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by inoljt

How North Korea Fell Behind South Korea, Part 2

12:05 am in Uncategorized by inoljt

This is the second part of two posts examining how North Korea fell behind South Korea. The previous part can be found here.

As the previous post found, for several decades North Korea kept up with South Korea. Then, during the mid-1970s, the country started falling behind. Ever since then the gap between the two countries has widened.

This post will explore several factors behind what caused North Korea to fall behind. There seem to be three main causes: the failed ideology of juche (self-reliance), the end of Soviet aid, and Kim Jong-Il’s incompetent rule.

Juche

If one looks at Gapminder’s graphic, North Korea and South Korea are neck-and-neck until the mid-1970s:

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Then North Korea falls behind:

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What caused this? Well, in 1972 North Korea adopted the ideology of juche into the constitution. Juche stands for self-reliance. There’s a lot of fancy Marxist philosophical complexity behind the idea, but in its essence it seems to be basically a fancy form of protectionism.

Juche was very harmful to the North Korean economy. Here is North Korea before the official adaptation of juche:

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As is evident, North Korea was progressing during this period. This is not to say that juche wasn’t part of the state’s ideology in these years. Rather, it seems to have played less of a role.

A description on this website provides a good description of the progress during this time:

The 1954-56 three year plan repaired the massive damage caused by the war and brought industrial production back to prewar levels. This was followed by the five- year plan of 1957-61 and the seven year plan of 1961-67. These plans brought about further growth in industrial production and substantial development of state infrastructure. By the 1960s North Korea was the second most industrialized nation in East Asia, trailing only Japan. While a number of internal limitations appeared, such as in the production of consumer goods, the national standard of living was considered by many third-world nations as an alternative to the capitalist model of development sponsored by the United States. Building upon the ruins left by the Korean War, the North Korean economy by the late 1960s provided its people with medical care, universal education, adequate caloric intake, and livable housing.

Here is what happens after the official adoption of juche:

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The website continues with a description of North Korea’s economic decline. I will quote the discussion in full because it’s quite comprehensive:

In the 1970s the expansion of North Korea’s economy, with the accompanying rise in living standards, came to an end and a few decades later went into reverse. A huge increase in the price of oil following the oil shock of 1974 hurt the economies of countries throughout the world, North Korea among them. North Korea has no oil of its own, and it had few export commodities of interest to the west. Compounding this was a decision to borrow foreign capital and invest simultaneously in the military and mining industries. North Korea’s desire to gain as much independence as it could from China and Russia prompted the expansion of its military power. They believed such expenditures could be covered by foreign borrowing and increased sales of its minerals in the international market. North Korea invested heavily in its mining industries and purchased a large quantity of extractive machinery and tools from abroad. However, soon after making these investments, the international prices of for many of these minerals fell, leaving North Korea with large debts and an inability to pay off the debts and provide a high level of social welfare to its people.

Adding to the above, the centrally planned economy, which emphasized heavy industry, had reached the limits of its productive potential in North Korea. Juche repeated demands that North Koreans learn to build and innovate domestically had run its course as had the ability of North Koreans to keep technological pace with other industrialized nations. By the mid to late-1970s some parts of the capitalist world, including South Korea, were advancing into new phases of technology and economic development and phasing out the coal-and-steel-based economies of the earlier period.

Kim ll-sung, trapped in an ideology that had once been highly successful, was unable to respond effectively to the challenge of an increasingly prosperous and well-armed South Korea, which undermined the legitimacy of his own regime. Having failed at their earlier attempt to turn to the market and conduct market-economy reforms such as those carried out in China by Deng Xiaoping, Kim opted for continued ideological purity. The DPRK by 1980 was faced with the choice of either repaying its international loans, or continuing its support of social welfare for its people. Given the ideals of Juche, North Korea chose to default on its loans, and by late 1980s its industrial output was declining.

One should note that the images above are models of North Korea’s economic path rather than based on North Korean statistics. Since North Korea doesn’t reveal its GDP, people have to make educated guesses. The people on Gapminder put North Korea as slightly wealthier than South Korea in 1944 and then modeled equal economic growth rates until the mid-1970s. At that point they put 0% GDP per capital growth to model North Korea’s stagnation during that period. Finally, they use slightly more accurate estimates after the fall of the Soviet Union to model North Korea’s famine and its most recent years.

