Key Point

“It seems to me there are three fundamental keys to achieving sustained prosperity. I want to emphasize the word sustained prosperity. The first is that individuals have to be free to pursue a vocation that suits their talents the best. Second, they have to be able to have the opportunity to reap the benefits of their efforts. And third, the economic system has to provide individuals with the right incentives to produce the goods and services that not only benefit them the most but benefit society the most.

“The institutions that give us those three attributes, I think, are the following: You alluded to them, Peter, but most importantly, the rule of law and not the rule of men; private property, as Terry mentioned in the introduction; free and open markets, where individuals are allowed to build businesses and enter freely; and then, fourth, a well-defined and limited role of government in society. If you get those four fundamental institutions right, you have what I call the necessary conditions for a sustained economic prosperity. If you get them wrong, both economics and history teaches us that you will not have sustained prosperity. You might be able to get it temporarily, but eventually you will not be able to sustain it.”

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