“Today, many governments give special treatment to a favored few businesses that eagerly accept those favors. This is the essence of cronyism…. One obvious example of this involves wind farms. Most cannot turn a profit without the costly subsidies the government provides.”
– Charles G. Koch, “The Importance of Economic Freedom.” August 17, 2012.
William Simon, the top energy regulator in the Nixon’s Federal Energy Administration, was surprised. Oil company head after head was visiting his office to demand this or that to alleviate their shortages of oil or get more entitlements credit for their refineries. But Koch Industries had come by to just ask the federal government to leave them alone—to allow price signals to allocate crude oil and petroleum products. It was a meeting that Simon would not forget.…
“The majority of businessmen prefer power and government-guaranteed profits to philosophical consistency; they are more than willing to trade off market principles for a system that promises less competition and more security…. Almost every major piece of interventionist legislation since 1887 has had important business support, and certainly regulation in the oil and gas industry is no exception.”
“Economic planning by its very nature is people planning. It is part of a misguided policy that would return us to the dark ages of political economy where the State controlled the entire economy and society in its own political interests. To return to that system is to finally abandon the American experiment and the American dream.”
– – Charles G. Koch (1977)
[Part I: Yesterday]
I would now like to turn to the more subtle historical and political implications of Thornton Bradshaw’s call for planning in oil.…
[Editor Note: This letter by Koch Industries’s CEO Charles G. Koch, addressed to Fortune Editor-in-Chief Hedley Donovan, provides a pro-free market rebuttal to ARCO’s CEO Thornton Bradshaw’s “My Case for National Planning” (Fortune, February 1977).
Koch’s scholarly effort is reproduced below as a historically important document in the energy debate. It is authored by a rarity of rarities, a principled free-market capitalist. The context and timeliness of the rebuttal was stated in the Libertarian Review at the time:
…While this essay was only the latest in a series of attacks on a free market economy and defenses of National Economic Planning to appear over the past few years by intellectuals, businessmen and labor leaders alike, Bradshaw’s piece deserves special scrutiny. For it comes to us from a man who both is a leading representative of American major oil companies, and was a member of Jimmy Carter’s task force on energy during the 1976 presidential campaign.