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.


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.


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."

Fallacies of State Education



by Alberto Benegas-Lynch, Jr.

European Center of Austrian Economics Foundation, Liechtenstein University, Vaduz, May 29, 2015

The first thing that should be said is that the expression “public education” is completely misleading, it hides the real nature of what it means to say, that is state education since, on the one hand, private education is also for the public, and on the other, the disguise is used because state education is such a horrible expression as state literature, state press, state art and the like, these are grotesque contradictions in terms. Force does not teach, in the last analysis, it is impossible to teach freedom and independence of thought based on compulsion.

In most countries today private education is not really private since secretaries and ministries of education must approve curricula. The private sector, with some limits, take care of such things as buildings and uniforms, but the essence of what they are offering to the public is managed or influenced by bureaucratic departments. This is a central characteristic of the hypocrisy of fascism: private property is registered by privates but government uses and disposes of it, in contrast with communism that in a direct way abolishes property. Both operate in the same direction, one in an indirect way and the other directly, but both distort accounting or block it all together because relative prices are falsified or eliminated, which means misallocation of scarce resources that necessarily increases poverty.

In a civilized country ministries and secretaries of education should disappear and accreditation, as it was originally, would be done by academies and private institutions that in the process audit each other and take responsibility of the quality of school and university programs.

Politics should not interfere with such an important and delicate matter as education. Since we are all different in most respects, specially from the psychological perspective, programs must be different to fit different potentialities given that we all are unique and in a multidimensional fashion, which requires not only competition of very different approaches but must be dynamic. Also it must be stressed that each one of us is not the same today in relation of what we were yesterday. To impose educational programs or guides vertically from political power, although they might be decentralized in the context of politicization, is not to understand what education is about.

It must be understood that we all pay taxes, specially those poor people that never have seen a form to pay direct taxes. This is so because those who are de jure tax payers reduce investment which, in its turn, reduces wages and income in real terms, a process that occurs since capitalization is the only explanation to rise standards of living.

Moreover, if we take on account the marginal utility concept it will be clear that a unit of money in general -although it is not possible to compare intersubjective values nor refer to them in cardinal numbers- is not the same for a poor person than it is for a rich one, as a consequence the negative effect is higher in the first case, so we conclude that the poor is in a worse situation since, in practice, they are responsible of a huge proportion of the payment. In other words, the consequence for relative poor people is deeper and more severe that what investment contraction and simple numbers indicate.

Imagine a very poor family that is not in condition to afford de opportunity costs to send their children to school. In that case, trough taxes that family is paying schooling for richer persons to attend. And if a family with great effort can send their boys and girls to study -if they incorporate a reasonable tax analysis- they will send them to a state school so to avoid paying double costs: one for the private school and another for the state school.

From another perspective, the costs per student in state education centers are in general higher than in private institutions for the same reason the so called “state enterprises” are inefficient. The constitution of these corporations necessary mean malinvestment because resources are allocated in a different way that the market would of done (and if it were in the same direction, there is no reason for state intervention). The way people drink coffee and the way they use lights is not the same in a private place than in a state building. Incentives and the “tragedy of the commons” operate in a inefficient way.

The voucher system has been suggested several times. It is true that this system shows the non sequitur: this means that from the premise that people should be forced to finance other peoples education it does not follow that there should be state institutions, since vouchers (demand subsidies) allow people to choose between all the existing private educational institutions.

In any case, vouchers also mean that poor people are principally financing more affluent students and, although IQ standard measurements are irrelevant (we are all intelligent but for different matters), those who do not qualify for the existing academic proposals must pay for those with better conditions and are more qualified, which is of course also an unacceptable injustice.

This does not mean that private vouchers should be eliminated, on the contrary, these provide very good incentives just the same as scholarships that are financed voluntarily in sight of positive externalities that good education means. The problem arises in the case of state vouchers.

It has been said that education is a public good, but this does not resist a technical analysis given that it does not meet the non-rival and the non-exclusion principles.

It has also been said time and again that state education must be incorporated because it gives support to the idea of “equal opportunities”.

Equal opportunity, prima facie seems attractive but it is absolutely incompatible with equality before the law. Liberalism and the open society provide that people have more opportunities but not equal. If a mediocre tennis player were to have equal opportunity playing with a professional, there must impose that the latter, for example, should play with one leg and, and that means that his rights have been infringed.

Similar reasoning goes for the alleged “right to education”. There is not such thing. A right implies the counterpart of an obligation. If somebody obtains 100 in the labor market, there is an universal obligation to respect that income, but if the same person demands the “right” to receive 200 which he does not earn, and this is granted by the state, this means that other persons are coerced to pay the difference which will infringe their rights, that is the reason why the “right to education” is a pseudoright.

I am perfectly aware that today state education is the sacred cow of the moment, nevertheless it should be denounced as a dangerous myth.

It is said that those that have the intellectual conditions to apply to the available educational proposals but do not have the sufficient resources, should be helped. This is a very well inspired statement but for this the first person of the singular should be used and not the third of the plural. “Put your money where your mouth is” constitutes a good recipe. In the same token, this is the reason why solidarity and charity can never be provided by the state since they mean voluntary acts with funds that belong to the owner.

In various countries home schooling is used as a defense against the invasion of state education, not to say the explosive revolution of on-line universities teaching. Some time ago, The Economist treated the home schooling issue at length where the opinion of some admission officials of Ivy League Universities in the US appeared in relation with candidates that studied under home schooling. They said that they were impressed not only with the high standard skills and learning of students but by their excellence in language and dressing.

