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A Prince on Politics

Prince Hans-Adam II. The State in the Third Millennium
Prince Hans-Adam II.: “The State in the Third Millennium”

A book review by Kurt R. Leube

   “The State in the Third Millennium” is a remarkable work. Elegantly written by a historian who is simultaneously a head of state, politician, successful international businessman, world famous art collector, and leading philanthropist, it will doubtless provoke some frank debates. After much research and historical study of the concepts, purposes, and limitations of the state, Prince Hans-Adam II, the reigning prince of Liechtenstein, has published a work of critical importance. In view of the growing loss of confidence in democracy and the current state of unchecked governments, Hans-Adam confronts the prevailing intellectual and political despondency in an audacious way.
Right from the start, Hans-Adam II passionately discloses his firm commitment to the classic liberal (in the European sense) principles of self-determination, direct democracy, and free international trade. Although the idea of self-determination has been incorporated in the un Charter, it regretfully “remains a central but still unfulfilled principle of the un.” Almost no country besides Liechtenstein has firmly enacted the right of self-determination. In states with self-determination, the population cannot be forced to cooperate with the government; rather it is the obligation of the state to make the effort to work together with its citizenry. After all, in the case of a lack of cooperation it is usually the supreme power of the state, and not the individual citizen, that falls apart.
The author takes us from the still somewhat murky origins of the state and the fundamental roles religions and ideologies have played in it to an intriguing discussion of the developments in military and transportation technologies and how much they have contributed to the size and strength of nations. History shows that in the long run the very idea of democracy proves to be incompatible with great and powerful states, most likely due to the fact that huge landmasses can be preserved only by means of totalitarian, or at least authoritarian, control. Following ancient Greek philosophy, the prince differentiates the cyclical evolution of monarchy, oligarchy, democracy, and anarchy. His goal seems to be the prevention of anarchy, and so he argues that the three elements of monarchy, oligarchy, and democracy “should be brought together so that they operate in harmony for the benefit of the state and its population.” Over time, he writes, the symbiosis between a monarchy based on religious legitimation and an oligarchy started to fade when the religious legitimation of monarchy was brought into question and the possibility emerged that democratic legitimation could be possible even in large states. The successful example of the American Revolution started a worldwide process that even today, after two hundred years, is not yet concluded.
The chapter on the “American Revolution and Indirect Democracy” discusses why the U.S. Constitution became such a dominant liberal (again, in the European sense) prototype for 19th- and 20th-century Europe, Latin America, and beyond. “Despite its weaknesses,” Prince Hans-Adam II notes, “the model of democratic legitimation of oligarchy and monarchy realized by the American Revolution represented a tremendous step forward in the history of the development of the state.” And yet, for him neither the American Constitution, nor almost any other modern constitution, can be viewed as the founding works of true democracies because “at the most, one could speak of certain democratic rights” granted to the population.
The author’s analysis of the major steps Switzerland’s Constitution took towards the developments of direct democracy helps one understand the current Swiss political system. The Swiss Constitution does not limit the right of the population to election of a representative who will then act in their behalf. In their direct democratic system “the people themselves have the right to make material decisions.” The “Referendum, which gives the people the right to vote directly on a decision of parliament,” and the “Right of Initiative” that grants the citizenry the irrefutable right to make material decisions are themselves the two fundamental pillars of direct democratic systems. For Prince Hans-Adam II, the difference between the U.S. and Switzerland thus lies in the structure of the state. Whereas in the U.S. the counterbalance to the Congress and the courts is the president, in Switzerland the executive branch, the legislature, and the courts are controlled by direct democratic forms. Over time and in comparison, the direct democratic model thus has “brought the people more democracy than the indirect democracy of the United States.” Unlike all other constitutions of Western countries, only those of Switzerland and particularly of Liechtenstein feature the direct democratic legitimation of their political functions. And even though it is very small in size and population, Liechtenstein’s legal framework has made a number of important new contributions to the further development of direct democracy and the right of self-determination.
Thus, Chapter 8 is devoted to the principality’s advanced constitutional reform of 2003. It concludes by describing Liechtenstein’s monarchy as “a partnership between the people and the Princely House, a partnership that should be voluntary and based on mutual respect.” The hereditary monarchy in Liechtenstein “always needs the confidence of a majority of voters and thus democratic legitimation” worked mutually well during the past 300 years.
After discussing the many weaknesses built into the traditional forms of most Western democracies, Prince Hans-Adam II presents his vision of a future state as a peaceful service provider. According to the Prince, the challenge of our times is the advancement of ideas that will lead to the development of a state model that accomplishes:

1. the prevention of all wars, including civil wars;
2. the serving of the entire population of a country and not just a privileged section;
3. the provision of “maximal democracy” and the certainty of individual freedom through the rule of law;
4. and, last but not least, the enabling of the state to compete globally.

