Megyn Kelly Interviews Charles Koch on Moral Values, Political Principles, and Happiness

October 16, 2015

Fox News host Megyn Kelly sat down with conservative businessman and philanthropist Charles Koch for a rare interview Thursday.

Koch discussed the influence of his father on his work ethic, portraying him as a man who believed in initiative, independence, and the "glorious feeling of accomplishment." He then revealed the unique hiring process at Koch Industries, which is based not on a degree from a prestigious university, but on integrity.

"I've had the philosophy that John Adams expressed, in the kind of system that we're trying to create in this country: that this is a system for moral people. It will work for no other," he said.

Koch also talked about his political principles, telling Kelly that he considered himself not a libertarian, as commonly thought, but a classical liberal.

"A classical liberal is someone who wants a society that maximizes peace, civility, tolerance, and well-being for everyone. One that opens opportunities for everyone to advance themselves," he said.

He decried the arrogance of the "tyranny of experts": a vision of society that places a premium on specialists and believes that the people "are too evil or stupid to run their own lives." He said that in this vision, specialists, armed with technical knowledge, climb to power because they are seen as "perfectly capable of running everybody else's lives, because they're so much smarter."

Later in the interview, Koch told Kelly what motivates him to keep working at the age of 79.

"I feel a passion for what we're trying to do," he said. "I mean, why does somebody who's old who's a writer keep writing? Because that's who they are."

In an especially illuminating moment, he told her how he conceived of happiness, hearkening back to Aristotle's enduring philosophy.

"To be happy you have to fulfill your nature. That's what Aristotle taught so many centuries ago, that the road to happiness isn't to go drink more or consume more. The road to happiness is to fully develop your abilities, and then apply them to do good," Koch said.

Full transcript below:

MEGYN KELLY: So how exactly did Charles Koch, a man demonized by the president, the majority leader and minority leader, to name a few, become so feared and so successful? For the first time, he tells us from his home in Wichita, banged up a little thanks to foot surgery, and wearing a cast decorated by his wife. Ready to talk about life, politics and his book, Good Profit.

KELLY: So your book, Good Profit, reads to me like a love letter to your father. How big of an influence was he?

CHARLES KOCH: Both my parents were a tremendous influence on me. My father's influence came from -- he decided well, probably before we were born that as he put it, 'I'm not going to have any kids who are country club bums.'

KELLY: He worked you.

KOCH: He wanted to instill the work ethic. And, because he knew if you don't learn to work to be more productive to improve your efficiency, to cooperate with other people at an early age, you may never learn those habits. So you can't make a contribution, you can't be successful. Then, years later, when I asked my father, I said 'Pop, why were you so much harder on me than my younger brothers?' he said, son, you plum wore me out.

KELLY: Later, Koch kept up the hard work landing at the prestigious M.I.T. His plan was not to take over the family business.

KOCH: The thought of going back and working for him - he was such a disciplinarian growing up, I had no idea I would do that.

KELLY: But things changed.

KOCH: He called me, he said, 'Son, my health is not good. I don't have that long to live. Either you come back to run the company or I'm going to have to sell it.'

KELLY: Tell us about the first piece of advice that you dad gave you when you took over as CEO.

KOCH: His first word when I arrived is, 'Son, i hope your first deal is a loser, otherwise, you'll think you're a lot smarter than you are.' But he had tremendous values, tremendous integrity, humility, work ethic and terrific thirst for knowledge.

KELLY: You warn in the book about the trap of overconfidence, in a business and a person?

KOCH: Oh, absolutely. Yeah. Hubris, arrogance, is just one step ahead of loss of integrity, because if you think you're better than other people, you know more, then you're going to think, as many leaders have, that the rules don't apply to them - so they lose their integrity.

KELLY: His new book, good profit, emphasizes integrity, arguing, it's fine to make lots of money. But how you do it matters.

KELLY: You say you've always prized values over talent in your hiring decision. Really?

KOCH: Absolutely. I've had the philosophy that John Adams expressed, in the kind of system that were trying to create in this country: that this is a system for moral people. It will work for no other.

KELLY: You're telling me some hot-shot salesman from New York can come down, top of his game, sure, he may bend the rules here or there, but he is a producer. You won't hire that guy?

KOCH: No, absolutely not - if he is going to bend the rules, we won't have it. In our interview process, that's what we look for.

KELLY: How do you figure out someone's value, their integrity, in a job interview.

KOCH: We put the candidate in different situations, like we have somebody that the candidate doesn't think is important, we take him down to the cafeteria, we see how the candidate treats that person, we see how they treat the staff at the cafeteria, and we see how they answer questions. We ask them, 'Gosh, did you have any problems? Did you make any mistakes?' If they say 'Oh, no, but the company was so screwed up and they wouldn't listen to me.'

KELLY: What does the inability to admit mistakes tell you about somebody?

KOCH: They don't have any humility and probably don't have any integrity.

KELLY: Humility in hiring also served Koch well.

KELLY: Don't you want all the hot shot MBAs from Harvard and Wharton and elsewhere?

KOCH: We find we do better from community colleges, from rural colleges, like after I was president of Koch Industries, our next president were -- well, one didn't graduate from college. And the current president is from state.

KELLY: At Koch Industries, even you get evaluated. Is that true?

KOCH: That's true.

KELLY: How does that work?

KOCH: That works great. I learn a lot.

KELLY: Aren't you afraid of a bruised ego?

KOCH: No - here's the thing. I think all of us need this attitude. Do you want to have your feelings hurt a little bit because you have some negative feedback, or do you want to continue down the disastrous track you're on and have a huge disaster? Talk about a bruised ego. It may ruin your career.

KELLY: Is it true that any employee at Koch can earn more than his boss?

KOCH: Oh, absolutely. We try to reward people according to the value they create, value they create in society and for the company.

KELLY: And you will hire based on talent? Even if you don't have an open spot, necessarily?

KOCH: On values, yeah.

KELLY: How can you hold to a budget under those circumstances?

KOCH: Well, we're not big on budgets.

KELLY: The other message you want to send your employee is try new things. Don't be afraid to fail or make mistakes.

KOCH: Right, if you never failed, then you're probably not doing very much. You're certainly not innovating. You're not improving, because the only way you improve is to try new things.

KELLY: What if you're a big success and you don't want to risk it?

KOCH: That's one of my principles. Success is one of the worst enemies of success, because success tends to breed complacency and lack of humility.

KELLY: When companies aren't successful, Koch says Uncle Sam should stay out of it, dismissing government subsidies, loans and tariffs as "corporate welfare."

KOCH: Well, corporate welfare, I think, is a disaster for this country. It's crippling our economy. It is contributing to a permanent underclass and corrupting the business community.

KELLY: Critics say what the Kochs really oppose is government assistance that could hurt Koch's bottom line, a charge Koch denies.

KOCH: We oppose all corporate welfare, whether we benefit or not. You will find that our policy positions mainly hurt our profitability rather than help it.

KELLY: What about China? We've heard Donald Trump talk repeatedly about how they're devaluing their currency, and how the next president need to put a stop to that by perhaps imposing a tariff on their goods.

KOCH: Well, I mean, tariffs are a disaster. The way -- the principle way that human beings had gotten out of extreme poverty is free trade.

KELLY: When we return, Charles Koch addresses the attack from the left, the death threats and why he is still working so hard at the age of 79. Don't go away.

KELLY: The Kochs are behind a number of political action groups which have been demonized by the left. Donors may remain anonymous under the law, a source of consternation for Koch's critics, including President Obama.

KELLY: Not long ago, President Obama himself came out and attacked you. It's not the first time, but he said that the Koch brothers are trying to prevent new clean energy businesses from succeeding. You came out, and, in a rare public statement, said you were flabbergasted by that accusation. Why?

KOCH: Because the opposite is true. All of our policies are based on whether it will make -- enable people to improve their lives or it will make their lives worse.

KELLY: On the comments made by President Obama - beneath the dignity of the office?

KOCH: I think it is - to misrepresent what a company stands for and attacking private citizens for trying to help people improve their lives.

KELLY: Do you believe that the Democrats, including the president, have tried to make bogeymen out of you and your brother David?

KOCH: Oh, definitely. That's a full time job on their part. I mean -- and that's why I've never been that fond of politics and only got into it recently kicking and screaming, because I don't think politicians are going to reverse the trajectory of this country. I think it's going to depend on the American people understanding what is fair and what makes their lives better.

KELLY: Why do you think they've been so relentless in their attacks. Harry Reid, your brother David pointed out, mentioned the Koch brothers 279 times. They have painted you as evil. The White House actually put you on an enemies list back in the 2012 campaign.

KOCH: Well, I mean that's very sad that -- that's what we've come to, because in fact what we're trying to do is the opposite.

KELLY: Is it dangerous? I know you've gotten death threats.

KOCH: Yeah, I get a lot of death threats. But the way I look at it, I feel I have a moral obligation to do the best I can to make the country better for everybody, and that threatens certain people because they're going to have much less power. I want the power to go back to people making decisions over their own lives rather than some experts making it.

KELLY: Are you a libertarian?

KOCH: No. I'm -- I have been a libertarian in my past but now I consider myself a classical liberal.

KELLY: Classical liberal. What does that mean?

KOCH: Classical liberal is someone who wants a society that maximizes peace, civility, tolerance and well being for everyone. One that opens opportunities for everyone to advance themselves.

KELLY: Koch didn't want to reveal his opinions on individual candidates. But we tried.

KELLY: So the "L" word will have people asking is he going to vote for Hillary Clinton?

KOCH: Well, I mean, putting aside all the things that are said about Hillary today, my main difference with her is on the vision of what kind of society will make people's lives better. So this is a vision of society in which people are too evil or stupid to run their own lives, but those in power are perfectly capable of running everybody else's lives because they're so much smarter. It's what Hayek called the fatal conceit, or William Easterly called the tyranny of experts, because that's what it is, it is tyranny.

KELLY: So, this discussion will now have people thinking, 'Ah-ha! He likes Rand Paul.' He has libertarian leanings. He wants government out of our lives. Is Rand your guy?

KOCH: No, I don't have a guy. I have these principles and what I'm trying to accomplish, and what we need, to me, is a candidate that will help change the trajectory of the country from all this wasteful, irresponsible spending that's heading us for a financial cliff, not just by the Democrats but by the Republicans. The reason we tend to support Republicans is they're taking us toward the cliff at only 70 miles per hour miles an hour and the Democrats are taking us 100 miles an hour.

KELLY: They say you're going to spend 900 million dollars on the presidential race this cycle. Is that true?

KOCH: No, not even close.

KELLY: Koch says it's actually more like 300 million, and not all will go toward the presidential race. As for the Democrat's charge that Koch's donor network is shady --

KOCH: Everything I give, pretty much, is public. Now not every donor wants to -- or is willing to get the kind of abuse and attacks that we do, or death threats, so they're not willing to have their names out. I think the other side is pushing for that because they want to intimidate people so they won't oppose it.

KELLY: But Charles Koch is not intimidated, and not slowing down any time soon.

KELLY: At 79 years old, you still work nine hours a day.

KOCH: Well, more than that! C'mon!

KELLY: You come home and have dinner with Liz. Then you work again.

KOCH: Ok, you got it. Thank you so much.

KELLY: Why? Why do you still work so hard?

KOCH: Because I feel a passion for what we're trying to do. I mean why does somebody who's old who's a writer keep writing? Because that's who they are. That's their nature, and to be happy you have to fulfill your nature. That's what Aristotle taught so many centuries ago, that the road to happiness isn't to go drink more or consume more. The road to happiness is to fully develop your abilities, and then apply them to do good.

KELLY: And speaking of happiness, Koch's father left his sons a bit of money upon his death, along with one final piece of advice.

KOCH: "If you choose to let this money destroy your initiative and independence, then it will be a curse to you and my action in giving it to you will have been a mistake. I shall regret very much to have you miss the glorious feeling of accomplishment. Remember that often adversity is a blessing in disguise and is certainly the greatest character builder." That's tough.

KELLY: The glorious feeling of accomplishment.

KOCH: Yeah.

KELLY: Charles Koch, thank you.

KOCH: Well, thank you, Megyn. Appreciate it.