The Chinese farm lesson

Back in January, I was driving home, listening to NPR to avoid the advertisements played around 6 o’clock by commercial radio stations. The program, Fresh Air, was about how China’s current economic rise in the world began. If you have eight minutes, you should listen to the story for yourself.

The seeds of China’s economic rise began in 1978 when the people of the village Xiaogang agreed among themselves to secretly buck the communist party. Here is the story in a nutshell. In 1978, in communist China, there was no personal ownership of property. In the village of Xiaogang everybody worked on a collective farm where everything belonged to the collective group. Whatever was produced was distributed equally. If you worked hard you received an equal share. If you were a slacker, you still received an equal share. There was no reason, no incentive, to work hard.

After one particularly hard year, a year where the collective farm did not produce enough food for themselves and they were going hungry, in desperation the farmers secretly met. They agreed to divide the farm into plots and each family would grow food on their assigned plot. They would give the food harvested to the government and to the collective, but if they grew enough food they would keep some for themselves. They formalized the agreement in a written document signed by each family. They had to keep their agreement secret or risk imprisonment or execution by the communist party.

After the agreement was signed the villagers’ attitudes changed. Working for themselves rather than the collective farm, they would go to work earlier than required by the official work day and secretly they competed against each other. This created a problem.

The problem was they couldn’t hide the results of the agreement. That year’s harvest was larger than the previous five years harvest combined. The secret was out.
The farmers of Xiaogang were fortunate. The Chinese government decided to hold the farmers up as a model for other villages to follow rather than kill everybody. Since this time the Chinese economy has grown and prospered raising 500 million Chinese people out of poverty.

That’s a great story brimming with American values. This story illustrates what America is about in such a simple way. The essence of the entrepreneurial spirit is about incentives and risk and rewards and the freedom to better ourselves. These farmers chose to be “self-employed” and their harvest was greatly increased. Although our government seems to act as a collective farm at times, rewarding those who don’t work (but could) by taking from those who do work, there is still plenty of incentive for an individual in the United States to own his or her own business. It’s a noble thing to do and it helps drive our economic growth.

I attended the Compass Conference 2012 organized by The City Wire last month. Jeff Collins, the economist who writes the Compass Report published by The City Wire, was one of the keynote speakers. His message was that the economy is changing structurally and as a result of this change manufacturing in this country will continue to decline.

For Fort Smith, a city with a long history of manufacturing employment, this change might mean many a hard worker displaced and without a job. If you find yourself in this circumstance, remember the farmers of Xiaogang. They solved their economic problem by becoming self-employed. They became business owners. Maybe you should too.

With an aging population, there will be many opportunities to buy ongoing successful businesses where the founder finds it necessary to sell his business. Another option would be to start from scratch.

My hope is that if the economy continues to see the decrease in manufacturing jobs in America and in the Fort Smith area, we don’t feel sorry for ourselves and become a people of “the check.” a people expecting the government to take care of us. The better choice, the more noble choice, is to get back to work through “self-employment” and business ownership and increase the size of your harvest.