South Korea North Korea fact of the day

According to a survey of 167 [South Korean] businesses earlier this month, almost 75 per cent would be prepared to invest in the North if sanctions were lifted. Companies that stand to benefit, such as steel and cement groups, have seen their stock prices soar in recent weeks. Shares in Hyundai Cement rose more than 500 per cent between March and June as detente unfolded on the Korean peninsula.

Much more is going on (FT).

Comments

President Trump is trying to make Korea great again. It's working.

Korea is already one of the great success stories of the past half-century- South Korea anyway. From dirt poor with military government to trillion dollar economy and democracy with per capita GDP similar to a middling European country.

This is the reason for hope on the peninsula. Like the Germans, the Koreans are best situated to help themselves.

They did it in a most impressive manner, but let’s not forget it was done under the auspices of our military security (literal boots on the ground).

America has been — in many though perhaps not all instances — the most benign great power in recent history.

'but let’s not forget it was done under the auspices of our military security'

Trust me, the South Koreans remember. They remember this guy https://en.wikipedia.org/wiki/Syngman_Rhee, this guy https://en.wikipedia.org/wiki/Park_Chung-hee, and this guy too https://en.wikipedia.org/wiki/Chun_Doo-hwan, as they generally gained and kept power under the auspices of our military security.

During the Vietnam War, the Australians and the RoK's were America's only battlefield allies.

And Thailand!

While I generally agree about America being a relatively benign great power, I consider it bad form to boast about ourselves. Modesty kids a virtue.

'While I generally agree about America being a relatively benign great power'

You might to read some of the information concerning those South Koreans. America might be benign - many of the people we have supported were not.

So Prior looks at a neighborhood made up of the Soviet Union which had just killed some 30 million of its own citizens, China which had just killed some 40 million of its own citizens and was going through the Cultural Revolution, and North Korea which is a socialist state to make those other two look like Switzerland ..... and he decides that Park Chung-hee is the bad guy?

Great.

For the region Park was about as benign as you can get. South Korea should carve his likeness into a mountain like Mount Rushmore.

"While I generally agree about America being a relatively benign great power, I consider it bad form to boast about ourselves."

Not when our history of being a benign great power stems in large part from our Enlightenment foundation of natural rights and classical liberalism. To bias evaluation of ourselves in a negative direction unfairly maligns the Enlightenment values that are inseparably associated with America due to the unique circumstances of our nation's founding. Modesty may be a virtue, but sometimes we must sacrifice the personal satisfaction that arises from feeling virtuous and humble to advance the greater good, welfare, and liberty of humanity. Which ideology will most advance human flourishing: American classical liberalism, China's version of Communist capitalism, Putinism, Islamicism, or the resurgent neo-nationalism? Only the first has a history of producing a benign great power. American Exceptionalism is not about American braggadocio.

"Exceptionalism is not about American braggadocio."
No, it is a communist invention. https://www.theatlantic.com/politics/archive/2012/03/how-joseph-stalin-invented-american-exceptionalism/254534/

sometimes we must sacrifice the personal satisfaction that arises from feeling virtuous and humble to advance the greater good

I know. It feels terrible to have to brag about how much better we are than the rest of the world, but we have to do it - it's for the greater good!

"sometimes we must sacrifice the personal satisfaction that arises from feeling virtuous and humble to advance the greater good"

And we must also halt the advancement of the greater good so that we may enjoy personal satisfaction. Any good libertarian will remind you this timeless bit.

"Which ideology will most advance human flourishing"

I'm a libertarian through and through but Chinese communism has a middle class larger than the whole of the United States. So your question remains to be answered.

Phone error. Kids = is

Trump is legitimizing murderous dictators like Kim. Already gave up American leverage for a bunch of nothing from Kim. What a dumb buffoon. #NeverTrump

America will be made great when Trump ends up behind bars. North Korea will be made great when Kim ends up behind bars. Democracy over two bit dictators.

They are Asian. https://www.nytimes.com/1987/07/20/opinion/l-toshiba-caught-between-tokyo-and-washington-774987.html

Why do you dislike Asian people, Thiago? Can you say kind thing about the Koreans, the Japanese, the Chinese, or the Indians? They are good people living under flawed governments, yes?

Or are they people who have been brainwashed to hate the West? There is no moral difference between Asia's refimes and Hitler's.

