Chang Chang was just turning ten years old when I met him. Whip-smart, he’d already passed the TOEFL (Test of English as a Foreign Language), though he’d only been in the US for about eighteen months. He was also about the size of a six year old, because of stunted growth from his early life in the People’s Republic of China.
You see, Chang Chang’s big sister had already died of starvation. Then his parents found out they were pregnant again, and they still had no food. So they named him Zi Chang, which means “Self Strength.” The name and the hope were the only things they could give him. His mother, a very tall and striking concert pianist, told me this story.
So, which will it be: starvation or execution? That was the choice the Chinese villagers of Xiaogang faced in 1978, right about the time Zi Chang was born. Their collectivized farms had failed in harvest after harvest, and they couldn’t beg from the other villages anymore. So, they wrote up a secret contract to divide up their land into private plots and allow each other to keep some of the proceeds of their own labor. They also agreed to raise the children of anyone caught, since the penalty for private ownership in the People’s Republic of China was death.
Did allowing people to benefit from their own labor make a difference? The next year, the new entrepreneurs harvested more than they had the previous five years combined!
The government did take notice, but instead of punishing the farmers for breaking the law, they changed the law and “Market Socialism” was officially born.
In the meantime, my kid’s forays into capitalism continue apace. He’s hired his best buddy to help with sales. The employee works on a contingency basis, so he’s been working with a will and making quite a bit of change for himself. In the meantime, the customers have been demanding more variety, so my guy had to make a large (for him) capital outlay to get a big multipack bag. When he got home, he carefully counted and sorted every piece and calculated what his sales price could be in order to give himself sufficient profit margin to stay in business. This took him hours. This is a kid who never likes to spend more than five minutes doing math homework every night. He’s also documenting everything from which candies are most popular, what special offers have the best response, kids on credit, break-even points, employee sales, and so on.
Is he learning this much useful knowledge in the classroom?
Among adults in this country, a similar black market is growing, fueled in part by the increasing difficulty of conducting legitimate business in our high-tax and highly-regulated country. But I’m not celebrating. Here’s why:
- There is no legal recourse for fraudulent products or purchases.
- There is no legal recourse for workers who are cheated out of wages.
- Bribery of local officials and other corruption are common in this kind of economy.
- Participants who can rationalize breaking unfair laws can often rationalize breaking moral ones, too.
- Contracts that can’t be enforced in the courts result in vigilantism and violence.
- Businesses can’t get loans except through knee-breakers.
- No taxes are collected, even as an extra strain is placed on police and other services.
On the other hand, we’re starting to starve, lawfully. Already, close to one in six of us is on food stamps, and private food charities report unprecedented demand.
There’s an interesting wrinkle to the black market in this country. Much of it is participated by illegal immigrants who cannot by definition work here legally. Yet the Department of Homeland Security and Department of Justice are both actively discouraging deportation or detention of any illegal immigrants caught who do not have “criminal backgrounds.” My question: So earning money under the table and not paying taxes on it is no longer criminal? It sure seems to be for legal residents.
The United States has plenty of resources, know-how and elbow grease to return its economy around, and make it strong again. What we need is for its laws to stop sapping the life-blood out of production. It would be sad if We The People have to take the lead until the government follows. The PRC is figuring this out, and will surpass the US in the size of its economy within a decade.
You can read about the Chinese villagers here. Notice that the two men interviewed, Hongchang and Jingchang both have “strength” in their names.
Elise Cooke is the author of “The Miserly Mind, 12 1/2 Secrets of the Freakishly Frugal,” which details how the independently wealthy pull themselves up by their own bootstraps. Visit her website at SimpletonSolutions.com