Archive for December, 2004

North Korea Time Warp

Tuesday, December 14th, 2004

My impression is that North Korea as the ultimate Stalinist freakshow really only entered western consciousness in the last few years as the Kim Jong-Il regime acquired nuclear weapons and long range missiles. Well known emblems of the freakish regime range from mass tragedy (famine), brutality (escapees strung together with a wire through their noses), to monumental failures and the amazing (a human video billboard). My personal favorite is a full page color ad placed in the New York Review of Books a few years ago for a book exalting Kim Jong-Il as the greatest human to walk the earth and then some (perhaps the book was Kim Jong-Il, A Brief History, brief indeed compared to the 2,161 page Complete biography of the Great Leader Kim Il Sung). The layout of the ad was sub-amateur and the hyperbolic language clearly written for a captive audience. I don’t believe I’ve ever seen a more hopeless advertisement in my life.

However, if two recent columns by Andrei Lankov are accurate, western perception may be trailing reality. December 7th’s Cracks in North Korean ‘Stalinism’ and December 14th’s Welcome to capitalism, North Korean comrades paint a picture of a regime that has lost control of the people’s minds and no longer runs the economy. Cheap used VCRs and transistor radios smuggled from China and soap operas broadcast from South Korea have helped, but the largest factor seems to be a total collapse of the state run economy over the last decade, leaving even the ultimate Stalinists bereft of carrots for party members and sticks for everyone else.

Total control of the economy is a rather impossible goal, though mere dictatorial political control should be no problem. However, Lankov argues that the regime’s myths are dissolving …

Perhaps few North Koreans believe that every South Korean family has its own car (even if it really is the case). But there is no doubt that it is dawning on them that the South is not exactly a land of hunger and desperation. This is certain to have political consequences in the not too distant future, since the myth of South Korean poverty has been fundamental to the survival of the North Korean state. Pyongyang has always based its claims for legitimacy on being a better type of Korean government, supposedly delivering the quality of life that would be unavailable in the “exploited” and “impoverished” South. If the North Korean populace learn about South Korean prosperity, then the Pyongyang government is in deep trouble – as the fate of the much more successful East German government demonstrated: the economic gap between North and South Korea is much greater than was once the case in Germany. According to current estimates, the per capita gross national product (GNP) in the South is 10 to 20 times higher than in the North.

… perhaps leading to a collapse not unlike that seen in Lankov’s native Soviet empire, and just as unexpected by most.

There are far more interesting observations in Lankov’s above columns and his Korea Times series on “Another Korea.”

While I have little stomach or interest in the most brutal atrocities of oppressive regimes, I find attempted total economic control perversely interesting. Here’s one illustrative quote from Lankov:

Unlike governments of other communist countries, until the late 1980s the North Korean government did not even allow its farmers to cultivate kitchen gardens – the individual plot was limited to merely 20-30 square meters, hardly enough to grow enough chili pepper. This was done on purpose. In many other communist countries, farmers had bigger plots and made their living from them, ignoring their work obligations to the state-run cooperative farms. Without their own plots, farmers would work more for the state – or so believed the North Korean government. In the utopia constructed by Kim Il-sung, every single man or woman was supposed to work for the state, and was rewarded for his and her efforts with officially approved rations and salaries.

This reminds me of a claim I once heard that tiny personal gardens made a substantial contribution, far out of proportion to space used, to the Soviet table, as gardeners had de facto property interest in production from such gardens, and no other production. If I ever recall and confirm details I may post them here.

[Welcome to capitalism, North Korean comrades link via the Mises Economics Blog.]

Becker-Posner for Perpetual War

Monday, December 6th, 2004

The esteemed Gary Becker and Richard Posner begin their new publishing venture with poor rationalizations of perpetual war for perpetual peace.

Becker‘s very first sentence sounds suspect:

Combating crime mainly relies on deterrence through punishment of criminals who recognize that there is a chance of being apprehended and convicted-the chances are greater for more serious crimes.

