 Good evening. I'm gonna go ahead and get us started. Still feel free to wait for your drink at the bar You're in the room, so you should be able to hear me. My name is Iwista Yub, and I'm director of the Fellows Program here at New America This event is part of a 20th anniversary series that we're hosting throughout the course of this year for those who don't know We're celebrating our 20th anniversary this year 1999 we were founded as a radical think tank here in DC That was willing to reach outside of the Beltway to figure out new ways to do that and books and films became an avenue in which We could do that 20 years later that vision has resulted in the publication of 116 books Over 200 fellows and we've supported nine films in addition to several long-form reporting articles as well Chris's book came out this year, and it's actually 114 on our list of 116 So a good number to have I think if you ask me So as I introduce the speakers just want to go over two housekeeping notes We do have a live stream happening this evening So please wait for the microphone when you do ask a question and more importantly we do have books on sale Our selling partner solid-state books is here tonight So please be sure to buy a copy of the book this evening and Chris will be available afterward to sign copies So with that it's my honor and my pleasure to introduce our two speakers Christopher Leonard is a class of 2014 national fellow and a business reporter whose work has appeared in the Washington Post The Wall Street Journal fortune and Bloomberg Business Week He's the author of two books two books the meat racket and coakland which won the Anthony J. Anthony Lucas Prize For work in progress from the New York Times or from Columbia and is also a New York Times bestseller Reaching the list this summer Chris is joined by Franklin for he's a class of 2016 national fellow and a national correspondent for the Atlantic He's also the author of the claim book house soccer explains the world Which is one of my favorite books by the way as well as the world without mind Which is a book that we actually helped support through his fellowship. So with that I'll turn the conversation over to you Frank Thank you, it's it's a real honor to be here and to be with you because as I think it's a journalist I kind of I look at what you did here with incredible. Ah, just at the That it this is not first of all It's not an easy story to tell because you're dealing with a company that it will discuss in a minute It is in many ways a very diffuse company and a company that I think pretty clearly intentionally it tries to obscure its footprint and so I mean, I think it's it's important to have program like the fellows program where you're able to kind of cover The market gap in journalism, which doesn't permit you to engage in this sort of One to engage in this sort of massive reporting project the very it's just such a such a painstaking Process to go through so I thought maybe one place we could start is Look around the room What are the things in this physical space that could be traced to coke industries? Okay, it's gonna be a long list Thank you and actually Before I answer that if I could you really Point it out how long this book took to report and to write and it simply would not have been possible without new America And and I want to take the moment to say thank you so much to this institution for everything It's done. It is impossible for me to articulate the level of support. I mean new America gave me years it sheltered me for years and gave me total independence to work on this book and Without that I mean talk about the gap in the marketplace Without somebody stepping in to fill that breach this type of journalism I just know it wouldn't have happened for me and I think that's the case for a lot of other fellows So from the bottom of my heart new America Thank you. It's just amazing when it happened without new America So, yeah, thank you That being said so this room You know, it sounds like I'm over advertising the reach of this company, but they definitely If they didn't make the specific carpet they make carpets just like this They make the plastics that are in the chair They make the fibers that are in our clothing in in elastic waistbands in Nylon in spandex They are playing a role in the delivery of the the electricity that's on right now Whether it's buying and selling natural gas supplies that fire up a plant whether, you know They were very involved in trading actual electricity hours in California They are a major player in the energy infrastructure that's hidden from our view But that keeps the lights running right now So I'd say other than like our clothing The building materials in the wall the insulation panels you probably see Georgia Pacific logos on office buildings under construction all the time I know I do but I'm also kind of obsessed with the whole thing but the wall panels the insulation the the timber framing and then you know finally the the food we're eating and Coke plays there in a really interesting way. They're one of the largest Global producers of nitrogen fertilizer Which is something that you don't think you buy but it is literally the bedrock of our food system So they are making billions of dollars and and having a major influence at that sort of foundational level of our food system As you were digging in and you were Unfolding this entity was there something was there a moment you said holy cow coke industries Makes that is there something so far afield that they do because everything you're describing is quite sprawling. Yeah It happened a lot The phones they make the sensors in our phones They bought this company called molex and they make Sensors that are in the door of your car and that that sense the speed in your car and that are in your phones So that's an area where I didn't think that they would be at all. How many people work for coke industries Oh, man, that's a hard question. I mean honestly, it's like it's over a hundred thousand spread around the world and yet You know despite that that reach despite the omnipresence despite the fact that we're consuming Coke things all the time. It just it's we there's there's no awareness of it. I mean people are so much more I mean We read about coke in the newspaper. It's usually has to do with politics. Yes, and not the things that they make Yes, okay That is key to the whole institution and it's key to the whole book and I can describe the reasons for it But you know first of all to back up. We're talking about their size. We're talking about their scale We're talking about a reach into our lives. That's