Eugene Volokh's Blog, page 2599
March 8, 2012
Koch v. Cato — A Statement from Charles Koch [Updated with link to Levy Response]
Charles G. Koch has issued the following statement about the Koch brothers lawsuit to obtain control of the Cato Institute. Here it is in its entirety:
Statement by Charles G. Koch
Chairman and CEO, Koch Industries, Inc.
Regarding the Cato Institute
March 8, 2012
In December 1976, when I co-founded and provided the seed money to establish the Cato Institute, which originally was the Charles Koch Foundation, my vision was to build a principled and non-partisan organization that would advance the ideas that enable all people to prosper – by promoting individual liberty, limited government, free markets and peace. This was my intent then, and remains my steadfast intent 35 years later.
With its emphasis on education, Cato has contributed greatly to the marketplace of ideas and is now a respected thought leader. My brother David and I have every intent to ensure Cato continues its work on the full spectrum of libertarian issues for which it has become known.
I am troubled by recent false allegations that our actions to preserve shareholder rights were done in disregard of Cato's interests. Here are the facts behind what we have done and why.
We did not want to address this shareholder issue at this time. Although our legal filing has accelerated media coverage of this issue, this was not our desire. For months we made every effort to resolve, avoid, or delay this issue. We proposed a standstill agreement to delay for one year or longer any discussion on the shareholders agreement. We asked to delay any shareholders meeting, which would have left the pre-March 1 board of directors in place during this period. We proposed third-party mediation. We proposed alternative corporate structures. We made every effort to avoid this dispute –finally requesting just an additional four days to negotiate a potential resolution – but all of our proposals were rejected. Every counterproposal we received required we forfeit our shareholder rights and act contrary to the corporate governance documents.
The third Cato shareholder, Ed Crane, insisted that we have a shareholder meeting on March 1 to vote on new directors. At this meeting, a new shareholder was to be recognized in violation of our longstanding written agreement and the Institute's bylaws and articles of incorporation. We warned Cato's leaders about the negative consequences of forcing a shareholder meeting. They scheduled the meeting anyway. Faced with this intransigence, we did not seek damages or make claims of misconduct by individuals. Rather, we merely filed a declaratory relief action asking the court to confirm the meaning of the relevant corporate documents.
The actions of Cato's leadership since the filing have provided evidence of their strategy. They thought we would back down rather than risk additional criticism from them and others on top of the many attacks we already face from opponents of a free society. They thought wrong. We will not capitulate to these threats and mistruths any more than we have bowed to other threats.
We have been asked why we did not choose to simply walk away from this dispute. Principle is not a matter of convenience. We firmly believe this is a pivotal moment in Cato's history. We want to ensure Cato remains consistent with the principles upon which it was founded. The furtherance of this vision is possible only if Cato fosters a culture that adheres to core principles such as integrity, humility, and treating others with dignity and respect. We view recent events as evidence that Cato's leadership has turned its back on these core principles. As we see it, we would not be acting honorably if we failed to stand up for these principles.
There is a great deal of speculation as to what direction we would take Cato if we were to be in a position to elect a majority of the board. Some have speculated that we would micro-manage the enterprise. Others have suggested we would turn Cato into a partisan Republican organization. These rumors are absolutely false.
My objective is for Cato to continually increase its effectiveness in advancing a truly free society over the long term. This was my objective when, in 1976, I came up with the idea of converting the Charles Koch Foundation to a public policy institute and recruited Ed Crane to run it. My observation was that there was an urgent need for an institute that would flesh out the policy implications of the general principles of a free society. I still believe there is a great need for this work and that Cato can fill that need.
To that end, we would seek to elect board members and officers who will ensure that Cato becomes increasingly effective in advancing liberty while remaining dedicated to its core principles. These officers and board members would act independently from me or any other individual – instead, their role, as should be with any non-profit board, would be to ensure greater accountability and effectiveness. As someone who has created and helped build many organizations in both the profit and non-profit sectors, I know from first-hand experience that sustainable growth can be achieved only through leaders who are committed to core principles. Recognizing all that Cato has accomplished in the past, I envision a Cato that can accomplish even more in the future.
We are committed to seeing Cato flourish because we believe it has the potential to make an increasing contribution to the advancement of liberty and prosperity. But none of this will be possible if Cato's leaders abandon the principles they are supposed to uphold or otherwise violate the core values of a free society. Such a path has been the downfall of many organizations.
I think it is all to the good that Charles Koch has issued a statement, but there's not much to it. The statement does not really address the dominant concerns that have been expressed by non-Cato-affiliated libertarians and fellow travelers and there is a conspicuous lack of detail on key points. Nowhere does he disavow that the Kochs' aim to obtain majority control of Cato's shares for the first time in Cato's history, and there is no factual detail of the sort necessary to dispell (let alone disprove) some of the charges that have been leveled to date. Further, some portions of the statement — such as the claim that his intent is to seek to elect "independent" board members — are contrary to the actions he and his brother have taken to date. [This is not an aspersion on those the Kochs nominated -- most of whom I know and respect. It is just a simple observation that only one could be fairly characterized as "independent" of the Koch brothers.]