  According to Hans-Adam II, these objectives can only be accomplished by transforming the state as we know it into “an organization that serves the people and not the other way around.” In tune with the academic tradition of the great classical liberal thinkers, Hans-Adam too attempts to limit the powers of government and the legislature and to assure the working of the Rechtsstaat as a safeguard of individual liberty. The clear separation of powers, a government under the law, the distinction between private and administrative laws, and the provision of due process for the enforcement of law — these are the guiding principles of the liberal Rechtsstaat. Only under the rule of law is everybody, including the government and the so-called sovereign parliaments, bound by rules. Political decisions thus are warranted to be made in accordance with known and general rules and not according to the apparent popularity of particular outcomes or, worse, whatever the majority finds expedient to do in order to retain majority support. The author’s ideas about the various tasks of the future service state, especially pertaining to most social security systems, pension funds, educational systems, and questions of public finance will undoubtedly provoke intensive discussions.
Although scarcity is a condition of our existence, most beneficiaries of the current welfare state were made to think of their provider as an infinite resource through which benevolent politicians appropriate assumed well-deserved benefits and favors. However, due to our finite supplies, any redistributional subsidy for one segment of the population must necessarily result in a denial of comparable funding for another section. When people are exposed to this sort of social redistribution, the anticipation of benefits and the growing loss of self-responsibility generates more welfare dependents, at staggering costs. And yet, rent-seeking politicians keep abusing the welfare systems by irresponsibly overloading future generations with financial obligations they will never be able to meet. In other words, “apart from its high cost, the system threatens the freedom of the individual and in a democracy gives political parties the possibility of ‘buying’ votes with taxpayers’ money. The welfare state faces a crisis in the age of globalization with the rapidly increasing mobility of people, services, and goods.”
‘The State in the Third Millennium’ devotes a chapter to the problems related to education. In it, the author asks “whether it should be one of the responsibilities of the future state to run the education system.”
Most state-run and unfunded pay-as-you-go pension systems are on the brink of collapse, and soon-to-be-deprived beneficiaries are already angrily defending their presumed claims, while others are facing confiscatory tax obligations. Thus does progressive taxation lead to decreasing motivation and public outbursts of discontent. “In order to prevent greater crises, the retirement age will have to be increased, and the pension system will have to be changed gradually from the current unfunded pay-as-you-go system to a funded system,” Prince Hans-Adam II writes. He recommends a full privatization. By changing the present patronizing social security benefit structure into a market-based capital accumulation system, pensions and other transfer funds will become transparent and will be determined by the individual’s contributions, and not by some politically decided standards of justice or even merit. With such radical changes made, a population will finally be able to keep the overpowering domain of the state in check and revive its own innate feelings of self-responsibility, dignity, and social bonds.
The State in the Third Millennium devotes a chapter to the problems related to education. In it, the author asks “whether it should be one of the responsibilities of the future state to run the education system.” After all, knowledge or ignorance are quite relative concepts; they can hardly be defined as public goods. There is not much reason to believe that even if some supposed best knowledge were made available to all it would result in a better society. The ideal of state education may well be traced back to J.G. Fichte’s and Wilhelm von Humbodt’s Prussia, which in the early 19th century created a system that combined obligatory education with government-run educational institutions. However, due to social and demographic changes, most of these publicly financed systems today can not be fully funded, nor is their present quality something to be trumpeted. “Instead of using taxpayers’ money to finance the education system, it is much better to subsidize parents or students so that they can themselves choose the school that in their opinion is best for them,” Prince Hans-Adam II astutely notes. He puts forward the idea of school vouchers, which Milton Friedman introduced in his influential essay, “The Role of Government in Education,” in the 1950s. Hans-Adam’s suggestion, like Friedman’s model, retains a decisive role for the state within the education system, but schools and other learning institution, he believes, should be exposed to competition.
There are other engaging chapters, on topics ranging from transportation, to public finance, to the problems of a national currency and the array of other duties that states have taken over during the past 200 years. Prince Hans-Adam II asks provocative questions: How should a future state finance itself if the governmental obligations “are limited to maintaining law and order, conducting foreign policy, and financing education”? Should we continue to permit the state to coerce as much as it can from the taxpayer? Should the state of the future be reduced to the role of a provider of the necessary infrastructure?
Especially poignant are Prince Hans-Adam’s thoughts on the conditions that must be met in order to have and maintain a national currency. And yet, one misses in this book Friedrich A. von Hayek’s radical and thought-provoking idea regarding concurrent currencies, published in his short but important essay, “Denationalization of Money.” So long as the state holds the legal tender monopoly on money creation and distribution, Hayek wrote, the temptation to inflate a currency and thereby gain a temporary economic boost is usually much too strong for politicians to resist. A market solution would therefore allow private enterprises to issue their own competing currencies, and the general public would naturally choose the most reliable, stable money, which is least prone to inflation. Consistently applied, the private issuance of money would not only prevent governments from damaging the economy, restricting the freedom of individuals, and robbing them from the fruits of their work, but it would also bring to a halt the constant expansion of governments.
In order to achieve the promising future he desires, Prince Hans-Adam II develops several motivating strategies. As its title suggests, for instance, his book ends with a carefully drafted charter for the state in the third millennium. Written in candid language, and based often on the advanced Constitution of the Principality of Liechtenstein, his book could become a key to limiting the growth of government and its involvement in an ever-widening sphere of life. The author’s ideal of the future state — one which guarantees the people’s right to self-determination and which would transform the state into a peaceful service corporation — may not be realized in full. Indeed, some parts of his vision might even remain in a distant utopia. A swift succession of new ideas is hardly a criterion for an achievement of powerful significance, of course, but the ideas and solutions presented in this book could certainly help to revive long-dead debates.
The Prince’s political philosophy is a remarkable attempt to contribute to bettering representative democracies — governments which are even now being challenged by an angrily disengaged populace and find themselves on the brink of social and financial collapse. His integration of the relevant literature, combined with bold ideas, family history, and his own experiences heading a state, makes The State in the Third Millennium an elegantly written tome, a rewarding read, and a very valuable contribution.


