Tuesday, March 13, 2012

Koch Brothers v. Cato

There seems to be quite a kerfuffle going on right now between the Koch Brothers, who helped found the Cato Institute, and the current management of the Institute.  It's over a shareholder agreement signed at the founding of Cato and it boils down the the Koch Brothers arguing that they have a legal right to control the Institute and the current management opposing that move (you can get more detail here, here and a recent update here).  I just thought I'd comment since I was a former employee of the Cato Institute and was also a Charles G. Koch Summer Fellow (I received a stipend and an apartment for a summer during college so I could intern at the National Taxpayers Union, paid for by the Koch Foundation).  Essentially, I've had ties to both camps.

So what do I think?  I think that if the interpretation of the shareholder agreement that the Koch's have is correct then they should be able to control the Cato Institute.  A contract is a contract.  I know that Cato's President, Bob Levy (who is the nicest guy you'll ever meet) has opposed the Koch move on three main grounds, first, that the Koch interpretation is incorrect, second, that a Koch takeover would change the character of the institute, and third that the shareholder agreement is outdated, as the Koch's are no longer large donors and people who are deserve a voice in how the Institute is run.  But really only the first one can even be partly legitimate.  This is about property rights pure and simple, the character of the Institute and age of the original agreement are really extraneous arguments that make me think that Cato isn't terribly confident in their legal defense.  Not only are they extraneous, I think the arguments are also just plain wrong.

First, the character of Cato issue.  Based on my summer hanging out with other Koch fellows, it's pretty clear that the Koch's support quite a few think tanks, all of which support limited government.  They might have different focuses, but their is one overriding theme, big government does more harm than good to everything from personal liberty to the economy.  So, I really don't think Cato is really going to change that much.  Sure, maybe on some issues they won't be completely down the line Libertarian Party platform, but I don't see why it needs to be.  My guesstimate is that 90% of libertarians aren't part of the party because it is so doctrinaire, not willing to make any compromise even if it moves things in the right direction (like Ron Paul's votes against every free trade agreement brought before him because they entail too much government).  Maybe it wouldn't hurt for Cato to be a little more mainstream, perhaps it would help them actually achieve something.  While working there it didn't take long for me to conclude that the work Cato was doing wasn't really achieving anything.  They would come out with these great policy papers and have them wonderful public forums and very few of their proposals would get anywhere.  Heck, for the last 11 years I would say that the Institute has been a complete failure.  With Republicans in charge of both the White House and Congress for much of the last decade you would think Cato's influence would have been at a peak, as Republicans are much more sympathetic to Cato than Democrats, instead you saw the opposite.  More government, more spending and a more active foreign policy (though not everyone was an overgrown hippie at Cato, I remember one time a few of us did go to a bar to have a beer, a burger and watch Iraq being bombed) were par for the course and where was Cato? Still writing policy papers that some people may have read but nobody put into practice.

Second, there is the claim that the shareholder agreement is outdated.  The Constitution is about 7 times older than that agreement, is that outdated too?  If they had wanted a time limit for the agreement they should have put a time limit in there when they wrote it.  Otherwise, if they don't like the way Cato is headed they should do what those of us who work in the private sector do.  Go somewhere else.  If so many donors and analysts are upset with the possibility of a Koch takeover, why don't they just start another institute?  Sure it will be a lot of work and they will have to create a new brand but so what?   Welcome to real life.  Maybe doing all of that will actually reinvigorate the place and make it relevant. 


  1. Thank you very much for this. It especially helps to hear from someone who is familiar with both camps. I especially like Dan Mitchell's work (and a few others). Especially a former CATO guy named LibNeocon...