Last year, [the Kochs] used their shares to place two of their operatives – Kevin Gentry and Nancy Pfotenhauer – on our board against the wishes of every single board member save for David Koch. Last Thursday, they used their shares to force another four new board members on us (the most that their shares would allow at any given meeting); Charles Koch, Ted Olson (hired council for Koch Industries), Preston Marshall (the largest shareholder of Koch Industries save for Charles and David), and Andrew Napolitano (a frequent speaker at Koch-sponsored events). [...]

Why are they forcing out Cato board members, all strong, principled libertarians who have been heavily involved with Cato – financially and organizationally – for years? The answer was given in early November of last year when David Koch, Richard Fink (he of many Koch hats), and Kevin Gentry met with Cato board chairman Bob Levy. They told Bob that they intended to use their board majority to remove Ed Crane from Cato and transform our Institute into an intellectual ammo-shop for American for Prosperity and other allied (presumably, Koch-controlled) organizations. That statement of intent is certainly consistent with what we’ve been hearing from both Kevin Gentry and Nancy Pfotenauer. They’ve frequently complained during their short time on our board that Cato wasn’t doing enough to defeat President Obama in November and that we weren’t working closely enough with grass roots activists like those at AFP.

In its present incarnation, Cato combines a kind of Randian social Darwinism with several less extreme positions on issues such as defense and gay rights. Cato doesn’t just oppose Social Security and Medicare, it believes that they are unconstitutional. Yet Cato is also a genuine ally in the fight for marriage equality and it has at times been the most pacifistic major DC think tank. Among other things, Cato opposed the 1990 Gulf War.

Taylor is clearly concerned that Cato will abandon its commitment to a modest defense policy and potentially even its progressive views on gay rights if the Kochs take over. Koch-sponsored board member Nancy Pfotenauer is a former spokesperson for the McCain campaign who argued in support of both the Iraq War and Don’t Ask/Don’t Tell. Koch front man Kevin Gentry is a “social conservative activist.” The Kochs also tried and failed to install John Hinderaker on the Cato board, a right-wing blogger who supports the Patriot Act and the Iraq War and who once called George W. Bush “[a] man of extraordinary vision and brilliance approaching to genius.” If this is reflective of the Kochs’ vision for Cato, then they want Cato to be nothing more than a mouthpiece for the Republican Party.

If the Kochs truly are committed to transforming America’s top libertarian organization into the Campaign To Defeat The President, however, then Cato will need to moderate many of its more extreme positions on domestic policy. Jerry Taylor’s job as one of Cato’s top climate science deniers will no doubt be safe — as the Koch energy juggernaut is unlikely to cut back on an issue so near and dear to its bottom line — but Cato’s miserly view of the Constitution is wholly inconsistent with an effort to develop a winning electoral agenda for President Obama’s opponent and would have to be abandoned.

Even in 2010, when President Obama’s popularity was at its lowest ebb and America’s economic woes seemed to stretch on for years to come, candidates like Joe Miller (R-AK), Sharron Angle (R-NV), John Raese (R-WV) and Ken Buck (R-CO) — all of whom share the Cato view of the Constitution — were creamed at the polls, each of them significantly underperforming Republicans with less radical stances on the Constitution. Now, by contrast, President Obama’s polls are experiencing a sharp upturn, and our economy is likely to experience meaningful growth in 2012 absent an economic disaster in Europe. If the Cato constitutional vision was toxic in 2010, it will be downright deadly in 2012.

The top funders of anti-science disinformation in this country, the Koch brothers, are fighting in court to seize control of the Cato Institute. The Washington Post’s Allen McDuffee broke the amazing story this morning. Politico further reports:

Charles G. Koch and David H. Koch, the deep-pocketed conservative activists, launched a court fight yesterday over control of the Cato Institute, one of the nation’s best-known free-market think tanks. The Washington-based public-policy group was founded in 1974 as the Charles Koch Foundation. The name was changed to Cato in 1976, with the Koch brothers as longstanding contributors. The group had four shareholders until last year: Charles Koch; David Koch; Edward H. Crane III, Cato’s president; and William A. Niskanen, who died in October.