Prince Hans-Adam II.: The State in the Third Millennium. I. B. Tauris & Company, 208 Pages, $45.00. -> Buy at Amazon


Kurt R. Leube is professor of economics emeritus and research fellow at the Hoover Institution, Stanford University. He also serves as academic director of ECAEF – European Center of Austrian Economics, a Think Tank based in the Principality of Liechtenstein.

Flood of Immigrants

An Economist Looks at Europe

by Pedro Schwartz (Jan 4, 2016)

Quite some years ago, when I was a very liberal young man writing a doctoral dissertation on John Stuart Mill, I asked my supervisor Lionel Robbins what he thought of the restrictions newly introduced on immigration by the then Conservative government. Robbins answered with another question: “Would you make immigration totally free?” I did hesitate but suggested immigration should be as lightly regulated as it was in the United States at the end of the 19th century—just a medical and fifty cents per head on Ellis Island. I want to consider whether I would give that same answer today for Europe, seeing the size of the displacements caused by the civil wars in Libya, Syria, Iraq, Afghanistan and the Horn of Africa. In what numbers should immigrants from the poorer parts of the world be let into Europe? Should there be limits to internal migration within the European Union? What methods are acceptable to stem the flow of people fleeing violence or seeking a job? Liberal democracies in North America and Australasia face the same general question, to wit: does the philosophy of freedom include the right of people to travel and settle as and where they want?

Mass migrations are not a new phenomenon in Europe. The end of World War II made for very large displacements, whether voluntary or not: the borders of Germany and Poland were moved westward at the stroke of a pen, with millions of people forcibly changing their place of abode. Later came the voluntary migration of thousands fleeing communist oppression and, after the demolition of the Berlin Wall, even more people from Eastern Europe seeking new opportunities in the West. The independence of Algeria from France led the former metropolis to open its doors to people of both French and Algerian extraction. And Spain in the 1980s not only allowed many Moroccans to settle in its cities but was also very generous in granting double nationality to Latin Americans, blessed as they were with the same language, customs and even religion. (My mention of religion is not fanciful,

“Liberal democracies face the same question: Does the philosophy of freedom include the right of people to travel and settle as and where they want?”

for much heavy weather is made of the difficulty of assimilating a large Muslim population in countries of Christian tradition today.)

A further development in the European Union is that its treaties mandate the free movement of European citizens within the EU, including the full enjoyment of their welfare and social rights. This freedom is reinforced by the obscurely named “Schengen Treaty”, whereby there are no inside border controls in the EU, so that you can drive or fly freely from Finland or Hungary to Portugal or Malta, just as when you travel from Maine to New Mexico. Even where border controls remain, as in the United Kingdom and Ireland, Europeans can seek employment there: ‘the Polish plumber’, as the catch-all phrase goes, allegedly puts the local worker out of a job. Finally, you have immigrants from outside the EU, either applying for refugee status or simply slipping in illegally—or drowning by the thousands in their attempt to come in by sea.

Let us see some numbers. The EU has become one of the regions that the rest of the world looks up to as a destination for a better life. According to the European Commission, immigration into Europe excluding refugees and asylum seekers was from 2010 to 2014 a steady 1.4 million per year. The result is that in 2014, residents in the EU born outside Europe numbered 33 million—or 7% of its population. This may look large but not when compared with the 14% foreign born in the US, 20% in Canada or 27% in Australia, also in 2014.

