The Koch Institute’s Statement to Koch Alumni

As you may have heard, and as Allen MacDuffie reports here, on Tuesday, “in response to an apparent flood of questions, the Charles Koch Institute sent an e-mail to hundreds of alumni of the organization’s job training and placement programs to address the Koch brothers’ lawsuit to gain control of the Cato Institute.”  The full text of the (unsigned) email is here.

“Thank you for bringing your inquiries forward,” the email’s disembodied author or authors say.  If those inquiries are anything like the questions Koch alumni have asked those of us at Cato, I can’t imagine many of them will find this response at all responsive.

Nor do I imagine that many Koch alums will think the message addresses their genuine concern that—if Charles and David Koch’s attempt to seize control of the Cato Institute is successful—it will do enormous damage, not just to Cato, but to the liberty movement as a whole.

“Respecting the Rule of Law”
This dispute boils down to “respecting the rule of law,” the author(s) insist. “If Cato’s leaders are willing to abandon a key libertarian principle – adhering to voluntary agreements,” well, then, the author(s) note, more in sorrow than in anger, “the organization has lost its way as an advocate of these principles.”

Can their argument really be that respect for the sanctity of contract requires one to unquestioningly comply with the Koch family’s interpretation of contracts?

It appears so. Not only that, refusing to accede to their legal theory—which would allow them to pack Cato’s Board with Republican activists —is a “departure from principle” akin to George W. Bush’s “abandon[ing] free-market principles to save the free-market system.” Go figure.

“Donor Intent”
I’ll leave it to our legal team to address the substance of the complaint the Kochs filed last week.  But much of Tuesday’s email to Koch alumni is really an argument about fairness and equity. “As active donors contributing tens of millions to Cato,” the author(s) explain, Charles and David “feel the shareholder structure is important to preserve donor intent.”

True, the Kochs have been very generous donors to Cato, and, in the Institute’s early years, Charles Koch’s generosity was indispensable to the creation of the Institute.

But let’s be more specific: from the figures I’ve seen, all told, contributions from Koch sources make up less than 10 percent of the contributions over the 35-year life of the Institute; over the last decade, around 4 percent; and for over a year, zero percent.

That’s not a complaint—far from it: we’re enormously grateful for everything they’ve done for us over the years.

But when the Kochs invoke “donor intent” to suggest that providing 10 percent of our donations entitles them to a controlling (2/3s) stake in the Institute, it’s worth asking–how much do the Kochs respect the intent of the other donors who’ve provided more than 90 percent of our funding?

“What Do the Kochs Hope to Accomplish?”
The final section of the Koch alumni email bears the header “What do the Kochs hope to accomplish?” But it never comes close to answering that question.

It should have been obvious to Charles and David Koch that filing this suit would necessarily result in a very public battle that would—even if they won–lay waste to the Cato Institute’s credibility, wounding allied scholars and organizations in the process.

As George Mason University’s Don Boudreaux has put it, “the Kochs are, with this action, most imprudently and unwisely threatening the long-term health of the liberty movement.” Responding to the Koch alumni email Tuesday, Jon Adler notes: “these have been the dominant concerns expressed about the Kochs’ actions, and yet to such concerns the letter offers no meaningful response.”

Scholars like these, it’s fair to say, have more to lose (in a material sense) from criticizing the Kochs’ lawsuit than they could possibly gain from siding with Cato.

Another who falls into that category is Steve Horwitz, who wrote on Facebook that:

Whatever you think about the Cato/Kochs dispute, the fact that the lawsuit has now meant that Gary Leff, the CFO of IHS and Mercatus, has had to say, in the NY Times, that the Kochs exercised no influence over research at Mercatus and IHS is…. horrifying. How could the Kochs not see the PR nightmare that this would bring on, no matter how justified the lawsuit might be?

The situation is even worse than Horwitz describes. The Kochs’ decision has set friend against friend, demoralized the Kochs’ own staffers and beneficiaries, and torn a rift throughout the movement for individual liberty.  And for what?

Charles and David Koch want the Cato Institute—they cannot have it. That’s not just defiance; it’s an inescapable fact. Cato is not simply a copyrighted logo and a gleaming glass building on Massachusetts Avenue.  It’s the reputation we’ve built up through decades of independent, nonpartisan public policy work, rooted in libertarian principle. Even if the Kochs win, they’ll destroy what they covet.

From the Koch alumni email, and some of the commentary floating around, you could almost get the impression that Cato caused this horrible situation.  That’s rich.

The Kochs launched this “PR nightmare”—complete with a “Politico Exclusive” about the lawsuit, no less.  Did they think we wouldn’t respond?

Maybe so.  If “respecting the rule of law” means “complying with Koch lawyers’ legal theories,” maybe there’s another “libertarian principle” requiring one to keep mum while the Koch family threatens a proud, independent voice for liberty.

That’s not how we see it. As David Boaz wrote yesterday: “We intend to fight it. And we intend to win and to preserve our independence.”

The author(s) of Tuesday’s email conclude by telling Koch alumni: “We will be in touch with future updates as we have new information.  In the meantime, please feel free to reach out to us with any questions you may have.”

Please do:

Posted on Mar 8, 2012 in Uncategorized | Comments

3 Responses to “The Koch Institute’s Statement to Koch Alumni”

  1. Posted by: Daniel Bier - 03/08/2012

    This post is spot on.

    One unfortunate phenomenon I’ve noticed since this whole thing began is a deep and persistent paranoia gripping Koch employees and beneficiaries. I can’t tell you how many people have told me in private that they are afraid to even discuss the lawsuit because they are worried about retaliation. If that is the kind of fear that working for Charles Koch provokes, I think that is reason enough to oppose his bid for more direct control of Cato.

    MBM® Principle #11: create a culture of fear, suspicion, and paranoia; use it to maintain hegemony in the minds of your workers long after they leave the office and even your employ.

  2. Posted by: Logan Moore - 03/11/2012

    As a ‘Koch staffer’ I can tell you that I’m not demoralized. Quite the opposite. The organization’s dedication to its principles and its vision of advancing a free and prosperous society are the reasons I work at the Charles Koch Institute. While this isn’t an easy situation for anyone, Charles Koch’s decision to do what is right, especially when it’s not easy, has reinforced my reasons for working here. Based on how you’ve characterized the events and the Kochs’ intentions, we clearly don’t agree on the details, but as committed advocates for a free society I’m sure we’ll have much to agree on in the future.

  3. Posted by: Gene Healy » Archive » Yglesias on “Legal Funnybusiness” - 03/20/2012

    […] annoying, and it’s surely useful for the Kochs, who’ve insisted that this dispute boils down to “respecting the rule of law.”  Interesting, if true! But not […]

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