What could Charles Koch say that would assuage the concerns I and others have expressed? If I had the opportunity to sit down with either of the Koch brothers or an authorized representative, here are the questions I would ask:
To what extent do any of your objectives not entail or require obtaining or maintaining majority control of the Cato Institute?
If you and your brother have never had majority control of the shareholders before, why is majority control necessary now?
Did you propose any alternative settlements or alternative corporate structures that did not entail establishing or maintaining majority-Koch control of the Cato Institute?
You support and have helped to found many non-profit organizations with traditional corporate structures, such as self-perpetuating boards. Why is it undesirable for Cato to have such a structure?
Do you understand why so many of your friends and allies believe that majority-Koch control would undermine the Cato Institute's credibility and effectiveness?
In what ways could the Cato Institute be more effective?
What does the Cato Institute or its current officers do now to hinder its effectiveness?
What concrete steps do you think are necessary to increase the Cato Institute's effectiveness?
Do you consider any of the board members you've successfully nominated or proposed, other than Andrew Napolitano, are "independent"?
Can you provide examples of the sorts of people you would consider to be appropriately "independent" board members of an organization like Cato?
Is it desirable for any independent think tank or policy organization to be under the legal control of a single bloc of funders or interests?
These are the sorts of questions that need to be answered — and the answers to these questions would go along way to assuage (or confirm) the fears that I and others have expressed. If the Koch brothers and their allies wish to quell the unrest that is surging throughout the movement, these are the concerns that need to be addressed.
A final point: While I would certainly characterize many of my posts as defenses of Cato, as an institution, I have not sought to defend any of the specific actions taken by the Institute's current leadership or staff. To me, this is about the Institute and the principles it represents, not the tenure of any specific officers. Both sides in this struggle have acted like former spouses locked in a custody battle in which the desire to "win" has overshadowed the other interests at stake. The question is not whether one side or the other will "walk away," but whether the principals in this feud are willing and able to put the interests of the Cato Institute ahead of their own. The shareholder agreement has been amended and the composition of the shareholders has been revised in the past. No principle demands the current agreement remain in force. Given the love of liberty all involved have shown throughout their careers, I retain some hope, however fleeting.
UPDATE: Under Penalty of Catapault has an interview with Cato Chairman Bob Levy responding to Charles Koch's statement, detailing compromise offers Cato made to the Kochs, and providing answers to some of the questions I've identified above. The specifics in Bob Levy's remarks make the lack of detail in Charles Koch's statement that much more conspicuous.
Koch v. Cato — A Statement from Charles Koch
Charles G. Koch has issued the following statement about the Koch brothers lawsuit to obtain control of the Cato Institute. Here it is in its entirety:
Statement by Charles G. Koch
Chairman and CEO, Koch Industries, Inc.
Regarding the Cato Institute
March 8, 2012
In December 1976, when I co-founded and provided the seed money to establish the Cato Institute, which originally was the Charles Koch Foundation, my vision was to build a principled and non-partisan organization that would advance the ideas that enable all people to prosper – by promoting individual liberty, limited government, free markets and peace. This was my intent then, and remains my steadfast intent 35 years later.
With its emphasis on education, Cato has contributed greatly to the marketplace of ideas and is now a respected thought leader. My brother David and I have every intent to ensure Cato continues its work on the full spectrum of libertarian issues for which it has become known.
I am troubled by recent false allegations that our actions to preserve shareholder rights were done in disregard of Cato's interests. Here are the facts behind what we have done and why.
We did not want to address this shareholder issue at this time. Although our legal filing has accelerated media coverage of this issue, this was not our desire. For months we made every effort to resolve, avoid, or delay this issue. We proposed a standstill agreement to delay for one year or longer any discussion on the shareholders agreement. We asked to delay any shareholders meeting, which would have left the pre-March 1 board of directors in place during this period. We proposed third-party mediation. We proposed alternative corporate structures. We made every effort to avoid this dispute –finally requesting just an additional four days to negotiate a potential resolution – but all of our proposals were rejected. Every counterproposal we received required we forfeit our shareholder rights and act contrary to the corporate governance documents.
The third Cato shareholder, Ed Crane, insisted that we have a shareholder meeting on March 1 to vote on new directors. At this meeting, a new shareholder was to be recognized in violation of our longstanding written agreement and the Institute's bylaws and articles of incorporation. We warned Cato's leaders about the negative consequences of forcing a shareholder meeting. They scheduled the meeting anyway. Faced with this intransigence, we did not seek damages or make claims of misconduct by individuals. Rather, we merely filed a declaratory relief action asking the court to confirm the meaning of the relevant corporate documents.
The actions of Cato's leadership since the filing have provided evidence of their strategy. They thought we would back down rather than risk additional criticism from them and others on top of the many attacks we already face from opponents of a free society. They thought wrong. We will not capitulate to these threats and mistruths any more than we have bowed to other threats.
