Academic journal article Business Law International

The Mobile Executive: A Short Comment

Academic journal article Business Law International

The Mobile Executive: A Short Comment

Article excerpt

Today's mobile executive would readily echo Voltaire's comment in 1838: 'Is it not an absurd and terrible thing that what is true in one village is false in another? What kind of barbarism is it that citizens must live under different laws? When you travel in this kingdom you change legal systems as often as you change horses.'

A couple of centuries before Voltaire's time, there were thousands of jurisdictions in the world. But then of course people were much, much less mobile so the collisions of conflicting laws did not seem so drastic. In addition, the volume of contacts between people was a tiny proportion of those we have now. Even in the 18th century, the GDP of the entire world was equivalent to that of modern Australia or Turkey and the amount of law and regulation was also a tiny proportion of present-day volumes.

There are now just under 200 sovereign states in the world divided into around 320 jurisdictions. Over the recent couple of decades, there has been a quite fantastic acceleration in the amount and complexity of legal systems. This has been driven by a number of important factors. The first is that nearly all the countries of the world are now part of the world economy. There are people who are interested even in Chad, even in Uzbekistan. Even Cambodia has a stock exchange. Only Bhutan, North Korea and perhaps a couple of others still stand loftily aside.

The second factor is the huge impact that the growth of GDP has on the volume of law. The very rapid increase in world GDP, now somewhere between 60 and 70 trillion US dollars or nearly 100 times what it was in 1830, means that the money has to go somewhere - into banks, into insurance companies, into non-financial corporates, into mutual funds. This, in turn, creates greater volatility and leads to the bankruptcy of banks, corporates and others, which in turn leads to more laws to contain the risks. A classic example of this process is the enormous outpouring of financial regulation following the recent global economic crisis, as legislators express their indignation by using the statute book to rant and throw their tantrums.

Probably three-quarters of the countries in the world have made major changes to their bankruptcy or corporate legislation over the past ten to 15 years and a large number of them have introduced or expanded their regulatory regimes about competition, about banks and insurance companies, about health and safety and about the environment, to say nothing of tax. …

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