Wednesday, December 21, 2011

More on Dismal Legacy of Communism in N. Korea

The chart above shows another comparison of the economies of North and South Korea, based on data from Angus Maddison.  Between 1950 and the early 1970s, real GDP per capita in South Korea was exactly the same as in North Korea.  As South Korea implemented market reforms, its economy and output per person started consistently rising while economic conditions to the north stagnated.  After forty years of market-based growth, real GDP per capita is now about 17.5 time higher in South Korea compared to its northern neighbor. 

24 Comments:

At 12/21/2011 11:42 AM, Blogger Benjamin said...

South Korea is much, much larger than N Korea in GDP and population.

Why do we keep US troops there? Surely, the advanced state of S Korea can defend itself.

No federal agency or outlay ever truly dies. We still subsidize farmers and rural telephones.

 
At 12/21/2011 12:15 PM, Blogger Hydra said...

What does that Chart look like if you include China?

Or China and Cuba?

 
At 12/21/2011 12:28 PM, Blogger Che is dead said...

We were curious if he's correct that South Korea does not reimburse the U.S. for those troops.

First, we should note that the number of U.S. service members is dwarfed by the more than 500,000 South Korean service members on active duty, plus many more South Korean reserve troops.

"The South Koreans defend themselves," said Allan R. Millett, a historian and director of the Eisenhower Center for American Studies at the National World War II Museum in New Orleans. "We do the high-tech things so they can have more shooters."

But do they pay for the U.S. help?

Indeed, they do. South Korea has regularly signed agreements spelling out its "burden sharing" responsibility for U.S. troops. The current agreement, which was signed by representatives of the two governments in January 2009, covers the five-year period between 2009 and 2013.

The financial burden South Korea must shoulder, converted into dollars, is about $694 million. That amount will rise for each of the succeeding four years at an amount pegged to inflation. The prior agreement covered 2007 and 2008, with payments totaling $664 million and $678 million in 2007 and 2008, respectively.

The payments by South Korea fall into several sub-categories. Labor cost sharing, paid in cash, accounts for about 41 percent of the total. Logistics cost sharing, which is paid in kind, accounts for about 18 percent. And construction programs, which are a combination of cash and in-kind payments, account for the remaining 41 percent of the costs.

Trump’s statement that South Korea doesn’t "pay us" is a sweeping statement that suggests they get U.S. protection for free. But in fact, they are paying the U.S. hundreds of millions of dollars a year.

-- Politifact

 
At 12/21/2011 12:42 PM, Blogger Methinks said...

I'm always suspicious of GDP numbers for communist countries.

For instance, China's GDP includes the construction of ghost cities. The USSR's GDP included mostly military spending and production of completely useless products (where the value of the inputs exceeded the value of the output and output was generally unusable).

Ghost cities and the production of ball bearings the size of human head (to meet quotas) all increase GDP without making any of the inhabitants of the country better off.

So, when we compare NK's GDP to SK's GDP, are we really comparing apples to apples? Are the citizens of the land of Il really as well off as $1,112/capita?

I doubt it.

 
At 12/21/2011 12:43 PM, Blogger Methinks said...

As well off as $1,112 per capita would imply, that should read.

 
At 12/21/2011 1:16 PM, Blogger Benjamin said...

"The financial burden South Korea must shoulder, converted into dollars, is about $694 million (annually)."

Since it costs the US taxpayers, working through the overhead-heavy and grifter-ridden Pentagon, about $1 million a year to put a solider anywhere, I guess the S. Koreans are paying for about 694 soldiers.

Seems like we should concentrate on protecting US borders, and get US troops the hell out of Asia.

Too expensive, and we need to balance the federal budget and stop financially raping productive US businesses and taxpayers.

Heaping taxes on productive citizens to finance military boondoggles and utopian visions is a great way to wreck an economy

 
At 12/21/2011 1:20 PM, Blogger Benjamin said...

"California leads in job growth: The state had 233,000 more workers on payrolls in November than for the same time a year earlier. Texas was second in growth."

Hmmm. The Perry record gets beaten by Moonbeam Brown? And Perry's jobs were largely in government. CA has been cutting public payrolls.

Next, let's eliminate all public pensions, from city, to state to federal, civilian and military!

 
At 12/21/2011 1:55 PM, Blogger Marko said...

Things should really be ideal in North Korea, shouldn't they? The government controls everything, so they don't have to worry about all the things that ruin the U.S. ecomony - speculators, greedy capitalists, crony capitalists, tea partiers, evangelical Christians, the military industrial complex, influence peddling, lobbyists, deregulation, tax cuts, overspending by Bush, etc. There must be something wrong the numbers, or somehow the west is undermining their wonderful system . . .

 
At 12/21/2011 2:03 PM, Blogger Gene Hayward said...

GDP numbers do not count the "informal" economy (see Hernando de Soto). An argument can/could be made the N. Koreans (or any other poor country), in terms of standard of living and/or subsistence, are better off then the GDP figure would suggest. However, I am not going to go out on a limb and actually say that... :)

 
At 12/21/2011 2:03 PM, Blogger NormanB said...

Wonder what the plot will be for Venezuela and is for the Middle East.

