January 1, 2003

Free Radical; Libertarian -- and Contrarian -- Ed Crane Has Run the Cato Institute for 25 Years. His Way.

by Richard Morin

Richard Morin is a Washington Post staff writer. This article was published on May 9, 2002, when the Cato Institute celebrated its 25th anniversary.

Early in the spring of 1988, Ed Crane and Kristina Herbert were two libertarians in love. And like so many lovers, they talked about marriage. At least Herbert did.

"Kristina was always nagging to get married, and I said you really think that a government ceremony would improve this relationship?" says Crane, co-founder of the free-market-loving, big-government-loathing Cato Institute. "And she said yes."

" 'Okay,' I said. 'Then let's get a serious government to do it. We're going to China.' " As it happened, Crane was already headed to China. Against the odds, Cato had won permission from the communist government to lead a conference on free market capitalism and limited government -- the first American think tank allowed to raise those once-forbidden ideas behind the Bamboo Curtain.

So on Sept. 26, 1988, after a six-month battle with bureaucracies in two countries, Edward Harrison Crane and Kristina Knall Herbert were married in People's Marriage Office No. 9 in Shanghai. That night, Communist Party functionaries joined with Chinese academics and Cato scholars to eat wedding cake, sing songs and toast the newlyweds.

In love as in life, Ed Crane has taken the different path, a single-minded free thinker whose life has been lived largely out of step with his times -- or perhaps a step or two ahead of them.

Today Crane, 57, is the longest-serving think tank president in town and probably the only one who declares that he "doesn't like politicians and people who like politics." Nor does he seem to particularly care whether Congress or President Bush embrace his ideas -- even as Capitol Hill and the White House have started to pay a bit more attention to Cato's policy prescriptions.

Crane also may be the only head of a think tank who doesn't vote in national or local elections. He hasn't for years, not even for candidates of the Libertarian Party -- the party that he led in the 1970s.

Crane calls himself a "genetic libertarian" who cannot "remember a time that I didn't think it was wrong for some people to tell other people how to live their lives or to spend their money." To him, the core libertarian principles of personal liberty, free markets and limited government clearly are, in the words of the Founding Fathers, the "self evident" birthright of all human beings.

Libertarians veer far to the left on issues of personal morality, free speech and individual rights but swing equally far to the right when the subject turns to market capitalism and the proper role of government. They favor slashing the size of government and federal spending -- including military spending. They oppose virtually all limits on personal freedoms, including drug and prostitution laws.

"There are only a few rules: You can't hit other people and you can't take their stuff," says David Boaz, executive vice president of Cato. "After that, you have to make the important decisions for yourself."

While entirely comfortable debating the nuances of libertarian thought -- and there is an abundance of debatable nuances -- Crane is best known as an aggressive, sometimes ruthless organizer, brilliant institution builder and gifted fundraiser.

Crane has guided Cato from its start in a rented San Francisco storefront to its present home in a modernist six-story building on Massachusetts Avenue. (When it opened in 1993, staffers immediately pointed to the $ 14 million building as evidence of Crane's "Ed-ifice complex.") From a staff of three, Cato has grown to 100 full-time employees, including 41 resident scholars, and an annual budget that hit $ 15.6 million in 2001.

Tonight [May 9, 2002], more than 2,000 libertarians and friends of Cato will gather at a black-tie gala at the Hilton Washington to celebrate the think tank's 25th anniversary.

Luminaries from the ideological extremes of politics and culture pay their respects to Cato in a 12-minute video to be shown at the dinner. "Hang in there! Keep doing what you're doing," says George P. Shultz, who held two Cabinet posts in the Nixon administration and was Ronald Reagan's secretary of state. Nat Hentoff of the Village Voice and Nadine Strossen, president of the ACLU, also appear in the filmed tribute praising Cato's commitment to free speech and personal freedom.

Crane, the lion king of button-down libertarianism, is not without his detractors. He's been called a bully by his enemies, and even by some of his friends. Crane admits that he has not always played well with others.

"Remember," says Fred Smith, a longtime friend of Crane's who heads the Competitive Enterprise Institute, "when two libertarians agree, both think the other sold out."

Crane grew up in the brushy hills above Los Angeles, in the suburb of View Park, north of Los Angeles International Airport. His father was a doctor and a committed Republican who was elected president of the Los Angeles County Medical Association. His mother was a homemaker.

In 1962, he enrolled at the University of Redlands, a small private school 60 miles east of Los Angeles. He played baseball and football, occasionally studied and regularly violated the school's strict code of student conduct.

"You couldn't have women in your room and you couldn't have beer in your room. Those were rules that were very difficult for me to adhere to." He lasted a year.

He transferred in 1963 to the University of California, Berkeley, where the free-speech movement was soon to be in full-throated roar and beer in the dorm rooms was the least of the administration's worries. Crane wistfully recalls how "you would wake up in the morning and smell tear gas and know you didn't have to go to class."

