Post-Unification De-population of North Korea?

Posted on by
13

north-korea-map

PNU’s Institute of Social Science Research had a good speaker this week, demographer Berhard Koppen of Landau-Koblenz University in Germany. His talk, “Demographic Change and Immigration in Germany since Unification,” focused on the population impacts of German unification. As you can imagine, the Koreans study the German model (although not as much as you’d think), because they wonder what unification will look like – how much, how long, how disruptive, etc.

Koppen laid out a lot of good demographic data on just how extreme the population shifts from east to west inside Germany have been. I don’t have all the numbers in front of me, but it was pretty striking. In the most underdeveloped parts of the old German Democratic Republic (GDR), the population drop was more than 40% in two decades! In toto, the old GDR is 20% below its old population, despite the move of the capital to Berlin. So bad is it, that many east German communities have had to bulldoze housing, because it has simply sat unused for more than a decade (this, in country with one of the highest population densities in the world).

I have written about the geopolitics of Korean unification before. In short, they are not good, because China is much stronger than the USSR was in the German case. SK is weaker than was the Federal Republic of Germany (FRG). The US is also relatively weaker. And NK is far worse off than the GDR, which was regularly touted as the most advanced socialist state. All this forebodes that China’s role in unification will be much greater than the Soviet Union’s. As Koppen put it, the wealthy FRG could effectively ‘buy’ unification from the bankrupt USSR. China today though is ‘rising,’ and given the NK borders China, its interest and influence in the issue are correspondingly greater. As I wrote a year, China will structure any final status Korean deal much more than most people think right now (and the Chinese were sure to tell me that in Beijing earlier this year).

If this doesn’t scare South Koreans enough, Koppen’s data quieted the room. When I asked about the comparison with Korea, and what Koreans should expect, he could only foresee that a sudden border opening would lead to a huge southward flow – maybe 6 million people in the first few years. The differences between east and west Germany were much smaller than NK-SK, yet look at how much population flight has been happened there. One can only imagine how bad it would be here – a 40% depopulation of NK (9 out of 23 million), perhaps? Where would they be housed, how would they be supported, what would they do all day? The questions are endless.

Koppen closed by arguing that a slow federation of North and South would be better than the lightning unification of a sudden border opening as in the German case. Koppen used the EU as a model for Korean unification (an interesting parallel I never considered). As the EU is gradually federating in stages, so might Korea. I have heard this line of reasoning before using a more Asian model – Hong Kong and mainland China. Like that arrangement, perhaps Korea can go through a ‘one country, two systems’ stage. So North Koreans would get temporary work and living permits in the South, while Southern business would be encouraged to go North, with the North reconceived as something like a massive enterprise zone.

I am skeptical for a number of reasons:

1. North Koreans are vastly poorer than not only east Germans, but any of the eastern EU members. The moral pressure to do more faster would be enormous. Paced unification would look like Southern niggardliness in the face of desperation and poverty. Note also, that Hong Kong is quite wealthy, as is surrounding Guangdong province. This helps mitigates the border pressure; the opposite would be the case in a united Korea.

2. The nationalism factor would make holding the North at arms length difficult and distasteful. If the Koreans are one minjoek, as they never cease to tell us expats here, then how can you justify, save unashamed selfishness, keeping Northerners out? It looks bad, and it would certainly encourage populist North Korean politicians to complain about Southern cheapness, etc.

3. Keeping the North in some kind of semi-national limbo would encourage Chinese meddling. Indeed, the slower the unification process goes, the more likely China and others are to stick their noses into it. Conversely, if unification speeds along as a chaotic mess, then even China will likely say, we want nothing to do with the catastrophe-in-the-making; you South Koreans figure it out. This sounds unfortunate – the more anarchic the reunification, the more likely it will be a Korean-only affair, but I think it is so.

4. And in fact, Korean unification is almost certainly going to be messy, rapid, and chaotic if not downright anarchic. If one looks at Germany, once the communist lid was removed, the desire for unification on the part of the east especially, but also the west, exploded and became like a freight train accelerating downhill. It was just unstoppable. Yes, there were all sorts of GDR intellectuals who wanted east Germany to become a unique space, neither capitalist nor communist, but somehow ‘more humane,’ and all that. But the huge bulk of the population wanted nothing to do with such academic airiness, a luxury for elites. Average east Germans wanted nationalism, unity, wholeness, an end to an awful, artificial historical division, and an immediate improvement in living standards. They just pushed aside all those both internally and externally (Thatcher and Mitterand especially) who wanted a paced process. Helmut Kohl led reunification as much as he was led by it. And even though the GDR was supposedly ‘advanced’,’ it turned out not to be at all. The state collapsed almost immediately, and realistically, there was no one to pick up the many, many pieces expect West Germany. I think this is by far the most likely scenario here too. Once North Korea slips, it will go lightning fast. It will be chaotic, unpredictable, with huge national emotions at play and populations on the move, and near anarchy in the North, given how thoroughly illegitimate the state there is. The only realistic way to get control over this nation-wide meltdown will be the immediate extension of SK constitutional authority across the whole peninsula. It will be messy, hugely expensive, and involve the dramatic depopulation of the North, but realistically, I don’t see serious alternatives given how much worse off NK is than Hong Kong, the GDR, or eastern Europe.

It’s the 1930s All Over Again…

Posted on by
3

currency

The increasing drift toward a ‘currency war’ should worry just about everyone. And it is remarkable given that we already went through this in the 1930s – a collective disaster for all involved, and which everyone realized afterwards was a huge error. Yet here are on the cusp of another round of beggar-thy-neighbor devaluation rounds as everyone seeks to export their way out of the recession.

