In Communist China, agricultural productivity on collective farms was low because peasants were not allowed to keep any surplus they produced; they would shirk rather than work hard. A saying in the former Communist world was that “they pretend to pay us and we pretend to work.” When incentives were changed in the late 1970s to allow peasants to keep their surplus, agricultural output doubled within four years. One of the causes of the 2008 financial crisis was that investment bankers were rewarded for short-term profits and were not punished when their risky investments blew up a few years
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