Why Letting the Koch Brothers Create a “Center for Free Enterprise” at Public University WCU is a Bad Idea

By run75441. Originally published at Angry Bear

About a week ago, I wrote about the events leading up to the dilemma faced by Western Carolina University faculty and administration with being offered a $2 million grant from a Koch Brothers foundation. What I did not mention is the recent domination of the North Carolina university system by Republican minded-administrators such as Margaret Spellings former President Bush Secretary of Education adding to the complexity.

Mark Jamison continues with the depiction of the dilemma Western Carolina University faces and provides the argument as to why the faculty and administration should reject this Koch Brothers donation. This article can also be found in the “Smoky Mountain News” as a guest column by Mark.

Mark Jamison

The proposed $2 million gift from the Charles Koch Foundation to WCU for the establishment of a Center of Free Enterprise raises several questions.

• Are gifts like these from private donors appropriate at public institutions? Do they entail a certain quid pro quo regardless of protocols to ensure transparency?

• Are certain types of gifts within certain academic disciplines different in their impact on the mission and perception of the university?

• In an era when we have seen the highest concentrations of wealth in more than a hundred years and when there exists a growing concern about the impact of money on the accountability and accessibility of political institutions do these sorts of gifts further a trend away from democratic institutions and public goods? Is this trend health? Unhealthy?

In 1971 Lewis Powell, a corporate lawyer and member of eleven corporate boards, wrote a memo to the Director of the U.S. Chamber of Commerce. Two months after he submitted the memo, Powell was nominated to the Supreme Court. The memo was essentially a diatribe against American Liberalism and a call for action from American corporate and business interests. It recommended a concerted effort to develop an intellectual infrastructure that would support the interests of American corporatism.

The Powell memo has often been credited as the birthing document of the web of think tanks, associations, and groups that advance conservative thought in this country. Another consequence of the memo was a renewed focus on capturing government and making it work directly for the interests of corporate elites.

Over the last generation we have increasingly seen the effects of Powell’s advice in action; especially as economic gains have concentrated in the upper .01% creating a class of billionaires able to buy an outsized voice and presence in politics and policy making.

Not content to simply fund think tanks that use non-profits to promote, advocate, and espouse particular points of view, the billionaire class has moved into other areas. A recent piece in the New Yorker on the Ford Foundation noted that the Gates Foundation, with an endowment of forty billion dollars, has done notable work in the fight to eliminate malaria. But Gates also “spent two billion dollars over eight years in an effort to break up big public high schools and form smaller ones.” Resulting analysis showed the effort had little impact on educational quality but it did spend millions on creating charter schools. Gates has been called “the nation’s unelected school superintendent”.

Mark Zuckerberg of Facebook fame spent over one hundred million dollars in a similar effort in the Newark schools that ended in dysfunction and controversy.

The owners of Hobby Lobby, famous for their suit against the ACA, have set up a multimillion-dollar foundation to create a Bible museum. The Atlantic has reported that as part of that effort the Green family has been acquiring ancient texts and antiquities, some in transactions that ignore international conventions in the trade of historical items. Scholars are concerned that access to these essential texts may be controlled in ways that limit research and scholarship.

The Walton family has placed a significant amount of its inherited fortune in nonprofit trusts, primarily as a way of avoiding taxes. One purpose of these trusts has been to create one of the largest private art museums in the world, Crystal Bridges. It seems we may be returning to a time before the Enlightment when the wealthy controlled arts and literature and the artist created at the whim of a patron.

In many ways these foundations act as a way of molding society in the image of a particular plutocrat. In some ways these foundations act as Super PACs, especially those that exist to advocate on behalf of political causes. There is one big distinction though, these foundations are created under nonprofit statutes so they are effectively subsidized by taxpayers to the tune of forty percent. The New Yorker piece quotes Judge Richard Posner on treating foundation assets as tax exempt,

”A perpetual charitable foundation . . . is a completely irresponsible institution, answerable to nobody. Unlike a hereditary monarch whom such a foundation otherwise resembles, it is subject to no political controls either. The puzzle for economics is why these foundations are not total scandals.”

The ubiquity of private think tanks and foundations assures that there is more than sufficient opportunity for the dissemination of political and ideological opinion. Here in North Carolina we suffer no lack of presence with Art Pope’s John Locke Society and Civitas.

