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Something dangerous is happening to the U.S. economy, and it's not inflation or trade wars. Chaotic deregulation and the selective enforcement of laws have upended markets and investor confidence. At one point, the threat of tariffs and resulting chaos in the U.S. stock market. This approach isn't helping the economy, and there are troubling signs it will hurt both the U.S. and the global economy .

The —the idea that legal rules apply to everyone equally, regardless of wealth or political connections—is essential for a thriving economy. Yet globally the respect for the rule of law is slipping, and the U.S. is slipping with it. According to annual rankings from , the rule of law has declined in more than half of all countries for seven years in a row. The rule of law in the U.S., the most economically powerful nation in the world, is now weaker than the rule of law in Uruguay, Singapore, Latvia and more than 20 other countries.

When regulation is unnecessarily burdensome for business, government should lighten the load. However, arbitrary and frenzied deregulation does not free corporations to earn higher profits. As a with an MBA who has taught business law for over 25 years, and the about the importance of legal knowledge to business, I can affirm that the opposite is true. Chaotic deregulation doesn't drive growth. It only fuels risk.

Chaos undermines investment, talent and trust

Legal uncertainty has become a serious drag on American competitiveness.

A study by found that public policy risks—such as unexpected changes in taxes, regulation and enforcement—ranked among the top challenges businesses face, alongside more familiar business threats such as competition or economic volatility. Companies that can't predict how the law might change are forced to plan for the worst. That means holding back on long-term investment, slowing innovation and raising prices to cover new risks.

When the government enforces rules arbitrarily, it also undermines property rights.

For example, if a country enters into a major trade agreement and then it, that threatens the property rights of the companies that relied on the agreement to conduct business. If the government can seize assets without due process, those assets lose their stability and value. And if that treatment depends on whether a company is in the government's political favor, it's not just bad economics—it's a red flag for investors.

When government doesn't enforce rules fairly, it also threatens people's freedom to enter into contracts.

Consider presidential orders that that have challenged the administration with cancellation of their government contracts. The threat alone jeopardizes the value of those agreements.

If businesses can't trust public contracts to be respected, they'll be less likely to work with the government in the first place. This deprives the government, and ultimately the American people, of receiving the best value for their tax dollars in critical areas such as transportation, technology and national defense.

Regulatory chaos also allows corruption to spread.

For example, the , which prohibits businesses from bribing foreign government officials, has leveled the playing field for firms and enabled the best American companies to succeed on their merits. Before the law was enacted in 1977, some American companies to pay bribes to compete. " of the law, as the current presidential administration has done, increases the cost of doing business and encourages a where chaos thrives.

When corruption grows, , and , which oppose the interests of the U.S., thrive. Halting the enforcement of an anti-bribery law, even for a limited time, is an issue of national security.

Legal uncertainty fuels brain drain

Chaotic enforcement of the law also corrodes labor markets.

American companies require a strong pool of talented professionals to fuel their financial success. When legal rights are enforced arbitrarily or unjustly, the very best talent that American companies need may leave the country.

The science brain drain is already happening. American scientists have submitted for jobs abroad compared with last year. Nonscientists are leaving too. Ireland's Department of Foreign Affairs has witnessed a in Americans taking steps to obtain an Irish passport. Employers in the U.K. saw a from the United States.

Business from other countries will as they compete against American companies. During the Third Reich, to other countries, including America. Now the reverse is happening, as highly talented Americans leave to work for firms in other nations.

Threats of arbitrary legal actions also drive away democratic allies and their prosperous populations that purchase American-made goods and services. For example, arbitrarily threatening to punish or a closely allied nation does not endear its citizens to that government or the businesses it represents. So it's no surprise that Canadians are now boycotting American goods and services. This is in American border towns and hurts the economy nationwide.

Similarly, the Canadian government has responded to whipsawing U.S. tariff announcements , which will slice the profits of American exporters. Close American allies and such as Japan, the U.K. and the European Union are also signaling their own willingness to , increasing the costs of operations to American business even more.

Modern capitalism depends on smart regulation to thrive. Smart regulation is not an obstacle to capitalism. Smart regulation is what makes American capitalism possible. Smart regulation is what makes possible.

Clear and consistently applied legal rules allow businesses to . An arbitrary rule of law deprives business of the true power of capitalism—the ability to promote economic growth, spur innovation and improve the overall living standards of a free society. Americans deserve no less, and it is up to government to make that happen for everyone.

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