Rule of law: also important economically

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If we were to ask ourselves what the term rule of law means, probably, among different definitions, we should prefer the one that conceives it as that form of state that protects citizens’ fundamental rights and freedoms.

And which, therefore, contrasts it not only with dictatorial states, but also with police states. That is, those systems which, even if formally constituted as democratic states, do not however observe certain fundamental rights. Or, in any case, they envisage excessive forms of interference by public authorities in the private life of individuals.

But what does this concept have to do with the economy?

And why is this topic returning to the fore in this period, regarding the Recovery Fund?

Rule of law: also important economically

One of the reasons why the rule of law is also important economically, certainly goes back to the fact that a dynamic economy, capable of significant growth rates, is accompanied in Western States by the type of protection that economic and subjective rights also receive from a Rule of law.

In the absence of these protections, the entrepreneur and the investor do not feel sufficiently protected, because anything could happen. From unfounded criminal charges relating to their activities to the failure to recognize economic rights, in the absence of which a company could even go bankrupt.

Guarantees, therefore, the absence of which often determines a lower degree of economic development.

It is therefore entirely logical and natural that, in the definition phase of the Recovery Plan, it was established that only those States that observe the principles of the rule of law can benefit from those resources, with a correlation between economic and political issues.

Opposition of Poland and Hungary

In the last few hours, the opposition of Poland and Hungary has followed, expressed both against the Recovery Plan and the European budget.

Evidently two states that do not consider themselves fully incorporated into the rule of law.

But, at this point, what could happen?

Nothing is a priori taken for granted, and the resources of the Recovery Plan therefore do not necessarily arrive in the quantities and on schedule.

However, the fate of a European economic revival need not be glued to bureaucracy and, above all, to institutional timing.

This Recovery Fund issue is now going through rough paths.

And the timing that is resulting from it may not be suitable and restart the potential multiplier of the foreseen economic resources quickly enough.

Above all, it is necessary to understand that the economic crisis can be beaten if, by releasing public budgets from strict budget parameters, one is able to invest heavily in the economic development of the countries affected by the crisis, determining a recovery rate capable of supporting both the crisis, which is the subsequent return to an expansionary phase.

A much more consistent growth rate

But the recovery phase will have to be based on much higher development rates than pre-Covid, if we really want to recover.

Europe and the individual states must therefore decide whether to wait for bureaucracy and debates on the rule of law and so on, or decide to act by budgeting much more resources.

It is true that the European GDP on a quarterly basis has rebounded significantly, but the situation must also be considered on an annual basis and in relation to the need for future developments.

Certainly in the USA, whoever becomes the President definitively confirmed on a formal level, there will be powerful programs of economic stimuli. Europe, for its part, should follow suit and abandon the role of those who only know how to look at rules, bureaucracy or inflationary fears.

Also because several observers also think, rightly or wrongly, that behind these discussions on the rule of law, there is in reality only an attempt to renege on the agreements reached in the middle of the pandemic crisis.

Except that one would not have the courage to say openly that, now that the first vaccines are arriving, perhaps the generosity shown has been excessive, according to some, and we want to return to the old rigor, mindful of the inflationary fears of the Weimar Republic. Be that as it may, there are certainly two entities that do not wait for the timing of political decisions, not even those of Europe. Pandemic and economy.

Curated by Gian Piero Turletti, author of “Magic Box” is “PLT

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