. His first mentor was a man by the name of F. A. “Baldy” Harper, author of a “free market primer” called “Why Wages Rise” in which he derides unions, public schooling and any kind of labor protection laws. A founding member of the Mont Pelerin Society along with Koch’s other idols F.A. Hayek and Edwin Von Mises, Baldy Harper would go on to found the Institute for Humane Studies with Koch’s generous and permanent funding.

The Mont Pelerin Society, in fact, would be the fountainhead for many beneficiaries of Koch money. Formed in 1947, the Society was the result of an historic gathering in Switzerland of free-market intellectuals led by their “guru”, F. A. Hayek, prophet of the rich propertied classes in a time when the rising power of unions and growing regulatory framework threatened to undercut their position. The infamous Chicago School of economics and its most polarizing figure, Milton Friedman, was a direct outgrowth of this post-war egghead club.

Friedman, however, was not radical enough for Koch and considered his approach to economics too technical to fulfill the more fundamental, philosophical and transformative changes Charles Koch wanted to bring about in America, turning his attention to other branches of the Mont Pelerin tree.

He found what he was looking for in another University of Chicago grad, who studied under yet another Mont Pelerin founder.

The Dictator’s Messiah

James M. Buchanan was more concerned with the political and social aspects of economic theory than with pesky numbers or statistics.

In 1956, he submitted a private proposal to the president of the University of Virginia for the creation of a department for Libertarian and conservative studies, misleadingly called the Thomas Jefferson Center for Political Economy and Social Philosophy. Buchanan was motivated to create his department by the watershed Supreme Court decision of Brown v.The Board of Education two years earlier, which put an end to racial segregation in the public school system.

The entrenched Southern White elites that ruled Virginia, led by one of the most powerful Senators in U.S. history, Harry F. Byrd, took the court’s decision as an affront and resisted desegregation with all the means at their disposal. Buchanan’s Center at UVA aimed to subvert what he and the Virginian ruling class perceived as federal incursion into states’ rights – a more palatable framing for their real problem: democracy.

The pull of history and strong resistance from Virginia’s White middle class doomed Buchanan’s project. The inevitable demise of the Byrd organization and the turnover of the university’s leadership eventually forced Buchanan to find refuge in a regular faculty position at UCLA, then a hub of radical right wing thought.

Buchanan’s ideas were popular enough in the tight knit circles he moved in, but they had yet to reach the broader audience he needed in order to generate the momentum required for them to actually affect policy. He began to acquire more widespread recognition after the publication of “Academia in Anarchy”, which put forward ‘solutions’ to expressions of social consciousness among the country’s student body. Along with his co-author, Nicos Devletoglou, he would propose remaking colleges and universities as “industries in which individuals sought to maximize their personal advantages and minimize their costs”. The idea was to eliminate dissent by turning higher education into a business and eliminating the humanities from the curriculum.

James Buchanan at George Mason in 1986 | Photo Credit – Sue Klemens

The book propelled Buchanan into the international spotlight and he would soon be heading back to Virginia to form a new department. Located in the less prestigious Virginia Polytechnic Institute, better known today as Virginia Tech, his Center for Public Choice was where he would first meet Charles Koch and become a regular recipient of the billionaire’s generosity.

Soon enough, Buchanan would have a chance to prove just how useful his anti-democratic vision of government could be to a select group of private interests and the Chilean Minister of Finance, Sergio de Castro, who hosted the American academic for a week of exclusive seminars in Augusto Pinochet’s military dictatorship. The main purpose of the five formal lectures he delivered during his 1980 visit was to explore how his “public choice” theory of economics could inform their new constitution.

Buchanan was credited – though not publicly – with providing the legislative tools the dictator needed to cement the governance structure he was running on behalf of the propertied classes. De Castro’s “modernizations” included such Buchanan staples as school vouchers, evisceration of the public university system, health care privatization and the creation of super majorities in the legislative chambers to make any future changes virtually impossible.

Six years later, James Buchanan would be awarded a Nobel Prize in economics and as his star rose, Charles Koch would single him out to lead his most important – and illegal – political operation on the banks of the Potomac. His name would serve to legitimize Koch’s project at George Mason University; very much the crown jewel of Koch’s by then well-established, multi-pronged political operation.

All About the Business

The engineering degree Charles Koch earned at MIT in 1957 served to sharpen a mind already predisposed to distillation. After his initial resistance, Fred Koch’s second-born settled in his role of heir-apparent and began to break down the parts of the corporation he would eventually rename after his father, selecting the best pieces and putting them back together for a more efficient performance.

He would tinker with it over and over again, reacting to changing markets, governmentally-imposed limitations and the ever-alluring siren call of more profits. Along the way, he would pick up the intellectual tidbits and political and economic theories that best suited his approach, cobbling together a personal business philosophy enshrined in what many a Koch employee would come to learn as Market-Based Management or MBM, for short.

An education in MBM, which some former employees described as a “cult”, was compulsory at the company and embracing its principles was a non-negotiable condition of employment. Ostensibly designed to attract and train free-market thinkers who thrived on the entrepreneurial spirit, Market-Based Management was a collection of tenets devised to produce clones of Charles Koch himself.

As Koch Industries expanded and devoured other gigantic corporations like Farmland and Georgia Pacific, it became harder to sell this glorified employee manual to the swelling number of people on its payroll. But, Koch’s ego and ambition grew along with the company assets. He began pouring more and more money into Libertarian causes and think tanks, as the need to keep the government at bay increased. He would invest in politicians and academics, like Buchanan, who could help him shape the public narrative and deflect negative attention from decidedly unfree market practices, such as the theft of resources from Native lands.

Measure Once, Take Twice

The rocky terrain in northeastern Oklahoma was thought to be of no particular value when the U.S. government relocated the Native American Osage tribe there from their original abode in what had become the state of Kansas. Only a decade earlier, George Bissell and Edwin L. Drake had successfully drilled for oil in Pennsylvania, kick-starting the age of fossil fuel extraction in the United States. The initially worthless land now part of the Osage Reservation soon revealed its rich deposits of crude. Oil leases were issued to the tribe, which oilmen all over the country would henceforth have to rent to gain access to the black gold.

The Osage would reap huge profits from the oil on their land, making them the wealthiest Native tribe in the country – indeed, the richest people per capita in the world. Decades later, Osage tribe members were driving around in expensive cars, wearing furs and exhibiting other signs of conspicuous consumption made possible by the ever-increasing dividends resulting from the oil gushing from the ground.

FILE PHOTO – Osage Nation delegation meets with U.S. President Calvin Coolidge

The story of the Osage takes a tragic but not so unexpected turn, as they began to be targeted in a criminal conspiracy to assassinate them and take over the fortune beneath their feet. The tribe would survive the ordeal with the help of nascent FBI and its fledgling director, J. Edgar Hoover who eventually cracked the multiple-murder case.

During the 1980’s, the Osage and the FBI would have to deal with a far more cunning and dangerous enemy in Koch Industries.

Koch President, Bill Hanna, sent out a company-wide memo instructing employees to “shred”, “burn” or otherwise destroy by “some equally effective method” any records that could benefit competitors. He did so in the midst of a U.S. Senate investigation into allegations of deliberate oil mismeasurement. The final report found Koch culpable of systematic oil theft.

For years, Koch had defrauded crude suppliers through manipulation of industry-standard oil gauging methods. They developed their own step-by-step procedure and drilled it into their oil gaugers with MBM-infused intensity with the understanding that their job depended almost exclusively on proper adherence to it. Gaugers were encouraged to always fudge the numbers they kept when siphoning crude from their suppliers’ tanks and loading it onto Koch’s barges. The practice was known as “cutting the top” and “bumping the bottom”, which simply meant that they took more than what they paid for.

This technique put millions of barrels of free oil into Koch’s refineries over the years. Among their victims were the Osage in Oklahoma, who they identified as the ideal target for a public relations campaign Koch mounted to undermine the Senate’s findings and stave off a criminal inquiry.

Understanding that the Osage had limited accounting expertise, Koch sent a former company trader, Ron Howell, to perform an ‘audit’ of the oil lease receipts against their own to prove that claims of oil theft were baseless. Howell came back with the incredible assertion that not only had Koch not stolen any oil, but in fact, had overpaid. In March, 1990, the Osage Nation News ran a story in which Osage chiefs cleared Koch of wrongdoing, based on the fraudulent audit results. Their statements were carried by the Daily Oklahoman soon after and Senator Bob Dole, beneficiary of almost a quarter of a million dollars from Koch throughout his career, submitted the article into the Senate record.

The criminal case never materialized. The FBI’s investigation was abruptly dropped by incoming U.S. Attorney, Timothy Leonard, a man with no relevant experience who was appointed by Oklahoma Senator and close Koch ally, Don Nickles.

Elbow Room

By 2016, Koch Industries would have grown into a fossil fuel behemoth with an annual revenue “larger than Facebook, Goldman Sachs and U.S. Steel combined”. Its insidious and calculated moves in local and state-level politics, academia and the law changed the political landscape of America. Their network would be instrumental in financing and amplifying the Tea Party zealotry. It would bring anti-union, anti-worker’s rights politicians like Scott Walker into the national spotlight. The radical right-wing rantings of Glenn Beck were written by the Koch-funded FreedomWorks, a tax-exempt group founded by former Republican House majority leader, Dick Armey. Beck would collect as much as $1 million dollars annually from the organization to spew his brand of free-market lunacy.

The Heritage Foundation, Cato Institute, The Reason Foundation, The Tax Foundation, The Club for Growth and Americans for Prosperity are just a partial list of the vast, multi-tiered operation initiated and maintained by the Kochs and their billionaire friends to shift the focus of political and economic discourse away from the majority and centering it around the interests of the 0.01 percent. The wealthy oligarch class coalesced around Charles Koch’s leadership to stage a coup on the rest of the country, couching their inhuman greed in populist rhetoric meant to seduce the masses of people they are intent on exploiting.

Along the way, Koch Industries’ shameful record of ecological destruction, subversion of democracy and death would soon be revealed as their true legacy.

The Bidders

The oil leases on the Osage territory began to be issued in 1912, drawing oil magnates from around the world to bid fortunes under the so-called “Million-dollar Elm”, where an auctioneer sold off the rights to extract from the wells. The tribe’s sudden stroke of luck didn’t come with the usual benefits associated with the accumulation of massive wealth familiar to most Americans. Much of it was kept behind a wall of racist paternalism expressed through government-appointed guardianships, that assigned White men to oversee the expenses of the tribal members and the power to cut them off at their discretion.

It was the sort of draconian government overreach that Koch and the various organizations he funded to promote the idea of limited government might uphold as examples of the dangers he was fighting to avert. But, that would have been empty rhetoric like most of the arguments put forth by many of his political front groups like Americans for Prosperity or Citizens for a Sound Economy. The endgame for Koch and his clique of preposterously wealthy (mostly) men was a government stripped of all responsibility beyond the responsibility to protect their property.

Among the bidders gathered under the tree in Pawhuska, Oklahoma in the 1920’s was a representative of the Gulf Oil company, owned by the Mellon clan, one of the original robber baron families and pioneers of the use of philanthropy as both a means of tax-avoidance and anti-government messaging. One of the heirs to the Gulf Oil, Mellon banking fortune would become one of the country’s biggest backers of radical right wing ideology and a strategically important partner to Charles Koch’s own efforts.

The Silverspoon Radical

Richard Mellon Scaife never gave any interviews or public speeches, but he exerted incalculable influence over America’s public affairs through the multiple foundations he and his family set up.

Inheriting an obscene amount of money at the age of 26 is probably not the easiest thing to deal with for even the most level-headed youngster. But, by all accounts, Richard Scaife was leading the kind of dissolute life most of us expect the scion of inter-generational wealth would. Kicked out of the Deerfield Academy prep school at 14 for drinking, his reputation for alcohol-induced benders would follow him to Yale University, which would also expel him for it.

Richard Mellon Scaife

After his father died in 1958, Scaife assumed the role of financial manager for the fortune passed on to his mother, Sarah. She would create several trusts, continuing the family tradition of using non-profits as tax shelters. Eventually, Richard would consolidate all of the foundations under the umbrella of the Scaife Family Charitable Trusts, which would be used to disburse hundreds of millions of dollars to radical right organizations, politicians and causes.

The most important of these may well have been the Institute for Contemporary Studies (ICS), based out of California. This Scaife-funded think tank initiated a slew of projects meant to influence policy. One of these sought to learn what was being taught in pre-collegiate economics classes and propose more free market-friendly curricula. Another put future president Ronald Reagan in front of every high school student in the state’s eleven hundred school districts via PBS.

Reagan’s deep ties to the ICS can be traced to the presence of Edwin Meese III on the foundation’s board. Meese, who would later serve as Reagan’s Attorney General and, arguably, his most trusted advisor, was among the invitees to Jim Buchanan’s 1973 unveiling of the Virginia academic’s “Third Century Project” outlining the way in which corporate America would transform the nation’s courts. Just a week earlier, Buchanan had presented his plan to another room-full of sympathetic business men. “Conspiratorial secrecy”, he warned them, “is at all times essential”.

The institute would soon count multinational corporations such as Exxon, IBM, Chase Manhattan Bank, Shell and Texaco among its ranks, making it one of the most influential think tanks in the nation.

Rise of the Oligarchs

In 1973, the brand new Environmental Protection Agency took aim at the Olin Corporation, which had started nearly a century earlier as a mine explosives and small arms company. Government contracts during World War I and II would greatly buttress its bottom line and the family-owned concern would go on to form a huge conglomerate producing everything from Winchester rifles to rocket fuel.

Its chemical division had a large rap sheet of environmental pollution and found itself being sued by the Environmental Defense Fund, the National Wildlife Federation and the Audubon Society for releasing DDT-laced effluents into a wildlife preserve. Three years before the EPA came down on the company, they were charged with dumping mercury into the Niagara River and were later found to have falsified records showing it had dumped 66,000 tons of toxic waste into a Niagara Falls landfill.

The Olin Corporation’s criminal negligence and outright disregard for human or environmental health spanned decades. But, as public outcry around these issues began to grow and regulations were put in place John M. Olin – who was not even running the company by then – created the Olin Foundation to, in his words, “see free enterprise re-established in this country. Business and the public must be awakened to the creeping stranglehold that socialism has gained here since World War II.”

Founder of the Olin Foundation, John M. Olin

Olin, along with many other members oligarch class, were galvanized by the infamous Powell memo calling for American business owners to mount a “counterrevolution” against what they saw as an existential threat. Powell, a former director of the Phillip Morris tobacco company, laid out the game plan in his 5,000-word manifesto, which identified the judiciary system as a central focus of their attack strategy. Nixon would appoint Powell to the Supreme Court just two years later.

The Olin Foundation immediately began funding projects focusing on the radical transformation of the American justice system. Among the first the Olin Foundation funded was a program run by an obscure law professor at the University of Miami, Henry G. Manne. Manne was his bringing corporate-oriented and cost-benefit analysis approach to regulation in his Law and Economics Center in the then marginally known campus in Coral Gables, Florida.

Charles Koch, in particular, would find Manne’s ideas very appealing as they dovetailed so perfectly with his own master plan.

Koch’s Law Manne

Charles Koch was following in the tradition of his covenant ideology forbearers. He saw his project to transform American politics akin to the Protestant Reformation, casting himself in the role of Martin Luther declaring that like the rebellious cleric, he stood firm against the established order. “I can do no other”, Koch boasted in a 1999 speech.

By that time, the project had made great, if largely unnoticed, strides. Henry G. Mane was Dean of Koch’s pseudo-academic operation at George Mason University. Over the previous two decades, Manne had been so successful with his Law and Economics program funded to the tune of millions of dollars by the likes of the Olin Foundation, Charles Koch and U.S. Steel, that by the middle of George H. W. Bush’s only term in office, 2 out of every 5 sitting federal judges had participated in Manne’s training sessions, applying free market economics to legal decision-making.

The “Henry Manne Camp”, which counts current Democratic presidential candidate and reportedly reformed liberal Elizabeth Warren among its alumni, doled out rich honorariums to legal scholars to write papers with his particular twist on legal questions that would be published in legal journals, spreading the meme throughout the profession. More than 600 institutions would end up sending their best legal minds to attend Manne’s intensive two-week courses; typically held in posh tropical locales such as Key West. Some institutions, like the University of Virginia’s law school, adopted Manne’s approach in its entirety.

Henry G. Manne, the libertarian legal scholar | Photo Credit: Benjamin Myers/Reuters

Koch and Manne identified what they considered the biggest threat to “economic freedom”. Together they determined that the environmental movement constituted the most clear and present danger to their designs as it sought to “control” corporate interests through “governmental regulation of business”. Government-backed health care also represented a danger since it “impaired the normal workings of labor markets”.

Tax policy, public education and feminism also sent shivers down their spines. The first because of the “inevitable egalitarian instincts” exhibited by “modern” democracies; education had to be curtailed because of the “community values” they considered to be “inimical to a free society”; and finally, feminism was too socialistic for their taste.

