On March 31, 2025, Daniel J. Mitchell, Chairman of the Center for Freedom and Prosperity, delivered a compelling presentation tracing the economic trajectories of nations across centuries. Drawing from extensive historical data, Mitchell argued that while poverty has been humanity’s default state for millennia, a select few countries have defied this norm by achieving remarkable wealth through a consistent “recipe” for prosperity. This recipe, distilled into five key ingredients—quality of governance, sound fiscal policy, regulatory policy, trade policy, and stable money—has proven effective across diverse global contexts. Using examples of convergence and divergence, Mitchell highlighted how adherence to or deviation from these principles shapes a nation’s economic fate, with a particular focus on Argentina as a potential turning point in modern economic policy.
From Poverty to Prosperity
Mitchell began by framing humanity’s economic history: for thousands of years, people lived in conditions of widespread poverty. It was only in the last few hundred years, spurred by the Enlightenment and the rise of capitalism, that some nations began to break away from this flatline of deprivation. Countries like the United States, the United Kingdom, France, and later South Korea emerged as exemplars of this shift, leveraging free-market principles to amass wealth unprecedented by historical standards.
This divergence from the norm, Mitchell emphasized, is not random but the result of deliberate policy choices. Convergence theory in economics posits that poorer nations should grow faster than rich ones due to lower production costs and capital inflows. While this holds true in many cases—such as the southern U.S. states catching up to the north or Poland overtaking the UK—the exceptions, or cases of divergence, offer the most profound lessons.
The Five Ingredients of Prosperity
At the heart of Mitchell’s presentation was the “recipe” for economic success, a framework he’s championed through his work at the Center for Freedom and Prosperity:
- Quality of Governance: A system marked by the rule of law and honest administration of justice. While some of his libertarian colleagues advocate for private-sector solutions, Mitchell pragmatically supported a lean, effective government to ensure this foundation.
- Fiscal Policy: Historically, he noted, the West grew rich when government spending was minimal—around 5-10% of GDP—without income taxes or sprawling welfare states.
- Regulatory Policy: Minimal interference in markets fosters growth, a stark contrast to the heavy-handed regulation seen in many lagging economies.
- Trade Policy: Openness to global trade, which Mitchell lamented has been undermined by recent U.S. policies under Trump’s second term, is critical.
- Sound Money: Stable currency underpins economic confidence and growth.
These ingredients, when combined, have consistently lifted nations from poverty to prosperity, as evidenced by historical data spanning decades or even centuries.
Convergence Success Stories
Mitchell cited numerous examples where adherence to this recipe led to convergence—poorer nations catching up to or surpassing richer ones:
- Lithuania: Once half as wealthy as southern Europe post-communism, it now exceeds it, thanks to free-market reforms.
- Poland: Outpacing the UK after shedding Soviet-era policies, Poland exemplifies how liberalization can propel growth.
- Singapore: From parity with Jamaica in the 1950s, Singapore’s free-market policies catapulted it to one of the world’s richest nations, while Jamaica stagnated under statism.
These cases underscore the predictability of convergence when countries adopt market-oriented policies, a phenomenon Mitchell noted surprises no economist.
Divergence: Cautionary Tales
More striking, however, were the examples of divergence, where nations with similar starting points took divergent paths due to policy choices:
- Singapore vs. Jamaica: Identical in the 1950s, Singapore’s embrace of economic freedom led to wealth, while Jamaica’s statism left it poor.
- Hong Kong vs. Cuba: Once comparable, Hong Kong’s market-driven rise contrasted sharply with Cuba’s stagnation under communism.
- Argentina vs. Hong Kong: In 1950, Argentina ranked among the world’s top 10 richest nations, while Hong Kong languished near the bottom. Decades of Peronism saw Argentina plummet, while Hong Kong soared—until recent Chinese interventions.
Mitchell argued that these long-term trends—spanning 20, 40, or even 100 years—cannot be dismissed as flukes. Natural resources or short-term shocks might explain brief anomalies, but sustained divergence points to policy.
Argentina: A Pivotal Case Study
Argentina emerged as a focal point of Mitchell’s presentation, both as a cautionary tale and a potential beacon of hope. Once a global economic powerhouse—rivaling the U.S. in per capita GDP around 1900—Argentina’s decline over the past century is stark. Mitchell attributed this to Peronism, a system of economic mismanagement that eroded its vitality, dropping it to the worst-performing nation in real per capita GDP growth over 105 years, per The Economist.
Yet, under President Javier Gerardo Milei, elected in 2023, Argentina is attempting a radical reversal. Mitchell praised Milei’s 2024 fiscal consolidation—the largest in peacetime history—as a bold step toward free-market reform. Early signs of growth are promising, though he cautioned against over-relying on short-term data. If Milei succeeds in reversing decades of bad policy, Mitchell believes Argentina could become a global model, proving that even deeply entrenched decline can be overcome with the right approach—a prospect that aligns with his advocacy for limited government and free markets.
Challenges and Counterarguments
Mitchell acknowledged counterarguments from the left, who often cite Sweden as a successful big-government model. He refuted this by noting Sweden’s wealth was built in the 1800s and early 1900s with small government, only faltering after adopting a welfare state in the 1960s. No example exists, he challenged, of a statist nation outperforming a free-market peer over decades—a claim met with “crickets chirping” from his critics.
Politically, Mitchell recognized the difficulty of implementing reforms. Politicians fear voter backlash—likened to withdrawal symptoms from “the heroin of government dependency.” Yet, citing Reagan’s success, he urged boldness, suggesting Milei’s experiment could inspire others if it withstands external shocks, like a potential Trump-induced trade war.
A Global Call to Action
Closing with a nod to Adam Smith’s simplicity—peace, easy taxes, and tolerable justice—Mitchell lamented the drift of international bodies like the IMF toward tax-heavy advice, a departure from the free-market “Washington Consensus” of the 1980s and 1990s. He posited that the West’s historical wealth, built on minimal government, remains a blueprint for today’s developing world.
Argentina, Mitchell concluded, is the most important economic story of 2025. Its success or failure could reshape global policy debates, offering a rare, real-time test of whether a nation can reclaim prosperity through radical reform. As he opened the floor to questions, his message was clear: the data of history speaks volumes, and the recipe for prosperity is within reach—if only nations dare to bake it.
