Encouragingly, the mainstream economics profession has been prating for some time now about the connection between the “rule of law” and economic prosperity and growth.
Most libertarians might take this increasingly popular term as mainstream code for “freedom and property rights,” as I do. I feel it’s what they’re trying to get at while: (a) maintaining the obligatory mumbo-jumbo that the profession relies upon to awe the natives; and (b) not saying anything that seems to lack compassion, such as that some people deserve to be rich and perhaps even grow richer.
This long article from the current Economist gives a good history of the term’s development along with the data required to produce terms like “a standard deviation of governance.”
Study the trend, and see if you think they’re bumbling toward, or away from, freedom and property rights.
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They seem to be arguing more that rule of law is loosely correlated with prosperity as though they both arise from some third unknown generator. I think they would rather spend time looking for that mythical source in hopes of rejecting the need for rule of law to create prosperity.
In response to the arguments that countries like China seem to have economic growth without rule of law, I would point out that there are many ways to have rule of law besides a traditional state. If you are governed by a criminal enterprise that extorts half your income but guarantees the other half is yours and enforces contracts and property rights, you have rule of law. On the other hand, if you live in a democracy that takes whatever it pleases for the “common good,” bails out certain groups who fail to meet contractual obligations, and changes the terms of contracts, then you have no rule of law.
Much of the article hinges on the idea that no one really knows what rule of law is. But everyone knows what rule of law is when they negotiate a deal. Even children hate it when bullies change the rules in the middle of the game so they can win. Only adults lose sight of the importance of rules.
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