really important but also as an author what drew me to this is is How they are spread across our entire economy if you're talking about the US economic system and our politics Coke can encompass the whole thing you can write about all of it by writing about this firm I mean that's how broadly dispersed and and deeply embedded in the system They are which is what drew me to it and then the second thing is exactly what you talked about Nobody knows about this stuff. Okay, and part of that Is because of coke strategy and I'm sure we'll talk about this but secrecy and privacy is key to the whole enterprise Part of that is personal about how Charles coke approaches life, but part of it is really deeply strategic But but also, you know For example coke isn't publicly traded So there's not a stock price to bounce around every day and get talked about on CNBC Which is very attracted to the shiny object. That doesn't mean that coke is not important I mean, it's it's vitally economically important, but they're just not trying to get attention and and to me That's really important. I remember You know one of the great people I met at New America was Lena Kahn and we used to talk all the time about stuff like this and in In terms of what's going on in the world. There's this quadrant of Things that are important and things that are boring okay Coke is down in this corner of super important and super boring oil refineries pipeline networks commodities trading nitrogen fertilizer production David and Charles coke as you know David coke passed away. They're two of the richest people in America Not coincidentally, but they're they're simply not trying to get attention by being involved in these hyper complex boring industries that underpin civilization They're making a massive fortune and they're influencing our lives Yeah, your book is the most boring thriller ever written. Yeah, or thrilling borer ever written Let's I want to just weave the discussion of tradecraft into the whole evening, but I'll just begin here So when you set out to write about this company You probably had an instinct that a lot of what they do would be a snoozefest if not Narrated in the right sort of way What were the choices that you made at the very beginning of the project that kind of tried to Try to tell the story of something important yet Diffuse and and in some ways, I mean there is a center to the book, right? Right, which is Charles coke and we'll talk about him But he's and he's he's Probably boring fascinating as well What were the how did you start to conceive of the project at the start in order to? Make it jump off the page in the way that it does wow, okay? And by the way now we're going back to like 2012, so let me dust off the cobwebs and remember First of all as a writer and as a reporter and as a reader I actually get really geeked out about this boring stuff because I have this theory that if you can take these things that are so vitally important to people and the writer's job is to mine through Miles and miles of tedium and horrific boring Material to come at the super important spark at the heart of it for example Michael Lewis's book the big short is like the textbook example of somebody who took collateralized debt obligation and help explain why This destroyed the economy and it's fundamental to modern American finance So in the beginning I I became obsessed and fascinated with the oil refining Super important part of the world the economy the country tells such an important story about our political system and and how people make fortunes and So to me that it was exciting to learn about it And I realized if I could distill it down to the real essence that people don't talk about if you've got the guts to get The machete and go through the brush for months and get to the real story You can bring it out in a way that's going to be interesting to people But then the honest truth is as I started reporting it. I Wanted to learn how things worked. I wanted to learn what coke industries really was How they really operate how they really think and what they really do and that's when I started interviewing people and people have this way of just being fascinating and so these stories started to really come forward which Totally changed my conception of of the whole institution and the whole history and and that's when it started to Jump off the page if you will and become super fast Yeah, give us an example of a person that you discovered Yeah, you found especially beguiling and who opened up the company in the way that you're describing Thank you so much because this person is like jumping out of my head So in the very beginning I'm calling around to everybody who's ever worked at coke industries And I also want to talk to people who used to be senior coke industries And I'm literally going down a list It's a you literally at the beginning of the project You just you compiled a spreadsheet of names and then just started calling I wish I could say I'm sophisticated enough to have a spreadsheet. Yeah I have like these yellow legal pad with yellow legal pads and scribbled stuff everywhere and these Microsoft Word documents It makes sense to me about don't make sense to anybody else But it means coke can't hack them. So yes, and actually that's a real thing. I Won't go there now, but that's a real thing Return to that bracket that bracket return to it later And so one of the random names on this list was Bernard J. Poulson former senior oil refining executive at Coke Who I reach at home and he's I think he was in his late 70s or early 80s And he just starts talking. How do you how do you present yourself to somebody like Bernard J. Poulson? Hello, my name is Christopher Leonard. I'm a business reporter I am writing about coke industries, and I'd love to interview you about your time with the company And before they can hang up on me. I try to rush in with an informed question I wanted to ask you about the 80s when they bought the Refinery in Corpus Christi because I heard that there was a lot of dissent about that deal, but it went through and you were in charge of it Well, then all of a sudden they're like, oh Well, yeah, you got that wrong though because like I you know, I did this or did that so you're like instantly kind of telegraphing I'm genuinely interested in the substance that I know a thing or two kind of thing So anyway, Paulson starts talking to me And he's like, well, yeah, it reminds me of the time Charles Koch hired me to break the Union up in Pine Bend, Minnesota Disco yeah, so like sweat breaks out on my forehead and I and I said well, please do tell me about that, you know