Why then is it necessary to extend the reach of these essentially political organizations into the publicly funded university system? Even if one concedes that accepting donations from wealthy benefactors can be beneficial to a publicly funded university, does a difference arise with respect to what the benefactor chooses to fund?. Leaving the question of agenda setting aside it would seem that there is a fundamental distinction between funding a Center for Bioresearch and funding a Center for Free Enterprise. The one is largely a pursuit of empirically constrained hard science while the other, as indicated by its name, is a study of ideology. This becomes particularly evident when one looks at the specialty of the proposed director of the CFE, Professor Edward J. Lopez. Dr. Lopez focuses on a branch of economics that comes under the rubric of “Public Choice Theory.”

In his book, “Madman, Intellectuals, and Academic Scribblers” Lopez states,

“The basic idea of public choice theory is that economists shouldn’t have one set of theories for a person making a commercial decision and a separate set of theories for that same person making a political decision. Economists working in the public choice tradition argue that if we are going to look at market failure, then it makes sense to see if there is government failure, too. With this perspective in mind, it becomes clear why democracies so often generate inefficient policies and why they allow them to persist.”

The implication is that all the world, every facet of the human experience, is not a stage as Shakespeare wrote; but a market, a market where rational beings make rational choices based solely on profit and loss – maximization of utility.

This is more than merely economics, it encompasses the whole of social sciences as evidenced by a quote Dr. Lopez uses in a book of essays he edited. In “The Pursuit of Justice” (which oddly enough focuses not on theories of justice but on the idea that our legal systems and institutions are fundamentally corrupt because they are victims of pervasive and perverse incentives) Dr. Lopez quotes James Buchanan, one of the founders of the PCT school as saying;

“Public choice should be understood as a research program rather than a discipline or subdiscipline of economics.”

And in fact Dr. Lopez makes it clear throughout his writings Public Choice Theory (PCT) is “intertwined with philosophy, history, finance, psychology, development, linguistics, and other fields;” an all encompassing theory of everything – a dogma.

Matt Yglesias has suggested that PCT fits a syllogism (a logical argument that offers two or more propositions and a conclusion):

P1) Spread skepticism about government officials and their motives

P2) ?

C) Libertarianism

Indeed, this may be a good description of much of Dr. Lopez’s work. The question mark does a great deal of heavy lifting in his arguments but the first proposition is meant to gloss over everything else.

Consider the three questions Dr. Lopez poses in his book, “Madmen, Intellectuals, and Academic Scribblers:”

1. Why do democracies generate policies that are wasteful and unjust?

2. Why do failed policies persist over long periods, even when they are known to be socially wasteful and even when better alternatives exist?

3. Why do some wasteful policies get repealed (for example, airline rate and route regulation) while others endure (such as sugar subsidies and tariffs)?

The first question does not ask “Do democracies generate policies that are wasteful and unjust?”. It assumes that they do which certainly is true in some instances but the framing isn’t about discovering under what circumstances wasteful policies occur, there are no definitions of wasteful, and despite constant references to just or unjust actions Dr. Lopez never gives much of a definition beyond a nebulous reference to “rules” and “property rights”.

As an example Dr. Lopez writes approvingly in a couple of different papers of President Grover Cleveland’s 1887 veto of a disaster relief bill for Texas farmers wiped out by drought. Such aid was not, in Cleveland’s and apparently Lopez’s view, constitutional. Presumably, the implication still holds true.

There is not a great deal of intellectual inquiry here. There is an assumption that we are all homo econimicus, that institutions are subject to the same incentives and rent seeking behavior that individuals always exhibit, and that the answer must therefore be a laissez faire version of society as encompassed entirely by the market.

Throughout his writings Dr. Lopez is adept at telling just- so stories leading us in the direction of his conclusions. For example, in his recent letter to SMN that began with a rebuttal to a previous writer’s assertions about BB&T’s actions during the financial collapse Dr. Lopez references BB&T’s repeated claims that they were forced to take TARP money, a claim that may have some truth but which also ignores the fact that BB&T was also found to be significantly undercapitalized and overleveraged.

Lopez is also much taken with Adam Smith’s metaphor of the invisible hand, perhaps one of the most overused, abused, and misunderstood phrases in the annals of economics. Lopez uses the phrase 11 times in his book while Smith used it three times in his entire body of work; once in a treatise on astronomy; once in “A Theory of Moral Sentiments” in the context of similar needs of both rich and poor for basic necessities ; and once in “The Wealth of Nations” in the context of comparing domestic and foreign manufactures. From those three examples and particularly in the last, a mythology of a self-generating and correcting marketplace has developed to the level of religious or iconic status.