In case you don’t know the history, start here. Just about everyone learns this story in Econ 101, but here is the quick version: The Great Depression struck in 1929, and everyone panicked. In that sort of adverse environment, everyone starts to save. This is individually rational, as savings represent a hedge against suddenly increased uncertainty about the future. You see that same thing today in the US as Americans are suddenly saving again to pay off their housing and credit card debt in order to get financially sounder. Unfortunately, as people save, they are not spending, and their spending ultimately creates jobs. When you buy stuff at Walmart, a whole slew of people got their jobs to bring you whatever it is that you just bought. This is the well-known paradox of thrift: while it is rational for you the individual to save ask a hedge against the future, if everyone does that, then our collective future gets that much worse because all that missing consumer spending (demand) eventually creates unemployment (less need for supply). Again, this is what is happening today in the US. As Americans retrench on their spending very suddenly and sharply (household savings rates have jumped something like 5% in 24 months), you get a consequent drop in the need for supply. That in turn means you don’t need so many workers to make that supply anymore, so people get fired. US unemployment has therefore suddenly spiked as savings rates spiked.

One good way out of this recessionary trap (high savings –> high unemployment –> worsening economy –> even more fear about the future –> more savings) is to export to others. If others buy your stuff, then you keep all the employment (to supply the foreigners’ demand), but your own consumer can still continue to save. It is a tempting way out that squares the mathematical circle in which, in a closed economy, savings must equal unemployment. But with exports, you can have your cake and eat it too; ie, the economists’ expression ‘export your way out of a recession.’ Now, a good way to make your exports cheaper is for your currency to be cheap against other currencies. Then your stuff is cheaper for foreigners to buy. It is therefore tempting for governments in recession to intervene artificially in currency markets to keep their currencies cheap, indeed maybe even undervalued (China today). Because a cheaper currency means cheaper exports means a quicker route out of recession. And in the 1930s, everybody tried to do this. But just like the paradox of thrift, if everyone tries to cheapen their currency, then no one’s currency becomes cheaper, and very quickly you can get a cycle of government-forced exchange rate devaluations across the board as everyone tries to get a price advantage over everyone else. We call this ‘beggar-thy-neighbor.’

It is now universally acknowledged by just about everyone (except Marxists I suppose) that this was a disaster that lengthened the Great Depression considerably. This intellectual consensus lies behind the creation of the IMF, and the IMF museum (next to the lobby in the Fund building) walks the visitor through this in excellent detail.

And now we are doing it all over again.

So much for learning from history and all that…

This time it is mostly Asians to blame. China, SK, and Japan all intervene regularly (‘fine-tuning’ they call it in SK) to keep their currencies lower than the market would otherwise say. China of course is the worst, and it is leading to some genuinely desperate policy ideas on what to do.

This leads me to two conclusions. First, it is evidence that global governance (GG) continues to fail. The G-20 squabbling over exchange rates so perfectly fits what we know states shouldn’t do, yet they are doing it anyway. This – along with the astonishing, ‘I-don’t-give-a-damn-what-the-world-thinks’ Bush unilateralism – tells me that GG was a dream of the 1990s that is fading fast. Second it tells me that the only answer is cultural change in Asian attitudes toward imports. For decades, a trade surplus (and if necessary, an undervalued currency) were not just natural outcomes of market processes, but an explicit statist-developmental goal wrapped in nationalism. A trade surplus is a mark of national pride and success in the world, and if Asian consumers must be punished with high prices and higher savings to get it, then so be it. In Korea, I see this ‘imports-are-bad’ everyday; contrast that with the American love of cheap Chinese stuff at Walmart. Given that barrier to Asian rebalancing is a cultural one – getting Asians to accept imports without mercantilist-nationalist distaste – that rebalancing is likely to take a long time. Culture changes slowly.

On the Kim Family Succession in North Korea

Posted on by
9

3highres_00000402386223

Kim Jong-Un (right), the now annointed successor to Jong Il (left)

As usual, Scott Snyder and Ruediger Frank have the best commentary on the succession and it importance for all Korea. Start with them before me.

I would just add a few points.

1. Much of the discussion about NK focuses on its supposed irrationality and unpredictability. I remember reading somewhere that Paul Wolfowitz was once asked which country on earth he feared the most, and he answered NK, because it operated so far outside international norms on just about everything – besides its regular asymmetric strikes against SK (like the Cheonan sinking, KAL 1987 bombing, or the bombing of the SK cabinet in 1983), it also engages in proliferation, drug-trafficking, insurance fraud (as a gimmick to raise money), and dollar counterfeiting. And of course, George Bush put NK on the Axis of Evil, even though it has no connection to Islamic radicalism at all, precisely because of the fear of irrationality linked to WMD. Increasingly though, I don’t buy this, and I think the succession demonstrates that NK is in fact somewhat predictable. I argued this a few weeks ago in Seoul, and the recent family succession, I believe, reinforces this.

While it is true that NK is nasty and does seem to cheat on all sorts of norms, they do this so regularly now, that its cheating is in fact predictable. This feels rather strange of course. Cheating is supposed to indicate unpredictability; but what if you cheat all the time? That too is regularity, right? As I argued in the link above, the Cheonan sinking does actually fit a pattern of asymmetric outbursts from NK in past, so it shouldn’t be a huge surprise, however awful it was. Similarly, the succession happened much as the last one did – from father to son – and lots of analysts, both Asian and Western predicted it, both then and again this time. And then those predications came true. So while it is unfortunate for the long-suffering North Koreans, and its does not bode well for better NK behavior in future, it was not unexpected. I am not fully convinced by this position myself; erratic and weird still seem to be the best words to describe NK. But its also not the case that we can’t make fairly educated guesses about NK’s future.

2. In line with point 1 is the likelihood that Kim III probably won’t change much. Indeed, he sent a huge signal to the whole world by his dress in last week’s coming out party-parade that he is not a Gorbachev. Just about everyone noticed that he looks strikingly like Kim Il Sung (Kim I). Note the hair style, NK lapel pin, Mao outfit, and, quite honestly, the obesity (presumably to signal stolidity and robustness, although it is a good bet too that he is party-boy like his dad). The speculation is endless that he might actually change stuff, but if NK is more predictable than we think (point 1 above), and if he is consciously cloning himself on Kim I, then it is a good bet that business as usual will roll on. In fact, given his youth and, hence, possible longevity, he could give the NK system a new lease on life, just as Bashar al Assad did when he took over Syria. Like NK, Syria is corrupt, isolated and broke, but the sheer energy of a younger dictator has helped hold Syria together and forestall the endless speculation, endemic to any dictatorship, of palace coups and such. If Kim III can hang on through the early years, which will be the toughest, as factions maneuver for influence in the nouveau regime, then we might be looking at a semi-stable NK for another few decades.

