A lawsuit by the Koch brothers threatens the Cato Institute’s reputation for independence
When scholars at the libertarian Cato Institute came out against the Gulf War, Olin Foundation president William E Simon was outraged. The foundation ended up withdrawing its support and, according to Brian Doherty in his book Radicals for Capitalism, Cato ended up losing nearly $1 million in funding as a result. Cato’s opposition to the war on drugs and its support for civil liberties have also led to tension with the mainstream conservative movement.
Since the 1950s, America’s conservative movement has allied conservatives with libertarians. Almost anyone who opposed liberals was welcome — even ex-Trotskyite neoconservatives. While think tanks like the Heritage Foundation attempt to fuse conservative and libertarian ideas, Cato has always been a libertarian think tank. But now a lawsuit may threaten Cato’s independence and draw it into the mainstream conservative effort to unseat Barack Obama.
Brothers Charles and David Koch have filed a lawsuit for control of the Washington based think tank but Cato president Ed Crane and his supporters are fighting back. The Institute has created a ‘Save Cato’ web page and supporters have created a ‘Save Cato’ Facebook page and are tweeting using the #savecato hashtag.
Cato has always relied on the Kochs for financial support and Charles Koch is one of the think tank’s founders.But as Cato research fellow Julian Sanchez writes: "after years of benign neglect, the Kochs have suddenly decided to use their existing shares in the Institute to attempt to pack the board with loyalists, several of whom are straight-up GOP operatives."
Former Cato vice president for research, Brink Lindsey writes:
Regardless of their intentions, the Kochs cannot take over Cato without destroying it. The mere act of converting Cato into a legally Koch-controlled entity – through a highly public and hotly contested legal proceeding, no less – would change Cato’s fundamental character in a way that would fatally compromise its hard-earned reputation for intellectual independence.
Even liberals are buying into the debate. At the Washington Post Ezra Klein declares that Cato is: "among a handful of think tanks whose work I regularly read and trust." It is not part party political the way the Heritage Foundation is, says Klein. Cato advocates libertarian principles "when Democrats are in power, and when Republicans are in power."
At Salon, Alex Pareene writes: "Cato is mostly antiwar, decidedly anti-drug war, and sponsors a lot of good work on civil liberties. That … is basically what the Kochs don’t like about them, because white papers on decriminalization don’t help Republicans get elected."
Ever since Friedrich Hayek advised Institute of Economic Affairs (IEA) founder Anthony Fisher to focus on intellectuals and ideas rather than on politicians and elections, free market think tanks have taken a long term view of political change. In his book, Brian Doherty cites one longtime Koch lieutenant’s view of the original Koch strategy::
Politicians, ultimately, are just actors playing out a script. The idea is, one gets better and quicker results aiming not at the actors but at the scriptwriters, to help supply the themes and words for the scripts — to try to influence the areas where policy ideas percolate from: academia and think tanks (p 410).
But in a endnote he acknowledges that more recently the Kochs have changed tack, funding Republican candidates like George W Bush as well as libertarian intellectual work. Applied to Cato’s work, this partisan political approach would steer scholars away from ideas and policies that are unacceptable to the conservative mainstream and Republican candidates.
In particular, some Cato scholars worry that a more politically focused Cato Institute may abandon its principled libertarian stance on foreign policy and the war on drugs. And as Cato research fellow Jason Kuznicki writes: "A socially conservative, hawkish Cato wouldn’t be Cato anymore. It would be the west annex of the Heritage Foundation."
The lawsuit
On 1 March 2012 Charles and David Koch filed a lawsuit for control of the Cato Institute. Cato is a 501(c)(3) nonprofit but unlike most nonprofits, it is a corporation controlled by a small number of shareholders. Until recently, the shareholders were Charles Koch, David Koch, Ed Crane and William Niskanen. Each held 25 per cent of the stock. The trouble began when William Niskanen in died October last year.
As the Washington Post’s TW Farnam explains, Cato, shareholders cannot sell or otherwise dispose of their shares without first offering to sell them to the corporation for the price they paid (Niskanen paid $1 for each of his 16 shares). The Koch brothers claim that the agreement obliges Niskanen’s widow, Kathryn Washburn, to offer to sell her husband’s shares to the corporation.
If the Charles and David Koch succeed, they will end up with the majority of shares. This will enable them to stack the board with their own supporters and control the organisation.