Thus the immigration phenomenon is one of old standing, but the present rush to enter the EU at any cost by people coming from Africa or the Middle East is causing alarm. Asylum applicants plus people crossing illegally were 540,000 in 2013, 911,000 in 2014, and 1.5 million in the first six months of 2015. Though 40% of asylum applicants are currently being rejected, this progression will certainly increase the 1.4 million immigrants per year entering the EU that I mentioned above.1

This poses two kinds of problems for the EU. The most immediate one is the bureaucratic nightmare of dealing with unmanageable numbers of destitute people banging on its doors. According to European law, it is the country of first arrival that should check and classify the newly arrived. But the main points of entry are the minute Italian islands in the Mediterranean, the tiny member-state of Malta, and the Greek islands a stone’s throw away from the Turkish coast. They cannot cope, nor can the small states on the mainland crossed by refugees and illegal immigrants heading towards Germany and Sweden, where most want to go. The second is the hopeless attempt to distinguish between ‘asylum seekers’ fleeing political or racial oppression and ‘economic migrants’ who simply come to find a job or learn a new trade. That distinction is artificial: though some are forced to move under duress, all come for a better life for themselves and their families. An indication of this is that 65% of the applicants for refugee status in the first nine months of 2015 were young men, clearly looking for employment, and that a sizeable proportion of the ‘refugees’ is made up of unaccompanied children who have a greater chance to be allowed in and start a new life.

The EU is being less than efficient in dealing with the immigration phenomenon as a whole. “Frontex”, a European Agency for the management of external borders is just beginning to help frontline states to cope with the refugee influx. A European coast guard is in the process of being launched. There has been an attempt by the Brussels Commission to set minimum quotas for the numbers of refugees that the different nations must accept but most are refusing the imposition. Germany is among the exceptions for it has promised to accept an even large number in 2016 on top of the 800,000 taken in last year. The United Kingdom is among the least generous of European countries, as it has limited its total intake to 20,000 refugees over the next five years. Political resistance is growing in Hungary, Poland, Denmark, and France. Even Angela Merkel is seeing dissent in her party. The anti-refugee reaction in some European countries has led Peter Sutherland, the UN special envoy for migrants and refugees, to condemn it as contrary to UN principles and international law: he has reminded Hungary that free Europe accepted 200,000 refugees after Russia put down the Hungarian revolution in 1956.

The debate on an open door policy

For background information, seeImmigration, by George Borjas in the Concise Encyclopedia of Economics.

Ted Rall is not my kind of liberal but he recently drew a cartoon for the Los Angeles Times that goes to the heart of the immigration problem. A poor white man sitting before his TV screen sheds a tear for the drowning Syrians and wonders aloud why Europeans do not let in all those refugees; but he calls for his gun when his wife cries ‘Mexicans in the garden’.2 This ‘not-in-my-backyard’ attitude to immigration of so many otherwise generous people may be understandable, but is misguided.

As Peter Sutherland has put it, “locals in destination countries believe that migrants are stealing their jobs, depressing their wages, or exploiting their welfare systems”. A widely unionised and protected workforce will indeed complain that enterprising, hungry-for-work entrants unfairly compete with them. It is true that in the short run immigration exerts downward pressure on local wages, especially of the less well prepared. But over time competition forces progress, which can be painful but will in the end be for the good of all concerned. This resistance is on a par with the attitude of trade-unions in Europe when they resist legal changes to allow older people to prolong their working lives: they fear this will reduce jobs for the young. Behind these arguments lurks the fallacy of believing that the total number of jobs is a fixed quantity. Much to the contrary, the greater the number of people in gainful employment, the more jobs are created, both directly by increasing productivity and indirectly by demanding labour inputs from other suppliers.3

On the same lines, the middle classes in Europe and in America complain about their lost status compared with the famed 1% at the top and blame it on globalisation and its concomitant, immigration. But surely accepting immigrants must be seen as a reduction of inequality. It is only human that people should squint up the earnings scale and reject more equality with those below them.4 To quote Peter Sutherland again: “Migration—when it is safe, legal, and voluntary—is the oldest poverty reduction and human development strategy”.5

Then there is the pressure on public services, especially schools, health care, and eventually pensions. The concern under this heading has two elements. One is that limitless benefits granted in welfare states are a powerful magnet for immigrants. The other is that entitlements for immigrants increase the cost of public services for existing taxpayers. I have indeed witnessed abuses of the free National Health Services in the

United Kingdom and in Spain by immigrants with a short history of Social Security contributions, who then bring in their families for expensive operations. But immigrants, as I said, tend to be young, healthy, and eager for work. If they are legal, the present value of their taxes and contributions will cover their social costs, except for schooling—but this can be seen as a beneficial investment for the host country in the long term. The positive effect is even greater when one notes the importance of young workers for alleviating the finances of non-contributory pensions. Also, this cost benefit analysis is not complete unless one takes into account the more than off- setting contribution of immigrants to the national product.6

For more ideas and information, see Changing the Continent?, by Anthony de Jasay, Library of Economics and Liberty, November 2, 2015; Schengen, adieu, by Alberto Mingardi, EconLog, December 14, 2015; Why the Conventional View of Immigration Is Wrong, by Daniel Kuehn, Library of Economics and Liberty, September 2, 2013; and An Economic Case for Immigration, by Benjamin Powell, Library of Economics and Liberty, June 7, 2010.