3. Finally, I can’t pass up noting the sheer ideological ridiculousness of a communist monarchy. Nothing demonstrates the ideological bankruptcy of NK as much as a family succession. That is a feudal practice, of course, which is exactly the type of thing communism was supposed to eliminate as backward and repressive. Marx and Lenin, we all know, were bitingly harsh in their critiques of feudalism. One of Marx’ most mean-spirited comments was his famous complaint of the ‘idiocy of the peasantry,’ meaning that they stood outside of history as passive, uninformed spectators mired in ignorance. And of course, the primary historical claim of just about every Marxist theorist and leader was that history moved in stages and the communism was the next one after capitalism. When Khrushchev said ‘we will bury you’,’ he meant exactly that these large Marxist-metaphysical forces of History were working against capitalism, no matter what it did to stop, and that communism was the inevitable future. This is why leaders like Stlin and Pol Pot were so harsh on their feudal-agricultural communities; they were ‘behind’ in the marxist historical mechanic. Even Mao had the sense to avoid the ‘familiazation’ of the CCP (his wife didn’t last too long) and famously criticized Confucius as a feudal reactionary. Yet here we have a communist regime openly going back to a pre-capitalist mode, not moving forward into the post-capitalist era as its own ideology says it should. One wonders how in god’s name NK ideologues must work to square this blatant neo-feudalism with regime ideology. It just baffles the mind.

Nobel: Occasionally Reminding China about Human Rights is still Good

Posted on by
5

Nobel

By now everyone one knows that Liu Xaibao won the Nobel Peace Prize. He is a human rights and democracy activist rotting in a Chinese prison, along with so many others, for laughable, ‘only-in-a-dictatorship’ crimes like ‘insulting the state and national dignity.’ He is most famous in the West for starting the ‘Charter 08,’ probably the most important liberal outburst from Chinese civil society in this decade (and a nice counterpoint to the ‘national humiliation’ nationalism otherwise showcased by the Chinese Internet). Predictably China was acerbic; it threatened Norway (!), because, of course, we all fear Norway rising and its rogue unilateralism. It is worth noting that the Norwegian government does not assign the prize; the independent Nobel Foundation does.

The flap tells us a few things:

1. I am not sure if we should laugh about the Norwegian threat (threatening the Green Nordics who give lots of development aid, have a globally envied living standard, and no military – lol) or lament (Chinese bullying now extends to NATO – yikes). But the Chinese overresponse fits its recent behavior in the South China Sea and toward Japan (as well as NK, I bet; it’s just behind the scenes, so we don’t see it), as well as its now system-threatening monetary interventions and downright bizarre head-in-the-sand denials about the Cheonan sinking. Now it is ok for rising powers to be tvetchy. We expect that. But if the Chinese keep up the bullying, then lots of westerners (think the Kagans) who can’t wait to label China a threat (in part because so many have predicted it) will claim that Chinese foreign policy has taken a major, and nasty, turn. For a long time, China’s claim to a ‘peaceful rise’ rested on its ‘Good Neighbors Policy.’ As Dave Kang has pointed out for years to the ‘China threat’ school, China has generally sought good relations with its neighbors. It has (previously at least) tried to settle border disputes peacefully (most importantly with Vietnam) and has generally sought to be a good institutional player in all those various East Asian semi-organizations like the EAS, ARF or the Six-Party Talks. US business lobby has generally used this to defend engagement with China, in an important pushback against the US military, especially the navy, which is both nervous (a possible peer competitor to break the Pacific-as-American-lake) and secretly hopeful (at last a symmetrical contestant we can understand! unlike all these noxious terrorists against whom our super-cool aircraft carriers are useless). In short, if the Chinese aren’t careful and step back here a bit in the next few months, they could find themselves seriously ringed in. Quick Prediction: the Chinese aren’t stupid. Unlike OBL, they don’t want to take on the whole world. They will pull back, and in six months we will be talking once again about the ‘unpredictable swings in Chinese foreign policy.’

2. I am pleased to see this issue back in discussion, after a decade of quiet. Everyone recalls what a big issue this was in the 1990s. I remember Jay Leno even once had a Chinese-American who had been arrested there on his show. And human rights (and labor) was the big stumbling block behind permanent most favored nation status for China under Clinton. Of course no one wants a war or another cold war, but it is also clear that western engagement can’t just be all flattering and desperate (please keep buying US bonds). Sometimes we need to push them hard on political change too. This is an obvious danger of mixed or contradictory signals – we want to work with you, but we will antagonize you too. But in fact, we do want both. When western governments push for change, it sends the Chinese off the deep end; hence neither Hillary nor Timothy Geithner challenge China on liberalization much anymore. In the end, Google too gave-in (rather disappointing that actually). But western NGOs like Nobel or Amnesty International can also send the other message – that our values are important, that we are genuinely uncomfortable dealing with dictatorships even if we don’t want a cold war, etc. So I think flaps like this, of the earlier Google one, are useful. They tell China that they are limits and expectations – mild, to be sure – that it will lighten up a little on the nationalism and repression. In short, after one experience with a superpower that stepped all over its people and bullied the neighborhood, no one wants to go through that all over again. And the Nobel reminds the CCP leadership of this.

3. Finally, after last year’s ridiculous Nobel choice, this year’s was smart and helps restore the Peace Prize’ good name. In fact, I bet the Foundation figured that after such a light, gauzy choice for Obama, credibility demanded a really tough choice this year. And few human rights cases are harder than China. Like most observers, I applaud the choice, but I am also glad, because I think the prize is a useful weapon in the struggle for human rights and liberalism. It shows up the glaring failures of places like Burma, apartheid South Africa, and China, and tells their elites that the West isn’t always looking the other way for business contracts. So here, here to the Foundation for such a strong choice. My quick choice for next year: Morgan Tsvangirai.

