Last night young Lee Fang, in-house video editor at the web site Think Progress, went on another hysterical rant against Koch Industries, one of America’s finest and most successful companies. Like yesterday’s failed effort, this screed tells us nothing at all about Koch Industries, but a great deal about the shortcomings of young Mr. Fang and his colleagues at Think Progress.
The subject of Fang’s part 2 was the environment. Think Progress accuses Koch of being a polluter, and argues that the company’s support for groups that advocate weighing costs against benefits in environmental regulation is self-interested. Once again, young Mr. Fang has revealed that he doesn’t understand how the world works. Before getting to the specifics of his indictment, two broader points are in order.
First, as long as environmental regulations are enforced even-handedly, how stringent they are makes little difference to the industrial concerns that are subject to them. The costs, whatever they may be, are ordinarily passed on to consumers. If cost/benefit analyses are not done, or are done but ignored, and as a result, excessive, wasteful regulations are imposed, the refinery doesn’t suffer. The consumer does.
In fact, over-regulation often benefits established companies. Environmental extremism has made it impossible to build new refineries in the United States. Does that hurt Koch Industries? Of course not! Koch already owns refineries. Excessive regulation prevents new entrants into the market and protects existing concerns from added competition. Therefore, when Koch Industries or its owners support groups that argue for regulation based on a rational evaluation of costs and benefits, they are not pursuing a narrow self-interest, they are sticking up for consumers.
Second, Think Progress tries to portray Koch Industries as an environmental scofflaw. But that is the opposite of the truth. Koch puts a high priority on regulatory compliance, and has a superb record of environmental stewardship. This is why the Obama administration’s Environmental Protection Agency has repeatedly praised Koch and its subsidiaries. In 2009, the EPA awarded Koch subsidiary Georgia-Pacific its SmartWay Excellence award and specifically commended Georgia-Pacific. Obama’s EPA has also praised Koch subsidiary Flint Hills Resources, calling a process that Flint Hills worked out “an excellent one” that “will serve as a model for other companies.” Remarkably, Koch companies have received more than 180 environmental, health and safety awards since the Obama administration took office.
Such recognition is nothing new. In 2004, the EPA gave Flint Hills Resources its Clear Air Excellence Award for “help[ing] [to] make progress in achieving cleaner air.” In December 2000, the agency recognized Koch Petroleum Group as the first petroleum company to reach a comprehensive Clean Air agreement involving the EPA and state regulatory agencies. At the time, EPA administrator Carol Browner called the agreement “innovative and comprehensive” and praised Koch’s “unprecedented cooperation.”
So we should understand, before even beginning to dissect the lies and misdirections that are typical of Think Progress, that its central thesis is not just false, but laughably so. Now, on what does young Mr. Fang base his criticism of Koch Industries?
— Fang says that Koch Industries is engaged in a number of “dirty” businesses. I have to admit, that’s a fact. Young Mr. Fang obviously has no experience of “dirty” businesses–unless, of course, you think that taking George Soros’s money to write lies is a dirty business. But it is “dirty” businesses–oil refineries, chemical processing plants, pipelines, lumber mills, and so on–that allow all of us to live well rather than poorly. It is “dirty” businesses that cause the light to go on when Mr. Fang, who has no idea how electricity is created, flips a switch. It is “dirty” businesses that allow Mr. Fang to drive his car, to build a house–well, maybe someday–to have ink for the pen with which he writes ignorant rants, and to play hacky sack–with, whether he knows it or not, synthetic materials. The 50,000 people who work for Koch Industries in the United States would no doubt plead guilty to working in “dirty” businesses, and happily so. It is only because they are willing to get their hands dirty that helpless wretches like Lee Fang are able to lead lives of comfort.
— The University of Masschusetts Amherst has scored Koch as among the top ten worst air polluters for its carcinogenic chemicals. It would be easy to dismiss this one as silly. The index in question includes most of America’s top companies. The “pollution” it measures consists of emissions that are permitted by law and carefully regulated by the EPA. Beyond that, it is worth noting that the co-creator of this index, Michael Ash, is a member of the Union for Radical Political Economics. Its web site says that it is an organization that “presents a continuing critique of the capitalist system and all forms of exploitation and oppression while helping to construct a progressive social policy and create socialist alternatives.” Is that also the mission of Think Progress? Mr. Soros and I both think so.
