Democracy in Chains Read online

  With these records, combined with those I found elsewhere, I started piecing together the first detailed picture of how this movement began and, more important, how it evolved over time, both in its goals and in its strategy. I learned how and why Charles Koch first became interested in Buchanan’s work in the early 1970s, called on his help with what became the Cato Institute, and worked with his team in various organizations. What became clear is that by the late 1990s, Koch had concluded that he’d finally found the set of ideas he had been seeking for at least a quarter century by then—ideas so groundbreaking, so thoroughly thought-out, so rigorously tight, that once put into operation, they could secure the transformation in American governance he wanted. From then on, Koch contributed generously to turning those ideas into his personal operational strategy to, as the team saw it, save capitalism from democracy—permanently.

  These papers revealed something else as well: how and why stealth became so intrinsic to this movement. Buchanan had realized the value of stealth long ago, while still trying to influence Virginia politicians. But it was Koch who institutionalized this policy. In his first big gift to Buchanan’s program, Charles Koch signaled his desire for the work he funded to be conducted behind the backs of the majority. “Since we are greatly outnumbered,” Koch conceded to the assembled team, the movement could not win simply by persuasion. Instead, the cause’s insiders had to use their knowledge of “the rules of the game”—that game being how modern democratic governance works—“to create winning strategies.” A brilliant engineer with three degrees from MIT, Koch warned, “The failure to use our superior technology ensures failure.” Translation: the American people would not support their plans, so to win they had to work behind the scenes, using a covert strategy instead of open declaration of what they really wanted.13

  The irony haunted me as I systematically worked my way through the piles of papers in Buchanan’s personal office and then moved on to the cabinets filled with documents that revealed virtually every step in the evolution of his ideas and associations. I was able to do so because Koch’s team had since moved on to a vast new command-and-control facility at George Mason called the Mercatus Center, leaving Buchanan House largely untended. Future-oriented, Koch’s men (and they are, overwhelmingly, men) gave no thought to the fate of the historical trail they left unguarded. And thus, a movement that prided itself, even congratulated itself, on its ability to carry out a revolution below the radar of prying eyes (especially those of reporters) had failed to lock one crucial door: the front door to a house that let an academic archive rat like me, operating on a vague hunch, into the mind of the man who started it all.

  • • •

  James Buchanan did not start out as a shill for billionaires. For one thing, there were no billionaires in the United States in 1956—only the oil magnate J. Paul Getty even came close.14 In an age when even kindred economists like Milton Friedman were producing ever more specialized and technical scholarship, Buchanan was a throwback to another time. His dream was to become a political economist in the classical mode, like Adam Smith, a veritable social philosopher. But instead of studying the things others in the discipline did, Buchanan wanted to use an economic definition of incentives to examine government behavior, in the hope of returning America to “the free society” it had once been, only some of whose lineaments the Virginia of the 1950s had managed to preserve.

  So what exactly constituted that “free society” where the “liberty of the individual” was preserved? Buchanan found it in an earlier time when government was usually weak. There were, consequently, few rules to constrain how a man might get wealthy, and great restraints on the government in asking for some part of that wealth, other than for the maintenance of order and military defense.

  What animated Buchanan, what became the laser focus of his deeply analytic mind, was the seemingly unfettered ability of an increasingly more powerful federal government to force individuals with wealth to pay for an increasing number of public goods and social programs they had had no personal say in approving. Better schools, newer textbooks, and more courses for black students might help the children, for example, but whose responsibility was it to pay for these improvements? The parents of these students? Others who wished voluntarily to help out? Or people like himself, compelled through increasing taxation to contribute to projects they did not wish to support? To Buchanan, what others described as taxation to advance social justice or the common good was nothing more than a modern version of mob attempts to take by force what the takers had no moral right to: the fruits of another person’s efforts. In his mind, to protect wealth was to protect the individual against a form of legally sanctioned gangsterism.

  Where did this gangsterism begin? Not in the way we might have expected him to explain it to Darden: with do-good politicians, aspiring attorneys seeking to make a name for themselves in constitutional law, or even activist judges. It began before that: with individuals, powerless on their own, who had figured out that if they joined together to form social movements, they could use their strength in numbers to move government officials to hear their concerns and act upon them.

  The most powerful social movement back then was what Buchanan’s proposal referred to as “the labor monopoly movement,” or what most of us would today call organized labor. But other movements, also injurious in his mind, were on the horizon, including the increasingly influential civil rights movement and a resumed push by elderly citizens to organize as they had not since the Great Depression. From his vantage point, it did not matter whether the movement in question consisted of union members, civil rights activists, or aging women and men fearful of ending their lives in poverty. Nor did the justness of the cause they advocated, the pain of their present condition, or the duration of the injustice they were attempting to reverse move him in any way. The only fact that registered in his mind was the “collective” source of their power—and that, once formed, such movements tended to stick around, keeping tabs on government officials and sometimes using their numbers to vote out those who stopped responding to their needs. How was this fair to other individuals? How was this American?

