Laissez les bons temps rouler? The persistent effect French civil law has on corruption, institutions, and incomes in Louisiana

Abstract

Louisiana consistently ranks as one of the most corrupt states in the nation. In fact, the Pelican State is the most corrupt state when looking at the most common indicator of corruption: corruption convictions per 100,000. What is less clear about Louisiana is how the state became corrupt. This paper seeks to provide the missing link. I argue that the high levels of corruption in the state can be explained by its origins in French civil law. This historical influence has perverse and persistent effects on the state, despite occurring over 200 years ago. Through these origins in civil law, corruption in Louisiana impacts its economic institutions. These institutions then lead to a variety of other bad outcomes in the state such as a high dependency on oil and low incomes. This argument implies that resource dependency is bad for development only when institutional quality is low. By linking legal origins to corruption, institutions, and economic outcomes, I seek to offer a clearer explanation for why Louisiana sets itself apart from other states in its politically corrupt environment.

Capitalist Diversity, Legal Origins, and Non-Independent Pasts: The Effects of Institutional Settings on Economic Performance

“…French civil law, in particular, proxies the forti cation of institutions that expand state power (Hayek, 1960(Hayek, , 1973La Porta et al, 1999;Levine, 2005), allowing governments greater space to use resources for political gains. Perverse and persistent effects on the state and high levels of corruption have also been associated with French civil law (Callais, 2021). On the other hand, English common law, with its focus on jurisprudence, is relatively better equipped to adapt to changing contractual needs (Levine, 2005).…”

Shock me like a Hurricane: how Hurricane Katrina changed Louisiana's formal and informal institutions

“…Institutional instability can in turn also affect economic growth, but the direction of effects can vary in rich and poor societies (Berggren et al, 2012). On the other hand, civil war, terrorist attacks, and other forms of conflict can affect various institutional outcomes such as social participation, cohesion, social trust, and governmental repression (Bauer et al, 2016; Bjørnskov and Voigt, 2022; Kijewski and Freitag, 2018) recovery (Callais, 2021;Congleton, 2006;Sobel and Leeson, 2006). Congleton (2006) and Sobel and Leeson (2006) find that Louisiana's layered bureaucracy, coupled with widely perceived public-sector corruption and widespread mistrust in government, was responsible for its sluggish postdisaster governmental response.…”

“…This is unsurprising considering Louisiana's longstanding association with political corruption. Noting Louisiana's French civil law origins and history of public corruption, Callais (2021) attributes much of Louisiana's post-Katrina disaster policy blunders to its preexisting institutional failures. This analysis, if true, suggests that the state's inability to respond effectively post-Katrina may be, in part, due to the persistence of formal legal institutions in the form of internalized corruption-friendly norms.…”

“…When formal institutions fail to secure property rights, they can have lasting consequences. In a paper highly relevant to this research, Callais (2021) links historical corruption within the French civil law system that Louisiana inherited 200 years ago to its modern era institutional frailties and the underperformance of its existing legal system. These factors worked jointly to worsen governmental responses to address Hurricane Katrina in many documented cases (p. 668).…”

“…Another strand of economics literature on Hurricane Katrina shows that governmental blunders and bureaucratic mismanagement led to ineffective postdisaster responses and slowed down economic recovery (Callais, 2021; Congleton, 2006; Sobel and Leeson, 2006). Congleton (2006) and Sobel and Leeson (2006) find that Louisiana's layered bureaucracy, coupled with widely perceived public-sector corruption and widespread mistrust in government, was responsible for its sluggish postdisaster governmental response.…”