Is it the prospect of using slave labor in the north that has these companies in the south all giddy? Yesterday, Cowen informed us that nothing really is happening on our southern border. Today, he informs us that North Korea is a virtual paradise for enterprising capitalists.

"Business in DPR Korea:
The DPR of Korea (North Korea) will become in the next years the most important hub for trading in North-East Asia.

Lowest labour cost in Asia.

Highly qualified, loyal and motivated personnel. Education, housing and health service is provided free to all citizens. As opposed to other Asian countries, worker's will not abandon their positions for higher salaries once they are trained.

Lowest taxes scheme in Asia. Especially for high-tech factories. Typical tax exemption for the first two years.

No middle agents. All business made directly with the government, state-owned companies.

Stable. A government with solid security and very stable political system, without corruption.

Full diplomatic relations with most EU members and rest of countries.

New market. Many areas of business and exclusive distribution of products (sole-distribution).

Transparant legal work. Legal procedures, intellectual rights, patents and warranties for investors settled." - http://www.korea-dpr.com/business.html
Lowest labor costs (they did not said that, but no free labor unions), low taxes, solid security? And no Blacks but Dennis Rodman. It looks like a
Libertarian dream. Why not? Americans love China's totalitarian regime. China Jr. must be OK, too.

Is that Ray bemoaning the coming collapse of the Worker's Paradise of North Korea?

I would hope every decent human being on the planet is praying for the day North Koreans get exploited by South Korean chaebol. Even if the Kim family is still in power - as opposed to hanging from ropes - the North Koreans would be much better off working 16 hours a day in a Hyundai sweatshop than they are now. They are slowly starving to death now.

"the North Koreans would be much better off working 16 hours a day in a Hyundai sweatshop than they are now. They are slowly starving to death now."

It is not clear why being explored by a chaebol for the Kims' gain will prevent North Koreans from starving.

I wonder what the rules of origin are under the revised US/Korea Free Trade Agreement, and whether the US will now become an indirect trading partner with North Korea, as components and parts of goods shipped from Korea will originate in North Korea but be incorporated in South Korean products.

Looks Good for Samsung and LG. I can hear them say: Thank you America although You may have a difficult time establishing businesses in South Korea because of the chaebol system but we will be happy to sell you products from our NKorea joint ventures.

'Shares in Hyundai Cement rose more than 500 per cent between March and June as detente unfolded on the Korean peninsula.'

Speculation is such a fine thing. So one can speculate - who will be paying the bill for all that concrete? And one can further speculate, assuming the first answer is essentially the South Korean government, how will the South Korean government pay for it?

The sad thing is, if one takes the German experience as at least somewhat comparable, that people are vastly underestimating how poorly off North Korea really is, and overestimating just how willing the South Koreans will be to pay for bringing North Korea into the 1970s (with the major exception of a cell phone network being easier than a 1970s telephone network), much less for bringing them up to date.

And the Germans already have a word for what the South Koreans will likely be blessed with for a couple of generations - Soli https://en.wikipedia.org/wiki/Taxation_in_Germany#Solidarity_surcharge

As usual, you have no point. Why would Germans be willing to help their poor German relations while Koreans wouldn't?

Also, you do know about diminishing returns, right? The first doubling of NK income would alleviate more suffering than the next doubling. Low-hanging fruit.

His point, right or wrong, is that Western Germans understimated the effort they would have to do to raise the economic level of a country much richer than North Korea is today. Maybe they wouldn't have done so if they knew what they were getting into. Anyway, the point is, warm feelings today won't necessarily survive contact with economic reality.

But the German story is a success story. Paying higher taxes is never fun, but I suspect Germans are less upset about helping out the former East Germany than supporting a million refugees. Perhaps I'm wrong and prior can correct me.

"but I suspect Germans are less upset about helping out the former East Germany than supporting a million refugees."
It says little about how much they would have commited to absorving Eastern Germany if they fully knew what that meant. It says little about how frustrated South Koreans will get if the North Korea proves to be a bigger burden than thought before. But the main point is, unification will be tougher than in Germany and probably tougher than we think. South Korea can go through it, as it went through worse, but the German precedent is less encouraging than it seems.

