Celebrating Freedom: Economic Prosperity and the Rule of Law

When thinking about the concept of justice in the western world, it is almost inextricably linked and dependent upon the Rule of Law and the somewhat fragile and vulnerable justice system that supports it.

Day after day we go about our business, generally relying on the fact that: people will stop at the stop signs; when we place our signature on an agreement, it will be honoured; there is an invisible line around our property that the neighbors will respect.

Likewise, investors and banks are generally able to rely on the fact that if they invest in a company or make a loan to a business or individual, their agreements, and the security they register will be enforced by the courts if not honoured by the participants.

As a consequence, nearly one-hundred percent of the time, people honour the promises they make and repay their debts.

Under the Rule of Law, it does not matter if you are a janitor, a barber or a Prime Minister. We are all subject to the same equal treatment under the Rule of Law and we can rely on the arrangements and agreements we make with those who may be wealthier, better connected, and more powerful than we are.

This being said, the system is fragile and can easily fall into disrepute. Law-enforcement, lawyers and judges work at the messy fringes of the system, striving to keep the system reliable, dependable and reputable, with significant success, but the system is always vulnerable to corruption, lack of resources and subsequent lack of respect.

In the western world, we tend to take the Rule of Law and supporting justice systems for granted.

Without awareness, we rely on them just like we rely on getting water from the faucet every day, but never think about the planning, infrastructure, and commitment it takes to make it work reliably or the daily dependence we have on the system to help regulate our lives. Ongoing respect for the system is key to prosperity and economic success.

In most parts of the world, the Rule of Law is either not present or the justice systems that support it are underfunded, understaffed, or otherwise under-resourced. The consequence of this is that justice starts to appear arbitrary and whimsical, quickly losing the confidence of the citizens and falling into disrepute. Individuals are not able to assume that the agreements they sign will be fulfilled. They cannot ensure that their property boundaries will be honoured or that investments or loans they make will be repaid.

Even large institutions like banks find it impossible to grant a mortgage to an individual or give a loan to a business as there is no security of title to property and assets. The enforcement systems do not make for a predictable outcome.

Without mortgages, people live in substandard housing as they must pay for improvements in advance of using them and cannot amortize them over time. Likewise, investing to advance a business venture becomes unduly risky as there is no dependable system to ensure the integrity of the investment or a return on capital.

The inability to enforce agreements and mortgages leads to trapped capital, unusable for advancing employment and prosperity. The lack of certainty leads to lack of investment, resulting in unemployment and poverty.

Notwithstanding that the system in Canada is not perfect, we should all be thankful on this one hundred and fiftieth anniversary of confederation, that, unlike many places in the world, we live in a country that still respects the Rule of Law and that supports the Rule of Law with a working justice system. We can be thankful that we don’t risk incarceration, or worse, for belonging to the “wrong” political party or the “wrong” religion.

For the most part, we don’t have to wonder if someone who is more wealthy, or more powerful, or who has better personal connections will take our property or our children.

The Rule of Law and a supporting justice system are fragile things that we often take for granted. However, this privilege we have but must be guarded, nurtured and honoured. The concepts need to be reinforced so that the system remains reliable, predictable and reputable such that the general population continues to retain broad confidence in them.

We must remain continuously vigilant to ensure that the Rule of Law and the support of our justice systems continue to be fundamental ingredients in the recipe that has led to our nation’s prosperity, and, along with IJM, we should look for opportunities to help prop up failing systems in other parts of the world so that they may enjoy prosperity as well.

Written by Lorne Penner as part of a series celebrating Canada 150.
Photo: Esther Havens Photography via IJM