Adam Smith's Simple Formula Explains Argentina's Rise, Fall, and Comeback

The December 2026 issue of Reason explores Argentine President Javier Milei's accomplishments and what is yet to be done.

In 1988, the great economist Robert Lucas Jr. asked a simple but haunting question: "Is there some action a government of India could take that would lead the Indian economy to grow like Indonesia's or Egypt's? If so, what, exactly? If not, what is it about the 'nature of India' that makes it so? The consequences for human welfare involved in questions like these are simply staggering. Once one starts to think about them, it is hard to think about anything else."

Adam Smith offered the answer in a 1755 lecture: "Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice."

The advantages to peace are obvious. A country won't get rich if foreign tanks are rolling through or if warring factions are killing each other. Resources are diverted from production, specialization, and innovation into fighting. One doesn't accumulate capital for tomorrow if it's likely to be destroyed or stolen. … [Subscribe to continue reading]