Libertarianism, Current Events

Koch vs. Cato — A Guest Post by Brink Lindsey

I’m grateful to the folks at Bleeding Heart Libertarians for affording me space on their site to comment on the dispute between the Koch brothers and the Cato Institute. I’m a big fan of the site, for reasons easy to guess: I was a bleeding heart libertarian before BHLs were cool. And before saying another word, let me make clear that the thoughts to follow are strictly my own and do not in any way represent some official position of this blog.

It’s no secret that I’ve had strong differences over the years with some of my former colleagues at Cato. In some cases I’ve maintained positions that I now believe were wrong: it took the long occupations of Afghanistan and Iraq to disillusion the hawk out of me. On other fronts, I continue to hold views that are minority positions among Cato’s ranks.

But the existence of those differences in no way detracts from my admiration for Cato or my belief that it is an important force for good in American political life. Although many, perhaps most Americans have a libertarian streak of some kind that runs through their thinking, principled support of limited government across the domains of economics, personal life, civil liberties, and foreign affairs sadly remains a rarity. For 35 years and counting, the Cato Institute has been keeping the flame alive and ensuring that a principled libertarian perspective has a prominent place in the national policy debate. All of us who regard ourselves as libertarians, as well as all who have had their thinking challenged and sharpened by exposure to libertarian ideas, owe a debt of gratitude to Cato for this service.

Accordingly, I am deeply troubled by the Koch brothers’ recent lawsuit, which I regard as a threat to Cato’s ability to continue the fine and important work it has been doing for so many years. As to the merits of the case, I will say only that there is a serious dispute about the proper interpretation of the long dormant and distinctly curious shareholders’ agreement. When the Kochs argue that they are merely upholding the rule of law, they are therefore begging the question. Both sides claim the rule of law is on their side – which is why the case is now in court.

As to why the Kochs are now seeking to take over Cato, I have had no contact with them or their representatives and am therefore not in a position to know for sure. But the evidence available to date points in a deeply disturbing direction. First, there are the changes in the composition of Cato’s board of directors that have come as a result of the Kochs’ assertion of their shareholder rights. Specifically, deeply committed libertarians and generous financial backers of Cato have been removed in favor of Koch operatives whose commitment to libertarian ideas is, well, less than clear. Furthermore, there are reports of a meeting between David Koch and Cato Chairman Bob Levy in which Koch apparently called for Cato to serve as a resource for the Kochs’ political activism – a role completely inconsistent with Cato’s longstanding mission as a nonpartisan research institute.

But in the end, the Kochs’ plans for Cato are beside the point. 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. Jonathan Adler, in one of the first public commentaries on this dispute, made precisely this point and in my view it is decisive. The fact that several Cato scholars and staffers have already either stated or strongly signaled that they would not be able to continue working for Cato after a Koch takeover further confirms that Cato in its present form would not survive a Koch victory in the courts.

Let me now respond a bit to a decidedly different take on this controversy by my good friend, former Cato colleague, and fellow “liberaltarian” Will Wilkinson. Will and I were on the same side in some of the intra-Cato disagreements I alluded to at the beginning of this post, and both of us ultimately left Cato for greener pastures elsewhere. In light of this history, it’s not terribly surprising that Will lacks enthusiasm for Cato’s cause in the current dispute – although, in the end, he does express the hope that Cato prevails. I’d like to take a moment to explain why, unlike Will, I come down much more squarely in Cato’s corner.

First, I want to address some of the substance of Will’s analysis. Specifically, he makes the plausible-sounding point that other institutions, namely the Mercatus Center and the Institute for Humane Studies, have strong ties to the Kochs and nonetheless do good work and are clearly libertarian-oriented. True enough, but neither as far as I know has the same kind of shareholders’ agreement that Cato does, and thus neither is legally owned and controlled by the Kochs as Cato would be if the Kochs prevailed in this dispute. Indeed, Mercatus is associated with George Mason University and its director is appointed by the Provost of GMU; its independence from any particular donor is thus institutionally secured. As to IHS, its academic mission is so far removed from partisan politics that legitimate concerns that it is being made to serve some partisan agenda really can’t arise. Cato’s situation is thus clearly distinguishable from that of these other organizations.

