- Dr. Timothy X. Merritt
Surviving the Greater Depression: How National and International Legal Systems Will Adapt
Abstract: Explores the potential impacts of a catastrophic global economic collapse on national and international legal systems from the perspective of a fictional character, Dr. Josef Ranell, the Chief Logistics Officer of Global Multimodal Logistics (GML). As Ranell seeks to navigate the maelstrom of the Greater Depression, he considers how national and international laws may change in response to a catastrophic global economic collapse. His challenge is to make sense of all these competing regulations and select from them those that will have the most significant impacts (negative and positive) on GMLs operations. Everything is at stake, GML's solvency, the financial security of his employees, and even his personal assets and freedom. His very survival may depend on his ability to withstand the intense pressure.
Background (STEEPLE Analysis) for Directed Fiction
This article is the sixth of a seven-part STEEPLE Analysis designed to examine the future impacts of a fictional Greater Depression. The specific Framing question for this exercise is:
How might Global Multimodal Logistics (GML’s) decision to purchase six hybrid airships be affected by a global-scale Greater Depression occurring in the decade of the 2020s?
From this perspective, it becomes possible to examine trends from the seven categories defined by the STEEPLE analysis. The sixth category is Legal. This article seeks to offer a plausible answer to the following question:
What will be the legal impacts from a Greater Depression on GML’s operations?
The term "Greater Depression" describes a catastrophic global economic collapse that would surpass the severity of the Great Depression of the 1930s. As the economy spirals out of control, national and international laws will be tested, and legal systems will be forced to adapt to survive the economic turmoil.
The GML Corporation is based in the United States. Still, as a logistics organization dedicated to shipping freight worldwide, Ranell knows he can reposition assets to mitigate risks and take advantage of emerging opportunities. So, he directs his staff to a wide range of laws in both the US and abroad and prioritizes those with the greatest potential for risk or reward.
US National Laws
Dr. Ranell is an American. He lives in California with his family and enjoys a comfortable lifestyle there. However, as he looks out of his office window at the Port of Long Beach, he dreads confronting his terrible situation. He still thinks the United States is the best place to do business if he can mitigate the adverse effects of a Greater Depression on GML. Maybe he just needs to relocate to another state. His team of lawyers prepared this report prioritizing categories of laws according to their perceived impact.
1. Tax Laws and Government Revenue
In response to a Greater Depression, various national, state, and municipal governments have implemented a slew of nearly incoherent measures to increase taxes on the wealthy while simultaneously trying to reduce taxes on businesses and cut funding for public services. The tax code is a hot mess and is just getting worse (Williamson, 2021). Ranell does not need his lawyers to explain that GML's tax exposure is his most urgent threat. The government is run by fools who have no idea what they are doing. They merely respond to the protestations of an economically illiterate populace by enacting asinine tax policies wrapped in euphemistic titles that most often exacerbate the problems they intend to solve.
2. Labor and Employment Laws
Unemployment levels have been skyrocketing. The government has passed laws designed to give employers more leeway to reduce labor costs to keep businesses running. They have reduced the legal protections against layoffs and wage cuts. As the crisis wears on, they are signaling they may implement additional measures such as reducing the minimum wage (Fernandez-Villaverde, 2018), cutting unemployment benefits, or loosening safety regulations.
These changes make it easier for Ranell to reduce GML’s labor costs, but it also makes it harder for workers to make a living wage and maintain stable employment. He hates laying people off but he cannot pay anyone if GML closes his doors. From a business perspective, this is good news. However, as the layoffs escalate, the government is facing increased public pressure to protect jobs and wages.
3. Property and Foreclosure Laws
GML has significant commercial real estate holdings in the US. With revenues cratering, Ranell is not sure how long he can continue servicing the loan payments. Recent policy measures have been passed to reduce property taxes, loosen regulations on foreclosures, and incentivize lean holders to offer lease reductions. These changes are making it easier for GML to maintain its property. However, as the commercial real estate market continues to collapse, it is triggering a massive wave of bankruptcies and foreclosures (Anonymous, 2021). No amount of regulation can help Ranell if he ultimately has fewer customers.
4. Criminal Justice and Law Enforcement
Crime has gotten much worse in the United States, and every approach to reduce it seems to fail (DeRoche, 2012). He never thought he would see it in the United States, but Ranell routinely deals with cargo truck hijackings. Whose idea was it to implement measures such as reducing funding for police and courts and ignoring minor crimes and drug use? What they need to do is begin loosening regulations on private security and increasing penalties for crimes. Until they do, Ranell knows that GML will likely face increased crime, and the criminal justice system will be unable to enforce laws effectively and protect citizens.
