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Monday, May 26, 2014

The Document that Transformed the Chinese Economy

Here's an interesting story that was recently (re)played on NPR's Planet Money podcast ("The Secret Document That Transformed China"). It tells the story of a group of farmers who, in 1978, wrote a secret contract and hid it in the roof of a mud hut. They were afraid it might get them executed because it advocated private property and the pursuit of profit. However, they were starving and desperate, so they took a chance, and in the end, the contract transformed the Chinese economy from one that focused on the good of the collective to one that embraced individual initiative. The irony, of course, is that by incentivizing individuals to make a profit, it ended up benefiting the wider community, and one of the primary reasons why China's economy is one of the fastest growing economies in the world. It's worth a listen to.

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