Session 1: Why Trustworthy Governments are Essential

 

This session examines how weak legal enforcement, political favoritism, and global financial loopholes undermine public trust, distort markets, and enable corruption. The discussion highlights both historical insights and contemporary challenges, from democratic backsliding and elite impunity to the global infrastructure that shields illicit wealth.

Moderator:  Curtis Milhaupt, Stanford Law School

Panelists:

  • Vic Khanna, University of Michigan Law School
  • Naomi Lamoreaux, Economics and History, Yale University
  • Alexander Cooley, Political Science, Barnard College

Discussant:  Rick Messick, Global Anticorruption Blog

 

Key Takeaways:

Impersonal Laws Drive Stability: Naomi Lamoreaux argued that stable democracies evolved by replacing “identity rules” (favoritism and rent distribution) with general “impersonal;” laws that apply broadly, fostering both economic growth and political trust.

Interest Groups and Party Polarization: Lamoreaux noted that impersonal rules encourage broad interest group formation, fueling cycles of political polarization. Historically, U.S. political parties have been pulled back to the center, but Lamoreaux cautioned that the forces of cohesion may now be weakening.

Weak Enforcement Undermines Trust: Vic Khanna spotlighted India’s judicial delays with millions of pending cases and decades-long litigation as a core reason financial markets underperform and legal deterrence is eroded.

Creative Workarounds Reveal Systemic Failures: Khanna detailed how India’s home mortgage market grew only after banks exploited a criminal law on bounced checks, relying on police summonses and extortion to enforce payment, illustrating dysfunctional legal innovation.

Global Kleptocracy Is a Networked Problem: Alexander Cooley emphasized that corruption is not confined to national borders but is enabled by global professional services such as accountants, lawyers, and real estate agents, who legally facilitate illicit finance.

Authoritarians Use the West for Protection and Prestige: Cooley described how elites from authoritarian regimes stash wealth in Western assets, buy reputation through philanthropy and sports clubs, and weaponize libel laws to silence critics, all while benefiting from Western legal protections.

Norm-Setting Tools Are Losing Ground: Rick Messick noted that U.S. enforcement of anti-corruption laws like the Foreign Corrupt Practices Act once set global standards, but recent retreats, such as paused enforcement of key laws, signal troubling backsliding.

Citizen-Led Accountability Is Crucial but Limited: Messick advocated for empowering citizens through legal avenues (e.g., UNCAC’s Article 35) to sue over corruption, though he acknowledged these tools often fail in states without robust enforcement infrastructure.

AI as a Tool for Smarter Enforcement: Khanna shared early results from pilot programs in India where AI helps tax departments predict which government-initiated cases are likely to succeed, cutting filings by 40% and improving win rates dramatically.

Money in Politics and Inequality Fuel Polarization: Lamoreaux warned that the influence of extreme wealth on elections, exemplified by individuals like Elon Musk spending millions, undermines democratic processes, fuels factionalism and populist backlash.

The Fight Against Corruption Needs Targeted Goals: Cooley emphasized the importance of defining clear goals in the fight against corruption, whether justice, deterrence, asset recovery, or cultural change, and stressed that meaningful reform often requires the urgency that comes with crisis.

Slide Decks from This Session: