Introduction
An essential condition for efficiently allocating productive resources and enabling private investment in fixed assets (plant and equipment) to materialize, expand capacity, and drive economic growth is having an independent, impartial, capable, efficient, and expeditious judiciary. This branch of government ensures the protection of individual rights, including private property rights against third-party violations, including those by governmental acts. Additionally, the judiciary guarantees contract compliance and assigns remedies when one party fails to fulfill their obligations.
Importance of an Independent Judiciary
When a judicial system meets the criteria mentioned above, businesses engage in contracts with suppliers and customers that allow them to operate efficiently and maximize returns on invested capital. They can do so with the assurance that if a contracting party fails to comply, they can seek legal recourse from an independent judge who will enforce the contract or allocate the agreed-upon guarantees. Conversely, without an independent, impartial, and capable judiciary, businesses will only engage in contracts with parties deemed “morally responsible,” even if they are not the best suppliers or customers, leading to socially inefficient resource allocation.
Recent Judicial Reform and Concerns
The recent judicial reform has resulted in a senseless and irresponsible selection process for federal and state judges across 19 federal entities. The reform allows anyone with a law degree, regardless of their qualifications and merits, to be elected by popular vote without voters knowing the candidates’ identities or expertise.
Constitutional Basis for Judicial Functions
Article 104, Section II of the Constitution states that federal courts shall have jurisdiction over civil or mercantile disputes concerning federal laws or international treaties. When only private interests are affected, plaintiffs may choose to have their cases heard by common law courts.
Implications of the Newly Elected Judges
The recent reform has raised concerns about the independence of the judiciary, leaving uncertainty about whether elected judges will be impartial, honest, and capable. In matters of ensuring contract compliance between private businesses or between private businesses and the government, will they possess the necessary knowledge of the Commercial Companies General Law, the Commercial Code, the Credit Institutions Law, the General Law of Titles and Credit Operations, and the General Law of Alternative Mechanisms for Resolving Disputes? Without this knowledge, they cannot guarantee the protection of private property rights and contract compliance.
Bankruptcy Proceedings
Two additional relevant topics arise due to the popular election of federal judges: first, their understanding of bankruptcy laws, particularly the Merchandise Bankruptcy Law. Will they know how to act in cases of restructuring liabilities versus definitive bankruptcies? Can they appoint an efficient and impartial liquidator for assets, understanding the debt payment order (including labor and financial debts)?
Competition Law Enforcement
Second, federal judges in competition law matters must understand the Federal Economic Competition Law and Telecommunications and Broadcasting Law thoroughly. However, this is insufficient; they must also have economic theory knowledge in market structures (monopoly, duopoly, oligopoly, monopsony, price leadership, cartels, and competition). They should recognize absolute versus relative monopoly practices and understand various mechanisms to regulate monopolistic practices, such as setting maximum prices based on marginal or incremental costs.
Conclusion – Potential Consequences
While it is hoped that elected judges will meet these requirements, the process of selecting largely unknown individuals for voters casts doubt on this optimism. However, one thing is certain: if the new judges fail to fulfill their duties adequately, Mexicans will all suffer from reduced economic growth, lower GDP in the future, and a diminished standard of living.
Key Questions and Answers
- What is the significance of an independent judiciary for economic growth? An independent, impartial, and capable judiciary ensures that businesses can engage in contracts with confidence, leading to efficient resource allocation and economic growth.
- How does the recent judicial reform impact the selection of judges? The reform allows anyone with a law degree to be elected without regard for their qualifications or merits, raising concerns about the independence and capability of newly elected judges.
- What are the implications if new judges lack necessary knowledge in specific areas? Insufficient knowledge of contract law, bankruptcy proceedings, and competition law can lead to inefficient resource allocation, reduced economic growth, and a lower GDP.