Will is on even weaker ground when he tries to minimize the significance of the recent Koch-engineered changes to Cato’s board. Yes, it’s true that David Koch has generously donated to Cato and served on its board for years, but there is all the difference in the world between the presence of one individual on the board and legal ownership of the institute by him and his brother. The fact that other new board members have had some connection to Cato in the past – one used to be married to a Cato senior fellow, another once spoke at a Cato event – doesn’t make their appointment to the Cato board any less jarring. Barney Frank and Dick Cheney have spoken at Cato events, too – would Will think that their appointment to the board was also no big deal?

I’ll close by addressing a larger question that I think lurks behind Will’s inability to see much at stake in the current dispute: why stand with Cato if the dominant brand of libertarianism there isn’t your own?

That dominant brand features strong intellectual commitments to natural rights theory, minarchism, and Austrian economics – commitments that neither Will nor I share. But nevertheless, Cato has provided a home for many scholars over the years who depart in various respects from the prevailing viewpoint – including Will and me!

And Cato has been open, not only to people of varying intellectual perspectives, but people from widely differing backgrounds. Personally, I owe my career in public policy to Cato’s faith that a recovering lawyer could reinvent himself as a policy wonk. And while Will, a former art student, held other public policy jobs prior to coming to Cato, there is no doubt that his own thinking and writing developed considerably because of the time he spent at Cato. And the number of people who follow his writing was boosted greatly by the platform Cato provided him.

I think our stories illustrate why Cato is special and why it deserves a stout defense. It is simply unique in Washington for the opportunities it affords to smart libertarian thinkers and writers of all kinds to develop their talents and reach a larger audience. Preserving Cato’s independence is essential to ensuring that bright young libertarians to come continue to enjoy the same opportunities Will and I had. Which is why I am proud to voice my support for Cato now as it faces this grave threat to its future independence.

P.S. Since I wrote the above, Will has come out with another long post. It starts with a lot of uninformed speculation about the Kochs’ possible motives and then transitions to an extended elaboration of his differences with Cato. I don’t think he says anything that causes me to change what I’ve already written, or that I feel I need to respond to, so I’ll just stick with what I’ve got.

  • Pingback: Koch vs. Cato Bibliography at Under Penalty of Catapult()

  • Pingback: Koch v. Cato — The Views of Former Cato Staffers and Ezra Klein - I Hate Paypal » I Hate Paypal()

  • Pingback: Keep Cato independent()

  • Hi, Brink!  Could you e-mail me?  I’d like to talk with you in private.  jkuznicki [at] Cato.

    I think you’re very right about all of this, incidentally.  

  • Capitalism, sites like Lew Rockwell’s, sites like the Daily Paul, or the Mises Institute, individuals like Tom Woods, are much better teachers than Cato in my opinion.   I’m not against Cato, per say, but I just find it odd that a libertarian is touting the great “Public Policy Positions” afforded through the Cato Institute.    It was always my thought that central planning wasn’t on the plate for those who refer to themselves as libertarians.

    • As a non-Austrian, non-anarchist, pro-national defense libertarian, I strongly disagree. Those websites and organizations help spread ideas, some of which I think are quite dangerous and wrong-headed, but they are unlikely to have any impact on policy. We can’t expect to transition to a minarchist state overnight. 

      • Jonathan Mailer

        “pro-national defense libertarian”

        Laugh out friggin’ loud!!  That says it all about the type of people STATO attracts.  P and ~P.   

    • 3cantuna

      Is it the Washington DC water? The fount of corrupt ideas I mean.  The nerve of Lindsey to claim that Cato is commited to Austrian economics. Even if what he means by “Austrian” is Hayek only– since Rothbard, Hoppe and other Misesians (Ron Paul too) were/are ignored, downplayed and rejected. Even Hayek wanted to de-nationalize currency, right?  Who at Cato rejects the Fed Reserve?  Cato has followed Chicago School Friedmanism with a sprinkling of public choice theory more than anything else. Part of the problem is that the Catoites truly believe they are carrying the Libertarian mantle. This egocentricism stems from the fact that they are libertarian-ish compared to the massively statist DC establishment. But does that really say much when e.g. Lindsey and other Catoites legitimize the National Policy route? Libertarianism via statism. Good luck Cato.

