Behind the Cato-Koch Kerfuffle

Reporting on Politics and Policy.
March 1 2012 3:49 PM

Behind the Cato-Koch Kerfuffle

In the beginning, there was Charles Koch. Ed Crane, fed up with the nascent Libertarian Party, was approached by Koch for ideas about where to take the movement. Crane's idea: A new think tank, based in San Francisco, named after Cato's Letters. (This, according to the great libertarian historian Brian Doherty, was Murray Rothbard's idea.) The Cato Institute was founded in 1977. Eight years later, as it relocated to Washington, a new agreement was drawn up that split the ownership of the think tank four ways: Crane, Koch, George Pearson, and William Niskanen. Each had 16 shares of the Cato Institute, $1 per share. But in 1991, as his brother David joined Cato and grabbed his own 16 shares, Charles Koch walked away.

"I have strong ideas," Koch told Doherty a few years ago. "I want to see things go in a certain direction, and Crane has strong ideas. I concluded, why argue with Ed? Rather than try to modify his strategy, just go do my own thing, and wish him well."

Advertisement

That was what happened. Koch took his money to other foundations. Crane kept building Cato. Contact was severed; in a 2010 interview, Crane told me that he never quite understood why Koch bolted.

Fast forward to 2011. Pearson, a Koch ally, has given back his shares. Niskanen dies, and his wife inherits his Cato shares -- 16 of them, worth $1 each. Crane, all of a sudden, is potentially a minority owner. That takes us to Allen McDuffee's scoop that Charles and David Koch are suing, claiming that Niskanen's widow has no right to her shares, per the 1985 agreement.

Plaintiffs respectfully request that the Court declare that (1) Defendant Washburn as personal representative is presently obligated to offer the Niskanen Shares to the Corporation; (2) that the Corporation has an obligation to its shareholders either to accept those shares for repurchase from Defendant Washburn as personal representative or, pursuant to the requirements of Section 3 of the Shareholders’ Agreement, recognize that the right to purchase the Niskanen Shares conferred by Section 3 upon the remaining shareholders is “deemed to be granted to the [other] shareholders of the Corporation,” including Plaintiffs Charles Koch and David Koch, in the event the Corporation does not repurchase the Niskanen Shares.

And so, with libertarianism at its modern apex, the Kochs are trying to wrestle the movement's leading think tank away from the guy who built it up. (Literally. They just completed a renovation.) How would it change? In the past, Charles Koch and his allies have criticized Cato for lacking real, provable results. Since then, David has found tremendous success with Americans for Prosperity, which in the Tea Party era evolved into one of the most powerful conservative organizations in electoral politics. (It has spent seven figures so far this year on TV ads against Barack Obama.) Draw your conclusions.

David Weigel, a former Slate politics reporter, is a reporter for Bloomberg Politics

TODAY IN SLATE

War Stories

The Right Target

Why Obama’s airstrikes against ISIS may be more effective than people expect.

The One National Holiday Republicans Hope You Forget

It’s Legal for Obama to Bomb Syria Because He Says It Is

I Stand With Emma Watson on Women’s Rights

Even though I know I’m going to get flak for it.

Should You Recline Your Seat? Two Economists Weigh In.

Doublex

It Is Very, Very Stupid to Compare Hope Solo to Ray Rice

Or, why it is very, very stupid to compare Hope Solo to Ray Rice.

Building a Better Workplace

In Defense of HR

Startups and small businesses shouldn’t skip over a human resources department.

Why Is This Mother in Prison for Helping Her Daughter Get an Abortion?

It’s Fine to Use Facebook to Serve People With Legal Papers, Court Rules

  News & Politics
Foreigners
Sept. 23 2014 6:40 PM Coalition of the Presentable Don’t believe the official version. Meet America’s real allies in the fight against ISIS.
  Business
Moneybox
Sept. 23 2014 2:08 PM Home Depot’s Former Lead Security Engineer Had a Legacy of Sabotage
  Life
Outward
Sept. 23 2014 1:57 PM Would a Second Sarkozy Presidency End Marriage Equality in France?
  Double X
The XX Factor
Sept. 22 2014 7:43 PM Emma Watson Threatened With Nude Photo Leak for Speaking Out About Women's Equality
  Slate Plus
Political Gabfest
Sept. 23 2014 3:04 PM Chicago Gabfest How to get your tickets before anyone else.
  Arts
Brow Beat
Sept. 23 2014 8:38 PM “No One in This World” Is One of Kutiman’s Best, Most Impressive Songs
  Technology
Future Tense
Sept. 23 2014 1:50 PM Oh, the Futility! Frogs Try to Catch Worms off of an iPhone Video.
  Health & Science
Bad Astronomy
Sept. 23 2014 11:00 AM Google Exec: Climate Change Deniers Are “Just Literally Lying”
  Sports
Sports Nut
Sept. 23 2014 7:27 PM You’re Fired, Roger Goodell If the commissioner gets the ax, the NFL would still need a better justice system. What would that look like?