Or, that perennial battle between the French and the British.
A couple of weeks ago, a person from Legal Affairs actually emailed us to let us know about this article on the apparent prosperity of countries that follow the British common law versus the French civil law. Chris handed the article off to me and I promptly forgot about it.
Today’s Boston Globe has a brief version of the article here, which reminded me of it. The argument in favor of the LLSV research seems pretty persuasive to me—indeed, the French have begun looking into it themselves, according to the Globe—but I suspect it will be argued about for some time to come before a real conclusion is reached. In the mean time it appears to me that the British common law is winning.
They use Malaysia (common law) and Indonesia (civil law) as examples; the former is prospering, the latter is not. The LLSV authors attribute the difference to the British common law and its protection of shareholder rights, among other things. The key graf, to me, is this one from the Globe:
Yet for all its mathematical sophistication, LLSV‘s research has not gone unchallenged by their fellow number-crunchers. According to Luigi Zingales of the University of Chicago, the economic differences among countries may not come from something intrinsic to common law or civil law, but rather from some other correlated factor. Common law countries, for example, tend to speak English, tend to be Protestant, and tend not to have been decimated by World War II. The English, furthermore, may have done a better job than the French of finding economically viable locations to set up colonies.
As with most statistical studies, there’s the rub: show causality, rather than just correlation. The LLSV
authors claim to have addressed these factors:
The LLSV scholars counter that their regression models try to take all of these variables into account, showing for example that civil law origin has much more of an impact on markets than religion does. They also note that at least they’ve found something that can be reformed. Legal origin may not explain everything, but changing laws is much easier than converting a country from Catholicism to Protestantism.
In the end, what LLSV has done is provide a giant statistical brief in support of the ideas of John Locke, James Madison, and Adam Smith, and they’ve updated those ideas for a world that’s as interested in economic success as in liberty. Creating a judicial branch that can check the executive and the legislature doesn’t just protect individual rights and prevent political persecution. It also improves your stock market and can transform your future. At least, that’s the theory.
I know where my sympathies lie—with the Brits, Adam Smith and John Locke, of course—but I’ll wait and see how the LLSV
guys do at defending their research in the future. If I get time, I might even look the stuff up myself. I have some of the same questions as the LLSV guys when it comes to Haiti and the Dominican Republic: how can two countries that share the same spit of land be so dramatically different? In this case I imagine it has to do with more than just legal codes (DR is French, Haiti is unknown to me).
hell school resumes tomorrow and the impact on my own blogging can only be negative. Tough semester in front of me, with qualifying exams to come in May.