In previous posts about the battle for control of the Cato Institute, I’ve noted (Part I) that the “Koch side” is a variety of different actors with different motivations who collectively seem not to apprehend the Cato Institute’s value. Next (Part II), I looked at why the Koch side is fairly the object of the greater scrutiny: their precipitous filing of the original lawsuit.

My premise has been that the Koch side cares. That is, I’ve assumed that they want to preserve Cato and see its role in the libertarian movement continue. Some evidence to undercut that assumption has come around, namely, their filing of a second lawsuit—and now a third! [Update: Mea culpa—there hasn’t been a third lawsuit. Just a new report of the second one. I had assumed the second was filed in state court and thus thought this was distinct. I’m not following the legal issues, obviously, which matter very little.]

The Koch side may be “on tilt.” Lawsuit-happy, win-at-any-cost. We will just have to wait and see.

For the time being, I will continue to assume that the Koch side has the best interests of liberty in mind and explore the dispute from that perspective. I owe the world some discussion of Cato-side miscalculation—of course, there is some—but before I get to that in my next post, I think it’s worth talking about the burden of proof in the Kochs’ campaign to take control of Cato.

Only fringies will deny that the Cato Institute adds some value to the liberty movement. It does. The question—if preservation of liberty is the goal—is how well it will do so in the future. The central substantive issue in the case—there are many side issues—is how Cato will operate in the future.

Now, here’s a quick primer on public campaigns and the difference between the “yes” side and the “no” side.

A “yes” campaign is hard. The moving side—the “yes” side—has to make the case that there is a problem, and it also has to make the case that it offers the best available solution.

A “no” campaign is easy. The “no” side can choose to dispute the existence of the problem, or it can dispute that the “yes” side’s solution is the right one.

In 1994, I worked for a campaign to defeat a single-payer health care initiative, California’s Prop. 186. The most memorable work we did—and the most fun—was a weekly release we faxed out (yes, faxed!) called the “Whopper of the Week.” Our side would take any dimension of the other side’s campaign and pound on it as hard as we could with mocking disdain and a smattering of the facts as we saw them.

By the end of the campaign, the “yes” side was arguing that their losses in battles like this were becoming more narrow each time around. Pathetic. We blasted out an Alice-in-Wonderland-themed Whopper. No, health-care socializers, a loss is not a win.

In the battle for control of Cato, the Kochs are the moving party, the “yes” campaign. But it has done almost none of the work that a “yes” campaign should.

As I wrote previously, they didn’t even make the case that there is a problem:

In terms of communications and public relations, this is kind of jaw-dropping stuff. It looks as though the Koch side laid little or no groundwork for public discussion of their move to take control of Cato. They didn’t register a public complaint about the direction of Cato’s research. They didn’t enlist a single ally or proxy into raising questions about Cato’s management.

And it’s becoming conspicuous with the passage of time that the Koch side isn’t putting forward a solution.

When the Kochs filed their original lawsuit, their public messaging was that it was a narrow contract dispute. “Nothing to see here.”

Then, the Koch messaging aimed at Ed Crane’s personality and management style. A statement from David Koch cited Ed’s rudeness. A pair of unsigned stories on Breitbart.com expanded on that theme a little breathlessly (using a picture of Ed that makes him look mean and fat!). I presume the Kochs helped with the placement of these stories, though I could certainly be wrong.

[ UPDATE: (4/23/12) A third Breitbart story went up today, but is no longer available at its original source. A mirror of the story, “The Crane Chronicles, Part III: Ed Gone Wild,” is available here.]

You only have to look at that “mean and fat” picture of Ed Crane to know he was going to be out the door soon anyway. Hopefully, to a chaise lounge and a mai tai with a little umbrella in it. Ironically, the instant dispute may keep Ed at Cato longer than he would have been if someone just said “thank you” and thrown him a nice going-away party.

Attacking Ed Crane does nothing to make the Kochs’ case for taking over Cato. It is at best one-third of the first half of a “yes” campaign.

