John Cogan on the Factors that Promote Economic Prosperity
Published November 3, 2020
Sustained economic prosperity occurs when individuals have the freedom to work and receive the benefits of their efforts. These conditions are possible through institutions such as the rule of law, private property, limited government, and free markets. History and economics show that without these institutions, economic prosperity is not be sustainable.
This video’s audio is excerpted from an episode of the Uncommon Knowledge web series, published by the Hoover Institution.
- Watch the Uncommon Knowledge podcast episode “Why Here? Why Now? Why Did the United States Enjoy Dramatic Improvements in the Standard of Living During the Last Century?” with John Cogan, Lee Ohanian, Terry Anderson, and George Shultz. Available here.
- Watch, “What Democratic Socialism Does to Economic Prosperity,” with Lee Ohanian. Available here.
- Watch “How the Rule of Law Promotes Prosperity,” with Michael McConnell on PolicyEd. Available here.
There are three fundamental keys to achieving sustained prosperity.
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.
The rule of law, private property, free and open markets, 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 might be able to get it temporarily but eventually you will not be able to sustain it.