Survival Of The Wickedest
STRATEGY PAGE
June 26, 2008: South Korean banking officials estimate that the North Korean economy shrank for the second year in a row (-2.3 percent last year, and -1.1 percent in 2006). North Korean GDP is estimated as $26.7 billion in 2007, creating a per capita income of $1,152. South Korea has a 2007 GDP of $971 billion (5 percent growth over 2006) and a per capita income at $20,045. The enormous economic gap between the two Koreas is the result of over half a century of communist economic mismanagement in the north. That has led to an increasingly corrupt police state that is at war with itself. Government officials fight over access to wealth, or to suppress corrupt behavior. The "purists" up north are a minority, but they have a license to kill, and regularly catch, prosecute and execute corrupt government officials. Execution is more often the punishment, because the upholders of communist purity up north are finding that they are catching more and more corrupt officials that have been caught and imprisoned before. These guys often manage to talk, or bribe, their way out of jail, and get back into the game. What fuels all this is the skewed distribution of income in North Korea. A few percent of the population gets most of the cash coming in. A lot of that is from criminal enterprises (exporting heroin, food aid and counterfeit U.S. currency) or somewhat legitimate ones (weapons exports). Inside North Korea, drug sales to the elite has increased, along with foreign porn and consumer goods.
Corruption in the army has become so widespread that the government authorized the civilian police (the People's Safety Agency) to investigate cases of corrupt military personnel. Previously, the military police handled such investigations, but the government believes the military police have become corrupted, and can no longer be trusted to find and punish soldiers involved in criminal acts (stealing, or aiding smugglers to get across the border). All this reflects poorly on the National Security Agency (secret police), who are also seen as corrupted. Meanwhile, the police must still obtain Communist Party permission before investigating senior members of the Party.
The few state run companies in the south have also demonstrated poor performance, and there is corruption among government officials as well. But the vast majority of the southern economy is in private hands, and the democratic political system there provides a way to get rid of corrupt officials. In the north, the Communist Party clings to power via brute force. During the 20th century, the one thing the communists created that worked was the modern police state. Thus the North Koreans can go on for years more, despite the fact that the population is starving and economic activity continues to shrivel. It's all relative, though, as the southerners see their prosperity in danger from rising international food and fuel (oil) prices. This has caused public unrest in the south that would result in mass executions in the north. Because of these problems, South Korea expects economic growth to slow to four percent for this year. North Korea's economy is expected to continue shrinking.
The food situation in the north would be a lot worse were it not for black market in farm products that has developed since the famine of the 1990s. Back then, North Korean farmers produced about 10 tons of grain per hectare (2.45 acres). Now that's down to three tons, at least officially. Unofficially, it's closer to 10 tons because the farmers have found ways to produce most of their food "off the books" and sell it on the black market. Local government officials have been cut in on this, creating pockets of prosperity in the countryside. The less productive agricultural areas, especially the ones hit by floods and other bad weather, are really suffering. But for those who can, they do very well. Those who cannot come up with some kind of scam or hustle, are starving to death. It's all very Darwinian up north.
strategypage.com |