Bill Clinton’s re-election motivated Koch to take things up a notch and neutralize these threats, bringing the Nobel prize-winning James Buchanan directly into his operation. After years of funding Buchanan’s work through his various foundations, Charles Koch put up $10 million dollars to set up the James Buchanan Center at George Mason University. The new department would be an amalgam of Buchanan’s Center for Public Choice that the laureate had run at Virginia Tech and Koch’s long-time political hatchet man, Robert Fink’s Center for the Study of Market Processes.

The board of visitors would include William Kristol and Dick Armey, while Edwin Meese III sat as the board’s rector. Buchanan would ultimately be pushed out after getting wind of the illegal nature of the Center’s work. Ostensibly a philanthropic endeavor, registered as a 501 3(c) non-profit legally barred from engaging in politics, the Buchanan Center at GMU was being used as a political lobbying operation led by Koch operatives.

Koch Industries was growing at a frenetic pace, swallowing competitors and violating so many laws in the process, that attacking the system prosecuting them under these laws and imposing multi-million dollar fines on them made perfect business sense.

The Altar of Doom

In due course, the political discourse around the country would begin to reflect the radical, ant-government viewpoints espoused by the foundations and initiatives sponsored by the Kochs and partners like the DeVos family of the Amway fortune, the Coors brewing empire and many others.

Charles Koch issued his battle cry in 1978. “Our movement” he intoned, “must destroy the prevalent statist paradigm”. In the space of two decades his revolution had managed to seep into the national consciousness and its insane tenets would begin to spew from the mouths of his minion politicians. Thom Tillis, a U.S. Senator from North Carolina who owed his post to the Koch machine, wanted to do away with laws compelling restaurants to make employees wash their hands since, he claimed, “the market” would “take care of that”. The press was not immune, either. An editorial board member of the Wall Street Journal took a Koch-infused line against the need for public health officials, expressing her opinion that testing for lead levels in the blood of children was nothing more than an excuse to justify their jobs.

If we were to really look for justifications, we could simply take a closer look at the egregious practices Koch Industries has been employing in their pursuit of profit and unfettered growth. The lawsuit brought against them in 1995 by the EPA for spilling over 12 million gallons of oil across six states as a result of faulty pipelines is only one of many incentives this enormous corporation has to subvert the law and, the tremendous wealth at their disposal has allowed Charles Koch to go beyond mere court battles to burning the U.S. code itself upon the altar of free markets.

Labor Tamers

From the time Charles Koch took control of the company his father built, he declared war on the working class. The most profitable asset in Koch Industries’ early years was the Pine Bend refinery, whose massive profitability was made possible by several extraneous factors including its geographical location, government policy on the importation of Canadian crude, loopholes in the Clean Air Act and government subsidies. It also had the benefit of being run by a highly-skilled, unionized workforce that was operating the plant before Koch acquired it in full.

The local chapter of the Oil, Chemical and Atomic Workers Union, OCAW 6-662, had negotiated the framework for the conditions of their employment at the Pine Bend refinery between the 50’s and 60’s. The OCAW was a powerful union in a heavily unionized state, buttressed by interlocking loyalty oaths with other big unions like the Teamsters. But, the livelihoods of working class families and backbone of the local economy were not part of Charles Koch’s plans to streamline his business and within months of acquisition, he hired Bernard Paulson to take the union down.

Paulson had been managing Costal Oil & Gas down in Corpus Christi, Texas when Koch brought him on board to Minnesota specifically for his expertise in dealing with organize labor. Paulson started at Pine Bend in 1971 and only months later, in the early Spring of ‘72, he laid out his first trap. He scheduled OCAW local president, Joseph Hammerschimdt, to work on Easter Sunday knowing full well the irascible leader of the proud chapter would refuse. Paulson fired Hammerschmidt on the spot declaring war on the union.

The OCAW local’s contract was set to expire in the Fall of 1972 and when negotiations started, it was Hammerschmdit himself, in his capacity of chapter president, who was sitting across Paulson when the latter presented him with the new work rules rewritten by Koch Industries. Take it or leave it, Paulson informed the outraged OCAW representatives. In January, 1973, the men walked off the job and went on strike.

Pine Bend refinery in Rosemount, MN

Paulson had already gone over the strategy with his boss and immediately put a non-union “skeleton crew” to work in the posts vacated by the OCAW workforce. He put a cot in his office, stockpiled food and ordered the cafeteria remain open 24 hours. Koch’s union-buster was hunkering down for the long haul, but the bad omens didn’t wait to make their appearance. On the very first night of the strike, a large furnace that superheated oil exploded after leaks failed to be detected over the previous several hours.

Two months later, a saboteur pushed the throttle on a train diesel engine parked near the refinery, which had tracks running through the middle of it. Tragedy was averted by the derailing mechanism and the engine flipped over before crashing into the very large and very flammable refinery stacks and gasoline tanks. Incredibly, no one was killed in either incident.

As the strike dragged on, Paulson was able to leverage Koch Industries’ extensive contract work needs to induce the Teamsters to break the picket line. Teamster drivers accepted to carry out Koch’s deliveries in the midst of the strike, severely weakening the OCAW’s position.

After nine months, the strike ended with the union accepting a far less favorable deal than the one they once had. Charles Koch emerged victorious and imposed new work rules like mandatory overtime and a laughable grievance process that settled any successful claims by allotting overtime so workers could “earn” back the money they were owed. In addition, skill-based assignments were eliminated altogether; foreshadowing a developing trend in American workplaces that demanded wage laborers carry out tasks they were not necessarily trained to do.

A Future for Nobody

Koch’s contempt for workers would become a feature of their management style and as Charles Koch made inroads into the legal system to further erode workers’ rights, the company’s ability to impose onerous working conditions on its many factory floors became that much easier.

The 2003 acquisition of Farmland’s fertilizer plants revealed as much and crystallized the reality that had by then fully manifested as a result of the American oligarchy’s efforts to return to the days of robber barons and corporate monopolies.

Farmland Industries was a hugely successful co-op owned by thousands of farm families, which had thrived for three quarters of a century. They all shared in the profits and voted on the decisions that affected the business. Koch president, Dean Watson, derided the cooperative as “socialism” during the acquisition process. The bastion of modern agriculture had suffered a reversal of fortune during the natural gas shortage in the 90’s, forcing them to auction off their immensely profitable fertilizer plants.

Koch was already a large producer of a key component in industrial fertilizer, nitrogen. The purchase of Farmland’s network of fertilizer plants, which ran all along the corn belt between Iowa and Nebraska, was completed for the relatively paltry sum of $290 million dollars and put Koch at the center of America’s agricultural universe. The co-op model was summarily dismissed as Koch executives took over Farmland headquarters and asserted control over yet another vital aspect of American life.

Not content with this, Koch also flexed their political muscle to deregulate the energy markets themselves, putting them in a position to profit from virtually every link in the chain of basic necessities and holding it hostage to market forces.

Opening the Gates of Hell

Joseph Coors, of the brewing family fortune, wrote a letter to his senator, Republican Gordon Allot, after reading the Powell memo with a seemingly unlimited offer to fund “conservative causes”. Allot’s press aide was a man by the name of Paul Weyrich who immediately took advantage of the wealthy man’s generosity and founded The Heritage Foundation with Edwin Feulner Jr., a graduate of Wharton.

Both men had been intent on creating a policy-crafting organization that wouldn’t shy away from pushing legislation directly, as most think tanks did. Originally named Analysis and Research Association, the political influence operation grew to become the only outside organization allowed to caucus with members of Congress. The same year that The Heritage Foundation opened its doors in 1973, Weyrich created the American Legislative Exchange Council or ALEC, with the purpose of mounting legislative battles at the state level around the country. Most of ALEC’s funding came from Richard Mellon Scaife’s foundation, but would eventually count on much Koch money, too.

Paul Weyrich a conservative think tank chairman testifies before the Senate Armed Serviced Committee on Capitol Hill during the confirmation hearing of Defense Secretary-designate John Tower in Washington. Weyrich, who coined the phrase “moral majority” and helped turn social conservatives into a powerful force in the Republican Party, died Thursday, Dec. 18, 2008. He was 66. (AP Photo, File)

Koch became a key supporter of ALEC’s national push to deregulate the energy markets, putting his men on the task forces put together by the organization. ALEC’s “model bills” were introduced to many states with barely any modifications and greatly helped Koch Industries partake of the massive fraud that the new energy markets afforded companies like theirs. Pushing the changes along with Koch on ALEC’s task forces were representatives of Enron, which ended up taking the brunt of the press coverage when the chickens came home to roost.

Koch had been trading in the commodities market for years prior. In 1983, when NYMEX introduced oil futures contracts, Koch was well-positioned to take advantage of the seismic change this represented for the way oil was traded on the open market. Ron Howell, the man who years later carried out the fake audit of the Osage leases on Koch’s behalf, was then the head of the company’s oil trading division.

He would retire just two years later in 1985, but not before observing how things were about change. “It was the first time that there was a […] visible market signal for the price of oil”, he told Kochland author, Christopher Leonard. Until then, the price of oil was set over the phone between traders themselves; privately and far away from anyone not intimately involved in the industry. These were also real trades, in that the seller had to deliver the oil to the buyer. Koch had the advantage over independent traders because they already owned the oil and could execute delivery themselves. Oil contract futures, on the other hand, opened the door to the entire financial sector.

The NYMEX price of oil wasn’t the real price of oil. It was a bet on what the price of oil would be at some point in the future and Koch had built an intelligence-gathering operation on its own private trading floor that rivaled anything found in Langley, Virginia. Koch used data gleaned from every other division in their company; they utilized any data they could pry from competitors; they scoured news stories for information and even had a stable of the best meteorologists in the business to get a jump on weather patterns to predict consumption trends.

Charles Koch would bring all of it under one roof as Koch Supply & Trading after George W. Bush broke up the natural gas companies in 2001, spurring the fossil fuel giant to assume the management of the nation’s natural gas infrastructure. The potential profits promised by the new structure separating gas sellers from distributors and consumers were made even more attractive by the invention of yet another financial instrument: derivatives.

Unlike oil futures, which – while deferred – still required delivery of the asset, derivatives were pure bets based on the underlying value of the asset but without actual delivery of the asset at any stage of the transaction. Clinton’s Commodity Futures Modernization Act of 2000 would keep derivatives away from any regulation, setting the stage for the collapse of the financial system just eight years later. In the meantime, the derivatives market exploded and Koch was in perfect position to take full advantage.

Hoarding the Light

The whole Y2K “panic” would become the subject of much ridicule after the absurd warnings of a computer glitch apocalypse failed to materialize. But, behind the scenes, the new millennium was teeming with multi-millionaires and billionaires across corporate America frothing at the mouth about what many of them knew was coming.

Coupled with the recently deregulated energy markets and new financial instruments around oil and gas, the Kochs and the Enrons of the world could see what regular people couldn’t possibly imagine. These “titans of industry” had the inside track on the country’s consumption patterns. They knew people were buying more computers, gadgets and devices as the roll out of the Internet reached critical mass and that, as a result energy consumption was about to skyrocket.

One trader at Koch Supply & Trading spotted the trend early on in 2000. Brendan O’Neil started buying natural gas options as soon as an unusual cold snap made gas prices spike in the Spring of that year. O’Neil, like his peers, knew that major gas shortages were on the horizon. By December, the price of natural gas stood at $10.48, up from $2.88 in March. He alone would make Koch $70 million on the gas trades. His team, only one of many at the Houston offices, delivered $400 million to Koch’s coffers. Koch Gateway, the pipeline division, which actually delivered the gas to the buyers made only $15.3 million that year.

Enron Corporation headquarters in Houston, Texas

The artificial run up in gas prices caused rolling blackouts, store and factory closures, even car accidents from failing traffic lights around the country. But, it was clear to Koch where the biggest source of profits lay. So it was only logical that they would pour more money and effort into creating other speculative markets for the assets they already owned.

The obvious target was electricity. Paul Weyrich’s ALEC would take on the work of selling legislators around the country on the idea of an electricity market throughout the 1990’s and it would eventually take hold in several states, but none more disastrously than in California where a liberal Democrat state senator passed the bill that created the California Power Exchange (CPE).

The “megawatt-hour” was born. Equivalent to one hour of electricity needed to power 330 homes, it was the basic unit to be bought and sold on the exchanges and the national market value was calculated to be about $215 billon dollars. The CPE was set up in a way to allow the price of electricity to float with market conditions, but capped the amount Utilities could charge the end-consumer. To protect consumers from being left without power in the event no electricity was being bought on the exchange, an emergency authority called the California Independent System Operator (ISO) was created, whose sole purpose was to buy any shortfall in electricity the market left.

It was this peculiar agency that would be the target of Koch, Enron and other energy companies to inflate their profits at the expense of the Utilities through a fraudulent scheme known as “parking”. The fraud consisted of keeping megawatt-hours off of the CPE by making fictional sales to an out-of-state Utility and then turning around and selling the same megawatt-hours to ISO at a much higher price. The more power prices rose, the greater the temptation to manipulate the market in this way.

California’s Utility companies were driven to the verge of bankruptcy with losses of $10 billion and when the scandal finally broke in early 2001, governor Gary Davis worked out a bailout plan to save them. It took many more months before the underlying market “dysfunction” was addressed. Koch and friends continued to gouge their clients until the Federal Energy Regulatory Commission (FERC) finally stepped in. Koch quietly settled the charges brought against them for a cool $4.1 million.

Leviathan

The 21st century would find Koch Industries ready to indulge its voracious appetite. Just as it helped to create the economic conditions that would ultimately destroy the Farmland co-op and facilitate the purchase of its fertilizer plants, the success of its stealth political operation in tandem with other American oligarchs would free them up to act in their own interests while convincing others it was in theirs, as well.

FDR’s New Deal was truly a vestige. Workers’ rights were widely perceived as an evil of defunct communist systems of government and, thanks to the Supreme Court’s Citizens United ruling, the 0.01% could finally use their wealth openly to finance their preferred presidential candidates without the embarrassing need to actually run themselves, as Charles’ little brother David had done in 1980.

The internet and the rise of computerized, data-driven management systems would also give Koch the tools needed to finally dispense with the pretense of MBM or other such frills when it came to keeping employees in line. The engineer in charge of the most powerful private company in America could finally trade in all those messy, self-moving parts for real-time numbers.

Latter-day Nazis

If you were to call Charles de Ganahl Koch a Nazi to his face, you’d probably get escorted out of wherever you are by a member of his large security detail. But, you wouldn’t be very far from the truth. While his views on socialism or anything approaching the communist ideology are more than clear, the tacit approval of fascist ideology that runs in the family is less well-known.

In 1932, as told in a Koch-commissioned family history, Fred Koch collected $500,000 for building 15 oil refineries for Joseph Stalin, forming the backbone of the Soviet Union’s petroleum industry. The contract had been won through a referral, of sorts, after the senior Koch had helped build one in Great Britain with his future son’s namesake and mentor, Charles de Ganahl. Fred continued to provide technical assistance as the Soviets went on to build 100 more. The family-approved lore leaves this last detail out, contending Fred Koch’s distaste for the communist regime led him to renounce all future involvement.

An eight-year gap is left in the official Koch story, but various independent accounts have him traveling to Hitler’s Germany from 1933 onwards. According to archival records unearthed by Jane Mayer in her seminal book, Dark Money, Winkler-Koch Engineering of Wichita – Fred’s company – “provided the engineering plans and began overseeing the construction of a massive oil refinery” in Hamburg. The company that hired Koch’s firm was led by American Nazi sympathizer, William Rhodes Davis, who met with Hitler himself to secure the deal. Completed in 1935, the refinery had the capability to produce the high-octane fuel German Nazi war planes required.

Fred had a real soft spot for the Third Reich and the other fascist regimes. Just before hostilities broke out in ‘39, Fred Koch decried America’s “dependence on government” and expressed his wish that the “course of idleness, feeding at the public trough” he saw as an affliction the United States could “overcome”. Perhaps it was this desire to correct the nation’s “course” that inspired him to bring a fervently pro-Hitler, German governess to rear his two first-born sons, Freddie and Charles. The boys were subjected to the nurse’s rather harsh methods, which included force-feeding and enemas for much of their early years until she returned to Germany of her own accord in 1940.

Winkler-Koch unit at the Eurobank oil refinery
in Hamburg, Germany | Photo: United States Strategic Bombing Survey

Physical, emotional and psychological abuse in the Koch household was the price Fred Koch exacted from his offspring for being born. The patriarch was known to let his rage loose on them with tree branches and belts. A family member witnessed the “twins” get “whipped like dogs” after disturbing some rocks in a stone patio. For Freddie Koch, the eldest son, life offered more than this and he would never participate in the family business, choosing instead a career in the arts and a close relationship with his mother. Charles, on the other hand, would rationalize it as the actions of a man trying to instill a “work ethic” in him.

Younger brothers, Bill and David, would round out the Koch heir pool. But, Charles would prevail in the end wresting control from Bill who would challenge him in court before accepting a multi-billion-dollar buyout. David would assume a subordinate role, preferring to indulge in his Manhattan lifestyle, but still own half of Koch Industries. Eventually, he would join his older brother in pursuance of their shared goal to bring government to heel wherever their interests were threatened.