You can read the Kochs civil filing here.

Koch officials tell Politico that the brothers think the shareholder agreement is clear that there should now only be three shareholders, while Crane thinks Niskanen’s 25-percent control should go to his widow, Kathryn Washburn. “We’ve proposed a stand-still agreement and third-party mediation,” said Wes Edwards, deputy general counsel of Koch Companies Public Sector LLC. “We feel that we’ve been refused. … We haven’t alleged any wrongdoing or sought any damages. This is not about money. We view this as a matter of shareholder rights.”

Let’s remember who the Kochs are — billionaire brothers who have done more to spread anti-science, pro-pollution disinformation than any other people on the planet:

• A 2010 report found Koch Industries now outspends Exxon Mobil on climate and clean energy disinformation
• We have video proof David Koch pulls the strings of the Tea Party extremists
• We know Koch-fueled Americans for Prosperity takes credit for bullying GOP lawmakers into climate denial

Of course, the Cato Institute has been a bastion of anti-science, pro-pollution disinformation for a long time, with research fellows like Patrick Michaels, who is a serial deleter of inconvenient data. This power grab would just make it official that Cato is a wholly-owned subsidiary of Koch Industries.

Related Posts:

• From promoting acid rain to climate denial — over 20 years of David Koch’s polluter front groups
• New Yorker exposes Koch brothers along with their greenwashing and whitewashing Smithsonian exhibit

An African American man lynched from a tree, 1925 (wikimedia)

The Cato Institute’s Ilya Shapiro opines that Sonia Sotomayor’s selection “represents the very worst of racial politics” as “she is not a leading light of the judiciary and would not have been considered had she not been a Hispanic woman.”

I think this is a revealing moment. Sotomayor has the normal qualifications for a Supreme Court justice—she shares the president’s political views, she lacks a record of inflammatory legal writing that would prevent confirmation, the has experience as an appellate judge, she went to fancy schools. Insofar as her background was a consideration in selecting her, which it undoubtedly was, this is also totally normal. Presidents have always sought various kinds of regional, religious, and ethnic balance in the courts. Much was made out of Samuel Alito’s Italian American ancestry, and obviously Thurgood Marshall was initially put on the court in part to make a symbolic statement about civil rights and Clarence Thomas was appointed to replace him in part out of a desire to fill Marshall’s old seat with an African-American. There was a tradition of a “Jewish seat” at various times, etc.

But even more revealing is that even if Sotomayor’s selection were somehow out of the ordinary, the idea that picking one appellate judge rather than another for a promotion could possibly be the very worst of racial politics is ludicrous. At its very worst, racial politics in the United States involved the systematic disenfranchisement of millions of people, their subjection to pervasive social and economic discrimination, and the maintenance of the apartheid system via the threat and reality of state-sponsored terrorist violence. At its very worst, racial politics in the United States involved persistent filibustering to prevent the federal government from doing anything to curb widespread lynching. At its very worst, racial politics in the United States involved a violent rebellion that sought to dismantle the country in the name of chattel slavery and led to the deaths of hundreds of thousands of people.

But despite that long history, broad swathes of the American right remain persistently and willfully blind to the problem of discrimination against non-whites. Their view is, essentially, that racism emerged as a problem sometime in the year 1967 and that the problem consists of white people being unduly burdened by efforts to remediate something or other.

Cairo Traffic Jam (cc photo by tronics)

Cato’s Daniel Mitchell reaches a truly puzzling conclusion about the source of a traffic jam in Washington, DC. In a kind of public choice analysis gone mad, he apparently thinks that the government seeks to maximize profits, whereas private corporations are wholly benevolent in their motives:

But when I made the right turn, I discovered why traffic was so snarled on 15th Street. There was a cop standing in the middle of Constitution Avenue waiting to snare drivers turning right from the center lane. Along with many other drivers that day, I got caught and lost another 10 minutes waiting for a ticket. But the $25 ticket is not what got me so irritated. It was the fact that thousands of commuters had to deal with horrible traffic (not only because people like me suddenly got stopped and traffic behind us also had to stop, but also because people in the right-turn-only lane also could not move with the cop blocking traffic) because some bureaucrat from the National Park Police found an easy way to fill his ticket quota.

