The Koch Brothers’ Designs on Cato

Political gift giving, whether in support of candidates for public office or ideologically active nonprofit organizations, is fraught with the risk that activists of a different stripe (or journalists who are themselves of a different stripe) may take offense and retaliate. 

Such has been the experience of the wealthy Koch brothers, Charles and David, two long-time funders of libertarian policies, politicians, and organizations who have been attacked without surcease by activists and journalists for about two years.  

In part, of course, attacks on them have happened because they’re easy targets.  As politically active billionaires, the Kochs quite naturally attract attention, and for all its intellectual strengths, libertarianism is a long way from being the “people’s choice.” 

Additionally, the Kochs have borne some of the brunt of the criticism that’s accompanied the Supreme Court’s correct undoing, in its Citizens United decision, of aspects of the McCain-Feingold Act.  From that time to this, advocates of campaign finance “reform” have been shrilly condemning  PACs, and particularly those, like the Koch-controlled Americans for Prosperity, that favor Republicans.

The motives of their critics aside, there have long been aspects of the Kochs’ philanthropy that are tiresome.  Take, for instance, Koch Industries’ and the Koch Foundation’s embrace of what they call “Market-Based Management,” a management philosophy developed by Charles Koch, and one that, it’s claimed, “can provide great value to non-profit organizations.”

A thing of some complexity – MBM features 10 “Principles” and five “Dimensions” – it can seem like about nine principles and four dimensions too many when pushed on grantees.

Now, though, comes the remarkable news that the Kochs have filed a lawsuit against the venerable Cato Institute, something that goes beyond the merely annoying to the virtually incomprehensible.  In a word, they want to take over Cato and fire its president and co-founder, Ed Crane.

To be fair, the Kochs have an important history with Cato.  Like Crane, Charles Koch was also a founder of the think tank, and the Koch Foundation has given millions to Cato over the years.  So if this were simply a management issue – that they wanted to replace Crane with someone else, or put new people on the Board – they’d clearly have the right to propose the idea, and whatever the merits of it, it wouldn’t be seen as an impossibly chowderheaded scheme.

Alas, issues with management are not the apparent reason for their lawsuit.  Instead, the Kochs’ designs on Cato seem to be a desire to more closely align the think tank’s policy analyses with the Kochs’ partisan political efforts, through such as Americans for Prosperity.

Taking advantage of the unusual fact that the nonprofit Cato has “shareholders” with the authority to select members of Cato’s board, the Kochs have lately been attempting to gain a majority among the directors (they already have seven of 16).

In a blog published on the Volokh Conspiracy on March 3, a senior fellow at Cato provided some background by revealing what was said at a meeting in November of last year between a Koch delegation and the chairman of Cato, Bob Levy:

They told Bob that they intended to use their board majority to remove Ed Crane from Cato and transform our Institute into an intellectual ammo-shop for Americans for Prosperity….  They’ve frequently complained … that Cato wasn’t doing enough to defeat President Obama in November and that we weren’t working closely enough with grass roots activists like those at AFP.

During a recent interview, Crane expressed contempt for those of the Kochs’ critics whose motive is political or ideological, even as he spoke of the “insanity” in the Kochs’ attempt to turn Cato into a partisan outfit.  “Were they to do it,” he said, “it would undo overnight 35 years of work and hard-won respect.”

Even though he personally would be a certain casualty if the Kochs succeed in their takeover attempt, Crane betrays little concern about that aspect of the battle at hand.  One might suspect that this is because, after 35 years at the helm of Cato, he’s had a good run, or because, like many of us, he’s reached an age where, professionally speaking, he can see the tunnel at the end of the light.  Or maybe he’s just confident that the Kochs won’t prevail.

Whatever, a few things are clear.  It’s been on Crane’s watch that Cato has grown into a leading U.S. think tank, along the way becoming one of the stoutest defenders of free speech in the country.  And none of that would have been possible if Cato had been perceived as a political front group.

One of Market-Based Management’s "Principles" is humility, described this way: “Practice humility and intellectual honesty.  Constantly seek to understand and constructively deal with reality to create value and achieve personal improvement.”

One wonders how much the Kochs thought about this Principle before they embarked on such an intellectually dishonest and destructive campaign.


The opinions expressed above are those of the writer and not of The Media Institute, its Board, contributors, or advisory councils.

