Monday, March 5, 2012

Behind Koch-Cato: The Failed Grand Strategy

Thomas DiLorenzo writes at
The word on the street (K Street, that is) is that Charles Koch's lawsuit against the CATO Institute is motivated by his desire to abandon what he once believed was a potentially successful Grand Strategy and replace it with a different institutional strategy. The Grand Strategy was explained to me back in the early 1980s by Richard Fink, the longtime head of the Koch Foundation, when we were both young assistant professors of economics at George Mason University (and before Richie was with the Koch Foundation). The strategy was to use institutions such as George Mason to educate undergraduate and graduate students in free-market economics who would then work for various arms of the Kochtopus, for members of congress or the executive branch, or become journalists or elected officials themselves. In other words, the strategy was all about influencing or taking over the Washington Establishment.

Well, this strategy has had a 35-year run and is obviously a collosal failure. There has never been any single law or regulation that is known as the "CATO Rule," or the "CATO law to deregulate industry X," etc. The welfare/warfare state has exploded beyond the control of anyone over the past several administrations despite all those CATO conferences, all those rubber chicken lunches and dinners, and all of the juvenile sniping at and gossiping/lying about the Rothbardians associated with the Mises Institute and who have done nothing but pursue an alternative educational strategy.

That strategy was always to educate the general public, especially the young, in Austrian economics and Austrian social theory. This was Murray Rothbard's preferred strategy, and it is a big reason why Charles Kock and Ed Crane kicked him out of the CATO Institute despite the fact that he was one of the original founders, came up with the name, and was an original "shareholder." In other words, Murray's strategy was to devote educational efforts to educating people like the millions of young (and not-so-young) Ron Paul supporters that we now read about on a daily basis (and whose existence reportedly infuriates Charles Koch). It was never to pretend that it was possible to take over the Washington establishment. Murray was never so naive as to belive in such a fool's errand. He believed instead that the opposite was much more likely to occur: that the Washington establishment would force CATO to compromise its principles as the price of being treated "respectfully" by the likes of the company newspaper, the Washington Post. He understood that the Washington establishment would only use an institution like CATO to fool the public into believing that there is actually a public policy debate in Washington, and that it is not just a matter of choosing minor, miniscule variations of the combination of welfare/warfare statism when choosing between the two political parties.

CATO began compromising its principles the moment it moved from San Francisco to Washington, D.C. At the time, I was an adjunct scholar of CATO. Within about a year or so I began sending op-ed articles to Jeff Tucker at the Mises Institute, and giving presentations at Mises Institute conferences organized by Murray Rothbard and Lew Rockwell, because everything I sent to CATO was all-of-a-sudden watered down so much that it sounded more like something coming out of the liberal Brookings Institution. Sheldon Richman, who was working as CATO's publications editor at the time, seemed deeply embarrassed that the op-eds I was sending him, at his request, were constantly being returned to me with such heavy editing by an anonymous person (to me) who seemed to be on the same ideological wave length as a leftist like Ted Kennedy or a neocon like Newt Gingrich. I was apparently too much of a Misesian and not enough of an intellectual prostitute for CATO, so they dropped me as an adjunct scholar the same week that they dropped Professor Ralph Raico for the same reason.

Murray Rothbard was right, and Charles Koch's lawsuit against the CATO Institute inadvertently admits it.


  1. Bob - I think DiLorenzo is closer to the mark than any commentary on the CATO kerfuffle yet. This really truly is about what happened on that fateful day back in 1981.

    In rereading Murray's accounts one thing keeps jumping right out at me. We talk about it in hindsight as a Kochtopus purge, but in every piece from 1981 Rothbard is focused like a precision laser on one man and one man alone: Ed Crane.

    Charles Koch is identified as a guilty party in an accomplice sort of way, but Murray always keeps coming back to Crane. And he even goes out of his way to avoid naming the third Koch-aligned shareholder George Pearson by name.

    I've also always found it odd that the Koches' falling out with Rothbard happened so suddenly. Only a few months before Murray was openly DEFENDING the Kochtopus in a highly intellectual debate with Sam Konkin about the role of millionaires in the movement. Meanwhile there is plenty evidence that Murray and Crane were at long at odds before the board meeting in 1981 - at least a year back to the Ed Clark campaign and probably longer.

    Could it be as simple as the Kochs betting on the wrong horse that fateful day in 1981? And could it be that they now realize Crane was the wrong make after all those years of mistakes and blunders trying to curry favor with politicians?

    I wouldn't expect the Kochs to come flocking home like prodigal Rothbardians led astray and I know there's no love lost for them on our side. But isn't the move to oust Crane at least a roundabout admission that he was the wrong pick when they chose sides all those years ago?

  2. And by the way I don't belive for one split fragment of a second Crane's line that the Kochs simply want to make CATO into a Republican hack political apparatus any more than it ALREADY IS.

    This would only be believable if Crane's shop didn't already spend thousands of hours reaching out to Bush Administration pukes and GOP operatives of every stripe for the past 8 years before Obama. But they even had Ben Bernanke keynote a major CATO monetary policy conference in 2007. They couldn't get more GOP-Bush Admin-Goldman Sachs "insider" than that unless Ed Crane had a direct hotline to Dick Cheney's undisclosed bunker installed on his desk!

    Of all the supposed Republican operatives the Kochs are putting on the board, why is nobody at CATO talking about Napolitano? That the Kochs curry favor with the GOP is no secret to anybody. But what they aren't telling you is CATO's own are not any better. The GOP has been the status quo for decades under "Boss Crane."

    Scorpions in a bottle indeed.