Kochtopus Cato Institute Power Grab: A Historical Perspective

Read time: 8 mins

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.

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The expose of the Koch brothers’ rise to economic & political power would make a great FRONTLINE special.

or HBO series – Episode 13:  CATO Awakens

I’ve got a bit of news for you;

99% of Americans have never heard of the Koch Brothers!

They are only used as whipping posts on leftist Green blogs such as this one. Otherwise there would have been a Frontline special years ago.

When Desmog has no one else to hate on, as when Heartland-gate turned into the unwanted “Fakegate” (or Gleickgate), they turn to their old favorites the Koch bros.


Perhaps disinformed business-as-usual deniers like yourself have never heard of mega-billionaires Charles G. Koch, Chairman & CEO, & David H. Koch, Exec VP, both principal owners of privately-held Wichita-based mega-billion-dollar petro-chemical-mining international conglomerate Koch Industries & its subsidiary legions, & William I. “Bill” Koch who runs privately-held West Palm Beach-based multi-billion-dollar carbon-intensive holding company Oxbow Group, but rest assured we surely have for some years now. 

And thanks to timely exposees & broad coverage by DeSmogBlog, Forbes, Bloomberg, New York Times, Washington Post, LATimes, ABCNews, MSNBC, & many, many more news outlets across this anthropogenically warming planet, you can bet your last teabagger talking point that more & more informed & concerned taxpaying citizens are already learning more & more about how these anti-democratic mega-billionaire oligarchs are screwing with the constitutional rights & liberties of we the people.

btw, were you aware that Papa Fred C. Koch was a founding member of the John Birch Society?


And if the adoring masses on Facebook have their way, they could make the Koch Brothers more famous than Jesus Christ or the Beatles.






And if you’d paid any attention to recent American history, you’d know that David Koch ran against Ronald Reagan in 1980 on a Libertarian platform to abolish the FBI, CIA, SEC, DOE, Social Security, all personal & corporate income taxes & to legalize prostitution, drugs, & suicide; what William F. Buckley, Jr. called Anarcho-Totalitarianism. The Koch brothers spent millions of dollars for 1% of the vote.

Since then, the Kochs have poured over a $100 million into ultra-conservative non-profits, etc., devolving from libertarianism into corporatism, confusing money for freedom, & promoting a radical social engineering philosophy.

“Public tax records show that between 1998 and 2008 the Charles G. Koch Charitable Foundation spent more than forty-eight million dollars. The Claude R. Lambe Charitable Foundation, which is controlled by Charles Koch and his wife, along with two company employees and an accountant, spent more than twenty-eight million. The David H. Koch Charitable Foundation spent more than a hundred and twenty million. Meanwhile, since 1998 Koch Industries has spent more than fifty million dollars on lobbying. Separately, the company’s political-action committee, KochPAC, has donated some eight million dollars to political campaigns, more than eighty per cent of it to Republicans. So far in 2010, Koch Industries leads all other energy companies in political contributions, as it has since 2006.”

With their Americans for Prosperity coming out Tea Party & recent exposés by DeSmogBlog & others, the Koch brothers are now under the public scrutiny of American taxpayers & the IRS, as well they should be.  After all, this is not the Soviet Union.


That’s what the Koch’s like to say about their company. Their enterprise is private - not accountable to public shareholders or the SEC. They do their best to keep a low profile, yet have been politically active behind the scenes until AFP.

When the more-recent Tea Party came on the scene (the one started from a Chicago talk radio show, not Ron Paul’s former, short-lived movement), it seems that Americans for Prosperity swept in to “support” them. Instead, it took the reins and started driving hard; hard right. AFP is a Koch group that whips people up into supporting policies that are good for Koch Industries and hating anything that would be less than profitable for Koch Industries.

What is interesting with the Cato development is that it shows that there is some daylight between the Koch-AFP-Tea-Party-Patriots-etc. show and the libertarian movement (a la Ron Paul now, Lyndon LaRouche previously). And the Kochs are in the process of showing that they really are just a new generation of aspiring oligarchs and not truly freedom-loving libertarians. This could be the crack that allows some of them to wake up and see that protecting your planet is not a communist plot (that’s a J. Birch Society standard retort).

The science is the science. If you add a significant amount of greenhouse gases to the climate system, you will get a more energetic climate. The Earth takes no notice of your political affiliation.

How humanity responds can be libertarian, conservative, progressive, liberal, scientific, or insert your favorite adjective - but it will be whatever solution can gain enough support based on the values it speaks to across the political spectrum.

Being green does not make one a “watermelon.”

99% of Americans have never heard of the Koch Brothers!

They are only used as whipping posts on leftist Green blogs such as this one.”

I imagine that they don’t know who Phil Jones is either. But that doesnt stop him being an anathema to the denialosphere and right wing blogs.


Good point. But that’s why ‘we’ are around, to inform the uninformed, right?  ;)

Neat to see what goes on behind the scenes in these think tanks. It looks like the origional Cato institue was more interested in throwing out ideas rather than to push a corporate Koch Adgenda. It is an unfortunate reality that money and power corrupts so often.

