SHORT NOTES ON MIXED GOVERNMENT AND CHECKS & BALANCES

AM | @agumack

"Checks and balances are our only security" — John Adams

* * *

[1] Country risk. For the student of political checks and balances, there is a striking result in the recently published report Rethinking Treasury: The Road ahead, HSBC, 2021. According to the survey, "more than 90% of CFOs [Chief Financial Officers] in both small and large organisations expect to invest in country/political risks in the next 12 months". Wow! This illustrates well Contrapesos' unpopular opinion: the health of political institutions is a key determinant of the cost of capital. Political risk is touted as being more important than supply chain risk and FX risk. What a great time to study checks and balances.

[2] 47 Ronin. I had some expectations about the 2013 movie 47 Ronin, starring Keanu Reeves. The story of a group of former Samurai seeking revenge following an absurd judicial decision is one of Japan's most celebrated tales. It was made popular in English with the publication of A. B. Mitford's Tales of Old Japan (1871). Jorge-Luis Borges's version, "El incivil maestro de ceremonias Kotsuké no Suké", was published in 1935 in Historia universal de la infamia.

* * *

Borges describes the cycle of revenge, property destruction and death —as well as the tremendous cost to society from the lack of personal security— that results from persons in a position of power acting as juges dans leur propre cause [See: "Kotsuké no Suké", Contrapesos]. By resorting to magic and to ridiculously out-of-context special effects, the movie ignores these 'political' aspects. It was a complete flop at the box office.

[3] Katharina Pistor. Writing in Die Welt about the power of big international corporations, Katharina Pistor asks an unsettling question: Can law be bought and sold? (*). The first lines are music to my ears: "Zu den wichtigsten Aufgaben einer Verfassung gehört es, politische Macht zu verteilen und diese zu kontrollieren. Dabei kommt der Gewaltenteilung zwischen Legislative, Exekutive und Gerichtsbarkeit eine zentrale Rolle zu. Sie soll sicherstellen, dass nicht zu viel Macht in den Händen einiger weniger gebündelt wird" 

(*) Katharina Pistor: "Is Recht eine Ware?", Die Welt, 13 January 2022.

_____________