and So an hour later he had unspooled This amazing story that like truly was lost to history about this very brutal bitter Labor war that Charles Koch undertook and he picked a fight When he was in his 30s right after he'd taken over the family company and he hired Bernard Paulson It's like six foot six Texan guy wore cowboy boots to go up and break the back of this militant labor union in Minnesota So that that became a huge chapter in the book which helped I think me understand What labor unions were like back in the 70s? What working conditions were like for blue collar workers at an oil refinery in the 70s and What the dispute was like and it also revealed to me a lot about Charles Koch's character So there's there's a case of a story where all of a sudden You're just talking to a person and the stories just come out How would you manage a source like Paulson? Would you you have this initial conversation with them on the phone? And then would you just keep talking to them on the phone? Would you go visit Paulson in person? Would you? How do you how do you? How did you open I mean it sounds like he opened up pretty much instantly, but how did you? What was your strategy for kind of milking him for all he was worth? Well? Of course we collaborated jointly on a synergistic project and no, but the way I I milked him for all he was worth was called him back and Asked him more questions that had come up if I had more frankly if I was more resourced up I would have flown to Houston, but you know you've always got to figure out How to use resources, and I didn't have that kind of resources at my command But then I went to the Library of Congress and verified what he was telling me with the old newspaper Clippings from the Minneapolis papers in the St. Paul papers, which are in like a Raiders of the Lost Ark style crate in the bottom and not digitized And then when I realized he was telling me the truth, and it was verifiable I flew to the actual refinery and then interviewed all the old-time Union people to flesh out the other side of the story and I think You know one in the green room You were you were mentioning that you take you took a trip to Houston And you were literally just knocking on Doors it when you went to Pine Bluff. Was that what you were doing there? You were you were you just I Mean, I think it's people don't realize no, maybe maybe not in Pine Bluff, but No, but there's a kind of shoe leather part of it is is it seems so antiquated in the age of the internet perhaps or Google, but it's actually Vital yeah reporting doesn't happen without it the reason I made that funny face is yeah I went up to I'm sorry if I mispronounced pine bend a pine bed. I'm sorry if I said that so I went up to pine bend I had a couple a couple phone call Contact setup of people I knew I could visit and then I spent I did spend the rest of the time knocking on doors and meeting people in diners and Might have kind of walked into a nursing home behind somebody without buzzing in and knocked on a door and got a Incredible interview with a guy who used to be a manager at the refinery and so but really truly honestly the point is you cannot do reporting I think without that and it's it's we live in an extremely fraught era in the media world in the political world in our literal communities and It is somewhat creepy and invasive and aggressive to knock on somebody's door and So I dress like this, you know and you show always wear the tie Yeah And particularly if I'm doing door work because you want to telegraph to somebody. I'm not a creep I'm like on the job. I'm on the clock and what what conveys that better than wearing a tie, you know, and so But you really do try to knock on daylight hours Instantly say look I'm a reporter. I'm a journalist And I really do want to know about this Would you be willing to talk to me about this and if they say I'm not interested? Thank you so much. I really appreciate it You can't be creepy and aggressive But unless you try to connect with people Unless you try to connect with people you can't understand what's going on is my view. Yeah. Yeah, so It's strikes me that two central characters in the book one Is something it's a concrete human being and then we'll get to the second one in a second the most concrete human I mean the concrete the human being who ties it all together is of course Charles Koch and One question I had this is a bit abstract But I was thinking, you know, what is this what Hank what keeps this corporation hanging together in one piece? What is this corporation and it seems it's an extension of one man? Above all else. Yeah, absolutely I Didn't know that going in I had no idea I knew this company was a big big company that could let me report all the stuff I cared about This figure at the heart of it didn't start to emerge until months into the reporting when I realized Charles Koch okay, the CEO of a corporation is is like a dictator They are accountable to the board of directors, but other than that they have the authority to hire fire and direct strategy This isn't like a democracy Charles Koch incidentally appoints the board the only person who can fire Charles Coke is Charles Koch He has been CEO of this organization since 1967 when Lyndon Johnson was president that's over 50 years He is the unquestioned authority at the top of the whole system. Okay, so that's pretty rare And you asked me if there was this sort of this aha moment when I realized oh my gosh I didn't think they were into that what came to my mind was a little bit different. I was at Dupont Circle Reading on a nice day This book he had written called the science of success that he published in 2007 which is Charles Koch's Management philosophy although that's such a simplistic term. It doesn't capture what it really is It is his blueprint for how to organize a company how to organize a country and how to live your personal life And there's a bar Code thing that that lays that all out in science of success and I was reading that book and I was just like Jesus this thing is so much more than a company this I this is like a true internal mini Society this is different from Walmart. This is different from General Electric This is different from Tyson foods, which I'd written a book about the people who work for coke Subscribe to this philosophy speak this vocabulary and and follow these rules that Charles Coke has has codified in this market-based Management system to a degree unlike any other I've ever seen okay, let's unpack this because One of the things that I think is so fascinating about coke industries and Charles Coke is what you're describing that it's it's we think about coke is an ideologue and Ideologues can sometimes have totalizing philosophies and there is this kind of Totalizing philosophy at the core that extends into almost every aspect of The company of his life and of his politics and so maybe you could just you could You could you could you could give us the contours of that absolutely, okay? So let's start very quickly Charles coke is born in Wichita, Kansas His dad is Fred coke his dad is a millionaire who owns this industrial conglomerate Fred coke has four sons Charles coke is one of them Fred coke was a co-founder of the John Birch Society. He is a hard core Right-wing conservative who believes the federal government is a Trojan horse of tyranny This is the political conversation at the coke family dinner table and coke is also raised Charles coke is also raised To believe in hard work. How did the federal government tell you today daddy? You know, I suppose so right and These are the ideas That are put into his head growing up and then he kind of augments this kind of right-wing anti-communist Theory with these Austrian economists Hayek and von Mises and all these people and then he gets handed the keys to the family company In 1967 when his dad dies of a heart attack. So now he starts to shape the institution In fact, it's his like obligation to start shaping the institution and what I'm getting at is he develops He's he's trying to think through he's a total engineer. How do I do this? What is the blueprint? To do this. What are the actual rules and he I interviewed him about market-based management? And what he's telling me is Chris there rules of physics in the world The I'm stupid at physics, but like inertia and gravity and all that stuff and he's saying There are rules and laws that guide human behavior, and I figured out what they are and Other people before me have figured out what they are von Mises figured out what it is in his book human action Hayek figured out what it is and I've codified those rules into this philosophy called market-based Management and he's written several books about market-based management. He teaches it to his employees and internal You know focus groups and and set and audit in the auditorium. You have these Teaching sessions about it called a university. They call it a university coke university and to your original question He says in his book the science of success there must be a quote total conversion You're not halfway in and halfway out you either obey the laws or you don't you either understand it Or you don't get it and you've got to fully embrace it and as I mentioned earlier. There's in science of success I don't know what you call it, but these it's a table. It's a table, and he's like this is good for a company It's good for a country, and it's good for your personal life like this is an all-encompassing view of how the world ought to work We'll just talk talk. All right. Let's let's break this down talk about I just obviously it's it's much more significant how this applies to Country and and company but begin maybe by talking about how it applies to personal life well, you get back to these ideas of personal responsibility Innovation and entrepreneurship How did it apply in it? How did you apply it in his own way? like in terms of oh child rearing or Gosh, so discipline Here's how I'll put it Before we talk about child rearing on Sunday afternoons Charles Koch brought his son and daughter into the family study And they listened to economic lectures on tape when they were toddlers So it's a full thing. It's a full thing. How does this apply to Charles Koch? There is I'm not kidding. There's this spirit of you in your in your piece about Bezos Amazon the word relentless is something Bezos really focuses on there's a total relentlessness To Charles Koch's belief that the market the market is constantly probing for weakness The market wants to destroy inefficient operations And it wants to elevate innovative and efficient new operations and if you slow down for a second and if you get fat and lazy and if you start to Operate Inefficiently the market will tear you down and you can fight it and complain and and form things like Medicare and Social Security But you're just fighting gravity and the market will eventually have its way And so when I think about Charles Koch, I do truly think about a relentless exhausting day on a treadmill of always working to stay ahead of failure I mean there's so much to unpack there. What's fast? Well You said fear of failure there. It was the one what is Psychic psychologically you have this guy who is kind of in this act of Constant creative destruction perpetual revolution Company revolutionizes itself several times over He's relentless when it comes to Constructing his political vision and influencing political economy to the ends that he deems ideal Is there any torment? underlying The way that he thinks about the world. Is there any does he is is he somebody who's ever had a second thought or questioned anything about his life So, you know first of all, I can't answer that I'm a reporter on the outside I don't know what goes on in his private moments. Well, you're no fun. I know sorry But I'll give you an answer. I Mean here's here's what here's what I do know. He doesn't project out he doesn't the people who work for him Describe a kind of supremely unemotional character. He doesn't pound his hand on the desk. He doesn't curse. He doesn't yell There are parts in the book where you see him. I rate and furious and angry He waged a super Ugly fight against his own brother bill over the fight over the control of the company I mean the kind of stuff that just I think Nauseau the person until they die. I mean really brutal inner family stuff But he projects an aura of Determination and calm and you know, I asked him about the worst period of the company's history and his personal history of the 1990s The company failed In major business ventures. They racked up an incredible roster of criminal fines from the US Department of Justice for pipeline leaks air pollution Wanton water pollution that's documented in the book. It was really hard time for the company and I asked him how he dealt with it And I mean, of course, how honest is he gonna be with the reporter? I don't know But he told me, you know, I just saw the failures and I worked harder like I sincerely believe he did not doubt the rules He didn't doubt his own vision of the world He didn't doubt his own competency He just realized he made a mistake and he needed to get back to the grindstone and work harder so I don't detect a lot of like self-tortured Doubt or self-interrogation Let's just what was the moment like So you interviewed him in what year? 2015 so relatively was it It was the book you conceived of the book by that point. Oh, yeah and what was to describe the interview and describe meeting him and What was what was it like staring at this guy and And meeting in the flesh and blood the person who would become the center of Your life for the next four years. Yeah You know as you know as a reporter It's always hard because you always want more. You know, he and I met in a very I Was interviewing him for a story. There was a PR person Sitting at the table right there. Did he know you were working on the book at that time? Yes. In fact, this is telling I conceived of the book and Wrote a profile of coke for Fortune magazine when I was here at New America and then I got a contract to do the book and I mailed Charles coke a letter and I mailed his PR team a letter saying I am before the book was ever announced I said, I'm writing a book about coke industries and I want you to know before it's publicly announced and One reason I did that is because they are so Smart and they're relentless researchers and they knew a lot about me And I knew that they were gonna find out I was doing a book very very quickly And that if I wasn't totally transparent and straightforward They would sense duplicity on my part and I also just think it's good practice to let the subject know what you're doing But I was more aggressive about it with coke because I knew They would find out and they're very big on trust. What was the reaction? Silence and then we can talk about this their PR team back then was very Contentious and aggressive and in your face, which I actually kind of appreciate it. They were very honest and Missy called me other PR person sent me an email saying I was very surprised to see someone referred you as an expert on coke industries recently I'm like, what can I say missing people say what they say, but um, why did they give you that they give the interview for the fortune article or for The book so they gave me interviews. Well for the fortune article when I told them I was doing the article They said no way. We're not gonna cooperate. We just have zero interest. Goodbye And so I flew to Wichita knocked on doors started getting interviews and as time went on after a lot of contentress back and forth They said okay fine come back We'll give you like two interviews with two people that are key to the story and they opened up a little bit And it was sort of like that over a period of four and a half years of They would open doors and give access and then maybe close them again When I was in the penalty box and we'd go through the whole thing and it goes back and forth like that so yeah and What was the like but let me let me pose the question this way You spend all this time sitting and staring at Charles coke Into a lot of Americans of Either who have a liberal persuasion. He's the devil incarnate Would you did you Did you find him likeable after looking at him were the things that you found yourself empathizing with or coming to appreciate that maybe others Can't see yes, and so I realized I didn't answer your first question what it was like to meet him Okay, I'm gonna just say this really quick During that tough time in 2013 They wouldn't talk to me and I just drove right up to the headquarters and walked into the lobby and said come down And talked to me. No, this is ridiculous. Well, that was 2013 Then they renovated the corporate headquarters When I went back in 2015 part of the renovation was at the street I had driven on in on a city street They had torn up and at their own expense ran it in a horseshoe shape around the campus and built a 10-foot tall wall Around the corporate headquarters because legitimately Charles coke gets so many death threats Constant stream of death threats and vitriol which I've seen on Twitter having done this book And so it you know, it struck me that I got a security code emailed to my phone I held it up to a scanner at a bunker the steel gates open. I drove down a long road Security escorted me up to his office building. I walk in here's one of the richest men on planet earth One of the most powerful men in America. I think it's fair to say and you know He's kind of hunched over he says oh, hey Chris. How are you doing? He didn't need a where tie to come talk to me, you know, and it's this instantly disarming Midwestern avuncular Personality that he projects but it is deceptive in a way it hides The backbone of a real fighter the prologue of the book is about Charles coke. It's kind of overview It's called the fighter. I mean he is absolutely Convinced he knows how the world ought to work and how American society ought to be organized and he is he's relentless in his fight to make that happen so, you know When I sat across from him is there a lot I respect about him of course and do I naturally feel A connection with another human being of course, you know, and he's a he's a brilliant brilliant person Who has a lot commendable about his leadership style his long-term strategy and his thinking? But there's also a lot more to the story About what his legacy is going to be and what the full impact of this Corporation and the political operation is going to be and not all of it's good and and the whole story isn't pretty so You know all that stuff is swimming around in your head When you're around someone like that, but I guess to close I mean like on this comment What struck me truly struck me about that time with him the one hour. I had was how much power he has He lives every day of his life at the apex of a globe-spanning Corporate Empire that's one of the most profitable in America that he has owned and operated since he was 32 years old and Virtually everybody he comes into contact with is beholden to him for a paycheck The people in that firm, you know borderline worship this guy and so that's the world he lives in every day That's what struck me Let's let's go through the counterfactual if Charles coke didn't exist How would America be different? Okay? I I mean I'm surprised at this answer You know the corporation Reflects deep realities about the American economy Okay, about how our political system and economic system works, but it's not like it transformed our life The coke industries did not invent the personal computer. They did not invent the automobile They run the machinery that makes life work, but if there was no Charles coke I think a lot of the stuff about our life would be the same I really do think at the end of the day after looking at this for years I would say the biggest impact they've had is on American politics and When I started reporting on their political apparatus all of the reporting Pointed me in one direction and that's the issue of climate change and carbon regulations. That's what they care about That's what got them up every day They have been unique in their approach to this issue. They've been uniquely uncompromising and militant to Not only derail any effort to regulate greenhouse gas emissions, but to cast out on the very science behind climate change What I'm telling what I'm saying is if there was no Charles coke a key thing that would be different And I feel comfortable saying this is the politics around climate change Contrast coax approach that to you dealing with cap and trade and the various other regulatory questions with say exxons of Approach if if you didn't have coke there Staking this uncompromising position would the rest of industry have Maybe folded under the pressure to make a deal Would we be would we actually have would we actually be in a different place with climate now if he wasn't sitting there at the vanguard of the Anti-regulatory Denialist movement Great question And and and I'm thinking about a lot of this stuff to me one of the central battlefields over this issue was in 2010 when the Democrats in Congress wanted to pass the waxman marky bill cap and trade They were close and The other fossil and this has never been an easy lift You I'm sure you've read the Nathaniel rich book losing earth which is about climate change debates back in the 70s or 80s It's not like this was an easy lift It was never gonna be an easy lift to do something about this problem, which is so deeply embedded in just modern life You know Producing greenhouse gases, okay, but Exxon Chevron Valero Big big players in this fossil fuel space were playing ball Okay, they weren't embracing climate change legislation, but a lot of them realized This is gonna happen Let's manipulate the law to work as as well as it can for us Let's make this so it's a hospitable future for fossil fuels and we can continue to make money even if Greenhouse gas emissions go down or we have to pay a price for putting carbon into the sky and the book documents that And and Exxon mobile some people say that they're playing a little game by supporting a carbon tax And they're just trying to forestall legislation But they are on the record saying we think this should happen and we will support it Coke was a different animal entirely and a lot of it traces back to this fact of what we've been talking about Charles coke Has a set view of how the world should work and you can't argue with a blueprint You can't say I don't want the laws of physics to apply here only here And so when they came to Washington on this issue of climate change, they approached it in a stunningly Militant uncompromising fashion And they helped burn to the ground that moderate wing of the Republican Party that wanted to do something about this They Infused cap-and-trade rhetoric into the Tea Party They helped reshape Republican politics so that when someone with a very good ear for politics like Donald Trump comes along He's talking about cap-and-trade climate change being a hoax and and the Chinese are behind it and solar power gives you cancer He's he's responding to the the sound waves that coke was putting out back in 2010 and the way they've reshaped the Republican Party So I mean my answer to you is I think coke is Quantitatively different from the other big oil companies I think a lot of that has to do with that they're privately held and Charles coke is in control And I think that they've had an outsized effect on this issue We'll open it up. I think in let me just ask you one more question, which is I said that there were two central characters in the book Yeah, the second I think it's capitalism American capitalism and and What as you as you studied the American economy through the lens of coke industries What did you learn about capitalism? What's what do you want the reader to take away? About the second subject. Yeah, thank you. That is a great question Capitalism is like Frankenstein's monster It's something that we create It is not handed down. It is not an organism that evolves independently It is a human created system of rules That's all capitalism is and it's I mean, I guess it's a beautiful thing. I think it's one When done, right? It creates opportunity liberty Individual sovereignty and all these amazing things. It's a great way for people to coordinate together You hear a lot about that in the coke rhetoric. It's it's an incredible way for humans to operate together Looking back, okay from 1900 to 2019 the the picture I took away is that when left alone capitalism kind of wants to revert to a mean and That's a mean where you've got kids working in coal mines the workplace injuries tainted meat Environmental pollution massive corruption in politics and profound income inequality and that's what America was like in 1900 straight up And then there was a public policy response to that in the 1930s and 40s that regulated financiers Controlled the power of monopolies empowered labor unions and as you and I were talking about earlier labor unions sure aren't perfect And when they were at the peak of their power, they sure weren't perfect, but it's not coincidental that when they were most dominant in American life is when Income was most broadly shared that productivity and wage gains went side by side. That's I just find it hard to believe That's coincidental and That whole system that was built in the 30s and 40s fell apart in the 70s And it wasn't just because of a cabal of right wing people who destroyed it They were like fundamental problems underline it was a really complicated thing But now we live in an era where the economy is is is leaving a decade of growth a decade of growth and unemployment is at a level where it hasn't been since the 1960s and You know, you just know this doesn't feel like the 1960s to people it just doesn't and the reason why is because The economy can grow for ten years the gains are captured by a small group of people. Most people are treading water economically and Fixing the hole with debt is that's exactly what's happened over the last decade So my lesson about American capitalism is that it's a wonderful system It has to be tinkered with constantly like a refinery And that when you don't tinker with it it can break down and when it breaks down the consequences are really bad I'm almost finished reading the book and it's it's a really wonderful read. It's hard to put down sometimes so Thank you My question is about so oftentimes