Mainly? What of prevention (locks, alarms, guards and the like), social pressure and economic growth? I’m skeptical, but that’s another argument.

Fundamentally Becker argues that because weapons are more powerful and more available, the putative good guys must be less cautious about attacking suspected bad buys. In other words, 9/11 changed everything, a view which I’ve always thought doubly naive. First, proliferation of massive destructive power is inevitable, and anyone who didn’t think of that before 9/11 just wasn’t thinking. Secondly, and more apropos to this argument, it is not at all clear that lashing out at suspected enemies is a cost minimizing strategy in such an environment.

I just love this gem from Posner, which attempts to dismiss cost-benefit analysis of war:

But the appropriateness of thus discounting future costs is less clear when the issue is averting future costs that are largely nonpecuniary and have national or global impact.

Please! Perhaps the discount rate would be different, but it would exist. Time preference is fundamental to economic analysis, which is certainly not limited to financial concerns. Incredibly disingenuous coming from someone who certainly knows better.

But Posner can’t resist cost-benefit analysis anyway and sets up a scenario in which a preventive attack would, supposedly, be cost-justified:

Suppose there is a probability of .5 that the adversary will attack at some future time, when he has completed a military build up, that the attack will, if resisted with only the victim’s current strength, inflict a cost on the victim of 100, so that the expected cost of the attack is 50 (100 x .5), but that the expected cost can be reduced to 20 if the victim incurs additional defense costs of 15. Suppose further that at an additional cost of only 5, the victim can by a preventive strike today eliminate all possibility of the future attack. Since 5 is less than 35 (the sum of injury and defensive costs if the future enemy attack is not prevented), the preventive war is cost-justified.

This strikes me as a highly unrealistic scenario. Governments invariably overestimate the benefits of their actions and understimate the financial cost of war by a factor of ten. Did the overthrow of Saddam Hussein eliminate the threat of terrorists based in or sponsored by Iraq? Hardly. Given the rose-colored glasses worn by government planners, in Posner’s scenario above I’d expect a preventive attack to cost 50 and not change the expected damage from a terrorist attack. 70 is greater than 35, war is not cost-justified.

Posner makes many more assumptions in an alternative history example:

A historical example that illustrates this analysis is the Nazi reoccupation of the Rhineland area of Germany in 1936, an area that had been demilitarized by the Treaty of Versailles. Had France and Great Britain responded to this treaty violation by invading Germany, in all likelihood Hitler would have been overthrown and World War II averted. (It is unlikely that Japan would have attacked the United States and Great Britain in 1941 had it not thought that Germany would be victorious.) The benefits of preventive war would in that instance have greatly exceeded the costs.

Why would Hitler have been overthrown in all likelihood had France and Great Britain invaded? Unless they were dead set on regime change is isn’t hard to imagine Hitler surviving. We don’t have to look back far to see a dictator surviving an invasion and military defeat — Saddam Hussein in 1991.

Would destroying Hitler have averted World War II, and not only the one we know? Who knows what set of events an invasion of the Rhineland may have set off? It could be now seen as a the beginning of a tragedy that led to a communist revolution in Germany, the ascendancy of still-credible fascism and anti-semitism in France and Great Britain, the inevitable Fascist-Communist worldwide conflict, and the U.S. pulled mightly to adopt one or the other, leading to mass slaughter and the extinction of freedom worldwide. Strange things happen. See World War I.

Hindsight is wonderful, eh? Unfortunately there’s no reason to expect it to be 20-20 unless we hold nearly everything constant. Foresight is even harder. We desperately need tools that provide better estimates of the impact of policy than bogus intellectual handwaving and self-serving bureaucratic guesstimation. Conditional futures, which I’ve mentioned here and here may be one such tool. I don’t think conditional futures is quite the term of art, but see Robin Hanson’s page on policy markets for a good explanation and his pages on the Policy Analysis Market and idea futures for far more in depth treatment.