We have been asked why we did not choose to simply walk away from this dispute. Principle is not a matter of convenience. We firmly believe this is a pivotal moment in Cato's history. We want to ensure Cato remains consistent with the principles upon which it was founded. The furtherance of this vision is possible only if Cato fosters a culture that adheres to core principles such as integrity, humility, and treating others with dignity and respect. We view recent events as evidence that Cato's leadership has turned its back on these core principles. As we see it, we would not be acting honorably if we failed to stand up for these principles.
There is a great deal of speculation as to what direction we would take Cato if we were to be in a position to elect a majority of the board. Some have speculated that we would micro-manage the enterprise. Others have suggested we would turn Cato into a partisan Republican organization. These rumors are absolutely false.
My objective is for Cato to continually increase its effectiveness in advancing a truly free society over the long term. This was my objective when, in 1976, I came up with the idea of converting the Charles Koch Foundation to a public policy institute and recruited Ed Crane to run it. My observation was that there was an urgent need for an institute that would flesh out the policy implications of the general principles of a free society. I still believe there is a great need for this work and that Cato can fill that need.
To that end, we would seek to elect board members and officers who will ensure that Cato becomes increasingly effective in advancing liberty while remaining dedicated to its core principles. These officers and board members would act independently from me or any other individual – instead, their role, as should be with any non-profit board, would be to ensure greater accountability and effectiveness. As someone who has created and helped build many organizations in both the profit and non-profit sectors, I know from first-hand experience that sustainable growth can be achieved only through leaders who are committed to core principles. Recognizing all that Cato has accomplished in the past, I envision a Cato that can accomplish even more in the future.
We are committed to seeing Cato flourish because we believe it has the potential to make an increasing contribution to the advancement of liberty and prosperity. But none of this will be possible if Cato's leaders abandon the principles they are supposed to uphold or otherwise violate the core values of a free society. Such a path has been the downfall of many organizations.
I think it is all to the good that Charles Koch has issued a statement, but there's not much to it. The statement does not really address the dominant concerns that have been expressed by non-Cato-affiliated libertarians and fellow travelers and there is a conspicuous lack of detail on key points. Nowhere does he disavow that the Kochs' aim to obtain majority control of Cato's shares for the first time in Cato's history, and there is no factual detail of the sort necessary to dispell (let alone disprove) some of the charges that have been leveled to date. Further, some portions of the statement — such as the claim that his intent is to seek to elect "independent" board members — are contrary to the actions he and his brother have taken to date. [This is not an aspersion on those the Kochs nominated -- most of whom I know and respect. It is just a simple observation that only one could be fairly characterized as "independent" of the Koch brothers.]
What could Charles Koch say that would assuage the concerns I and others have expressed? If I had the opportunity to sit down with either of the Koch brothers or an authorized representative, here are the questions I would ask:
To what extent do any of your objectives not entail or require obtaining or maintaining majority control of the Cato Institute?
If you and your brother have never had majority control of the shareholders before, why is majority control necessary now?
Did you propose any alternative settlements or alternative corporate structures that did not entail establishing or maintaining majority-Koch control of the Cato Institute?
You support and have helped to found many non-profit organizations with traditional corporate structures, such as self-perpetuating boards. Why is it undesirable for Cato to have such a structure?
Do you understand why so many of your friends and allies believe that majority-Koch control would undermine the Cato Institute's credibility and effectiveness?
In what ways could the Cato Institute be more effective?
What does the Cato Institute or its current officers do now to hinder its effectiveness?
What concrete steps do you think are necessary to increase the Cato Institute's effectiveness?
Do you consider any of the board members you've successfully nominated or proposed, other than Andrew Napolitano, are "independent"?
Can you provide examples of the sorts of people you would consider to be appropriately "independent" board members of an organization like Cato?
Is it desirable for any independent think tank or policy organization to be under the legal control of a single bloc of funders or interests?
These are the sorts of questions that need to be answered — and the answers to these questions would go along way to assuage (or confirm) the fears that I and others have expressed. If the Koch brothers and their allies wish to quell the unrest that is surging throughout the movement, these are the concerns that need to be addressed.
A final point: While I would certainly characterize many of my posts as defenses of Cato, as an institution, I have not sought to defend any of the specific actions taken by the Institute's current leadership or staff. To me, this is about the Institute and the principles it represents, not the tenure of any specific officers. Both sides in this struggle have acted like former spouses locked in a custody battle in which the desire to "win" has overshadowed the other interests at stake. The question is not whether one side or the other will "walk away," but whether the principals in this feud are willing and able to put the interests of the Cato Institute ahead of their own. The shareholder agreement has been amended and the composition of the shareholders has been revised in the past. No principle demands the current agreement remain in force. Given the love of liberty all involved have shown throughout their careers, I retain some hope, however fleeting.
Children's Immunizations, and Disputes Between Divorced Parents
What happens when divorced parents with joint legal custody disagree about whether their child should be given the routine childhood immunizations? That's the issue in Grzyb v. Grzyb (Va. Cir. Ct.), decided in mid-2009 but just uploaded to Westlaw a day or two ago.
