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parties—especially the party in power—and must limit contact with the
executive branch to security, financial, and administrative matters.
ii. Security of remuneration. The salary of judges should be fixed and secure.
iii. Guaranteed tenure until retirement or expiry of office. Judges should be
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removed or suspended only for reasons of “incapacity” or “behavior that
renders them unfit to discharge their duties.” Such behavior would encompass
things such as accepting bribes.
iv. An open court. Members of the public should have the right to enter the
court at any time a trial is in progress and have access to decisions.
Guidelines and principles should be applied to the media with maximum
freedom about what they can report in order to ensure fair trials.
v. A requirement to communicate the law to the public. Even a concerned
and involved citizenship cannot hold political leaders and government organs
responsible for their actions (or lack of actions) if they do not know what
behavior is actually required of their leaders in both local and international
law.
vi. A judicial selection process that is fair. The selection of judges should be
made from people with “integrity” and “ability,” with “appropriate training
and qualifications” and without discrimination.
This last principle should apply whether the selection process is made by
appointment or election. Indeed, given the complex requirements involved in quality
adjudication and the fact that judges should not attempt to make policy from the
bench, selection of judges by largely uninformed voters is likely to be especially
problematic.
d. An independent central bank
One disadvantage of a democratic system (although certainly one that does
not offset its many advantages) is that politicians facing a contested election may
make decisions that create benefits now but impose much larger costs in the future
when they will no longer be in office. This short time horizon can lead to high public
spending without increased taxes to pay for such spending. Faced with this dilemma,
politicians are often tempted to “pay for” their spending by ordering the central bank
to create money. As we saw in Part 2, Element 5, excessive creation of money will
lead to a high level of inflation, perhaps even hyperinflation. Both economic theory
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and past evidence say that by changing incentives and introducing uncertainty that
makes planning for the future difficult, such inflation will lower economic growth
and citizens’ well-being in years to come. When Central Banks have the
independence to resist pressure from politicians, the results have been lower and
more stable prices and higher growth rates.
e. Protection of property rights
The philosopher John Locke, writing in the late seventeenth century, claimed
that the right to own and use private property was a “natural right” and that the
“preservation of property” was the “great and chief end” for which human beings
created governments. Almost every constitution makes mention of the protection of
property. Examples include:
i. The European Charter of Fundamental Rights, which says: “Everyone has the
right to own, use, dispose of and bequeath his or her lawfully acquired
possessions. No one may be deprived of his or her possessions, except in the
public interest and in the cases and under the conditions provided for by law,
subject to fair compensation being paid in good time for their loss.”
ii. The United States Constitution, which contains the widely quoted phrase:
“No person shall be … deprived of life, liberty, or property, without due
process of law; nor shall private property be taken for public use, without just
compensation.”
iii. The Constitution of the Russian Federation, which is even more specific:
“The right of private property shall be protected by law. Everyone shall have
the right to have property and to possess, use and dispose of it both
individually and jointly with other persons. Nobody may be deprived of
property except under a court order. Forced alienation of property for State
requirements may take place only subject to prior and fair compensation.”
Unfortunately, many of these words are, as the saying goes, “not worth the
paper they are printed on.” Governments frequently erode the protections of
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property. Phrases like “public interest,” “just compensation,” or “fair compensation”
are subject to interpretation. Governments frequently use regulations to take or
control private property without compensation, even though the property owner had
violated the rights of no one. Courts have generally allowed such takings of private
property as long as a legislative body deemed that the action was “in the public
interest,” or that the taking did not deny the owner all uses of his or her property.
This issue of effective taking (denying many uses of the property while technically
not changing ownership) is especially problematic. What does it mean, for example,
for an individual to “own” a piece of beachfront property if there is a regulation that
it cannot be built on?
In sum, simply writing property rights into law or even constitutions is not
sufficient to promote economic growth. Such rights must be credible and believed by
potential investors. Economic research has shown that the effect of property rights on
growth is much stronger when combined with judicial independence and a greater
level of checks and balances in government structure.
f. Guarantees of freedom of speech and the press
While, as discussed above, checks and balances within the structure of
government are important, they need to be supplemented with external monitoring.
This is especially the case for what is known as “collusive corruption” in which both
the payer of a bribe and the recipient are legally punishable, meaning that it is hard
to gather evidence since no one involved has an incentive to betray the other. While
there are more sophisticated statistical tests, the link between a free press and the
overall effectiveness of government (and related greater economic success) is clear
from a simple graph such as the one below. It is no wonder that in an authoritarian
government, journalists are threatened with censorship, arrest, and even murder.
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