Some object home schooling based on the opinion that the system does not allow to socialize with other students, which is not true because those programs specially concentrate in relations with other youngsters through sports, dancing, chess clubs, Church and other kind of meetings. The extraordinary support of Internet programs does not require that parents know the content of different topics, they just must be near and alert with schedules for their children, directly or via persons hired for that purpose at home.

Where state education exists, at different degrees, sooner or later, indoctrination will take place. If bureaucrats are in charge of education it is a natural consequence that government should influence programs and texts in some way, which affects the so crucial diversity. Just the same as it is so important to separate religion and power, education and political power must be separated if an open society would be the goal.

In some countries historians concentrate in education when state education appeared and do not take note of the previous private schools and institution that existed, most of them disappeared due to the irruption of “free” education, situation that had a negative effect on this field. It is also relevant to stress the indirect influence of politics in education when government finances the so called “private education”, for example, the large proportions of the budget of some of what are considered as high rank US universities, such as Richard Pipes shows in great detail.

It is maintained that children should have a minimum of education such as learning to read and write, but if this is so and people agree it is precisely what they will have through direct payments or through scholarships, there is no need for compulsion. It is true that education is basic, but more basic is to have food and no sensible person will suggest that food production should be in the hands of the state as in Stalin´s era -and his imitators, past and present- because people starve under that conditions. When politics take over education there is a tendency to produce another kind of starvation: the cultural and spiritual one.

May be the most powerful reason for the degradation of education is the corruption of democracy, originally as majorities owe respect to the rights of minorities, but instead have smuggled and installed an infamous system that we can identify as cleptocracy, that is, government of thieves of liberties, properties and legitimate dreams and projects of private lives.

If we pay attention to the writings of historians, we learn that starting with Athens, education was free from government regulation. Anybody could start a school and compete for students at very different prices, which produced the most well educated society of the time, in contrast with Sparta that established a military and totalitarian system that made that society the least literate of that world, only trained in brute force and aggression of dissidents and neighbors with no such thing as private lives.

Rome had basically a free system that included private tutoring during the Republic which changed with the Empire that required teachers to be officially certified and demanded state licenses for schools, and prosecuted and deported teachers whose teachings were disapproved by government.

In the Arab world, education was based on the Athens free system. This was the reason for progress in architecture, medicine, economics, law, geometry, algebra, philosophy, agriculture, literature and music during several centuries, instead of fanatic governments of our time who are inclined to socialize education as a way to indoctrinate people for political and religious purposes, as it was established before in some Christian countries through the criminal Inquisition and other authoritarian methods. In Spain, during the eight centuries of Arab governments, the enormous progress obtained has been stated by historians in the very different fields we have just mentioned, including religious tolerance for Jews and Christians.

Due to the propagation of the control of the state in education and other fields, starting in the sixteen century, the first system of state schools was established in Germany, Switzerland and France. In the eighteen century most of Europe was under the influence of that view (except Belgium that established the system in 1920). In the United States, except New England, education was free but this changed dramatically and in the twentieth century compulsion to attend schools was established and the Secretary of Education was introduced in the seventies. Originally, in the colonies parochial education of different religious denominations had great influence and, later on, in some colonies when state education started it was financed with state lottery so as not to resort to compulsion.

The argument that state schools and state supervision of the so called private education must be controlled by the state to “fabricate good citizens” is a very bad excuse for indoctrination. This is why it is wrong to suppose that if government spends more in state education things will be better: on the contrary, via politicization things will worsen. The revival of the statist ideas of Herder, Fichte, Hegel, Schelling, Schmoller and List in German schools and universities (which, in part, Bismarck started in the political field) is one of the main reasons through which Germany prepared the path for Hitler to assume power. And once the Nazis were in government, the system was endorsed by such intellectuals as Keynes who in the preface of his 1936 German edition of The General Theory wrote that “the theory of output as a whole, which is what the following book purports to provide, is much more easily adapted to the conditions of a totalitarian state, than is the theory of production and distribution of a given output produced under conditions of free competition and a large measure of laissez-faire”.

I would like to end this telegraphic presentation by quoting Ludwig von Mises from his book The Free and Prosperous Commonwealth, where he underlines that “there is, in fact, only one solution: the state, the government, the laws must not in any way concern themselves with schooling or education. Public funds must not be used for such purposes. The rearing and instruction of youth must be left entirely to parents and to private associations and institutions”.

Download the entire essay, including Bibliography here ->

An Austrian in Argentina


by Federico N. Fernández*

   Thanks to the generous invitation of Juan Carlos Cachanosky and Kurt Leube I had the pleasure to co-edit a book in honor of Alberto Benegas Lynch, Jr. The Festschrift is titled “An Austrian in Argentina. Essays in Honor of Alberto Benegas Lynch, Jr” and is comprised of articles written by some of the greatest contemporary thinkers of the Austrian tradition in Latin America.
Benegas Lynch is a key figure of classical liberalism and Austrian economics for the Spanish speaking world. He has authored more than twenty books and countless articles. Scholars like James Buchanan, Jean-Francois Revel, and the Nobel laureate Friedrich von Hayek have written forewords for some of his books. He has always been a staunch and uncompromising defender of the ideas of freedom and open society. Benegas Lynch has reflected on many areas and has made multiple original contributions. Lately, he has been writing on matters related to determinism and free will and about education … Continue Reading -> Market Diaries


*Federico N. Fernández: Austrian Economics Center Senior Fellow, Classical Liberal, Critical Rationalist.