What about the other two-thirds of the “problem” statement? Has Cato’s fundraising lagged? Is the scholarship weak? Has Cato failed to strike the right balance between principle and relevance? These are important, substantive questions … that the Koch side has barely raised.

Much less has the Koch side put forward the solutions that it thinks are the right ones. PR statements won’t do for the people who dedicate their every work-day to advancing liberty. What is the Koch vision for Cato? Who do the Kochs think should be at the helm? How can we know that Cato will remain a distinct, non-partisan voice in Washington? It takes something more than words when the devil we know has a 35-year track record.

The evidence of miscalculation I bring to bear in this post is the dog that didn’t bark. By all appearances, the Kochs didn’t prepare for the campaign to take over Cato. A fair inference is that the Kochs aren’t prepared to run it.

I’m fascinated in writing this post that I feel the need to explain to whoever is running this issue for the Kochs what they should have done in the effort to get control of Cato. It’s not because I wish the Koch side success. It’s because the evidence we have indicates fairly strongly that the Koch side is not prepared to run the Cato Institute. What happens if the dog catches the car?

Last week, I posted about the conflict between the Koch brothers and the Cato Institute, threatening to make that post first in a series. Never let it be said that I don’t follow through on my threats, sometimes.

Recapping: I believe the Koch brothers want what’s best for liberty, but the actions of the “Koch side”—an array of actors with differing motivations and strategies—may not be serving that goal. This seems due to miscalculation: the Koch side seems not to recognize how much of the Cato Institute’s value is in its reputational capital, capital which would be despoiled by a Koch takeover. I basically fleshed out an early point of Jonathan Adler’s on the Volokh Conspiracy.

But why is it the Koch side that gets the attention and not the Cato side? That deserves some explanation.

I’m a Cato partisan, but I don’t think it’s just my partisanship that puts the Koch side’s goals and strategies in play. So let me explain why I think the Koch side should get most of the examination—and why that‘s a product of Koch-side miscalculation.

I believe the Koch side is fairly regarded as the moving party in the dispute. I’m still not 100% certain, but when the Kochs filed suit—and remember that link: to a Politico story that went up the next morning—I believe they stood to lose nothing from waiting. A Cato board meeting had been called at which Bill Niskanen’s shares might be transferred to his widow, leaving Koch ownership at 50% contrary to their desires. But the Kochs could have objected and given up no legal rights to contest at a later time what they would argue to be an invalid transfer.

If there’s a corporate lawyer who can clear it up for me in the comments, please do, but I believe the Kochs’ rights under the articles of incorporation or shareholders agreement would not have lapsed upon a transfer of shares to which they objected. If the Kochs had to install new board members, ejecting the old, in order to preserve their rights, tell me what operative document or law required it.

If I’m not wrong, the Kochs are the moving party. The Kochs went to court to require a change from the status quo in terms of ownership (Niskanen’s shares not having been transferred). The Kochs changed the status quo in terms of membership on the Cato board. (Cato had independence from the Kochs as a long-term goal, but preferred the short-term status quo.)

Was the timing of the meeting precipitous? Bob Levy has stated that Cato’s bylaws require a meeting on the first day of December, and that the 2011 meeting had already been postponed 90 days.

Maybe some on the Koch side feel they were goaded into action. One could craft a narrative that the Cato side was ingeniously laying trip-wires for the Kochs and scheduled that meeting as a final provocation. But the truth is probably somewhere closer to “sick of this $&*#—schedule the meeting.”

Life isn’t fair, and having been goaded does not diminish the fact of having acted. Read your Sun-Tzu. Suing made the Kochs the moving party.

As the moving party, the Kochs put their own motivations and actions in issue. But the Koch side had taken no steps ahead of time (none I can discern, anyway) to make Cato’s management or leadership the issue in public debate. Doing so would at least have softened the argument that a Koch takeover would be bad for Cato.

But remember that link I pointed out above? I’ve seen it suggested on the Cato side that the Koch side dished an exclusive to Politico. I don’t know the truth of it, but the story was posted before 10:00 a.m. the day after the Kochs went to court. That’s awfully quick Politico sleuthing, to get the court documents out of Kansas and the story up before the morning coffee break. I don’t know when or how Cato people were served the legal papers, but I doubt they got clean PDFs. I could easily be wrong, but the evidence and inferences I’ve accessed point to someone on the Koch side pushing the lawsuit story.