China, Japan, and these Fights over Islands

Posted on by
9

diaoyut

 

There has been lots of good commentary recently over the China-Japan flap about the fishing captain. (Start here and here.) I tend to agree that China is setting itself back 5 to 10 years with the neighbors, and that this is the somewhat predictable behavior of a ‘rising’ state. Just about everyone expects China’s appetites to grow as its power grows. It is reasonable to expect China to get pushier in its backyard as it grows, just as the US did in Latin America in the late 19th century. I have just a few extra thoughts:

1. All these left over island disputes leave China (and Japan, Korea, Russia, and ASEAN) with lots of friction points. Just last week, the Japanese told the Russians not to visit their disputed islands either. The standard liberal internationalist answer would be to create some joint committee (indeed, boundary demarcation is one of the few things the World Court does well) to iron out the details. But this has never really happened out here, as it has in other places, like South America, where geography also created confusion. (In SA, it was the highest peaks of the Andes that made the lines unclear.) But in Asia, I have the sneaking suspicion that these island/sea disputes never get resolved in part, because domestic elites don’t really care that much; indeed they may like having them around once in awhile for patriotic rallying purposes. They serve an unremarked domestic utility: These disputes are low cost. They can simply be ignored when necessary. A few rocks here or there have no real economic value; according to UNCLOS, if the rocks are uninhabitable without external provision (ie, food and potable water must be transported in), then possession of the islands has no impact on the claims to the surrounding water either. That is why fishermen so frequently seem to spark these flaps; the seas are wide open to everyone. But because these conflicts-in-waiting are always still hanging around, they can be turned on and off at will – whenever domestic leaders need a rally-round-the-flag effect. This is probably especially useful for deeply illegitimate regimes like China or Russia, or in Japan with its endless rotation of governments in search of credibility. In this, I am reminded of the oft-made accusation that Israel’s Arab neighbors don’t really want the Palestinian-Israeli conflict resolved, because it is a nice deflector of public unhappiness at home.

2. One unremarked deep cause of these flaps is Japan’s slow erosion. Most of the excitement focuses on rising China. But just as important is the steady decline of Japan. If Japan were still rising, as it was until the 1990s, the competition here would be quite different – two rising powers side by side (like India and China). But in the western Pacific, China is walking away with the game because both the US and Japan are in decline, and ASEAN remains in its perpetual disorganized dither. This would create space for China, even if it weren’t booming. But it is, hence doubling the power shift. In fact, this is the weakest Japan has been vis China since the Opium War upended China-Japan relations 170 years ago. This is the most important Asian balance of power shift since the West arrived in East Asia. We are moving back toward the 18th C (not the 19th), when China was dominant in the neighborhood.

3. The Chinese leadership is increasingly boxed in by nationalized opinion. 20 years of patriotic reeducation on the national humiliation has created an unhappy nationalistic youth in China with prestige grudges against Japan and the US. As China gets wealthier and more connected, it will become harder and harder for the CCP to avoid dealing with this, and these island fights are a useful outlet, per point 1 above.

4. China will have a harder time carving out a backyard than the US did. Latin America has been weak for centuries and the rest of the world was far way, so there was an easy vacuum for the US to fill. In Asia, China is next to India, Japan, South Korea, and, a bit further out, Australia. All of them have a much better capacity to push back than Mexico, Argentina, or Brazil ever did. (PS: The Economist says the Monroe Doctrine is dead now. I don’t buy it.)

National Security Decentralization: Kor. Inst. of Defense Analysis (2) – UPDATED: Response to Charli Carpenter – UPDATED II: More in the Comments

Posted on by
27

520px-Provinces_of_South_Korea_Txt

Part one is here.

Last week, I spoke at a KIDA discussion of the Korean peninsula post-Cheonan. In brief I argued that there was no ‘post-Cheonan’ world as the SK right was hoping for. South Koreans are unwilling to risk war. There is no desire to hit back for the Cheonan sinking, because escalation might lead to a war in which South Koreans believe their wealthy democracy will get trashed and then burdened with Northern reconstruction.

But there is another specific reason why there is no response. SK’s hands are tied by the extreme vulnerability of its major population centers to NK retaliation. Specifically, following the above map of Korea’s provinces and cities, Seoul has 10.464 million; Gyeonggi province around it, filled with Seoul’s suburbs, has 11.549 million, and Incheon has 2.767 million. Busan by contrast has just 3.566 million. Korea’s total population is 48.875 million. (Those numbers come from a colleague at PNU’s Department of Public Policy and Management.) Worse yet, Busan’s population is shrinking, and Incheon’s is growing. So this means that 50% of Korea’s population lives within 50 miles of the DMZ, and 30% lives within just 35 miles.

NK knows this, and in order to hold SK hostage against any Southern retaliation for incidents like the Cheonan, it has stationed something like 10-20k artillery and rockets at the DMZ closest to this massive urban agglomeration in northwest SK. In effect then, half of the SK population is a massive city-hostage to NK, and it is only worsening because of Incheon’s rapid new growth.

In game scenarios of a second Korean war, the first six hours are decisive. NK knows that it will likely lose the war, and that its assets will be quickly eroded by allied air power. That is, in the first few hours, a primary SK-US bombing target will be all those rockets and canon at the DMZ. Nonetheless, almost everyone thinks that the KPA will be able to get off enough shells and rockets to effectively devastate the Seoul-Gyeonggi-Incheon area. Given that Koreans mostly live in high-rise apartment buildings, some with 60+ stories, the result would be hundreds of World Trade Center collapses. I live in such a high-rise; I can’t imagine that it could realistically withstand a Scud missile or two. 2500 live in my building alone. Consider that all across Gyeonggi, and you have a holocaust.