Scorched Earth Freedom

At the center of the fossil fuel barons’ nightmares was what Lew Ward, chairman of the Independent Petroleum Association of America, called “The radical environmentalist ‘off-oil’ agenda”. In 1997, when the Koch-connected and former Oklahoma oil man said this to a room-full of colleagues, the scientific consensus had already arrived at the conclusion, that 80% of the word’s fossil fuel reserves had to remain in the ground if we were to make it to 2050 with tolerable temperatures. Such warnings represented a death knell to an industry dominated by mostly private, but fabulously wealthy hands with a long tradition of bucking government regulation.

Historically and for obvious reasons, this powerful faction had maintained their position in the pecking order despite blatant anti-government stances and even public expressions of the racism, like that of Texas oil magnate Hugh Roy Cullen who, in defiance of FDR’s policies decided create a new political party promulgating “the restoration of the supremacy of the White race”. His grandson, Corbin Robertson Jr., a prominent member of the Koch network, owns one of the largest coal caches in the country, second only to that held by the government of the United States.

A full list of Koch’s donor network is yet to be compiled, but Jane Mayer’s tour de force accounting of this massive subversive political operation, provides a comprehensive sample that gives us a clear image of the scope and reach it has. The players are not limited to the fossil fuel industry either. Sheldon Adelson of the Las Vegas Sands casino empire and Stephen Schwarzman of the embattled Wall Street hedge fund, Blackstone Group are only two of the enormously influential characters with whom Charles Koch has partnered with to face off increasing pressure from a planet, which can no longer support the activities they profit from.

Koch was already years ahead of Lew Ward’s admonitions in the late 90’s, having poured millions of dollars to political front groups, foundations and think tanks dedicated to the Oligarch’s cause. But, the new century would, indeed mark a stronger push by the richest men in the country to put a stop to the “siege” their extractive industries were under.

We’re Not in Kansas Anymore

Koch’s political machinery was hard at work mounting attacks on what he and Henry Manne had identified as their number one enemy all those years ago and which Ward had warned against in his retirement speech at the IPAA. The environmental movement, in the mind of the fossil fuel oligarchy, was nothing more than an attempt by an entrenched government bureaucracy to restrict their property rights and rescind the divine edict passed down by the gods of “free markets” to devastate any ecosystem in the name of profit.

Foremost in their sights was the EPA; the single government agency they despised above all others. Taking it down required a long term strategy, which Charles Koch embraced. In concert with the vast array of think tanks and political lobbying organizations masquerading as foundations, as well as straight forward lobbying efforts, the Koch network went about the work to overturn, subvert or neutralize any environmentally-friendly legislation.

In Washington D.C., Koch Industry lobbyists were not only among the most active, but also among the most numerous. In a time when 90% of U.S. corporations did not employ one full time lobbyist, Koch Industries had five full time lobbyists who were industry leaders in their own right, fighting the company’s top issues: chemical safety, rate billing and tax rates. The bigger operation, however, was happening at the state level where Koch through ALEC and other groups like Americans for Prosperity (AFP) were pushing through legislation and even candidates favorable to their anti-environmental aims.

One of the most salient examples was the fight to reverse Kansas’ renewable energy mandates passed by the state legislature in 2009. Koch and friends zeroed in on state lawmakers two years later, sending Cato Institute scholars and other “heavy hitters” to testify about the “damaging” effects of wind power on the economy and other critiques of the mandate, which had been adopted as a compromise to the construction of a coal fired plant.

Republican Kansas state senator, Dennis Hedke, a geophysicist who had done consulting work for the oil and natural gas industry was the chairman of the House Energy and Environment Committee pushed a bill in 2013 to repeal the renewable energy mandate. The bill had been crafted by ALEC, which Hedke put forward with a few modifications. Parallel to this, Koch dumped $50,000 in the local primary races – a huge amount for the mostly rural state. The money was used to run negative ad campaigns against opponents, while the Koch-picked candidates were advised to simply stay home.

Hedke’s repeal passed in 2015 and, by then, Koch had managed to fill the Kansas state house with Koch Industry drones. Republican Senator Tom Moxley had joined the legislature in 2007 and sat in the same Energy and Environment Committee Hedke chaired. Himself a climate change skeptic, Moxley had changed his views after reading the science and, after witnessing the underhanded tactics used by the Koch network to defeat the bill and flip the house, he retired in disgust.

These same moves were executed in over a dozen states by the same Koch funded institutions and political operatives. Ohio and West Virginia passed similar bills against renewable energy. In these particular cases, the bills were not even modified from the drafts written by Koch-funded Heartland Institute and presented by ALEC. Through these machinations, Koch managed to redraw the country’s political map, setting the stage for the coup de grace in 2016.

Koch’s President

There’s no such thing as an outsider in American politics. No matter how seemingly removed from the established order an individual in either of the two sanctioned parties might be, a network of sponsors must exist behind the scenes to put wind in the sails of any prospective candidate for public office. Donald Trump, despite claims of being beyond the reach of special interests because of his wealth, is no exception. Certainly, no one can reach the highest office in the land, beset as it is by a multiplicity of foreign and domestic policy issues, without a powerful coterie of intensely interested patrons.

Donald Trump and Mike Pence during the 2016 Presidential campaign | Photo AP – Copyright 2016 The Associated Press.

Charles Koch had been working, greasing and diverting the political pipelines for decades by the time Donald Trump ran roughshod over the Republican Party and captured the electoral victory over Hillary Clinton in 2016. A narrative was quickly spread about Koch’s distaste for the New York real estate developer and media personality. Rumors of the billionaire brothers balking at Trump’s veiled, derisive references to their donor network fundraisers helped the NBC reality star appear to be a kind of anti-establishment, anti-oligarch maverick. Trump’s running mate would have been a red flag for anyone entertaining such ideas, if the Manhattan billionaire’s own status wasn’t a clear enough indication of the opposite.

Mike Pence was closely aligned with Koch’s Americans for Prosperity as Congressman and later Governor of the state of Indiana. Just six months into the new Trump administration, Charles Koch took an unscheduled, hour-long private meeting with Pence in Colorado where the fossil fuel baron, the Vice President and a few staffers discussed the President’s legislative agenda and, significantly, strategies to take after the midterm elections, which they already foresaw being a ‘blue wave’.

As Trump filled cabinet positions, Koch’s hand was more than visible to anyone with eyes to see. Rex Tillerson’s appointment as Secretary of State, while not directly tied to Koch Industries was, nevertheless, a blatant gift to the oil industry, in general. But, once Tillerson exited he was replaced with a Koch politician through and through in Mike Pompeo who was a member of the House Energy and Commerce Committee during the 112th Congress during Obama’s second term, when Republicans took control after the 2010 midterms.

Pompeo was then a freshman Republican from Wichita, Kansas, home of Koch Industries. Known as the “congressman from Koch”, Pompeo not only received funding for his political campaigns from Koch, but for his own aerospace company, as well. The future Director of the CIA even poached Koch’s lobbying team to find his Chief of Staff, Mark Chenoweth.

The Republican-controlled Committee featuring Pompeo had signed a “No Climate Tax” pledge invented by Americans for Prosperity. 156 Republican house members would go on to sign the same pledge and initiate the attack on their donors’ nemesis, the EPA, by taking away 27% of the Environmental Protection Agency’s budget.

Mike Pompeo (center) flanked by Senator Bob Dole (right) and Senator Pat Roberts (left) | Photo Joe Raedle – Getty

The radical transformation Koch and his cadre of billionaires had carried out in the nation’s political landscape was beginning to reach critical mass. The red lines their policy think tanks and front groups had drawn across the country had delivered a whole new species of politician to the halls of state and municipal power and, in turn, to the floor of the U.S. Congress. The next step was 1600 Pennsylvania Avenue.

Destroying the EPA

The plan to get rid of the Environmental Protection Agency would take six years to complete, according to David Schnare, the man tasked with putting it together. Schnare was a part of Trump’s EPA transition team, which also included AFP organizer, Charles Muñoz, senior research fellow at Weyrich’s Heritage Foundation and outspoken EPA opponent and climate change denier, Myron Ebell.

Schnare’s 47-page “Agency Action Plan” was a veritable wish list of the fossil fuel industry: elimination of the Clear Act Greenhouse Gas regulations, rescinding of federal fuel efficiency standards known as the CAFE standards and the end of Clean Coal laws. As for the agency itself, it would be broken up and its functions assigned to other agencies or ignored altogether.

Trump’s initial pick to lead the EPA, Scott Pruitt, was yet another creature of the oil interests. Attorney General of Oklahoma where oil reigned supreme, Pruitt ultimately proved to be to incompetent to see the job through and resigned a year later. His replacement, and EPA Administrator to this day, is former Coal industry lobbyist, Andrew Wheeler.

Koch Industries had been pegged as the largest toxic waste producer in the United States, responsible for 950 million pounds of hazardous material in 2012 alone. The company emitted the equivalent of 5 million cars a year in greenhouse gas pollution. Koch boasted of its “10,000%” compliance policy throughout its huge, cross-industry private corporation, but evidence of it is scant and often contradicted by the public record.

In 1998, the MPCA (Minnesota Pollution Control Agency) fined Koch $6.9 million for pollution from the Pine Bend refinery. An additional $11.5 million followed after federal criminal charges were brought against the company. One of Koch’s own employees, whose job it was to make sure the refinery was abiding by the clean water laws, had to blow the whistle on Koch after they tried to silence her when she tried to report the violations.

New Money, Old Game

The FBI’s case in the Osage murder investigation in the 1920’s revealed a plot so evil, that it transfixed the whole nation when the details were published in the biggest newspapers and projected on the earliest movie screens as news reels. William K. Hale had built a solid reputation in the Osage community as a stand-up citizen purporting to protect the interests and livelihoods of the Native Americans in this corner of Midwest America, who were sitting on a fortune beneath their feet. The people looked up to this White man as a beacon of righteousness and integrity.

Convicted murderer, William K. Hale; one of the
masterminds of the Osage murder plots

When it was discovered that he had masterminded the cold-blooded assassination of several Osage Indians in a plot to secure their headrights, worth millions of dollars, his name and face would become synonymous with the devil himself for the descendants of the Osage tribe. The satanic scheme was not limited to Hale, however, and while the FBI would never pursue any of the other leads in the epidemic of Osage murders, subsequent investigations have shown that dozens of other ‘masterminds’ and accomplices were killing hundreds of Osage Indians during this period in order to take over their oil fortunes.

The murderous “Indian business”, as it was called by the perpetrators themselves, reached high up the social ladder. Far beyond the relatively limited capabilities of a former ranch hand like W.K. Hale. But, Hale was enough for J. Edgar Hoover to establish himself as the nation’s top law enforcer. After all, the case was sensational enough to grab the public’s attention and peddle a reassuring tale of good triumphing over evil. But, the truth was that nobody really cared much about Native American lives and the 12 years Hale served of the “life sentence” he received for the single murder he was convicted of was more than most would have expected in those days.

A similar game, on a far larger scale, is being played out today with the calls for “liberty” and “free-markets” by the billionaire Koch network, posing as defenders of the everyman and patriots who seek only the best for America, have angled to trick an increasingly exploited and economically insecure population into supporting policies that, in the long run, cause us all irreparable harm.

The truth of their self-serving greed will make itself evident in its own time, much as it did when a repentant Koch oil gauger, unbeknownst to him, struck up a conversation with a relative of the very first victim in the Osage murder saga. Charles Whitehorn was shot between the eyes for his oil wealth and his corpse left rotting on a hill over a mile north of Pawhuska, Oklahoma. Osage Chief, Dudley Whitehorn, sat with the former Koch employee as his car was being repaired at a local gas station. “We did steal from you”, the remorseful man admitted.

 

Works cited in this article: Kochland, The Secret History of Koch Industries and Corporate Power in America by Christopher Leonard; Democracy in Chains, The Deep History of the Radical Right’s Stealth Plan for America by Nancy MacLean; Dark Money, The Hidden History of the Billionaires Behind the Rise of the Radical Right by Jane Mayer; Killers of the Flower Moon, The Osage Murders and the Birth of the FBI by David Grann

Part Four of Multi-part series | go to part one >> / part two >> / part three >> or go to long read >>

Latter-day Nazis

If you were to call Charles de Ganahl Koch a Nazi to his face, you’d probably get escorted out of wherever you are by a member of his large security detail. But, you wouldn’t be very far from the truth. While his views on socialism or anything approaching the communist ideology are more than clear, the tacit approval of fascist ideology that runs in the family is less well-known.

In 1932, as told in a Koch-commissioned family history, Fred Koch collected $500,000 for building 15 oil refineries for Joseph Stalin, forming the backbone of the Soviet Union’s petroleum industry. The contract had been won through a referral, of sorts, after the senior Koch had helped build one in Great Britain with his future son’s namesake and mentor, Charles de Ganahl. Fred continued to provide technical assistance as the Soviets went on to build 100 more. The family-approved lore leaves this last detail out, contending Fred Koch’s distaste for the communist regime led him to renounce all future involvement.

An eight-year gap is left in the official Koch story, but various independent accounts have him traveling to Hitler’s Germany from 1933 onwards. According to archival records unearthed by Jane Mayer in her seminal book, Dark Money, Winkler-Koch Engineering of Wichita – Fred’s company – “provided the engineering plans and began overseeing the construction of a massive oil refinery” in Hamburg. The company that hired Koch’s firm was led by American Nazi sympathizer, William Rhodes Davis, who met with Hitler himself to secure the deal. Completed in 1935, the refinery had the capability to produce the high-octane fuel German Nazi war planes required.

Fred had a real soft spot for the Third Reich and the other fascist regimes. Just before hostilities broke out in ‘39, Fred Koch decried America’s “dependence on government” and expressed his wish that the “course of idleness, feeding at the public trough” he saw as an affliction the United States could “overcome”. Perhaps it was this desire to correct the nation’s “course” that inspired him to bring a fervently pro-Hitler, German governess to rear his two first-born sons, Freddie and Charles. The boys were subjected to the nurse’s rather harsh methods, which included force-feeding and enemas for much of their early years until she returned to Germany of her own accord in 1940.

Winkler-Koch unit at the Eurobank oil refinery
in Hamburg, Germany | Photo: United States Strategic Bombing Survey

Physical, emotional and psychological abuse in the Koch household was the price Fred Koch exacted from his offspring for being born. The patriarch was known to let his rage loose on them with tree branches and belts. A family member witnessed the “twins” get “whipped like dogs” after disturbing some rocks in a stone patio. For Freddie Koch, the eldest son, life offered more than this and he would never participate in the family business, choosing instead a career in the arts and a close relationship with his mother. Charles, on the other hand, would rationalize it as the actions of a man trying to instill a “work ethic” in him.

Younger brothers, Bill and David, would round out the Koch heir pool. But, Charles would prevail in the end wresting control from Bill who would challenge him in court before accepting a multi-billion-dollar buyout. David would assume a subordinate role, preferring to indulge in his Manhattan lifestyle, but still own half of Koch Industries. Eventually, he would join his older brother in pursuance of their shared goal to bring government to heel wherever their interests were threatened.

Scorched Earth Freedom

At the center of the fossil fuel barons’ nightmares was what Lew Ward, chairman of the Independent Petroleum Association of America, called “The radical environmentalist ‘off-oil’ agenda”. In 1997, when the Koch-connected and former Oklahoma oil man said this to a room-full of colleagues, the scientific consensus had already arrived at the conclusion, that 80% of the word’s fossil fuel reserves had to remain in the ground if we were to make it to 2050 with tolerable temperatures. Such warnings represented a death knell to an industry dominated by mostly private, but fabulously wealthy hands with a long tradition of bucking government regulation.

Historically and for obvious reasons, this powerful faction had maintained their position in the pecking order despite blatant anti-government stances and even public expressions of the racism, like that of Texas oil magnate Hugh Roy Cullen who, in defiance of FDR’s policies decided create a new political party promulgating “the restoration of the supremacy of the White race”. His grandson, Corbin Robertson Jr., a prominent member of the Koch network, owns one of the largest coal caches in the country, second only to that held by the government of the United States.

A full list of Koch’s donor network is yet to be compiled, but Jane Mayer’s tour de force accounting of this massive subversive political operation, provides a comprehensive sample that gives us a clear image of the scope and reach it has. The players are not limited to the fossil fuel industry either. Sheldon Adelson of the Las Vegas Sands casino empire and Stephen Schwarzman of the embattled Wall Street hedge fund, Blackstone Group are only two of the enormously influential characters with whom Charles Koch has partnered with to face off increasing pressure from a planet, which can no longer support the activities they profit from.

Koch was already years ahead of Lew Ward’s admonitions in the late 90’s, having poured millions of dollars to political front groups, foundations and think tanks dedicated to the Oligarch’s cause. But, the new century would, indeed mark a stronger push by the richest men in the country to put a stop to the “siege” their extractive industries were under.

