9:00 am
Mon April 16, 2012

Could Billionaire Koch Brothers Ruin Cato?

Originally published on Mon April 16, 2012 8:56 am



I'm Michel Martin and this is TELL ME MORE from NPR News. In a few minutes, we will tell you about a billion dollar settlement, years in the making, between the Justice Department and 41 Native American tribes, over what the tribes have called years of mismanagement of tribal money and resources. We'll have that conversation in a few minutes.

But first we want to talk about one of those stories that, on first look, could come across as inside baseball, you know, one of those disputes among insiders that has nothing to do with anybody but them. But we thought it might be bigger than that. It might be one of those small stories that could have a big impact on the way big issues are debated in this country.

You might have heard of Charles and David Koch. They are the billionaire brothers who have become famous, or infamous, depending on your point of view, for their millions of dollars in investments in think tanks and other organizations, mainly in support of conservative political causes.

Recently, the Koch brothers have filed two lawsuits against the Cato Institute. That's a leading libertarian think tank here in Washington, D.C. Leaders of the Cato Institute said the suit would essentially put the Koch brothers in charge of that respected institution's research operations, and they say that would threaten the institution's identity and independence.

The Koch brothers, for their part, say they aren't attempting a hostile takeover, but simply want to make sure that the Cato Institute remains, true to its, quote, "fundamental principles," unquote.

Michael Cannon is the director of health policy studies at the Cato Institute. He also recently penned an open letter to Charles and David Koch. It was published in Politico and he joins us now to talk about his letter and his concerns and, presumably, the concerns of other scholars at the institute.

Michael Cannon, welcome back. Thanks for joining us once again.

MICHAEL CANNON: Thanks for having me.

MARTIN: I do think it's worth noting that we reached out to the Koch brothers to ask them to participate, in some form, in this conversation. They declined.

So, with that being said, first off, Michael, for people who aren't involved in this kind of work, what does a think tank like Cato do?

CANNON: Well, the Cato Institute's a little different from most of the think tank - or a lot of the think tanks in Washington, D.C. We don't try to affect legislations before Congress. We don't try to affect particular policy outcomes that are being debated right now or proposed.

MARTIN: So you don't draft legislation.

CANNON: Right. We...

MARTIN: You don't sit with lawmakers drafting legislation.

CANNON: We try to change the way they think so they propose better legislation, over the long term. An example of that, is when the Cato Institute was founded in the 1970s, we were talking about social security personal accounts, letting people own what they now pay in social security taxes to the government. And people sort of laughed at that idea.

But, you know, 30 years later, that became a viable political issue, such that a president of the United States was pushing it. So that's the sort of impact that the Cato has. That's how we try to influence public policy and in a direction toward individual liberty, free markets and peace. That's really the libertarian vision or view of a free society.

MARTIN: Well, I was going to ask you - the next question I was going to ask you, is that I think people who follow these matters know that the Koch brothers are known for their extremely conservative political perspective. What's the difference, in your view, between the conservative movement and the libertarian perspective that you feel that - which is what the Cato Institute is dedicated to, explicitly? What's the difference?

CANNON: Well, first, I think that the Kochs are libertarians, first. Keep in mind, Charles Koch founded the Cato Institute with our current president, Ed Crane, because he wanted a libertarian think tank to add to the public debate. He and David Koch have funded the Cato Institute. Over the life of the Cato Institute, their contributions have come to about eight percent of total revenues.

What's really at stake here, I...

MARTIN: That's what - that was my next question. In your view, what is this lawsuit about?

CANNON: The Cato Institute, for a think tank, has a really unique and sort of bizarre governance structure. Instead of being governed solely by members or a board of directors, they're - it's actually owned by shareholders. One of them passed away in October. The Kochs are two of the shareholders. They control 50 percent of the shares and they believe that, with the passing of our late chairman emeritus, Bill Niskanan, that the rules of the shareholder agreement entitle them, effectively, to Bill Niskanan's shares and the board of directors disagree with their interpretation of the shareholders' agreement.

And so they filed one lawsuit in order to have that dispute settled. The reason this matters, is because if the Kochs do prevail, then they will literally own the Cato Institute. That is a problem, because even the perception that a think tank is controlled by a single financial interest, can wreck that think tank's credibility.