The Grzybs were the divorced parents of a 3-year-old girl, with "joint legal custody of the child, which implicitly included joint decision-making regarding the child's medical and health care." The father wanted the daughter immunized, but the mother had a religious objection to the immunization:
Mrs. Grzyb … testified that she first formed a religious objection to vaccinations when she was pregnant with the child, that she "prayed about it a lot," and felt "led by the Holy Spirit" to the conclusion that the child should not receive routine immunizations. She testified that "I never felt so strong about anything outside of faith as I do about vaccination." … Ms. Grzyb's pastor, the Reverend Scott Mauer, … [testified] that it was not a tenet of his religion that children remain unvaccinated. Rather, he testified that "this falls into an area that we would consider to be what the Bible often refers to as disputable matters, which are areas that the Bible does not necessarily address directly." He continues:
in those cases, historically the position that the Baptist Church has taken is that a person should apply the best understandings of our truth of the scripture and also the sensitivities believing as the Holy Spirit and come to a conviction about it. And that furthermore if they do come to a conviction based upon those things, that they are then to be obedient to that conviction because the Bible is clear that, if a person has come to a conviction that they do believe is from God, that to the best of their ability that they believe that in good faith before the Lord, that if they do not then pursue that directive of that decision that they are in sin.
Now if this were just a matter of whether two parents acting together (or a sole custodial parent) were exempt from the Virginia immunization requirement, Mrs. Grzyb's religious objection would give her a statutory immunity (see subsec. D(1)). But in this case, the question was what should be done to the child when the two parents who share legal custody disagree. The common answer is such situations is to conclude that joint legal custody isn't working out on this question — since joint custody presupposes an ability to agree — and one parent should be given sole custody as to medical matters. But which parent?
Here's the court's analysis: The court concludes that (1) getting immunized would indeed be in the child's best interests, given the medical expert testimony that, "the risk of 'serious complications' [from vaccines] was 'very low' and that [the child] is 'at greater risk of the diseases that the vaccines protect against, absolutely.'" But the court also observed that (2) the mother was more actively involved in the child's medical care:
Mrs. Gzryb remains the parent primarily responsible for attending to the child's medical needs. There have been numerous visits and phone calls to the child's pediatrician and, for the most part, it has been Mrs. Grzyb who is the parent interacting with the child's pediatrician and the pediatric practice. Mrs. Grzyb is the parent who took the initiative to obtain a referral to an allergist because of the child's persistent colds, runny nose and cough, and a family history of wheat allergies. Mrs. Grzyb has thoughtfully and fully explored each medical issue that has arisen in the child's life.
And on balance, the court concluded, the mother was therefore "in a superior position to assess and meet her child's medical needs," and should be awarded sole custody for purposes of making medical decisions — even though the court thought the mother's opposition to immunization was against the child's interest:
The Court's sole reservation in finding Mrs. Grzyb to be in a superior position to assess and meet her child's medical needs is the very decision that brings the parties to Court today, i.e., Mrs. Grzyb's decision not to have the child undergo routine vaccinations. As stated above, the medical testimony is uncontradicted that the child would benefit from the vaccinations. There are, however, two significant points that should be made in this connection.
First, Mrs. Grzyb's objection to routine immunization is substantially, although not exclusively, a religious, rather than a medical, objection. This is significant because the Court has concluded that the medical benefits of immunization outweigh the medical risks of immunization.
Second, Mrs. Grzyb's objection is to routine vaccination and does not extend to vaccinations that are medically indicated due to a specific exposure to a particular disease. Thus, she testified that she would allow a tetanus or rabies vaccine if her child was specifically exposed to those diseases.
An interesting result, and I'm not sure what I think of it. Though I have argued at length that both divorced parents should have broad rights to speak to their children and to express their religious views to their children, that stems from the fact that both parents can retain their free speech rights at the same time. When it comes to questions about whether or not to immunize, on the other hand, there has to be one decision made on the child's behalf, so it makes sense that the court would need to decide which parent is most fit to make that decision. And I do think that a parent's unwillingness to immunize a child, an unwillingness that appears to be against the child's best interests, should count against the parent.
But how this should be weighed against the parent's greater involvement in the child's medical care is a difficult matter, which I thought I'd raise for readers who are interested in such parental rights (and child health) questions.
Publication party for "Firearms Law and the Second Amendment"
On Friday, March 9, Fordham Law School is holding an all-day symposium on the Second Amendment. The event is free, and open to the public. Or if you would prefer to pay, you can get CLE credits. Among the speakers are Gary Kleck, Nelson Lund, Robert Cottrol, Nicholas Johnson, Adam Winkler, and me.
After the event ends at 5 p.m., we are going to have an informal event to celebrate the publication of the new law school textbook . (By Nicholas J. Johnson , David B. Kopel , George A. Mocsary , Michael P. O'Shea.) Three of the four co-authors (Johnson, Kopel, and Mocsary) will be there. Our tentative plan is to hang around Fordham for a little while, and then proceed to P.J. Clark's at 44 W. 63rd Street in Manhattan. VC readers are welcome to join us.
Or if you would just like to buy the book, you can order it from Amazon, or from the Aspen Publishers link, above.
