This article first appeared on the World Economic Forum blog on 3 April 2014.
Most economies in Latin America struggle with recurring problems in their institutional frameworks. The repeated flooding of the Bogota River illustrates the cyclical and expanding nature of these weaknesses and their devastating socio-economic impact.
The river overflows once every few years, inundating large portions of the semi-rural areas around the city and incurring major economic loss. Every time it happens, landowners build walls to protect their land against future damage. With each flood, new walls divert water to neighbouring areas, whose owners then build their own walls. The pattern resembles a flood-barrier arms race.
The instinct to protect one’s own land at the expense of others presents three problems. First, the walls do not solve the problem, only move it. Second, the cumulative cost of this band-aid solution is probably higher than the permanent solution of dredging the river. Lastly, walls have a regressive effect; the wealthiest landowners can afford higher walls, and each new flood brings greater economic loss to the already disadvantaged small farmers.
This story illustrates why, in Latin America, combating institutional failure through coordinated action is so difficult. Instead of dredging the river (or tackling the root causes of violence and corruption), we build fences (or hire security guards to protect our homes). However, just like water, crime flows around fences, and we never solve the problem.
The same is true for the generalized breakdown of judicial systems throughout the region, and the never-ending war on drugs. Ours is a land of cosmetic and incomplete reforms, which carefully avoid attacking the structural problems. So, how do we escape this vicious cycle? In the long run, the solution requires a collective shift in the way we understand society and our role in it. Such profound transformation can only be achieved through education.
In our paper, Education, Complaints and Accountability, published in the Journal of Law and Economics, Alejandro Ponce, Andrei Shleifer and I argue that better-educated countries have governments that are more accountable, thanks to effective mechanisms for citizen feedback. We must start to impress upon our children that we are all stakeholders in the rule of law and that, in the end, playing by the rules is better than taking shortcuts for personal benefit at the expense of others.
Of course, action can also be taken in the short run. The first step is to assess the problem in its true proportions, which requires objective and impartial measurement. On March 5, the World Justice Project (WJP), where I serve as executive director, released the WJP Rule of Law Index 2014. The report relies on more than 100,000 households and 2,400 expert surveys to measure how the law is experienced in the everyday lives of citizens around the world. The findings show positive signs: in Latin America and the Caribbean region, protection of fundamental rights and government openness are stronger than anywhere else, except Western Europe and North America.
Grave challenges were also found: Latin American countries struggle the most with violence, corruption and ineffective justice. Crime rates are the highest in the world and the use of violence to resolve personal grievances is widespread. The region’s criminal justice systems are, on average, the least efficient in the world. Judicial delays and ineffective enforcement of civil justice are widespread. Corruption and impunity remain major challenges, particularly among legislative bodies.
WJP measures the rule of law to provide multiple actors with an independent, objective basis for improving it. Detailed, disaggregated data on multiple dimensions of the rule of law is available for most countries in the region. For instance, while 72% of Mexican people say they can freely express opinions against the government, more than 60% of the nation’s households report paying a bribe to the police in the past three years. Timely and impartial data should be used by governments and private actors to set policy benchmarks, stimulate and guide reforms, and monitor progress.
In the case of Latin America, the data suggests we should go back to the basics: instead of relying on temporary solutions such as building higher fences and buying armoured vehicles (which are cumulatively more expensive, have a regressive effect on society, and ultimately do not solve the problem), all sections of society must commit to a major collective effort to help clean and revitalize the basic institutions of the state.
One example would be to mobilize resources to ensure that police officers on the street are adequately trained and remunerated, and held accountable for misconduct. In Latin America, where income inequalities are among the highest in the world, private companies and wealthy individuals should take the lead.