Note too, that all this can occur without Northern nuclear use. Essentially,the early hours of a war would a race between allied air and ground power to hit all those Northern emplacements before they fire. Like the old Cold War logic facing the the US and USSR, NK faces an extreme ‘use-it-or-lose-it’ dilemma. For this reason, the DPRK has repeatedly threatened to turn Seoul into a ‘sea of fire.’ This huge threat to SK’s extremely vulnerable northwest urban centers is the primary reason why the North never suffers military retaliation for attacks such as the 1976 tree-cutting incident or the 1987 KAL bombing.

So what to do? To me it seems rather obvious – the gradual de-centralization of SK’s population (and government and economy) from the northwest. Strangely, I have found almost nothing in the IR-national security literature on SK defense recommending or even discussing this choice. Yet when I suggested it last week at KIDA, multiple SK and US analysts and officers approached me afterwards to discuss the idea. Should Korea’s population be spread more equitably around the peninsula and further south from the DMZ, this would open new strike-back options after incidents like the Cheonan.

There are several objections worth rebutting now.

1. It would be expensive. Ok. Sure. But so is all the ROK defense spending that goes into protecting the northwest already.

2. It would take forever. Yes, this is true. But the stalemate with NK is now entering its seventh decade. To our great surprise, NK has withstood the end of the CW, the collapse of Soviet support, the death of Kim Il Sung, and the famines of the 90s. Rather than taking a perpetually short-term attitude toward NK – when will it just collapse so we can get on with reconstruction? – a better approach might be to consider strategies to win a drawn-out stalemate, which is already what this conflict is anyway. Consider that if decentralization had started in 1990 how much better the post-Cheonan options would be.

3. When NK collapses, this will have been a huge waste of money. Not necessarily, because there are regional growth and national equity reasons also in support of decentralization. Ie, the ROK is already far too centralized in one place (Seoul). Koreans outside of Seoul even call it the ‘Seoul-Republic.’ Like France, SK is wildly unbalanced with one city starving the rest of the country for capital, human talent, government attention, etc. (One sees this quickly living, as I do, in the ‘provinces,’ like Pusan.) Even if NK collapses, it would be healthier for SK to look more like Germany, Canada, or the US, with multiple large cities competing with each other for national resources and talent.

4. Forced population transfer are illiberal and wrong in a democracy. This is the strongest argument. Clearly decentralization would happen most rapidly if it were coerced, but this is, correctly, intolerable. But the government could create lots of incentives short of force. It could move the seat of the ROKG out of Seoul for starters. Brazil did this – for regional equity purposes – in 1960; and West Germany put its capital in sleepy little Bonn, because West Berlin was just too exposed. Israel doesn’t let too many people live near the borders with Gaza and Lebanon. So there is democratic precedent. Also, the Korean government intervenes in the economy all the time to help companies with subsidies and what not. How about directing some of that money outside of the northwest? But I agree it would be tricky; eminent domain, even for national security, would be tough when millions of people are involved.

_____________________________________________________

UPDATED:

This was linked heavily at Lawyers, Guns and Money and the Progressive Realist (h/t Charli Carpenter). Here is a response to the criticims raised in the comments:

“Let me try to answer a few of the objections proposed:

1. ‘You can’t just move cities.’ Perhaps, but that misstates my suggestion. Seoul is very old city with strong emotional roots in Korean national identity. It will not move. But it can shrink. Its postwar explosion into a megalopolis is a direct result of (reversible) policy choices – including the government’s susbsidization of mega-firms (chaebol), huge infrastructure projects like the Incheon airport, and most importantly, the legacy of authoritarian political centralization. Like most dictators, SK’s pre-democratic generals centralized almost everything (in Seoul) in order to more easily control the state. This legacy survived and worsened, gradually depopulating Korea’s other major cities (Pusan, Daegu, Dajeon) as everyone now wants to ‘move up’ (the local term) to Seoul. It has become a vacuum that hoovers up talent relentlessly and starves the rest of the country, and it is actually getting worse now, not better: Pusan, the second city, is shrinking and aging, while Incehon, right next to Seoul, is booming. (This has slowly become a bigger issue in Korean politics in the last two decades as the imbalance between Seoul and the rest has become genuinely extreme. The ‘Sejong City’ project aims to move the capital, although the local argument for rebalancing away from Seoul is made mostly for regional equity, not national security, purposes.) In short, Seoul’s centrality relfects historical path-dependence that can be reversed by new policy choices, although Seoul-based elites in almost all fields oppose this as a major inconvenience.

2. ‘It is illiberal to move them.’ Yes, it is, but a) deomcracies make such calculations all the time, b) living next to NK is vastly more disruptive than refusing to move for the development of a mall or something, and c) I don’t endorse coercion but incentivization. The West Germans imposed all sorts of restrictions on the residents of West Berlin that didn’t apply elsewhere, and Israel too uses zoning codes and such all the time for political purposes. SK already prevents people from living even closer to the DMZ. Also, Korea, unlike Western states, embraces state-led development and expects the state to do these sorts of things. Americans find ’eminent domain’ a culturally unacceptable intrusion on personal freedom, but I bet if you polled Koreans you wouldn’t get nearly that sort of anger. The role of the state in Korean life is much greater, subtler, and desired than it is in the US. Further, all sorts of places are deemed off-limits for residence for national security reasons in many countries. Finally, it hardly strikes me as ‘residential fascism’ or something to encourage people not to live right next  door to a super-dangerous enemy. Indeed, I am rather amazed that SK never did anything to halt this decades ago. The scale, not the legality, strikes me as the real problem. There are just so many people in Seoul and Kyeonggi; any serious plan to encourage relocation would take forever and cost mountains of money. On top of the demographic movement would be the further costs of an economic and political shift. It seems ridiculously expensive when the money could be spent on so much else. But if unwinding the already-exising over-population would be hard, the government could still take steps to prevent it from worsening in the future, as it is doing right now (point 1 above).

