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Free market fantasist often claim that laws and regulations stand in the way of business, but the example in this story indicate the opposite.
When men of power are not constrained by the rule of law, the costs of doing business can quickly rise to unsustainable levels.
1/ https://twitter.com/matthewsyed/status/1305052958879608832
When men of power are not constrained by the rule of law, the costs of doing business can quickly rise to unsustainable levels.
1/ https://twitter.com/matthewsyed/status/1305052958879608832
While the example is of a factory in Nigeria, I have seen many similar cases in Asian countries. Investors discover the need to pay spurious "fees" on services, traders unable to clear their goods without paying exorbitant bribes... many sad tales often ending in bankruptcy.
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Experiences like this show that those who see all laws and regulations as nothing more than "obstructive and superfluous red tape" are wrong.
In truth, some laws and regulations play a very positive for business. They can butter the path to profit rather than obstruct it.
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In truth, some laws and regulations play a very positive for business. They can butter the path to profit rather than obstruct it.
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Most importantly, it's the rule of law which decides whether regulations are costs or benefits. When all companies play by the same rules you have a level playing field. When some of your competitors are bribing officials to get around those rules this no longer is the case.
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The ability to pay a one-off "fee" to circumvent some "annoying red tape" may appeal to some who have not experienced life in countries where this is the norm.
But businesses from such countries dream of the rule of law - a key reason why they traditionally invest in the UK.
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But businesses from such countries dream of the rule of law - a key reason why they traditionally invest in the UK.
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They also appreciate the fact that they will be treated fairly and equally, that courts will judge disputes according to the merit of a case, without bias to whether a business is owned nationals, foreigners or the state. We're used to this here and take it for granted.
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But those of us who have done business in countries that do not have strong culture of the rule of law know that its merits outweigh the costs.
This is why we are so alarmed when politicians in countries that ought to know better become willing to bend or break the law.
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This is why we are so alarmed when politicians in countries that ought to know better become willing to bend or break the law.
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Whether this is deliberately ignored or unknown to the think tankers who want us to emulate such economies is a moot point. Most are young men with no business experience, let alone of the East, aside perhaps a short trip which left fond impressions of skyscrapers. So naive...
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