when you describe Charles coke and the sort of senior people around him He seems so logical and methodical and everything he does and very rational and that's almost across the board except when it comes to climate change and then all of a sudden you hear people in The book saying things that I I didn't think that they actually believed like it's all a hoax It doesn't matter, you know, we don't have to do anything about this because it's not real And I know of course this has to do with his management philosophy and so forth but I and I'm asking you maybe to peer into someone's mind in a way that you can't but Did you get a sense of how? He and those folks around him kind of square this idea of there's the scientific evidence about this thing that's happening and You know fighting cap and trade might be good for our short-term bottom line But in the long run for our business for you know, our kids this could be really devastating Yeah, thank you. So my answer is so unsatisfying Because I don't have an answer and you're asking questions. I hear all the time and that I was asking I have sent multiple requests to coke industries to let me sit down with Charles coke I have sent the list of questions. I have and they're exactly what you just asked Here's a person with three masters degrees in engineering from MIT one of them being nuclear engineering He understands data. He understands science Where does he come down on this? Okay, I don't know he won't answer that question to me Now here's what I do know. We've recorded their footprint. We've recorded what they've done in the world through the lobbying Through their think tanks and they have done what we just talked about earlier Which is derail efforts to regulate greenhouse gases. Is it because they think the science is fake? Is it because they think a market solution will emerge and that by regulating the energy industry We're only going to create massive problems that will forestall that market solution Is it a totally cynical effort to protect the future profits of the company? the cost to coke industries from Cap on carbon emissions or a price on carbon emissions Over 50 years is measured in a tee and trillions of dollars and I can walk through that whole thing And I've published that and I printed it and coke can't dispute it and hasn't disputed it Because what you look at the value of the assets they have in the fossil fuels business and then the future value of those assets as oil Flows through them and if oil prices fall and demand falls the losses are just huge So there is a clear economic interest there You know the only other data I have as I was interviewing Philip Ellender their top lobbyist here in Washington, DC in 2014 and he was telling me we're not so sure about the science of climate change and I was interviewing a former senior executive at Coke Very very smart person who I think totally sincerely Believes the whole climate change thing is a massive hoax Cooked up by universities and governments to cow the population into accepting tyranny and he was like, you know shaking his head Chris How can you be so? Seduced by this lie, you know, how can you believe this and I think he was being sincere with me So at the end of the day You know, I talked about how Charles Cokes live lives in the middle of an empire He created there probably aren't a lot of people aggressively questioning this. In fact the book Features on the record a former senior compliance attorney at Coke named David Hoffman Who did question this stuff and and created an internal think tank to figure out how to adapt to a cap and trade Regulated carbon world and and was Kind of forced out of the company certainly was ignored on that topic and told me They they accept challenging views, but not on this topic So maybe what you can see is a snowball building over decades where the challenging information is minimized and the supporting information is emphasized But look at the end of the day, I'm an outside reporter Looking into a dark glass window, and I don't know what they really believe in their heart about the issue But we can say what they've done about it. Hi, Anne-Marie Slaughter CEO here and Chris first of all, we're just enormously proud of this book It's wonderful to hear you So my question is are there any women in the story at all? Are there any? Sisters are there any wives are there any senior women? I mean, it's just actually extraordinary to hear you talk and the only woman's name I've heard is the PR person so I just wonder inside the coke family. Were there any women presumably yet a mother, but anybody else? Wow, so The demographic diversity inside coke industries has not been tremendous over the decades That is for sure and there are very very few women in this book. It is Extraordinarily dominated by not just conservative white men, but conservative white men of a certain type Who thrive in the company who help? lead the company So and and there is one woman in the book I really would like to talk about but there were no sisters There's no coke sister There were four coke brothers and the father You know encourage them to box with each other and compete with each other and there were lots of king of the hill games there's a lot of competition and aggression there and even physical and so I You know there's a daughter Charles coke has a daughter and a son and They were both brought into the family study to listen to the economic lectures and the daughter was the eager pupil and the son told me He would fall asleep with a ball cap over his eyes But the son is in line to take over the company and the daughter runs a publishing house in New York City so and Leslie Rudd a close friend of the family said look this was Wichita in the 70s the son came in behind the father That's a very real cultural thing One of my favorite chapters in the entire book is called the secret brotherhood of process owners And it's about a woman named Heather Faragher who went to work at a coke refinery in Pine Bend, Minnesota and Her bosses began to break the law by dumping ammonia Laid in water into nearby wetlands Because the refinery wasn't working well. They were producing all this pollution They had the choice to put it into the river where it would be detected and they would bust their permit and face Fines or they could dump it out the back into the nearby wetlands and she sent them All documented all totally documented. She sent memos saying you can't do this. She told them verbally you can't do this She would leave for the weekend. They would do it over the weekend. She'd come back Monday And they tell her she did it she ended up cooperating