Category Archives: Correcting the Record

“Anytime anyone says anything libertarian, spit on them”

Check this out: with a few simple searches, I can demonstrate that the Nation magazine, that grizzled old dame of the American Left, is, contrary to popular belief, pro-war, pro-Second Amendment, and soft on George W. Bush. What’s more,  she gives aid and comfort to global warming “denialists.” The “reflexive squawk of the Greenhouse fearmongers”? Really, Katrina vanden Heuvel?

Cherrypicking links is fun. For my next trick, I’ll use the pundilectable stylings of Norm Ornstein to prove that the American Enterprise Institute loves Al Franken and Barney Frank, backs Common-Cause-style campaign finance restrictions and has gone all wobbly on the Iraq War—and never once will my fingers leave my iPad.

Through the magic of Google, you too can earn a yellow belt in halfassed hackery. Mark Ames shows how it’s done in his recent Nation article, “Independent and Principled? Behind the Cato Myth.”

Stop me before I spit again!

I first became aware of Ames when he coauthored a 2010 Nation article based on the innovative premise that any American who protested getting pornoscanned and groped by the government just had to be part of a Koch-funded astroturf conspiracy. (Reason magazine had a field day with that one, helping to force a semi-apology from the Nation‘s editor.)

Ames sure hates the Kochs, but, as he announced in this spittle-flecked October 2010 rant, his true enemy is libertarianism itself:

Anytime anyone says anything libertarian, spit on them. Libertarians are by definition enemies of the state: they are against promoting American citizens’ general welfare and against policies that create a perfect union. Like Communists before them, they are actively subverting the Constitution and the American Dream, and replacing it with a Kleptocratic Nightmare.

So when Ames argues that any talk about Cato’s “principled opposition to the Bush administration’s imperial presidency” amounts to spinning “fairytales,” let’s stipulate that he approaches his analysis of Cato’s work with a somewhat distinct perspective.

Still, his motives don’t matter if his case holds up. Let’s look at that case.

In the course of his argument, Ames squeezes out a grudging rabbit pellet of a concession, admitting that “it’s true that compared to other pro-Republican think-tanks, Cato did have periods when it was critical of Bush’s wars and attacks on civil liberties.”

That’s nice of him; and it’s true enough. For example:

  • In 2004, Cato was the first major DC think tank to offer an extended argument for Exiting Iraq, in Christopher Preble’s book of that name.
  • That same year, during the height of Bush administration fear-mongering about Al Qaeda, Cato advanced the argument that terrorism was anything but an existential threat.
  • And in 2006, Cato released the white paper “Power Surge: The Constitutional Record of George W. Bush,” coauthored by Tim Lynch and myself, warning that “far from defending the Constitution, President Bush has repeatedly sought to strip out the limits the document places on federal power,” and has insisted that he “cannot be restrained, through validly enacted statutes, from pursuing any tactic he believes to be effective in the war on terror.”

The Nation gave the latter study a little love:

…the Cato report is so compelling because it hews so closely to the basic critique made by Representative John Conyers…. In words that might spill from the mouth of Cindy Sheehan or Scott Ritter, Cato concludes that we now have “a president who can launch wars at will, and who cannot be restrained from ordering the commission of war crimes.”

Thanks! (I think).

Still, Ames complains that Cato wussed out sometime in 2005, when the Institute “suddenly called a halt to its growing criticisms of Bush’s War on Terror.”

Looking through Cato’s 2005 archives month-by-month, I’m having a little trouble figuring out just when that was. Maybe it was March—it seems we were a little weak in March.

What else does Ames have to back up his claim that “the Cato Institute’s actual record during the Bush Administration years was anything but principled”? Stuff like this:

  • “John Yoo, author of the notorious “torture memo,” served on the Cato Editorial Board for Cato Supreme Court Review during the Bush presidency,” while crafting “the adminstration’s legal justifications for waterboarding, Guantanamo, warrantless wiretapping and more.”

This is silly. Cato’s constitutional studies department put Yoo on the original editorial board of the Cato Supreme Court Review for the inaugural 2001-2002 issue, several years before the torture memo leaked.

I don’t think I knew that “Dr. Yes” was on the CSCR board when I started attacking his handiwork. I do know we later took Yoo off the board because his views are (to put it mildly) incompatible with ours.

