To understand the limits of economics is to avoid the error of assuming that economic success requires only that monetary incentives — prices, wages, profits, rates of return — be correct. Tariffs, minimum wages and other government interventions that distort monetary incentives do indeed make economic performance worse than it would be otherwise. But the success of even the freest market requires that people respect each other's property rights, that people keep their promises and that people behave responsibly toward their family, friends and own future selves.Put another way, you can say all you want about the tax code, or trade, or making good deals, but if you enable dysfunction, you won't get rich.
A society dominated by adults who never look beyond today will never become wealthy, no matter how free the market might be.
If the culture says “Live only for today!” then too few people will reduce their pursuit of immediate pleasure; too few people will have the discipline to sacrifice today's certain pleasures for the always-uncertain prospects of a brighter future.
Markets that are at least reasonably free are a necessary condition for prosperity. But free markets are not a sufficient condition. This fact is why deregulation alone or free trade alone or tax-cutting alone should not be expected to spark and sustain widespread economic growth.
The case for free markets presumes the existence of a culture that encourages people to care about their families and their futures and that discourages people from looking with scorn upon entrepreneurs and merchants. Under these cultural pre-conditions, prosperity will indeed occur if markets are free.
Without these cultural pre-conditions, however, the economic situation is hopeless. People whose cultural norms prevent economic growth from occurring through markets will prevent economic growth from occurring through governments — even if, by some miracle, politicians possessed enough knowledge to successfully “grow” an economy.
INSTITUTIONS ARE CIVILIZATION.
Don "Cafe Hayek" Boudreaux summarizes.