Thursday, March 8, 2012

MIT Prof: The Kochs Will Not Takeover the World

Well this is a relief. Simon Johnson writes in NYT:
In the new Bloomberg billionaire index, released this week, the Koch brothers are each worth $33.5 billion. If they choose to act together, as they often seem to, including in the case of Cato, they are the richest pair in the world. 
Professor Acemoglu is concerned about the Kochs’ well-organized attempts to exert sway over American politics (e.g., through Americans for Prosperity and its affiliated organizations). But he feels that American democracy is sufficiently strong and will prevail. If he is right, the Koch brothers are unlikely to end up calling the shots as corporate titans did in the Gilded Age at the end of the 19th century.
Murray Rothbard used to teach that you don't have to be very bright to become rich. (On one tape, I recall he used an example of a bumbling monk, who was kicked out of the monastery and set up some shop and became wealthy.)

Monks the Kochs may not be, but bumbling in their control of the Cato Institute, for sure.  I mean, if I am a billionaire (just one billion, never mind thirty-three), I would set up an organization where it is clear I am in control. I have been around enough very wealthy people to know that they are asked for handouts on a daily basis. Others plot other ways to go after superwealth.

The super-rich are always on guard. Thus, it is simply bizarre that the Kochs used a part of their fortune to set up an institute where they have to battle for control. Dumb. Mega-dumb. Maybe they needed outside shareholders for tax purposes, but in that case you make your lawyer or your bumbling aide who holds doors open for you, shareholders. You don't put the principled Murray Rothbard on the board or the Machiavellian Ed Crane on the board. For completely different reasons, these guys are not going to roll over and play fetch with a couple of billionaires. You make them officers and throw them some bucks that don't mean anything to you, but why the hell would you make them shareholders? Did I mention mega-dumb?

For a couple of guys that have billions to play with, their influence on domestic affairs has been a joke. What have they done? Aside from hiring some lobbyists to protect parts of their businesses, they have done nothing.

Lew Rockwell, who probably has less than $33 billion in assets, with a web site that probably cost him less than $100 to register, was instrumental in launching the Ron Paul campaign into orbit, where now some 10% of the electorate will not even consider voting for anyone else. That's power.

There are a lot of DC types, who chide me for attacking Cato. They think Cato is important, but what I think is that they really smell Koch money and that they think that some of it, somehow, will fall into their pockets. Well, I tell you when it comes to betting between money and brains, always go with the brains.

No matter how much money someone has, weak thinking can lead to incredible spectacles of disaster.

While discussion around Ron Paul centers on how many delegates he will win and what leverage they may hold and while many youth squeeze every free minute they have to read Ron Paul books on liberty, at Cato we have the executive vice-president writing about the damage that has already occurred because of the Crane-Koch power opera. Writes David Boaz:
This misguided attempt at corporate control of an independent, nonpartisan think tank is bad for the Cato Institute and bad for the libertarian movement. We hope that everyone will come to see that, soon, before any more damage is done.
Self-absorbed as ever, Boaz writes above, that the Cato disaster is a disaster for the libertarian movement. Not quite. It is true that damage has been done to Cato, perhaps irreparable damage, but this has nothing to do with libertarianism. In New York City subways, in airport lounges, I regularly hear conversation about Ron Paul and see others reading Ayn Rand, I have seen Rothbard and Mises t-shirts, but I have never heard a conversation about Cato or seen anyone ever reading a Cato publication.

The Kochs will never takeover the world. The nutty structure they set up for control of Cato teaches you they aren't close to being tier one strategic thinkers. A sharp mind would have spotted the nutty structure immediately and would have rejected it. A billionaire should always be thinking about control so that blow-ups and fights for control, like that going on for Cato, never occur. I see weak thinking by the brothers. George Soros must be sneering at the incompetence. You don't see Soros having control problems with the organizations he launches.

But at the same time Cato implodes (Who knows the Cato building may eventually have to be sold), the understanding of liberty advances. It is advancing perhaps by someone who is spreading the word, who can not afford to travel by limousine and travels by subway, but has a way of promoting liberty that catches peoples ear. Perhaps by a creative short film creator and by clever web writers. Cato isn't even on the radar of impact compared to these creative lovers of freedom.