A fair assessment of Cato work that mentions Professor Yoo will reveal that there’s little love lost between us. Take it away, senior fellow Nat Hentoff:

There’s more:

  • “Another Cato executive, Ted Galen Carpenter, former VP for Defense and Foreign Policy Studies, enthusiastically supported Bush’s war on terror and called on Bush to invade Pakistan.”

I don’t read the 2002 column Ames links to as a demand that the US “invade Pakistan,” as opposed to mounting airstrikes and cross-border raids against Al Qaeda cells.  Regardless, the implication that Ted Carpenter’s an “enthusiastic” hawk is hardly a fair-minded summary of Carpenter’s career, which is marked by steady advocacy of diplomacy, realism, and, as the title of his 2002 book puts it, Peace and Freedom: Foreign Policy for a Constitutional Republic.

Still, Ames soldiers on:

Ah, yes: it’s the old Norm Ornstein trick I mentioned above. Radley Balko addressed this one on Reason’s blog, shortly after Pilon’s WSJ oped was published:

Ed Crane and board member Bob Levy have co-written an op-ed entitled, “No, a President Can’t Do as He Pleases,” which sounds quite a bit like a scolding of fellow Catoite Roger Pilon for his recent op-ed in the Wall Street Journal.

Much as I disagree with Pilon’s op-ed (disclosure, I’m a former Cato employee), it seems to me that this is the proper response. Cato is of course a libertarian think tank. But my experience there was that within that framework, there is quite a bit of intellectual freedom. A common refrain there has always been that “there is no official Cato position, only positions held by Cato scholars.” Crane didn’t fire or publicly discipline Pilon for apostasy. Rather, he took up a pen himself, and wrote a piece that, along with Tim Lee’s rebuttal and Gene Healy’s forthcoming book, makes it pretty clear that Pilon’s position on executive power isn’t one held by many others at Cato.

MORE:  Lee and Healy also have a piece in today’s Orange County Register on FISA.

It’s not the easiest thing to make the case for civil liberties and restrained foreign policy in an atmosphere of war fever, with even most of the liberals jumping ship. But if you ride it out, you may find that people eventually acknowledge that you were right.

As Radley suggests, there was and is no “official Cato position” on any given military action or constitutional claim associated with the War on Terror. But there was and is a dominant position. Here are a couple of links cataloging our civil liberties and foreign policy work over the years. Take a look and judge for yourself.

I think the evidence shows that we’ve been a far more consistent opponent of Washington’s crackbrained foreign interventions–and the civil liberties abuses that accompany them–than any other major think tank in town.  Who’s done better: the Brookings Institution? The Center for American Progress?

Cato’s not perfect. But in this fallen world, in this sinful company town, I’d say we’ve done alright.

Alas, if we lose, I wouldn’t bet on the “new Cato” holding the line.

Koch Dissembling about the Board Vote that Started the War

Back in February, you may remember, the Koch brothers nominated 12 new members to the Cato board of directors in advance of a shareholders meeting that was, in point of fact, required by the stipulations of the shareholder agreement. They only had the votes, however, to put four of those nominees on the board. So at the March 1 meeting, they rammed through Charles Koch, Preston Marshall, Andrew Napolitano, and Ted Olson, and in the course of doing so, displaced four long-standing members of the Cato board; John Malone, Don Smith, Bill Dunn, and Lew Randall. Hence, a fair description of what happened is that the Kochs had four incumbent board members removed, two of whom happened to be the largest donors to the Cato Institute.

But wait – the Kochs now say nothing of the kind happened!

Melissa Cohlmia, director of corporate communication at Koch Companies Public Sector, responded that the Washington Post was incorrect in saying that Charles Koch and David Koch had four members “removed.” She said the Kochs requested that the vote on the board members be delayed. When that didn’t happen, the Kochs voted to retain two of the four board members

They did? Well, yes and no … but mostly, no. The Kochs’ support for two of the four ousted board members is a convenient fiction.

First, a little background: from the inception of the Cato Institute through 2010, board members were chosen by board members. Cato was, functionally, governed by a self-perpetuating board like almost all other non-profits. But Cato’s shareholder agreement gave the shareholders the power to elect board members if they chose. Prior to 2010, the shareholders had only met once (in 1981 to buy-out Murray Rothbard) and had never exercised their power to elect board members. In 2010, however, the Koch brothers insisted on exercising their long-dormant shareholder power and imposed two new members onto the Cato Board (Koch employees Kevin Gentry and Nancy Pfotenhauer). In 2012, they did so again, but this time, they went all-in and put four new members onto the Cato board.