If the private sector operated the roads (permit me to engage in some libertarian fantasizing), this would never happen. Because of a desire to please drivers (customers), the folks in charge of the road would have made right turns an option from the center lane. But when government sees a bottleneck, the reaction of politicians and bureaucrats is to figure out how to fleece people for more money — not to make travel safer and quicker.

This is ludicrous. The private sector seeks to maximize profits. If a private sector firm owned the streets of Washington, DC it would exercise its monopoly power “to fleece people for more money.” This is pretty basic. That’s what private firms are there for.

The larger issue is that whether publicly owned or privately owned, the smart thing to do with crowded roads is to charge a fee for the right to drive on them. That would generate revenue, and I wouldn’t call it “fleecing” people since it would result in reduced congestion, a smoother flow of traffic, and a more pleasant experience for the citizens slash paying customers. Of course at the moment we have very little congestion pricing in the United States because of political opposition. And since private road owners would want to engage in congestion pricing, the exact same political impediments stand between sensible public management of roads and their privatization. But if the road was publicly managed, and featured a congestion charge, then the revenue could be used to reduce the overall tax burden or else to increase the quality of the alternative forms of transportation offered.

Whether or not you like the idea of a Canadian-style single-payer health care system, there’s no question that we already have such a system here in the United States. The Canadians call their system “Medicare” and it’s open to all citizens. We call our version of Medicare “Medicare” and it’s open to all citizens over the age of 65. In Medicare, like in Medicare, medical services are provided by the private sector but the costs are substantially born by a government-run insurance program. Medicare in Canada has problems, but it’s very popular and Canadians show little sign of wanting it to change. Medicare in the United States also has problems, but it’s also very popular and senior citizens show little sign of wanting it to change. Older Americans are also generally skeptical of Barack Obama and thus plagued by anxiety that he’s going to somehow curtail their access to generous government-provided health insurance.

Alternatively, you could act like the Cato Institute’s Doug Bandow and treat AARP members’ skepticism as a sign of incipient libertarianism:

In Dallas, at least, the AARP staff found it tough going attempting to explain to the organization’s members why the elderly would be better off with Obama-like “reform.” These people obviously were having trouble with the line, “I’m from the government and I’m here to help you.” And they were quite vocal in stating their concerns. But they were acting well within the American political tradition, which seems to be what has spooked advocates of a government medical takeover speaking breathlessly of “mobs”–presumably like the one in Dallas–opposing “reform.”

I’m sure they did have trouble explaining because there are people like Bandow out there deliberately confusing the situation. But, again, senior citizens are already experiencing government-run health insurance. And they like it. They love it! They’re nervous that it might change. And their fears are being stoked by a right-wing campaign of deception. But they’re certainly not clamoring for a Cato-style agenda in which the government stops giving them health insurance.

Well, Roger Pilon slams her as “the most radical of all the frequently mentioned candidates before him.” In the course of his condemnation he mentions her ruling in just one case, Ricci, and makes no effort to mount an argument on the merits against her position. In a second Cato post on Sotomayor, Ilya Shapiro slams her as an “Identity Politics over Merit” pick. In the course of his condemnation he mentions her ruling in just one case, Ricci, and makes no effort to mount an argument on the merits against her position.

Thank God there’s a think tank looking out for the white men of the world.

So what will become of us all? Well, it’s pretty obvious. At this same time, household savings rates in the United States have gone way up. On one level, that’s pushing us further into recession. On another level, that’s necessary because household savings have been way too low. Still, Bandow is very concerned:

It’s difficult to accurately predict future demand. But U.S. borrowing will be truly staggering in coming years. If international demand is down, the Treasury will have to rely on American investors. Whether the domestic market can easily absorb so much debt — and particularly, to what extent federal debt offerings will crowd out private investment during what we hope will be a recovery — are questions that our spendthrift leaders have not bothered trying to answer.