Control of the board
The Koch’s critics claim they are trying to remove Ed Crane from the board and his position as president. According to Cato senior fellow Jerry Taylor, the struggle for control began last year:
Last year, they used their shares to place two of their operatives – Kevin Gentry and Nancy Pfotenhauer – on our board against the wishes of every single board member save for David Koch. Last Thursday, they used their shares to force another four new board members on us (the most that their shares would allow at any given meeting); Charles Koch, Ted Olson (hired council for Koch Industries), Preston Marshall (the largest shareholder of Koch Industries save for Charles and David), and Andrew Napolitano (a frequent speaker at Koch-sponsored events). Those four – who had not previously been involved with Cato either financially or organizationally – were likewise opposed by every member of our board save for Gentry, Pfotenhauer, and David Koch. To make room for these Koch operatives, we were forced to remove four long-time, active board members, two of whom were our biggest donors. At this moment, the Kochs now control seven of our 16 board seats, two short of outright control.
Tension between Charles Koch and Ed Crane dates back to the early 1990s when Koch left the board of directors. According to the New Yorker’s Jane Mayer, Crane may have "had been insufficiently respectful of Charles’s management philosophy".
What’s at stake?
According to Cato research fellow Julian Sanchez the Koch brothers want to change the think tank’s direction:
There’s every indication that they (and their proxies on the board) think Cato would be more useful if it were integrated more tightly into the Koch portfolio of advocacy groups—Americans for Prosperity, etc.—for which it could serve as a source of intellectual ammunition in the ongoing struggle to defeat Barack Obama and the Democratic Party.
Sanchez says he will resign if the Kochs take control: "I can’t imagine being able to what I do unless I’m confident my work is being judged on the quality of the arguments it makes, not its political utility—or even, ultimately, ideological purity."
Cato’s director of foreign policy studies, Justin Logan and senior fellow Jerry Taylor are worried about the influence of new board members, particularly John Hinderaker. Hinderaker supported George W Bush’s policies in the Middle East and is often described as a neoconservative (Tony Woodlieff, one of the Koch’s nominees to the board, claims that Taylor has misrepresented his views).
Cato’s director of health policy studies, Michael Cannon says the Koch takeover poses an “existential threat” to the institution while former Cato vice president for research, Brink Lindsey argues that the takeover: "would change Cato’s fundamental character in a way that would fatally compromise its hard-earned reputation for intellectual independence."
But not everyone is so worried about the takeover. Former Cato research fellow Will Wilkinson writes: "I do suspect that a Koch-controlled Cato would work more closely with the Republican Party, which I don’t at all like. Yet I’ve seen very little evidence that a Koch-controlled Cato would look a lot different ideologically than Cato does currently."
Other members of the think tank community worry about Ed Crane’s strategy. The Manhattan Institute’s Ted Frank argues that Cato’s litigation position: "seems to be calculated to maximize the benefit to Ed Crane (either as head of Cato or head of a future hypothetical Cato-in-Exile), rather than Cato and the libertarian movement."
Meanwhile, Cato grows weaker the longer the dispute goes on. According Skip Oliva’s interview with Cato chairman Robert Levy, some of the think tank’s large donors have refused to contribute as long as there’s a possibility that the Koch’s will take control.
The Kochtopus
As the Hungry Beast video below explains, the Koch brothers wide ranging involvement in conservative and libertarian causes has seen their network dubbed the ‘Kochtopus’. Libertarians have constantly ridiculed the idea that the Koch’s control Cato. As Jason Kuznicki writes: "The people who spin elaborate fantasies about the Kochs acting as our puppet masters were, and are, dead wrong. They’ve been wrong since at least the early 90s, if not earlier."
But as Alex Pareene writes in Salon : "One mildly amusing side effect of all this has been a bunch of pro-Cato libertarians continuing to mock liberals for imagining the Kochs to be powerful and nefarious while … bemoaning their insidious plot to destroy Cato from the inside."
This little episode is yet more evidence, not that any is needed, that America is a democracy with “plutocratic characteristics”. Does anyone seriously believe any more that you can have a genuine democracy when 0.001% of the population has virtually infinite wealth and the power to manipulate, coerce and influence others that comes with such wealth?
If all “plutocrats” were like the Koch brothers then the world would be a much better place. Nobody has done more in the last 10 years to advance the cause of human liberty than Charles and David Koch.
Apparently though they are the most evil people in the world because they don’t support Earth Hour.
Yobbo has a valid point, if Koch Bros Inc could gobble up all the libertarian/faux libertarian organisations the world would be a better place.
Koch are not aiming at just Libertarian targets — they aim to control every state from within / each state has their internal web aimed at overtaking each state. In New Jersey, Chris Christie was their BOY – a would be 21c Adolph – a personality with a dictatorial bent. Take a look at the You Tube Koch video; it’s revealing. Going back to their relatives who controlled Buchenwald down the line to C&D — the zeitgeist remains the same. They are also buying up universities to twist minds of young who are mostly democratic thinkers, not right wing / libertarians.
