Jacob Levy offers an alternative take on UChicago faculty opposition to the creation of a Milton Friedman Institute:
Now, if you model academic behavior as rational, mutually-distinterested self-interest, you find that everyone should welcome an inflow of $200 million into another part of their university. You predict that there will be no opposition.
If, however, you model academic behavior as a status game, more concerned with relative position than with absolute position, and you find that your university is going to take the fields that are already very high-status in the world and relatively even higher status within your institution, and symbolically endow them with even greater status by making them more central to the institution's name and identity and campus and budget, then things look very different. The promise of getting the econ department's leftover offices and the spilloff from the interest on the new endowment pale in comparison to what will be lost. You predict that there will, in fact, be opposition.
While Levy and Drezner (both former Chicagoites) place their emphases in different places, I am not sure their accounts are in conflict. Sure some faculty in other departments are envious and fear the new Institute's presence may (further) eclipse their work, but they'd have less to be envious about were they to receive a bigger piece of the pie.