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No degree of substantive law improvement—even world “best practice” substantive law—will bring the Rule of Law to a country without effective enforcement.1 A sound judiciary is key to enforcement. No doubt some technical laws can be enforced by administrative means, but a Rule of Law, in the primary economic sense of protecting property and enforcing contracts, requires a judiciary to resolve disputes between private parties. And protection against the state itself is made easier where the judiciary can resolve a controversy raised by a private party against the state based on constitutional provisions or parliamentary legislation. One conclusion widely agreed upon, not just in the economic literature but also among lawyers and legal scholars, is therefore that the judiciary is a vital factor in the Rule of Law and more broadly in economic development. A number of studies show some of the positive benefits of strong effective judiciaries. The degree of judicial independence is correlated with economic growth.2 Better performing courts have been shown to lead to more developed credit markets. A stronger judiciary is associated with more rapid growth of small firms as well as with larger firms in the economy.3 Economic studies show that within individual countries the

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This essay explores the extent to which income and consumption taxes can be implemented using parallel designs. The economic differences in the two taxes is thought to be the taxation of pure time value returns under an income tax but not under a consumption tax. In theory, therefore, all differences in implementation methods should be traceable to the measurement of time value returns. To explore the extent to which this is true, the essay examines four major design elements of any tax system: (i) the use of cash flows or basis accounts to measure the base; (ii) remittance of the tax by firms or individuals; (iii) whether the system is open or closed; and (iv) how the system operates across borders.

This paper analyzes the consequences of the findings from research into self-reported well being or happiness for taxation. It primarily considers two findings: that happiness depends on status as well as income, and that individuals may adapt to disability, exhibiting relatively small losses in happiness from disabilities. In each case, it examines how adding these concerns to standard tax models changes the results and then compares the empirical findings of the happiness literature to see whether they provide the type of data needed to parameterize the models. In both cases, the theoretical models ask for different types of data than the happiness studies emphasize. The paper also looks at Robert Frank’s arguments for a progressive consumption tax based on the findings of the happiness research. It finds that these claims are not supported by the current findings. Preliminary Draft. Please do not cite without permission.

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China is the fastest growing country in the world. Moreover, its economy has already become one of the most important in the world. Many commentators predict that China will surpass the size of the U.S. economy some time in the second decade of this century (although it will, to be sure, still be at a much lower per capita income level). Though these predictions are for most purposes quite misleading,1 China’s prowess in manufacturing is already a challenge to the manufacturing sectors of the most advanced economies, at least in labor intensive industries. Moreover, China is going beyond low-wage manufacturing and entering the high technology arena (from the top down, so to speak) through high-level research backed by a growing army of highly educated scientists and engineers completing graduate studies and through the outsourcing to

This Working Paper is brought to you for free and open access by the Coase-Sandor Institute for Law and Economics at Chicago Unbound. It has been accepted for inclusion in Coase-Sandor Working Paper Series in Law and Economics by an authorized administrator of Chicago Unbound. For more