Julian Sanchez writes:
I wonder how Julian thinks this has worked out under the current president who has broad powers under Homeland Security/presidential prerogatives to reduce some of the most clear breaches of civil liberties. Does he feel he’s been taken for a ride by these Dems? I’m not seeing the fog clearing on here.
Yobbo – The Koch’s opponents are worried about more than earth hour.
Yes, Don. Apparently they are also evil for donating money to political candidates.
Including funding the Reason Foundation and donating 20 million to the ACLU to help fight the Bush administration’s Patriot Act. What evil criminal masterminds.
Evidence? ACLU have not declared the doantion.
And donating money to 150 odd colleges and universities on the condition they can hire and fire staff and insert and delete content from the curriculum. That’s plutocracy, folks.
Yobbo @6: “Yes, Don. Apparently they are also evil for donating money to political candidates.”
Do the “donations” come with strings attached? Are the Koch’s buying influence?
Public relations front/intellectual cover for entrenched power faces hostile takeover by slightly different configuration of entrenched power. Remaining vestiges of relevance and intellectual precision circling the drain. Couldn’t have happened to a nicer bunch. Yawn.
Mel:
I think what you may be talking about is chairs at universities and in that case the position are (I’d guess) dependent on the terms and conditions set out in the agreement between the donor and the college or university. In order to see if there may be undue influence you also need take a harder look because simple eyeballing isn’t really enough. Lots of foundations with a strong left bias also fund positions too. There is also pretty decent disclosure too… at least at the most reputable places.
——
The Koch brothers are not conservatives they are Libertarian types and it’s good to see them involved. If they are attempting to influence the GOP it would be to take them in the the Libertarian direction. I hope the succeed.
Don:
Was that vid you linked to made by Soros Foundation or their astroturf operations? The reason I’m asking is because Van Jones appeared in it and he is aligned with one of Soros’ astroturfs if memory serves me. It’s also worth noting he was fired by the Obama Administration for his extremism.
I found it quite ironic that the Vid had the usual smoking chimneys in it to give the impression of what big polluters the Koch’s are.
It would be worth looking at the latest Soros fund stock holdings as I think his investment portfolio of 110 stocks at the end of 2011 (according to SEC disclosure) would be more emission intensive. Of course you don’t get that contrast in the video.
You retards are just getting more ridiculous every day, everything is a conspiracy. Peace out.
Mel @ 9
Yes and so what is your point, until in Australia’s case we can remove compulsory unionism (it may not legally be compulsory but in effect it is in some places) which has compulsory donations to the ALP incorperated I don ‘t see what your problem can be with those on the other side. So if you happen to support the ALP clean them up first before you start throwing stones. Even the Labour Party in England is better because union members can choose whether or not they want to donate to the party.
[…] Arthur, “Libertarians vs. the Kochtopus,” Club Troppo (March 11, […]
Link
I don’t believe the Koch brothers are evil. However I think some righties are being a little too dismissive of the concerns which are in fact being expressed by *current* Cato people who cannot be dismissed as lefty conspiracy theorists. Some of these people do think that the Koch brothers want Cato to be more directly involved in partisan campaigns and be more visibly pro-Republican. If so I think this would be a very bad strategy – think tanks to work have to be somewhat above the fray of grubby party politics.
Remarkably Jason is being quite sensible.
Cato has been a fine think-tank. You might not agree with all its stuff but you wanted to read it all.
You do not get people merely writing for team Republican in their publications at present.
It would be a shame if Cato became like say Heritage for example.
That is what is likely to happen under the Koch brothers.
Hi Jason
But it’s not as though the Koch Bros haven’t been involved with CATO. One of them has been sitting on the board for about 20 years or so.
I think people like Brink Lindsay are just stirring up trouble. Brink is an okay guy, but he also says some really stupid things at times. Brink left Cato after he came out with the horrendously lame idea of a left/libertarian fusion. That date lasted 35 seconds as other libertarians realized the girl hadn’t ever shaved her legs. Brink obviously wasn’t wearing his contacts at the time.
I think Don wrote about it when Brink was making this suggestion and I told him there was never going to be marriage and if there were it was going to end up in divorce court at light speed.
It’s always advisable to check and recheck what you’ve posted if you get a thumbs up from the Homester.
If the same thing happened locally to the IPA, the Australian poliblogs would be in uproar.
Not really, Paul. The IPA doesn’t command any respect, so a hostile takeover would be like raping the least reputable whore in town; it might stink but hardly anyone would pay much attention.
