An Open Letter to Koch Program Alumni

By now, you’ve probably heard the unwelcome news: last Thursday, Charles and David Koch filed suit in Kansas court against the Cato Institute, Cato President Ed Crane, and Kathryn Washburn, the widow of longtime Cato chairman Bill Niskanen, in an attempt to assert majority control over Cato.

Current Cato chairman Bob Levy has told the Washington Post that “the Koch brothers, who have the power to appoint half of the board, ‘have been choosing Koch operatives’ for members, with an eye to push Cato toward support of the Republican Party.”

You’re probably confused. I’m confused too, because, like most of you, I admire the Cato Institute greatly, and I’m also tremendously grateful to the Koch brothers for their longstanding, generous support of the pro-liberty movement.

In fact, I don’t just admire the Cato Institute—I’ve made my career there. And I’m not just grateful to Charles G. Koch—I owe that career to him.

KSFP Toast I was a member of the inaugural Koch Summer Fellow Program class in 1992. And last Fall, two decades after one of the best summers of my life, the Institute for Humane Studies asked me to give a toast to Charles Koch at an event marking KSFP’s 20th Anniversary.

I thanked him for creating a program that was “probably the most valuable thing I’ve ever done.” I told him that what I experienced that summer made me decide to stay here in this miserable company town and devote myself to the intellectual battle for individual liberty, free markets, and peace.

So I can understand why so many people in the small-government movement feel conflicted and disappointed about this dispute. But while I’m disappointed, I’m not conflicted.

When it comes to this lawsuit, like Jonathan Adler, “I cannot understand how [the Kochs’] actions can, in any way, advance the cause of individual liberty to which they’ve devoted substantial sums and personal efforts over the years.”

On Thursday, Charles G. Koch told the press, “We are not acting in a partisan manner, we seek no ‘takeover’ and this is not a hostile action.”

With all due respect, Mr. Koch, that is not true.

If there’s no “takeover” in the works, then why have the Kochs sought to pack Cato’s independent board of directors with people who are in the employ of, or otherwise beholden to, Koch interests?

By invoking Cato’s long-moribund Shareholders’ Agreement, the Kochs have nominated or elected 15 people to Cato’s Board of Directors, in the process removing four of our largest and longest-standing contributors from the Board.

Among the directors the Kochs nominated but were unable to elect were: the executive vice president of Koch Industries; a staff lawyer for Koch Industries; a staff lawyer for the Charles Koch Foundation; and a former Director of Federal Affairs for Koch Industries.

Koch appointees now on the Board are:

Charles and David Koch, the two largest owners of Koch Industries;
Preston Marshall, third-largest shareholder of Koch Industries;
Kevin Gentry, VP at the Charles Koch Foundation;
Nancy Pfotenhauer, authorized spokesperson for the Kochs and Koch Industries;
Ted Olson, distinguished Republican lawyer who represents and publicly speaks for Koch Industries; and
Judge Andrew Napolitano.

If this isn’t an attempted “takeover,” it’ll do until the real thing comes along.

And if there’s no “partisan” agenda afoot, then why did Charles and David Koch nominate and install a host of Republican party operatives on Cato’s board?

As my colleague Jerry Taylor details here, new Cato board member Kevin Gentry “is a social conservative activist who’s also vice-chair of the Virginia GOP.”  Nancy Pfotenhauer is “a former spokesperson for the McCain campaign who has argued on television in favor of the Iraq war and the ‘don’t ask, don’t tell’ policy pertaining to gays in the military.” Ted Olson, solicitor general for one of the least civil-liberties friendly administrations in modern memory, “is a Republican super-lawyer who’s never identified himself as a libertarian.”

True enough, the Kochs have also placed Judge Andrew Napolitano on the board. Alone among the new members, Napolitano has a record of advocacy of libertarian causes. But given the other nominees and appointees, that’s slim consolation indeed. Consider:

One of the candidates that the Kochs nominated, but were unable to elect, was Tony Woodlief, who has blogged about “the rotten heart of libertarianism,” criticized gay marriage, and complained about libertarians “toking up” at political meetings. In fact, Woodlief’s blog features an entire category of posts devoted to “Taunting Libertarians.”