Finally there is the question of the cultural shock that the arrival of large numbers of immigrants from societies with different traditions, habits and religions may cause to the countries accepting them. Under this heading we can include a number of points. One is the treatment of women by immigrants from different cultures, not only the more conservative Muslims but also the less cultured among Latin-Americans: in fact, in Spain much of the violence visited on women and children comes from immigrant men. However, if one looks carefully, sexist violence is not the monopoly of migrants from alien cultures. In Britain much cruelty to women and their children comes from men who are not married to the mothers and who are not the biological fathers of someone else’s offspring. The real danger comes from their ‘partners’, British or immigrant, who father children with one welfare reliant woman after another.7 This kind of behaviour is not limited to immigrant men, be they Muslim or Mexican. Immigrants always face resistance when they arrive in an established society. 8 The crucial point is that they and their offspring should have no excuse not to look for work and have the opportunity to find it.

More recently, there is the drift of some young Muslims of both sexes towards radical positions and even participation in terrorist groups.9 In the opinion of many, this is the result of the failure of Islamists fully to integrate

in the societies that so openly accepted them: they resist Western values of respect for the ways of others and separation of State and Church. This stress on religion does not go deep enough. Education systems are blamed for failing to teach the young these values. One should rather say that on the whole public education does not teach, full stop. Public education simply does not deliver the service expected of it. Two simple indicators: in Europe and America from 15 to 20 per cent of adults are functionally illiterate, let alone proficient in arithmetic; and many families are led to changing their domicile to place their children in the catching area of decent schooling. Public housing has created ghettoes of destitution and lawlessness in France, Germany and even Britain. These young drifters and their families often lead effortless lives under the dispensation of the welfare state. If school had to be paid for; if health care were mainly based on private insurance; if the young did not automatically have access to unemployment benefits; and if the labour market were truly de-regulated: then immigrants and their families would have to base their lives on steady work and personal effort, free of the incentive to sponge off the state.

There have been many attempts in Europe to make public assistance compatible with poverty reduction, less unemployment, greater self- reliance, and renewed family life. Free public schooling is being extended to include nursery at one end and apprenticeship at the other. Austria makes pensions portable from one job to another and adds whatever the individual has not spent in unemployment benefits to their future pension entitlements. Denmark has made the labour market fully flexible while having government actively retrain the unemployed. In the United Kingdom there are fewer limits to dismissal than is the norm in the EU, but the state demands firms pay a ‘living wage’ over and above the minimum wage. And there are small charges for public medical services in France, Germany and other EU nations. These minimal changes are clearly not enough. As Michael D. Tanner has written (2003), “it is time to end Welfare and replace it with an invigorated system of private charity”.10

Milton and Rose Friedman

In their charming book Two Lucky People (1998) the Friedmans told us how they and their families came to be Americans. Rose was born in the Jewish part of what today is a Ukrainian village. Preceded by her father, the whole family repaired to Portland, Oregon. She moved east to study at the University of Chicago, where she came to share a desk with Milton at Jacob

Viner’s economics course. Milton was born in Brooklyn but his parents came from the Jewish quarter of Berehovo in today’s Ukraine. The Friedmans, when they arrived in America got no help from the state. They were helped by relatives and made their way up by hard work. Milton’s parents met and married in New York. His mother worked in a cloth-making sweatshop and his father tried his hand at business. Young Rose and Milton both worked in their free time.

Children of immigrants, and in Rose’s case an immigrant herself, we are rather typical of our contemporaries, though less so of our successors, as the melting pot has increasingly been replaced by multiculturalism, and rugged individualism by a welfare state. (Two Lucky People, Preface)

Milton wrote the following words of another immigrant,Arthur F. Burns, but they apply equally to the Friedmans: “What a testament to the benefits that a policy of free immigration has conferred on the United States!” (page 31)

Friedman himself pointed out later in life how big an obstacle a policy of free immigration was to the welfare state. David Cameron, the British Prime Minister, wants to exclude EU migrants from all entitlements for four years after their arrival. He thus falls into the trap of tarring all immigrants with the brush of exploiters of the welfare system. I would put it another way. Since immigration seems to be incompatible with the welfare state, a flood of immigrants, be they political, economic, or stowaways, could be a blessing in disguise: it may have the effect of proving what we suspect: that the welfare state is unsustainable.

Footnotes

  1. See the detailed articles on the European Migrant Crisis in Wikipedia for the sources of all these figures. Accessed 26.iv.15. Most of the figures mentioned come from Eurostat.

2. You can see the cartoon on Rall’s blog at rall.com -> african-vs-mexican-immigrants-get-my-gun

3. Dr. Raúl Hinojosa-Ojeda (2010) has noted a counter-productive effect in the United States of the refusal to legalise unauthorised immigrants. Paperless workers tend to accept, and employers to pay, lower wages, thus depressing the wage level. Their emoluments increase as soon as they are legalised. “Raising the Floor for American Workers: The Economic Benefits of Comprehensive Immigration Reform,” Center for American Progress. Available online at:https://www.americanprogress.org/issues/immigration/report/2010/01/07/7187/raising-the- floor-for-american-workers/.

