When I crossed through Checkpoint Charlie from West Berlin to East Berlin nearly 30 years ago, the failures of former East Germany were immediately obvious. The grey unkempt landscape and dilapidated buildings looked as though that country hadn’t been repaired since American and Soviet tanks faced off yards apart decades earlier in one of the most tense nuclear showdowns.

While there, I witnessed the dismantling of the Berlin Wall and observed the first free parliamentary elections held in that region since 1933. Although these historic events marked the end of Soviet-dominated communism, that system began collapsing several years earlier.

Michael Novak, the author of dozens of books on the philosophy and theology of culture, stressed that checks and balances are to the political order what competition is to capitalism. The former Soviet Union, East Germany and other Soviet-controlled countries did not have a system of checks and balances or real competition, and failed miserably.

Even today, China has not designed a system with these critical functions. Consequently, its brand of one-party capitalism is undergoing difficulties that are likely to become more severe in the years ahead.

The American system of checks and balances is part of a critically important formula that prevents any one group from permanently imposing its will on others. It shepherds constant changes – some good, some bad – but always allows for self correction.

Combined with American free-market capitalism, which promotes dynamic and healthy competition, as well as a brilliant Constitution, the rule of law and separation of church and state, these factors have improved the lives of millions of people. They also have attracted the world’s brightest entrepreneurs, engineers and scientists, and empowered people to unleash their creativity, take risks and start new businesses.

But to continue to succeed, this American experiment also requires trust in important American institutions, like good government, a well functioning electoral system, a fair judiciary and sound property rights that protect investments. And herein lies a big problem: faith in many American institutions is declining, especially in government.

Stated in a recent report by the Pew Research Center, “Long running surveys show that public confidence in the government fell precipitously in the 1960s and ‘70s, recovered somewhat in the ‘80s and early 2000s, and is near historic lows today.” The report also indicates that only 37% of those interviewed have at least a “fair amount” of confidence in elected officials to act in the best interests of the public, and 63% have “not too much” or “no confidence at all.”

According to the report, “Why Institutions Matter for Economic Growth,” published by the World Economic Forum, a Geneva-based nonprofit organization best known for its annual meeting in Davos, Switzerland, institutions play an important role in a country’s economic health. When trust declines, economies can fail.

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