Must-Read: North Korea's "Private Sector" Stymies Cuba's

Wednesday, December 23, 2015
Clearly, the Obama Administration and the U.S. Chamber of Commerce are missing the real opportunity among the world's remaining totalitarian dictatorships.

Can't wait to see the plan for "empowering" the people of North Korea through greater business ties with the Kim regime.

After all, according to this article, it is estimated that 30-50% of North Korean GDP is now produced by the private sector; property prices have increased ten-fold; agricultural cooperatives are producing record-breaking harvests; and there's 4% GDP growth.

Plus, in North Korea, U.S. business doesn't have to deal with the burdensome $12 billion in stolen American property claims and legal judgments.

Kim's "developmental dictatorship" is really putting Raul Castro to shame.

The amazing thing is Kim appears to be having exponentially greater success than Raul, despite sharing the same perverted model (praised by the Obama Administration and the Chamber alike), whereby the "private sector" has no legal status, property rights or recourse.

If Kim can do it, so can Raul.

All that is needed now is an aggressive U.S. policy encouraging business with Kim's monopolies, so it'll "trickle-down" to North Korea's booming private sector.

Maybe some exile businessmen will even take a trip to Pyongyang, talk with people in the park and dine at a North Korean "paladar" (see image below of hostesses standing outside of a private restaurant).

Sadly, despite the sarcasm, this story and Obama's absurd policy are all too real.

From The Guardian:

Kim Jong-un's recipe for success: private enterprise and public executions

Reforms have brought record harvests and economic growth, but the leader won’t risk giving North Koreans more personal freedom, writes Andrei Lankov

Kim Jong-un, the third hereditary ruler of North Korea, gets a really bad press. He is widely seen as a capricious, overweight youngster, fond of executing his generals and threatening the world with war; ruler of an impoverished country ever on the brink of famine but equipped with nuclear weapons.

There is some truth in this description but it does not represent the whole story. He may have a penchant for executions, but Kim is also the first ruler of the dynasty to implement market-oriented reforms.

The oft-repeated cliche of North Korea as a “starving Stalinist country” is outdated – it is neither starving nor Stalinist. Experts agree that over the past decade the country has not only recovered from the disastrous famine of the late 1990s, but has also experienced significant economic growth. Pessimists put the annual growth rate at about 1.5%, while the optimists believe it may be close to 4%.

This growth was brought about, above all, by the emergence of the private economy. While on paper private entrepreneurial activities remain illegal, the law is seldom, if ever, enforced. As a result some North Koreans – the more entrepreneurial, lucky, well-connected and ruthless of them – have recreated the market economy from scratch. Nowadays, there are private mines, truck companies and oil refineries in North Korea.

Admittedly, the owner has to register the enterprise as state property, but this fiction misleads nobody. It is estimated that 30-50% of North Korean GDP is now produced by the private sector.

The presence of the new rich business people (many of whom are women) is much felt in Pyongyang and other major North Korean cities. They account for the majority of patrons in the upmarket restaurants popping up across the city. Although meals cost $15 to $25, roughly equivalent to the average family’s weekly or fortnightly income, these places are always crowded.

Property prices are going through the roof. A good apartment in Pyongyang costs about $100,000, and the best homes go for $200,000. Over the past 10 years, house prices in North Korea have increased tenfold. Technically, houses cannot be owned privately so people buy and sell “residence rights” only, but few see this as anything but a convenient legal fiction.

Property prices are going through the roof. A good apartment in Pyongyang costs about $100,000
There is a spillover effect: while rich people buy houses and European cars, more and more ordinary North Koreans can afford meat at weekends and pure rice gruel every day.

All these changes began in the late 1990s but the late Kim Jong-il, the father of the current ruler, did not quite know what to make of the growing private economy. Sometimes he initiated crackdowns (always partial and never successful), while other times he grudgingly tolerated the changes. Kim Jong-un is different: he quietly encourages the market economy.

The greatest success of the young dictator has been the reform of agriculture, similar to what the Chinese did in the late 1970s. Fields, while technically state-owned, are given for cultivation to individual households and farmers work for a share of the harvest (30%-70%).

The results of the reforms were predictable: the past few years have seen record-level harvests, and North Korea is now close to self-sufficiency in food production. This year a major drought prompted concern but it now seems that farmers, working not for the party’s glory but for their own gain, managed to fix the problem, and this year’s harvest is going to be high – perhaps even a record breaker.

If plans for industrial reforms (decentralisation and partial privatisation of what is left of state industries) are taken into account, the general picture seems clear. Kim Jong-un wants to apply to his country a model of authoritarian capitalism, a so-called “developmental dictatorship”. This model worked very well in Taiwan and South Korea and now is producing impressive results in China and Vietnam.

This is good news, and observers should not be surprised that recent polls among refugees from North Korea – a group not known for their sympathies towards the regime – indicate that Kim Jong-un is popular with his people.