We’re Not in Kansas Anymore

Koch’s political machinery was hard at work mounting attacks on what he and Henry Manne had identified as their number one enemy all those years ago and which Ward had warned against in his retirement speech at the IPAA. The environmental movement, in the mind of the fossil fuel oligarchy, was nothing more than an attempt by an entrenched government bureaucracy to restrict their property rights and rescind the divine edict passed down by the gods of “free markets” to devastate any ecosystem in the name of profit.

Foremost in their sights was the EPA; the single government agency they despised above all others. Taking it down required a long term strategy, which Charles Koch embraced. In concert with the vast array of think tanks and political lobbying organizations masquerading as foundations, as well as straight forward lobbying efforts, the Koch network went about the work to overturn, subvert or neutralize any environmentally-friendly legislation.

In Washington D.C., Koch Industry lobbyists were not only among the most active, but also among the most numerous. In a time when 90% of U.S. corporations did not employ one full time lobbyist, Koch Industries had five full time lobbyists who were industry leaders in their own right, fighting the company’s top issues: chemical safety, rate billing and tax rates. The bigger operation, however, was happening at the state level where Koch through ALEC and other groups like Americans for Prosperity (AFP) were pushing through legislation and even candidates favorable to their anti-environmental aims.

One of the most salient examples was the fight to reverse Kansas’ renewable energy mandates passed by the state legislature in 2009. Koch and friends zeroed in on state lawmakers two years later, sending Cato Institute scholars and other “heavy hitters” to testify about the “damaging” effects of wind power on the economy and other critiques of the mandate, which had been adopted as a compromise to the construction of a coal fired plant.

Republican Kansas state senator, Dennis Hedke, a geophysicist who had done consulting work for the oil and natural gas industry was the chairman of the House Energy and Environment Committee pushed a bill in 2013 to repeal the renewable energy mandate. The bill had been crafted by ALEC, which Hedke put forward with a few modifications. Parallel to this, Koch dumped $50,000 in the local primary races – a huge amount for the mostly rural state. The money was used to run negative ad campaigns against opponents, while the Koch-picked candidates were advised to simply stay home.

Hedke’s repeal passed in 2015 and, by then, Koch had managed to fill the Kansas state house with Koch Industry drones. Republican Senator Tom Moxley had joined the legislature in 2007 and sat in the same Energy and Environment Committee Hedke chaired. Himself a climate change skeptic, Moxley had changed his views after reading the science and, after witnessing the underhanded tactics used by the Koch network to defeat the bill and flip the house, he retired in disgust.

These same moves were executed in over a dozen states by the same Koch funded institutions and political operatives. Ohio and West Virginia passed similar bills against renewable energy. In these particular cases, the bills were not even modified from the drafts written by Koch-funded Heartland Institute and presented by ALEC. Through these machinations, Koch managed to redraw the country’s political map, setting the stage for the coup de grace in 2016.

Koch’s President

There’s no such thing as an outsider in American politics. No matter how seemingly removed from the established order an individual in either of the two sanctioned parties might be, a network of sponsors must exist behind the scenes to put wind in the sails of any prospective candidate for public office. Donald Trump, despite claims of being beyond the reach of special interests because of his wealth, is no exception. Certainly, no one can reach the highest office in the land, beset as it is by a multiplicity of foreign and domestic policy issues, without a powerful coterie of intensely interested patrons.

Donald Trump and Mike Pence during the 2016 Presidential campaign | Photo AP – Copyright 2016 The Associated Press.

Charles Koch had been working, greasing and diverting the political pipelines for decades by the time Donald Trump ran roughshod over the Republican Party and captured the electoral victory over Hillary Clinton in 2016. A narrative was quickly spread about Koch’s distaste for the New York real estate developer and media personality. Rumors of the billionaire brothers balking at Trump’s veiled, derisive references to their donor network fundraisers helped the NBC reality star appear to be a kind of anti-establishment, anti-oligarch maverick. Trump’s running mate would have been a red flag for anyone entertaining such ideas, if the Manhattan billionaire’s own status wasn’t a clear enough indication of the opposite.

Mike Pence was closely aligned with Koch’s Americans for Prosperity as Congressman and later Governor of the state of Indiana. Just six months into the new Trump administration, Charles Koch took an unscheduled, hour-long private meeting with Pence in Colorado where the fossil fuel baron, the Vice President and a few staffers discussed the President’s legislative agenda and, significantly, strategies to take after the midterm elections, which they already foresaw being a ‘blue wave’.

As Trump filled cabinet positions, Koch’s hand was more than visible to anyone with eyes to see. Rex Tillerson’s appointment as Secretary of State, while not directly tied to Koch Industries was, nevertheless, a blatant gift to the oil industry, in general. But, once Tillerson exited he was replaced with a Koch politician through and through in Mike Pompeo who was a member of the House Energy and Commerce Committee during the 112th Congress during Obama’s second term, when Republicans took control after the 2010 midterms.

Pompeo was then a freshman Republican from Wichita, Kansas, home of Koch Industries. Known as the “congressman from Koch”, Pompeo not only received funding for his political campaigns from Koch, but for his own aerospace company, as well. The future Director of the CIA even poached Koch’s lobbying team to find his Chief of Staff, Mark Chenoweth.

The Republican-controlled Committee featuring Pompeo had signed a “No Climate Tax” pledge invented by Americans for Prosperity. 156 Republican house members would go on to sign the same pledge and initiate the attack on their donors’ nemesis, the EPA, by taking away 27% of the Environmental Protection Agency’s budget.

Mike Pompeo (center) flanked by Senator Bob Dole (right) and Senator Pat Roberts (left) | Photo Joe Raedle – Getty

The radical transformation Koch and his cadre of billionaires had carried out in the nation’s political landscape was beginning to reach critical mass. The red lines their policy think tanks and front groups had drawn across the country had delivered a whole new species of politician to the halls of state and municipal power and, in turn, to the floor of the U.S. Congress. The next step was 1600 Pennsylvania Avenue.

Destroying the EPA

The plan to get rid of the Environmental Protection Agency would take six years to complete, according to David Schnare, the man tasked with putting it together. Schnare was a part of Trump’s EPA transition team, which also included AFP organizer, Charles Muñoz, senior research fellow at Weyrich’s Heritage Foundation and outspoken EPA opponent and climate change denier, Myron Ebell.

Schnare’s 47-page “Agency Action Plan” was a veritable wish list of the fossil fuel industry: elimination of the Clear Act Greenhouse Gas regulations, rescinding of federal fuel efficiency standards known as the CAFE standards and the end of Clean Coal laws. As for the agency itself, it would be broken up and its functions assigned to other agencies or ignored altogether.

Trump’s initial pick to lead the EPA, Scott Pruitt, was yet another creature of the oil interests. Attorney General of Oklahoma where oil reigned supreme, Pruitt ultimately proved to be to incompetent to see the job through and resigned a year later. His replacement, and EPA Administrator to this day, is former Coal industry lobbyist, Andrew Wheeler.

Koch Industries had been pegged as the largest toxic waste producer in the United States, responsible for 950 million pounds of hazardous material in 2012 alone. The company emitted the equivalent of 5 million cars a year in greenhouse gas pollution. Koch boasted of its “10,000%” compliance policy throughout its huge, cross-industry private corporation, but evidence of it is scant and often contradicted by the public record.

In 1998, the MPCA (Minnesota Pollution Control Agency) fined Koch $6.9 million for pollution from the Pine Bend refinery. An additional $11.5 million followed after federal criminal charges were brought against the company. One of Koch’s own employees, whose job it was to make sure the refinery was abiding by the clean water laws, had to blow the whistle on Koch after they tried to silence her when she tried to report the violations.

New Money, Old Game

The FBI’s case in the Osage murder investigation in the 1920’s revealed a plot so evil, that it transfixed the whole nation when the details were published in the biggest newspapers and projected on the earliest movie screens as news reels. William K. Hale had built a solid reputation in the Osage community as a stand-up citizen purporting to protect the interests and livelihoods of the Native Americans in this corner of Midwest America, who were sitting on a fortune beneath their feet. The people looked up to this White man as a beacon of righteousness and integrity.

Convicted murderer, William K. Hale; one of the
masterminds of the Osage murder plots

When it was discovered that he had masterminded the cold-blooded assassination of several Osage Indians in a plot to secure their headrights, worth millions of dollars, his name and face would become synonymous with the devil himself for the descendants of the Osage tribe. The satanic scheme was not limited to Hale, however, and while the FBI would never pursue any of the other leads in the epidemic of Osage murders, subsequent investigations have shown that dozens of other ‘masterminds’ and accomplices were killing hundreds of Osage Indians during this period in order to take over their oil fortunes.

The murderous “Indian business”, as it was called by the perpetrators themselves, reached high up the social ladder. Far beyond the relatively limited capabilities of a former ranch hand like W.K. Hale. But, Hale was enough for J. Edgar Hoover to establish himself as the nation’s top law enforcer. After all, the case was sensational enough to grab the public’s attention and peddle a reassuring tale of good triumphing over evil. But, the truth was that nobody really cared much about Native American lives and the 12 years Hale served of the “life sentence” he received for the single murder he was convicted of was more than most would have expected in those days.

A similar game, on a far larger scale, is being played out today with the calls for “liberty” and “free-markets” by the billionaire Koch network, posing as defenders of the everyman and patriots who seek only the best for America, have angled to trick an increasingly exploited and economically insecure population into supporting policies that, in the long run, cause us all irreparable harm.

The truth of their self-serving greed will make itself evident in its own time, much as it did when a repentant Koch oil gauger, unbeknownst to him, struck up a conversation with a relative of the very first victim in the Osage murder saga. Charles Whitehorn was shot between the eyes for his oil wealth and his corpse left rotting on a hill over a mile north of Pawhuska, Oklahoma. Osage Chief, Dudley Whitehorn, sat with the former Koch employee as his car was being repaired at a local gas station. “We did steal from you”, the remorseful man admitted.

 

Part Four of Multi-part series | go to part one >> / part two >> / part three >>

 

Works cited in this series: Kochland, The Secret History of Koch Industries and Corporate Power in America by Christopher Leonard; Democracy in Chains, The Deep History of the Radical Right’s Stealth Plan for America by Nancy MacLean; Dark Money, The Hidden History of the Billionaires Behind the Rise of the Radical Right by Jane Mayer; Killers of the Flower Moon, The Osage Murders and the Birth of the FBI by David Grann

Part Three of Multi-part series | go to part one >> / part two >> or go to long read >>

Labor Tamers

From the time Charles Koch took control of the company his father built, he declared war on the working class. The most profitable asset in Koch Industries’ early years was the Pine Bend refinery, whose massive profitability was made possible by several extraneous factors including its geographical location, government policy on the importation of Canadian crude, loopholes in the Clean Air Act and government subsidies. It also had the benefit of being run by a highly-skilled, unionized workforce that was operating the plant before Koch acquired it in full.

The local chapter of the Oil, Chemical and Atomic Workers Union, OCAW 6-662, had negotiated the framework for the conditions of their employment at the Pine Bend refinery between the 50’s and 60’s. The OCAW was a powerful union in a heavily unionized state, buttressed by interlocking loyalty oaths with other big unions like the Teamsters. But, the livelihoods of working class families and backbone of the local economy were not part of Charles Koch’s plans to streamline his business and within months of acquisition, he hired Bernard Paulson to take the union down.

Paulson had been managing Costal Oil & Gas down in Corpus Christi, Texas when Koch brought him on board to Minnesota specifically for his expertise in dealing with organize labor. Paulson started at Pine Bend in 1971 and only months later, in the early Spring of ‘72, he laid out his first trap. He scheduled OCAW local president, Joseph Hammerschimdt, to work on Easter Sunday knowing full well the irascible leader of the proud chapter would refuse. Paulson fired Hammerschmidt on the spot declaring war on the union.

The OCAW local’s contract was set to expire in the Fall of 1972 and when negotiations started, it was Hammerschmdit himself, in his capacity of chapter president, who was sitting across Paulson when the latter presented him with the new work rules rewritten by Koch Industries. Take it or leave it, Paulson informed the outraged OCAW representatives. In January, 1973, the men walked off the job and went on strike.

Pine Bend refinery in Rosemount, MN

Paulson had already gone over the strategy with his boss and immediately put a non-union “skeleton crew” to work in the posts vacated by the OCAW workforce. He put a cot in his office, stockpiled food and ordered the cafeteria remain open 24 hours. Koch’s union-buster was hunkering down for the long haul, but the bad omens didn’t wait to make their appearance. On the very first night of the strike, a large furnace that superheated oil exploded after leaks failed to be detected over the previous several hours.

Two months later, a saboteur pushed the throttle on a train diesel engine parked near the refinery, which had tracks running through the middle of it. Tragedy was averted by the derailing mechanism and the engine flipped over before crashing into the very large and very flammable refinery stacks and gasoline tanks. Incredibly, no one was killed in either incident.

As the strike dragged on, Paulson was able to leverage Koch Industries’ extensive contract work needs to induce the Teamsters to break the picket line. Teamster drivers accepted to carry out Koch’s deliveries in the midst of the strike, severely weakening the OCAW’s position.

After nine months, the strike ended with the union accepting a far less favorable deal than the one they once had. Charles Koch emerged victorious and imposed new work rules like mandatory overtime and a laughable grievance process that settled any successful claims by allotting overtime so workers could “earn” back the money they were owed. In addition, skill-based assignments were eliminated altogether; foreshadowing a developing trend in American workplaces that demanded wage laborers carry out tasks they were not necessarily trained to do.

A Future for Nobody

Koch’s contempt for workers would become a feature of their management style and as Charles Koch made inroads into the legal system to further erode workers’ rights, the company’s ability to impose onerous working conditions on its many factory floors became that much easier.

The 2003 acquisition of Farmland’s fertilizer plants revealed as much and crystallized the reality that had by then fully manifested as a result of the American oligarchy’s efforts to return to the days of robber barons and corporate monopolies.

Farmland Industries was a hugely successful co-op owned by thousands of farm families, which had thrived for three quarters of a century. They all shared in the profits and voted on the decisions that affected the business. Koch president, Dean Watson, derided the cooperative as “socialism” during the acquisition process. The bastion of modern agriculture had suffered a reversal of fortune during the natural gas shortage in the 90’s, forcing them to auction off their immensely profitable fertilizer plants.

Koch was already a large producer of a key component in industrial fertilizer, nitrogen. The purchase of Farmland’s network of fertilizer plants, which ran all along the corn belt between Iowa and Nebraska, was completed for the relatively paltry sum of $290 million dollars and put Koch at the center of America’s agricultural universe. The co-op model was summarily dismissed as Koch executives took over Farmland headquarters and asserted control over yet another vital aspect of American life.

Not content with this, Koch also flexed their political muscle to deregulate the energy markets themselves, putting them in a position to profit from virtually every link in the chain of basic necessities and holding it hostage to market forces.

Opening the Gates of Hell

Joseph Coors, of the brewing family fortune, wrote a letter to his senator, Republican Gordon Allot, after reading the Powell memo with a seemingly unlimited offer to fund “conservative causes”. Allot’s press aide was a man by the name of Paul Weyrich who immediately took advantage of the wealthy man’s generosity and founded The Heritage Foundation with Edwin Feulner Jr., a graduate of Wharton.

Both men had been intent on creating a policy-crafting organization that wouldn’t shy away from pushing legislation directly, as most think tanks did. Originally named Analysis and Research Association, the political influence operation grew to become the only outside organization allowed to caucus with members of Congress. The same year that The Heritage Foundation opened its doors in 1973, Weyrich created the American Legislative Exchange Council or ALEC, with the purpose of mounting legislative battles at the state level around the country. Most of ALEC’s funding came from Richard Mellon Scaife’s foundation, but would eventually count on much Koch money, too.

Paul Weyrich a conservative think tank chairman testifies before the Senate Armed Serviced Committee on Capitol Hill during the confirmation hearing of Defense Secretary-designate John Tower in Washington. Weyrich, who coined the phrase “moral majority” and helped turn social conservatives into a powerful force in the Republican Party, died Thursday, Dec. 18, 2008. He was 66. (AP Photo, File)

Koch became a key supporter of ALEC’s national push to deregulate the energy markets, putting his men on the task forces put together by the organization. ALEC’s “model bills” were introduced to many states with barely any modifications and greatly helped Koch Industries partake of the massive fraud that the new energy markets afforded companies like theirs. Pushing the changes along with Koch on ALEC’s task forces were representatives of Enron, which ended up taking the brunt of the press coverage when the chickens came home to roost.

Koch had been trading in the commodities market for years prior. In 1983, when NYMEX introduced oil futures contracts, Koch was well-positioned to take advantage of the seismic change this represented for the way oil was traded on the open market. Ron Howell, the man who years later carried out the fake audit of the Osage leases on Koch’s behalf, was then the head of the company’s oil trading division.