3. ‘Can’t we just protect them by destroying the weapons targeted at them?‘ This is what US Forces in Korea (USFK) hope, and they will tell you that in the first few hours of a war, they are going to fly hundreds of sorties to get the canon and artillery. In response to this NK has put, by some estimates 20,000 artillery and rockets at the nearby DMZ as a counter. I have not meet any analyst here – military or cilivian, Korean or America – who believes that allied air power could get them all without several hours (minimum) of bombing runs. Given that most Koreans live in closely clustered high rises, not dispersed homes, you only one need one or two shells or rockets to kill 2000 people. The referent image should be the hundreds of World Trade Center towers clustered tightly in an area smaller than Rhode Island collapsing under a rain of shells. You don’t more than a few hours of Northern shelling to create a holocaust.

4. ‘Can civil defense protect them?‘ Probably not. First, Seoul/Kyeonggi’s transportation network would be dwarfed by the scale. Seoul traffic is already some of the worst in Asia. The subways are bursting during rush hour. The dilemma is similar to New Orleans’ one road out during Katrina. 2. The area around Seoul is hilly and rugged. 75% of the Korean population lives on only 25% of its landmass (that’s one reason we all live in enormous apartment towers). There is simply no where close to Seoul to handle the scale of movement unless you had many weeks to disperse them all over the peninsula. Finally, as I said in the orignal blogpost (above), NK artillery at the DMZ faces a severe ‘use-it-or-lose-it’ dilemma: once the war starts, allied air power is going to hammer these sites relentlessly. So if you start moving people out of Gyeonggi preemptively in a slow-moving crisis (like summer 1914, or right now in Korea?), you are signaling to the North to strike first before its deterrent evaporates.

For all these reasons, it seems to me that there is no short-term answer, but that a medium-term policy incentivizing residence and investment elsewhere is the way to go. That should probably include decentralization of authority to Korea’s provinces, the movement of the capital to either Sejong City or Daejeon (because they are in the geographic middle of the country [and not Busan, because it is too far away]), and the subsidization of economic development outside of the northwest.”

Cheonan Sinking Changes Nothing: Kor. Inst. of Defense Analysis (1)

Posted on by
16

menubar_toplogo

Another week, another North Korea conference. It amazes me just how much we (in Korean IR) talk about this issue. It is a never ending thrill-ride. And it is not just academics. I meet military, intelligence, even literature and photography experts (deciphering NK propaganda) from the US, SK, and Japan regularly. If you thought the GWoT created a defense-intel-IR gravy train in the the US, try Korea’s never ending circus on what to do about NK. It’s a cottage industry military-industrial-academic complex all of its own. Honestly, I wonder if we’ll all miss NK when she finally goes. Shamelessly, of course, I too am a part of that circus. Part of me understands obviously. The US doesn’t live next to the wackiest, more dangerous state on the planet. But still, I am amazed just how much of my time goes into this issue because of the simple fact of teaching IR in Korea.

So this week, the Korean Institute of Defense Analysis (KIDA) held its conference on what has changed since the sinking of the Cheonan in March. Here is my previous thinking on this. Here is the ROKG final report on it, clearly blaming NK. KIDA is a great institution, with really high-quality material and a super SSCI journal. So off I went to talk about this with the usual suspects of intel, military, diplomacy, academics, and the rest.

So now, 6 months out, tempers have cooled. No one is talking about air-strikes anymore. So what have we learned?

1. We didn’t learn much about NK. We already knew that NK is erratic, prone to savage, but limited outbursts, shamelessly denies everything, and uses external military-intel actions for internal in-fighting purposes. The tree-cutting incident, the cabinet bombing, the KAL bombing, and Cheonan sinking all show these characteristics, as well as the smaller incidents like the sub penetrations or Yellow Sea skirmishes.  So yes, the regime may be attributing this to the new boy-king, Kim Jong-Eun,for internal promotion purposes. But while that is important, it is not new. We didn’t see much we haven’t seen before.

2. Regarding the cause, we still don’t really know. I tend to agree that Jong-Eun (Kim III) is being given some accolades to establish him. But the larger structural cause is the steady factionalization common in late-stalinist systems. We saw internal jockeying among elites and interest groups in the USSR in the 80s, and in China in the early 70s. My read of the Cheonan sinking is that it is a message from the NK military to everyone else – the party and civilians in NK, including Kim III, the ROKG and military, the US, etc. – that it is a major, if not the central, actor to be reckoned with in peninsular affairs. There is no deal to be had without the KPA’s approval, and they will shoot up SK facilities every once in awhile to remind us all of that fact.

3. The Cheonan sinking told us more about SK than NK actually:

3a. We learned that SK has a very high threshold for NK pain; ie, that South Koreans don’t care much about NK and just don’t want to hear about it. There was no outburst of popular anger at NK. No call for air or naval strikes, much less war. Like the Chinese insistence that maybe the Cheonan just hit a rock or the Russian notion that it hit a mine, South Koreans too just want to put their head in the sand and not know the truth. Everyone just wanted it to go away as soon as possible. No one wants to recognize that NK did this, because it is so nasty, it screams for retaliation. Consider if Iran sank a US warship in the Gulf, or if Pakistan shot down an Indian jetfighter. The rhetoric would have been sharp and the responses swift. Here, nothing happened. No one, but for the SK military perhaps, wanted a strike-back. So it all just faded to black, and we are back to where we’ve always been – NK asking for aid, rumors about the 6 party-talks again, a focus on nukes, more talk of succession. The Cheonan changed nothing, because SK doesn’t it want it to.

3b. From this minimal willingness to risk escalation, we can conclude that SK has become a status quo power effectively in the peninsula, despite its formal (ie, constitutional) claim to the whole Korean landmass. SK has labored tremendously to build its consumer society-trading state, and it does not want that wrecked by NK. While most observers would say that NK has more to lose in a war – the regime leaders are terrified they will be hanged in the end – South Koreans clearly don’t see it that way. Instead they see their wealthy democracy getting trashed to save poor people they scarcely know, possibly including the use of nukes on their own soil. For this, they are willing to pay this price of a few Cheonans now and then. 6 months ago, most of us would have said something like the Cheonan would be a redline. But here we are over it with little change, so the question arises, just how far can NK go?