5. Consumer Protection Laws
GML does not deal directly with consumers, yet the recent changes in consumer protection laws significantly impact Ranell's operations. The businesses he routinely deals with are taking advantage of reduced regulations and cuts in funding for consumer protection agencies. These changes have made it easier for businesses to sell their products, but it has also made it harder for consumers to protect themselves from fraud and deception. Ranell knows it is getting ugly out there (Anonymous, 2018), and there is a race to the bottom as desperate business owners try every dirty trick in the book to stay afloat. The threat to GML may not be imminent, but it would be prudent to pay attention to changes in consumer protection laws. Ranell’s lawyers are expecting a backlash from an outraged public.
Laws change across national borders. If moving GML operations to another US state fails to resolve his problems, perhaps relocating operations to another country will. What Ranell wants is some sort of decision matrix that he can use to estimate costs and benefits between specific countries. However, before he can develop the decision matrix, he first needs to decide what categories of laws and regulations matter most and prioritize them.
1. International Trade and Tariff Laws
Since the onslaught of the Greater Depression, international trade laws have changed in response to the economic collapse. Trade relations are under strain as countries attempt to protect their own economies. Ranell knows that protectionism is driving international businesses to face increased competition. The United Kingdom, Japan, China, India, the European Union, and the United States have all implemented some forms of protectionism, including; increasing tariffs on imported goods, restricting the flow of capital and labor, and renegotiating trade agreements (John, 2019). These changes have made it harder for businesses to sell their products in other countries and as a result, the demand for GMLs container shipping services is plummeting. Ranell considers if the new air shipping lanes made possible by his small fleet of hybrid airships might reveal some yet-to-be-discovered opportunities.
2. Bankruptcy and Debt Restructuring Laws
The inescapable fact is that GML is facing bankruptcy. Ranell knows that if current trends continue, that is the most likely outcome. He has been searching for some strategy to avoid this inevitability, but the time has come to consider the best way for GML to declare insolvency.
Worldwide bankruptcy and debt restructuring laws have changed dramatically in response to the Greater Depression. Some governments are reducing regulations and offering protections for entrepreneurs and managers of bankrupt firms (Cirmizi, Klapper & Uttamchandi, 2010), while others are increasing the ability of creditors to seize assets to dissuade debtors from defaulting. Rannell considers the wisdom and ramifications of relocating GML’s headquarters to a country with more favorable bankruptcy laws than can be found in Los Angeles, California. It is, at best, a dangerous strategy to consider. Businesses and banks have been shuttering their doors worldwide, and regulators are growing wise to the tricks and schemes of desperate business owners. There is a real possibility of jail time or worse.
3. Social Welfare and Public Assistance Laws
What happens to GML employees if GML closes its doors? All over the world, social welfare and public assistance laws are being enacted to address chronic funding shortages. Programs are drying up (Bodewig, 2016). Despite promises by governments to provide a safety net, the realities of the Greater Depression are proving those promises to be empty. The elites have run out of other people’s money to spend (Thatcher, 1976). Ranell knows that austerity measures designed to balance government budgets have drastically cut resources, making it harder for people to access social welfare and public assistance services. Corporations like GML, designed to generate profit, have now inherited the moral duty to provide for the basic survival needs of their employees. Ranell never wanted this responsibility, but now he cannot turn away from it. He must consider keeping GML operational far past the point of no return, even if it means violating his fiduciary responsibilities to GML shareholders and allowing the company to run ground to protect his employees for as long as possible.
4. Environmental and Natural Resource Laws
The Green New Deal is dead. Burned by ill-conceived environmental laws that failed to usher in an era of “net-zero” fantasy (Dyke, Knorr & Watson, 2021), most countries have loosened regulations on pollution and resource extraction. Draconian cuts in conservation and environmental protection funding, combined with incentives for businesses, have made it easier to exploit natural resources. However, these new laws have also made protecting the environment and natural resources harder.
This development is a devastating blow to GML. One of the primary benefits of hybrid airship operations is their low carbon footprint. They consume only a fraction of the fuel used in other forms of commercial aviation, cutting emissions by as much as 90% (Neate, 2021). Ranell laments that his strongest argument for airship use has become a subject of international scorn.
