Category Archives: economics

by | 7 December 2021 · 4:23 am

Opposition to the Shogunate, 1867

From Emperor of Japan: Meiji and His World, 1852–1912, by Donald Keene (Columbia U. Press, 2005), Kindle pp. 112-113:

The most pressing problem facing the shogunate was, of course, its continued existence. Because the mounting opposition to the shogunate is a subject already treated by many historians, suffice it to say here that the alliance between Chōshū and Satsuma, formerly bitter enemies, was the key factor in galvanizing the opposition to the shogunate. The anti-shogunate domains, mainly in west Honshū, Kyūshū, and Shikoku, had become increasingly dissatisfied with the shogunate’s monopoly of the highly lucrative foreign trade. But when discussing their grievances, they normally did not mention this; instead, they spoke of the need to restore imperial rule. A contemporary historian has written, “It needs hardly be said that the internal disturbances at the time of the Restoration were definitely not caused by loyalist convictions. Fundamentally, they resulted from the aspirations of the major domains in the southwest, headed by Satsuma and Chōshū, to be independent of the shogunate.”

Even if these were the real aspirations of Satsuma, Chōshū, and the other domains that ultimately overthrew the shogunate, they needed a rallying cry, and “Restore power to the emperor!” served this purpose. The shogunate under Tokugawa Yoshinobu, especially after its humiliating defeat in the war with Chōshū, took desperate measures to stave off collapse. With France’s help, it rapidly increased its store of modern weapons, and under Yoshinobu’s leadership, many reforms were launched. Senior shogunate statesmen, notably Oguri Tadamasa (1827–1868), attempted to push through plans for making the shogunate into an absolutist regime, believing this was the only way it could ensure its authority over rebellious domains. As early as 1866 Oguri privately discussed the advisability of abolishing the domains and replacing them with prefectures, a measure that eventually was adopted by the Meiji government in 1871, but the shogunate lacked sufficient support to carry out so daring a plan.

The daimyos of the major domains, especially in the west and south, joined forces in alliances. But for all the reverence they professed for the court in Kyōto, their chief concern seems to have been preserving their own power. Initially at least, they seem not to have hoped to substitute the absolute authority of the emperor for the authority of the shogunate, as hardly any of the daimyos or their retainers rose above anxiety over the survival of their particular domains to consider what was desirable for the country as a whole.

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by | 2 December 2021 · 6:40 am

Dutch Urge Japan to Open, 1856

From Emperor of Japan: Meiji and His World, 1852–1912, by Donald Keene (Columbia U. Press, 2005), Kindle p. 30:

Two days after Harris’s arrival in Shimoda [1856], Jan Hendrik Donker Curtius (1813–1879), formerly the chief merchant of the Dutch trading station on Deshima but now the Netherlands government commissioner, sent (by way of the Nagasaki magistrate) a letter to the shogunate in which he urged that the policy of the closed country be abandoned. He predicted that if Japan persisted in this policy, it would lead to war with the major countries of the world. He also called for the old regulations against Christianity to be lifted, deploring in particular, as contrary to good relations with other countries, the use of fumie (images, generally of the Virgin Mary) that the Japanese were obliged to tread on to demonstrate that they were not Christians. He pointed out the advantages to Japan of trade with foreign countries and advised the Japanese to set up a schedule of import duties and encourage the production of wares suitable for export. He suggested also that men from countries with relations with Japan be permitted to bring their wives and children to live with them in the open ports. Finally, Curtius asked that the restrictions on foreign ships be lifted and the laws revised with respect to permission to leave the ports and to travel to Edo.

Twelve years earlier (in 1844) Willem II, the king of Holland, had sent a letter to the shogunate asking that the country be opened to trade. The haughty officials did not deign to respond, but since then the situation had changed dramatically, and the shogunate now felt that it had to give serious consideration to Donker Curtius’s suggestions. At the council meeting, virtually all those present spoke in favor of opening the country speedily. Only Abe Masahiro, worried about the reactions of the various domains and fanatical patriots, said that the time was not yet ripe for such action. No one defended the longstanding tradition of the closed country. The shift in policy had occurred with startling swiftness.

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Filed under economics, Japan, language, military, nationalism, Netherlands, religion, U.S.

by | 1 December 2021 · 6:46 am

Response to Russians at Nagasaki, 1853

From Emperor of Japan: Meiji and His World, 1852–1912, by Donald Keene (Columbia U. Press, 2005), Kindle pp. 20-22:

The court had not yet recovered from the shock of Perry’s unexpected visit when it was informed by the shogunate on September 19 that a Russian fleet of four ships, under the command of Vice Admiral E. V. Putiatin (1803–1884), had entered Nagasaki Harbor. On his arrival, Putiatin announced to the officials in Nagasaki that he had brought from his government a letter concerning trade between the two countries. His orders had initially called for him to proceed to Edo and conduct negotiations there, but the Russian government later decided it would be better to show respect for Japanese law by proceeding to Nagasaki, the port designated for intercourse with foreign countries, in this way establishing a contrast with the Americans, who had brazenly sailed into Edo Bay.

