TWENTY YEARS AGO liberals thought they knew how to make a
country rich: self-government, public education, and loads of World
Bank infrastructure grants. Free-market conservatives also had a
simple nostrum. “Privatize, privatize, privatize,” said Milton
Friedman. Today they both know better. What they missed was
something so obvious that it escaped their attention: the rule of
law.
In time we all came to recognize the crucial need for a legal regime that promotes growth. Privatization isn’t enough, recognized Friedman. “The example of Russia shows that. Privatization is meaningless if you don’t have the rule of law.” It’s been estimated that a rule-of-law improvement from relatively poor to merely average would result in a fourfold increase in people’s earnings. Along with that would come the spillover benefits of a wealthy society: better health, higher literacy, stronger safety nets, happier people.
But just what does the rule of law mean? When politicians talk about the rule of law, they mean democratic elections. When newspapers talk about it, they mean a free press. All well and dandy, but these miss the more important ways that the rule of law contributes to economic progress. What makes a country rich is private, not public, enterprise, and what private enterprise requires is a legal system that protects and encourages private ordering through stable property rights and enforceable promises.
http://spectator.org/archives/2013/09/30/the-misrule-of-law-in-america
In time we all came to recognize the crucial need for a legal regime that promotes growth. Privatization isn’t enough, recognized Friedman. “The example of Russia shows that. Privatization is meaningless if you don’t have the rule of law.” It’s been estimated that a rule-of-law improvement from relatively poor to merely average would result in a fourfold increase in people’s earnings. Along with that would come the spillover benefits of a wealthy society: better health, higher literacy, stronger safety nets, happier people.
But just what does the rule of law mean? When politicians talk about the rule of law, they mean democratic elections. When newspapers talk about it, they mean a free press. All well and dandy, but these miss the more important ways that the rule of law contributes to economic progress. What makes a country rich is private, not public, enterprise, and what private enterprise requires is a legal system that protects and encourages private ordering through stable property rights and enforceable promises.
http://spectator.org/archives/2013/09/30/the-misrule-of-law-in-america
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