These aren’t question they’ve “bothered trying to answer” because the future is inherently unpredictable and there’s no need to try to guess the answer. We have no way of knowing whether or not hypothetical future deficits will crowd out hypothetical future private investment at some hypothetical future point. But we do have a good way of telling, at any given time, whether or not this is what’s happening. You can tell because because interest rates go up. It was high interest rates that led the Clinton economic team to conclude in 1993 that it was more important to reduce the deficit, thus decreasing crowding-out, than it was to juice demand through fiscal expansion. These days you have a similar group of personnel in place but a different policy because they’re facing a different situation. Interest rates are incredibly low—nothing is being crowded out.

Meanwhile, the administration has outlined a longer-term plan to bring the deficit to sustainable levels. Those projections might prove wrong. Or that path might prove inadequate. In which case we’ll have to change policies. But there’s no reason to avoid doing what’s necessary for growth now just because in the future we might need to do something different. And it’s worth keeping in mind that a years-long recession would devastate our long-term budgetary picture anyway so it’s not as if there’s a huge short-term tradeoff.

The Cato Institute usually doesn’t mess around with the way-outside-the-mainstream elements of the libertarian worldview (see Chris Hayes for some of this) and certainly not with the elements of hard-core anti-statism that the business community would find very distressing. But with the economy in crisis, a lot of people are feeling somewhat ideologically discombobulated (myself included, at times) so I suppose it’s not shocking to see some loopy ideas moving closer to the mainstream. At the same time, there’s another trend that Brad DeLong’s been calling attention to, namely the fact that the present crisis has reached a level where even Milton Friedman’s ideas suggest that we should be doing stimulus. Brad, with touching naiveté, seems to think that that means that people normally inclined to admire Friedman should start agreeing that stimulus is a good idea. What’s happening, in fact, is that people normally inclined to admire Friedman are embracing fringy “Austrian” ideas (or Ayn Rand books) since the point of admiring Friedman is to reach the conclusion that government intervention is always economically ruinous.

All of which is by way of introducing the fact that Cato Institute Executive Vice President David Boaz apparently thinks we should adopt the gold standard and abandon “fiat money.” Of course, contractionary monetary policy amidst a sharp worldwide recession would doom us to years and years of misery. And during the Great Depression, nations’ ability to recover was strongly linked to their willingness to abandon gold.

Paul Krugman’s old post on “The Goldbug Variations” is always worth re-reading.

Cato Institute senior fellow William Poole offers us the latest version of the new right-wing fad for 1920s-vintage economic thinking:

Federal policy is damaging the economy’s prospects. It fails to provide the needed tax incentives for investment in factories and equipment, incentives that were central to efforts to revive the economy during the Kennedy-Johnson era and under Ronald Reagan. But government spending can’t lead the way to sustained recovery, because its stimulating effect will be offset by anticipated higher taxes and the need to finance the deficit.

One could imagine a world populated by beings who respond to government deficit spending by decreasing their own spending on a one-to-one basis in order to offset anticipated higher future taxes. Even then, it’s not entirely clear that you would get zero stimulative effect, but certainly it would be hard to conduct fiscal expansion in a planet populated by such beings. At the same time, it’s somewhat difficult to understand how these supremely calculating beings with no rate of time preference would ever manage to get involved in speculative bubbles or large debts in the first place. And it’s truly mysterious why this effect would exist during deficits caused by increased spending, but not by deficits caused by decreased revenues. And last of all, I find it baffling that a lot of people on the right persist in talking as if the stimulus plan was 100 percent spending and zero percent taxes when it was, in fact, almost 40 percent tax cuts—one of the biggest tax cuts ever. Perhaps if Obama had contrived to concentrate all the benefits at the very top of the income distribution he could get some credit as a tax cutter.

Paul Krugman offers some of the academic background on how we came to this point.