  Buchanan believed with every fiber of his being that if what a group of people wanted from government could not, on its own merits, win the freely given backing of each individual citizen, including the very wealthiest among us, any attempt by that group to use its numbers to get what it wanted constituted not persuasion of the majority but coercion of the minority, a violation of the liberty of individual taxpayers.

  To end the coercion, he counseled, one had to stop “government corruption.” By that he meant the quiet quid pro quo reached between government officials and organized groups that keeps these officials reflexively attuned and responsive to the demands of such groups in exchange for their votes.15 At first he thought he could explain to government officials how wrong it was for them to accede to this arrangement; even under Keynesian economic theory, popular since the Great Depression, government was only meant to spend more than it took in during recessions. But he soon learned that even in antidemocratic 1950s Virginia, few politicians would follow his recommended courses of action if doing so jeopardized their own reelections.

  UVA in the 1950s was not a top research institution, but it was a venerable one, so Buchanan understood that asking Darden to fund what was in essence a political center at a nonprofit of higher learning was highly inappropriate. To avoid criticism that “an organization with extreme views, or a propagandizing agency” was being established on campus, he recommended that the center should not have the words “economic liberty” in its name, even if this phrase captured “the real purpose of the program.”16

  He displayed the same canniness in the names he gave to various elements of his economic theory—the Virginia school of political economy, as it came to be known. His study of how government officials make decisions became “public choice economics”; his analysis of how t
he rules of government might be altered so officials could not act on the will of the majority became “constitutional economics.” The enemy became “the collective order,” a code phrase for organized social and political groups that looked to government.

  Jargon aside, Buchanan used his center to refine his research program over the years while also figuring out how to develop a sophisticated strategy to implement his vision. The intellectual and the activist in him worked side by side, but one had enormous success while the other did not appear to be making much headway.

  Buchanan’s penetrating analyses of how incentives guide government action would be awarded the Nobel Prize in Economic Sciences in 1986. That award was the supreme vindication of his intellectual achievement. But the other Buchanan, the deeply political foot soldier of the right, experienced mounting despair. His attempts to win passage of radical proposals in Virginia in the late 1950s failed miserably, because legislators understood what at first he did not: the unpopularity of his political-economic vision.

  Buchanan’s hopes were lifted with the presidential run of Barry Goldwater in 1964. But when the candidate conveyed to voters his desire to end Social Security as we know it, to disallow the Civil Rights Act under the combined rubric of property rights and states’ rights, to create a flat tax system, and to undercut public education, he lost every state in the union except his home state of Arizona and those of the Deep South.17

  Even when conservatives later gained the upper hand in American politics, Buchanan saw his idea of economic liberty pushed aside. Richard Nixon expanded government more than his predecessors had, with costly new agencies and regulations, among them a vast new Environmental Protection Agency. George Wallace, a candidate strongly identified with the South and with the right, nonetheless supported public spending that helped white people. Ronald Reagan talked the talk of small government, but in the end, the deficit ballooned during his eight years in office. When the Cold War suddenly came to an end in 1989, social movement organizations began sharing ideas about how to apply what came to be called “the peace dividend,” each with its own proposals for domestic betterment. Compounding the problems Buchanan faced of elected officials who seemed like allies but, once in power, failed to walk the walk was the passage of the National Voter Registration Act of 1993. It began drawing into the electorate more poor people who, in Buchanan’s eyes, were likely to support proposals for programs that cost yet more money. Moreover, as the 1990s went on, environmentalists pushed climate change into the national discussion. Their calls for bold new government action looked likely to succeed, because so many citizens identified as environmentalists by then. It was hard for Buchanan not to become pessimistic.

  Had there not been someone else as deeply frustrated as Buchanan, as determined to fight the uphill fight, but in his case with much keener organizational acumen, the story this book tells would no doubt have been very different. But there was. His name was Charles Koch. An entrepreneurial genius who had multiplied the earnings of the corporation he inherited by a factor of at least one thousand, he, too, had an unrealized dream of liberty, of a capitalism all but free of governmental interference and, at least in his mind, thus able to achieve the prosperity and peace that only this form of capitalism could produce. The puzzle that preoccupied him was how to achieve this in a democracy where most people did not want what he did.

  The Libertarian Party he funded to run against Ronald Reagan in 1980, with his brother David on the ticket, had proven a joke, hardly worth the investment, save for its attraction of new recruits to the cause. The Cato Institute, which he founded and funded, had not proven much more effective in its advocacy. Politicians might be persuaded to spout such Cato slogans as “the ownership society,” but when push came to shove, they were unwilling to inflict radical changes of the magnitude his team sought. Ordinary electoral politics would never get Koch what he wanted.