While others at Berkeley read Marcuse and McLuhan, Crane devoured books by the prophets of libertarianism, F.A. Hayek and Milton Friedman. He read the novels of Ayn Rand, who treated her capitalist heroes with the veneration that teenagers reserve for rock stars. (Rand had little use for libertarians, dismissing them as "hippies of the right.")

After graduating, he headed back to Los Angeles to complete an MBA at the University of Southern California. He eventually found work as a money manager and became active in the state Libertarian Party. In early 1972, he saw the announcement of the founding convention of a national Libertarian Party, to be held in June in the Radisson Hotel in Denver. "I said what the hell, I think I'll take some time off and go."

Even his years at Berkeley had not prepared him for what he found at the Radisson. "As a libertarian I was always aware that it was appropriate to be tolerant of alternative lifestyles. But until I walked into that room, I had no idea just how many alternatives there were."

It was a scene straight out of an Oliver Stone fever dream. "There were anarchists dressed in all black. There were Randians holding long, gold cigarette holders. And hippies from the left and conservatives from the far right. I think the only other person there with a suit was Ed Clark, who later ran for president on the Libertarian ticket."

Crane returned to California committed to assembling a party from these odd lots of ideologues, seekers and drifters. He became chairman of the Southern California Libertarian Party in 1972 and national chairman in 1974.

In 1980 he managed Clark's presidential campaign. David Koch was the vice presidential candidate; his brother Charles had largely bankrolled the campaign. They ended up getting 921,199 votes, or 1.05 percent of all votes cast. It was the largest share of the vote that the Libertarian Party ever won, before or since.

But Crane realized the party was going nowhere. After that election, his enemies were organizing against the Organization Man. His detractors wore "Smash the Crane Machine" buttons to party meetings. Libertarian publications warned of the "Koch-topus" that had a stranglehold on the party.

Crane also came to realize that post-Watergate limits on campaign contributions made it impossible for third parties to effectively challenge the Republicans and Democrats.

Then there was the weirdo problem. "Any third party is going to attract a disproportionate number of people who are not doing that great in the mainstream of society," he says.

Crane recalled how he once watched in dismay as libertarians in New York cheered as a naked woman on horseback was led into a tax protest rally. An article in The Washington Post recounted a Libertarian candidate for Congress in Northern Virginia "who was calling for neighborhood ICBMs."

"I was always fighting off the crazies." The Libertarian Party, Crane concluded, was "not in the real world."

At the same time Crane was attempting to build a party, he was building a think tank. He had moved the Libertarian Party to Washington in 1975 and had become increasingly impressed with the influence that the Brookings Institution and American Enterprise Institute had on policy.

A think tank, he realized, could do what the Libertarian Party could not: rescue libertarianism from the political fringe.

Charles Koch, the heir to a petroleum and chemicals fortune, agreed in 1976 to contribute $ 500,000 to fund a libertarian think tank and asked Crane to run it. Crane said no. In order to work, a think tank would have to be based in Washington and Crane couldn't wait to return to California. Koch agreed to establish the tank in San Francisco.

On Jan. 3, 1977, the Cato Institute opened its doors in a temporary office on Kearney Street in the Embarcadero District of San Francisco with three employees. Crane was 32 years old.

Almost instantly, Crane realized that San Francisco was exactly the wrong place for Cato to be. "It was so obvious that the ideas were going to be discounted anyway, but certainly if they were coming out of San Francisco" -- a city intimately linked in the public's mind with everything that went so ghastly wrong in the late 1960s. "And all the political media was in Washington. . . . It made sense to move to Washington. So we did."

The move met with ferocious opposition from some key Cato supporters and staff. "Washington is an evil city," recalls Milton Friedman, 90, in a video that will be shown at the dinner. "People who move to Washington tend to get corrupted by Washington. Cato will be ruined if it moves to Washington."

It wasn't, Friedman now cheerfully acknowledges. Instead, Cato flourished.

The move east was a turning point, says Boaz, the only staffer to follow Crane from San Francisco to Washington in 1981. "It was a signal that we were going to focus on public policy and less on intellectual disputes."

Over the next 10 years, Cato aggressively worked to be taken seriously by the Washington policy establishment. Crane scoured the country to find bright scholars with impeccable academic credentials and libertarian leanings, and then he showcased their work.

Crane persuaded William Niskanen, the acting chairman of President Reagan's Council of Economic Advisers, to join Cato as its chairman in 1985. "Niskanen could have gone to Brookings or AEI" when he decided to leave the Reagan administration, Boaz says. "His decision to join us made official Washington think, 'This is more of a serious organization than we realized.' "

Building the headquarters building, which some board members viewed as a extravagant waste of money, was another signal to the policy world "that we were in Washington to stay and that we had significant resources," Boaz says.

The launch of its Social Security initiative in 1995 was the next Cato milestone, Boaz says. Cato's first policy book, published in 1980, was on Social Security reform. At that time Social Security was viewed as the "third rail" of American politics, and Cato's proposals to privatize the plan were anathema. Two decades later, President Bush has adopted some of Cato's ideas into his own reform proposals -- much to Cato's surprise.