Jane Mayer and the Brothers Koch

If your taste in journalism and politics runs to artless screeds and hatchet jobs, you might want to read Jane Mayer’s “Covert Operations,” published in the Aug. 30 issue of the New Yorker.  Having earlier pilloried such as Dick Cheney and Clarence Thomas, Mayer now does the remarkable – she pillories some more conservatives.

Her latest targets are the wealthy Koch brothers, Charles and David, who together run Koch Industries, the country’s second largest privately held corporation.  Make no mistake, it’s not their wealth that Mayer dislikes, it’s their politics.  This becomes clear (early on and without surcease thereafter) by the sources she quotes and by her strained attempt to brand the Kochs’ philanthropy as something not merely conservative (and therefore wrong) but venal and surreptitious as well.

But never mind.  Other people (as shown here and here) have already undertaken the easy job of deconstructing Mayer’s fable, and in any case, with their kind of money and influence the brothers Koch can take care of themselves.  The objection here is with something Mayer writes virtually in passing, not about the Kochs but about another politically active philanthropist, albeit one with very different political views – George Soros.

Here’s the offending text:

Of course, Democrats give money, too.  Their most prominent donor, the financier George Soros, runs a foundation, the Open Society Institute, that has spent as much as a hundred million dollars a year in America.  Soros has also made generous private contributions to various Democratic campaigns, including Obama’s.  But Michael Vachon, his spokesman, argued that Soros’s giving is transparent, and that “none of his contributions are in the service of his own economic interests.”  (Emphasis added.)

How many things are wrong with this paragraph?  Let’s count the ways.  First, there’s the very brevity of it.  Here we have what purports to be an expose of extraordinary and dangerous influence on the political process, and George Soros is treated to precisely 74 words – in an article that totals nearly 10,000.

The second problem is the false claim, unchallenged by Mayer, that Soros’s contributions are “transparent.”  As the head of an organization that every day has to contend with the misrepresentations and outright lies of one of the Open Society Institute’s grantees – Free Press – let me report that nothing could be further from the truth.  In fact, the amount and kind of Soros’s (and OSI’s) funding of groups like Free Press is unknown (and of no apparent interest to reporters, “investigative” or otherwise.)

There’s yet another problem with the quote attributed to Soros’s spokesman, namely, the assertion that none of his giving benefits his economic interests.  Not to put too fine a point on it, how would anyone know?  After all, the gentleman made his bones in international finance as a currency speculator.  And as recently as March of last year, in the middle of the recession, he was quoted as boasting that he was “having a very good crisis.”

Point being, of course, that hedge funds and other investors often profit by going “short” on securities as diverse as bonds, equities, commodities, and currencies.  In other words, it’s entirely possible, if he’s been making bearish bets, that Soros’s investments have been enhanced by his philanthropy, such have been the disastrous economic consequences of the public policies and politicians he supports.

This said, the thing that’s most wrongheaded about the paragraph at issue is the notion that people’s political views are suspect only when they’re (arguably) motivated by some economic interest.

This canard has been so widely circulated for so long it’s rarely challenged, but it should be.  This, because as anyone who has ever worked in policy circles knows well, those people who are the least objective and truthful are political activists, of whatever cause or political stripe, whose satisfactions come not so much from financial rewards as from the psychological satisfaction they gain as warriors in political crusades.

Consider, again, the example of Free Press.  This noxious organization, whose founders’ political views are in fact incompatible with a free press, makes much of the fact that it doesn’t receive funding from for-profit corporations.  But it gets lots of money from ideologically motivated groups like the Open Society Institute.

That this financial circumstance is treated by so many journalists as thereby absolving Free Press, and kindred organizations, from the kind of skepticism and scrutiny they visit on those that derive some or all of their funding from for-profit entities, amounts to a double standard of some considerable moment.  Because the fact is that, however much the Kochs and other businessmen may contribute to non-profit organizations, it’s a pittance compared to the kind of money provided to left-leaning organizations by the country’s major grant-making foundations.

And what’s the upshot of that?  If you’re a left-of-center activist you have a good chance of scoring big bucks from foundations with a keen political interest in your activities, and as a bonus you can go about your business free of worry that Jane Mayer, or some other reporter, will ever accuse you of being a mouthpiece for “vested interests.”

As in the title of the movie, it’s a wonderful life!


The opinions expressed above are those of the writer and not necessarily of The Media Institute, its Board, contributors, or advisory councils.