The Koch Brothers are attempting to take over the Cato Institute, and its head, and much of the staff, are appalled.

The law seems straightforward, the Koch Brothers own at least half the shares in the institute, so they get to call the shots, which seems to be to turn it into a partisan think tank, as opposed to a libertarian sand box.

The response of the principals at Cato has been a remarkable exercise in self abnegation:

No. The irony here is that the nation’s preeminent libertarians—who ought to be exquisitely attentive to freedom of contract, institutional design, and observing the letter of the law—couldn’t get their rights right. They built this Streeling of libertarian thought, with its $20+ million annual budget and world-wide reputation, on a shareholding structure that is either actually or nearly under the control of people who do not share many of their values and have not for decades. The entire enterprise may well have been for years only one death away from Koch domination. If so many libertarians are now so worried about a Koch takeover, one has to ask, why have they spent so many years building a brand with an unshielded thermal exhaust port?

I must say, a week ago I would have said that I would have been willing to pay serious money to hear Ed Crane and his posse at the Cato Institute say something like:

Shorter Ed Crane: Our collective societal well-being is advanced when restrictions are put on the ability of property owners to do what they wish with their property. The Cato Institute itself, for example, is in a legal sense the private property of its shareholders. But its shareholders do not have the moral right to do what they wish with it. For the Cato Institute is not a mere legal instrumentality that three shareholders control and direct. Instead, what the Cato Institute is is a social trust, a Great Compact, a contract that makes a great chain between all libertarians dead, living, and yet unborn, in which all those committed to the collective intellectual project of libertarianism are stakeholders who have moral rights over the Cato Institute that completely trump the property rights that so-called “owners” of The Cato Institute may claim to have.

For such an argument would seem to have the potential for wider applicability…

While the schadenfreude is nice, James Grimmelmann observes that this entire dispute knocks out one of the primary philosophical underpinnings of Libertarian thought, the idea that contracts executed between people of reasonable intellect can handle such matters:

The answers are obvious, and completely understandable. Because few people knew about Cato’s unusual share-based ownership structure. Because those few who knew didn’t think the Kochs’ power play was a serious possibility. Because Cato was there, and so it made sense as a coordination point, whatever its weaknesses. Because each individual project made sense, regardless of the long term. Because they never even thought to ask. All completely human, all quite arguably reasonable, and all things any of us would likely have done in the same position. And yet the end result could well be to deliver one of the world’s most recognizably libertarian institutions into the hands of men who would use it for other purposes.

I could not tell you how many times I’ve encountered libertarian arguments about law that assume that individuals can and ought to use contracts to protect themselves against just this sort of contingency. Don’t worry about users clicking “I agree” to overreaching terms of service; if they truly cared about the terms, they’d negotiate for better ones. Don’t worry about people who refuse to buy health insurance; they’re making a rational choice for themselves. Don’t worry about minority shareholders, don’t worry about franchisees, don’t worry about all the other groups that find themselves on the wrong end of a bargain that always seems to tip against them in the long run—if they wanted better protections, they could and should have negotiated for them up front.

Except they don’t. They never do. And really. If the uber-libertarians of the Cato institute can’t watch out for themselves, what hope is there for the rest of us?

And so libertarianism is shown not to be just morally lacking, intellectually as well.

If the best libertarians in the world can get taken down like this, then the idea that contracts are a replacement for government is a lie.

But this is still some really yummy schadenfreude.

Of course, if the Koch’s win, now that the spat has gone public, much of the credibility of the organization will be destroyed in the process.

Heh.