4. As regards the United States of America, from 1970 to 2013, median real income per head has been growing in the US by 1.70% one year with another, which puts inequality figures in perspective. (Bureau of the Census).

5. Peter Sutherland and William Lacy Swing (2014): “Migration on the Move”, Project Syndicate https://www.project-syndicate.org/commentary, March 17, 2014.

6. In the United States, the federal budget gets more from income tax paid by immigrants than it spends on Medicaid, Medicare and pensions for the same group, while states and municipalities incur a net loss due to the weight of public school costs. Daniel Griswold (2012): “Immigration and the Welfare State”, Cato Journal, 32, 1(Winter), pages 159-174. [Available online at:http://object.cato.org/sites/cato.org/files/serials/files/cato-journal/2012/1/cj32n1-11.pdf.] Apart from helping considerably with the pensions burden Griswold mentions different studies in states of the Union, where the supply of goods and services added by immigrants more than outweighs the cost of social services, especially that written by Dixon and Rimmer (2009): “Restriction or Legalization”, Cato Trade Policy Analysis, number 40, August 2009. [Available online at: http://www.cato.org/publications/trade-policy- analysis/restriction-or-legalization-measuring-economic-benefits-immigration-reform.]

7. See James Bartholomew (2004, 2013): Chapter 6, The Welfare State We’re In. Biteback Publishing, London.

8. Friedman was lucky that he suffered no discrimination as a Jew except once in his life, in his failed appointment for tenure at the University of Wisconsin in 1941, expressed by the chairman of the Economics Department, a gentleman who later repented his attitude. However, in an interview after being awarded the Nobel Prize he did remember his surprise on hearing his Jewish colleagues at Columbia and more generally New York students complain about anti-Semitic attitudes. (Academy of Achievement, “Milton Friedman, Ph.D.” accessed 18 December 2015). This is the fate of all immigrant stock: yesterday the Jews, today the Muslims.

9. The horror of the terrorist crimes at the beginning of the present century has made us forget that terrorism is an old and repeated occurrence in Western societies. We need only remember Joseph Conrad’s novels The Secret Agent (1907) and Under Western Eyes (1911). Terrorism must be prevented and fought decisively but we must not forget it is a price we pay for liberty.

10. Michael D. Tanner, The Poverty of Welfare: Helping Others in Civil Society, (2003), Preface. Tanner examines in that book the 1996 Personal Responsibility and Work Opportunity Reconciliation Act signed into law by President Clinton. He shows that the Act had good consequences critics at the time of its framing did not expect, such as the shrinking of welfare rolls and the reduction of poverty, especially for children. But he laments that one cause of poverty, out-of-wedlock childbirth, has not abated, and that government assistance is still tying down many recipients to a life of dependence. (chapter 4)

In memoriam Juan Carlos Cachanosky

In memoriam Juan Carlos Cachanosky

Juan Carlos Cachanosky     With the untimely death of Juan Carlos Cachanosky (13. 10. 1953 – 31. 12. 2015) we have not only lost a very dear and reliable friend. We have also lost a brilliantly insightful and resolute free-market scholar who managed to get so many things right and who could explain real world economic behavior with incision and clarity. Among the small number of true Austrians in Central- and South-America, identified with the European liberal tradition that produced such great thinkers as Ludwig von Mises or F. A. von Hayek, ‘Cacha’ as he was called by his friends, was one of the most enterprising minds, tirelessly working hard to turn his ideas into viable international projects. Despite his remarkable academic achievements in Austrian Economics, he always remained a generous and modest chap, who came as close to the vanishing ideal of an honest mind as perhaps human frailty will ever permit. With his dry sense of humor, his striking energy and passion for spreading sound economics, and his cheerfulness it was at all times intellectually very rewarding to be with or just around him. I feel privileged indeed to have been among his friends and collaborators.

    Juan Carlos Cachanosky studied Economics at the Catholic University of Argentina and was awarded a PhD by the International College of California. Following various academic appointments he was elected Director of Research at ESEADE, a major university and free market hub in Buenos Aires, Argentina. At the same time he successfully directed the Economics Department at the Catholic University in Rosario, Argentina. Among countless other important students, Juan Carlos served as the thesis advisor for Máxima Zorreguieta Cerruti, now Queen Máxima of the Netherlands. For well over a decade Juan Carlos was Dean of Universidad Francisco Marroquín’s Business School in Guatemala City, Guatemala. It was him who helped to push this unique place into an internationally recognized university. After hard work and until his premature death, he worked not only as professor and academic President of CMT Group in Edinburgh (UK), but also as a close collaborator with ECAEF (LI) and the Liechtenstein Academy (LI). As a much sought after lecturer Juan Carlos Cachanosky was active on almost all continents, but his enterprising spirit was mostly appreciated in Central- and South America, in Scotland, and the Principality of Liechtenstein, possibly the last stand for sound economics and free market ideas. Cacha’s work developed from a comprehensive approach to various disciplines that condition and influence one another. His countless publications, especially in the field of monetary theory and the history of economic thought are fine cut jewels.