The Cato shareholder arrangement allows for cumulative voting. Crane and Washburn hold 50 percent of the shares, so they got to fill half of the board seats up for the vote. Charles and David Koch hold the other 50 percent of the shares, so they got to elect the other half.  When the shareholder meeting convened on March 1, there were eight seats up for grabs. Each of the four shareholders owned 16 shares, so each shareholder was afforded 128 votes (16 [shares] x 8 [board vacancies] = 128 votes) and those votes could be allocated any way the shareholder wished.  The total number of votes cast on March 1 was thus 512; 256 by Crane-Washburn and 256 by Koch-Koch.

To be assured of election on March 1, a candidate for the board needed 57 votes (8 seats x 57 votes = 456 total votes, so the 9th highest candidate would have 512 – 456 = 56 votes; not enough to get into the top eight).  Thus, to elect their four candidates, Koch-Koch gave each of them (Charles Koch, Marshall, Napolitano, and Olson) 57 votes, or 228 of their 256 total votes.  Crane-Washburn did the same, electing Washburn, Jeff Yass, Howie Rich, and Fred Young with 228 of their 256 total votes.

The point here is that it did not matter who received the “extra” 28 votes from each side. Even if Crane-Washburn and Koch-Koch voted for the same 9th candidate, he would only have received 56 votes; not enough to be elected.

The Kochs apparently chose to use their meaningless 28 votes on Malone and Smith so that they could say “Hey, don’t blame us for displacing Cato’s two largest donors; we voted for them!” Their lack of enthusiasm for Malone and Smith, however, was made abundantly clear when the newly-constituted Cato board met on March 22 and voted to expand its membership from 16 to 20 so as to put Malone and Smith (along with Dunn and Randall) back on the board. The Kochs responded with yet another lawsuit on April 9, claiming that there was “no compelling justification” for expanding the board so as to include Malone and Smith. That tells you all you need to know about how genuine their support for Malone and Smith was at that March 1 shareholders meeting.

Merriam-Webster’s Online Dictionary defines “dissemble” as “to put on a false appearance: conceal facts, intentions, or feelings under some pretense.” There’s been a heck of a lot of that going on (most recently here, here, here, and here) from the Kochs of late.

Playing Well with Others

The main criticism of Cato that David Koch makes in his March 22 statement is that we are not effectively “translating esoteric concepts into concrete deliverables,” in part because we’re not doing enough to “be supportive of other organizations that are advocating public policies consistent with a free society.” According to Koch, “Cato should be reaching out to many potential allies in order to most effectively advance a free society.”

So what about this? Does Cato play well with others?

As it happens, Politico has a piece up today detailing how Cato’s director of health policy studies, Michael Cannon, has “dropped in on more than a dozen states to make the case to lawmakers that they should not lift one legislative finger to implement President Barack Obama’s health reform.” As that article points out, after Cannon visited the state,

the New Hampshire Legislature not only allowed a Republican-sponsored exchange bill to die this winter, but the House went a step further and passed a bill prohibiting the state from enacting an exchange shortly after his visit.

And according to Maine Democratic state Rep. Sharon Treat, Cannon’s New Hampshire visit had a chilling effect across the state line. She had been in talks with some of her Republican colleagues about an exchange bill. That stopped.

[...]

“It took a lot of people like Cannon and me and certain legislators to give some backbone” to lawmakers uncertain about drawing a hard line against exchanges, said [the Pacific Research Institute's John] Graham.

But maybe this is just an anecdote. Maybe most of us are walled off here on Mass Ave, noodling around with esoteric concepts like individual liberty, limited government, free markets, and peace. So let’s take a look at some of the outside institutions from which we’ve had scholars speak at our recent events, and see just who we’re engaging with:

Jan. 19 Hill Briefing on “rogue website crackdown”: Heritage, Brookings, CEI

Feb. 16 Book Forum for book by cofounders of Tea Party Patriots

March 1 forum on EPA regulations: Solicitor General of Virginia, Pacific Legal Foundation, Southeastern Legal Foundation

March 16 Book Forum for book on gay marriage: University of Minnesota Law School, Washington Post

March 19 forum on taxing the internet: Mercatus Center

March 23 Obamacare event: Georgetown Law School, Constitutional Accountability Center, Pacific Legal Foundation, National Senior Citizens Law Center

