OPINION:
We heard a lot of opinions when the Trump verdict was handed down in New York, but one point has been largely overlooked: The rule of law no longer applies in the Empire State if you don’t have the right politics. And that has big implications for the enforcement of contracts.
Those in the political establishment have no idea what kind of Pandora’s box they’ve opened. And they certainly don’t understand the economic impact this will have on the Big Apple.
Even before this recent travesty of justice, New York was already facing plenty of headwinds to business and investment, including the second-worst business tax climate among the 50 states. New York City is also home to the country’s highest marginal income tax rate.
But the Empire State doesn’t just punish productivity — it rewards the unproductive, too. Gratuitous welfare programs, including for illegal aliens, have given people incentive not to work, while high taxes have been encouraging the industrious to leave for places like Florida.
Add in noneconomic factors like high crime and dangerous streets on top of the tax and regulatory burden, and it’s clear why people have had enough of New York. The state has hemorrhaged so much of its population that fewer people there are working today than before the pandemic.
Conversely, Florida has about 10% more jobs compared with pre-pandemic levels and has now surpassed New York’s employment level.
The travesty of the Trump trial has given many New Yorkers yet another reason to leave: The rule of law is now subordinate to politics. Lady Justice has exchanged her blindfold for a microscope, myopically fixated on political dogma alone.
If you fall in line behind the political establishment, if you donate to the right politicians, and if you virtue signal as prescribed by the high priests of the radical left, you are much more likely to receive the full protection of the law. Renege on any of these obligations, however, and the law will be turned on you.
Make no mistake: This applies to civil law as much as criminal law. Business contracts are no longer sacred covenants with binding obligations but mere suggestions to be selectively enforced based on the politics of the parties involved.
Imagine you enter a deal with someone, and they fail to uphold their end of the bargain. Maybe they’re an employee who does a subpar job. Maybe they’re an employer that fails to pay an agreed-upon wage. Maybe they’re a borrower who fails to repay on time.
Previously, you would have had recourse to the law without worrying that your political leanings or those of your counterparty in the deal would become material determinants in the courtroom. That idealism lies dead in the wake of the Trump trial, trampled by vengeful prosecutors and corrupt judges.
The American legal system is supposed to turn a blind eye to political beliefs and party affiliation, with judgments based on the merits of a case. Today, conservatives in New York have little hope of fair treatment in a courtroom, like the expectations of Catholics in the “Know Nothing” era or of Blacks in the South in the Wilsonian era.
What makes the Trump trial so dangerous for doing business in New York is not actually that it has anything to do with Donald Trump himself. The significance is that the rule of law, the inviolability of contracts, and the impartiality of the judiciary were all swept aside for a political end.
Business is based on contracts. The entire banking system is dependent on credit — a promise to repay. Investment hinges on promises of future outcomes and actions. All of this falls apart if we cannot trust the government to fulfill one of its basic functions: enforcing contracts as written, not according to the political whims of a corrupt justice system.
There is now a political risk premium for doing business in New York. Anyone, but conservatives especially, will need to price this in when making business or investment decisions. For example, there’s a risk that a borrower won’t repay a lender, but now there’s also a risk that the lender will have no legal recourse.
And don’t think you’re immune to this risk. If they can do it to a former president, they can do it to you.
• E.J. Antoni is a public finance economist and the Richard F. Aster fellow at The Heritage Foundation, and a senior fellow at the Committee to Unleash Prosperity.
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