  Passionate about ideas to the point of obsession, Charles Koch had worked for three decades to identify and groom the most promising libertarian thinkers in hopes of somehow finding a way to break the impasse. He subsidized and at one point even ran an obscure academic outfit called the Institute for Humane Studies in that quest. “I have supported so many hundreds of scholars” over the years, he once explained, “because, to me, this is an experimental process to find the best people and strategies.”18

  Koch first learned of Buchanan in the early 1970s, the moment when the economist shifted from analysis of the seeming inability of government officials to say no when deficits were allowed to crafting the playbook for radical change—change so radical he referred to it as revolutionary. The goal of the cause, Buchanan announced to his associates, should no longer be to influence who makes the rules, to vest hopes in one party or candidate. The focus must shift from who rules to changing the rules. For liberty to thrive, Buchanan now argued, the cause must figure out how to put legal—indeed, constitutional—shackles on public officials, shackles so powerful that no matter how sympathetic these officials might be to the will of majorities, no matter how concerned they were with their own reelections, they would no longer have the ability to respond to those who used their numbers to get government to do their bidding. There was a second, more diabolical aspect to the solution Buchanan proposed, one that we can now see influenced Koch’s own thinking. Once these shackles were put in place, they had to be binding and permanent. The only way to ensure that the will of the majority could no longer influence representative government on core matters of political economy was through what he called “constitutional revolution.”19

  This was Buchanan’s parting gift to the cause he had sired—the insistence that majority rule, under modern conditions, had created such systemic corruption, at such risk to capitalism, that “no existing political constitution contains sufficient constraints or limits” on government. “In this sense, all existing constitutions are failures,” he stated repeatedly to operatives of the right that his team trained, as well as to corporate sponsors. So, too, had been “almost all proposals for reform.”20

  By the late 1990s, Charles Koch realized that the thinker he was looking for, the one who understood how government became so powerful in the first place and how to take it down in order to free up capitalism—the one who grasped the need for stealth because only piecemeal, yet mutually reinforcing, assaults on the system would survive the prying eyes of the media—was James Buchanan. For a brief moment in time it seemed as if Buchanan and Koch would lead the revolution together. But men like James Buchanan and Charles Koch do not share power, and in a competition between the two, who would win was a forgone conclusion. Choosing to slide into effective retirement, Buchanan would live to see Charles Koch and his inner circle turn the ideas into a revolutionary plan of action with frightening speed and success.

  Koch never lied to himself about what he was doing. While some others in the movement called themselves conservatives, he knew exactly how radical his cause was. Informed early on by one of his grantees that the playbook on revolutionary organization had been written by Vladimir Lenin, Koch dutifully cultivated a trusted “cadre” of high-level operatives, just as Lenin had done, to build a movement that refused compromise as it devised savvy maneuvers to alter the political math in its favor.

  But no war is won with all generals and no infantry. The cause also needed a popular base to succeed, one beyond the libertarians of the right, who were kindred in conviction but few in number. Camouflaging its more radical intentions, the cadre over time reached out and pulled in the vast and active conservative grassroots base by identifying points of common cause.21 Indeed, after 2008, the cadre more and more adopted the mantle of conservatism, knowing full well that the last thing they wanted was to conserve, but seeing advantages in doing so.

  A similar cynicism ruled Koch’s decision to make peace—at least in the short term—with the religious right, despite the fact that so many libertarian thinkers, Buchanan inc
luded, were atheists who looked down on those who believed in God. But the organizers who mobilized white evangelicals for political action—men such as Reverend Jerry Falwell and Ralph Reed and Tim Phillips—were entrepreneurs in their own right, so common cause could be made. The religious entrepreneurs were happy to sell libertarian economics to their flocks—above all, opposition to public schooling and calls for reliance on family provision or charity in place of government assistance.22 So, too, did the Koch team learn how to leverage wider corporate backing, despite its opposition to the fruits of corporate lobbying of government—from farm subsidies and targeted tax breaks to protection of particular industries from foreign competition.23

  The Koch team’s most important stealth move, and the one that proved most critical to success, was to wrest control over the machinery of the Republican Party, beginning in the late 1990s and with sharply escalating determination after 2008. From there it was just a short step to lay claim to being the true representatives of the party, declaring all others RINOS—Republicans in name only. But while these radicals of the right operate within the Republican Party and use that party as a delivery vehicle, make no mistake about it: the cadre’s loyalty is not to the Grand Old Party or its traditions or standard-bearers. Their loyalty is to their revolutionary cause.