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Perfect freedom is as necessary to the health and vigor of commerce as it is to the health and vigor of citizenship. — Patrick Henry

Why are some nations rich and others poor? Why do some rich nations, such as the US, at certain times enjoy periods of strong growth and prosperity, while at other times struggle with little or no growth?

These are the very questions economists have attempted to answer for at least two and a half centuries. To be useful, any attempts to answer these questions should be policy oriented. They should provide policymakers and advocates with a clear, practical guide to policies that promote the creation of wealth, as well as those that impede it.

One potential policy-oriented answer is the one provided by the world’s two most famous economists— Adam Smith and Milton Friedman. Both viewed economic freedom as the key to the wealth of nations. Economic freedom involves placing the main power and authority over economic issues with individuals instead of with government.

An alternative policy for enhancing wealth is to give more power and control over economic decisions to government. Increasing the government’s power and authority over economic decisions produces a corresponding decrease in the economic freedom of individuals. This alternative policy direction has been termed progressivism, socialism and communism, depending on the degree to which government controls economic decisions.

The underlying assumption behind increasing government control over economic decisions is the belief that governments make better decisions than individuals operating in a free market environment. With the collapse of the Soviet Union there has been a greater recognition of the problems associated with the extreme lack of economic freedom under communism. There is less widespread recognition of how less extreme moves to restrict freedom, from either progressive or socialist policies, might also erode wealth and promote poverty. Analyzing the economic performance of various countries under different policy regimes can provide insights into this important issue.

The objective of this book is to provide systematic, historical evidence of the extent to which policies promoting or impeding economic freedom have been associated with the rise and fall of the wealth of nations. Chapter 2 defines wealth in a specific way and explains why the definition is important. In order to measure and test economic concepts it’s important to clearly define the terms involved.

Chapter 3 describes the wealth-creation process. It’s necessary to describe this process since too often there is a belief that wealth is a natural consequence of technological innovations or is something that can be created by increasing government spending. Chapter 4 deals with measuring the concept of wealth, its relationship to wages, and how best to compare the wealth of one nation to others.

Chapter 5 focuses on the extreme differences between the world’s wealthiest and poorest nations. It explains why attempts to redistribute wealth cannot be an effective means to reduce poverty. It also discusses the only practical solution to minimize poverty throughout the world. Chapter 6 summarizes the broad overall relationship between economic freedom and wealth among countries.

Chapter 7 begins the process of looking at the evidence for the creation of wealth in specific countries. The objective is to determine the extent to which economic progress, or a lack of progress, is related to a specific set of policies. The United States is the first, and most unique, example of a country founded on the principles of economic freedom.

The next six chapters are devoted to major shifts in economic policies during the past century in the United States. Periods where policies moved clearly in the direction of economic freedom are distinguished from those where policies moved away from these principles and toward the progressive or socialist agenda.

The most significant finding from this analysis is that no growth in wages occurred during those periods when economic polices moved in the direction of the progressive agenda. Almost all gains in workers’ wages since 1900 occurred during years when US policies embraced free-market classical principles. This finding explains how the disappointing performance of wages from 2004-2015 is not unusual. It is typical of every historical period when economic policies have enhanced the power and control of government at the expense of individual economic freedom.

The remaining chapters analyze economic performance in countries throughout the world. Chapter 14 compares wealth in the United States to Canada, Australia, and New Zealand. Chapter 15 compares the United States to Europe's wealthiest countries. The three —Norway, Switzerland and Ireland—provide important lessons regarding the European experience with creating wealth.

Chapter 16 describes policies in the two most extreme real world examples of countries following free- market classical principles—Singapore and Hong Kong. Although neither country is blessed with natural resources, each has progressed from being among the poorest nations in the world to being among the world’s wealthiest countries.

The next two chapters examine the role of classical principles in the resurgence of growth in China and India. Chapter 19 deals with Russia’s failed experiment with communism and its recent attempts to restore growth. Chapter 20 examines how Japan moved from being a world leader in terms of economic growth to a quarter century of economic stagnation.

Chapters 21 and 22 look at recent developments in Latin America and Africa from the perspective of economic freedom. A final chapter summarizes the evidence.

Two and a half centuries after Adam Smith wrote The Wealth of Nations, and more than half a century since Milton Friedman updated the case for freedom, our analysis confirms their insights. There is clear, overwhelming evidence over the course of history and throughout the world. The evidence is fully consistent with the conclusion classical economists reached over two centuries ago: Economic freedom is the key to the wealth of nations.