He would retire just two years later in 1985, but not before observing how things were about change. “It was the first time that there was a […] visible market signal for the price of oil”, he told Kochland author, Christopher Leonard. Until then, the price of oil was set over the phone between traders themselves; privately and far away from anyone not intimately involved in the industry. These were also real trades, in that the seller had to deliver the oil to the buyer. Koch had the advantage over independent traders because they already owned the oil and could execute delivery themselves. Oil contract futures, on the other hand, opened the door to the entire financial sector.

The NYMEX price of oil wasn’t the real price of oil. It was a bet on what the price of oil would be at some point in the future and Koch had built an intelligence-gathering operation on its own private trading floor that rivaled anything found in Langley, Virginia. Koch used data gleaned from every other division in their company; they utilized any data they could pry from competitors; they scoured news stories for information and even had a stable of the best meteorologists in the business to get a jump on weather patterns to predict consumption trends.

Charles Koch would bring all of it under one roof as Koch Supply & Trading after George W. Bush broke up the natural gas companies in 2001, spurring the fossil fuel giant to assume the management of the nation’s natural gas infrastructure. The potential profits promised by the new structure separating gas sellers from distributors and consumers were made even more attractive by the invention of yet another financial instrument: derivatives.

Unlike oil futures, which – while deferred – still required delivery of the asset, derivatives were pure bets based on the underlying value of the asset but without actual delivery of the asset at any stage of the transaction. Clinton’s Commodity Futures Modernization Act of 2000 would keep derivatives away from any regulation, setting the stage for the collapse of the financial system just eight years later. In the meantime, the derivatives market exploded and Koch was in perfect position to take full advantage.

Hoarding the Light

The whole Y2K “panic” would become the subject of much ridicule after the absurd warnings of a computer glitch apocalypse failed to materialize. But, behind the scenes, the new millennium was teeming with multi-millionaires and billionaires across corporate America frothing at the mouth about what many of them knew was coming.

Coupled with the recently deregulated energy markets and new financial instruments around oil and gas, the Kochs and the Enrons of the world could see what regular people couldn’t possibly imagine. These “titans of industry” had the inside track on the country’s consumption patterns. They knew people were buying more computers, gadgets and devices as the roll out of the Internet reached critical mass and that, as a result energy consumption was about to skyrocket.

One trader at Koch Supply & Trading spotted the trend early on in 2000. Brendan O’Neil started buying natural gas options as soon as an unusual cold snap made gas prices spike in the Spring of that year. O’Neil, like his peers, knew that major gas shortages were on the horizon. By December, the price of natural gas stood at $10.48, up from $2.88 in March. He alone would make Koch $70 million on the gas trades. His team, only one of many at the Houston offices, delivered $400 million to Koch’s coffers. Koch Gateway, the pipeline division, which actually delivered the gas to the buyers made only $15.3 million that year.

Enron Corporation headquarters in Houston, Texas

The artificial run up in gas prices caused rolling blackouts, store and factory closures, even car accidents from failing traffic lights around the country. But, it was clear to Koch where the biggest source of profits lay. So it was only logical that they would pour more money and effort into creating other speculative markets for the assets they already owned.

The obvious target was electricity. Paul Weyrich’s ALEC would take on the work of selling legislators around the country on the idea of an electricity market throughout the 1990’s and it would eventually take hold in several states, but none more disastrously than in California where a liberal Democrat state senator passed the bill that created the California Power Exchange (CPE).

The “megawatt-hour” was born. Equivalent to one hour of electricity needed to power 330 homes, it was the basic unit to be bought and sold on the exchanges and the national market value was calculated to be about $215 billon dollars. The CPE was set up in a way to allow the price of electricity to float with market conditions, but capped the amount Utilities could charge the end-consumer. To protect consumers from being left without power in the event no electricity was being bought on the exchange, an emergency authority called the California Independent System Operator (ISO) was created, whose sole purpose was to buy any shortfall in electricity the market left.

It was this peculiar agency that would be the target of Koch, Enron and other energy companies to inflate their profits at the expense of the Utilities through a fraudulent scheme known as “parking”. The fraud consisted of keeping megawatt-hours off of the CPE by making fictional sales to an out-of-state Utility and then turning around and selling the same megawatt-hours to ISO at a much higher price. The more power prices rose, the greater the temptation to manipulate the market in this way.

California’s Utility companies were driven to the verge of bankruptcy with losses of $10 billion and when the scandal finally broke in early 2001, governor Gary Davis worked out a bailout plan to save them. It took many more months before the underlying market “dysfunction” was addressed. Koch and friends continued to gouge their clients until the Federal Energy Regulatory Commission (FERC) finally stepped in. Koch quietly settled the charges brought against them for a cool $4.1 million.

Leviathan

The 21st century would find Koch Industries ready to indulge its voracious appetite. Just as it helped to create the economic conditions that would ultimately destroy the Farmland co-op and facilitate the purchase of its fertilizer plants, the success of its stealth political operation in tandem with other American oligarchs would free them up to act in their own interests while convincing others it was in theirs, as well.

FDR’s New Deal was truly a vestige. Workers’ rights were widely perceived as an evil of defunct communist systems of government and, thanks to the Supreme Court’s Citizens United ruling, the 0.01% could finally use their wealth openly to finance their preferred presidential candidates without the embarrassing need to actually run themselves, as Charles’ little brother David had done in 1980.

The internet and the rise of computerized, data-driven management systems would also give Koch the tools needed to finally dispense with the pretense of MBM or other such frills when it came to keeping employees in line. The engineer in charge of the most powerful private company in America could finally trade in all those messy, self-moving parts for real-time numbers.

GO TO PART FOUR: U.S. OF KOCH >>

Part Two of Multi-part series | go to part one >> or go to long read >>

The Bidders

The oil leases on the Osage territory began to be issued in 1912, drawing oil magnates from around the world to bid fortunes under the so-called “Million-dollar Elm”, where an auctioneer sold off the rights to extract from the wells. The tribe’s sudden stroke of luck didn’t come with the usual benefits associated with the accumulation of massive wealth familiar to most Americans. Much of it was kept behind a wall of racist paternalism expressed through government-appointed guardianships, that assigned White men to oversee the expenses of the tribal members and the power to cut them off at their discretion.

It was the sort of draconian government overreach that Koch and the various organizations he funded to promote the idea of limited government might uphold as examples of the dangers he was fighting to avert. But, that would have been empty rhetoric like most of the arguments put forth by many of his political front groups like Americans for Prosperity or Citizens for a Sound Economy. The endgame for Koch and his clique of preposterously wealthy (mostly) men was a government stripped of all responsibility beyond the responsibility to protect their property.

Among the bidders gathered under the tree in Pawhuska, Oklahoma in the 1920’s was a representative of the Gulf Oil company, owned by the Mellon clan, one of the original robber baron families and pioneers of the use of philanthropy as both a means of tax-avoidance and anti-government messaging. One of the heirs to the Gulf Oil, Mellon banking fortune would become one of the country’s biggest backers of radical right wing ideology and a strategically important partner to Charles Koch’s own efforts.

The Silverspoon Radical

Richard Mellon Scaife never gave any interviews or public speeches, but he exerted incalculable influence over America’s public affairs through the multiple foundations he and his family set up.

Inheriting an obscene amount of money at the age of 26 is probably not the easiest thing to deal with for even the most level-headed youngster. But, by all accounts, Richard Scaife was leading the kind of dissolute life most of us expect the scion of inter-generational wealth would. Kicked out of the Deerfield Academy prep school at 14 for drinking, his reputation for alcohol-induced benders would follow him to Yale University, which would also expel him for it.

Richard Mellon Scaife

After his father died in 1958, Scaife assumed the role of financial manager for the fortune passed on to his mother, Sarah. She would create several trusts, continuing the family tradition of using non-profits as tax shelters. Eventually, Richard would consolidate all of the foundations under the umbrella of the Scaife Family Charitable Trusts, which would be used to disburse hundreds of millions of dollars to radical right organizations, politicians and causes.

The most important of these may well have been the Institute for Contemporary Studies (ICS), based out of California. This Scaife-funded think tank initiated a slew of projects meant to influence policy. One of these sought to learn what was being taught in pre-collegiate economics classes and propose more free market-friendly curricula. Another put future president Ronald Reagan in front of every high school student in the state’s eleven hundred school districts via PBS.

Reagan’s deep ties to the ICS can be traced to the presence of Edwin Meese III on the foundation’s board. Meese, who would later serve as Reagan’s Attorney General and, arguably, his most trusted advisor, was among the invitees to Jim Buchanan’s 1973 unveiling of the Virginia academic’s “Third Century Project” outlining the way in which corporate America would transform the nation’s courts. Just a week earlier, Buchanan had presented his plan to another room-full of sympathetic business men. “Conspiratorial secrecy”, he warned them, “is at all times essential”.

The institute would soon count multinational corporations such as Exxon, IBM, Chase Manhattan Bank, Shell and Texaco among its ranks, making it one of the most influential think tanks in the nation.

Rise of the Oligarchs

In 1973, the brand new Environmental Protection Agency took aim at the Olin Corporation, which had started nearly a century earlier as a mine explosives and small arms company. Government contracts during World War I and II would greatly buttress its bottom line and the family-owned concern would go on to form a huge conglomerate producing everything from Winchester rifles to rocket fuel.

Its chemical division had a large rap sheet of environmental pollution and found itself being sued by the Environmental Defense Fund, the National Wildlife Federation and the Audubon Society for releasing DDT-laced effluents into a wildlife preserve. Three years before the EPA came down on the company, they were charged with dumping mercury into the Niagara River and were later found to have falsified records showing it had dumped 66,000 tons of toxic waste into a Niagara Falls landfill.

The Olin Corporation’s criminal negligence and outright disregard for human or environmental health spanned decades. But, as public outcry around these issues began to grow and regulations were put in place John M. Olin – who was not even running the company by then – created the Olin Foundation to, in his words, “see free enterprise re-established in this country. Business and the public must be awakened to the creeping stranglehold that socialism has gained here since World War II.”

Founder of the Olin Foundation, John M. Olin

Olin, along with many other members oligarch class, were galvanized by the infamous Powell memo calling for American business owners to mount a “counterrevolution” against what they saw as an existential threat. Powell, a former director of the Phillip Morris tobacco company, laid out the game plan in his 5,000-word manifesto, which identified the judiciary system as a central focus of their attack strategy. Nixon would appoint Powell to the Supreme Court just two years later.

The Olin Foundation immediately began funding projects focusing on the radical transformation of the American justice system. Among the first the Olin Foundation funded was a program run by an obscure law professor at the University of Miami, Henry G. Manne. Manne was his bringing corporate-oriented and cost-benefit analysis approach to regulation in his Law and Economics Center in the then marginally known campus in Coral Gables, Florida.

Charles Koch, in particular, would find Manne’s ideas very appealing as they dovetailed so perfectly with his own master plan.

Koch’s Law Manne

Charles Koch was following in the tradition of his covenant ideology forbearers. He saw his project to transform American politics akin to the Protestant Reformation, casting himself in the role of Martin Luther declaring that like the rebellious cleric, he stood firm against the established order. “I can do no other”, Koch boasted in a 1999 speech.

By that time, the project had made great, if largely unnoticed, strides. Henry G. Mane was Dean of Koch’s pseudo-academic operation at George Mason University. Over the previous two decades, Manne had been so successful with his Law and Economics program funded to the tune of millions of dollars by the likes of the Olin Foundation, Charles Koch and U.S. Steel, that by the middle of George H. W. Bush’s only term in office, 2 out of every 5 sitting federal judges had participated in Manne’s training sessions, applying free market economics to legal decision-making.

The “Henry Manne Camp”, which counts current Democratic presidential candidate and reportedly reformed liberal Elizabeth Warren among its alumni, doled out rich honorariums to legal scholars to write papers with his particular twist on legal questions that would be published in legal journals, spreading the meme throughout the profession. More than 600 institutions would end up sending their best legal minds to attend Manne’s intensive two-week courses; typically held in posh tropical locales such as Key West. Some institutions, like the University of Virginia’s law school, adopted Manne’s approach in its entirety.

Henry G. Manne, the libertarian legal scholar | Photo Credit: Benjamin Myers/Reuters

Koch and Manne identified what they considered the biggest threat to “economic freedom”. Together they determined that the environmental movement constituted the most clear and present danger to their designs as it sought to “control” corporate interests through “governmental regulation of business”. Government-backed health care also represented a danger since it “impaired the normal workings of labor markets”.

Tax policy, public education and feminism also sent shivers down their spines. The first because of the “inevitable egalitarian instincts” exhibited by “modern” democracies; education had to be curtailed because of the “community values” they considered to be “inimical to a free society”; and finally, feminism was too socialistic for their taste.

Bill Clinton’s re-election motivated Koch to take things up a notch and neutralize these threats, bringing the Nobel prize-winning James Buchanan directly into his operation. After years of funding Buchanan’s work through his various foundations, Charles Koch put up $10 million dollars to set up the James Buchanan Center at George Mason University. The new department would be an amalgam of Buchanan’s Center for Public Choice that the laureate had run at Virginia Tech and Koch’s long-time political hatchet man, Robert Fink’s Center for the Study of Market Processes.

The board of visitors would include William Kristol and Dick Armey, while Edwin Meese III sat as the board’s rector. Buchanan would ultimately be pushed out after getting wind of the illegal nature of the Center’s work. Ostensibly a philanthropic endeavor, registered as a 501 3(c) non-profit legally barred from engaging in politics, the Buchanan Center at GMU was being used as a political lobbying operation led by Koch operatives.

Koch Industries was growing at a frenetic pace, swallowing competitors and violating so many laws in the process, that attacking the system prosecuting them under these laws and imposing multi-million dollar fines on them made perfect business sense.

The Altar of Doom

In due course, the political discourse around the country would begin to reflect the radical, ant-government viewpoints espoused by the foundations and initiatives sponsored by the Kochs and partners like the DeVos family of the Amway fortune, the Coors brewing empire and many others.

Charles Koch issued his battle cry in 1978. “Our movement” he intoned, “must destroy the prevalent statist paradigm”. In the space of two decades his revolution had managed to seep into the national consciousness and its insane tenets would begin to spew from the mouths of his minion politicians. Thom Tillis, a U.S. Senator from North Carolina who owed his post to the Koch machine, wanted to do away with laws compelling restaurants to make employees wash their hands since, he claimed, “the market” would “take care of that”. The press was not immune, either. An editorial board member of the Wall Street Journal took a Koch-infused line against the need for public health officials, expressing her opinion that testing for lead levels in the blood of children was nothing more than an excuse to justify their jobs.

If we were to really look for justifications, we could simply take a closer look at the egregious practices Koch Industries has been employing in their pursuit of profit and unfettered growth. The lawsuit brought against them in 1995 by the EPA for spilling over 12 million gallons of oil across six states as a result of faulty pipelines is only one of many incentives this enormous corporation has to subvert the law and, the tremendous wealth at their disposal has allowed Charles Koch to go beyond mere court battles to burning the U.S. code itself upon the altar of free markets.

Go To Part Three >> KOCH BUST

Part One of Multi-part series or go to long read >>

Total Control

Koch Industries’ interlocking web of companies, foundations and front groups touch everything from the plastic cups you put out at parties, the gasoline you pump into your car, the votes you cast at the ballot box and even the wages your employer is willing to pay you. In short, this privately held enterprise, owned by two brothers, exerts arguably more influence over your life than the government they and their network of like-minded billionaires have been trying to undermine for over forty years.

Through theft, deception and secrecy the Koch’s have built a capitalist juggernaut and infiltrated the institutions of democracy in order to propagate its plutocratic designs upon the country; availing itself of a fringe political ideology rooted in the antebellum South, they have wrought environmental devastation, eviscerated the middle class and have managed to shift the political discourse in America to favor their self-serving, radical free-market policies.

Despite appeals to notions of liberty and so-called “sound economics”, at the core of the Koch business philosophy is little more than a justification for rapacious greed and a pathological inability to share. Those of us downstream from their unimaginable wealth are left to deal with the consequences of their massive, unchecked and wounded egos. But, it is only by dispensing with the pseudo-academic, quasi-legal arguments crafted by the purveyors of Koch’s proto-fascist gestalt, that we can begin to see the contours of their totalitarian dream.

Spiking the Water

In April 2014, the city of Flint, Michigan switched its water supply from Lake Huron to the contaminated Flint River. By June people were dying from a Legionnaires-associated disease caused by bacteria found in the water supply. The crisis became a national scandal as more people got sick even as municipal leaders claimed the water was safe to drink.

Five years later, Flint is still reeling. A fact recognized by the city’s new Mayor, Karen Weaver, who swept into office on a wave of anger and resentment. “It’s a community that’s still dealing with the trauma and the aftermath”, she told the New York Times “of having been poisoned at the hands of the government.”

But, the government was actually the first victim of this tragedy. Hidden in the depths of the rancid waters that killed twelve people and sickened nearly a hundred more, none other than the Kochtopus and its vast political influence machine thrashed about.

In the state of Michigan, it exerted considerable influence in the governor’s office through the Koch-funded and Koch-staffed think tank, Mackinac Center, which had been pushing for legislation that would place any community facing a “financial emergency” under direct state control and, in turn, hand over extraordinary powers to emergency managers. Among the powers accorded to these unelected bureaucrats was selling off local resources to private companies, outsourcing services and changing municipal suppliers at will.

