A decision in the Doral case looms. Its outcome is important to Doral, but more important to the reputation of Puerto Rico in the business world. For the past four months, stateside publications have been riling the PR Government’s decision not to honor its agreements with Doral. This is clear violation of the Rule of Law, meaning, you have to do what you agreed to do and if not, a court will make you do it.
Most academics involved in explaining how societies grow insist on the importance of the Rule of Law and protection of contractual obligations. Francis Fukuyama, Harvard professor and author of a two-volume study on political order, The Origins of Political Order: From Prehuman Times to the French Revolution and Political Order and Political Decay: From the Industrial Revolution to the Globalization of Democracy, said in the latter:
The Rechtsstaat [Prussian bureaucracy] proved to be an excellent platform for economic development because it because it encompassed strong protection of private property rights and provided for enforcement of contracts. (Kindle location 1122)
Niall Ferguson, Harvard professor and Senior Research Fellow of Jesus College, University of Oxford, a Senior Fellow of the Hoover Institution, Stanford University and visiting professor at the New College of the Humanities, author of may books on economic history, concurs. In The Great Degeneration: How Institutions Decay and Economies Die, stated as follows:
In a seminal article published in 1989, North and Weingast argued that the real significance of the Glorious Revolution lay in the credibility that it gave the English state as a sovereign borrower. From 1689, Parliament controlled and improved taxation, audited royal expenditures, protected private property rights and effectively prohibited default. (Page 37-38)
Ferguson continues further on in his book:
Few truths are today more universally acknowledged than that the rule of law-particularly insofar as it restrains the ‘grabbing hand’ of the rapacious state- is conductive to economic growth. (page 84)
PR and the PPD have a history of socialistic ideas and actions. They have served the island ill. Whereas the Four Dragons of Asia, Singapore, Taiwan, South Korea and Hong Kong have had spectacular growth since the 1960’s, PR has stagnated. This must change. Robert D. Kaplan, a roving military expert, in Asia’s Cauldron: The South China Sea and the End of a Stable Pacific, describes Lee Kuan Yew, the father of modern Singapore, in following manner:
In the radical 1960’s when Western youth nursed ideas of world peace and connoted centralized power of any kind with evil, Lee saw that “half-digested theories of socialism and redistribution of wealth, “when compounded with less than competent government” in the Third World, would have “appalling consequences” in Asia, Africa and Latin America. (Kindle location 1744)
Instead of flirting with Fidel and Maduro, PR would be better off reading The Singapore Story: Memoirs of Lee Kuan Yew. Only then we can overcome the mentality that has brought us to a $73 billion debt and questioning closing agreements simply because they were made by the previous administration.
Very good information and better assesment of the issue.
A well-written column. Persuasive arguments, smooth flow, and illustrative examples.