5. Immigration and Refugee Laws
With nearly one billion people displaced, the Greater Depression is driving the largest mass migration in human history (Baker, 2020). Governments have enacted policies to tighten border security, reduce the number of refugees and immigrants accepted, and increase penalties for immigration violations. It has become a world of fortresses, and it is now easier for governments to control their borders. Nevertheless, no solution has worked to stem the vast tide of humanity struggling to escape economic ruin.
Harsher laws mean immigrants and refugees face increased barriers to entering other countries and are at greater risk of being detained or deported. This, in turn, drives the incentive for human smuggling. Criminal elements are likely to point out that hybrid airships are a perfect vehicle to transport people around border crossings and deliver them to locations with no external infrastructure needs. With a twenty-ton cargo capacity, facilitating the influx of migrants may prove extremely lucrative. If someone who realized the severity of his problem made Ranell an incredible offer, would he be able to resist the temptation?
Dr. Ranell's team of lawyers has delivered their report on national and international laws emerging from the chaos of the Greater Depression. The breadth and scope of the legal landscape are staggering. The laws surrounding labor and employment, property and foreclosure, consumer protection, tax laws, government revenue, criminal justice and law enforcement, international trade and tariff laws, social welfare and public assistance, environmental and natural resource laws, and immigration and refugee are just a tiny fraction of the changes wrought by the catastrophic global economic collapse.
Ranell’s challenge is to make sense of all these competing regulations and select from them those that will have the most significant impacts (negative and positive) on GMLs operations. If he is caught violating the law, GML’s solvency, the financial security of his employees, and even his personal assets and freedom are at stake. Ranell is desperate. All eyes are on him as he considers options that will affect the lives and livelihoods of tens of thousands of people. He drinks too much, and he does not sleep well. He has heard that investors leaped from windows to their deaths on Black Thursday, the stock market crash of 1929. He does not know if that is a true story (Anonymous, 2023), but he thinks he understands the sentiment. The pressure is indescribable and unbearable.
Anonymous (2018). 11 times big brands violated consumer protection laws. Law Firm of Zebersky Payne Shaw& Lewenz. Retrieved from https://zpllp.com/fort-lauderdale-law-firms/
Anonymous (2021). Commercial real estate collapse triggering a massive wave of bankruptcies and foreclosures. Epic Economist. Retrieved from https://www.epiceconomist.com/commercial-real-estate-collapse-triggering-a-massive-wave-of-bankruptcies-and-foreclosures/
Anonymous. (2023). Myth or fact: did investors really jump out of windows after the 1929 market crash? History 101. https://www.history101.com/investors-jump-windows-stock-market-crash/
Baker, L. (2020). More than 1 billion people face displacement by 2050. Reuters. Retrieved online https://www.reuters.com/article/ecology-global-risks-idUSKBN2600K4
Bodewig, C. (2016). Does high social spending help the poor? Evidence from European welfare states. Brookings. Retrieved from https://www.brookings.edu/blog/future-development/2016/01/13/does-high-social-spending-help-the-poor-evidence-from-european-welfare-states/
Cirmizi, E., Klapper, L., & Uttamchandi, M. (2020). The Challenges of Bankruptcy Reform. World Bank Development Research Group. Retrieved from https://documents1.worldbank.org/curated/en/556211468331212706/pdf/WPS5448.pdf
DeRoche, C. (2012). A failing criminal justice system. New York Times. Retrieved from A Failing Criminal Justice System - NYTimes.com
Dyke, J., Knorr, W., & Watson, R. (2021). Climate scientists: The concept of net zero is a dangerous trap. The Conversation. Retrieved from https://theconversation.com/climate-scientists-concept-of-net-zero-is-a-dangerous-trap-157368
Fernandez-Villaverde, J. (2018). The economic consequences of labor market regulations. University of Chicago Legal Forum. Retrieved from https://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=1593&context=uclf
John. (2019). Top countries with the largest imports and exports. Countries Today. Retrieved from https://www.countriestoday.com/largest-imports-and-exports/
Neate, R. (2021). Airships for city hops could cut flying’s CO₂ emissions by 90%. The Guardian. Retrieved from https://www.theguardian.com/world/2021/may/26/airships-for-city-hops-could-cut-flyings-co2-emissions-by-90
Thatcher, M. (1976). Interview with journalist Llew Gardner. This Week television program. Retrieved from https://www.snopes.com/fact-check/other-peoples-money/
Williamson, K. D. (2021). The trouble with the tax code is the tax code. National Review. Retrieved from https://www.nationalreview.com/2021/04/the-trouble-with-the-tax-code-is-the-tax-code/