David Skeel: Respect For The Rule of Law
Posted by Larry Doyle on August 22, 2012 8:32 AM |
If we do not have the courage to enact laws and then mandate that they are upheld, what type of future will we have? Not the future that we could have and should have. I have tried to address this topic regularly here at Sense on Cents.
A few months back, I highlighted a clip from Barron’s that I found quite chilling:
When countries improve rule of law, property rights, and investor protections, and when regulation becomes more transparent and corruption reduced, there are major payoffs. The World Justice Project says the U.S. has been deteriorating for close to 10 years by all these measures, which contrasts with improvements in some emerging markets, like Hong Kong.
The costs being borne by America for not embracing the rule of law are very real but not readily transparent given that the media does not actively address this issue. That is a shame.
On this note, I was heartened to see David Skeel, a professor at the University of Pennsylvania Law School, write an editorial in today’s Wall Street Journal on this critically important topic. These excerpts made a major impression on me.
>>No one doubts that the coming election will be the most important referendum on the size and nature of government in a generation. But another issue is nearly as important and has gotten far less attention: our crumbling commitment to the rule of law.
>>Even in a crisis, jettisoning legal constraints can have enormously destructive consequences. Investors are likely to flee, for instance, precisely when continued confidence in the markets is essential.
>>By far the most disturbing element of recent trends is that precisely the opposite seems to be taking place. The commitment of government officials to the rule of law has continued to crumble—even after the crisis has subsided.
>>A sad irony of these developments is that rule-of-law values have been one of America’s greatest contributions to world-wide economic development in recent decades. When the economist Hernando de Soto tried in the 1990s to determine why economic growth is so limited in much of the world, he concluded that respect for basic property rights is essential.
>>America, where this commitment gradually emerged in the 19th century, was Exhibit A in Mr. de Soto’s story. In the years after the Berlin Wall fell in 1989, American markets served as a model of the importance of privatization and protection of property rights as the nations of Eastern Europe charted a new economic future. Now we increasingly are the ones that need to learn these lessons.
>>Rule-of-law matters cannot be separated entirely from questions about the size and role of government. The more government grows, the harder it is to preserve rule-of-law virtues like transparency and clear rules of the game.
I heartily recommend A Nation Adrift From the Rule of Law. I feel so strongly on this topic that I believe Skeel’s writing warrants that we immediately induct him into the Sense on Cents Hall of Fame.
If only those in Washington had an equal appreciation. Are we on our way to becoming a third world “banana republic?”
I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.