Oddly enough, Lopez never seems to quote Smith during his many discussions of the problems of working folks and the disadvantages and inequalities that labor faces. For example, it is unlikely that Lopez would cite Smith’s take on progressive taxation:

“The rich should contribute to the public expense,” he wrote, “not only in proportion to their revenue, but something more in proportion.” Adam Smith

Dr. Lopez is also adept at portraying his intellectual heroes in the most positive light while subtlety poking figures he is in disagreement with. In one passage, he says about John Maynard Keynes, “He even took both sides in love, not terribly unusual among intellectuals of his circles in that day. As a young scholar, Keynes had male lovers, including the writer and critic Lytton Strachey. But, like Pareto, he later married a Russian woman, the ballerina Lydia Lopokova.”

This puts one in mind of the controversy that arose after the Harvard historian Niall Ferguson took a Keynes quote about how in the long run we are all dead badly out of context and then proceeded to point out that because Keynes was gay and had no children, he had no sensitivity to future generations. I’m not sure what Dr. Lopez hoped to accomplish with this observation but for the life of me I can’t understand how Keynes’s sexual preferences, Russian wife’ or reference to Pareto tell us anything about his economic thinking.

Perhaps Dr. Lopez was trying to make a point that Keynes often changed and adapted his positions, a point that would have been served by offering up this well known quote from Keynes;

“When the facts change, I change my mind. What do you do sir?”

Dr. Lopez has been quoted saying that academic inquiry should not be censored even if unpopular. I heartily agree with him and I would never suggest that his teaching be censored or limited. I would suggest that each instructor, particularly in a public institution, has an obligation to present material in the spirit of intellectual honesty and inquiry and that would include presenting a fair assessment of ideologies or systems that conflict with an instructor’s preferred ideologies or systems. In his book, “Madmen, Intellectuals, and Academic Scribblers” Lopez’s main theme is that ideas should win out in the marketplace. While the marketplace is only a small part of the world and human experience, a point on which Lopez and I would disagree, his basic construction is correct – good ideas; ideas subjected to empirical, logical, and philosophical testing; ideas that advance, expand, or illuminate our concepts of justice; and ideas that have been broadly and fairly debated and contested ought to win our respect.

But the question here is more than what Dr. Lopez teaches or even how he teaches it. At issue is not the legitimacy of one professor’s views. The issue is whether a publicly funded institution ought to take a gift to establish a program with the clear mission to teach a particular ideology, an ideology that is, in fact – broadly contested. This is especially true in a discipline like economics and especially when the proposed center and its proposed leader mix economics, political philosophy, and political science. Maybe the discussion ends up being framed differently if we were talking about a hard science, or medical research, or a purely technical discipline. Even then, there might still be questions about billionaires dictating an agenda but in a discipline that is entirely empirical there are fewer and different problems. The search for facts and the search for truth are two different endeavors; that distinction is both critical and germane to this specific proposal.

Transparency is not the issue, no matter how unstructured the grant the undeniable fact is that $2 million buys influence, it gets phone calls answered, and it gets preferences on the agenda. The simple fact is that one of the basic tenets of the ideology Dr. Lopez preaches is that money talks, it is the measure of the market. More to the point, the ideology that Dr. Lopez espouses argues that institutions, particularly public institutions, are subject to manipulation and perverse incentives. The proposed grant is a demonstration of whatever truth lies in public choice theory.

The land grant colleges and public university systems were built to serve as great equalizers. These public institutions were built to give average folks the opportunity to acquire knowledge and pursue intellectual inquiry. Sadly as our world has graduated from a market economy to a market society, much of the mission of our public institutions has been lost. In a world where billionaires and corporate sponsors face few constraints in their ability to dictate public policy and control public discourse we ought not blithely encourage yet another venue for indoctrination, no matter how much the enticement. I would make this argument regardless of the source of the money whether it comes from the Kochs or some liberal bogeyman like George Soros.

Let Dr. Lopez teach what he wants but let WCU retain its integrity as a public institution, something it cannot do under any conditions if it accepts this gift.

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  1. Anonymous

    This is a well-written article. It is worth pointing out that they have done this before.

    In Florida they gave a grant to Flordia State University’s Econ department with the rider that they get veto power over who is hired with the money. They would also get to:

    assign specific readings, select speakers brought to campus and instruct them with regard to the focus of their lectures, shape the curriculum with new courses and specify the number of students in the courses, name the program’s director, and initiate a student club.”

    That fact was intended to be secret for some time but was liberated along with the contracts:




    There is also an excellent article about the Koch’s attempt, along with Papa John’s CEO John Schnatter to fund “Free Market Thinking” at the University of Louisville here:


    It includes an interesting quote from the chair of economics at Florida:

    “The Koch Foundation agenda is to expose students to free-market ideas and to provide opportunities for students who want to study with faculty who share Koch’s appreciation for markets and distrust of government. The proposal is, therefore, not to just give us money to hire anyone we want and fund any graduate student that we choose,” Benson wrote.

