Kochtopus Cato Institute Power Grab: A Historical Perspective


A new chapter is being added to the ongoing Kochtopus saga. On March 1 the Washington Post, in a story sure to fill the airwaves for the weeks and months to come, revealed the Kochtopus is suing the Cato Institute for control of the recently deceased and former Cato Chairman William Niskanen‘s ownership share in the think-tank.

The Koch Empire was recently outed by DeSmogBlog as a key seed funder of the climate change denier think-tank, the Heartland Institute. Heartland’s internal documents were recently leaked to DeSmogBlog (see “Heartland Exposed”). 

Billionaire oil baron Charles Koch is now waging war against another entity that was created with Koch seed money decades ago: the Cato Institute.

The Post explained succinctly:

At the heart of the dispute is the fate of the shares owned by Niskanen, who died in October at age 78 of complications from a stroke. The Koch brothers believe that they have the option to buy Niskanen’s shares, while Cato officials believe that the shares belong to Niskanen’s widow, Kathryn Washburn, according to the complaint.

Cato’s Pat Michaels is a key player in the world of climate change denial, “sowing the seeds of doubt” on human-caused climate change.

That said, Cato has also stood up for key libertarian principles in the past that do not fit a partisan framework. Among them: protection of civil liberties, opposition to imperialism, opposition to the war on drugs, opposition to the militarization of domestic law enforcement agencies, and support for gay rights, to name several.

A brief overview of the key movers and shakers behind Cato’s ascendancy is important to understand the rise of the Koch Empire and the split between the faux-libertarians and the true libertarians.

Murray Rothbard, the Kochs, the Austrian School and the Rise of Cato  

It all began nearly 40 years ago in Wichita, Kansas, corporate headquarters of Koch Industries, now and then the centerpiece of the potent Kochtopus machine. The Cato Institute was founded in 1974 and originally funded by Charles Koch, of Koch Industries fame and fortune.

The name “Cato Institute” came fromCato’s Letters,” which Wikipedia explains were “essays condemning tyranny and advancing principles of freedom of conscience and freedom of speech, [and] were a main vehicle for spreading the concepts that had been developed by [political theorist] John Locke.” 

Often left out of the Cato historical discussion, though, is another key libertarian economist, political theorist, historian and former good friend of Charles KochMurray Rothbard.

Rothbard was a key thinker and writer advocating for the Austrian School of Economics, a school of thought current Republican Party Presidential candidate, Rep. Ron Paul (TX), also embraces

Rothbard was also one of the co-founders of the Cato Institute, as explained in a 2008 article written by David Gordon of the Ludwig Von Mises Institute.

The Austrian School’s ideology is best represented today by a think-tank that gets little to no play in the mainstream media, the Ludwig Von Mises Institute, currently chaired by former Paul congressional chief of staff from 1978 to 1982, Lew Rockwell, and named after Austrian School economist Ludwig Von Mises, who was Rothbard’s professor.

The Von Mises Institute, it turns out, ended up filling the void left behind when Rothbard was strong-armed out of the Cato Institute by Charles Koch in the early 1980’s.

Gordon explained Rothbard’s departure, writing,

He thought that Cato’s primary mission should be scholarship rather than political campaigns and attempts to secure audiences with the high and mighty in Washington. His antagonists emphatically disagreed

…Koch could not tolerate what they deemed blatant disloyalty. Even though Rothbard was the leading theorist of libertarianism and the Cato Institute had been established to promote his views, they expected him to obey the orders sent down from on high.


After Rothbard departed from Cato, he joined forces with the Mises Institute, established in 1982 by Lew Rockwell. The new group was a standing reproach to Koch…since its consistent defense, encouragement, and development of a Rothbardian program were exactly the program that the Cato Institute had betrayed. The Koch forces endeavored to strangle the new group in its cradle.

The main difference between the Rothbardian crowd and the Koch crowd boils down to support for a pure free market vs. what the Rothbardian crowd calls a “corporatist” market.

In a 1983 essay, not long after the Cato falling out, Rothbard penned a short essay titled, “The Business-Government Alliance,” in which he wrote,

The push for the new corporate state was generated by an alliance between corporatist big-business groups and technocratic intellectuals, eager to help run and to apologize for the new system, which promised them a far plusher niche than did a freely competitive economy.