Writer and journalist James Delingpole has an encouraging story on The Commentator about a recent guest spot he did on LBC radio in London. It wasn’t so much what he said but what the callers in had to say;


“Something extraordinary is happening in the great Climate Wars. I had a taste of it just the other day on an LBC talk show. The producer had only booked me in for a ten-minute slot, in case the listeners weren’t interested in my boring new book about that tediously hackneyed subject Man Made Global Warming. But the switchboards were jammed and the station ended up keeping me in for a full hour to reply to all the calls.

There was one big problem though: “We can hardly find ANYONE who disagrees with you,” whispered the show’s host, Julia Hartley-Brewer. This was true. By the end, things had got so desperate that I found myself accidentally picking fights with callers who were on my side. An easy mistake to make for someone on my (sceptical) side of the debate: we card-carrying Satanic “deniers” are so used to being vilified at every turn it really feels kind of weird suddenly to be in tune with the popular mood.”

Denialism is rampant these days. The actions of Gleick have only helped to fan the flames. However it should be noted that the other 99% of scientists conduct there affairs hiesntly and ethically.

At some point we will have to take action to address this issue. It will be easier now than later. I don’t understand why some simple activities like placing a price on carbon, reducing personal transport and removing the Mcmansions from new construction can’t occur.

anti-enlightenmentism is on the march once again.

… anti-intellectualism & anti-education.

… anti-gay, anti-women.

Republican’s have lost a lot of ground with women with their latest spate of anti-abortion, anti birth-control, and lets not forget Rush’s ‘slut’ comment.

The CBC ‘voice’ had a great response regarding gay marriage…

“Let them get married. Then they’ll stop having sex.”

Fred C. Koch, who made the initial family fortune building refineries for Stalin’s Soviet Union, appears to have been a paranoid racist.

“In 1958, Fred Koch became one of the original members of the John Birch Society, the arch-conservative group known, in part, for a highly skeptical view of governance and for spreading fears of a Communist takeover. Members considered President Dwight D. Eisenhower to be a Communist agent. In a self-published broadside, Koch claimed that “the Communists have infiltrated both the Democrat and Republican Parties.” He wrote admiringly of Benito Mussolini’s suppression of Communists in Italy, and disparagingly of the American civil-rights movement. “The colored man looms large in the Communist plan to take over America,” he warned. Welfare was a secret plot to attract rural blacks to cities, where they would foment “a vicious race war.” In a 1963 speech that prefigures the Tea Party’s talk of a secret socialist plot, Koch predicted that Communists would “infiltrate the highest offices of government in the U.S. until the President is a Communist, unknown to the rest of us.”

Could Papa Fred Koch’s farmboy paranoid racism be the roots of the Koch brothers’ covert war to remove a blackman from the White House at all costs?

Covert Operations: The billionaire brothers who are waging a war against Obama, Jane Mayer, August 30, 2010


“In the late 1920s there was at least one country in the world where oil was not bought and sold, in the usual sense–the Soviet Union. The Soviets had been trying to take advantage of their immense oil reserves since gaining power in 1917, and under Joseph Stalin the drive to industrial efficiency was pursued with ruthless speed but without the benefit of Western technology. Fred Koch offered to build oil refineries in the Soviet Union that would be more efficient than those in the West. The young engineer’s ideas were welcomed, and he was awarded a large contract to coincide with Stalin’s first five-year plan, beginning in 1929. The contract called for construction of 15 refineries for an initial fee of $5 million, from which Koch and his partner, L. E. Winkler, are said to have netted a $500,000 profit. Koch’s work in the Soviet Union necessitated sojourns in that country, offering the Texas farmboy an intimate look at the Soviet system while providing the cash he would later need in building his U.S. empire.”

Funding Universe: Koch Industries, Inc.


I support gay marriage… as long as both chicks are hot.

But seriously… I haven’t heard anyone on the Right offer to remove marriage benefits from being enshrined in our laws.  I mean.. wouldn’t that be the Libertarian ideal?  Furthermore marriage benefits were the driving factor behind gay marriage.

The CATO power grab appears still another step by the Koch brothers to consolidate their power & move America towards oligarchic rule, akin to the days of the robber barons.

“The Acemoglu-Robinson view is much more nuanced: states are often captured by powerful elites and very much used as a tool of oppression, but it is also possible for liberal democracies to develop in which the government not only helps people but also behaves in a way that is conducive to widely shared economic prosperity.”

“In this context, the Koch brothers are an important topic of discussion — or cause for concern. 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.”

The Koch Brothers, the Cato Institute and Why Nations Fail


So why would Charles & David Koch want to take hostile control of CATO?

“In a meeting with Robert Levy, the chairman of Cato’s board of directors, they expressed their intention to remake Cato into a party organ that would aid their campaign to unseat President Barack Obama. To do so, however, they need control of the board. They intend to get it by suing the widow of William Niskanen, a recently deceased board member, for control of Niskanen’s shares.”


Or militaristic big government, neocon style.

“Given that some of the people the Koch brothers want to put on CATO’s board are firmly in the neocon camp, one doesn’t have to be a rocket scientist to see that a Koch-controlled CATO Institute is one big win for unbridled militarism and one big setback for those advocating small government and individual liberty.”


