While it is difficult to pinpoint the precise reason for this decline, the increased use of eminent domain to transfer property to powerful political interests, the ramifications of the wars on terrorism and drugs, and the violation of the property rights of bondholders in the auto-bailout case have all weakened the tradition of strong adherence to the rule of law in the United States and we believe have contributed to the sharp decline in the rating for Legal System and Property Rights. Expanded use of regulation has been an important contributing factor to the declining ratings of the United States. During the past decade, non-tariff trade barriers, restrictions on foreign investment, and business regulation have all grown extensively. Michael Walker, who along with Milton and Rose Friedman, was the central figure in the development of this project, often stated: “Regulation is the raw material of corruption”. Thus, he would not be surprised that the expanded use of regulation in the United States was accompanied with sharp reductions in ratings for components such as independence of the judiciary, impartiality of the courts, and regulatory favoritism. To a large degree, the United States has experienced a significant move away from rule of law and toward a highly regulated, politicized state.
Top-ranked countries: Hong Kong, Singapore, New Zealand, Switzerland