True to the words of one state governor, who stated unequivocally, “When the Mackinac Center speaks, we listen”, their legislative recommendation made it into law and many cities were placed under this regime. More than half of the state’s black voters would come to be governed by such managers. The one assigned to oversee Flint made the fateful decision to switch the city’s water supply to “save money”.

Mind of the Kochtopus

The vital role Koch played in the Flint water crisis received little, if any, media attention because, as in this case, most of their machinations are carefully concealed behind front-groups, innocuous-sounding foundations and ostensibly noble causes.

Koch
AP Photo/David Zalubowski – Charles Koch and son Chase – June 29, 2019

Charles Koch began building this network, dubbed “Kochtopus” for its monstrous reach and multiple tentacles, almost as soon as he took the reins of Koch Industries in the 1970’s. His first mentor was a man by the name of F. A. “Baldy” Harper, author of a “free market primer” called “Why Wages Rise” in which he derides unions, public schooling and any kind of labor protection laws. A founding member of the Mont Pelerin Society along with Koch’s other idols F.A. Hayek and Edwin Von Mises, Baldy Harper would go on to found the Institute for Humane Studies with Koch’s generous and permanent funding.

The Mont Pelerin Society, in fact, would be the fountainhead for many beneficiaries of Koch money. Formed in 1947, the Society was the result of an historic gathering in Switzerland of free-market intellectuals led by their “guru”, F. A. Hayek, prophet of the rich propertied classes in a time when the rising power of unions and growing regulatory framework threatened to undercut their position. The infamous Chicago School of economics and its most polarizing figure, Milton Friedman, was a direct outgrowth of this post-war egghead club.

Friedman, however, was not radical enough for Koch and considered his approach to economics too technical to fulfill the more fundamental, philosophical and transformative changes Charles Koch wanted to bring about in America, turning his attention to other branches of the Mont Pelerin tree.

He found what he was looking for in another University of Chicago grad, who studied under yet another Mont Pelerin founder.

The Dictator’s Messiah

James M. Buchanan was more concerned with the political and social aspects of economic theory than with pesky numbers or statistics.

In 1956, he submitted a private proposal to the president of the University of Virginia for the creation of a department for Libertarian and conservative studies, misleadingly called the Thomas Jefferson Center for Political Economy and Social Philosophy. Buchanan was motivated to create his department by the watershed Supreme Court decision of Brown v.The Board of Education two years earlier, which put an end to racial segregation in the public school system.

The entrenched Southern White elites that ruled Virginia, led by one of the most powerful Senators in U.S. history, Harry F. Byrd, took the court’s decision as an affront and resisted desegregation with all the means at their disposal. Buchanan’s Center at UVA aimed to subvert what he and the Virginian ruling class perceived as federal incursion into states’ rights – a more palatable framing for their real problem: democracy.

The pull of history and strong resistance from Virginia’s White middle class doomed Buchanan’s project. The inevitable demise of the Byrd organization and the turnover of the university’s leadership eventually forced Buchanan to find refuge in a regular faculty position at UCLA, then a hub of radical right wing thought.

Buchanan’s ideas were popular enough in the tight knit circles he moved in, but they had yet to reach the broader audience he needed in order to generate the momentum required for them to actually affect policy. He began to acquire more widespread recognition after the publication of “Academia in Anarchy”, which put forward ‘solutions’ to expressions of social consciousness among the country’s student body. Along with his co-author, Nicos Devletoglou, he would propose remaking colleges and universities as “industries in which individuals sought to maximize their personal advantages and minimize their costs”. The idea was to eliminate dissent by turning higher education into a business and eliminating the humanities from the curriculum.

James Buchanan at George Mason in 1986 | Photo Credit – Sue Klemens

The book propelled Buchanan into the international spotlight and he would soon be heading back to Virginia to form a new department. Located in the less prestigious Virginia Polytechnic Institute, better known today as Virginia Tech, his Center for Public Choice was where he would first meet Charles Koch and become a regular recipient of the billionaire’s generosity.

Soon enough, Buchanan would have a chance to prove just how useful his anti-democratic vision of government could be to a select group of private interests and the Chilean Minister of Finance, Sergio de Castro, who hosted the American academic for a week of exclusive seminars in Augusto Pinochet’s military dictatorship. The main purpose of the five formal lectures he delivered during his 1980 visit was to explore how his “public choice” theory of economics could inform their new constitution.

Buchanan was credited – though not publicly – with providing the legislative tools the dictator needed to cement the governance structure he was running on behalf of the propertied classes. De Castro’s “modernizations” included such Buchanan staples as school vouchers, evisceration of the public university system, health care privatization and the creation of super majorities in the legislative chambers to make any future changes virtually impossible.

Six years later, James Buchanan would be awarded a Nobel Prize in economics and as his star rose, Charles Koch would single him out to lead his most important – and illegal – political operation on the banks of the Potomac. His name would serve to legitimize Koch’s project at George Mason University; very much the crown jewel of Koch’s by then well-established, multi-pronged political operation.

All About the Business

The engineering degree Charles Koch earned at MIT in 1957 served to sharpen a mind already predisposed to distillation. After his initial resistance, Fred Koch’s second-born settled in his role of heir-apparent and began to break down the parts of the corporation he would eventually rename after his father, selecting the best pieces and putting them back together for a more efficient performance.

He would tinker with it over and over again, reacting to changing markets, governmentally-imposed limitations and the ever-alluring siren call of more profits. Along the way, he would pick up the intellectual tidbits and political and economic theories that best suited his approach, cobbling together a personal business philosophy enshrined in what many a Koch employee would come to learn as Market-Based Management or MBM, for short.

An education in MBM, which some former employees described as a “cult”, was compulsory at the company and embracing its principles was a non-negotiable condition of employment. Ostensibly designed to attract and train free-market thinkers who thrived on the entrepreneurial spirit, Market-Based Management was a collection of tenets devised to produce clones of Charles Koch himself.

As Koch Industries expanded and devoured other gigantic corporations like Farmland and Georgia Pacific, it became harder to sell this glorified employee manual to the swelling number of people on its payroll. But, Koch’s ego and ambition grew along with the company assets. He began pouring more and more money into Libertarian causes and think tanks, as the need to keep the government at bay increased. He would invest in politicians and academics, like Buchanan, who could help him shape the public narrative and deflect negative attention from decidedly unfree market practices, such as the theft of resources from Native lands.

Measure Once, Take Twice

The rocky terrain in northeastern Oklahoma was thought to be of no particular value when the U.S. government relocated the Native American Osage tribe there from their original abode in what had become the state of Kansas. Only a decade earlier, George Bissell and Edwin L. Drake had successfully drilled for oil in Pennsylvania, kick-starting the age of fossil fuel extraction in the United States. The initially worthless land now part of the Osage Reservation soon revealed its rich deposits of crude. Oil leases were issued to the tribe, which oilmen all over the country would henceforth have to rent to gain access to the black gold.

The Osage would reap huge profits from the oil on their land, making them the wealthiest Native tribe in the country – indeed, the richest people per capita in the world. Decades later, Osage tribe members were driving around in expensive cars, wearing furs and exhibiting other signs of conspicuous consumption made possible by the ever-increasing dividends resulting from the oil gushing from the ground.

FILE PHOTO – Osage Nation delegation meets with U.S. President Calvin Coolidge

The story of the Osage takes a tragic but not so unexpected turn, as they began to be targeted in a criminal conspiracy to assassinate them and take over the fortune beneath their feet. The tribe would survive the ordeal with the help of nascent FBI and its fledgling director, J. Edgar Hoover who eventually cracked the multiple-murder case.

During the 1980’s, the Osage and the FBI would have to deal with a far more cunning and dangerous enemy in Koch Industries.

Koch President, Bill Hanna, sent out a company-wide memo instructing employees to “shred”, “burn” or otherwise destroy by “some equally effective method” any records that could benefit competitors. He did so in the midst of a U.S. Senate investigation into allegations of deliberate oil mismeasurement. The final report found Koch culpable of systematic oil theft.

For years, Koch had defrauded crude suppliers through manipulation of industry-standard oil gauging methods. They developed their own step-by-step procedure and drilled it into their oil gaugers with MBM-infused intensity with the understanding that their job depended almost exclusively on proper adherence to it. Gaugers were encouraged to always fudge the numbers they kept when siphoning crude from their suppliers’ tanks and loading it onto Koch’s barges. The practice was known as “cutting the top” and “bumping the bottom”, which simply meant that they took more than what they paid for.

This technique put millions of barrels of free oil into Koch’s refineries over the years. Among their victims were the Osage in Oklahoma, who they identified as the ideal target for a public relations campaign Koch mounted to undermine the Senate’s findings and stave off a criminal inquiry.

Understanding that the Osage had limited accounting expertise, Koch sent a former company trader, Ron Howell, to perform an ‘audit’ of the oil lease receipts against their own to prove that claims of oil theft were baseless. Howell came back with the incredible assertion that not only had Koch not stolen any oil, but in fact, had overpaid. In March, 1990, the Osage Nation News ran a story in which Osage chiefs cleared Koch of wrongdoing, based on the fraudulent audit results. Their statements were carried by the Daily Oklahoman soon after and Senator Bob Dole, beneficiary of almost a quarter of a million dollars from Koch throughout his career, submitted the article into the Senate record.

The criminal case never materialized. The FBI’s investigation was abruptly dropped by incoming U.S. Attorney, Timothy Leonard, a man with no relevant experience who was appointed by Oklahoma Senator and close Koch ally, Don Nickles.

Elbow Room

By 2016, Koch Industries would have grown into a fossil fuel behemoth with an annual revenue “larger than Facebook, Goldman Sachs and U.S. Steel combined”. Its insidious and calculated moves in local and state-level politics, academia and the law changed the political landscape of America. Their network would be instrumental in financing and amplifying the Tea Party zealotry. It would bring anti-union, anti-worker’s rights politicians like Scott Walker into the national spotlight. The radical right-wing rantings of Glenn Beck were written by the Koch-funded FreedomWorks, a tax-exempt group founded by former Republican House majority leader, Dick Armey. Beck would collect as much as $1 million dollars annually from the organization to spew his brand of free-market lunacy.

The Heritage Foundation, Cato Institute, The Reason Foundation, The Tax Foundation, The Club for Growth and Americans for Prosperity are just a partial list of the vast, multi-tiered operation initiated and maintained by the Kochs and their billionaire friends to shift the focus of political and economic discourse away from the majority and centering it around the interests of the 0.01 percent. The wealthy oligarch class coalesced around Charles Koch’s leadership to stage a coup on the rest of the country, couching their inhuman greed in populist rhetoric meant to seduce the masses of people they are intent on exploiting.

Along the way, Koch Industries’ shameful record of ecological destruction, subversion of democracy and death would soon be revealed as their true legacy.

Go To Part Two >> KOCH JUSTICE

Sacred Writ

We all remember the droning, repetitive ritual of indoctrination known as the Pledge of Allegiance that our school teachers forced us to recite every morning. This compulsory mantra is used in homerooms across the nation to introduce young, pliable minds to the hallowed compendium of American scripture, which include tracts like the Gettysburg address, the Federalist Papers and, of course, the U.S. Constitution.

All of them are rooted in re-imagined narratives of Calvinist-infused Christianity. Concepts such as ‘Predestination’, – man’s incontrovertible fate as determined by God at the moment of creation – or the ‘Elect’, a select group of people known only to the almighty who are to be spared eternal damnation.

Over time these ideas were re-fashioned to fit America’s political narrative. The “god-fearing” puritan ethos of the first settler communities mingled with Locke’s quasi-theological empiricism and his novel take on private property, which was broadly used to justify the theft of Native lands.

Predestination became “manifest destiny” and “land of the free” worked well as a catchy twist on the idea of “the elect”. Together with other rehashed biblical plot lines, they formed what has been referred to as Covenant ideology; less an organic, cultural construct and more a facile tool for the manipulation of the American public by unscrupulous politicians. More alarming still, is its spread to other parts of the world and a deliberate push to bring “adherents” together as a single global entity.

In the United States, specifically, the contours of this informal state doctrine have taken the shape of a cult. Since the 70’s the inexorable decline of American manufacturing and exponential rise of household debt coupled with stagnant wages has left millions of disaffected citizens ripe for radicalization. A fact no one who witnessed the 2016 U.S. presidential election and its aftermath can deny.

But, most revealing of America’s descent into ideological madness is the continued apathy and even active resistance to address the epidemic of gun violence and mass shooting events in this country.

The priests of America’s state religion preach from their pulpits in the Capitol and other state churches across the country. They quote foundational scripture to their followers who rationalize the gun massacres taking their young men, women and children in workplaces, schools and churches.

In spite of the mind-boggling frequency of mass shootings and persistence of gun-violence in poor minority communities, the gun-control debate rages on. Meanwhile, as the stone-faced deities hewn on a mountain once revered by the native people of this land continue to ask for more blood, “believers” continue to offer it.

Origin Stories

Through the sacrament of marriage and the concomitant prohibition against its dissolution, the Catholic Church had controlled the whole of Christendom for centuries. It was the fulcrum of its power and riches. The Church’s monopoly on the family unit allowed it to dictate the socio-economic dynamics of Europe’s disparate monarchies and, in turn, dictate to the monarchs themselves.

The Reformation was the beginning of the end for this arrangement and, in many ways, for the Catholic Church, as well. The fatal blow was delivered by Henry VIII, who empowered a competing ministry by divorcing five times under the authority of the upstart Anglican Church.

Statue of John Knox at Edinburgh University

What followed was a series of bloody and protracted wars across Europe and the British Isles, in particular, as an emerging class of merchants and landed aristocracies vied for control. Religious doctrine became atomized as the different regions in Europe adopted their own more culturally relevant versions of Christianity.

John Calvin’s unique re-interpretation gained popularity towards the end of the 16th century and attracted adherents from all across the continent. Among the French theologian’s most ardent students and supporters was a Scottish theologian named John Knox, who would go on to form and lead the Protestant Church in Scotland.

Knox’s reactionary and misogynist brand of Christianity would permeate the culture of Lowland Scots who would eventually immigrate across the Atlantic. The hyper-moralist Puritanism of New England’s first settler communities can be traced back to Knox, whose particular take on Calvinism colored the worldview of their direct ancestors who were part of the Plantation of Ulster, a state-executed campaign of dispossession and land theft meted out against the Irish and a virtual dress rehearsal for the colonization of North America.

After the British experiment in Northern Ireland foundered, a great many Ulster Scots chose to test their fortune in the colonies as indentured servants. The Scots-Irish, as they would call themselves, would end up representing a majority of early colonial settlers and their state militias.

Meanwhile, Cromwell’s revolution had set the stage for British preeminence in a post-Catholic Church world. New forms of economic organization were displacing older feudal methods as the seeds of capitalism were being sowed.

Most significantly, it was the eve of the Industrial Revolution; driven not by the cotton gin, but by the evolution in the manufacturing processes of the single most important tool of the imperial model: the gun.

The Force of Lead

By the time war had broken out in New England, a proto-military industrial complex had already begun developing in the mother country. Sprawling colonial enterprises were putting pressure on London gun makers who tried to keep up with demand, while the state sourced its needs both at home and abroad. Gun makers not only had to fulfill ordnance requests from the Royal armory, but also from the chartered merchant companies stretching from subcontinental Asia to the Hudson river. Inevitably, artisanal gun making slowly gave way to more efficient modes of fabrication.

The Seven Years War in the mid-eighteenth century saw the largest conscription of British troops ever to that point, with over 100,000 men deployed throughout Europe. All of them needed guns. The Napoleonic wars further pushed firearm-manufacturing into standardization. The French, themselves, had made large strides in the area of factory-style production, while Britain relied more on a loose network of independent contractors designed to keep the cost of manufacturing low by inciting competition for state contracts.

This incipient arms industry produced innovations in iron smelting, casting and other manufacturing processes, that would prove indispensable for the realization of the Industrial Revolution. By 1776, every British soldier was carrying an identical, mass produced muzzle-loading musket known as the Brown Bess. Over 4 million were made.

As gun manufacturing was perfected, revolvers and other short guns democratized the ability to kill at a distance. By drastically reducing the skill and proximity required to exact lethal force upon others, guns allowed Locke’s theory on private property to fully manifest itself in the world. Defending the “perimeter” would now be an individual prerogative and the very foundation of our present economic paradigm – codified into law by America’s founders – became possible.

Codification

The U.S. Constitution was completed after two weeks of intense, cloistered brainstorming and foisted on a largely unsuspecting public. During the Convention, the issue of an armed citizenry didn’t even come up. The second amendment itself was only later included to address the contentious issue of standing armies, opposed by most states but favored by the Federalists.

Firearm ownership was taken for granted and its relative ubiquity was such, that certain groups, like the Quakers, had found it necessary to claim their “right” to NOT own a gun. For the better part of a century afterwards, courts would rule time and again, that the second amendment applied only to Congress in the context of militias and was irrelevant to the issue of personal gun rights.