Perhaps it is no surprise after writing articles with passages like these that Rothbard and the Austrians were exiled from the Kochtopus network.

The term “Kochtopus” was coined by a Rothbard-inspired libertarian, Samuel Edward Konkin III, author of the New Libertarian Manifesto, published in 1975.  

10 Years Later, Charles Koch Departs Cato

Rothbard’s early 1980’s exile from Cato meant that the Koch Brothers were running the show there, alongside Edward Crane, the current President and CEO.

When 1991 rolled around, though, Charles Koch jumped ship from Cato and started investing his money elsewhere. Journalist Dave Weigel explained,

…[I]n 1991…Charles Koch walked away. 

“I have strong ideas,” Koch…[said in an interview]. “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.”

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.

Twenty years later, Charles Koch and his brother David are resurfacing in the Cato world, but the conflict rages on. 

The Kochtopus Sues Cato in a “Power Grab”

In recent years, the Kochtopus is most famous for its funding of the astroturf Tea Party machine Americans for Prosperity (AFP), a tour de force in the world of climate change denial, union-busting, and in the sphere of electoral politics.

The common theme to its AFP front group efforts: sheer corporatism, with a well-lubed GOP machine through which to push its corporate agenda at both the federal- and state-level.

Having funded and turned AFP into a powerful national political animal, the Kochtopus Cato power grab was a logical progression. 

“Mr. Koch’s actions in Kansas court yesterday represent an effort by him to transform Cato from an independent, nonpartisan research organization into a political entity that might better support his partisan agenda,” said Crane of the lawsuit.

Crane went further this week, telling the New York Times:

This is an effort by the Kochs to turn the Cato Institute into some sort of auxiliary for the G.O.P.,” said Edward H. Crane, who is president of Cato and co-founded it with Charles Koch. “What he is doing now is detrimental to Cato, it’s detrimental to Koch Industries, it’s detrimental to the libertarian movement.”

There is some irony in the fact that Rothbard left Cato because he felt Crane and Koch had abandoned true Austrian School of Economics libertarian principles, and now Koch is taking it to a new extreme, desiring to transform Cato into a mere tentacle of the AFP political machine.

Equally ironic: AFP, a key piece of the Tea Party “movement,” skyrocketed in popularity after it skillfully co-opted the original Ron Paul-led grassroots Tea Party movement.

Coming full circle, it could be said that Rothbard has been vindicated after all.

Cato Employees Peeved and Ready to Fight

Cato will not go down without its guns blazing. Many high-ranking employees other than Crane have come out with strong statements against the Koch maneuver. A “Save Cato” Facebook and Twitter account have also been created.

Robert A. Levy, chairman of Cato’s board, said in an interview with the New York Times:

We can’t be perceived as a mouthpiece of special interests. The Cato Institute as we know it would be destroyed.”

We already have major contributors who will say we are not contributing another dollar until we are sure that the Kochs are not calling the shots,” Mr. Levy said. “It is a fund-raising nightmare.”

Gene Healy, a Cato Vice President, stated in an open letter,

“…I can’t begin to understand why Charles and David Koch have chosen a course of action that, if successful, would carelessly, pointlessly, and grievously injure the cause I thought they were fighting for.”

Jonathan Blanks, a Cato Research Assistant, wrote on his blog,

“…the Kochs’ actions here have demonstrated they have no interest in maintaining it. Cato as a name will be irreparably damaged…and they’ll have to start poaching Right-wing shops to fill the vacancies left by the resignations of people who refuse to associate themselves with this naked power grab.”

Julian Sanchez, a Cato Research Fellow, went so far as to write a “Preresignation Letter” on his website, saying that if the Kochtopus wins the lawsuit, it’s “game over” for him at Cato. He stated,

“I hereby tender my pre-resignation from Cato, effective if and when the Kochs take command. I’ll be sad to go, if it comes to that, but sadder to see a proud institution lose its autonomy.”

Stay tuned as the battle rages on.

Steve Horn is the owner of the consultancy Horn Communications & Research Services, which provides public relations, content writing, and investigative research work products to a wide range of nonprofit and for-profit clients across the world. He is an investigative reporter on the climate beat for over a decade and former Research Fellow for DeSmog.

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