3c. We also learned how deep anti-Americanism runs in SK. To the astonishment of just about every mi-guk-in I know in Korea, something like 1/3 of Koreans believe the US sank the ship. And another third or so, think the sinking reveals the incompetence of the Lee administration. This just floors me. It tells me SK is so desperate to avoid escalation, they’ll believe anything. And how the Lee administration could realistically have been expected to defend against something like this is just beyond me. The case for NK blame is so obvious – yet so disruptive to regional stability – just about everyone – the SK public, the Russians, the Chinese – want to pretend otherwise, and NK denials dovetail perfectly.

4. Finally, the Cheonan tells us just how willfully unhelpful China and Russia really are. Russia’s primary foreign policy goal is to be perceived as a great power, because it can only barely claim that status now. Crises which get Russia invited to the top tables of world politics are therefore to be kept going as long as possible. Russia’s interest is the perpetuation of the stalemate, not its resolution. Regarding China, the news is even worse. When forced to choose between the two Koreas, China chose the North (foolishly); China refused to admit that the North sank the ship. This more clearly pushed NK into China’s embrace, making it ever more likely that China will keep the North alive for awhile yet, and that when unification does happen, China’s role will be more intrusive, including perhaps demands for a buffer zone or unified Korea’s finlandization.

Part 2 is here.

Asia’s ‘Culture of Export’ 2: The Case of Korean Mercantilism

Posted on by
7

P091004002

Part one is here. On the financial mercantilism rising in the wake of the Great Recession, go here.

Any foreigner living in Korea is bombarded with the notion of Korea globalizing. Its everywhere – both at the IR academic conferences, and in everyday life. The government-sponsored English agitprop network (Arirang) positively gushes about how cosmopolitan Korea is and how happy resident expats are to live here. Korean print media is constantly hyping this or that Korean star breaking into global attention. Yuna Kim in iceskating was last year’s rave; this year its Yong-Eun Yang the golfer. Korean films, we are told, have a worldwide audience, as does Korean pop music. Even Korean food they tell us, is poised for a global breakout. (I actually doubt all 3 claims; they are recycled endlessly like propaganda. In 32 years living in the US, I only saw 1 Korean movie – The Host – and never heard K-pop or saw a Korean restaurant. That hardly means they don’t exist in the US, but if they are as popular as the Korean government tells us, then I should have seen something.) And Koreans are downright obsessed with the numbers and kinds of foreigners living here, and multiculturalism is a raging debate right now in Korea.

Yet for some reason, this incipient globalization never seems to happen. And every once in awhile, you get a glimpse of the real story – the deep seated nationalism and the desire to have globalization occur on strictly Korean terms. Try here and here,  and note that the primary response to a trade deficit with Japan is the desire to reduce it through increasing self-sufficiency, a third worldist economic notion directly at odds with globalization.

This sorts of articles show you exactly the Korean ambivalence on globalization that prevents it from every attaining the global status it so desperately craves. I see this attitude all the time at conferences on the topic of Korean trade and IPE policy: exports are good, but imports are bad. For a raw, almost xenophobic, example of this mercantilist, illiberal spirit (trade surplus = health), try here.

So its great that Korea exports this or that to the world (food, cars, TVs), but Koreans clearly violate the spirit of the WTO by formally and informally discriminating (‘nationalist buying’) against imports. Koreans are downright desperate for global cultural recognition (endless stories on Korea’s ‘brand’ – whatever that means), but lots of knowledgeable people I know in academia still insist that Korea needs a positive current account and should mimic rather than import successful foreign products. Of course, you can’t have it both ways; you can’t demand ‘buy Korea’ from locals and then tell foreigners you are globalized.

Here a just a few examples. Imported goods are almost always far more costly in run-of-the mill stores. The best known stories are the 20-30% tariffs on cars imported into Korea. You’ve never seen as many Korean cars in the entire rest world as you do here in this one small market. Alcohol too has a extreme price differentials. A fifth of Jack Daniels costs $40 (see the picture above from my local grocery store)! Even something as mundane as scotch tape is hammered. Scotch brand transparent tape is 3 times the cost as the Korean brand. When I bought a TV, there was not even a discussion that I would buy a Sony or a Panasonic. They were a good 25% more costly, so of course, I bought the Samsung. And the cell phone sector too is overpriced, protected, and cartelized. Blackberry, Apple and Microsoft scarcely operate here. So forget about the easy compatibility of Windows Mobile or an I-phone.

This attitude is hardly specific to Korea. Lots of countries express a preference for mercantilism, and the everyday voter generally does not support free trade anywhere in the world. But economic nationalism is stronger in Korea than it was when I lived in Europe, and the cost differentials are more obvious and so extreme, there is no way they reflect just market pricing. Further, it jars badly with Korea’s constant repetition that it is globalizing. Because of course, globalization goes both ways. The flow of goods, people, ideas, etc. comes in and out. Little I have seen here or read in the literature or media suggests Koreans really want a lot of inbound traffic. Exports are great, but imports will probably bring swine flu. Incoming traffic is strictly controlled, especially of foreign people living here.

Asia’s ‘Culture of Export’ (1): Persistent, Politicized Asian Imbalancing

Posted on by
5

export_ship

Part 2 is here.

In my IPE class this week, we discussed the issue of global imbalances. (If you have no idea what this means, start reading Martin Wolf at the Financial Times.) I argued that it will take awhile to ‘unwind’ them, because Asians have acquired a cultural habit of saving and exporting. Imports are suspect, and a trade surplus has become a downright obsessive national goal out here rather than a natural, occasional imbalance in trade. Now this would be a laudable goal if East Asian states were highly indebted poor states, as in Africa and Latin America, but East Asia is sitting on close to $4 trillion in US debt stocks from two decades of single-minded stockpiling. If China didn’t run a trade surplus in a given year, it would provoke an existential political crisis in the Chinese Communist Party. This is just how deeply mercantilist Asia is. Korea’s trade balance is reported every month in the news, and it is frequently the leading story. The reporter’s spin is always congratulatory and nationalistic. The trade surplus is always reported as a major national-political goal, not a technical economic outcome. In Japan in the last month, the BOJ intervened to keep the yen down at the behest of major exporters, and it is threatening to do so again this week. There is your ‘culture of export.’ East Asians are politically opposed to running trade deficits. Trade surpluses are not economic outcomes; they are nationalistic, highly managed, artificially and purposefully-created political outcomes. This is a massive cultural hurdle to righting the global economy.