Not that we’d hear about it if it happened, I guess, given how secretive the IPA are.
That’s a god awful analogy, Mel. Seriously.
The Jewish Man’s Burden to the US
some people have no brains at all.
There is a vast difference between sitting on the board and being the piper.
The Koch bros have a just reputation for being political players.
Cato would completely change. It would simply become another player for team republican moreover one that lives in another world where adopting policies that blow out the deficit would magically reduce it would be one current example
Bill Niskanen must be squirming in his grave
Yea Homer… Cato of course has been one of the leading proponents of massive deficit spending. Oh hang on, no they haven’t. It’s all happening in your head.
Stop the name dropping.
He’s a Zombie? Who is he Homes?
Gosh JC here is another example of you being unable to understand simple english.
Become means …..
Showing your true ignorance if you do not know who Bill Niskanen was.
In Fact it does show you simply are not a conservative at all!
Psst – JB, JC knows who he is and was testing you. Thank me later.
Actually here’s a great great piece by Brink Lindsay that is really worth reading. He is on the side of the angels, but he can wonder off in numbskullery at times. The left/libertarian fusion thing was one of the most audacious attempts at stupidity I’ve ever seen, but he’s still a good guy.
http://reason.com/archives/2009/05/26/nostalgianomics
Mel:
I suppose a National Curriculum that spans all schools across an entire country, with a single, central point of control, and practically no public discussion, must be even worse, huh? While on the subject of Yes Minister style publications, here’s cut-an-paste from the information sheet:
If you are playing wank word bingo then you are onto a winner with that lot, but if you wanted an answer to the question asked, hmmm, maybe point [3] is half an answer, but I dispute that too. They say, travel broadens the mind, but the intent of point [3] is to prevent that happening — a backwards step IMHO. Diversity is a desirable thing. Localised decision-making is a good thing.
So, John Howard got a bit of mileage pushing his own version of history into the schools, and since the ALP have very few ideas of their own, they figured might as well do what he did. That’s what this is really about isn’t it?
Tel,
That’s a sterling defense of the Finnish model. Good on you, and colour me surprised.
Dan, I typed “finnish model” into google but even after that I need more explanation to know what you are talking about.
Actually this thread is a good example of the dittohead nature of right libertarianism (with the honourable exception of a certain beautician from the Gold Coast).
Try:
http://www.theatlantic.com/national/archive/2011/12/what-americans-keep-ignoring-about-finlands-school-success/250564/
Tel @29:
“I suppose a National Curriculum that spans all schools across an entire country, with a single, central point of control, and practically no public discussion, must be even worse, huh?”
What are you babbling about? Seven elected legislatures had to agree on the National Curriculum, public comment was sought, hundreds of articles were written on it and various changes were made as a result of feedback. Moreover any state can pull out of the NC if it likes.
“So, John Howard got a bit of mileage pushing his own version of history into the schools, and since the ALP have very few ideas of their own, they figured might as well do what he did. That’s what this is really about isn’t it?”
Use your brain. Don’t waste my time with stupid comments.
Oh, I almost forgot, you’re the clown who wants to throw the economy back into the 19th century by banning limited liability corporations because of something the knucklehead Lew Rockwell wrote. Chuckle.
Tel: in fact, FFS. I typed “Finnish model” into Google and got the link I posted as the fourth hit and another very relevant one as the third hit. I also got some Finnish models but given that your blather was about about decentralised schooling I would have thought you could put two and two together.
C-
See me.
JC at #18 – Yes, I remember an earlier discussion where you used an even more bizarre political-alliance-as-sexual-relationships metaphor.
I’m a bit surprised at the US media sympathy being expressed to Cato, when a key feature of the think tank has been the long term residence of Patrick Michaels, the much discredited climate change skeptic.
There is no doubt that long term effects of climate change and its influence on energy policy is a major international issue that requires serious political effort to address. So what has Libertarianism, with its love of free markets, done in terms of the issue?: gone out of its way to discourage belief in the reality of the problem in both politicians and the public.
This is a disgrace, and the any think tank that has taken this tactical approach to the issue – including the IPA here – deserves no respect at all.
Steve,
As much as I think libertarianism is for children of all ages, I’m fairly sure Reason’s editorial line is that it does exist, it is a problem, and should be dealth with via a market-based mechanism.
*dealt
Jim Powell (Cato) has a piece in Forbes lamenting the takeover and citing various historical events to support the independence of Cato from the partisan Koch bros.
There is an inherent weakness to their argument; Cato’s support of free and unregulated markets is at odds with their claim that politics is corrupt.