We at ECAEF and Liechtenstein Academy are very saddened and we will miss him dearly. Our heartfelt condolences go to his family.

Kurt R. Leube
Academic Director, European Center of Austrian Economics

Let Rwandans decide whether to stick with success

In a referendum last week on their country’s constitution, the people of Rwanda overwhelmingly approved an amendment that changed presidential term limits. The new rules mean that 58-year-old President Paul Kagame can run again for the presidency in 2017, and could theoretically serve until 2034, writes Prince Michael of Liechtenstein in his latest GIS publication.

Rwanda, Africa’s most densely populated country, had suffered through civil war and genocide for years until a rebel force commanded by Mr Kagame ended the slaughter in 1994. He then served as vice president and minister of defence until 2000, when he acceded to the presidency. Under a new constitution, Mr Kagame was re-elected to seven-year terms in 2003 and 2010.

President Kagame is probably Africa’s most successful leader. His goal is to develop what was once among the poorest nations on the continent into a middle-income country by 2020. Rwanda boasts few national resources, but under his leadership has achieved impressive growth rates of 7 to 8 per cent annually. Inflation has fallen to single digits. Although the majority of the population still makes its living through subsistence farming, an impressive services sector, especially in IT and telecommunications, has developed. Education and health care are priorities, crime is low and the country is safe.

Mr Kagame – in contrast to many other African leaders – has not been tainted by corruption. Though he has been accused of supporting the M23 rebels in the east of the Democratic Republic of the Congo (DRC), the extent of that support, if any, is unknown. It is important to note that the situation in the eastern DRC is extremely fragile and that the government and its troops have a track record of committing atrocities. Rebels sometimes act in defence of minorities though they may, unfortunately, also commit cruel acts.

All in all, Mr Kagame’s track record is good. Unfortunately, Africa is a place where corrupt leaders tend to cling to power, as is happening now in neighbouring Burundi. However, Mr Kagame continues to enjoy the support of a solid majority of the population – as shown by elections whose results, on all evidence, have not been manipulated.

The administration of United States President Barack Obama has come out strongly against measures taken to allow Mr Kagame to run again. ‘President Paul Kagame has an opportunity to set an example for a region in which leaders seem too tempted to view themselves as indispensable to their own countries’ trajectories,’ said Samantha Power, the US ambassador to the United Nations, at the beginning of December. ‘We expect President Kagame to step down at the end of his term in 2017.’

The initiative has also been widely criticised in Europe. But the choice does not lie with the Americans or Europeans. The decision is the Rwandans’ alone to make. The international community should abstain from judgement.

We do not know what path President Kagame will take in the future, nor the details of how his succession will proceed. We do know, however, that he has promoted integration in a country with a history of discord, and that he has a clear, positive vision for its future. No critic of Rwanda’s choice has come forward with a credible alternative. In a country at an early stage of development, continuity can be essential – and President Kagame is not yet an old man.

Europas Wertegemeinschaft ist ein Wieselwort

Wertegemeinschaft Europa

Europas Wertegemeinschaft ist ein Wieselwort

von Frank Schäffler (Prometheus – Freiheitsinstitut, Berlin)

Europa droht zu zerfallen – und die EU-Kommission beschäftigt sich mit einer Kerzen-Verordnung und einem Kerzen-Verbot. Aber geredet wird von europäischen Werten. Weiter können Sprüche und Wirklichkeit nicht auseinanderfallen.

Erst durch konkrete Institutionen werden die europäischen Werte fassbar. In diesen Tagen der europäischen Krise werden wieder die europäischen Werte beschworen. Europa sei eine Wertegemeinschaft, betonte Bundeskanzlerin Angela Merkel neulich im Parlament der Europäischen Union. Merkel bezog diese floskelhafte Aussage auf die Flüchtlingskrise. Sie forderte, Europa müsse sich an Menschenwürde, Rechtsstaatlichkeit, Toleranz, der Achtung von Minderheiten und Solidarität orientieren.

KAMPF UM WERTE IN EUROPA

Zweifelsohne sind dies wichtige Werte, die Europa historisch verbinden. Es waren spanische Dominikaner, die im 16. Jahrhundert beim Anblick der Unterdrückung der Bevölkerung in Mittel- und Südamerika die Menschenwürde als universelles Grundrecht gegenüber dem spanischen König einforderten. Es war im 13. Jahrhundert die Magna Charta, die die Willkür des englischen Königs beschnitt und den Weg zum Rechtsstaat bahnte. Schon im 16. Jahrhundert wurden die Werte Toleranz und Achtung von Minderheiten eindrücklich verwirklicht, als etwa das Königreich Polen-Litauen verfolgten Protestanten aus ganz Europa eine neue Heimat gab. Und es war der als Sankt Martin verehrte Bischof von Tours, der im 4. Jahrhundert seinen Mantel aus freien Stücken mit einem Bettler am Wegesrand geteilt hat.