with federal authorities and they were given a record Fine for that and found guilty essentially even though it didn't go to court It was a very interesting story Because it I loved that chapter because it talks about whistleblowers and it talks about how difficult it is inside a corporation to stand up and say no and It can't be Coincidental the gender issues that are there she told me that the compliance hotline attorney told her she was being too emotional and Should literally she told me he said you know you should take care of your family so I think that there was an issue of people not being listened to and and and this look this all ties back in my view to sort of Homogene and corporate group think and how difficult it can be to stand up against it And I guess my final closing thought And I hope I've answered the question there I'm you know, they're just not many women in the book But it does describe a significant like institution in our system And there's real conformity here one of my favorite things was I found a picture of the coke Cafeteria back in the 70s and everybody's wearing White shirts sport coat and a tie and then Charles Koch decided in the 90s ties are not working They're too formal and you see the same picture of him sitting there with no tie and everyone behind him's no tie You know and so There yeah, it's it's a homogenous in many ways Oh Hi in terms of the actual makeup of the business the Corporate structure so oil always at the heart of it In terms of like percentage terms has that changed over time or is it really oil at the core and then profitable bits on the sides Thank you so much for asking that and and I should have gotten into that more when I described the company Starts an oil and oil is the bread and butter bedrock of this firm oil refineries pipelines and trading has always been at the core And then they're very smart about how they expand and grow This is a company always looking to expand and grow, but they branch out from what they know Okay, so they branch out from oil refinery into liquid natural gas processing plants Which are like oil refineries and then they break out from there into natural gas Pipelines and from there into trading electricity, which is highly contingent on natural gas prices So you can see how the thing branches out into the world constantly growing, but doesn't grow in the sense that they don't sell TVs They don't sell t-shirts. They don't make movies. They do these certain kinds of businesses So it's very difficult to measure what coke industries is today because they're privately held and they jealously guard that I think what I can tell you is that still about 55 percent of their sales every year comes from just Flint Hills resources crude oil and that's probably wrong now because it fluctuates a year-to-year But that's not probably it's a good ballpark and then they have a huge chunk that does nitrogen fertilizer Which again, it's just natural gas. That's all it is and then after that you you've got Georgia Pacific Which is paper building materials? So these would make up the minor Components, but nitrogen fertilizer Georgia Pacific then the small little suite of companies like molex, which makes those phone sensors Guarding glass which makes the glass in buildings and then a very troubled division called in Vista, which is what makes the clothing materials It's never really been that profitable. Hi, I'm looking they work in criminal defense in the city So it's a really great book And I'll just say that like throughout your descriptions of the details of like how an oil refinery works I never thought I'd be interested in reading about that, but I found myself pretty You know the chapter three on the war on pine bend is really fascinating. So I was very impressed with that my question is Does coke the Duke oak and coke industries faithfully apply market-based management Where where do you see that being faithfully applied or where do you see them falling short of applying those principles? Okay, and first of all I'm gonna tell my editor exactly what you said about that chapter in pine bank because we had a lot of fights about that But my my theory is like I want readers to really feel empowered and I want you to or I really like when books Teach me about the machinery and so that when you're having a conversation about this stuff You can talk about it, you know and talk back and that's really great And so I'm glad you were as fascinated about that stuff as I was so then how is market-based management applied and is it applied? consistently I'll all answer this honestly, and this is how I see it. I think it is a Constantly moving target. It's got this set of principles. They've got worksheets to go through before you make an acquisition There's a definite vocabulary to it To me the major power of market-based management is very Significant and serious it unifies the workforce when you've got a company Spread across the globe in all these different industries market-based management gets everybody speaking the same language Working under the same incentives and marching to the same tune that can't be overstated That's hard to do I've covered a lot of companies and having a unified corporate culture is really hard but in the sense that it's applied Like a actual blueprint equally in each division. I have found it tends to be a moving target so that when somebody fails they weren't doing it right and when someone succeeds they were doing it right and It's arbitrary in my view, and I'm sure coke would like massively dispute that say I got it all wrong didn't observe the right things and But that's my takeaway point is that it's mostly a cultural thing And of course they're Important nuggets in it in terms of how you think about the markets you're trading in for example and how you buy another company But at the end of the day It it did seem to be a moving target if you will And if you heard from coke at all any week in pretty and coke about the book so no We The book came out August 13th Back up to February 1st. I gave them 260 pages of material from the book Fact-checking memos with a emphasis on everything bad. Here's everything critical. Here's everything that might upset you Let's talk about it. We went through that for months They engaged in a totally good faith effort with me We had a constructive dialogue It got heated at the end as we got down to the final issues And got pretty heated at the end when we kind of had different views of things and then when the book came out It has been total radio silence Nothing to refute Congratulations again, thanks. All right. Thank you. Thanks everybody