The Real Wealth of Nations

On Governance, Law, and Endowments

Wealth that endures is not what a country has but what it can reliably make of what it has. Minerals exhaust, booms fade, and skylines date; a polity that binds itself to general rules, arbitrates disputes impartially, and keeps time on its promises converts present effort into future prosperity. In this light, governance and the rule of law are not backdrop but engine—an invisible capital stock that compounds across generations.

This essay advances a simple thesis with large consequences: institutions create more wealth than endowments. I develop the logic first—how credible rules lower uncertainty, shape incentives, and lengthen horizons—and then, within each idea, weave a practical illustration. If you’re reading as a free subscriber, you’ll get the full spine of the argument; paid subscribers receive an investor’s institutional checklist, reform sequencing notes, and a curated reading map through the best scholarship.

Why now? Because the world is volatile: war-bent trade routes, climate shocks, demographic pivots, and technological leaps punish countries that rely on luck and flatter those that rely on law. In such conditions, credibility becomes currency: nations that can be trusted to enforce contracts and constrain rulers attract investment, mobilize savings, and nurture productivity. As Adam Smith framed it, prosperity rests on peace, modest and predictable taxes, and justice that is not arbitrary.

What follows is political economy with a philosophical edge: order without law is fear, and law without order is noise. Only when public power is constrained by general rules does private initiative become emboldened; only then do citizens invest not merely money but time—the scarcest capital of all.