I was once pitched a deal in the heart of the Amazon—Manaus, Brazil. What was I buying? Firstly, a commercial asset. But I couldn’t shake my concern around governance. The sanctity of a contract is only as good as the governing laws and those following (or not) those laws. Governance was once something we only mildly considered in U.S. deals and even then, locally.
The U.S. system of checks and balances was thought to be a barrier to possible corruption, bad actors and dramatic shifts in law, even those by executive order.
If the “purpose of a system is what is does” (Stafford Beard), the U.S. was replete with foreign investment, number 1 in invention and the world’s top spot for new business launches.
Stabilizing the domestic business environment was a three-legged stool: the Constitution, an intentionally “slow and plodding” legislative body and a citizenry who embraced the dignity of work, the value of commerce and most importantly, understood that freedom can only align with the ordered universe.
Drawing from ancient Greece, the concept of freedom was an invisible social compact that citizens are individually responsible for their actions. This freedom was not about doing what you feel, but regulating emotion and doing what is good for oneself and others.
In contrast, disorder might be Hugo Chavez and his deliveries of washers and dryers to voters prior to the election.
Less dramatic examples might be pet “improvements” traded for construction permits, surprise regulatory fees during construction… oh, and rent control right before an election.
Rent control, like student debt, transfers a liability to a third party with no associated value offered in return. It breaks the sanctity of a contract and is essentially a government taking of revenue without compensation.
But if it’s cloaked as a “tax,” it might pass under the Constitutional dark of night.
Humans are never free from constraint. The complexity of freedom is that it begins with subduing one’s passions. Example: To freely converse with those with whom you disagree, you must tolerate their opinions.
The Greeks believed that a “thinking human” was created by self-reflection, hard work and self-regulation. The result is a beautifully ordered, high functioning society where the wheels of productivity turn smoothly, and supply and demand are equalized.
In the end, I didn’t invest in the Manaus deal. Uncertainty never makes a good partner.