Surely one reason the Germans went through with it was that the Easties themselves—the ordinary people were benefiting and not a cruel cadre of Kims. East Germany’s leaders (morally illegitimate communists put in place by the Soviets) did not stay in power.

I hope a few hanged Kims make it up for the lasting chasm between the two halves of the country.

Somebody seems to have been able to explain the point(s) fairly well, actually.

What I did not discuss is that while the differences between East and West Germans was real, it is nothing compared to the differences between North and South Koreans (based to large extent on how completely cut off normal North Koreans remain from a wider world).

And the bills for rebuilding North Korean are going to dwarf what West Germany has paid in bringing East Germany up to BRD standards.

It will be very interesting to see how it all works out, but if the East German real estate/building boom of the early 90s is any guide, a lot of that gold rush enthusiasm is going to end in tears.

And it really is hard to remember that West Germans thought that East Germany was basically a more or less 1950s version of 1980s West Germany. Instead, it turned out that the communists were much more skilled at hiding the fact that East Germany was more or less at the level of 1930s Germany than building anything to replace it. Literally, in many case - it was a real shock to see that the East German phone network, for example, was basically reliant on 1930s physical infrastructure.

That the Germans were able to re-unify is a good thing, of course. It is merely that even the most pessimistic West German projections from 1989 turned out to be far too optimistic.

And it helped that the East Germans basically overthrew their government before starting the process of re-unification. This current economic speculation is more akin to betting on Willy Brandt's Ostpolitik.

How did China pay for it?

https://www.washingtonpost.com/news/wonk/wp/2015/03/24/how-china-used-more-cement-in-3-years-than-the-u-s-did-in-the-entire-20th-century/?utm_term=.fa15239e1c13

If you have the labor and resources, the money can be created to meet the demands.

Prior has a point about the costs of reunification if North Korea collapses but I expect he misses the other point about the rise in Hyundai Cement's share price.

Hyundai was founded by a peasant from what is now North Korea. Chun Ju-yung came from Tongchon - quite possibly the only famous person to have come from there. All his life he was committed to reunification and going back to build up the other half of his country. He pushed every scheme for better relations with the North. He invested there when he could.

There are those (Cowen?) who seem to believe that Kim can remake himself as North Korea's version of Lee Kuan Yew. That's absurd: Yew never terrorized the people of Singapore. The people in North Korea won't forget Kim's brutal history, and will quickly attempt to displace (i.e., assassinate) him if he loosens his reign of terror. And when threatened, Kim, like all brutal dictators, will strike back, including against the outsiders he will blame for the plot against him, with nuclear weapons or other weapons of mass destruction if he has them.

I'm going to bet that the situation in North Korea is more nuanced and complex than some Florida real estate lawyer thinks.

Ask John Bolton. Do you believe he is going along with the show because it will reduce the risk of war with North Korea? Bolton and I share a more nuanced view. Blessed are the cheesemakers."

Its certainly more complicated than a New York real estate owner in the White House thinks.

One wonders how closely the referenced FT business tracks with the one from Korea regarding Complete, Verifiable, Irreversible Dismantlement by DPRK: http://english.yonhapnews.co.kr/graphic/1002000000.html?cid=GYH20180503002200315

If views on CVID start shifting towards greater doubt does the business view change?

No mention of how much total capital will likely be invested? More fluff reporting, lazy journalism. I've read estimates of how much capital investment is necessary to reach 1/2 of South Korean per capita output, and it's seems likely to be multiple trillions of dollars. How does what's lining up compare to that figure, how fast should we expect convergence? That's what I'd like to know.

Not really sure if anyone in this thread has taken into account the significance of ethnicity/race on the Korean Peninsula, or of Confucian values.
Culture, ethnicity and family often trump economics and politics. They should never be underestimated. Sure, the 'one blood' story has become less important to younger Koreans, but Confucian values still dominate.

Are younger Koreans more Confucian these days?

That's a tough question; so, there's less emphasis on group family decisionmaking, but ideas like 'johwa' (harmony) are still essential in group dynamics outside of the family. Perhaps this is the case as families have become more fractured between rural and urban locations (?). That said, vacation weekends like Korean New Year are still completely family oriented. The commitment to education is still paramount. I have never seen anything like it anywhere in the world. With the possible exception of Singapore (and I haven't spent a great deal of time in China).

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