These three basic principals are the foundation of a countries prosperity. How does Panama rate in these areas? I used to believe that Panama had strong property rights and on the surface it appears to be the case. Panamanians are quick to point out their on-line public registry and their corporation structures that help protect the owner by providing anonymity.
But when you look at the weak rule of law in Panama, you discover that it is this area where the rights of the property holder are most vulnerable. I have my own experience with corrupt judges and hear from readers regularly about the courts being paid to rule in favor of whoever pays the most for the decision. This corruption of the courts undermine any possibility of a solid right to ones property with equal protection under the law.
And how about sound money? Well, Panama uses the U.S. dollar as its currency which up until recently I would say was a strong foundation. Because they don't print their own money, they do not create inflation and maintained one of the lowest inflation levels of any country in the world. But, as I pointed out in a post earlier this week, the U.S. is printing money like never before and the buying power is decreasing proportionally. The cost of everything has and will continue to go up for Panama because of their dependency on the U.S. dollar.
So what can Panama do to clean up its act and become one of the top countries in the world for strong sustainable growth? First and foremost is to end corruption in the courts by implementing severe penalties for those who make and take bribes. In Roman times a judge caught taking a bribe would be cast of a high cliff along with the one paying the bribe. During that time in Roman history, corruption was nearly non-existent. Panama leadership must do much more than just talk about ending corruption. President Martin Torrijos made it central to his campaign 5 years ago because it ranked high on the list of complaints by the general population. Unfortunately, nothing came of it.
The new leadership must get serious about corruption and put such fear into the legislature and judicial system that they dare not participate in any form. If Panama's new leadership makes headway in the areas of property rights, rule of law and sound money, Panama could rise to become the best country in the world to invest or to live.
Be sure to view this great video about these foundations.
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