Nevertheless, these models are based off what happened in real life. It’s undeniable that North Korea was stagnating during the late ’70s and ’80s. It’s also undeniable that there was a famine during the late ’90s. So while the graphic isn’t perfect, it’s a decent representation of reality.

The End of Soviet Aid

Juche seems to have been the main turning point in North Korean economic history. Nevertheless, it’s worth noting that there are in fact two “parts” of North Korean economic decline. The first part, during the late ’70s and 80s, is stagnation – when North Korea doesn’t go forward but doesn’t go backwards. The second part starts in the ’90s, when North Korea actually starts going backwards.

What caused this?

Well, for all of its economic history North Korea depended extensively on communist aid. The Soviets were determined to prove that their system was superior and, like the Americans, gave lots of aid to their allies. Eventually it turned out that their system was in fact not superior, and by the end the Soviet Union couldn’t really afford to give out that aid. In 1991 the Soviet Union collapsed and all Soviet aid withdrew.

This hit North Korea hard:

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In fact, it eventually created a famine. This graphic shows North Korea after the fall of the Soviet Union. This is the second part of the country’s economic decline, when it actually starts going backwards. Soviet aid was particularly important because the Soviet Union sold North Korea oil at low prices. North Korea’s inefficient economy and agricultural system depended badly on petroleum, but it couldn’t afford to buy petroleum at market prices. When the Soviets stopped giving North Korea oil, North Korea collapsed.

Here’s a comparison with South Korea:

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Kim Jong-Il

Kim Jong-Il’s rule was incompetent and terrible for North Korea. Let’s take a look at North Korea under his father Kim Il-sung, until his death in 1994.

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We see progress throughout most of Kim Il-sung’s rule. During his final years, however, stagnation and finally decline sets in. Nevertheless, one could say that Kim Il-sung did good for North Korea.

What happens under Kim Jong-Il?

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Decline. Indeed, there’s a startling coincidence between Kim Jong-Il’s path to power and North Korea’s economic decline. Kim Jong-Il began taking power during the 1980s. During that time North Korea is well into stagnation. He takes over the armed forces in 1991. North Korea then begins going backwards. His father dies in 1994, leaving him in absolute control. North Korea then suffers a famine from 1994 to 1998.

Here’s North Korea and South Korea during Kim Jong-Il’s rule:

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Conclusion

It seems that there were three main events that caused North Korea’s economic decline: juche, the end of Soviet aid, and the incompetence of Kim Jong-Il. Juche turned economic growth into stagnation. The end of Soviet aid turned stagnation into absolute decline. This backwards path gained momentum as Kim Jong-Il gained power and ruled incompetently.

North Korea’s tale is fairly unique. It’s the story of a country which achieved a decent standard of living and high industrialization under communism. Then the strains of the system became apparent, such as the overreliance on petroleum, and it eventually collapsed. This is why one hears of a lot of North Korean factories that used to work but now don’t. One hopes that the new leader Kim Jong-un will turn things around for his people.

by inoljt

How North Korea Fell Behind South Korea, Part 1

5:37 pm in Uncategorized by inoljt

This is the first part of two posts examining how North Korea fell behind South Korea. The second part can be found here.

The story of the two Koreas is a common American tale amongst the educated classes. As the fairy tale goes, once upon a time there was one Korea. By chance, one day this Korea was divided amongst the communists and the capitalists. The communist Korea fell into chaos and poverty. The capitalist Korea became rich and a democracy. Beware communism!

The general thrust of this tale is true. But there are some interesting complexities behind how North Korea and South Korea became the way that they are. After the Korean War, it wasn’t as if South Korea immediately began pulling ahead. For a long time it wasn’t obvious which Korea was doing better.

This is what happened:

The 1940s
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To write this analysis, I utilized the website Gapminder. Run by a Swedish professor, Gapminder shows graphics of different levels of every imaginable type of statistic amongst the world’s varying countries.

This is the most basic graph: it shows wealth and health in 1944. The y-axis is life expectancy. The left axis is income per person (in dollars adjusted for inflation and purchasing power parity) put on a logarithmic scale (so that the difference between $1,000 and $2,000 is just as important as the difference between $10,000 and $20,000; this makes comparing things much easier). As one would expect, wealthier countries generally have higher life expectancies. The main exceptions, such as Germany, are busy fighting World War II.