  • Dolphieness

    What I am seeing is fear mongering on the part of people who see change as an evil (Brink & Jason).  Cato has been financially teetering and has had many of us concerned about its continued success.

    The Koch brothers have done more good for this country than not.  They have NOT interfered in the entities they control.  They have solidified the financial foundation such that the institutions have not fallen prey to entities that DO force ideological changes (like Soros, et al).

    The Koch brothers respect our country and her beginnings. They do not try to make us all into robotic think alikes.
    Before acting like hysterical children – let’s ride the wave out. 

  • Steven Horwitz

    I’ll take up one quibble with Brink.  I love Cato and I’m largely siding with them in this dispute, but I think it’s a major overstatement to say that Cato has a serious commitment to Austrian economics.  I wish it had a deeper one, but Cato has been very “big tent” about the sorts of economics that has been done in the last 25 years.  That’s fine at one level, as we should make the best arguments we can for the policies we think are right.  But at another  level, as I said, I wish what Brink said was more true than it is as someone who works in the Austrian tradition.

    • Several years ago I shelled out $100 or so to go to Cato’s day long monetary conference, where the only Austrian among the Keynesians and Friedmanites was Lawrence White. I went up and told him it was so nice to see a libertarian at a libertarian monetary conference.

      Around the same time (the mortgage crisis), NYU Austrian libertarian Mario Rizzo organized a half day panel on the cause of the crisis that was sponsored by Heritage at a downtown DC hotel. It was ironically much more radically libertarian.

  • Sleep with dogs; wake up with fleas.

    Please tell me you don’t really believe that the Koch brothers give a gold-plated rat’s rear end for anything other than making their $35B pile of cash bigger. You can’t POSSIBLY be that naive.

    Look at it this way… Rich folks like the Koch’s have a very simple and direct way of getting what they want: they buy politicians. You know very well the Koch’s do this and all their billionaire, country-club, buddies do the same.

    So with all this cash being spread around the political sphere to promote libertarian ideals, what have we got? End the drug war? Uhh… no. End overseas militarism? Uhh… no. Enhance civil liberties? Not so much. Deregulate the financial industry? Ohh… yeah! Tax breaks big oil and other favored corporations? Ooh, boy! and ever!

    So they threw a few bucks at a “libertarian” think tank and let the “scholars” write some articles. Big deal. (Oh, look, David. Isn’t that cute? Another article on legalizing drugs. How’s our CCA stock doing?)

    You all were played and now they’ve decided they want something more substantial for their investment. That’s all there is to it.

    • J_D_L

      I get it: people who disagree with you aren’t as simple as you wish they were, and you ease the discomfort this causes by applying an ideologically satisfying narrative to them. Hence you don’t need to know anything personal about the Kochs or the people you’re sure they’ve duped. That various policies could be uniquely pliable (or resistant) to the work think-tanks do isn’t relevant; apply the narrative! With a narrative, understanding is no longer a prerequisite for dismissal, and “that’s all there is to it”. 

      Progressives probably don’t appreciate you making them look bad on blogs like this. : (

      • Really? So why are they packing the board with Republican operatives? Because Republicans are so much more freedom-loving than libertarians or liberals? Have you been paying attention for the last 30 years or so?

        Besides, is it any more simple-minded than the “government is evil and ef’s up everything it touches” libertarian narrative?

        Until this incident at Cato the Koch’s were fairly opaque to me. All I knew is that they were a major funding source behind a lot of these execrable Tea Party governors in the Midwest like Scott Walker of Wisconsin or Kasich in Ohio. And I was vaguely aware they had something to do with Cato, but I knew nothing of the details other than they were referred to as “libertarians”.  Btw, that’s the kind of association that does very little to dispel the popular trope of libertarians being Republicans who want to smoke dope and get laid.

        I mean… just why the hell are you all so lip-smacking cozy with Republicans anyway? Even if I were to stipulate that they’re marginally better on economic issues — and that depends a lot on how you define economic freedom, and for whom — they just positively suck on the civil liberty side.

