The Moral Framework for Prosperity

One of the important advantages that enabled nineteenth-century Britain to become the first industrialized nation was the dependability of its laws. Not only could Britons feel confident in investing in their country’s economy, without fear that their earnings would be confiscated or the contracts they made voided for political reasons, so could foreigners doing business or making investments in Britain. For centuries, the reputation of British law for dependability and impartiality attracted merchants and investments from continental Europe, as well as skilled immigrants and refugees. In short, both the physical capital and the human capital of foreigners contributed to the development of the British economy from one of the more backward economies of Western Europe to one of the most advanced, setting the stage for Britain’s industrial revolution that led the world into the industrial age.

Widespread corruption is another deterrent to investment, as it is to economic activity in general. Countries high up on the international index of corruption, such as Nigeria or Russia, are unlikely to attract international investments on a scale that their natural resources or other economic potential might justify. Conversely, the top countries in  terms of having low levels of corruption are all prosperous countries, mostly European or European-offshoot nations plus Japan and Singapore…the level of honesty has serious economic implications.

Sowell, Thomas, Basic Economics: A Citizen’s Guide to the Economy (Basic Books, 2004) p.276, 328

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