South Korean economists believe that the North Korean economy actually grew last year (by .8 percent). This was the first time that had happened in three years. There may have been a similar small growth this year. That means the 24.3 million North Koreans had an average of $1,240 in income, while the average of the 49.8 million South Koreans was 18.7 times more income. Not only are southerners wealthier, they live longer. Life expectancy in the south is 12 years more than in the north.
Most of the GDP increase in the north is due to a lot more trade with China and allowing Chinese firms to set up shop (especially for mining) in North Korea. Chinese businessmen are wary about investing too much because North Korean officials have turned out to be even more corrupt and untrustworthy than their counterparts in China. The greedy North Korea officials are also often ignorant of how a business works and will try and steal so much that the business becomes unprofitable and is abandoned by the Chinese owners or partners. China represents 70 percent of North Korean foreign trade (imports and exports). South Korean trade is over a hundred times what it is in the north. South Korea is a major exporting nation worldwide.
Another factor in GDP growth in North Korea is the continued growth of private business. This began when the government legalized the black market over the last decade. This made thousands of traders and other business people rich (by North Korean standards), despite all the bribes they had to pay to corrupt officials and police. Markets were legalized in part because the government was desperate to create more economic activity and the Chinese had been hounding the North Korean leaders to allow more free enterprise, as it had worked very well in China. The government was shocked at how successful the entrepreneurs were. They should not have been surprised because for over 60 years the government has kept the most talented people away from economic opportunities. This is because when North Korea was founded in the late 1940s, a caste system was created. This established an official list of 51 social classes in North Korea. Most (29) of these classes were composed of people considered either hostile to the government or leaning that way. These new lower classes included business people, the most successful farmers, professionals, and, well, you get the picture. Most of the population falls into these 29 social classes and they are getting increasingly hostile to a government that seems to do nothing but create one disaster after another. The people are hungry, the soldiers are hungry, the secret police are stealing whatever they can get their hands on, and the senior officials are planning their escape routes. The highest caste people, who have long come to regard themselves (quite accurately) as a hereditary aristocracy, are growing more corrupt and fearful. Many of these high caste families do have talented people but a lot of those selected for the top castes were chosen because they were loyal communists and willing to be brutal and do whatever they were told. Not the entrepreneurial type at all, which is why they are so wary of all these newly rich lower caste business people.
Speaking of caste, the new leaders of China, Japan, North Korea, and South Korea all come from families full of powerful political ancestors. While the North Korean leader inherited his job, the Chinese one was “elected” by the senior Communist Party” officials, while the Japanese and South Korean leaders had to win a popular election. Foreigners in North Korea report that the news of Ms. Park winning the election spread quickly through the country and amazed most northerners that a woman, and the daughter of a disgraced dictator, could become leader of South Korea.
Meanwhile, the North Korean leader, who is less than half the age of 60 year old South Korea president Park Geun Hye, got on TV and radio and said the recent launch of the large rocket meant that North Korea would soon take care of energy and consumer good shortages. Few North Koreans believed him and now refer to him as the “Boy General” (after a popular 1990s North Korea comic book character who was good at fighting and making speeches but not much else). North Koreans are aware of foreign reports that the small satellite the rocket launched is out of control and not broadcasting, just like so much else in North Korea.
December 23, 2012: South Korea missile experts believe, as do many of their foreign counterparts, that the December 12, North Korea rocket launch (which put a malfunctioning satellite into orbit) was actually a cover for an ICBM test. The rocket used could easily be reprogrammed to travel up to 10,000 kilometers and reach most of the United States, while carrying a half ton warhead. South Korea recovered many components of the rocket (the first two stages fell back to earth in international waters) and engineers were able to study the pieces, as well as satellite photos of the rocket before launch. South Korean engineers found the construction of the missile components retrieved to be sloppy and there were some foreign components in the rocket. International sanctions do not allow for the North Korean launch and there may be more sanctions as a result. But as long as China does not enforce the sanctions, North Korea can get by. North Korea has pitched the rocket launch to its people as a major achievement. But since most have little electricity or heat right now, it’s uncertain how much morale will soar because of the failed satellite launch.
December 19, 2012: South Korea elected its first female president, Park Geun Hye. Her father, an army general, staged a coup in 1961. While this was unpopular with many South Koreans, general Park Chung Hee introduced reforms that got the economic boom going. Fifty years later South Korea is one of the wealthiest countries on the planet. General Park was assassinated by an aide in 1979, and eight years later democracy returned. The new president Park is a conservative, like her predecessor, and is expected to continue dealing with North Korea as a potential foe, not a wayward brother in need of endless handouts. That policy, called the Sunshine Policy, lasted from 1998 to 2008, and was considered a failure. Since 2008, the South Korean government has been stricter towards North Korea and demanded honesty and fair dealing. The North Koreans have not changed and still threaten to invade South Korea.
December 17, 2012: The embalmed body of Kim Jong Il, who died a year ago, has been put on public display, to be admired by his fans, as the body of Vladimir Lenin has been in Russia for nearly 90 years.