Question

Adam Smith wrote, “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: all the rest being brought about by the natural course of things.”

True or False: A fair administration of justice would encourage saving and investment through the enforcement of property rights, thereby promoting economic growth.

Answer 1

True.

policy of very limited government which he believed should limited to three things: peace, low taxes, and an acceptable (and presumable also cheap) system of justice is the need for the economic growth.

Property rights must be monitored and the possession of the rights must be enforced.The greater the restrictions that property rights place, the more likely that defense of the rights will be needed.

The lack of enforcement of property rights, it does not contribute to increasing the stock of physical or human capital of a nation.so

Enforcement of property rights is likely to result in more incentives to invest and saving which promote economic growth.