Ob Angela Merkel wohl an diese historischen Ereignisse gedacht hat? Es spricht nicht viel dafür. Doch da ist sie nicht alleine. Heute werden die Werte Europas umgedeutet und in Sonntagsreden banalisiert. In der real existierenden Europäischen Union wird unter Menschenwürde der Beschäftigung vernichtende Mindestlohn und unter Rechtsstaatlichkeit die Vertragsbrüche von Maastricht und Dublin verstanden, unter Toleranz die Regulierung von Kerzen, Ölkännchen und Glühbirnen, unter der Achtung von Minderheiten die Förderung der Nomenklatura in Brüssel und unter Solidarität die Rettung europäischer Banken. Die europäische Wertegemeinschaft ist ein Wieselwort. Erst durch konkrete Institutionen werden abstrakte Werte real und fassbar.

Die Trennung von Kirche und Staat, Marktwirtschaft, individuelle Freiheitsrechte, Rechtsstaat und Demokratie sind Institutionen, die diese Werte Wirklichkeit werden lassen. Die Trennung von Kirche und Staat ist das Ergebnis eines über Jahrhunderte ausgetragenen Machtkampfes zwischen den Kirchen und den weltlichen Herrschern. Der Drang der Kaiser und Könige, sich in innerkirchliche Belange einzumischen, und das Ansinnen der Päpste und Bischöfe, sich die weltlichen Herrscher zu ihren Untertanen zu machen, haben eine Machtbalance hervorgebracht, deren Ergebnis die tatsächliche Trennung der beiden Bereiche war. Anders als etwa in den meisten islamischen Staaten, die keine Trennung zwischen Religion und Staat kennen. Ein entscheidender Unterschied ist, dass in unseren Breitengraden das kirchliche Recht nicht über dem staatlichen Recht steht, sondern ihm untergeordnet ist. Zwar entstammt die europäische Rechtstradition auch dem kanonischen, also kirchlichem Recht, aber auch dies entstammt letztlich griechisch-römischer Rechtstradition.

WACHSENDE KLUFT ZWISCHEN WERTEN
UND INSTITUTIONEN

Die Marktwirtschaft und der Kapitalismus haben ihre Verankerung im Privateigentum und im Individualismus. Beides verdanken wir der schottischen Aufklärung des 18. Jahrhunderts, dessen prominentester Vertreter Adam Smith war. Einige wesentliche Erkenntnisse über deren Funktionieren haben sogar bereits die scholastischen Philosophen im 13. Jahrhundert und die Gelehrten der Schule von Salamanca im 16. Jahrhundert gewonnen und formuliert.

Die individuelle Freiheit folgt der Erkenntnis, dass nicht das Streben nach gemeinsamen Zielen eine freie und offene Gesellschaft ermöglicht, sondern dass die größtmögliche Verwirklichung individueller Freiheit am Ende auch die Freiheit einer ganzen Gesellschaft mehrt.

Der Rechtsstaat sichert in der Tradition eines Immanuel Kant die Gleichheit vor dem Gesetz. Sein kategorischer Imperativ: “handle nur nach derjenigen Maxime, durch die du zugleich wollen kannst, dass sie ein allgemeines Gesetz werde” hat nicht nur die europäische Verfassungsgeschichte seit dem 18. Jahrhundert maßgeblich beeinflusst, sondern auch die amerikanische.

Das Aufbegehren gegenüber den Königen und Fürsten durch das Volk brachte letztlich auch die Demokratie hervor, deren Wurzeln wir in der Schweiz verorten können wie in Großbritannien, in den Niederlanden wie in Polen. Bald erkannte man, dass es nicht genügt, nur dem reinen Mehrheitsprinzip zu folgen, sondern dass man Demokratie einhegen muss in einen Grundrechtskatalog, der das Individuum vor der Despotie der Mehrheit schützt. Heute wissen wir, dass Fortschritt darin besteht, dass die Wenigen die Vielen überzeugen. Neue Ideen treten zuerst bei Einzelnen auf, bevor sie zur Mehrheitsmeinung werden können.

Diese Institutionen entstammen einer europäischen Werte-Tradition, die längst vergessen scheint, weil Werte und Institutionen immer wieder auseinanderklaffen. Sie wieder ans Tageslicht zu bringen, würde Europa helfen, seine Krise zu überwinden, und der europäischen Wertegemeinschaft wieder einen Sinn zu geben.

"Mit freundlicher Genehmigung des Autors: Frank Schäffler (Prometheus Institut, Berlin). Der Artikel erschien ursprünglich am Dec. 11, 2015 in den "Orientierungen" der Ludwig Erhard Stiftung."