The Abolitionist movement, westward expansion and the Union’s push towards the consolidation of a true federal structure all converged to produce a spike in gun violence and its gradual welding with patriotism, politics and religion.

Just before the Civil War, Reverend Henry Ward Beecher, an outspoken Abolitionist, organized a gun-drive from his Congregational church in Brooklyn, declaring that there was “more moral power in one [rifle],… than in a hundred bibles”. The guns, destined for free slaves in Kansas, were dubbed “Beecher’s Bibles”.

As the Union claimed victory and inaugurated the nation’s first federally-funded army, the Industrial Revolution began to hit its stride. The quality, accuracy and availability of guns all increased. In the space of less than a hundred years, the gap between the government’s weaponry capabilities and the people’s grew exponentially.

The second amendment languished in irrelevance. As a strictly Congressional matter, it was understood to have no bearing on individual gun rights. Nevertheless, the issue of personal gun rights did come up in the infamous Dred Scot decision of 1857, in which the Supreme Court recorded the young nation’s racist foundations for posterity. The court concluded that black people could never be citizens and, therefore, had no right to carry a gun. While the decision was later overturned, the underlying sentiment that made it possible in the first place would express itself after the Civil War, when so-called “Black Codes”; laws that were widely instituted across the country to disarm returning black Union soldiers.

The defeated Confederacy re-emerged as the Jim Crow South after Reconstruction. It formed the base of the Democratic party for decades, thereafter, until the second half of the 20th century when a reshuffling of political alliances took place as a result of a re-alignment of national priorities following the Allied victory in World War II.

The Big Rebrand

The National Rifle Association makes much of its longevity. But, for most of its history, the NRA was little more than a club for enthusiastic game hunters and largely supported gun-control laws. Its current incarnation as a polarizing influence in American politics began in the late 1970’s, as part of a larger, calculated conservative backlash against liberal policy momentum accrued since FDR’s New Deal.

Racial tensions caused by the Civil Rights movement were motivating millions of Southern White Democrats to abandon their party and join the Republican side of the aisle. Simultaneously, fundamentalist Evangelicals asserted their leadership over the Southern Baptist Church, spurring the rise of televangelists like Jerry Falwell and his so-called “Moral Majority”.

In 1977, a shakeup of the NRA during their annual convention known as the “Revolt in Cincinnati” replaced the group’s leadership with hardline gun-rights advocates, who transformed it into a politically active organization. The second amendment would serve as the lynchpin for the upturning of the prevailing liberal order and the creation of a new voter base, which would bring the Neocons into power years later, via Reagan.

The late Charlton Heston, the former actor and head of the National Rifle Association, addresses gun owners during a “get-out-the-vote” rally in New Hampshire in October 2002.

The romanticizing of gun-culture and its amalgamation with Judeo- Christian belief systems would continue apace when Moses, himself, came down from Hollywood Hills to become president of the NRA in the late 90’s. Outspoken gun advocate, Charlton Heston, would use the platform to lead the national pro-gun conversation, leading the flock into the new millennium with an iconic performance during the contentious election of George W. Bush.

Just after the end of Bush’s second term, and on the heels of the largest transfer of wealth in the history of the United States, the Supreme Court handed down a landmark ruling, conferring Constitutional protection to individual gun-owners, based on a so-called “originalist” reading of the Second Amendment. More than a win for gun-rights advocates, it was an epic victory for the broad coalition of conservative voices, groups and think tanks behind the emergence of a fundamentalist political ideology, which has successfully radicalized millions of Americans.

The rise of the “Tea Party” and other fringe right-wing groups would follow in tow. Explosive events like the siege at Waco, the Oklahoma City bombing and, crucially, the September 11th attacks galvanized these groups, taking them further down the road of biblically-induced madness. Their cause for “freedom” at gunpoint is now a global affair, as they batten down the hatches to engage “evil-doers” and “bad hombres” in a predestined “clash of civilizations”.

Father Time

Today marks the 58th anniversary of the ill-fated Bay of Pigs invasion, a date commemorated each year by the surviving members of Brigada 2506, the makeshift contingent of Cuban army defectors and other anti-Castro Cubans who enlisted to be a part of the U.S. government’s secret plot to overthrow the island’s putschist regime.

The famously failed mission kicked off a decades-long enmity between the Cuban Exile Community and the Democratic Party of the United States. GOP operatives like George H.W. Bush pounced on the opportunity to create a loyal voter base, which was fostered through government handouts and preferential immigrant policies. Over the next several years, they formed a hardline Republican block in South Florida.

CORAL GABLES, FL – April 17: Former U.S. Congressman, Lincoln Diaz-Balart, shakes a guest’s hand at the Biltmore Hotel on the occasion of the 58th anniversary of the Bay of Pigs operation in Coral Gables, Florida on April 17, 2019 | PHOTO CREDIT: Raul Diego for deepcitychronicles ©2019 Deep City Chronicles. All Rights Reserved.

Not coincidentally, Cubans would rise to the top of the political pyramid in Miami during the Reagan years, when Bush was Vice President, and play a pivotal role in the hegemonic wars carried out in the name of “anti-communism”. South Florida’s cocaine economy helped funnel cash to fund covert operations around the world, including the Contras in Nicaragua.

Sixty years later, the usefulness of the Cuban exile community to the American political establishment is reaching its natural end. A new generation of exiles is being groomed to replace them as the specter of communism is once again evoked in South America.

Passing of the Torch

This year, the Bay of Pigs commemorative activities were held at the iconic Biltmore Hotel in the swankiest part of Dade-County instead of the usual venue on the equally iconic, but far lower-rent 8th Street, where a permanent flame burns atop the monument dedicated to the fallen members of Brigada 2506.

CORAL GABLES, FL – April 17: City of Miami Mayor, Francis X. Suarez, embraces a member of the Brigada 2506 at the Biltmore Hotel in Coral Gables, Florida on April 17, 2019 | PHOTO CREDIT: Raul Diego for deepcitychronicles ©2019 Deep City Chronicles. All Rights Reserved.

The colorful street murals and fruit stands of Little Havana didn’t quite suit the expectations of the guest list. Miami’s most privileged minority community came decked out in their best Spring attire to the Coral Gables landmark where a string quartet welcomed them to yet another political event headlined by Trump’s National Security Advisor, John Bolton.

Bolton, who was in Miami just last February, chose the anniversary of the Bay of Pigs to announce a new round of sanctions and banking restrictions on the countries of Cuba, Nicaragua and Venezuela. In addition, the Trump administration will activate a dormant law, that greenlights legal action against corporations doing business with Cuba. Title III of the Helms-Burton Act, created in 1996, has been ignored by all previous administrations over clear international opposition.

CORAL GABLES, FL – April 17: Members of the Cuban exile community gather at the Biltmore Hotel for the 58th anniversary of the Bay of Pigs operation in Coral Gables, Florida on April 17, 2019 | PHOTO CREDIT: Raul Diego for deepcitychronicles ©2019 Deep City Chronicles. All Rights Reserved.

The European Union has already stated it will challenge any such law with the WTO, while other countries such as Canada, already have legislation in place blocking enforcement of Helms-Burton against companies based in their nations.

Title IV of the act, which calls for the denial of visas to those involved in “trafficking” properties confiscated by the Cuban government, is also set to come into effect, further pushing America back in time to a bygone era of communist paranoia.

Bolton’s job in Miami is to help recruit the new batch of exiles to underpin America’s re-invigorated hegemonic foreign policies in Latin America. But, the freshmen class of Venezuelan exiles isn’t turning out to be as receptive to his overtures as their Cuban counterparts were back in the 60’s.

Maduro has, so far, been able to keep the vast majority of the Venezuelan military on his side and the Guaidó operation seems to have fallen flat, despite the mainstream media’s efforts to maintain the illusion of his “presidency”.

CORAL GABLES, FL – April 17: Former Mayor of Miami, Tomás Regalado, mingles with the guests at the Biltmore Hotel on the occasion of the 58th anniversary of the Bay of Pigs operation in Coral Gables, Florida on April 17, 2019 | PHOTO CREDIT: Raul Diego for deepcitychronicles ©2019 Deep City Chronicles. All Rights Reserved.

Clearly, a regime-change scenario in Venezuela is a much more complicated proposition than the one half-heartedly attempted in Cuba all those years ago. However, given the political gold mine that South Florida has proven to be for the Republican party, in particular – and precisely as a result of the failure of American policy towards Cuba – one can only question the true motivations behind these largely toothless measures now being enacted against Venezuela and the other two countries which have a large exile community in the region.

Interest or Principle

When a bank issues a loan, the principle is listed as an asset on the bank’s books. If you pay off the principle, that money disappears from the bank’s ledger. If you only pay the interest on the loan, however, the bank not only keeps the asset on its books, but it makes a profit, too.

Similarly, when a government makes a promise it will collect as much interest (votes) as it can before delivering on that promise. Just like a bank, once they deliver on the promise they can’t collect interest anymore.

CORAL GABLES, FL – April 17: TV News anchor, María Elvira Salazar, mingles with the guests at the Biltmore Hotel on the occasion of the 58th anniversary of the Bay of Pigs operation, while behind her, Miami Mayor, Francis X. Suarez, talks on the phone in Coral Gables, Florida on April 17, 2019 | PHOTO CREDIT: Raul Diego for deepcitychronicles ©2019 Deep City Chronicles. All Rights Reserved.

Venezuelan exiles in Miami should ask themselves what the true motives of the United Sates are when it comes to intervening in their country’s affairs. They should take a long, hard look at the fate of the “martyrs” of Brigada 2506 and the community of Cuban exiles who decade after decade continue to support policies, like the embargo, which have only changed things for the worse.

They should ask themselves if they want to take out this loan. They should remember that it will show up as an asset on the political ledger of the United States, but a liability on their account.

Snakes in the Grass

Jeanne Humphreys’ beautiful home at 210 Harbor Drive, Key Biscayne, Florida had a snake problem, but a recent trip to Jamaica had given her some food for thought. She learned that farmers on the island had introduced the mongoose into the local fauna to fight a snake infestation during the 1870’s. Curly Humphreys’ wife found herself thinking about the snake-killing carnivores one night at the Fontainebleau Hotel in Miami Beach and innocently broached the subject with her husband’s associate and friend, Johnny Rosselli.

“What do you know about the word mongoose?” She asked Rosselli.

Shocked by the question, the gangster balked. “Are you crazy?”, Rosselli inquired before nearly spilling the beans on the CIA’s top-secret plot to kill Fidel Castro, in which he and Jeanne’s husband, were deeply involved.

“This Castro stuff is OK’d by the G [U.S. government]. We’re not supposed to talk about it”, Rosselli protested. “I can’t believe believe Curly would talk about such a thing.”

Jeanne Humphreys had no idea what Johnny was talking about and, wondered aloud what Castro had to do with the snakes in her front yard. Realizing his mistake, Rosselli asked Jeanne to keep it to herself. “Look, I just fucked up.” He said. “Please don’t tell Curly.”

The plot was the brainchild of then Vice President, Richard Nixon, who was angling for the presidency and calculated that a coup in Havana would get him there. After the scheme was hatched at a National Security Council meeting in the Spring of 1960, Nixon encouraged his military aide, General Robert Cushman, to meet with exiled Cuban militants and put a group together for its execution. Originally called Operation Pluto, the plan’s name was later changed to Operation Mongoose and it called for the invasion of Cuba and the assassination of Fidel Castro along with his top retinue of revolutionaries.

“I had been the strongest and most persistent for setting up and supporting such a program”, wrote Nixon, years later. But, the ragtag collection of exiles didn’t inspire the greatest confidence in the planners, and the decision was made to enlist the help of Johnny Rosselli, Curly Humphreys and a handful of other mobsters from the Chicago Outfit.

PHOTO – Mugshot of a young Filippo Sacco, a.k.a Johnny Rosselli

The Genius

Murray “Curly” Humphreys was the brains of the Chicago mob, otherwise known as The Outfit. His intellectual abilities would help them outmaneuver many a legal problem. But, one particular maneuver was such a stroke of genius, it would be enshrined in the most celebrated film in American history – The Godfather.

“I refuse to answer on the grounds that it might incriminate me.”, was the phrase crafted by the brilliant, former jewel thief to repel the onslaught of questions by U.S. Senators during the United States Senate Special Committee to Investigate Crime in Interstate Commerce, known as the Kefauver Committee. Over and over, Outfit members called to testify simply repeated the mantra, to the immense frustration of the dais.

The Committee called eight hundred witnesses in fifteen cities across the country during an eleven-month-long investigation, that resulted in more than 11,500 pages of testimony and must-watch TV. First broadcast in New Orleans, the hearing’s popularity soon drew in the big markets of New York and Los Angeles, among others. The record ratings attained during the 1950 World Series a year earlier were shattered, attracting between 20 and 30 million viewers. Committee Chairman Estes Kefauver became a household name and, at one point, the front-runner for the 1952 Democratic presidential nomination.

Nevertheless, none of the nineteen legislative recommendations issued by the committee’s report were ever implemented, and Kefauver himself, was found to be an avid gambler who was constantly broke as a result. Jewish mob boss, Meyer Lansky, confronted the hypocritical Senator. “What’s so bad about gambling?, asked the infamous New York Commission boss, “You like it yourself. I know you’ve gambled a lot.” Kefauver admitted as much, but revealed his true bigoted motivations in his repsonse: “That’s right, but I don’t want you people to control it.”

Forty-six “contempt of Congress” citations were issued during the hearings over the mobsters’ repeated use of Humphreys’ legal device. Only three were upheld by the courts. An incredible victory for the man who invented ‘Taking the fifth’, immortalized in Francis Ford Coppola’s seminal film.

Al Pacino in a still from the film, ‘The Godfather,’ directed by Francis Coppola, 1972. (Photo by Paramount Pictures/Courtesy of Getty Images)

The Godfather movie, itself, was a tribute the mob – which controlled most of Hollywood then – made to itself. Paramount producer Bob Evans had the rights to Mario Puzo’s novel and was unceremoniously turned down by MGM president, Jim Aubrey, when he tried to accommodate Coppola’s choice for the role of Michael Corleone – an unknown actor with an “unbreakable” contract with the competing studio, named Al Pacino. Undeterred, Evans sought help from Tinsel Town’s notorious fixer, Sidney Korshak.

“He never heard of the schmuck, either.”, recounted Korshak to Evans about how he dealt with the reluctant Aubrey. “I asked him if he wanted to finish building his hotel.”, said Korshak. The thinly veiled threat was enough for MGM to release Pacino from his contract and allow him to play the part, which would establish him in as one of the biggest names in the business.

A Fucking Hoofer

The Outfit’s incursion into the entertainment industry had begun after the end of Prohibition forced them to find other rackets to grow and launder their fortunes. The movie business, with its massive budgets and licensing opportunities, was the perfect vehicle. But, before film, the mob had taken over the music industry and bankrolled many of its brightest stars. Frank Sinatra was, perhaps, the brightest of them all.

The mob not only made Frank Sinatra, but also saved his career when it was foundering in the early 1950’s. Despite his marriage to Hollywood A-lister, Ava Gardner, Frank’s bid to jump-start his career again by getting a part in Harry Cohn’s upcoming movie, “From Here to Eternity”, was falling flat with the producer, who wanted a real actor for the part. “You’re nothing but a fucking hoofer”, Cohn told the desperate crooner, who immediately appealed to his mob buddies for a helping hand.

In a scenario similar to the one, that would play out years later between Korshak and MGM’s Aubrey, Johnny Rosselli came to Frank’s rescue and made Cohn an offer he couldn’t refuse. The movie won a total of eight Oscars, with Sinatra taking home the award for Best Supporting Actor and a new professional lifeline.

Meanwhile, things were picking up over in Havana, Cuba; the very place where Sinatra’s career had been launched. Santo Trafficante, Jr. was making a killing in the revamped casino business in Havana, in league with dictator Batista, who made Trafficante’s partner, Lansky, “adviser on gambling reform”.

PHOTO – Mugshot of young Frank Sinatra

The Commission boss soon opened a casino inside the iconic National Hotel, designed by Igor Plevitski, who also designed The Biltmore in Coral Gables. Six years earlier, a historic meeting between the biggest mafia bosses took place at the legendary hotel. Yet another pivotal moment also dramatized in The Godfather, when the heads of all the families gathered at the National to discuss something that was left out of the classic film – their participation in a highly classified, CIA-sponsored operation. Just before the mob summit, Frank Sinatra landed in Havana with two million dollars in a suitcase for the CIA’s point-man, Lucky Luciano.

Charles “Lucky” Luciano was recruited by CIA-precursor, OSS in 1942 to ostensibly safeguard New York harbor from acts of sabotage by the enemy axis. After being convicted to 30 years in federal prison for running a prostitution ring, Luciano was approached by undercover OSS agents , the precursor organization of the CIA, and offered a deal, that would mark the beginning of a far-reaching partnership between the U.S. government and the Sicilian and Italian-American mafia.

