The Cato Controversy: Tensions in Libertarian Land

The Cato Institute is a think tank that is practically synonymous with current-day libertarianism. Those connected with it at one time or another constitute a virtual who’s who of modern libertarians, including Murray Rothbard, the Koch brothers, Milton Friedman, Charles Murray, and a host of lesser known commentators and philosophes. It has performed much of the research behind today’s anti-government  movement, including ideas for the privatization of Social Security, the dilution of health and safety regulation, and the undermining of global action on climate change. The Institute’s success in getting its ideas out there epitomizes the success of “conservative liberty” in today’s politics.

Today, however, a cloud hangs over the Cato Institute. One of its founders and major shareholders, Charles Koch, is launching a lawsuit against its current leadership. Koch, who along with his brother David controls two of the four existing shares, is now claiming the right to take possession of a third following the death of a fellow shareholder. Although a released share normally reverts back to the remaining shareholders, some ambiguity exists about its disposition when a shareholder dies. There is no doubt, however, that if the Kochs  take over the third share, they effectively control the organization, since shareholders appoint board members who have the power to hire or fire the director, staff, and research fellows.

The dispute, which has generated passions on all sides, has resulted in the fracturing of the libertarian community. By becoming public it reveals an underside of conservative think tank politics that is rarely seen. Different participants, of course, view things in different ways. Koch and his supporters portray it as a case of legality, respect for contract, and consistency of purpose. They state that the organization was meant to be in the hands of a small group of founders with a defining purpose. They hold that another of the shareholders, Edward Crane, who was effectively in charge of Cato’s direction for some 25 years, diverted it to his own purposes. Crane and much of the Cato inner circle, on the other hand, see Koch’s lawsuit as a power play pure and simple. They see him attempting to use the organization for crassly political purposes and to intertwine it with his other undertakings. Their show of distaste for politicization, of course, means portraying themselves as relatively non-partisan, a somewhat unconvincing position in light of their conservative orthodoxy on most issues. Nonetheless, the Cato-ites portray Koch’s move as a vital threat to their independence.

A recent meeting in December 2011 between David Koch and Cato Board Chairman Bob Levy, who opposes a Koch take-over, brought many of these issues to the fore. The two men give different interpretations of the meeting, but their comments actually suggest a common theme. Levy understands David Koch as eager to make Cato more “responsive” to the needs of Koch organizations like the well-funded advocacy group Americans for Prosperity. Cato would need to supply such groups with “intellectual ammunition” and essentially take closer “marching orders” from them.  David Koch uses more elevated language to summarize such matters. He admits telling Levy of the need to be more “effective in translating esoteric concepts into concrete deliverables.” “Deliverables” is  apparently another word for the achievement of policy change. He also admits saying that the Republican Party, “however flawed,” is the best hope of moving policy in the desired direction. What is needed is more effectiveness in reaching this overall goal.

A further insight into what the Koch brothers’ mean by “effectiveness” is evident from their less publicized remarks. In a 2006 interview with Brian Doherty (the author of Radicals for Capitalism), Charles Koch expresses his desire to develop a “science of liberty” that can be sold to the masses and converted into tangible political results. He speaks of an “integrated strategy” to bring about social change that sounds a bit like a Ford plant assembly line. This integrated approach involves a chain of connected activities “from idea creation to policy development to education to grassroots organization to lobbying to litigation to political action.” He makes clear that the serial linkage from idea to end result is a wonderful conception not only in terms of achieving libertarian outcomes but of making the best use of his millions of donations to the cause. One can assume that Koch aspires to making the Cato Institute, the provider of “intellectual ammunition,” an integral link in his unbreakable chain.

It is revealing that many on the libertarian right have no problem with the Koch brothers in the abstract. Most of Cato’s current anti-Koch detractors were singing alleluias to the Koch brothers and their service to libertarianism as recently as a year ago. But facing the prospect of being in close quarters with the Kochs and subject to their command structure and factory discipline, they clearly have second thoughts.

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