The Kochs won't takeover the world, and that's a good thing, but someday liberty may be a concept that will spread across the planet, and that is a very good thing. And, the promoters of liberty that achieve such an end will not be those who spend time genuflecting before a couple of characters with billions. A couple of billionaires, who bumble out of the gate with a nutty organizational structure, makes them only potential  material for a sitcom starring Charlie Sheen as, well, Charlie Coke.


  1. "I have seen Rothbard and Mises t-shirts, but I have never heard a conversation about Cato or seen anyone ever reading a Cato publication."

    Your dismissal of Cato is a bit overblown. Cato, and its scholars, has thousands of followers on Twitter, has thousands of visits to its site, and is generally known among educated lovers of freedom.

    It's true that your average "Ron Paul Revolution" member may not be aware of Cato, but that's because many of those people haven't participated in sophisticated policy discussion for very long. As relative newcomers to the arena (some, certainly not all of them), it's unsurprising that they aren't aware of what a Washington D.C. think tank does or says.

    However, you act as if Cato hasn't had a measurable impact on liberty, which I think is completely misleading. Their scholarship has had in impact in legislation and in constitutional law. In fact, just a few months ago Cato held a monetary conference with hundreds of attendees where Ron Paul gave the keynote speech. Would you completely trivialize these types of contributions Cato has made?

    It's funny to me how often liberty lovers get into these intellectual tiffs. They refuse to acknowledge that they are 95% similar, and instead choose to focus on their 5% dissimilarities. It's a never-ending academic dong measuring contest to determine which group has the "purest" take on libertarian philosophy. Give it up already! Just acknowledge that both of you are generally fighting the same fight!

  2. I for one would be glad to see the Cato Institute go under. I say this as an absolute Rothbard fanboi (hell, I even excuse the fact that he was in the pretentious, correct-line salon-intellectual circle of that Rand harridan).

    I can simply not 'grok' why Rothbard would name a libertarian institute after Cato Minor; it must have occurred to him that MANY people would assume it was named after his (more famous) great-grandfather - who was a statist douche and a central-planner's wet dream.

    Imagine naming a poetry institute the 'Hitler Institute' because Hitler's stepfather Alois was found to have written some flowery prose... you get the drift. It would slightly be ridiculous.

    (Cheer up, folks who get antsy at Hitler references - it was either Godwin or Rule 34, and nobody wanted Rule 34, believe me).

    1. "...the fact that he was in the pretentious, correct-line salon-intellectual circle of that Rand harridan..."

      You call yourself a "fanboi" of Rothbard after writing something like that? In the first place, Rothbard is an anarcho-capitalist, WAYYY too radical for Rand. In the second, Rothbard was dismissed as a potential cultist by Rand because he refused to stop thinking for himself and disown his wife, of whose beliefs Rand disapproved. Rothbard, in jest, wrote a one act play titled "Mozart Was A Red" lampooning Rand and her circle (Google it). The irony. I know. Nevertheless, what you've written suggeststs that despite your self-proclaimed fanboi status, you need to learn more about both Rothbard and Rand, lest you embarass yourself further. Just sayin'.

    2. GT:

      You are mistaken about Rothbard, not only in your opinions about Rand's supposed influence upon him, but also regarding his role in the naming of the CATO Institute.

      The naming of the CATO Institute was indeed suggested by Rothbard, but it had nothing to do with the Roman Senatorial dynasty. Prof. Rothbard suggested the CATO Institute in reference to two pamphleteers, Thomas Gordon and John Trenchard, the authors of "Cato's Letters" whose writings on individual rights and personal liberty in the early XVIII century laid the foundations of what eventually was expressed in the Declaration of Independence and motivated the American Revolution. The Roman Catos whom you cited had nothing to do with it!

      David K. Meller

  3. Sophisticated policy discussion! So that's what they get up to. Goodness gracious! No wonder few have heard of Cato. It's an irrelevance. It is irrelevant to the living.

    Liberty is not a difficult principle to understand. It does not require being filtered, pastuerised, fractionated, mixed with other ingredients (like the usual socialist preservatives), reconstituted (to seek the acceptance of statists and the like), diluted, sterilised, vacuum packed and relabelled (with suitably dense jargon so the self-appointed can make themselves appear super-knowledgeable). No need for the disengenuous sophistication of the sell-out or of the turncoat.