— After a lobbying campaign waged by Koch fronts Americans for Prosperity, Competitive Enterprise Institute, Cato Institute, and others to stop federal action on climate change, Koch fronts have worked to decimate state-level efforts to curb carbon emissions. Liberals love to talk about “fronts,” unless they are actual fronts like the Lawyers’ Guild or the Holy Land Foundation. The “fronts” to which Mr. Fang refers are independent organizations that are supported by many thousands of Americans, of whom Charles and David Koch are two.
What Think Progress doesn’t seem to understand is that there is a genuine debate over anthropogenic global warming. Not only that, a debate in which the realists are clobbering the global warming hysterics. Scientific evidence shows conclusively, in my view, that the global warming theory is at best overblown, and at worst 100 percent fraudulent. You can consult my dozens of posts on the subject for the details. For now, the point is that supporting groups that demand scientific evidence of anthropogenic global warming as opposed to childish hysteria hardly disqualifies the Koch brothers from polite company.
— Koch Industries is one of the largest producers of formaldehyde…. Koch’s conservative front groups [sic] have battled proposed regulations on formaldehyde, and David Koch used his position on the National Institutes of Health to try to stop the EPA from classifying it as a “known carcinogen” in humans. This one is frankly sick. David Koch is a cancer survivor who has donated many millions of dollars to cancer research. Koch Industries and countless other companies, NGOs, government agencies and individuals submitted comments during rule-making procedures on formaldehyde, as is routinely done.
—Gov. Scott Walker’s (R-WI) demand that he be allowed to sell off Wisconsin’s state owned power plants with no-bid contracts has fueled suspicion that Koch Industries might take advantage of the deal…. Of all the dumb theories liberals have offered to distract attention from what is happening in Wisconsin, this is the funniest. The idea that Koch Industries is supporting Governor Walker in order to get access to some broken-down, environmentally inadequate, unprofitable heating and cooling plants for Wisconsin’s universities and prisons is so silly that it could be believed only by the likes of Lee Fang and Paul Krugman.
Here are the facts: Wisconsin owns around 34 heating and cooling plants, scattered around the state, that are used to provide heat and air conditioning to universities and prisons. These plants are mostly coal-fired, antiquated, environmentally shaky, and fully depreciated. There is no particular reason why Wisconsin should be in the heating and cooling business, and proposals to sell these plants have been around for some years. In its 2005 budget, Wisconsin’s legislature proposed to unload these unprofitable turkeys, but Governor Jim Doyle vetoed that legislation.
In 2005, the state of Wisconsin analyzed these power plants and concluded that “the value of the 34 plants [was] $235.9 million, offset by $83.9 million in debt.” Which is to say, a pathetic $4.4 million apiece. These power plants are probably more a liability than an asset, since they have a long history of problems in complying with environmental regulations:
Jeff Plale, a former Democratic state senator who was hired by the Walker administration to run the Division of State Facilities, said he didn’t think a bidding process is appropriate for the sale of the heating plants. “A bid implies that there is a value in the physical asset,” he said.
It’s difficult to tell what kind of price they could fetch, particularly because of environmental liabilities. Several of the old coal plants are in potential violation of the Clean Air Act because they lack modern pollution controls, Plale said.
“A number of these plants have potential environmental liabilities hanging over their head. How that falls into the mix still needs to be addressed,” Plale said.
So it is quite possible that the value of these 34 obsolete plants may be negative. The head of Wisconsin’s Sierra Club chapter agrees:
“The state knows darn well that it has got compliance issues with these aging coal plants, and so the violations are going to have to be corrected,” said Jennifer Feyerherm of the Sierra Club in Madison. “How the governor thinks he can put lipstick on that pig and sell huge financial and environmental liabilities to someone else, good luck. Bottom line, those plants need to be cleaned up.”
Around Wisconsin, the conventional wisdom is that the state will be lucky to find anyone willing to take these liabilities off the state’s hands. Koch Industries does not own any similar facilities anywhere in the world, and it is no wonder that Koch has said that it has zero interest in relieving Wisconsin of the burden of these antiquated plants.
Think Progress is being paid millions of dollars by left-wing billionaires to attack Koch Industries. It is remarkable how little those millions have produced. Koch Industries is the second-largest privately owned company in the United States and is, without a doubt, one of the five or ten most admired companies in the world. Ignorant attacks by kids like Lee Fang only highlight how misguided their leftism is, and what a great company Koch Enterprises is.
As for the incorrigibly lazy and ill-informed Paul Krugman, I will deal with him tomorrow unless I have something better to do.
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