March 28 event for Scott Rasmussen’s book: Washington Examiner, Real Clear Politics

March 30 event on US-Iran relations: Woodrow Wilson Center, Foreign Policy Initiative, Georgetown, Yale, RAND Corporation, US Naval War College

April 4 event for Daron Acemoglu’s book: MIT, World Bank

April 11 hill briefing on prospect of US-China trade war: US-China Business Council

April 13 event on homegrown terrorism: Marquette University, RAND Corporation, Johns Hopkins, NYPD/Columbia, University of Pittsburgh, CIA (retired)

That’s just a smattering of who we’re working with to try to advance a free society. It bears noting that we don’t agree with all of these people on every issue, and in a number of cases we invited these folks to come because they don’t agree with us on the issue at hand. We think we can win the war of ideas on an open battlefield and accordingly we don’t stack our events with people who all agree in an effort to “rally the base.” But the idea that we don’t work well with others doesn’t withstand scrutiny.

Koch v. [REDACTED]

The National Review‘s Patrick Brennan has been following the Koch brothers’ battle with Cato since its inception.  And I keep getting the sense that he thinks there’s something vaguely disreputable about Cato offering our side of the story while we’re getting sued. “While one cannot exactly blame Cato partisans for taking the side they have,” Brennan wrote recently, “one should note that it has been obvious for a while that they are merely reinforcing the Left’s narrative about the Kochs, as sinister corporationists.”

Yesterday, reporting on the second lawsuit that the Kochs have filed against Cato in five weeks, Brennan wrote:

Koch supporters note that the Cato faction appears perfectly happy to wage this legal battle as publicly and loudly as possible, while they actually attempted to file this most recent suit under seal, but the court prevented them from doing so.

I don’t know who these unnamed “Koch supporters” were, but they’ve steered Brennan wrong here.

Take a look at the “Petition to File Portions of the Petition [etc.] Under Seal.”

In it, the Kochs note that “Kansas law imposes a duty of confidentiality on members of corporate boards.” They insist no such duty applies here, but assert they “wish to avoid any controversy” over whether, by providing “detailed descriptions of discussions among board members” at the March 22 board meeting they’ve breached any such duty:

The Kochs wanted “portions” of the filings under seal, not the suit itself. Specifically, they asked for leave to file “redacted versions,” obscuring only the board discussions, and “placing all other portions of the Petition and related filings in the public record.”

So if the judge had bought the Kochs’ argument, (unsurprisingly, he didn’t) we’d have had a bunch of publicly available filings, large swathes of which would have been mysteriously blacked out like an OLC torture memo.

You really have to bend over backwards to interpret that move as one designed to tamp down public curiosity about the dispute.

More Koch Misinformation about Kevin Gentry

Is Koch Vice President Kevin Gentry a valuable asset to the Cato board of directors or little more than a reliable vote for Koch Industries in their campaign to takeover the place?  In his March 22 public statement, David Koch argues the former:

… his [Gentry’s] expertise in fundraising has been utilized repeatedly by Cato, its directors, and its donors.  In fact, Ed offered Kevin a job at Cato in 2003 because of his fundraising skills. Kevin was a desirable potential employee in 2003 and a unanimously elected director in 2010. Kevin’s generous agreement to help Cato for a time has been repaid by insults in the board meetings by Ed.

Nonsense.

  • Gentry has not raised one single dime for the Cato institute either before becoming a board member or after.  Nor, to anyone’s knowledge, has he even bothered to try.  If I’m mistaken, donor and dates please.
  • Crane never offered Gentry a job.  If Gentry has evidence that an offer was extended, let’s see it.

Be that as it may, there is a world of difference between someone who is qualified for a job here and someone who is qualified to run the place.  And this “unanimously elected” nonsense is blatantly disingenuous, as I discussed here.

I understand the Kochs’ desire to come to the defense of their employees.  But let’s not engage in make-believe.

Pyrotechnics about Partisanship

There is an increasing correlation between how seriously the Kochs take one of our arguments and how likely they are to mislead the public about the same.  Take our fear that the Kochs, were they to gain control of the place, would align Cato more closely with the right wing partisan activists they traffic with.  In his March 22 public statement, David Koch responded to this fear by saying, in effect, Crane’s even worse:

Ironically, just within the past few weeks, Ed has asked an outstanding individual, who is a self-admitted partisan Republican, to join the board.  This person, who actively partners with us on many initiatives, has often disagreed with us on projects because we would not offer blanket support to Republican candidates or the Republican Party.

