The Balance between Politics and Economics - Essay Example

? IELD Law Essay Question No The Main Readings (Hulme, Collier, Sachs, Easterly and Acemoglu) Accordingto Acemoglu, inequality in the world can only be understood by looking at the ‘inefficient and socially undesirable’ manner in which some societies are organized. In his book titled Why Nations Fail: The Origins of Power, Prosperity and Poverty, he says that for this inequality to be managed and reduced there must be renewed efforts directed towards the creation of new and functioning policies (68). Acemoglu continues to argue that our main focus should not be getting underdeveloped countries to do things right, but rather getting them to stop doing the wrong things in terms of policy-making and the creation of new and stable institutions. Acemoglu goes on to say that it is important to obtain the right balance between politics and economics, because one inadvertently affects the other (Acemoglu 68). This is where law comes in because laws and policies are mainly made by politicians; these are the same laws that have major effects on the economy and development of a country. As a result of this, it is really important that a right mix be found between politics (law) and economics; this will create new opportunities and freedoms which can be exploited in order to improve economies and by extension the living standards of people living in poor countries (Acemoglu 69). In his book, The End of Poverty: Economic Possibilities for Our Time, Sachs provides several reasons why some countries fail to achieve economic growth and therefore remain poor and underdeveloped. He goes on to list government failures as one of the reasons for failed economic growth in poor countries, and explains this by stating that governments must protect businesses and make it easy for people to do businesses (Sachs 59). This, he says, can be done by taking steps to assure people that it is perfectly safe and conducive to do businesses in a particular country (Sachs 60). My understanding of this is that law is heavily involved since policies have to be enacted and implemented in order for investors to inject their money into a particular economy. As a consequence, I can conclude that Sachs also agrees that law plays a vital role in economic development and should therefore be taken seriously because it is a tool for promoting and enhancing economic development. In his book the Bottom Billion: Why the Poorest Countries are Failing and what can be done about it, Collier (65) argues that “governance and bad policies help to shape economic performance, but that there is a proportionality in the effects of getting them right or wrong”. Collier is simply saying that bad governance and failure to enact the right economic policies can seriously dent a country’s hopes of developing. When governments cannot develop and implement policies that ensure a good environment for doing business, investors will stay away and the country will not be able to attract foreign direct investment (FDI). FDI plays a crucial role in the development of a country, and it is common knowledge that all developed nations attract a lot of FDI, and also go to great lengths to ensure that their countries are investor-friendly. In poor and underdeveloped countries, bad governance and lack of democracy leads to things dictatorships, chaos and instability. These are some of the arch-enemies of development; they greatly inhibit the ability of a country to attract investment, aid and good diplomatic relations and therefore limit its potential for development. In Easterly’s The White Man’s Burden: Why the West’s Efforts to aid the rest have done so much ill and so little good (Easterly 5), Easterly identifies two groups that have influential roles to play when it comes to aid and the distribution of aid. He names these groups as planners and searchers, and says that planners are those who insist on a continuation of giving out aid and grants that often do not reach their intended targets, while searchers advocate for a change in this approach so as to make sure that the poor in the society receive aid, grants and vital supplies. Easterly then goes on to discuss the issue of feedback and accountability (Easterly 15), and this is where the law comes in. So often, aid is misappropriated and misused and therefore does not reach those who really need it. This is a problem that can be solved by putting in place laws, policies and measures that guarantee stiff penalties for anyone who is found guilty of misappropriating and misusing aid. This will instill a sense of responsibility and as a result improve the overall effectiveness of aid; without this the planners can distribute as much as aid as they want but it will not bring much change. In Hulme’s Global Poverty: How Global Governance is failing the Poor, Hulme’s presents a valid argument on the need for better laws, policies and regulations that help to empower people and accord them protection as they seek to exploit the opportunities made available to them by their countries. He says that rich and privileged nations have managed to trick the rest of the world that they are honest and willing to assist poor countries develop, when the actual truth reveals something much more sinister. Rich nations, global elites in poor and rich countries and powerful organizations have maintained the structures of resource access and power as well as their legitimacy at a great cost to poor countries and almost no cost for themselves (Hulme 2). This, however, is no excuse for underdevelopment. By putting in place effective, practical and workable laws and policies and by practicing democracy, poor countries can gradually free themselves from the yoke of poverty and suffering they have placed upon themselves with assistance from the West. A look at the arguments presented by all 5 authors shows that they are all in favor of the need to enact better policies and laws that they believe will help poor countries awaken from the slumber and set them on the road to prosperity. Essay Question No. 2: Economic Development and the Rule of Law Although it is already acknowledged that the law has a very important role to play in economic development, it is also necessary to observe caution when applying the law in the stimulation and promotion of economic development. Sometimes, it is not always necessary to employ the law in every aspect of development because this can create feelings of inhibition and restriction. The law can be used sparingly and only where necessary, because too much strictness can lead to over-regulation which usually scares away potential investors and stunts economic development. In his book The Law-growth nexus: the Rule of Law and Economic Development (5), Dam says that the fact that institutions (particularly legal institutions) play a crucial role in economic development does not mean that these legal institutions are more important than other areas of government policy. For example, healthcare and educational institutions also have vital roles to play in the advancement of economic growth and development. Dam (6) goes so far as to say that they (healthcare and educational institutions) play complementary roles to legal institutions in the same manner that the different fingers of the hand combine to form a solid grip. As a consequence, it is unnecessary to debate over which finger is the most important (Dam 6). In the book Development in the Underdeveloped World: of Culture, trust, and legal Institutions, De Soto and Danino (14) argue that well-developed legal structures have the ability to capture values that are non-material, such as allowing people to be organized and identify value in a manner that facilitates the creation of wealth. This shows that it is crucial that the role of law be regulated so that it can be exploited in such a way that maximum benefits are reaped from its application. In conclusion, I would say that the law is a double-edged sword, and therefore it should not be applied or implemented in a blanket manner or else the outcome might be negative. It is necessary to exercise prudence and caution whenever legal measures are being considered in situations involving economic development so as to avoid possible negative ramifications that may stunt economic development. Works Cited Acemoglu, Daron, and James A. Robinson. Why nations fail: the origins of power, prosperity and poverty. New York: Crown Publishers, 2012. Print. Collier, Paul. The bottom billion: why the poorest countries are failing and what can be done about it. Oxford: Oxford University Press, 2007. Print. Dam, Kenneth W. The law-growth nexus: the rule of law and economic development. Washington, D.C.: Brookings Institution Press, 2006. Print. Easterly, William. The white man's burden: why the West's efforts to aid the rest have done so much ill and so little good. New York: Penguin Press, 2006. Print. Hulme, David. Global poverty: how global governance is failing the poor. New York: Routledge, 2010. Print. Sachs, Jeffrey. The end of poverty: economic possibilities for our time. New York: Penguin Press, 2005. Print. Soto, Hernando de. Development in the Underdeveloped World of Culture, Trust and Legal Institutions. London: BIIC [etc.], 2007. Print. Read More