Concurring Opinions in Jones Lead FBI To Turn Off 3,000 GPS Devices, Considered a "Sea Change" Within the Bureau
Earlier today, I sent off to law reviews a new draft article on the implications of the mosaic theory of the Fourth Amendment introduced in the GPS case, United States v. Jones — and specifically the majority opinion for the DC Circuit (under the name United States v. Maynard ) and the concurring opinions of Justice Alito and Sotomayor. A recent speech by the general counsel of the FBI suggests that I'm not the only one who thinks that the mosaic theory is a really big deal — and a lot more complicated than many realize:
A Supreme Court decision has caused a "sea change" in law enforcement, prompting the FBI to turn off nearly 3,000 Global Positioning System (GPS) devices used to track suspects, according to the agency's general counsel.
When the decision-U.S. v. Jones-was released at the end of January, agents were ordered to stop using GPS devices immediately and told to await guidance on retrieving the devices, FBI general counsel Andrew Weissmann said in a recent talk at a University of San Francisco conference. Weissmann said the court's ruling lacked clarity and the agency needs new guidance or it risks having cases overturned . . .
Weissmann said it wasn't Scalia's majority opinion that caused such turmoil in the bureau, but a concurring opinion written by Justice Samuel Alito. Alito, whose opinion was joined by Justices Ruth Bader Ginsburg, Stephen Breyer and Elena Kagan, agreed with the Court's conclusion in the case but wrote separately because his legal reasoning differed from the majority.
Alito focused not on the attachment of the device, but the fact that law enforcement monitored Jones for about a month. Alito said "the use of longer-term GPS monitoring in investigations of most offenses impinges on expectations of privacy." . . .
In his talk at a University of San Francisco Law Review Symposium, Weissmann suggested that Alito's concurrence means that several members of the court are concerned with long-term surveillance by technologies beyond GPS systems and that the FBI needs new guidance in order to ensure that evidence does not get thrown out.
"I just can't stress enough," Weissmann said, "what a sea change that is perceived to be within the department."
He said that after agents were told to turn off the devices, his office had to issue guidance on how some of the devices that had been used without a warrant could actually be retrieved. "We had to come up with guidance about you could locate [the devices] without violating the law," Weissmann said. "It wasn't obvious that you could turn it back on to locate it because now you needed probable cause or reasonable suspicion to do that."
Weissmann said the FBI is working on two memos for agents in the field. One seeks to give guidance about using GPS devices. A second one targets other technologies beyond the GPS, because, Weissmann said, "there is no reason to think this is just going to end with GPS."
"I think the court did not wrestle with the problems their decision creates," Weissmann said. "Usually the court tends to be more careful about cabining its decisions" and offering useful guidance. But in the Jones opinion, he said, the court didn't offer much clarity or any bright line rules that would have been helpful to law enforcement.
"Guidance which consist of 'two days might be good, 30 days is too long' is not very helpful," Weissmann said.
Good for Weissmann for speaking about these issues publicly. The FBI has tended to be too secretive about these issues in the past, I think. Anyway, I hope to post a draft of my new article in a week or two, and I'll post a link to it at the blog when I do.
Rev. Pat Robertson Calls for Marijuana Decriminalization
The NYT reports:
"I really believe we should treat marijuana the way we treat beverage alcohol," Mr. Robertson said in an interview on Wednesday. "I've never used marijuana and I don't intend to, but it's just one of those things that I think: this war on drugs just hasn't succeeded."
Mr. Robertson's remarks echoed statements he made last week on "The 700 Club," the signature program of his Christian Broadcasting Network, and other comments he made in 2010. While those earlier remarks were largely dismissed by his followers, Mr. Robertson has now apparently fully embraced the idea of legalizing marijuana, arguing that it is a way to bring down soaring rates of incarceration and reduce the social and financial costs. . . .
Mr. Robertson, 81, said that there had been no single event or moment that caused him to embrace legalization. Instead, his conviction that the nation "has gone overboard on this concept of being tough on crime" built up over time, he added.
"It's completely out of control," Mr. Robertson said. "Prisons are being overcrowded with juvenile offenders having to do with drugs. And the penalties, the maximums, some of them could get 10 years for possession of a joint of marijuana. It makes no sense at all."
Law Enforcement Against Prohibition has more on Robertson's views here.
Koch v. Cato — The Views of Former Cato Staffers and Ezra Klein
The commentary on the Koch-Cato continues to multiply. Three recent posts are particularly noteworthy. The first are two former Cato staffers associated with so-called "liberaltarianism," Brink Lindsey and Will Wilkinson. Brink's views, in particular, are quite close to my own. In addition, noted progressive blogger Ezra Klein adds his voice to those wondering what the Kochs hope to accomplish by taking over the Cato Institute. All three posts are excerpted after the jump.
In addition to these three posts, here some additional items of potential interest to those following this libertarian family feud:
Jeffrey Toobin profiles Cato Chairman Bob Levy;
Slate's Explainer explains what goes on at think tanks;
Jessica Flanagan addresses charges of libertarian hypocrisy;
Cato's Jonathan Blanks proclaims "Just because we support legalized prostitution doesn't mean we want to live it."