 
At 12/21/2011 2:10 PM, Blogger Hydra said...

The US GDP includes waste, too.

 
At 12/21/2011 2:36 PM, Blogger Methinks said...

Gene, that's possible. But, an informal economy requires people to be able to carve out a little space to maneuver. I'm not sure that's happening in NK. It's a fairly small country with an enormous amount of brutal, top-down control. It's harder to believe that the informal economy is large enough to make those numbers better than they appear.

My father-in-law was, until recently, a doctor with the WHO. He visited NK on official business. There was a lot of building of roads (on which few cars travel) and statues and the like. The hospitals were very poorly equipped and the nurses and doctors where very proud of their garden - which grew cotton for use in the hospital. They also made other things, like their own tongue depressors and other common items. Catheters, syringes and the like were re-used (just as in the USSR).

And how well can the informal economy be doing if the country is periodically subject to famines?

It's not impossible that the informal economy could raise the GDP number above the official number, but it's more difficult to believe that about NK than about Egypt or even the USSR.

 
At 12/21/2011 2:37 PM, Blogger Methinks said...

The US GDP includes waste, too.


Yes, Hydra. GDP is a pretty poor measure of the health of an economy and the welfare of the people.

 
At 12/21/2011 3:22 PM, Blogger juandos said...

psedudo benny again showing us his tenuous grip on reality: "Since it costs the US taxpayers, working through the overhead-heavy and grifter-ridden Pentagon, about $1 million a year to put a solider anywhere, I guess the S. Koreans are paying for about 694 soldier"...

Quite an imagination you have there psedudo benny trying to equate Afghanistan with S. Korea...

 
At 12/21/2011 3:49 PM, Blogger juandos said...

pseudo benny parroting Mary Ann Milborn says: "California leads in job growth: The state had 233,000 more workers on payrolls in November than for the same time a year earlier. Texas was second in growth"...

Meanwhile the Gallup Polling outfit has a different story it seems...

So which outfit is correct in its call?

 
At 12/21/2011 3:58 PM, Blogger Mike said...

Benjamin,
If you're going to bring up something completely off-topic, it should probably make sense to someone about something.

Cal #1 in job growth, TX #2? Based on whole numbers? Really? C'mon.

1. California has 12 million more people than Texas.
2. Cal has a MUCH higher unemployment rate.
3. Cal produced 7 thousand more jobs than Texas (y to y).

With room for growth and percentage of jobs to population, it looks like Moonbeam isn't kicking anyone's ass.

 
At 12/21/2011 4:12 PM, Blogger Mike said...

Benjamin,
If you're going to bring up something completely off-topic, it should probably make sense to someone about something.

Cal #1 in job growth, TX #2? Based on whole numbers? Really? C'mon.

1. California has 12 million more people than Texas.
2. Cal has a MUCH higher unemployment rate.
3. Cal produced 7 thousand more jobs than Texas (y to y).

With room for growth and percentage of jobs to population, it looks like Moonbeam isn't kicking anyone's ass.

 
At 12/21/2011 4:37 PM, Blogger bix1951 said...

The American Dream...a little piece of land, where you can have a little garden, your own little piece of the earth
what is that worth?

 
At 12/21/2011 5:19 PM, Blogger Mike said...

Bix,
That varies based on market.
Here ya go...http://www.realtor.com

 
At 12/21/2011 6:45 PM, Blogger Michael Hoff said...

Marko,

I think the reason why things aren't ideal in North Korea is that they don't have America's unbelievably intelligent leftists running it. If our phenomenally brilliant leftists were given Kim's power, then it would be utopia. Because they're so smart. And they can do everything better than hopelessly average people can do it.

 
At 12/21/2011 6:52 PM, Blogger Marko said...

NK is also an example of how protectionism, taken to the extreme, doesn't work. The NK government routinely blames their shortages on the blockade and lack of trading partners (unless I am confusing Cuba with NK - either way, the argument still works). If the best thing for a country is to make all their own stuff, then NK should have a huge advantage over other countries - they make almost all their own stuff.

So, next time someone says we need to stop buying stuff from other countries, you can say "oh you mean like in North Korea and Cuba? That works great!"

 
At 12/21/2011 7:20 PM, Blogger Manuel Álvarez said...

More about North Korea.

 
At 12/21/2011 8:35 PM, Blogger T J Sawyer said...

In 1950, at the beginning of the Korean War, the North was the industrial center of the country, the south was agricultural.

"Seoul - – the largest city in the world without underground sewage. The smell of Seoul even in good times used to sicken Westerners when their ship entered Inch’on Harbor."

From The Korean War, by Donald Knox. A compilation of oral histories worth reading. Warning for the squeamish - nothing held back and not at all politically correct.

I guess our efforts there made a difference.

 
At 2/27/2012 1:43 AM, Blogger Carlos said...

Cuba gets a lot of help from Venezuela and China is not comunist on what respects to economy. It has become in a developmental state with a strong state that fuel the private expansion,is like the fusion between comunism and capitalism, the creature that results of that is a mixed economy the best system, this system has raised the economy of the other asian tigers, Germany, Escandinavia, Austria and Japan.

 

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