Without details, who knows what he’s talking about?  I suspect, however, that David Koch is referring to a telephone conversation Ed Crane recently had with a Arthur Pope, a friend of Crane’s who’s a co-founder of the John Locke Foundation and chairman of the John William Pope Foundation.  Pope is, however, a member of several Koch-affiliated boards and a friend and ally of the Koch brothers.  Crane told Pope that if the Kochs were going to pack the Cato board with Koch loyalists, he’d rather they pack the board with people like Pope because he at least was a reasonable man who had independent stature and credibility (unlike, say, Pfotenhauer and Gentry).

That off-hand comment is a far cry from asking Pope to join the board.  But it was apparently enough to serve Koch’s purpose of muddying the waters.

Koch Suzerainty at Cato – a Long Standing Affair?

One of the strongest arguments against what the Kochs are doing was forwarded by Case Western Law Professor Jonathan Adler only days after the Koch lawsuit was filed.  In short, he argues – as many have argued since – that an institute that is, legally speaking, the private property of Charles and David Koch would have zero credibility outside of the libertarian community.  Hence, their suit, if successful, can only have one outcome; the utter destruction of the Cato Institute.

David Koch’s statement on March 22, on the other hand, argues that Cato has long been the private property of the Kochs and Cato has thrived nonetheless:

For most of its existence, Cato has been controlled (as Bob’s talking points describe it) in whole or large part, by the Kochs.  In fact, between 1991 and 2008, Cato had five shareholders – Charles; Ed; Bill Niskanen; a long-time Koch Industries employee (then still employed by Koch); and me.  During those 17 years, Koch-affiliated individuals had the ability to elect the majority of the board and the ability to acquire the stock of Ed and Bill, but we did not, and there was never any outcry over a “negative impact” during that time.

Every one of those three sentences is factually incorrect.

  • The implicit claim that George Pearson – the unnamed “long-time Koch Industries employee” - was a Koch employee between 1991 and 2008 is false.
  • Pearson was an independent actor and by no means a person “controlled” (as David Koch so bluntly put it) by the Koch brothers.
  • Even if the Kochs did control Pearson’s vote as long as he worked at Koch Industries, that would have afforded them a majority among the shareholder group for only five of Cato’s 35 years; 1981-1985 and 1991-1992.  If we consider Pearson an independent vote, Kochs’ majority existed only from 1981 through 1985.

As you will see below, there’s probably a very good reason why David Koch chose not identify Pearson by name; he doesn’t want Pearson talking to reporters given what he’s likely to say.

From the founding of the Cato Institute in 1977 through 1981, there were four shareholders; Charles Koch (12 shares), George Pearson (12 shares), Murray Rothbard (12 shares), and Ed Crane (12 shares).  After Rothbard was bought-out in 1981 by Koch, Pearson, and Crane, there were three shareholders, each of whom received four of Rothbard’s 12 original shares.  In 1985, those three agreed to make Bill Niskanen a shareholder and disbursed to him 16 “new” shares, which brought the group back up to four (Koch, Pearson, Crane, and Niskanen) and increased the total number of shares from 48 to 64 (16 shares apiece).  In July 1991, those four agreed to make David Koch a shareholder and disbursed to him 16 new shares, bringing the number of shareholders to five and the number of outstanding shares to 80 (16 shares apiece).

Now here’s where it starts to get interesting.  In September 1991, Koch Industries’ then-attorney H. Allen Caldwell informed Crane in a letter that “Mr. Charles Koch has requested, and George Pearson has agreed to the transfer of George’s stock in Cato to Richard Fink.”  Caldwell then claimed that “a waiver by each existing share-holder is required to effect the transfer.”  Crane, however, refused to sign the waiver and threatened to resign were Fink given any role in the Cato Institute.  In any event, the matter was accordingly dropped.

