Incentives

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Incentives

The following is from Thomas Sowell. Compassion Versus Guilt. pp. 103 - 105

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Incentives

One of the remarkable things about the Chinese is how they prosper in a wide range of societies around the world—but not in China.

One of the key ingredients in the success of the Chinese is their indefatigable capacity for work. Whether as plantation laborers in colonial Malaya, storekeepers from Thailand to Jamaica, or engineering students from Cal Tech to M.I.T., the Chinese are noted for long hours of painstaking work.

Against this background, it is especially striking to encounter a recent story out of Communist China about the problems of trying to get workers there to do a decent day's work. American Motors has a plant in China to manufacture Jeeps. But the assembly line workers are a study in slow motion—and sometimes no motion. One worker, after reading his newspaper, simply sat down on a bench und fell asleep. A photographer for the New York Times captured him on film for posterity.

The Chinese goofing off? American college professors and students may find it hard to believe. Anyone who has seen the frenzied work ethic in such overseas Chinese Communities as Hong Kong or Singapore will find it al most inconceivable. Yet statistics show that it takes the average auto worker in American Motors' Beijing plant more than two weeks to do the same amount of work that an American auto worker does in less than one week in the company's Toldeo plant.

Auto making is not an unusual case. People in Hong Kong report that in general refugees from Communist China often make very unproductive workers until enough time passes for them to get into the Hong Kong spirit. The problem is very simple: incentives.

In an economic system in China that offers relatively little to hope for in material rewards and relatively little to fear, such as unemployment, there are often not enough incentives to do your best. Once refugees from China get reoriented to the fact that their income can vary considerably in Hong Kong, according to their own efforts, those efforts increase.

Even in countries where the Chinese encountered harsh discrimination, which restricted their occupations, they could nevertheless make more money by working hard than by taking it easy. It was not justice but incentives that were economically crucial.

The Chinese are not unique in their widely differing responses to different incentives. There are levels of inefficiency in Israel which are hard to believe for anyone familiar with Jewish communities in other countries. Israel too has a suffocating set of economic policies along socialistic lines.

If the wrong incentives can undermine the efficiency of the Chinese and the Jews, they can undermine anybody. It is not a racial issue but a human issue.

Recent attention to the tragic situation of many black families too often makes it appear as a racial matter, simply because they compare blacks and whites, or blacks and the "national average." Actually, similar levels of teenage pregnancy and female-headed families have existed for years among Puerto Ricans.

But welfare state benefits are not very tempting to groups with better economic prospects. Teenage girls who have good prospects of going on to college, and perhaps postgraduate education, have too much at stake to throw it all away and end up as welfare mothers. Black girls who are on a different track in life also have very different child-bearing patterns. Black teenagers who are married have fewer children than white teenagers who are married----and both have fewer children than welfare mothers.

The Soviet Union's housing incentives often cause an even more tragic family fragmentation than here, according to Dr. Mikhail Bernstam of the Hoover Institution. Young women new to a big city like Moscow or Leningrad may face a very bleak prospect of waiting for an apartment — unless they have a child, which moves them up on the waiting list. Many, get pregnant, get the apartment, and then put the baby in an orphanage. Now, as a young woman with her own apartment, she is very eligible for marriage.

In country after country, too many social programs are discussed in terms of the wonderful goals they are meant to achieve. Much more attention needs to be paid to the incentives created and their actual consequences.

Human beings around the world seem to respond to incentives more so than to rhetoric.

—April 14, 1985

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29 May 2024