    And he supported the deal.

    It also notes one key thing not covered in other articles. In Florida, the contract allows the Koch’s to review the work by faculty and students in the program and, if they are displeased, they can withdraw their money at any time. This is not a gift. It is a bribe.

    I wonder what the WCU contract says?

  2. Antifa

    The Tea Party influence is strong in western North Carolina, so the Koch brothers are not seen as the whoremongers they are. Instead, they are celebrated as philanthropists who toss harmless millions to the masses in the form of orchestras, foundations, universities, and straight, white, Christian, male candidates for political office. It’s all good.

    The Kochs’ are certainly clever pimps — they negotiated $1.4 million in WNC University funds in the form of a matching donation in exchange for their $2 million. All the details of the deal, and how much the University could manage to match, were worked out behind closed doors without ever telling the Faculty Senate what was coming. Chancellor David Belcher announced it as a done deal back in early December, and he and the Trustees of the University have been busy rolling right over all the objections presented the faculty and students since then. He wants that money, no matter what strings are attached, and no matter how much it hollows out the reputation of the school. It’s the money, stupid.

    D. Belcher and his Trustee majority are determined to donate $1.4 million of University funds, provided by taxpayers, directly to the Kochs’ John Bircher crusade without anybody voting on it other than themselves. This in a state that just passed a bill allowing community colleges to tack another 10 percent surcharge onto tuition. This in a state that has experienced a huge population growth in the last decade without raising funds for education accordingly.

    But D. Belcher wants that money. So do the ladies and gentlemen of easy virtue on the Board of Trustees, which is why the Senate Faculty and student body has had so little notice, and so little influence on this blatant act of prostitution. The professors and students can drop their drawers for Charles and David, or go find a school where money doesn’t buy integrity.

  3. JEHR

    Canadian oil made the Koch brothers rich:

    “As it turns out, Koch Industries also controls anywhere from 1.1 million to as much as two million acres of Alberta’s oil sands – or the equivalent of around 4,500 square kilometers – thereby guaranteeing the company’s prosperity for decades to come. The value of their oil sands holdings is in the tens of billions of dollars.” (from The National Observer’s Bruce Livesey)

    1. shinola

      That article is from May of last year. With oil under $30 a barrel, I wonder what those holdings are worth now.

  4. Daniel

    Great essay.

    The Koch brothers also funded ($30 million) and started the Mercatus Center, a think tank housed at George Mason University in the Washington DC area. It is currently run by Tyler Cowen, whose name has probably been seen herein before. I recommend reading the wikipedia article to get an idea how much influence Mercatus had in the GWB administration and still has in social policy.


    So the web of libertarian (and anti-government) influence is at least Mercatus, WNCU, and FSU. And the message is always the same one that Yves describes above.

  5. aka

    Speaking of free enterprise, how about we free commercial banks of their exclusive role as gatekeepers to the nation’s fiat by allowing, nay, encouraging everyone and every business, organization, etc. to have a risk-free account at the Fed so as to provide an alternative payment system for the economy? So the economy can be free of commercial bank extortion? So payments by the US Treasury can go, by default, to individual, business and organizational accounts at the Fed and not to commercial bank accounts at the Fed unless explicitly requested by the payee? Thereby not GIFTING the commercial banks with free reserves that by right they should have to borrow from individual, business and organizational accounts at the Fed?

    And while we’re at it, how about we free the commercial banks of government-provided deposit insurance and free the population of a big chunk of private debt by providing every adult citizen with an equal portion of the new reserves required for the abolition of that insurance?

    Free enterprise is a sick joke when we have government-subsidized private credit creation.

  6. Minor Heretic

    They could also endow a “Center for Oxymorons.”

    They want to use academia as another communications channel to persuade people that 1 tiger and 99 gerbils on a level playing field is a fair contest.

  7. Wade Riddick

    “Why do democracies generate policies that are wasteful and unjust?”

    Compared to what?

    The implicit assumption in the way this question is phrased is that other forms of government – non-democracies – would not be wasteful or unjust. It particularly assumes that private, for-profit companies are never wasteful or unjust.

    Was it “just” to sell Vioxx or Thalidomide while covering up their dangers to your customers?

    This is yet another ideology that seeks to enable elite fraud. It’s all about helping crooked managers loot the economy by buying off the justice process.

    It’s important that you understand Lopez and the Koch brothers are communists. I mean that in the most literal sense. They don’t believe in the private property rights of others because they don’t believe in its basic foundations.

