The free-market economist Milton Friedman used to argue that for a nation to prosper, all that was needed was to increase privatization and reduce the size of the state. But the collapse of the Soviet Union and other communist states made him realize that “Privatization is meaningless if you don’t have the rule of law.”
Today, the idea that the rule of law is a necessary component of growth is all but commonplace. So why don’t more economists and policymakers connect the dots between America’s slow growth and our poor ranking, compared to other nations, on measures of the rule of law?
As F. H. Buckley, Foundation Professor at the George Mason University School of Law, points out, America is not as high on the rule of law scale as most of us would assume:
The index measures how corrupt government officials are perceived to be, and is based on sample questions about things like bribe-taking and the use of public office for private gain. A similar measure of corruption, by the World Justice Project, ranks the U.S. tenth out of 12 peer countries in North America and Europe. Moreover, this likely understates America’s corruption problem, when corruption is understood to include wasteful lobbying. What bribes are for poor countries, lobbying is for rich ones: a means of obtaining political influence with money. No other country has anything like the number of American lobbyists, who load up legislation with interest-group bargains.
America’s ranking on measures of corruption is nothing to write home about, and we can expect it to get worse before it gets better, for three reasons.