Koch v. Cato — The View From Koch

I have spoken with quite a few folks close to the Koch brothers and their organizations, but have not been able to get anyone to speak (let alone answer questions) on the record. I have, however, come across a letter sent to alumni of the Charles G. Koch fellowship program detailing the Kochs’ position. I believe the letter is sincere, but I think most of the arguments are beside the point. Yes, if the Kochs’ interpretation of the shareholders agreement is accurate, they are within their rights to enforce it and Cato’s other shareholder and the Institute are obligated to comply. But so what. The existence of the agreement says nothing about whether it should be enforced by the parties, and that’s the issue — a point the letter concedes when it notes that the Kochs are willing to consider alternative arrangements.

The concern I expressed in my initial post (and elaborated upon here) is that enforcing the agreement so as to establish Koch control of Cato comes at a cost. A Koch takeover of Cato, however well-intentioned, will necessarily diminish the Institute’s credibility and compromise Cato’s ability to advance individual liberty. This is true whether or not the Kochs are within their legal rights to take such actions and whether or not they have better ideas as to how Cato should be run than current Cato President Ed Crane. These have been the dominant concerns expressed about the Kochs’ actions, and yet to such concerns the letter offers no meaningful response. There is a brief mention of an offer to consider alternative corporate structures, but no indication of what alternatives were proposed or how such alternatives would preserve the Institute’s independence — real and perceived — and its reputational capital. A proposal that satisfied such concerns would be welcome — and would along way toward convincing many of the Kochs’ libertarian critics that they are not engaged in a hostile takeover. But until such a proposal is made, the fact remains that the Kochs are engaged in an effort to take control of Cato.

Meanwhile, the Koch-Cato feud has made the NYT. Here’s additional commentary from Patrick Brennan at National Review and Justin Logan at The American Conservative.

UPDATE: Tony Woodlief comments:

I don’t know much about this Cato business. I do of course know Koch. I know people there well enough to find laughable the notion that they are somehow opposed to liberty, or that they could ever imagine Cato is essential to some secret partisan or corporate agenda and must therefore be taken over. . . .

But I suppose right now the point is to circle the wagons, craft a narrative of conspiracy, and paint whatever side one is not on as intransigent and small-minded. None of which will have any bearing on the final legal decisions, but all of which is to the great delight of those who despise liberty and would love to see Cato torn down.

Former Cato staffer Will Wilkinson writes a lengthy post arguing the stakes in the Koch-Cato conflict are smaller than many suppose. He concludes:

I think it’s better for libertarians if some prominent libertarian institutions remain outside the Kochtopus . . . . Still, this isn’t a battle between good and evil, and the stakes are probably lower than you think. Of course, nobody likes to be on the wrong side of creative destruction’s wrecking ball, but it can be indispensable and revitalizing, even for ideological movements.