The following year, Pearson left Koch Industries but he retained his stock out of concern that Charles Koch was on a collision course with Crane and that the latter might some day need his support.  In 2008, however, he sent his shares back to the corporation with the following letter:

Enclosed are my shares of Cato stock.  I wish to surrender these to Cato.  I understand that Cato’s Governance Committee wishes to convert Cato from a stock corporation to a membership corporation.  That makes a great deal of sense to me.  With your vision and leadership Cato has grown to become a strong, effective voice for freedom, stronger and more effective than we ever dreamed of during those early years when Cato was so fragile.  With its current broad base of support I don’t see any reason for Cato to continue as a stock corporation.  I hope that the other stock holders will decide to make Cato a membership corporation.

As an aside, the Kochs have made a great deal out of the need to maintain the shareholder arrangement in order to ensure that the founders’ intent is honored as the years go by.  Only three of those founders are today alive and two of them – Crane and Pearson – favor the elimination of that shareholder arrangement.  So from now on, when you hear the Kochs go on about “founder intent,” substitute “Charles Koch’s intent” so that you understand what’s really being said.

In any event, let’s put to rest this argument that “For most of its existence, Cato has been controlled … in whole or large part, by the Kochs.”  It’s simply not true.

About That So-Called “Smear Campaign”

Last week, at CNN.com, Koch lieutenant and recently installed Cato board member Kevin Gentry complained that, in its quest to maintain control over the Cato Institute, Cato’s management has launched a “scorched earth public relations fight.”

In that, he picked up on a talking point introduced by David Koch in his March 22 statement about the dispute. David Koch accuses Cato chairman Bob Levy and others of scheming to “elicit support” from leftist groups “that have been attacking Koch Industries, Charles, and me.” Koch accuses Levy of “helping organize a public smear campaign” against him and his brother.

But as Bob Levy pointed out in a rejoinder issued the same day, “it’s an unusual ‘smear campaign,’ accompanied as it is by regular expressions of praise and gratitude for the Kochs from Cato directors, management and employees.”

Here’s a quick review of what Cato policy staffers have said about the Kochs since they sued the Cato Institute on February 28:

David Boaz:

Let me note that we at Cato are immensely grateful for the support we received from Charles and David Koch up until a couple of years ago (about 4 percent of our budget in the past decade), and we admire their donations to many other libertarian causes as well. This dispute isn’t personal, we’re not trying to demonize the Kochs.

Michael Tanner:

I certainly have no personal animosity toward the Kochs. One cannot overstate their efforts over the years to make this country a better and freer place. And for those efforts, they have been horribly and unfairly maligned by much of the media.

Trevor Burrus:

I immensely respect the Kochs and what they have done for liberty. I have defended their political activity many times, and I will continue to do so in the future. They are true libertarians who have devoted incredible resources to the ideas they believe in. And those resources have made a difference, especially for me.

Jim Harper:

I believe the Kochs want what’s best for liberty. The Kochs’ work to advance liberty over many decades is very strong evidence that they want to see its advance continue. The statements put out in their names are creditable evidence of the same.

Jerry O’Driscoll:

Charles Koch supported Austrian and libertarian activities and even attended some of them. He was approachable and happy to discuss ideas and strategy. There is now a bureaucracy surrounding his philanthropy, so I’ve had no contact with him in decades. I have only gratitude for the support provided me in the past.

Michael Cannon:

… the Brothers Koch are magnificent people, about to make a very big mistake…

…and me:

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…. I owe Charles Koch “an enormous debt of gratitude. And—whether he gets credit for it or not—the country owes him its thanks as well.”

Oh, the humanity!

Now sure, in the many blogposts and articles Catoites have written opposing the takeover, you can find the occasional harsh criticism, not least from Cato president Ed Crane himself. I won’t defend every single thing Catoites have said about the Kochs since they sued Cato, but the fact is, people tend to get their Irish up when they believe that an institution they know and love is under assault.

Still, “scorched earth”? “Public smear campaign”? I’d thought that Charles and David Koch had been through a lot worse. Can the Kochs, who’ve been involved in politics for three decades now, really be that sensitive to criticism?

Perhaps so. In his March 22 statement, David Koch makes clear that one of the gravest offenses committed by Cato’s management occurred when Ed Crane talked to the New Yorker’s Jane Mayer in 2010. Crane was “the individual quoted as the ‘top Cato official,” David complains:

When confronted about this, Ed initially claimed he only spoke briefly and favorably about us. He later acknowledged that he had made the statement as quoted, but it was only for background. Subsequently, he claimed that he was misquoted. As Ed has shown, he will partner with anyone – including those that oppose Cato and what it stands for – to further his personal agenda at the expense of others working to advance a free society.