Also, FWIW, I think Ilya outlines the sort of initiative that could resolve this conflict. The question is whether either side is willing to set egos and personal interests aside to embrace such an outcome.
The first of the three posts I'm excerpting comes from former Cato staffer Brink Lindsey, guest-posting at Bleeding Heart Libertarians:
It's no secret that I've had strong differences over the years with some of my former colleagues at Cato. In some cases I've maintained positions that I now believe were wrong: it took the long occupations of Afghanistan and Iraq to disillusion the hawk out of me. On other fronts, I continue to hold views that are minority positions among Cato's ranks.
But the existence of those differences in no way detracts from my admiration for Cato or my belief that it is an important force for good in American political life. Although many, perhaps most Americans have a libertarian streak of some kind that runs through their thinking, principled support of limited government across the domains of economics, personal life, civil liberties, and foreign affairs sadly remains a rarity. For 35 years and counting, the Cato Institute has been keeping the flame alive and ensuring that a principled libertarian perspective has a prominent place in the national policy debate. All of us who regard ourselves as libertarians, as well as all who have had their thinking challenged and sharpened by exposure to libertarian ideas, owe a debt of gratitude to Cato for this service.
Accordingly, I am deeply troubled by the Koch brothers' recent lawsuit, which I regard as a threat to Cato's ability to continue the fine and important work it has been doing for so many years. As to the merits of the case, I will say only that there is a serious dispute about the proper interpretation of the long dormant and distinctly curious shareholders' agreement. When the Kochs argue that they are merely upholding the rule of law, they are therefore begging the question. Both sides claim the rule of law is on their side – which is why the case is now in court. . . .
Lindsey also takes time to respond to his former colleagues, Will Wilkinson's first post on the subject.
[H]e makes the plausible-sounding point that other institutions, namely the Mercatus Center and the Institute for Humane Studies, have strong ties to the Kochs and nonetheless do good work and are clearly libertarian-oriented. True enough, but neither as far as I know has the same kind of shareholders' agreement that Cato does, and thus neither is legally owned and controlled by the Kochs as Cato would be if the Kochs prevailed in this dispute. Indeed, Mercatus is associated with George Mason University and its director is appointed by the Provost of GMU; its independence from any particular donor is thus institutionally secured. As to IHS, its academic mission is so far removed from partisan politics that legitimate concerns that it is being made to serve some partisan agenda really can't arise. Cato's situation is thus clearly distinguishable from that of these other organizations. . . .
As Lindsey was composing his post, Wilkinson was composing a second post, expanding the reasons for his ambivalence about the suit, hypothesizing about the Kochs' motivations, and suggesting Cato President Ed Crane bears some responsibility for the current conflict.
Based on the combination of my time spent with Koch operatives and time spent working under Ed Crane at Cato, my guess is that the Kochs want two things: (1) to replace Ed Crane and (2) make Cato's work more relevant to the actual policy-making process.
My completely speculative thought is that the Kochs' takeover attempt is a gambit to pressure the Crane-loyal board members into agreeing to defenestrate Ed, or, if it comes to it, to get a Koch-loyal majority on the board who will then vote to give Ed the heave-ho. I figure the Kochs think that the management of Cato under Crane has long fallen short of professional standards, and that Crane's continued leadership hurts Cato's mission. Whether Crane is a liability to Cato is by no means unrelated to (2), but it's largely a distinct issue. I further speculate that contention over Crane's continuing tenure is a much bigger part of the conflict than has been reported. Crane is going to retire and/or die soon anyway. The question is what happens then? The Kochs are packing the board in part to force the issue, and are suing to deny that Bill Niskanen's widow can inherit his shares in part to try to prevent Ed's shares from passing on to an ally rather than reverting back to the board when he finally keels over. (I have no idea whatsoever about the merits of the lawsuit, by the way.)
I half suspect that the whole battle for majority control of the board might have been avoided had Crane been willing to step down, or had a couple of the Crane loyalists on the board been willing to vote him out and replace him with someone, probably a Kochtopus veteran, agreeable to both board factions. Cato might not have needed "saving" had Ed gone quietly and retired, but if he's gonna go down, it seems that he intends to take the ship down with him, probably because he thinks the ship is his.
What I imagine to be the Kochs' second aim, to increase Cato's effectiveness in directly influencing policy, seems to pose a challenge to Cato's current strategy for creating pro-liberty political change. . . .
. . . a more practical bent need not involve changing anything about Cato's ideological orientation. It simply requires a shift in attention and emphasis to certain issues on which it already has a clear position. And this needn't be one-sided. Suppose Cato, without changing anything at all about its ideological orientation, were to focus more energy on some issues currently of interest to both groups like AFP and groups like, say, the ACLU or Amnesty International? I think there's a plausible argument that this would lead Cato to deliver greater libertarian bang for its donors' bucks, while possibly even improving its non-partisan reputation.