In terms of communications and public relations, this is kind of jaw-dropping stuff. It looks as though the Koch side laid little or no groundwork for public discussion of their move to take control of Cato. They didn’t register a public complaint about the direction of Cato’s research. They didn’t enlist a single ally or proxy into raising questions about Cato’s management. It’s as if they were unaware they might meet with resistance, though they have apparently met with downright obstinance from Ed Crane, Cato’s president, for some number of years. Then, when they sued, they may even have pushed that story.

Only recently, and very late, have a statement from David Koch and a write-up on Breitbart.com attempted to tar Ed Crane for his management style and his evil-geniosity in the present dispute. We’ll see how that works.

Ed may have miscalculated some and played into the Koch side of the story by talking to Dave Weigel at Slate about some things he has done wrong. He pretty much admitted to rudeness, and he said he gave on off-the-record quote to Jane Mayer, the terms of which she did not respect in her hit-piece on the Kochs. I get what he seems to have been saying—“Nobody will tell the Kochs that ‘market-based management’ isn’t the best thing since sliced bread”—but it’s a whole hell of a mess whether Ed had a good point or not. A sharp quote he got in—“Who the hell is going to take a think tank seriously if it’s controlled by billionaire oil guys?”—barely saves it and makes it a wash in my opinion. (Update: A new Breitbart piece exploits the Weigel interview.)

Except for fringies who will back the Kochs because they are reviled on the left and Cato is not, the story remains fairly well set: The Koch brothers are trying to take over the well-respected Cato Institute and convert it to their own purposes. Unfair? Well, the Koch side impetuously put itself at the center of the story by filing the lawsuit without preparing for public discussion of it. The outcome was fairly well dictated by that framing. This seems like miscalculation of a high order and communications malpractice.

We in Washington, D.C. pay attention to how issues are framed and communicated. It looks like someone on the Koch side didn’t think this thing through and didn’t have a communications plan, so the opening salvo in the Koch/Cato dispute was a Koch-side backfire.

Over just the past 24 hours, there’s been quite a hullabaloo surrounding the Wall Street Journal’s controversial front-page story on Google’s edge caching plan and whether it violates Net neutrality. (See Cord’s post and Bret’s). Lessig calls it a “made-up drama“, David Isenberg says it’s “bogus” and “bullshit,” and Google’s Rick Whitt has said it’s much ado about nothing.

Regardless, here’s the important thing not to overlook about this episode: It is a prime example of the what Tim Lee has referred to as “the fundamental problem of backlash” that ensues whenever there is even a hint of a potential violation of network neutrality (however one defines it). As Tim argued in his excellent Cato paper on Net neutrality, “No widespread manipulation would go unnoticed for very long,” and a “firestorm of controversy would… be unleashed if a major network owner embarked on a systematic campaign of censorship on its network.” (p. 23). Indeed, this (non-)story about Google’s edge-caching plans have spawned an intense “firestorm of controversy” over the past 24 hours and it doesn’t even involve serious network meddling or censorship! I’ve been trying to keep up with all the traffic about this on TechMeme and Google News during that time, but I have given up trying to digest it all. (Take a look at those snapshots I pasted down below to get a feel for the volume we are talking about here).

In that regard, I love this quote from the always-bloodthirsty Tim Karr of the (inappropriately-named) regulatory activist group Free Press:

If Google or any other tech company were secretly violating Net Neutrality, there would be an absolute and cataclysmic backlash from the grassroots and netroots who have made Net Neutrality a signature issue in 21st Century politics. The Internet community would come crashing down on their heads like Minutemen on Benedict Arnold.

Indeed, that’s exactly what we saw today. But it wasn’t just pro-regulatory fanatics like Free Press. The entire tech and business blogoshere and even some of the mainstream media were on top of this. That’s the “fundamental problem of backlash” at work, and with a vengeance.