Soon after the arrival of the Russian ships, various Japanese dignitaries came aboard along with a Dutch interpreter. They were informed by the captain of the Pallada that Vice Admiral Putiatin had brought a letter from his government to the Japanese government. There was also a note for the Nagasaki magistrate that, it was said, should be delivered immediately. After some hesitation, the officials accepted the note. It contained a declaration in extremely polite language of the profound respect for Japanese law that had impelled the Russian fleet to call at Nagasaki rather than Edo. This was a mark of the czar’s ardent desire for harmonious relations between the two countries. The officials at once sent word to Edo reporting the arrival of the Russians and asking whether or not to accept the letter from the Russian government. After waiting some time for an reply, Putiatin sailed to Shanghai to pick up supplies and perhaps to find additional orders from his government.  When there was still no answer even after he got back from Shanghai, he announced that he had no choice under the circumstances but to go to Edo.

The alarmed Nagasaki officials sent word by fast messenger to Edo, mentioning how much more accommodating the Russians were than the Americans and suggesting that the Russians might be used to blunt the edge of American demands. They added that if the Russian overtures were met with the usual suspiciousness, Japan risked incurring the enmity of a country that was twice as big as the United States.

Shortly before the messages from Nagasaki reached Edo, the shogun Tokugawa Ieyoshi died, and the senior officers of the shogunate, in mourning and faced with organizing a new regime, did not get around immediately to responding to the problem of how to answer the Russians. After considerable debate, they decided to accept the letter from the Russian court, falling back on the precedent established by accepting the American president’s letter.

The letter (in Russian but with translations into Chinese and Dutch) from Count Karl Robert Nesselrode, the minister of foreign affairs, expressed his hopes for establishing peace and good relations between the two countries, for settling the disputed border between Japan and Russia on the island of Sakhalin, and for opening ports to trade. Most senior members of the shogunate favored accepting the Russian requests, but Tokugawa Nariaki, the shogunate’s adviser on maritime affairs, was strongly opposed, and the discussions dragged on. The shogunate finally agreed that the best course was to delay.

Putiatin grew increasingly impatient over the failure of the shogunate officials to return with an answer from Edo, as promised by the Nagasaki officials, and threatened again to sail to Edo if they did not appear within five days. Four days later, the tardy officials … arrived with the shogunate’s reply to Nesselrode’s letter. First, it said, the establishment of the border was a difficult matter that would require considerable time to determine. Maps would have to be drawn, consultations made with affected parties, and so on. Second, the laws of their ancestors strictly prohibited opening the ports. However, in view of world developments, the government did recognize the necessity of opening the country, but a new shogun had just taken office and the situation was still too confused to give an immediate answer. Reports would have to be submitted to Kyōto and to the various daimyos. After due consideration of the issues, they expected to be able to come up with a proposal in three to five years.

It is apparent from the message’s wording how desperately the shogunate wanted to stall off a decision; but even more important was the admission that despite the long tradition of isolation, the Japanese now had no choice but to open the country. This awareness of the change in world conditions was not communicated to the court, however, because of the anticipated outraged resistance by Emperor Kōmei.

Putiatin was disappointed by the reply. He moved now to the offensive, informing the shogunate’s representatives that with the exception of the southern part of the island of Sakhalin, all the islands north of Etorofu (Iturup) were Russian territory. Tsutsui replied that Japan had possessed Kamchatka as well as (it went without saying) the Kuriles and Sakhalin. He proposed that shogunate officials be dispatched to Sakhalin the following spring to ascertain the situation. In the meantime, the Russians would be free to obtain firewood and water at any place on the Japanese coast except for the vicinity of Edo. He promised also that if Japan made trade concessions to another country, they would apply to Russia as well.

Putiatin was still not satisfied, but he left Nagasaki early in the first month of 1854, saying he would return in the spring. The most influential men in the country were by now aware that the policy of isolation could not last much longer. As early as the seventh month of 1853, as we have seen, Kuroda Nagahiro, the daimyo of Fukuoka, had formally proposed lifting the ban on constructing large ships. In the eighth month, Shimazu Nariakira, the daimyo of Kagoshima, sent a letter urging the shogunate to purchase ships and weapons from Holland. Abe Masahiro (1819–1857), the chief senior councillor (rōjū shuseki) of the shogunate, who had long advocated building ships that (unlike the small fishing boats that operated off the Japanese coast) were capable of making ocean voyages, decided on October 21 to lift a prohibition that had been in effect for more than 220 years. The shogunate ordered several steam warships from the Dutch, and soon several domains started building large ships, intended for the shogunate. In August 1854 the shogunate decided on the flag to be flown on the new ships: a red sun on a white ground.