Today Cato scholars are fixtures on the talk shows and op-ed pages. Cato-affiliated scholars appeared 1,499 times on radio and television last year, according to the tank's communications department. Also in 2001, Cato scholars wrote 895 opinion pieces for newspapers, including 146 that appeared in the country's 25 largest newspapers.

Cato publishes the quarterly review Regulation, which features the work of libertarian scholars and the humor of P.J. O'Rourke and Penn Jillette, "the louder, bigger half" of the Penn & Teller magic team and a longtime supporter of libertarian causes.

In the latest issue of Regulation, Jillette offers his own proposal to combat terrorism in the skies: Instead of confiscating guns, knives, mace and fingernail clippers, "try some freedom. Let anyone with a ticket get on the plane with anything he wants, and then make the terrorists decide which passengers to attack. . . . Make the terrorists do the profiling."

Is this the official position of the Cato Institute?

Crane chuckles. "Well, the Cato Institute actually has no official position on anything. Our scholars take positions. We have a disclaimer on all our studies. So there isn't a Cato position."

Meanwhile, Jillette says he won't be attending the anniversary gala.

"Wooo, party hearty, Eddie," Jillette bellows into the phone from his home in Las Vegas. "No, I'm not going. The day I have nothing better to do than go to a Cato function is the day that I hope my [you can guess] falls off."

Ed Crane's battles with his enemies are legendary. His fights with his friends, even more so.

A decade ago, a management dispute with co-founder Koch veered out of control. Koch resigned from the board and withdrew his generous financial support.

"I broke one of the cardinal rules of fundraising: Never [tick] off a billionaire," Crane admits. (Koch's brother David, also a billionaire, remains on the board and is a major contributor.)

The late Murray Rothbard, a seminal figure in the libertarian movement who died in 1995, also was an early ally of Crane and Cato. It was over drinks in the bar at the Waldorf-Astoria in Manhattan that Rothbard suggested the fledgling think tank be named "Cato," the nom de plume adopted by John Trenchard and Thomas Gordon, two British essayists of the 1700s.

Crane commissioned Rothbard to write a book on the progressive era in American politics. The two began squabbling over ideology. Rothbard missed deadline after deadline for the manuscript.

The arguments intensified, got loud and then got personal. Rothbard eventually quit the Cato board. He published articles in libertarian journals and newsletters with titles like "New Crane Machine Floperoo!"

More recently, George Will earned a public spanking from Crane after the conservative columnist wrote that "events since Sept. 11 have underscored the limits of libertarianism," calling it a "faux conservatism."

Crane accused Will in a column in the National Post of Canada of being in league with "New Deal interventionists" and suggesting that "the Hamiltonian side of Will's split personality [is] getting the better of him."

But the man who housebroke libertarianism may himself have become housebroken. Close friends note that Crane seems to have mellowed, at least a bit.

"He is more subtle than he used to be," Niskanen says. "He is more confident in his own judgment. And he's learned that you don't personalize issues. That is the one characteristic that you need to play successfully in this city."

Crane agrees that he's changed. But Washington isn't the reason why.

"Kristina has changed me. Washington hasn't. She lets me know when I'm being an ass."

Even after more than two decades in town, Crane remains largely the Washington outsider. He commutes to work from Falls Church, where he lives with Kristina and their three children. Crane is rarely seen on Capitol Hill and generally avoids the reception circuit, the Georgetown policy salons and the Sunday morning television shows.

Cato also remains far from the centers of power in Washington policymaking, though it is edging closer. Presidents routinely pluck scholars from the Brookings Institution, the Heritage Foundation and American Enterprise Institute to fill key policy roles in their administrations. By Cato's own count, only two alums have occupied positions in the current Bush or Clinton administrations; five more have served on presidential commissions.

"We want to be independent of any political party," Crane says. "And in this town you don't get appointments in the administration if you don't play the partisan game, which we don't play."

And Congress, while more respectful of Cato and its scholars than it was a decade ago, remains nonetheless suspicious. Even its friends on the Hill view Cato as an unreliable ally.

"The Hill doesn't trust us because we're not partisan," Niskanen says. "They're intrigued with us, but they can't predict us."

Its critics on the Hill say just the opposite: Cato is too predictably anti-government. Besides, the practical politicians in both parties view many of Cato's bolder recommendations as impractical fantasies.

Even some Cato scholars acknowledge, for example, that its widely publicized plan to eliminate eight federal Cabinet-level departments will not happen soon, if at all.

"In a sense, the Cato Handbook for Congress is like pornography for Republican staffers," Boaz told the writer for a libertarian newsletter a few years ago. "They flip through the pages and say 'Oh, yeah, I'd love to do that, I'd love to do that!' They're not actually going to, but they love to read about abolishing agencies and cutting taxes."

Crane says he doesn't care if Congress ignores Cato. Its time will come.

"Our job is to get ideas on the table of the national debate, and whether Congress takes it up or not is not our primary concern." Later, he adds: "If I had to pick 535 people to try and convince of these ideas, I wouldn't pick those. But you never know when the external conditions will be ripe. And you have to be ready for that."

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