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Tuesday, September 27, 2011

And a Whole Lot Less Laissez-Faire?

Continuing our theme . . . part of the reason for the sanctioning effect of international anti-corruption law is that we fundamentally misunderstand the difference between the U.S. legal regime and that which is often held up as its principal alternative:  China.  We tend to think of the U.S. as practicing, and promoting, a  system of protecting individual economic freedom and minimizing state interference.  And we tend to think of China as subsuming individual economic freedom under the common good, while expanding state regulation to direct economic activity toward social and political goals.  China still calls itself communist, right? 

"You keep using that word . . . I don't think it means what you think it means."  I'm going to argue that in international business law, exactly the opposite is true.  In yesterday's post, I suggested that in such diverse areas as the FCPA, the ATS, economic sanctions, and the extension of our employment anti-discrimination laws to U.S. citizens overseas, we deliberately restrict short-term corporate profit-seeking to advance various liberal-democratic norms.  And guess what?  China does none of these things:  it does not enforce anti-corruption laws systematically; it does not impose economic sanctions or hold corporations liable for human rights abuses; and it does not enforce employment discrimination laws overseas.   So what is the upshot?  In the regulation of international business, China is substantially more laissez-faire than we are.  And this is in large part why the enforcement of anti-corruption law specifically produces such ironic results:  Chinese companies significantly out-laissez-faire us, at the developing world's expense. 

Sure, China's state is more heavily involved than the U.S. in such areas as fiscal or industrial policy.  But when it sends its companies overseas, China is looking for resources, profits, and political alliances; any collateral impact on corruption, human rights, or social development more broadly is quite beside the point.   Such is the world in which we now find ourselves; I'll next write a bit on what we might do about it.

Posted by Andy Spalding on September 27, 2011 at 03:24 PM | Permalink


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"You keep using that word . . . I don't think it means what you think it means."

Merriam Webster fairly accurately defines "laissez faire" as:

1: a doctrine opposing governmental interference in economic affairs beyond the minimum necessary for the maintenance of peace and property rights
2: a philosophy or practice characterized by a usually deliberate abstention from direction or interference especially with individual freedom of choice and action

Arguing that China sends its companies out to achieve goals that are incompatible with US norms and/or legal principles is decidedly NOT the same as arguing that Chinese companies operate under a laissez-faire approach. It sounds like you are arguing that Chinese companies operate under a nationalist/mercantalist set of guidelines, and I would agree wholeheartedly with that.

Posted by: Dave Min | Oct 3, 2011 4:15:25 PM

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