MARTIN: I guess I'm wondering - and I think other people might be wondering - how do you know that and is that really true? I mean, isn't sort of - you know, politics is the means by which government happens, so how would this be really any different?

CANNON: Well, there is a lot of concern that that's what the Koch's vision for the Cato Institute is, and I don't see any problem with a think tank that provides intellectual ammunition to groups that are more politically active. For me, I think the issue here is credibility, and we can already see how Cato's credibility will suffer.

As I wrote in that open letter to Charles and David Koch, I had a health policy scholar, a professor who's really at the top of his field, approach the Cato Institute with an idea for a book. And it's a fantastic book proposal and I leapt at the chance to publish it. But on the day that the Kochs filed their lawsuit, that professor backed away from the offer because he said he didn't want - he cited the threat to Cato's credibility the Koch ownership would pose and he didn't want his book to be dismissed.

I also received an email from a reporter who quotes Cato's scholars frequently, and said that, if the Cato Institute were owned by the Kochs or any other single financial interest, it would have no value to him as a reporter.

MARTIN: So is the - say, maybe the analogy here - and if you're just joining us, this is TELL ME MORE from NPR News. I'm speaking with Michael Cannon. He's a voice that is familiar to our listeners, if you follow issues in health policy. He's the director of health policy studies at the Cato Institute, the libertarian think tank.

He recently wrote an open letter to Charles and David Koch in Politico, in response to a lawsuit that the Koch brothers have filed against the Cato Institute, and some people say that it's an attempt to take control of the think tank.

Could I just try this as an analogy? Is the analogy something like research that is solely funded by a pharmaceutical company - however worthy the scholarship - people look at that and say, why should I believe that? Because it's funded by a pharmaceutical...

CANNON: Exactly. Because it gives - it - because...

MARTIN: ...company that has an interest in and is known to...

CANNON: Because they don't - right.

MARTIN: ...have an interest in a certain thing.

CANNON: Because those issues are really complicated and that provides a way for people to dismiss it if they don't understand the issues involved. And so, I mean, this issue of credibility is a challenge not just for think tanks. It's a challenge for journalists. It's a challenge for everybody who's trying to either inform the public or persuade the public of a certain point of view.

How does the listener know that what you're telling them is true and unbiased? How do they know that what I'm telling them is what I believe is best for society, and not just what my funders want me to say because it's in their financial interest?

And what the Cato Institute has done, I think, is really remarkable. Over 35 years, the Cato Institute has built up this reputation where even - where Republicans and Democrats and journalists all agree that, you know, even if you don't agree with the Cato Institute, they're not just a front group for some industry or some political party. And we've built up that reputation and it's taken a long time to do that. And that reputation, I think, could vanish very quickly if the Koch's lawsuit is successful.

And this is a very difficult issue and it's a very difficult thing for folks at Cato, because we wouldn't have our jobs without Charles and David Koch. They are billionaires who have funded the libertarian movement. Not just the Cato Institute, but other groups that have - where I've worked and others at Cato have worked. We owe a lot to them, and I'm not sure...

MARTIN: So you've been biting the hand that's fed you?

CANNON: I don't think so. I think we're trying to protect an asset that they and we have tried to - have worked very hard to try to establish. And I can't - I don't understand why it is that they're doing this and so the open letter is part of an effort to try to begin that dialog and try to get some more understanding on both sides.

MARTIN: What's the next step?

CANNON: I don't really know. You mentioned the Koch's have filed two lawsuits against the Cato Institute. Those are going to work their way through the courts and, hopefully, there can be enough dialog from these two sides of the family that we can work toward some sort of compromise that preserves Cato's credibility, preserves that asset that everyone involved has been working to build for 35 years.

MARTIN: Michael Cannon is the director of health policy studies at the Cato Institute. His open letter to Charles and David Koch was recently published in Politico and I do want to say once again, we reached out to the Koch brothers and asked them to participate, in some way, in this conversation and they declined.

Michael Cannon, thanks so much for joining us once again.

CANNON: Anytime.

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