Now, I'm not sure I buy this argument. I tend to think that a greater focus on practical political relevance would tend to exert a subtle pressure on Cato's analysts to take it relatively easy on perceived allies when they do and say things harmful to liberty. Indeed, this pressure already exists, and it wouldn't be a good idea to increase it, since it's already biased toward the right. The legacy of right-fusionism has been to desensitize many libertarians to the inherently liberty-limiting aspects of social conservativism, and to reduce many self-described libertarians to acting primarily as cheerleaders for the economic agenda of "free-market" reactionaries. . . .
I'd really like to see Cato establish a deserved reputation for partisan neutrality, since that's something I worked hard for in my half-decade there, but nothing in my experience leads me to believe that either Crane or the Kochs are interested in that. If libertarians want an institution that is not right-fusionist, they need to build it. It's not going to be Cato. Now, I do think Cato's reputation for partisan independence, such as it is, would suffer under Koch rule, and that this would hurt a number of good friends at Cato, and for this reason I sincerely hope the Crane faction prevails. Yet I don't think the Kochs are wrong to think Cato would be better off with a more effective and professional manager at the helm, if that is what they in fact think. I also suspect that Cato would be more effective, according to the right-fusionist standards I think both the Koch and Crane factions accept, if the Kochs had their way and integrated Cato more fully into their line-up of policy and politics non-profits. However, because I don't think greater right-fusionist effectiveness is desirable, my sympathies again fall on the side of the Crane faction.
Finally (for now), noted progressive blogger Ezra Klein weighs in on what could be lost if the Kochs take over Cato.
It seems the effort by billionaires Charles and David Koch to take control of the libertarian Cato Institute is going poorly. "We are not acting in a partisan manner, we seek no 'takeover' and this is not a hostile action," Charles Koch told Bloomberg News. When you are denying partisanship, takeover ambitions and hostile intentions in one sentence, you probably need to rethink your PR strategy. . .
Whether they can pull off this coup is for the courts to decide. (Alison Frankel has a good rundown of the relevant legal issueshere.) But the bigger question is: Why in the world would they want to? . . .
I am not exactly a libertarian. I'm a technocrat. I believe in the government's ability, and occasionally its responsibility, to help solve problems that the market can't or won't resolve on its own. I find much of Cato's hard-line libertarianism — to the point of purging Will Wilkinson and Brink Lindsey, libertarians who explored making common cause with liberals on select issues — naive, callous and occasionally absurd. And yet, it's among a handful of think tanks whose work I regularly read and trust.
That's because Cato is, well, "the foremost advocate for small-government principles in American life." It advocates those principles when Democrats are in power, and when Republicans are in power. When I read Cato's take on a policy question, I can trust that it is informed by more than partisan convenience. The same can't be said for other think tanks in town. . . .
What the Kochs have in Cato is an advocacy organization that matters in the years between elections, even when the Koch brothers' preferred candidate doesn't win, even to people who don't share the brothers' ideology. Cato is an organization that can have more than a marginal impact on elections. It can have a significant impact on policy and governance. That's a level of influence even the Kochs can't buy. When two of the right wing's most influential funders don't recognize that, it should cheer liberals immensely.
A Few Notes on the Cato-Koch Controversy
I love the Cato Institute. I admire the Kochs and greatly appreciate their contributions to libertarian causes. I have ties to both sides too numerous to bore readers with. So I'm distressed that they are at odds. Here's my small contribution to the debate:
(1) In one sense, the Kochs had no choice but to file their lawsuit, given that the two sides couldn't come to terms on a modification of the shareholder agreement. The point of that agreement, poorly drafted as it was, was obviously to ensure that Cato remained true to its libertarian mission by vesting personal control in particular stakeholders. But let's say that Bill Niskansen's widow was a closet socialist, and the Cato board had declined to buy back Niskansen's shares thinking she was a Cato-style libertarian. Think about John Kerry coming into Republican Senator Heinz's fortune via Theresa, and you can see the potential problem. Apparently, before the lawsuit, negotiations had broken down over whether and how to modify the shareholder agreement. Without knowing each side's position in those negotiations, I'm not in a position to judge who was acting unreasonably.
(2) The Kochs made a huge error in nominating some directors without strong libertarian credentials (Hinderaker, Olson), and others with direct ties to the Kochs (including Olson, who does legal work for them). This falls short of proof that the Kochs either want to "take over" Cato, or change its direction in any significant way, but it's a p.r. disaster that clearly strengthens Crane's hand in the court of public opinion.
(3) Cato claims that David Koch and a couple of directors expressed their dissatisfaction that Cato doesn't act in a more partisan matter. That's not terribly surprising from David, given his funding of Americans for Prosperity. But it's brother Charles who strikes me as the more doctrinaire libertarian (he's certainly the one who has been more involved in "movement" libertarianism over the years), and, as the one who co-founded Cato, likely the one much more involved in pursuing this dispute. I very much doubt Charles wants Cato to be substantially different than it is now, though it's well-known that he and Crane are at odds on a somewhat personal level, as well as to some extent on management. ('m sure that Charles would like Cato to institute objective measures of its success and influence, consistent with his market-based management philosophy. That may or may not be a sound idea, but it's not indicative of a change in ideology or non-partisanship.) The problem, though, is that the way the shareholder agreement is currently structured, it's entirely possible that David could wind up being in sole control of Cato upon Charles's death. This makes Cato's concerns about the effect of a successful lawsuit on its ultimate direction quite reasonable.