I just find it funny how Hippocratic it is that domination and control is considered Libertarian.  The Koches want less government in our lives yet by the same token move to alter laws around gay marriage.

They want to define and control what we think and how we behave.  It doesn’t quite sound like they believe what they are selling.

Doe’s Anyone know if there is investigation going on with Koch and Iran? Has there been anything since the bloomberg article?


“A Bloomberg Markets investigation has found that Koch Industries – in addition to being involved in improper payments to win business in Africa, India and the Middle East – has sold millions of dollars of petrochemical equipment to Iran, a country the U.S. identifies as a sponsor of global terrorism.

“Internal company documents show that the company made those sales through foreign subsidiaries, thwarting a U.S. trade ban. Koch Industries units have also rigged prices with competitors, lied to regulators and repeatedly run afoul of environmental regulations, resulting in five criminal convictions since 1999 in the U.S. and Canada.

“From 1999 through 2003, Koch Industries was assessed more than $400 million in fines, penalties and judgments. In December 1999, a civil jury found that Koch Industries had taken oil it didn’t pay for from federal land by mismeasuring the amount of crude it was extracting. Koch paid a $25 million settlement to the U.S.

“Phil Dubose, a Koch employee who testified against the company said he and his colleagues were shown by their managers how to steal and cheat – using techniques they called the Koch Method.”

Koch Brothers Flout Law Getting Richer With Secret Iran Sales


Thanks for the response:

I have been trying to dig deeper into the Koch Iran connection.  I’m going to try to get in contact with the journalist who wrote the article.  This new turn of events could create another avenue to provoke the Koch Brothers.  Could we put Koch Industries under federal investigation if they broke U.S. trade bans?  Is it even worth pursuing?   

FWIW, according to the Bloomberg article, Koch’s director of corporate communications claims that, at the time, U.S. law allowed foreign subsidiaries of U.S. multinationals to trade with sanctioned Iran under certain conditions, &, since then, Koch has stopped all its units from trading with Iran

“Doe’s Anyone know if there is investigation going on with Koch and Iran?”

IMO, there is not enough coverage on oil in regards to Iran. Whether it be the Koch bribes and secret deals with Iran as uncovered in the Bloomberg article or the TAPI  (Turkmenistan, Afghanistan, Pakistan, India) VS IPI (Iran, Pakistan, India) pipelines. It seems there is very little coverage of this. Even desmog wants to stay away from it.

Yet US Gov is actively lobbying a maneuvering on behalf of Unocal (Chevron) & Exxon to secure the TAPI pipeline:

“Mr Munter said the US assistance in the energy sector did not mean adding megawatts to the grid as reforms were needed badly in the sector. “We are looking for a long-term business and private partnership.””


We do not favour the Pakistan-Iran gas pipeline project but consider the Turkmenistan pipeline via Afghanistan as a better project.”


Chevron & Exxon vying for contracts:




“Unocal has been very involved in the Afghanistan, Pakistan and Turkmenistan part of the world. These regions are central to a trans-Afghan pipeline which would grant broad economic and military power throughout the Eurasian landmass. Military decisions in the Balkans by NATO forces mirrored the same concerns of control for these vital areas.

Before Unocal was able to make their first bid in the region, Bridas, an Argentinian oil company headed by an ambitious Carlos Bulgheroni struck a deal with the Rabbani government which gave him a thirty year agreement on an 875 mile pipeline. Bulgheroni looked for partners, among them Unocal, and was turned down. Teaming up with Saudi Arabia’s Delta Oil,Russia’s Gazprom, and Turkmenistan’s state owned Turkmenrozgas, Unocal made their own deals with local leaders in the area.

This led to Turkmenistan blocking exports from some of Bridas’ oil fields, which led to three lawsuits filed with the International Chamber of Commerce that Bridas eventually won. They lost the suit against Unocal in Texas, in which they charged them with civil conspiracy and tortuous interference. Unocal was awarded a 918 mile pipeline in October of 1995. The Taliban overthrew the Rabbani government with help from the CIA and Pakistan’s ISI. This negated whatever thirty year contract Bulgheroni had with Afghanistan which led him to fight back the only way left. Deal with the Taliban, and their dealings went back and forth until two U.S. embassis were bombed in Africa.

President William J. Clinton initiated a freeze on business deals with the Afghani government as it was, and this put a halt to the pipeline. After 9/11, and the subsequent war there, new roads have miraculously opened up for work on huge $3.2 billion deal signed in December of 2002 between Pakistan, Turkmenistan and Afghanistan. The new president, Hamid Karzai, has been associated with Unocal, but whether he was ever on their payroll has been denied by both sides”

Now hard hard would it have been to stitch up the TAPI pipeline deal for US interests if they had not invaded Afghanistan? Virtually impossible. Meaning the IPI pipeline could be the most dominant and Pakistan & India would be so reliant on Iran for gas, that US sanctions would equate to not only an attack on Iran, but on India & Pakistan also.

India is now caught in the middle with Pakistan now going ahead with the IPI pipeline & is asking India to ignore US pressure not to do so.