This graph shows the state of the two Koreas in 1944. The South is relatively more populous and relatively poorer. One ought to note that at this time there were no good statistics; the figures here are estimates.

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Korea was divided in two in 1945. I started a year earlier, and this chart makes clear why. The destruction of World War II did quite a lot of damage to both countries. By 1950 they still hadn’t recovered, unlike much of Western Europe and Japan. Both countries were generally poorer than your typical country.

Then the Korean War started.
Read the rest of this entry →

by inoljt

America – A Very Young Country

11:28 am in Uncategorized by inoljt

I recently had the opportunity to talk with a foreigner about American history. He asked how long America had been independent.

That’s a complicated question. There are a lot of years that could be used to answer the question. 1776, when the Declaration of Independence was signed? Perhaps 1783, when Great Britain admitted defeat? 1787, when the Constitution was written? Or perhaps 1789, when George Washington was inaugurated as president?

In any case, I said, America is a very young country. It’s only been independent for around three hundred years.

I decided to actually double-check that figure. 2012 minus 1776, which seems to be the year most people use for American independence.

It turns out that America has been an independent nation for only 236 years! That is not a lot of time. Think about it this way: one really really old person theoretically could have lived for more than half of the history of this nation. That’s pretty amazing.

There’s an interesting bit of historical context that goes along with this. Most great powers throughout history tend to last for a remarkably uniform amount of time: around 200 years. There are empires, of course, which fall apart the moment their founder dies. Other powers last for milllenia. But even with these powers one can see the two-century cycle: two centuries of dominance and hegemony, followed by a time of decay and chaos, followed by another two centuries of strength, followed by another time of decline, and so on.

The United States has been a great power roughly since 1898, when it won the Spanish-American War. That’s 114 years. Following the simple logic above, America has roughly 86 years of greatness left before it falls into chaos. (Of course, good leadership and strong institutions can shorten or lengthen that period of time.)

–inoljt, http://mypolitikal.com/

by inoljt

Analyzing Polish Elections

9:45 pm in Uncategorized by inoljt

The country Poland is comprised of two main political parties; the first is Prawo i Sprawiedliwość (PiS) – “Law and Justice” in English. This party is a populist group which runs upon anti-corruption and anti-Communist credentials. The second party is the Platforma Obywatelska (PO) – in English the “Civic Platform” – a group espousing support for free market capitalism.

On October 2007, Poland held parliamentary elections between the two parties. Most of the Western media backed the Civic Platform (PO), disliking the unpredictability of the Kaczyński twins (leaders of Law and Justice). Here is a map of the results:

As it turns out, the Civic Platform (PO) won the election, taking 41.5% of the vote. Law and Justice polled 32.1%, with the rest of the vote going to third parties.

A clear regional split is apparent in these results. Poland’s southeast – with the exception of Warsaw – generally voted for Law and Justice (PiS). On the other hand, support for the Civic Platform (PO) took a sickle-like shape along Poland’s northern and western borders.

These patterns are not random. Take a look at pre-WWI Imperial Germany superimposed upon this map:

As the map above indicates, there is a powerful correlation between the borders of Imperial Germany and support for the free-market, pro-Western Civic Platform (PO) Party. In contrast, areas that voted strongest for Law and Justice (PiS) used to belong to the Austrian-Hungarian and Russian empires.

An exact map of Poland’s pre-WWI boundaries looks as so:

These voting patterns have very little to do with any actual German presence in pro-Civic Platform regions. Few Germans live in the regions that used to belong to Imperial Germany; after WWII the process of ethnic cleansing effectively expelled them all from modern-day Poland.

The reason, rather, involves economics. The German Empire was far more economically developed than the Russian and Austria-Hungarian empires. This legacy is still present today, as Poland’s 2007 parliamentary elections showed quite starkly.

An interesting instance of Poland’s “German” divide occurred during the 1989 parliamentary elections. One may recognize this date: it was the year that communism fell in Poland. In these elections the Polish communists actually competed directly with the anti-communist Solidarity movement.

Here are the results:

Solidarity, of course, won in a landslide victory – which is why communism fell in Poland. Yet even in these elections one can make out the regional, east-west divide in Poland. Surprisingly, the more “Western” and economically developed regions actually gave stronger support to the Communists.