Heather makes this point straight out of the gate. At this point, the anchor seems to agree that her intro was totally off-base, but it makes you wonder why she said it in the first place. Boaz, meanwhile, agrees that the situation doesn’t resemble the situation Reagan faced, but then just says we need Reaganite policies anyway! Which I suppose is a pretty good encapsulation of libertarianism’s one-note approach to public policy.

But the fact remains that these are different situations and the differences are important. We shouldn’t just emulate what FDR did. But that’s because some of the things FDR did were bad ideas. What we need is to do something similar to what we would advise FDR to do if we had a time machine. To model our approach on what worked in Depression-era policymaking (not just in the U.S., but abroad) and that avoids what didn’t work or what was counterproductive. The Reagan era is just irrelevant. Reagan did some good things, like remaining relatively steadfast in the face of the short-term pain caused by Volcker’s interest rate policies. And he did a lot of bad things. But you don’t want to emulate either of those things because the situation is different.

Nowhere in the works of Adam Smith or John Stuart Mill, for example, is there anything about how if science indicates that certain form of human activity that was long thought to be harmless to others is, in fact, doing massive, hard-to-reverse damage to the long-term interests of billions of people that the correct response is to retreat into dogma and ignorance. And yet here’s Cato Institute Executive Vice President David Boaz teaming up with Washington Post columnist George Will to push the idea that there was a 1970s-era scientific consensus that we were facing dangerous “global cooling” and that, therefore, we shouldn’t take today’s warnings about global warming seriously.

The fact of the matter is that there was a bunch of media hype in the 1970s about a cooling trend. Now as probably know, the media sometimes hypes up bogus trend stories with no real basis in evidence. Neither Will nor Boaz are small children or lobotomy victims, so presumably they understand this, too. And that’s exactly what was happening in the 70s:

The supposed “global cooling” consensus among scientists in the 1970s — frequently offered by global-warming skeptics as proof that climatologists can’t make up their minds — is a myth, according to a survey of the scientific literature of the era.

The ’70s was an unusually cold decade. Newsweek, Time, The New York Times and National Geographic published articles at the time speculating on the causes of the unusual cold and about the possibility of a new ice age.

But Thomas Peterson of the National Climatic Data Center surveyed dozens of peer-reviewed scientific articles from 1965 to 1979 and found that only seven supported global cooling, while 44 predicted warming. Peterson says 20 others were neutral in their assessments of climate trends.

Yes, that’s right, even in the 60s and 70s the bulk of scientific concern was about warming. The evidence was, at that time, tenuous. But it’s grown steadily in every passing decade. This is not media hype. It’s real science. It’s possible, of course, that the vast majority of competent scientists are all part of a vast conspiracy to defraud the public into believing that human activity is causing the planet to warm. But it’s hard to see why that would happen. It is, however, easy to see why polluting industries and their hirelings in the think tank world would want to pretend that this is what’s happening.

A wise adviser to President John Kennedy, Arthur Okun of Yale, devised the “misery index” to gauge the pain of economic crisis – a measure that simply adds together the unemployment rate and the inflation rate. It hit 22 percent in June 1980, during an inflationary recession that preceded the Fed’s disinflationary squeeze of 1981-82. The misery index was nearly as bad in January 1975, at 19.9 percent.

Assuming inflation was close to zero this January, the misery index would have been roughly the same as the unemployment rate, or 7.6 percent. By this standard, we have a very long way to go before the economy feels nearly as miserable as it did in 1975 or 1980.

John Judis observes that this is a strange argument to make against a fiscal stimulus measure whose purpose is to avoid a deflationary spiral.

To go stronger, one question a non-crackpot asks himself before proclaiming the economic situation not so bad is “does my method carry the implication that the Great Depression was only a mild downturn?” And, indeed, Reynolds’ method does have this implication. During the Depression, the unemployment rate was extremely high but the inflation rate was strongly negative leading to “misery index” measures that are a lot lower than the “stagflation” of the late-1970s:

In other words, according to Reynolds not only are today’s problems no Great Depression, but the Depression itself paled in comparison to the horrors of the Ford years. But surely nobody—not even Reynolds—is dumb enough to think that economic conditions were worse in 1975 and 1980 than they were in 1932. Right?