(4) Given all this, and the fact that both sides have not-crazy reasons for what they are doing, I hope a compromise can be found that gives the Kochs a say in Cato commensurate with their contribution to the organization over the years (which, to my mind, clearly suggests a minority stake), while still preserving Cato as Cato. Better yet, if the well hasn't been poisoned, I would love to see the outcome of reconciliation between the two sides. Some informal mediation undertaken by high-profile libertarians with ties to both sides may help, given what clearly is an atmosphere of mutual recrimination and suspicion. Also, I like Ilya's idea, below.
A Possible Alternative Solution to the Cato vs. Koch Conflict
Many supporters of the Cato Institute in its conflict with the Kochs claim that the latter are trying to transform Cato into a partisan outfit that is less libertarian than the current Cato, and acts to promote the interests of the Republican Party. They worry that the Kochs will stack the Cato board of directors with conservatives, Koch employees, and GOP operatives. The Kochs, for their part, vehemently deny any intent to change Cato's mission, arguing that they filed suit against Cato only because the Institute's current leadership violated the Kochs' shareholder rights. Personally, I am skeptical of claims that the Kochs want to turn Cato into a shill for the GOP. However, I still think that the Koch lawsuit is ill-advised for both public relations and substantive reasons.
The easiest way to address the critics' concerns would be for the Kochs to drop their lawsuit. But there is another option as well. The Kochs could announce that if they win the suit, they will appoint board members who are well-known independent libertarian academics, policy experts, and activists and are not Koch employees. These people would need to be clearly libertarian and widely respected in their fields. I have in mind big-name libertarian scholars and commentators such as Tyler Cowen, Richard Epstein, Virginia Postrel, and co-blogger Randy Barnett.
Their commitment to libertarianism and longstanding differences with conservatives would assuage any concern that Cato is about to turn conservative or become a cats-paw for the GOP. Their scholarly orientation would ensure that Cato remains an organization focused on ideas and in-depth policy analysis rather than day-to-day partisan politics. And their independence and strong intellectual and academic reputations would make it difficult for any fair-minded observer to conclude that they are merely tools of the Kochs.
If I understand the Institute's unusual legal structure correctly, the shareholders retain the power to remove board members. So skeptics could still claim that the Kochs intend to replace the independent libertarian board members with conservatives or GOP operatives at some later date. But they would suffer substantial public relations damage if they tried such a purge. Still, if there is a widespread belief that further safeguards are needed, the Kochs could act to change the shareholder agreement and give Cato a more conventional nonprofit structure under which the board is self-perpetuating rather than chosen by shareholders. As I understand it, this could be done by a unanimous agreement of the shareholders. And the non-Koch shareholders would likely be amenable to such a change should the Kochs succeed in their lawsuit. If I am wrong about the legal details here, I welcome correction from people who know more about the relevant law than I do.
Obviously, such an announcement would not resolve the legal dispute between Cato and the Kochs; nor would it completely eliminate all the bad blood between the two sides. But it would go a long way towards addressing the concerns of the libertarian community, and ensuring that Cato remains a politically independent, intellectually serious voice for libertarianism regardless of who wins the legal battle. It would also give weight to the Kochs' contention that their purpose in filing the lawsuit was to protect their shareholder rights rather than alter Cato's mission. By quelling the perception that they intend to transform Cato into a fundamentally different institution, the Kochs would also reduce the likelihood that many of Cato's top scholars and staff would depart in the event of a Koch victory, thereby leaving the putative victors in control of an asset that has lost much of its value.
CONFLICT OF INTEREST WATCH: I described my connections to the two sides in this dispute here.
On the Lack of Connection Between Life Expectancy and Quality of Hospital Care
My father-in-law is ill and has been hospitalized for a couple of weeks in Israel. Life expectancies in Israel are the fourth highest in the world (especially impressive given various populations that exist on the margins of the mainstream–Bedouin in the Negev, extremist Haredi sects, Arabs in rural villages), but it's clearly not because of the quality of care one gets when one needs hospitalization. I won't bore readers with all the details, but let's just say an illegal immigrant with no insurance showing up a random American hospital would get far better care than my fully insured father-in-law has gotten at one of the best hospitals in Israel–and even that care would have been worse if my sister-in-law didn't have some connections at the hospital. Indeed, my physician sister and brother-in-law tell me that if said hypothetical illegal alien in the U.S. had received the care my father-in-law has received in Israel, he would have multiple valid medical malpractice claims against the hospital.
I know readers are expecting some sort of political point to conclude this post, but I don't have one. The U.S. medical system is screwed up in many ways, and I don't know enough about Israel's system to definitively compare the two. But, as many others have noted, the line some people draw between life expectancies and quality of medical care, especially hospital care, is less than linear.
[Updated to delete details that I decided were unnecessary for the post]
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