        So you want to point at liberals and tell us we need to start taking economic liberty as seriously as the civil liberties. Well when are you going to get serious about the civil liberties? It’s all well and good to TALK about it and write position papers but as long as you’re “sleeping with the enemy” it’s hard to take you seriously. It’s not as if you’ve had a lot of influence with them on restoring civil liberties, ending the drug war, or ending militarism. Ron Paul’s more of a joke WITHIN the Rep party than anywhere else. He’s managed to sponsor exactly one bill that passed Congress, and that was to rename a post office or something equally inconsequential.

        Look, I couldn’t care less about the “kerfuffle” at Cato. It’s sorta interesting the same way watching the Insane Klown Posse that’s the Republican primaries is interesting, but in the end it’s somebody else’s inside baseball. If they had ever had much success at defending and extending civil liberties I would mourn the change despite disagreeing on many economic issues, but as it stands it’s simply no great loss. And that’s because the strategy conceived by the Paleo-libs back in the ’70s was fundamentally flawed.

        • I suspect the Kochs were disappointed that more libertarians did not aim for leadership, influence and education and outreach in the tea party movement, but instead carped and criticized the unwashed, illiterate masses of small business people and taxpayers who dared to become politically active without first reading “Man, Economy and State.”

          • Basically.  The biggest thing happening for libertarianism right now is Ron Paul… and thats kind of sad.  So much money has been spent on libertarian think tanks and ideas all without any effect, because libertarians wouldn’t be arsed to actually go out and take over a political establishment, then play the game.

          • I wouldn’t say “no effect” exactly. They’ve provided intellectual cover for the plutocracy. Where they’ve had no effect is in promoting any cause that, as a progressive, I care about.

    • Could you have posted anything more moronic? If the Kochs only cared about money it would be easier to make it being Democratic Party do ors and getting bail outs and green subsidies.

      • Fact: The oil and gas industries, which is where Koch makes all their money, is far more heavily subsidized and tax-advantaged than any green energy.

        Both the bank bailouts and GM were initiated under the Bush administration. The Obama administration converted what was planned under Bush as a pure gift to GM into a loan that has since been repaid.

        I have no intention of defending the Wall Street bailouts. Both hard-left and hard-right congress-critters opposed them, but it was safe to do so since the mushy middle was buying into the Bush administration scare tactics. I have no idea what would have happened if the bailouts hadn’t happened but I think it’s safe to say it wouldn’t have been pretty. How you feel about that sort of thing is going to depend a lot on how you feel about inflicting pain on innocent bystanders to make an ideological point.

        Of course the bank crisis shouldn’t have been allowed to happen in the first place. That’s why we write history books.

        • Dubious. Many industries compete for the crown of most subsidized and regulated. And the Kochs did not choose the industry, they inherited it. And you haven’t showed that they have lobbied for the tax credit or deductions the industry receives, besides the fact that tax credits are not exactly subsidies.

          • Let’s unpack this:

            “Dubious. Many industries compete for the crown of most subsidized and

            I said “green energy”, not “industry” in general. That crown would likely go to agriculture, but I’m only guessing here. But oil and gas got something like $40B in direct subsidies over the last ten years which exceeds by orders of magnitude subsidies for wind, solar, geothermal, and even ethanol.

            “And the Kochs did not choose the industry, they inherited

            And that makes a difference… how? So not only are they huge welfare queens, they’re welfare queens that inherited daddy’s money, thereby a member of that class that was born on third base and acts like they hit a triple. Got it.

            “And you haven’t showed that they have lobbied for the tax credit or
            deductions the industry receives,”

            I never claimed they did, although I would be really surprised if they hadn’t somewhere along the way. Anyway, it doesn’t take a lot of reading between the lines to see that’s likely what they have in mind vis-a-vis Cato.

            “besides the fact that tax credits are
            not exactly subsidies.”

            Isn’t that what you guys call “picking winners and losers”? At least if they go to something like green energy anyway. Besides, there exists things in the tax code called “refundable” tax credits, where you can claim a “refund” even if you have no tax liability. I defy you to show me how that differs from just getting a check directly from the treasury.

          • Let’s unpack it a little farther, just to amuse ourselves with your DSM level animus about the Kochs:

            1) Green industries are famously subsidized. They also didn’t exist when the Kochs started their careers. They don’t really exist now except as fantasies or welfare projects.