Asians desperately want the old system of high exports and high savings to continue, but it can’t because traditional global importers are leveraged to this hilt. But I genuinely believe Asia’s mercantilist elites will put their hands in the sand on this and simply refuse to play ball seriously in the medium-term and so prolong global unemployment. Exporting in Asia is not just a regular economic activity on par with consumption or government spending. Export has acquired a near-mythic status as a mark of national greatness and power. This is wildly mercantilist and unsustainable, but that won’t prevent Asian elites from trying anyway and dragging the globe into a long ‘savings glut’ recession.

In liberal trade theory, current account surpluses are natural outcomes of an unforeseen change in the desirability of a country’s exports. One year, a country’s exports may be suddenly very desirous. Recall that the first Playstation 3s were resold on Ebay for $1000+, so Japan got an export surge. This is ok, because when you exports surge, your currency, if it is floating, should surge too. Your stronger currency reflects that your stuff is in greater demand than you are demanding others’ stuff. The following year, as your stuff becomes more expensive due to your appreciated currency, your net exports over imports, your current account surplus, should recede. Broadly, your imports and exports should tend toward equilibrium, because the world is a closed system. So everybody is happy, because in the long-run, there should be – in fact, mathematically, there must be – equilibrium.

But this healthy process of circulating trade and currency got all gummed up in the last 15 years or so, and this is why the Great Recession is so brutal. In short, East Asia (and Germany) are big net exporters, and the US and peripheral Europe are big importers. If the exporters don’t buy stuff from the importers though – ‘recyle’ the importers’ currency back to them by buying stuff from them – then the importers eventually run out of money. This is ‘natural.’ Previous importers should pendle back to export, and vice versa. But that is not at all what happened.

Instead, running out money didn’t stop the Americans (or the Greeks) in the last decade. When the money ran out, we just borrowed more – and from the exporters. The average American burned through all his savings by around 2005 and went into debt; the US government of course was in debt too. So everyone was borrowing more and more, and Asian states, unwilling to import more, were super-willing to lend their savings back to Americans so that they could keep on buying. (The same thing happened within the euro-zone between the German exporter and the southern European importers.) Hence the ‘imbalance’ – importers piled up more and more debt borrowed from the exporters, and the exporters piled up more and more savings by lending and re-lending their profits back to the importers.

We piled up debt to buy more, while they lent us our own money back to us so we could keep buying. This bizarre, predatory symbiosis is why Ferguson coined the expression ‘Chimerica,’ and its unsustainability has now become evident for all to see. Resembling a ponzi-scheme by 2008, it all collapsed.

The big problem is that if the pre-Great Recession super exporters (above all, China) don’t start spending, not saving their foreign currency, then global consumer demand will collapse, because the erstwhile importers’ demand is much reduced. Indebted and overleveraged, the former consumers are now saving again. The problem is that all that US (particularly) consumption before created global demand which created jobs. Now that US demand has contracted dramatically. Without demand from consumers to buy stuff, companies don’t need as many laborers to make stuff, so they start firing people – unemployment.

So in brief, US demand imploded under debt, but Asians don’t really really want to substitute for that demand. They don’t want to go shopping, or rather their governments don’t want them to go to shopping, because the governments are trapped in a Spanish Habsburg mindset that they MUST run trade surpluses all the time. Getting Asian consumers, especially the Chinese, into the malls is the globe’s best hope for a fast recovery, but the cultural blowback from 40 years telling citizens to save as a national mission is a huge obstacle, as is the Chinese government’s adamant, infuriating refusal to encourage its citizens to shop.

Part 2 will be a case study of Korean mercantilism.

US Embassy Security – Yikes!

Posted on by
7

P100614001

There has been a lot of discussion of the ramp-up of US embassy security since 9/11. Generally, the fear is that US embassies increasingly look like bunkers. They are being moved far away from downtowns. They are surrounded by loads of police, military, and barbed wire.

The Seoul one was quite an experience. I needed more passport pages, so off I went. It was frightening. There were multiple layers of security, blast doors, and US and Korean military and police with automatic weapons and body armor all over the place, including the SWAT tanks in my picture above. To boot, cell phones were confiscated, and there were the ubiquitous cameras. I imagine if I wrote more about it, they would be miffed over this post.

It was a depressing experience. I am with Thomas Friedman on this issue of US openness post-9/11. I think this stuff just sends a terrible image to the world about an open society gone loopy. 9/11 abetted the worst instincts of the national security state, and I fear we are moving down an Israeli path toward a barracks democracy with gates and locks all over the place. But this is not what open societies look like. Nor is it what we should want. Who wants barbed wire and cops with rifles at the mall? This is Bin Laden’s real victory – the installation of paranoia in the US. And I fear it will take decades to undo. The 1990s seems like such a paradise by comparison.

And I am not sure all this is necessary. The US has not in fact been targeted that much since 9/11. As John Mueller noted years ago, a lot of this has been overblown. I recall reading somewhere that you are more likely to be hit by lightning – twice – that killed in a terrorist incident. And what terrorism there has been has not been Bin Laden-style plots, but wacky rogues like the underwear bomber or the Fort Hood shooter. It is unlikely that all these walls could have stopped them.

Visiting our embassy was a genuine shock. It certainly didn’t look like America. It reminded me of those execrable gate-communities that fill California and subdivide people against themselves. This doesn’t look like homeland security. It looks like Israel, Pakistan or South Korea in the cold war – democracies under siege and paranoid. This is exactly the sort of freedom-reducing militarization the Founding Fathers warned about in instances of long wars and huge standing armies. This needs to be unwound sometime soon for the health of our democracy.