Here’s the little quote that helped launch this great war:

… Crane had been insufficiently respectful of Charles’s management philosophy, which he distilled into a book called “The Science of Success,” and trademarked under the name Market-Based Management, or M.B.M. In the book, Charles recommends instilling a company’s corporate culture with the competitiveness of the marketplace. Koch describes M.B.M. as a “holistic system” containing “five dimensions: vision, virtue and talents, knowledge processes, decision rights and incentives.” A top Cato Institute official told me that Charles “thinks he’s a genius. He’s the emperor, and he’s convinced he’s wearing clothes.”

It’s a little shocking for those of us at Cato to learn that our careers and the Institute itself are at risk in large part because Ed Crane cracked wise about Market-Based Management in the pages of the New Yorker, but I suppose it’s useful information to have.

About Those “Unanimously Elected” Koch Operatives

There’s a great deal of disingenuousness characterizing Koch rhetoric of late, and much of it has to do with two of our recently-added board members; Kevin Gentry (Vice President of Strategic Development for the Charles G. Koch Charitable Foundation) and Nancy Pfotenhauer (spokesperson for Koch Industries).  To parry arguments that the two were foisted upon us by the Kochs, David Koch wrote on March 22:

 It is worth noting that Kevin and Nancy were unanimously elected to the board in 2010 … Nancy and her communication expertise were well known and valued by the board when she was unanimously elected as a board member in 2010.

The most recent piece up at Breitbart repeats the argument; “Most tellingly, in December 2010, Pfotenhauer and Gentry had both been unanimously elected to Cato’s board and received Crane’s vote (as well as the Chairman’s).”  And just for good measure, Kevin Gentry today echoed the same “unanimously elected” line over at CNN.

But stop right there:  Pfotenhauer and Gentry were unanimously voted onto the board by the shareholders (Charles Koch, David Koch, Ed Crane, and Bill Niskanen), not by the board of directors (the first time, incidentally, that had occurred in the history of the Cato Institute).  Crane and Niskanen did indeed vote for Pfotenhauer and Gentry at that shareholder’s meeting, but not because, as Gentry implies, either or both were anxious to have them on the Cato board.  In fact, both Crane and Niskanen understood full well that they lacked the power to block those two Koch nominees given the complexities of the shareholder voting arrangements.  So rather than make a pointless vote of protest, Crane and Niskanen decided to vote with the Kochs in the hope that they might thereby appease Charles and David, both who were up-in-arms over Crane’s comments in the celebrated Jane Mayer article a few months earlier.

The implicit suggestion here – that Pfotenhauer and Gentry were wanted on the board not just by the Kochs, but by everyone else – is simply not true.  On the contrary, every member of the Cato board at the time – save for David Koch – opposed their nomination (just ask them).  Didn’t matter though; it wasn’t up to them.

Kevin Gentry and the Independence of Cato’s Board

Over at CNN.com, Koch Foundation VP Kevin Gentry (archived bio here) has written a response to Cato chairman Bob Levy’s recent column, “Cato must not turn into a tool for Koch.”  Gentry’s response–like David Koch’s March 22 statement, emphasizes the issue of board independence.  As I’ve suggested before, they’d really do better to talk about something else.  It’s hard to characterize what they’re doing as an effort to promote board independence.

I left a comment to Gentry’s article at CNN.com:

Kevin Gentry charges that Cato’s president and chairman want “a board that is responsive to and dependent upon them.”

But if board independence is so important to the Kochs, why is it that virtually everyone Charles and David Koch have nominated to our board in the two years since they reactivated the shareholder arrangement is financially entangled with and/or dependent on Charles and David Koch? Koch-backed appointees to Cato’s board now include the three largest shareholders of Koch Industries, a vice president at the Charles Koch Foundation, an authorized spokesperson for Koch Industries, and a distinguished Republican lawyer who represents Koch Industries. The Kochs also nominated the executive vice president of Koch Industries, a staff lawyer for Koch Industries, a staff lawyer for the Charles Koch Foundation, the president of a Koch-created nonprofit and former vice president of the Charles Koch Foundation; and a former Director of Federal Affairs for Koch Industries.

Also, in his byline above, “Gentry is a board member of the Cato Institute,” he neglects to mention that, as a VP at the Koch Foundation, he too works for Charles Koch.

Gene Healy
Vice President
Cato Institute