    Without democratic government – without fairly written laws and fair treatment before the law – you cannot secure your property rights when other citizens infringe on them. This is, in fact, the long term goal of these internal enemies of the constitution. They want to steal from the rest of us. They have had many names throughout our history – cartelists, slaveholders, filibusters. These are the people Henry Wallace warned us about in his 1940 New York Times editorial.

    We could call them fascists too, like Wallace did, since they want corporations to own and operate the government like a business. That is, after all, what Mussolini would have called the _Citizens United_ system.

    The ideological spectrum is not a line but a bracelet. The ends bend back around toward each other and they wind up being closer to themselves than they are to pragmatists in the middle. Stalin and Hitler, for instance, each had rigged elections to fake democratic mandates, they had propaganda, secret police and death camps. The list goes on but the end result is the same. Citizens were stripped of their rights.

    It’s important you call the Koch brothers communists, since thy portray themselves as such strong defenders of property rights. They’re the ones pushing for a doctrine that allows companies to steal money from their customers to bribe politicians. If you think you’re equal to the corporations in Kochtopia, try telling Exxon to take 30% off your gasoline bill next time because you have some lobbyists you have to hire. They do it to you and it’s okay. You do it to them and you go to prison for stealing gas. Some pigs on the farm are definitely more equal than others.

    Is it property rights when you dump toxic chemicals on your neighbors and give them illnesses? Are the Koch brother defending those property rights when they push for a repeal for all pollution controls? If smokestacks are so good for economic growth, why don’t the Koch brothers have any in their living rooms?

    These guys are communists, so call them that.

    Federalist Society members are actually “anti-federalists.” Call them that. They side with Federal Farmer in the framers’ great debate. This has been obvious to legal scholars for twenty years.

    Zimmerman didn’t kill Trayvon Martin because it was “part of God’s plan.” Denial of free will is a heresy. Christians find it hard to kill and we’re supposed to die to save another. Zimmerman got out of the car than night armed with a gun because he was afraid to die and unafraid to kill. That’s the opposite of Christian doctrine. Yet no one called him on it in the national press.

    If you’re going to steal rights from people in a democracy, you have to lie to them. If we want a remedy, we have to start telling the truth about all these people and their conflicted motives.

    P.S. The result of Arrow’s theorem in public choice theory is that all forms of government are “inefficient” and that trying to optimize group voter preferences is pretty much mathematically impossible. The only “efficient” form of government is dictatorship – because then the math of preference maximization for one is really easy (not that I personally think individuals ever have rationally ordered preferences in the first place). But nobody in public choice actually wants a dictator. It’s a cautionary tale about mindlessly applying preference maximization for stylized, stilted economic problems to truly complex and difficult subjects like politics.

    1. aka

      “Zimmerman got out of the car than night armed with a gun because he was afraid to die and unafraid to kill. “ Wade Riddick

      Beautifully stated. Thanks.

  8. flora

    “Without democratic government – without fairly written laws and fair treatment before the law – you cannot secure your property rights when other citizens infringe on them. This is, in fact, the long term goal of these internal enemies of the constitution. They want to steal from the rest of us. They have had many names throughout our history – cartelists, slaveholders, filibusters. “

    This is an important point. Capitalism developed over centuries and at each step a new form of anti-feudal government developed: First the city-state and then the modern nation state, along with new ideas of civic virtue and growing democratic accountability. In some sense, capitalism created the modern nation state and laws and democracy to prevent its own destruction by the raw power of the old feudal system and newer undemocratic powers, both public and private.

  9. William

    Interesting piece, and I share the author’s general concern about the way the Kochs et al are shaping the public debate (and ultimately public policy) through deep and long term strategic investments at “think tanks”, academia, and political campaigns. However, I have a quibble with the following statement: “The issue is whether a publicly funded institution ought to take a gift to establish a program with the clear mission to teach a particular ideology, an ideology that is, in fact – broadly contested. This is especially true in a discipline like economics and especially when the proposed center and its proposed leader mix economics, political philosophy, and political science.
    What is wrong with mixing economics with political philosophy and political science? Let us remember that Adam Smith held the Chair of Moral Philosophy, not Economics, at the University of Edinburgh. He used markets to help explain human behavior, but he never considered economics a stand alone empirical discipline. Rather, he saw economics as inseparable from politics, and would write about “political economy”. So I don’t see anything wrong with mixing economics, political philosophy and political science, per se. In fact, one could argue (as Yves has in her book and postings) that part of the problem with contemporary “economics” is that it pretends to be a pure empirical science (as opposed to a social science), and therefore irrefutable. A multidisciplinary approach towards solving some of our contemporary economic challenges has merit. I would be more concerned about what conditions there would be on the “donation”, and how much direct control they exert on what get’s published.

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