We’ve mentioned the struggle for control of the Cato Institute a few times around here. New York Law School Associate Professor James Grimmelmann notes that libertarian theory has nothing to do with how human beings actually behave:
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?
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?