            2) You don’t like the Kochs because they inherited more than you as well as produced more than you. How scintillating. Everyone has inherited something.

            3) You blame the Kochs for government policies but yo cannot show that they lobbied for them. So I wouldn’t be surprised if somewhere along the way you haven’t smeared someone because you opposed them politically.

            4) But you haven’t shown that the Kochs get refundable tax credits, used eminent domain etc etc. And tax credits are only bad in that everyone cannot access them and escape the theft taxation .

        • mcsandberg

          First of all – fossil fuels do not get subsides, I.E. actual cash from the government. All they get is tax breaks. The tax breaks are actually very small :

          “Well look at that: tax subsidies for all fossil fuels were only 15% of all federal subsidies for energy.  The Green alternatives of renewables and “efficiency” took 78% of all tax subsidies for energy.  Big Oil has so much influence on Capitol Hill that our government subsidizes its competitors five times more.  Fossil fuels provide 77% of our nation’s energy yet receive just 15% of the federal government’s tax subsidies.”

          • Damien S.

            Fossil fuels also get big implicit subsidies in being able to dump their waste into the environment, in both intended use (burning) and low liability for oil spills.  Fossil fuel companies can also get big subsidies in the form of how property and extractive rights are allocated, though this probably doesn’t affect how much fossil fuels get used.

          • The “state” at nearly all levels has committed itself to a growth model and a transportation infrastructure that  facilitates a high level of consumption of fossil fuels. Fossil fuels may not get “actual cash from the government” but the government has designed our entire society around high levels of fossil fuel consumption. We may not have “subsidy” for fossil fuel-related firms; instead we have something akin to central planning that virtually guarantees the financial success of fossil fuel firms. In other word there may not be direct subsidy but at the institutional level the state has organized our society around a high level of fossil fuel consumption. 
            Beyond that I have always wondered how big business owners could describe themselves as “libertarian” and why libertarians seem to believe them. Large corporations are authoritarian state-chartered organizations and, at least within the firm, are centrally planned command economies. It doesn’t seem like a very libertarian organizational model and I personally wonder how people who are interested in promoting freedom could, in their day jobs, be at the helm of authoritarian command economies. Of course we all have our inconsistencies and we shouldn’t judge too harshly. 

          • mcsandberg

            The transportation infrastructure, with the single exception of the Red Car Lines being bought and converted to busses by GM, grew up unplanned. Petroleum simply is the best transportation solution. A rather dramatic demonstration of this is filling your tank. It takes about 5 minutes to put 20 gallons in. Using the EPA’s 33.7 KWH per gallon conversion, you find that you’re putting in 674 KWH into the tank. To put that in in 5 minutes, means delivering 135 KWH/minute, which is simply impossible. That’s a substation size load.

            Being able to move that much energy in that small a volume, made petroleums primacy inevitable.

            As for the corporate model –  that’s simply people voluntarily choosing to work for one and there’s no force involved, hence no conflict.

            However, many companies have found that having internal units compete for jobs with the outside free-market can work better than automatically picking the internal unit.

          • Damien S.

            “grew up unplanned”

            Dude, seriously?  Have you not heard of Eisenhower’s interstate system?  Then there’s requiring businesses to provide parking, letting people take up public curbside space with their cars, letting people operate heavy machinery with minimal training at high speeds, not charging trucks proportionally to the damage they cause to roads…  There may not have been a single central decisions of “we shall use cars now!” but there’s been lots of governmental involvement and pushing and enabling at all levels.

            “Petroleum simply is the best transportation solution.”

            No it’s not, devoid of context.  It’s a great way of powering cars, independent vehicles with intermittent contact with a grid (gas stations).  It is energy dense and easy to transport (though that dense energy is largely wasted in inefficient heat engines.)

            OTOH, while filling your tank may be like drawing 8 megawatts of power (dunno what substations are like), cars are rather inefficient in needing that much energy.  Electric rail uses 1/20th the energy of cars or trucks, and a lot less space, labor, and other resources.  The advantage of cars is convenience, and even that gets undermined when everyone else is using cars too, causing jams or sprawl, or comes at the expense of the possibility of other choices (walking, bicycling.)