Which is fine, we can take it–but it would be a little unusual to get “taunted” by our own board.

Another Koch nominee for Cato’s Board of Directors was right-wing blogger and attorney John Hinderaker, who calls himself a “neocon,” and has described George W. Bush as “a man of extraordinary vision and brilliance approaching to genius.”

In his statement Thursday, Charles Koch insisted that he and David merely “want to ensure that Cato stays true to its fundamental principles of individual liberty, free markets and peace.”

We’ve done a pretty good job staying true to those principles over the years. Were people like Woodlief and Hinderaker supposed to improve our performance?

From what I understand, late last week, Koch officials began contacting key members of the limited government movement about this dispute. I’ve heard enough about what was said to get the general drift by now, I think: this case is about the rule of law and respect for property and contract. It’s an age-old dispute between Ed Crane and Charles Koch, with zero ideological content.

Well, take a look at the relevant legal documents appended to the Kochs’ complaint and decide for yourself whether they straightforwardly grant the Kochs what they believe they’re entitled to. As this Reuters analysis suggests, their legal argument for divesting Bill Niskanen’s widow of her shares is anything but clear. And consider what the Kochs will win even if they prevail: a hollow Institute whose every pronouncement can be dismissed as propaganda from a “Koch-controlled” enterprise.

And if you’re inclined to think that it’s merely personal loyalty to Ed Crane that’s driving Cato’s opposition, then ask yourself why so many Cato employees, junior and senior staff alike, have publicly and vehemently opposed this takeover attempt—at no small risk to their careers, in a town where so many free-market organizations are funded by the Kochs. As (unpaid) Cato adjunct scholar Tim Lee points out,”The fact that so many senior Cato employees are sticking their necks out … underscores how serious the situation is—if this were just a personal fight between the Kochs and Ed Crane, longtime Catoites wouldn’t risk denouncing their possible future boss.”

As a friend put it to me last night, the Kochs’ hostile takeover attempt represents “a big leap down a pernicious path that most of Washington started down long ago. It strangles one of the last places in town that doesn’t put politics first.” That’s what’s at stake, and that’s why we fight.

When I got the chance to toast Charles G. Koch last October, I said that I owed him “an enormous debt of gratitude. And—whether he gets credit for it or not—the country owes him its thanks as well, because when we finally restore limited, constitutional government in this country,” the people in the Koch alumni network will have played a key role.

I believed that then; I believe it now. And that’s why I can’t begin to understand why Charles and David Koch have chosen a course of action that, if successful, would carelessly, pointlessly, and grievously injure the cause I thought they were fighting for.

Posted on Mar 5, 2012 in Uncategorized | Comments

21 Responses to “An Open Letter to Koch Program Alumni”

  1. Posted by: Melissa - 03/05/2012

    Can you explain this whole “shares” and “shareholder” thing? I’ve worked for several 501c3 organizations and have never heard of such a thing.

  2. Posted by: Tom Jackson - 03/05/2012

    When the Kochs have come under criticism, libertarians have been the only people willing to defend them who can’t be dismissed as right-wingers and GOP partisan hacks. Defending the Kochs doesn’t exactly play to the received wisdom in the media and the culture at large. I wonder if the Kochs realize this move is costing them a lot of friends?

  3. Posted by: Greyson - 03/05/2012

    Mr. Healy,

    I see you’ve repeated a good chunk of the language I’ve read elsewhere regarding the new “additions” to the Cato board pushed through by the Koch bros. If I may, as much as the caricatures do paint a worrisome picture, I am much more disturbed by the Koch brothers’ move to oust these four former, unidentified, board members/donors. Who are these people and why are they not speaking out?

  4. Posted by: HLM - 03/05/2012

    Tom: You asked if the Kochs “realize this move is costing them a lot of friends?” I think it fair to put that in the past tense: it has cost them a lot of friends. My blog has defended the Kochs previously from unfair attacks. Now, it will never defend them again, even when attacks are unfair. And personal what they are doing is the most destructive thing I’ve seen done to the libertarian movement in 30 years. I despise what they doing and their power-play politics. They should retire. I don’t care if they take their money with them. They haven’t been funding Cato for a long time anyway, and most their funds goes to conservatives these days.