An argument can be made, that the CIA was created for the sole purpose of managing this partnership, which involved the creation of secret militias financed by world-wide heroin trafficking, called Operation Gladio.The meeting at the National Hotel in Havana was made to convince the Gambinos, Genoveses, Accardos and other top mafia families to get into the narcotics game, many of whom considered a dishonorable endeavor, and help Uncle Sam “fight communism”. The money Sinatra delivered to Luciano in Havana was part of a down payment he intended to distribute among the guests.

PHOTO – Hotel Nacional de Cuba view towards the Malecón in Havana, Cuba

The Wrong Cuban

Cubans were becoming part of America’s collective consciousness, thanks in large measure to the “I Love Lucy” show, which featured the bongo-playing Ricky Ricardo, Lucile Ball’s real-life husband and the sitcom’s producer, Desi Arnaz.

Arnaz is credited with inventing the multiple-camera sitcom method, which made his production house, Desilu Studios, one of Hollywood’s most successful, at the time. In 1959, Arnaz had another hit on his hands. The Untouchables, a show about fabled law-enforcer, Elliot Ness and his mobster-chasing adventures, ran for four years on ABC and became one of television’s classic shows. But, the Italian-American community did not take well to the portrayal of their culture on the series and it drew special ire from the real crime bosses, who went after the producer.

Desi’s childhood friend had been none other than Sonny Capone, the only son of the legendary mob boss, Al Capone. It was Sonny who first complained to Arnaz about the problem he had stirred up, but Arnaz insisted he was the best person to make such a show because of his own personal connection to the subject matter. From there, the issue only escalated and Sam Giancana, nominal head of the Chicago Outfit, sent Frank Sinatra to talk some sense into the Cuban.

The conversation between Arnaz and Sinatra ended with the singer storming out and pulling all of his productions from of Desilu Studios. Outraged, Giancana dispatched two of his henchmen to remove Desi Arnaz from this earth. Al Capone’s widow, Mae, stepped in to call off the hit and Ricky Ricardo was spared.

American actress Lucille Ball (1911 – 1989) (as Lucy Ricardo) and her husband, Cuban actor Desi Arnaz (1917 – 1986) (as Ricky Ricardo) talk in an episode of ‘I Love Lucy,’ Los Angeles, California, September 21, 1954. (Photo by CBS Photo Archive/Getty Images)

As it turns out, the mob had been worried about the wrong Cuban. Fidel Castro was about to turn the mob’s Havana dreams into a nightmare as his revolutionary forces ousted Batista and his entrenched elite. With Eisenhower riding out the last year of his Presidency and more worried about how his legacy would be affected by starting a conflict 90 miles from the U.S. mainland, Castro caught a break.

Nevertheless, the calculation regarding Castro seems to have changed among the real policy-making circles of America, and Castro’s sudden take-over of the island was seen as more of a boon than a detriment to U.S. designs for the rest of Latin America.

Cuba, after all, had no value besides that of a playground for the rich. In terms of natural resources, for instance, it was hardly worth the trouble to invest any kind of man-power to the goal of regime-change, even if such efforts were comprised of disposable mobsters and Cuban exiles. On the other hand, having a communist boogie man they could wave around as a warning to those in the continent who dared to dream of self-determination was much more valuable.

The Snake Pit

After the fiasco in the Caribbean, the upper echelons of the mafia saw the writing on the wall and made the necessary adjustments. Trafficante, Jr. cut a deal with the new island boss and gave Castro a piece of the bolita proceeds, a street-level gambling racket up and down the U.S. east coast. In contrast, Johnny Rosselli would go down with the ship.

Rosselli, like many of his Italian-immigrant brethren, dreamed of becoming full-blooded Americans. For him and his ilk, legitimizing their fortunes and joining the ranks of the “upperworld”, or the realm of sanctioned wealth creation, was also part of that aspiration.

He considered himself a patriot and his sincere commitment to anything the “G-men” would ask of him bore this out more than once. As far as Rosselli was concerned, he had reached the dream. Narrowly escaping fire from Cuban forces and twice having to jump out of speed boats during failed CIA-missions in the Caribbean, Rosselli had the war stories to prove it.

The era of the “Goombahs”, however, was coming to a close. The new RICO laws were successfully used to dissolve the crime family model in the United States. Rudy Giuliani, future Mayor of New York and Italian-American son, was the first and most prolific prosecutor of the mafia under the Racketeer Influenced and Corrupt Organizations Act, passed in 1970.

In 1976, Filippo Sacco’s decomposing body – Johnny Rosselli’s real name – was found in a 55-gallon steel drum floating near Miami, Florida after he had been called to testify before the Church Committee for a second time about who had killed Kennedy. As it turned out, Johnny Rosselli had a snake problem of his own and would have been better served by following his friend Curly’s advice all those years ago and taken “the fifth”.

The real scope and implications of what Rosselli was lending himself to, through his participation in the anti-Castro plot and other deep state operations probably escaped him and other members of the Outfit who were a part of them. Ultimately, they were pawns in a covert war that continues to this day, under different guises and with different players.

Role Reversal

If you would have carried out a poll in early November of 1963 about who was most likely to be assassinated that month between the President of the United States and Fidel Castro, the final tally would have likely tilted toward the latter. The fact that the bearded, cigar-smoking revolutionary remained in power for another five decades should tell us something.

The Cuban exile community blames Kennedy for the failure of the Bay of Pigs. But, it is clear that a decision had been made by more powerful, invisible players to keep Castro in power. The same ones who made the decision to remove Kennedy, and his entire mob-connected family, from it.

PHOTO – Fidel Castro surrounded by showgirls in Havana, Cuba

The scramble for power between the time of JFK’s assassination and Nixon’s resignation almost a decade later, was real. America’s post-war superpower status was seriously threatened by the Arab oil embargo. The Vietnam war and other internal strife had frayed the social fabric of the country.

Concurrently, Operation Gladio was unraveling in Europe and the usefulness of the CIA’s partnership with the mafia was becoming a liability. Luciano’s Sicilian networks and their affiliation with CIA-sponsored right-wing terrorists were being exposed by Italian law enforcement and attracting unwanted international attention. The whole house of cards was starting to come down and it would have, had it not been for the operation’s success in Afghanistan, where the Soviet military was exhausting itself fighting Gladio-financed Mujahidin led by one Osama Bin Laden.

Despite teetering on the brink of collapse, “anti-communism” was still fungible currency in American political theater, which could be traded for lowering protectionist barriers and other obstacles to U.S. interests at home and abroad. Fidel Castro, as a gatekeeper for an economic embargo that destroyed the lives of the Cuban people – not to mention a clear and present “nuclear threat” to the region, represented a valuable hegemonic tool for these same interests.

Sleep with the Fishes

The mob developed Hollywood’s proof of concept and built the industry’s SOPs. Today, the CIA and the Military Industrial Complex exerts direct control and oversees the messaging of almost every theater release; especially in the superhero/comic movie genre, which is little more than war propaganda.

The Cuban Missile Crisis and Ricky Ricardo are two sides of a false dialectic. Nuclear annihilation or Merengue; starvation or dinner with Ethel and Fred. The ‘TV-fication’ of America allowed simple yes/no narratives to be delivered right to the viewers’ prefrontal cortex.

Today, the ‘Internetification’ of America is bypassing even this step in the flow of perception and taking it straight to the limbic system, where discernment is an afterthought and the need for a narrative is eliminated altogether.

Much of the research for this article comes from Gus Russo’s fantastic account of the Chicago mob scene in his book The Outfit – The Role of Chicago’s Underworld in the Shaping of Modern America

Foundational Discrimination

Miami’s image of a multicultural melting pot of Caribbean and Latin American cultures, all co-existing together in an idyllic setting of palm trees and warm beaches hides a deeper history of Black disenfranchisement and state-sponsored population transplantation, unprecedented in American history.

The area’s first black community was settled by Bahamians in the 1880’s, well before the incorporation of the city in 1896. It was called Coconut Grove then, as it is now, and provided many of the black male registered votes used to reach the required quota for the official creation of Miami. Slave-descended Black Americans and other Afro-Caribbean groups were likewise used for the same purpose. All were subsequently stripped of their voting rights, as the region was transformed into an international metropolitan hub and Jim Crow laws spread throughout the South during the early part of the 20th century.

Black labor was the primary source of man power used to build Flagler’s pivotal railroad and to develop the earliest farming settlements, which would make South Florida the breadbasket of America. As the country emerged out of World War II, “benign tools of segregation” began to replace the violent lynch laws, and racist zoning practices started to carve out the real estate along the skin color line. Overtown, a thriving enclave of black culture in the middle of the city known as “The Harlem of the South” and with 45% of Miami’s black population, was bisected by the construction of I-95 – along with many other black and minority neighborhoods across the nation – as part of Eisenhower’s Interstate Highway system.

PHOTO – Gathering at the boat house. Miami’s Coconut Grove neighborhood was the first black settlement in southern Florida | Courtesy of History Miami Museum

In order to build the massive vehicular artery, the government invoked eminent domain, seizing the land and property of black businesses and homes, displacing over 40,000 people in the 1960’s. The livelihoods of hundreds of “black doctors, lawyers, shopkeepers, entertainers and hotel owners” were destroyed, as a result.

Simultaneously, the federal government was implementing a population transplant operation from a Caribbean nation just 90 miles away from Miami, which had been snatched away from the entrenched, mob-affiliated political class by a bearded revolutionary, who was just beginning his 5-decade tenure as America’s most iconic nemesis.

Mayflower of the Caribbean

The first wave of Cuban immigrants, that touched South Florida shores are collectively referred to as the “Golden Exiles”. Arriving between 1959 and 1962, 31% of the Cubans who came to the United States during this period were educated professionals with resources. Many already had bank accounts in the U.S. and further benefited from extensive help from the American government, unprecedented in scope and generosity.

The Cuban Refugee Program assisted the exiles with resettlement, job training, housing and education programs to the tune of US$ 1 Billion in those early years. In addition, they benefited from special business loans and accreditation of their foreign-earned degrees. The program continued for decades and US$ 3 Billion more were invested through 1996.

PHOTO – Fidel Castro | Photo by David Hume Kennerly/Getty Images

Policies like affirmative action also gave Cuban arrivals a leg up at the expense of Black Americans, reducing the latter community’s already shrinking employment opportunities in Miami.

After the “Golden” wave of immigrants, the second stage consisted of mostly middle-class, mostly white Cubans, who were able to take advantage of the groundwork laid by their immediate predecessors as part of a so-called “ethnic economy”. The transformation of the city’s demographics was well underway. By the 1970’s, the relentless Cuban exodus would overtake the Black population as the second largest in the city, behind White Americans.

Third Wave

The McDuffie Riots was a watershed moment for Miami. Sparked by the acquittal of all 7 police officers indicted in the killing of African-American accountant, Arthur McDuffie, the violence expressed a subconscious recognition of a changing of the guard, literally.

The MPD officers who were involved in the incident with McDuffie on the morning hours of December 17, 1979 were White Americans, except for one. Alex Marrero, the officer who beat Arthur McDuffie to death, was Cuban.

In the most macabre way possible, this signaled the success of the Cuban exiles’ political and economic ascent. Aided by the generous hand of the state, they had firmly established themselves among the higher rungs of the city’s pecking order and were beginning to take hold of several seats in municipal governments.

A new swell of Cuban migrants would soon flood the streets of Miami, but this group occupied a far different social stratum than their state-side cousins and looked more like Arthur McDuffie than Ricky Ricardo. Unlike their predecessors, who had come in through the customs gate at the airport after a short flight on Pan American Airlines, the latest arrivals were processed like cattle by the Coast Guard.

PHOTO – A firemean battles a building set on fire during the McDuffie Riots in Miami, 1980 | Courtesy Miami Herald

The Mariel Boatlift dropped tens of thousands of Cubans on South Florida shores in 1981. Many were sent to different parts of the country as the sheer number of people became unmanageable for a single city. Carter sent thousands of “Marielitos” to Arkansas, then governed by Bill Clinton, who blamed the loss in his 1982 reelection bid on the influx.

Although the Mariel Cubans also received special assistance by the federal government, it was a fraction – in dollar terms – of what the first two groups enjoyed. It was, nevertheless, a king’s ransom compared to the roughly 80,000 Haitians who had taken refuge in Miami during the same period, who instead of getting help were looked upon as a drain on public resources.

The Politics of Color

A recent study entitled “The Color of Wealth in Miami” takes a deep dive into the economic reality of the various ethnic groups, nationalities and races that comprise the residents of Miami-Dade County, revealing a stark picture of racial marginalization and an economically segregated population.

Ranking 8th among the poorest regions in the nation and 3rd least affordable metropolitan area according to HUD, Miami-Dade County presents one of the country’s biggest disparities of wealth-inequality, which the data shows is heavily skewed by skin color, irrespective of ancestral origin.

Latinos comprise 65% of the population, far and away the largest in the County. Of these, Cubans are the most numerous, representing 18.4%. The rest are broadly spread out among Colombians, Dominicans and Puerto Ricans, as well as many other Latin American nationalities  in smaller groups. West Indian and Afro-Caribbean immigrants such as Haitians, Jamaicans and Trinidadians and Tobagonians add up to about 8%. African-Americans (non-Latino Blacks) in Miami-Dade County come out to roughly 7%. Non-Latino Whites in the Miami area comprise only 33%, almost half than their numbers in the state as a whole.

The median wealth gap between Whites and other ethnic groups in Miami is incredibly wide. Calculated at around US$ 107,000 on average for White households, the closest group was the Cubans, who nonetheless hold just US$ 22,000 median household wealth or about 20% of the median household wealth of Whites. Puerto Ricans, for example, report a negative US$ -3,940 median wealth position.

The study analyzes differences and relationships between income, wealth, education and race as they pertain to Miami-Dade County, and finds that people who self-report as White (Latino or otherwise), tend to show better socio-economic indicators than their Black and Latino counterparts. One of the most telling observations is how Cubans, Colombians and Dominicans who self-identified as White “did not report substantially higher rates of college educational attainment than their co-ethnic counterparts who racially identify as Black. But they did report substantially higher incomes.”

PHOTO – Pool party scene at the Sir John Hotel in Overtown, Miami in 1962 | Courtesy of History Miami Museum

Home ownership is, likewise, one of the clearest signs of Miami’s wealth-inequality with nearly 71% of non-Latino Whites owning homes, followed by Cubans, Colombians and Dominicans who self-identify as White with approximately 53%, 49% and 47% home-ownership rates, respectively. Among black Miamians, home-ownership rates are between 40 and 60% lower, regardless of nationality.

A home, of course, is the most basic economic anchor there is. The difference between having a stable place to live and raise a family and not can determine a person’s future economic success. From education to employment opportunities, there are many variables this one factor can influence during the course of our lives. In Miami, non-white home-ownership has been under attack by speculators and irresponsible government. And climate change is about to make it worse.

The Last Wave

The 2008 crash left thousands of Miami’s most vulnerable in a very tenuous position, after foreclosure affected 1 in 14 homes by the end of 2009. Real estate developers, encouraged by local leaders, have since returned with a vengeance and are aggressively targeting low-income, minority communities who happen to live on the higher ground elevations of the County.

Sea-level rise and the constant risk posed by an ever-more active hurricane season, coupled with rampant property speculation and gentrification represents a serious threat to the already frail socio-economic fabric of Miami, which could devolve into widespread violence of the kind the city experienced almost forty years ago.

According to a report issued by The JP Morgan Chase Institute on the “financial implications of Hurricanes Harvey and Irma”, the inflow of checking accounts of both businesses and individuals in the wake of the natural disasters fell 20% below baseline. Of the two cities, Miami showed a slower rate of recovery than Houston.

The precarious financial position of the majority of Miami’s residents, with 51% of households lacking enough cash to survive more than three months in the case of an emergency, along with predatory real estate developers salivating over their land should raise all sorts of red flags.

PHOTO – Aerial shot of the destruction brought on by the McDuffie Riots in Miami in 1980 | Courtesy Miami Herald

During preparations for Hurricane Irma, tens of thousands of people from low-income communities were evacuated as part of a county-wide operation unlike any that had ever been attempted. Many weren’t even in an evacuation zone, yet were urged to flee to a number of improvised shelters throughout the county. After the storm, thousands lined up to receive D-SNAP aide, because they had no cash on hand to replenish their refrigerators.

A majority of Miami stands on the brink of financial annihilation as a result of decades of racist policies. The Pew Research Center ranked Miami 10th in the nation among economically segregated cities, close to doubling its “Residential Income Segregation Index Score” of 30 in 1980 to 49 in 2010. Only certain Latino groups have experienced some relative level of economic mobility. It’s no accident, perhaps, that these are also the same groups who play a role in the goals of American foreign policy in Latin America: Cubans, Venezuelans and Colombians.

In recent years, the mayors of four South Florida counties signed an emergency plan that contemplates mass evacuations and other crisis measures in the case of sea-level rise. Given the history, it is not beyond the realm of possibility to assume that our County and city leaders would take advantage of a climate-related crisis like this to dislodge people from their homes, counting on the fact that they couldn’t afford to come back.

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