Today I’m going to take a break from writing tips to climb on my soapbox. I have an apparently self-loathing lawyer friend who likes to complain that we lawyers are carbuncles on the face of humanity I like to point out to him that one of the founding principles of America is that we “are a government of laws and not of men.” That is, we are all governed by the rule of law. It is the rule of law that has made America the richest nation on earth and the last remaining superpower. Lawyers have always played a significant role in American society. It is nothing new. America has grown in wealth because of this and not in spite of this.
We have laws that create stable capital markets. Intellectual property law protects innovators and creators allowing them to profit from their creations. Businesses, credit card companies, and banks can all extend credit because of the rule of law. Minority shareholders can invest knowing that their rights are protected. Foreign investors can buy real property, bonds, and shares secure in the knowledge that some arbitrary and capricious decree will not deprive them of their property. Americans can buy homes and other property knowing that their property rights are protected by the rule of law. In short, it is the rule of law that makes the American economy function.
I was reminded of this while reading Thomas L. Friedman’s book “The World Is Flat: A Brief History of the Twenty-first Century.” He has a section where he talks about the sclerotic regulatory and legal systems of other countries where a bankruptcy can take ten years or a routine collection matter can take “27 procedures” and “more than 550 days.” Small business owners cannot get credit because of inefficient courts and poor mechanisms for enforcing debts. The adoption of efficient regulatory and legal systems is one of the major differences between emerging economic powers like China and India and the also rans like Egypt, sub-Saharan Africa, and Latin America.
Mexico is located on the same continent as the U.S. and has relatively abundant resources, including oil. Yet, according to Mr. Freidman, Mexico imports statues of the Virgin of Guadalupe from China. Mexico has a large supply of cheap labor and yet it languishes in poverty while China races ahead. A Mexican citizen can buy a condominium anywhere in America and know that his investment is respected and protected, but an American cannot do the same in Mexico. China’s economic reforms have created enough comfort for foreign citizens to invest there and do business with China. This is one of the key differences between the countries. These differences are due in part to the rule of law.
Is there room for reform? Sure. Things can always be made better. Procedures, especially for smaller matters, could be streamlined. Could we use fewer lawyers and more engineers? Absolutely. But the next time you sit in your own home and bash lawyers, remember that it is a well established system of laws that allowed you to borrow the purchase price of your home, record the deed, and protect it against all others.