  4. Many Cato related scholars have done good work over the years, and the "Think Tank" strategy is not without merit. In the UK for decades the IEA acted as a flag bearer for libertarian and classical liberal thinking. Those of us old enough to remember the pre-web days can remember how isolated libertarians were, at least outside the US. Even meeting another one was a rare event. In those days IEA papers and pamphlets were like aid drops to stranded sailors.

    Think Tanks are not going to take over the world and Murray Rothbard has made some incisive criticism (as usual) of strategies that attempt to win over rather than remove the power elite. I suppose the "best" the Think Tank strategy can offer, and we are no where near this yet, is something like the old New Left "long march through the institutions" strategy. So the Tanks seed a cadre of libertarian influenced or actual influenced actors in the political system and these influence the system in our direction. This tactic has sort of worked for the now old New Left, at least as a mode of Masonic hand shake career advancement for former hippies. But instead of overthrowing the old order has seen a Frankenstein fusion of leftist and bureaucrat elitist (e.g. Hilary Clinton). The establishment has had the last laugh, and thus absorbed and contained the old new left threat. Of course the establishment has changed too, the former New Left recruits have provided a rich trove of fancy new propaganda for old fashioned establishment operations. So now instead of just bombing Afghanistan to get their oil or navy coaling stations, we drone the hindu kush because they don't celebrate international womens' day.

    That being said, Think Tanks can provide a lifeline for libertarian scholars who face a natural handicap when attempting to make their careers in a state and statist dominated academic community.

    All political strategies of course have their strengths and weaknesses and the Think Tank strategy can, as we have seen, see the donor's interests dominate over the cause. This really shouldn't come as a surprise to libertarians who have finely tuned radar for detecting the private vested interest exploitation of public policy in virtually all matters of state. This same pattern can presumably arise in politics conducted in arenas outside of the formal state apparatus too. Libertarians' radar may have a blind spot there.

    At one time Boaz may have been right, or at least, half right. The loss of a Cato could have been a significant set back in the pre-internet days. Maybe not so much now. We have our own free market in ideas on the web and libertarianism has a natural strength there just as it had a natural handicap in the state academic-bureaucratic complex. It wasn't Cato that seeded the Ron Paul revolution.

  5. I'll be honest. I don't know nearly as much of the Kochs as Beltway libertarians would know. But, could it be that they may have had more altruistic feelings toward fellow libertarians in the 1970's? Or, perhaps at that time they had youthful optimism and trust? Perhaps they didn’t have enough experience knowing Rothbard or Crane. What if Cato, at the time, was thought more of an experiment to see where it goes, and maybe it was more successful than hoped for at the time? Or, at the time of founding it, they made the judgment that thinking through every little contingency wasn’t worth the time as much as getting it off the ground.

    Perhaps they purposely put on board people whom they knew they would disagree with and have different characters, for the purpose of keeping Cato intellectually honest (this would show a certain humility and acknowledgement of one's own limitations etc.). Good decision makers will often have people in charge or authority whom they differ with. The reason is they know they are only human, and are subject to intellectual blind spots and limited understanding. Moreover, competition keeps one on one's toes, and provokes strength where otherwise could cause stagnation.

    One thing that does seem sloppy, from a legal perspective, was ‘what are the rules for deceased shareholders?’ Otherwise, corporate and probate law must be very plain on this question, making specifying it in the agreement superfluous.

    Just some thoughts. Does anyone have counter evidence (I am sure)? I believe a little more evidence needs to be presented for the assessment of 'stupid' to be applied.

  6. I'm with you, anon. Sophisticated, indeed. Sell outs, more like it.

    Excellent article, Bob.

  7. GT - Good point, but I think Murray was only with Cato before Cato moved to Washington DC. It was originally SF based. Front Street (good name!) So earlier on it may have been less 'respectable' /'responsible' (i.e. less elite friendly.) There were always some Chicago School types involved and many are very good but, as I understand it, Rothbardian and Austrian types were purged to make Cato more acceptable to Washington DC.