          • mcsandberg

            The interstate system was a RECOGNITION that the car and truck had won the competition for the best transportation solution. If you don’t understand What a substation is, picture pad mount transformers 15 feet tall, per car being refueled. This illustrates just how incredible the energy density of hydrocarbon fuels is.

            The modern internal combustion engine compares quite favorably with the overall fuel cycle of electric cars. That’s why conventional cars are so cheap.

            As for light rail – its capital costs of about $100 million per mile eliminate it as a general, wide area solution.

          • Damien S.

            So the interstate wasn’t a massive government project, funded by tax^Wtheft dollars, distorting the market making cars even more attractive by making it feasible to drive between cities?

            And you’re ignoring all the other government subsidies for cars that I pointed out.

            Conventional cars are ‘cheap’ or rather electric cars are even more expensive because batteries suck.

            Yes, hydrocarbons are dense and convenient.  I said that.  They’re also wasted in pushing around 1 ton of car per person.  They’re also going up in price aka running out.

            I didn’t say light rail, I said electric rail; light rail’s only a subset of that, one which barely exists in the USA.  Capital costs vary widely, from $30 million a mile to $300 million or more for subway.  A lot of the higher costs are for right of way in urban areas, or for tunneling.  Electrifying existing rail is about $1 million/mile.  As for being a general wide area solution… it used to be one for the US, and still is in Europe and Japan, and still is in the US for freight.

          • Ugh I hate these pointless debates but I can’t resist. 

            1) CEOs executives etc.  like the Kochs, lead inordinate amounts of power in a state-chartered hierarchical command economy structure. I would think that this would cause some cognitive dissonance for a lover of liberty. Personally, my very limited workplace authority conflicts with my meager libertarian impulse.  I suppose you could create some type of ideological system to deal with that dissonance.  But if your basic orientation is that people should be as free as possible I would think that this would cause some internal conflict with your extreme levels of power and authority. I don’t think I could legitimate my own authority to myself in that situation and I am by no means a doctrinaire libertarian.

            2) The U.S. would look radically different if not for massive public investment in transportation infrastructure. You are correct in that we would still use petroleum but the unusually high levels of fossil fuel consumption are abetted by the design of our public transportation infrastructure. We build huge, wide roads for huge, wide cars that allow us to drive to our huge, wide houses.
            Levels of fossil fuel consumption like those in the U.S. are by no means a given or “natural”.  Comparable countries use far less energy and emit far less Co2 per capita. Granted, all advanced economies use some level of fossil fuels by the U.S. is an outlier among wealthy countries (though AUS and CAN are in our league on the Co2 per capita)…..

  • Pingback: Lindsey and O'Driscoll on the Koch-Crane Struggle « Blog()

  • My central problem with think tanks is not so much their ideological or political bent or the funding they receive from big business. Rather, the quality of scholarship that comes from think tanks is almost uniformly poor. Cato is probably one of the better ones but the average Cato paper is of roughly the same quality as a paper a graduate student might write for a seminar course. Once you get away from Cato the quality goes down even further and think tank papers are full of methodological errors that could never get published in a scholarly journal. I’ve often wondered by academics (mostly tenured economics professors) would put their names on poor quality scholarship. Several pieces I have read from Cato contain very basic methodological flaws. 
    I don’t think this process is very “libertarian”. In other words, I don’t think its very “liberating” to produce poor quality research to provide fuel for a certain political orientation to influence the debate; I don’t think this process makes society more “free” in any meaningful sense. 
    But that’s just my opinion. I know that Cato and other think tanks are really popular among libertarians (and on here). Again, its not that Cato is all bad or that we don’t need non-academic research agencies but we should have higher standards. 

    • 3cantuna

      Cato puts out policy papers, not academic.

    • But actual academic papers are not publicly accessible, and are often jargon laden and blindered by the assumptions within which the narrow academic discipline functions. And many multidisciplinary academics, like women’s or black studies, are often little more than agitprop with intellectually deficient professors who are affirmative action promotions.

  • Freddie_deBoer

    Does this blog have official positions?

    • 3cantuna

      I don’t think so. It is for the best. The dialectics are very productive.

  • Pingback: Brink Lindsey | Koch VS Cato | The Murph Report()

  • Pingback: In response to left wing misinformational fearmongering | The Murph Report()