Yea Don, I recall, which is why I used a variation of it in respect of that truly bizarre idea. You thought it could work unless I’m mistaken.
Mel:
Just to make one tiny correction where you seem to have got into a muddle, I’m pretty sure I provided quotes by a man named “Smith”, not “Rockwell”. It’s from an obscure text about nations and wealth and a bunch of stuff you probably aren’t much interested in. Come to think of it, with such well articulated and logical arguments (name calling, going off topic with irrelevant material, complete misrepresentation, etc) I doubt there a whole lot this Smith character could teach you.
Just to show that I’m open minded on the issue, I’d love to read what Lew Rockwell has written about it if you could be so kind as to provide that URL.
Don’t be defensive, JC. Surely you realise how frequently you insert aggressive and vivid sexual themes into your comments. For example:
“[Poster} is my carbon slave and he ins’t allowed to speak with fellow lefties unless he receives my formal approval. Don’t tempt him as he invariably gets severely punished if he breaks the rules.”
“Make sure you’re fit…I’ve already bought a pair of satin shorts with my own logo.”
Nothing wrong with a healthy interest in sex, of course. It’s just the psychosexual repression seeping out that’s a worry. It leads to the sort of carnival we’re seeing in the run-up to the US election, where the Right is certain that with two wars going on, a recession to recover from and the gradual decline of global American influence, the single most important issue in politics is ensuring women are punished for having sex.
Sanchez:
Defensive? Lol
On an annoying Friday afternoon with that infernal racket from the silly F1 races one can’t escape from, I get an email with your name featured prominently on the Troppo alert. Great, this is turning out well. Do you realize how that makes me feel?
So let me see what you’re doing here. You’re tying up my reference to the preposterous hope of a left/libertarian “fusion” sorta appearing like a Crying Game incident and the other reference to whipping Metro-Mick, my carbon slave, into shape as a result of his many transgressions like not turning off his fridge when I wanted the heating, thereby allowing me to claim a carbon credit…. And you’re suggesting the last has sexual connotations? Are you always this absurd? Yes, is my answer.
I don’t really give a toss about other people’s sexual orientations. I’m pretty much at ease with my own, however I find it amusing seeing this unseemly passive aggressive gotcha kinda of thing.
You obviously lifted the quote from The Cat. What ought to be a little concerning is how there are so many “disaffecteds” like you and others that come here spend their time whining and squealing about The Cat like big babies. Grow up Sanchez, you’re batter than that. I know you are.
You didn’t come even close to a point there, JC, but it’s interesting to watch the way you hastily grab whatever tangential subject matter jumps into your head, stuff it all together into a lumpy strawman, then victoriously conclude that you got everything wrapped up.
Beating slaves and monogrammed underpants. Another day on the internet with the conservative fringe.
As a proud Catallaxy malcontent, I’d be happy to make my comments there, but dear old Sinclair has banned me because speech is only free if it supports Right-wing talking points. The way you regard examination of your own statements as an attack on the entire Catallaxy website pretty much sums up the divergence of opinion allowed there.
It would be fascinating to explore exactly why discussions of media regulation cause you to describe your underwear while challenging strangers to fistfights over the internet, or why the subject drives you to make passionate declarations that sound lifted from S&M erotica, but it would derail a lovely thread about the Cato Institute.
Take it to an open thread if you like.
You’re not just a malcontent, Sanchez. They banned you for the same sort of insanity you’re exhibiting here.
But keep talking about the Cat and continue making other point point.
SO, a few questions for those who follow such things.
1) Why has CATO been a long-time helper for tobacco companies?
See Fake science…:
p.39 Philip Morris funding 1991-2001, from tobacco archives. Of 39 thinktanks, CATO is #3 with $965K, after WLF and ATR.
p.40-41: what the thinktanks did for their tobacco money.
It’s too bad the archives effectively stop after that.
Does anyone know if they still are helpers?
Is it a Libertarian value to help tobacco companies addict children?
2) Can anyone figure out why getting money for such things qualifies as 501(c)(3) tax-exempt?
3) Does anyone know if IPA does also? And how are charity rules in Oz?
It’s pretty easy to figure out Mashey, CATO is a tax exempt organisation because it’s non-profit and literary. You don’t have to be a charity to qualify for tax exemption.
Who they receive their funding from is, as always, completely irrelevant. But it’s extremely typical of the left to attack the funding source since they long ago lost the ability to challenge their actual arguments.
“Who they receive their funding from is, as always, completely irrelevant.”
Yeah – the battle of ideas and the beneficiaries of those selfsame ideas are entirely separate things.
Yes, Dan. They are.