  5. Posted by: Charles - 03/05/2012

    Who were the four board members who were removed?

  6. Posted by: David Andersen - 03/05/2012

    Hey, nice selective quoting! I guess everyone does it these days. In the same post Woodlief wrote “The Rotten Heart of Libertarianism,” he also wrote “libertarianism represents perhaps the best set of potential political solutions to America’s problems…”

    Whatever you do, don’t let truth get in the way of propaganda. I once gave money to Cato and I support the general ideas of libertarianism. I don’t, however, support contorting the truth to advance your agenda.

  7. Posted by: Michael A - 03/06/2012

    As a former fan, I’m sympathetic to Cato’s plight, but not how it got here.

    Where was Cato when the Koch family did this to other organizations that once protected individual liberty from unregulated corporate hegemony?

    And what, again, was Cato’s position regarding Citizens United and the right of cartels to freely buy (and bid up the price of) political influence, as if it were a commodity?

    Some of us “progressives” (your label, not mine) were fans of Cato, until we realized that you were drifting toward corporatism. You seem to be in denial about your drift in recent years.

    I wish you luck in fighting off the takeover — but I hope you will re-evaluate the values that left Cato so exposed to corporate excess.

  8. Posted by: David Andersen - 03/06/2012

    And now I see that Hinderaker has written that the quote on Bush:

    “a man of extraordinary vision and brilliance approaching to genius.”

    was sarcasm.

    If this represents the quality of Cato thinking these days, it might be better if it is taken over. Sadly.

  9. Posted by: Abel Winn - 03/06/2012

    I don’t know anything about the legal case the Kochs have, and it really saddens me that there is a public falling out between the Kochs and Cato, because I hold both in very high regard. I also can’t speak to most of the proposed board members you mention. But you’re way off base regarding Tony Woodlief. I spent 4 years working for him at a Koch non-profit, and he is anything but a GOP hack. He might not self-identify as a “libertarian,” but that label fits him far better than “conservative” as it is currently defined by the Republican party.

  10. Posted by: Greyson - 03/06/2012

    Citizens United recognizes that citizens have the right to unite to buy (and bid up the price of) political advertising media, which is a commodity. It has nothing to do with what’s going on here.

  11. Posted by: Mark - 03/06/2012

    “When I got the chance to toast Charles G. Koch last October, I said that I owed him ‘an enormous debt of gratitude. And—whether he gets credit for it or not—the country owes him its thanks as well, because when we finally restore limited, constitutional government in this country,’ the people in the Koch alumni network will have played a key role.

    “I believed that then; I believe it now. And that’s why I can’t begin to understand why Charles and David Koch have chosen a course of action that, if successful, would carelessly, pointlessly, and grievously injure the cause I thought they were fighting for.”

    As to your inability to understand, be sincere or willful, one can only type a single phrase:

    More’s the pity.

  12. Posted by: Chuck Ross - 03/06/2012

    I don’t know about the others, but you’ve mischaracterized Tony Woodlief. As Abel Winn touched on, Woodlief holds conservative values which means that he’s not a GOP hack.

    Either way, I find it strange that you’re just now developing a bit of a bad taste for the Koch’s after Charles Koch and Ed Crane ganged up on ol’ Murray Rothbard way back when.

  13. Posted by: George Meyer - 03/08/2012

    I worked at Cato in the early Washington, DC years and I know the invaluable contributions that the Charles and David Koch have made to the libertarian movement and to Cato. However, this shocking news about an attempted takeover by them to install a bunch of Republican lackies to Cato’s board is beyond understanding. If the Kochs are successful in this attempt, Cato will lose all credibility in the Washington arena and I will end my support of Cato that has been solid for almost 30 years. I hope that doesn’t happen.

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  17. Posted by: chelcie wimmer - 05/17/2012

    An intriguing discussion is definitely worth comment. I do believe that you need to write more about this topic, it might not be a taboo subject but usually people do not speak about these topics. To the next! Cheers!!

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