Do Temporary Surges in Political Instability Heighten the Incentives to Overproduce Laws?

Here’s an interesting piece that my researchers sent over while building a bespoke ICRG literature review for one of our clients.

First, I must say that – lamentably, and perhaps because I’m forced to deal with far too many lawyers – I’ve always been astounded at the propensity of some individuals (supported by institutions and cultures) to resolve almost every issue with resort to a rule or regulation and, where is an apparent gap, create a new one. It’s if we are incapable of using reason, compassion, and practicality to resolve conflicts, however minor.

There were a few lines in this article published in the American Economic Review that caught my attention, as it used our ICRG risk data to investigate the connection between political instability and the overproduction of laws: ‘[t]emporary surges in political instability heighten the incentives to overproduce laws and can shift the economy towards the Kafkaesque state.’ And by extension: ‘[w]ith inefficient bureaucratic institutions, the effects of laws are hard to assess, and incompetent politicians may pass laws to build a reputation as skillful reformers.’

Phrased differently, the idea here is that less-than-perfect situations can create additional problems and, more specifically, flawed state machinery can be exploited by less-than-noble characters, which create unintended and unnecessary results.

The article begins by looking at variations in how well bureaucracies perform across countries, with some resembling the Weberian ideal of order and efficiency, while others are known for their Kafkaesque disorganization.  The paper goes on and talks about Italy: after a surge in political instability in the early 1990s, the country experienced a significant increase in the amount of poor-quality legislation and a decrease in bureaucratic efficiency.

Have a look.  It lends some insight into much of what we’ve seen over the course of the past decade or so: (https://www.jstor.org/stable/27086098?searchText=ICRG&searchUri=%2Faction%2FdoBasicSearch%3FQuery%3DICRG%26so%3Drel%26pagemark%3DeyJwYWdlIjoyLCJzdGFydCI6MjUsInRvdGFsIjoxMDMxfQ%253D%253D%26groupefq%3DWyJzZWFyY2hfYXJ0aWNsZSIsImNvbnRyaWJ1dGVkX3RleHQiLCJzZWFyY2hfY2hhcHRlciIsIm1wX3Jlc2VhcmNoX3JlcG9ydF9wYXJ0IiwicmV2aWV3IiwiY29udHJpYnV0ZWRfYXVkaW8iLCJjb250cmlidXRlZF92aWRlbyIsInJlc2VhcmNoX3JlcG9ydCJd&ab_segments=0%2Fspellcheck_basic_search%2Fcontrol&refreqid=fastly-default%3A4efedd0f9e3953b87a7c32c76a72ecc5)

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CHRISTOPHER MCKEE, PHD CHIEF EXECUTIVE

Christopher McKee is PRS’ CEO and Owner. An international political economist, global investor, entrepreneur, and author, Chris received his PhD from Queen’s University (Canada) and has been involved in the field of geopolitical risk, limited recourse financing, and private sector development for the past 25 years.