All in all, Poland’s electoral divide provides a powerful example of how long-past history can influence even the most modern events. Whatever the political parties of Poland’s future, and whatever their political positions, one can be fairly sure that Polish elections will continue to replicate the boundaries of pre-WWI Germany for a long, long time.

–Inoljt, http://mypolitikal.com/

by inoljt

Otto Wels: A Moment In History

4:24 pm in Uncategorized by inoljt

In any given year, every politician will probably make several dozen speeches. The vast majority of these will be forgotten instantly; even prime-time presidential speeches fade from the news cycle after a couple days. Indeed, history may only remember one out of the thousands of speeches given over a political leader’s term.

One such memorable speech was given by a Mr. Otto Wels. A German politician belonging to the Social Democratic Party, Mr. Wels spent more than a decade in politics and eventually became the party’s Chairman. He must have given a number of speeches throughout this time.

Yet out of all the time Mr. Wels spent as head of his party, history remembers only one speech of his. Today it is overshadowed in light of the great and terrible events that came after, but nevertheless worthy of recalling.

The date is March 1933, the place Germany’s parliament. The occasion: Chancellor Adolf Hitler and his National Socialist Party are proposing an Enabling Act after unknown assailants burned down the Reichstag building last month. This will transfer all legislative powers to the executive under Mr. Hitler. It will make Germany a one-party dictatorship.

With Hitler’s armed Brown-shirts standing right there as voting takes place, the Enabling Act passes by a 4-to-1 margin. All the parties, save one, vote for it.

Last of all stand the Social Democrats, and to a man they vote against Hitler’s Enabling Act – right in front of the Nazi stormtroopers. Even today the party prides itself in its actions on that fateful day. Otto Wels moves up to make a speech assailing the Enabling Act – the only opposing speech that day. A translated transcript can be found here.

To be honest, it is not a particularly memorable speech. Mr. Wels spends much of it defending his party; at times the flow is quite jumpy. One almost gets the feeling that it is politics-as-usual, not a moment that will be frozen in history. Nevertheless, Wels gets off some good lines:

Freedom and life can be taken from us, but not our honor.

We stand by the principles enshrined in, the principles of a state based on the rule of law, of equal rights, of social justice. In this historic hour, we German Social Democrats solemnly pledge ourselves to the principles of humanity and justice, of freedom and socialism. No Enabling Act gives you the power to destroy ideas that are eternal and indestructible.

When Wels ends, there is chaos in the room. The Social Democrats applaud; Hitler’s supporters, who outnumber them, raise a cacophony booing.

Then Hitler himself gets up and launches an epic attack on the Social Democrats. It is a quite unforgettable response (one can listen to this speech; the first part is here, the second here, and the conclusion here):

We National Socialists will now clear the path for the German worker leading to what is his to claim and demand. We National Socialists will be his advocates; you, Gentlement, are no longer necessary!

You think that your star will rise again? Gentlemen, Germany’s star will rise and yours will fall!

Everything that becomes rotten, old, and weak in the life of a people disappears, never to return. Your death knell has sounded as well.

I do not even want you to vote for it. Germany will be liberated, but not by you!

On balance, Hitler’s speech is by far the more effective of the two. Unlike Wels, he has two clear themes: the German people and the wrongs done to Germany after WWI. He blames the Social Democrats for the latter and skillfully wields the card of German nationalism.

Moreover, Hitler has three advantages over Wels. Firstly he is a brilliant speaker, the best – perhaps – in German history. He is excited and angry, emotional and quite able to rouse an audience. To this day Germans are suspicious of politicians with impressive speaking skills.

Secondly, the Social Democrats had somewhat naively released copies of Mr. Wels’s speech to the media. It had then found its way to the Nazis, enabling them to pre-write a strong rebuttal.

Finally, Hitler has battalion of armed Nazi Brown-shirts in the room applauding his every word. Otto Wels was not so lucky.

Perhaps it is just, then, that history commemorates the words Otto Wels said that day and not those of Hitler. He was not a great speaker (that was Hitler), but he spoke for the side of justice. In the context of the times it was perhaps one of the bravest speeches ever spoken.

–Inoljt, http://mypolitikal.com/