Eroding the Rule of Law Threatens US Economy

The US economy is facing a threat that goes beyond inflation and trade wars - chaotic deregulation and selective enforcement of laws have upended markets and investor confidence. A decline in the rule of law has resulted in over $4 trillion evaporating from the US stock market. This approach is not only detrimental to the economy but also poses a significant risk to both the US and global economies in the short and long term.

Key Takeaways:

• The rule of law has declined in more than half of all countries for seven years in a row, according to annual rankings from the World Justice Project.
• The US, the most economically powerful nation in the world, has weaker rule of law than Uruguay, Singapore, Latvia, and over 20 other countries.
• Chaotic deregulation doesn't drive growth; it fuels risk, undermines investment, talent, and trust.
• Legal uncertainty has become a serious drag on American competitiveness, with public policy risks ranking among the top challenges businesses face.
• When government enforces rules arbitrarily, it undermines property rights, threatens freedom to enter into contracts, and allows corruption to spread.
• Halting the enforcement of anti-bribery laws, even for a limited time, is an issue of national security, and can fuel brain drain, labor market corrosion, and economic losses.
• American scientists have submitted 32% more applications for jobs abroad compared with last year, and nonscientists are leaving the US at an increased rate.
• Threats of arbitrary legal actions drive away democratic allies and their prosperous populations, leading to economic losses for American businesses.

Statistics:

• $4 trillion: the value of US stock market losses due to chaotic deregulation and selective enforcement of laws.
• 7 years: the number of consecutive years the rule of law has declined in more than half of all countries, according to the World Justice Project.
• 64%: the increase in public policy risks as the top challenge businesses face, according to the US Chamber of Commerce.
• 32%: the increase in job applications for scientists abroad compared with last year.
• 50%: the increase in Americans taking steps to obtain an Irish passport.
• $1.5 billion: the estimated loss in revenue for US businesses due to retaliatory tariffs from Canada.

Sources:

• The Conversation -- USA (2) -- By Robert Bird, Professor of Business Law & Eversource Energy Chair in Business Ethics, University of Connecticut
• World Justice Project annual rankings
• US Chamber of Commerce study
• The Conversation -- USA article "The rule of law is key to capitalism: Eroding it is bad news for American business"
• Contify.com report on American businesses facing economic losses due to retaliatory tariffs from Canada