Harmony is Overrated
Many recent histories, including Samuel P. Huntington’s, allege that cultural divisions drive policies on Civilization A that are inherently in conflict with those of Civilization B. The logical outcome, then, is a set of parallel, different worlds. These civilizations would presumably develop wildly different laws.
This is where the thesis of the late Dr. Huntington weakens. Despite allegedly sharp cultural differences, jurisprudential convergence is rapidly outpacing divergence. The best evidence of this can be seen in the last twenty years of law. Law is a fascinating area of study because it is not heavily resource- or environment-dependent. Civilizations with more oil or more timber are not better-equipped to manufacture laws. Law can be equally well-crafted in an ornate building or on a beach. Law is not “found” in the contextual sense, or found on ancient scrolls (except in rare cases of orthodox theocracy), but rather it is made by people to govern each other.
Innovations in law and policy are, and have been for centuries, surprisingly well-distributed historically and geographically.
Civilizations produce law to benefit and nurture activities they value while punishing or making incrementally more inconvenient (by licensing, taxing) the activities they find undesirable. And, the laws that govern societies globally are more similar than ever before.
Finance in the Arab world more closely resembles Western European finance than it has at any time since before the Enlightenment. Ships all over the world are insured through the LOF or Lloyds of London process.
Despite all this talk of differing civilizations and differing normative value judgments, easily over 90% of the corpus of rules restricting and incentivizing everyday human behavior is essentially uniform across over 90% of places on our planet. This seems peculiar, as one would think policymakers would specialize, essentially examining their legal comparative advantage.
The United States system of federalism offers an interesting, albeit tame, view of what regulatory heterogeneity might look like. Various states within the United States set their own maximum speed limits, their own rules regarding family law and contract law, and have power to tax independent from (but concurrent with) the national government. Some states offer laws to aid corporations based there (Delaware), some offer no sales tax (Oregon) or no income tax (Nevada), some maximize architectural creativity and site choice by having no building rules or zoning controls (Texas).
This has happened internationally, but only in small pockets. Again, to find the best examples of policy or legal innovation, one must choose areas where no natural resource advantage is possible. The obvious areas are regulation and technology. The Dutch island of Curacao has a liberal attitude toward gambling and dominates the Internet gambling business in the Caribbean. Though any country could ratify laws to allow the purchase of citizenship, Austria remains the only EU member state that allows outsiders to buy citizenship.
Unfortunately, the dominant mode of regulatory deviation from the norm is in the area of tariffs and subsidies. The United States offers huge subsidies to sugar producers, Brazil routes substantial revenues to the producers of biofuel raw materials, and the system the French have devised for subsidizing domestic agriculture is more complex than their tax code.
On the whole, even relatively arbitrary decisions are duplicated nearly globally. Roughly the same list of drugs is legal and illegal in the vast majority of jurisdictions. While there is some heterogeneity in definitions, this, like drug regulation, is largely normative (the definition of pornography, for instance) rather than derived from a logical set of rules (for instance, restricting only those drugs which have a certain incidence of user fatalities). Most countries tax earned income, investment income, and estates of the deceased. Similar transactions are restricted or disallowed across most populated areas of the northern hemisphere.
Thankfully, the current state of international regulatory harmony is likely fragile and, on many fronts, failing.
At this, we should rejoice. In general, the world as a whole would benefit from more policy and legislative heterogeneity. In a world with increased mobility, a German entrepreneur today can choose not only between German cities for his new venture, but cities across the whole of Europe. I predict we will see more policy innovation in coming decades, with many countries courting new citizens by charging high immigration fees but offering very low (or zero) income tax rates. Countries, particularly those in Asia, will begin to apply the Dutch approach of selective drug legalization to other areas, from financial regulation to software piracy. Tension between the major stock and commodities exchanges will continue, with the countries playing host to exchanges adopting less rigid financial regulatory schemes in an attempt to gain an advantage for their constituents.
And, once the countries choose their laws, it will be left to individual people and corporations to choose their countries.