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by | 17 November 2021 · 3:02 am

Tibetan Wealth in Caterpillar Fungus

From Eat the Buddha: Life and Death in a Tibetan Town, by Barbara Demick (Random House, 2020), Kindle pp. 100-101:

Tibetans also discovered a niche that was almost uniquely their own: collecting medicinal herbs. Herbs were commonly used in both Chinese and Tibetan medicine, and many of the more valuable were found on the Tibetan plateau. Beimu, an alpine lily used to treat coughs, grew at altitudes of more than 10,000 feet, and Tibetan nomads were perfectly situated to collect it.

Most lucrative was Cordyceps sinensis, a prized ingredient in traditional medicine, believed to boost immunity, stamina, and lung and kidney function. Tibetans call it yartsa gunbu, meaning “summer grass, winter worm,” or simply bu, “worm,” for short. [In Chinese, it’s 冬虫夏草 dōng chóng xià cao ‘winter worm, summer grass’.] The worm is actually a fungus that feeds on the larvae of caterpillars. In the past, the worm was commonplace enough that Tibetans would feed it to a sluggish horse or yak, but the Chinese developed a hankering for it that sent prices soaring. Chinese coaches with gold-medal ambitions would feed it to athletes; aging businessmen would eat it to enhance their sexual potency. At one point, the best-quality caterpillar fungus was worth nearly the price of gold, as much as $900 an ounce.

Tibetans had a natural monopoly on the caterpillar fungus. Non-Tibetans didn’t have the local knowledge or the lung capacity to compete. The best worm was in Golok, northwest of Ngaba. Nomadic families would bring their children with them, sometimes taking them out of school because their sharp eyesight and short stature allowed them to more easily scan the ground for the worm amid the grasses and weeds. The season ran for approximately forty days of early spring, the time when the melting snow turned the still-brown hills into a spongy carpet. The families would camp out for weeks in the mountains. In a good season, a Tibetan family could make more in this period than a Chinese factory worker could earn in a year.

The Communist Party would later brag about how their policies had boosted the Tibetan economy, but the truth was that nothing contributed as much as the caterpillar fungus, which according to one scholar accounted for as much as 40 percent of Tibetans’ cash earnings. Unlike earnings from mining and forestry, industries that came to be dominated by Chinese companies, this was cash that went directly into the pockets of Tibetans. The nomads acquired the spending power to support the new shops and cafés. The golden worm was part of a cycle of rising prosperity.

Until the 1980s, trade between the Tibetan plateau and southern China had gone only in one direction. Tibetans were eager customers for the newfangled electronics and ready-to-wear clothing stamped out by China’s new factories, but Han Chinese didn’t have much taste for Tibetan products like dairy and lamb. The medicinal herbs gave the itinerant traders something to put in their suitcases when they went on shopping trips to Shenzhen and other southern Chinese cities.

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by | 15 November 2021 · 2:17 am

Tibetans Take the Great Leap Forward

From Eat the Buddha: Life and Death in a Tibetan Town, by Barbara Demick (Random House, 2020), Kindle pp. 43-45:

The Communist Party had identified feudalism and imperialism as the greatest evils of society. Their dilemma was how to destroy feudalism without becoming imperialists themselves; they couldn’t simply force “reforms” on the Tibetans. In order to live up to their own lofty propaganda, they needed the Tibetans to carry out reforms voluntarily, joyfully. To convince them, they dispatched young Chinese recruits, some of them still in high school, to spread the word. These young Chinese cadres lectured about the corruption of the aristocracy and the monasteries, which also had large holdings of land. Delek remembers their speeches.

“You will be your own master,” the Chinese promised poorer Tibetans. “We will topple the feudal landlords.”

“Nobody will be able to exploit you anymore.”

“Religion is superstition. You are worshipping demons.”

The mass uprising never materialized. But the pitch did appeal to those Tibetans who hoped the redistribution of wealth would improve their lot in life. Tibetans who joined forces with the Communist Party were known as jiji fenzi, which loosely translates from Chinese as “activists.” The Tibetan term was hurtsonchen—the lowest level of enforcers, the collaborators who squealed on and beat up neighbors who resisted Communist rule. As a reward, hurtsonchen were allowed to loot clothing, shoes, and household goods from their wealthier countrymen. But anything of real value went to the Party-controlled communes, which turned out to be far greedier than the worst of the feudal landlords. Tibetans of this generation refer to this period simply as ngabgay—’58. Like 9/11, it is shorthand for a catastrophe so overwhelming that words cannot express it, only the number. But there are some evocative figures of speech. Some will call it dhulok, a word that roughly translates as the “collapse of time,” or, hauntingly, “when the sky and earth changed places.”

The “Democratic Reforms” in eastern Tibet roughly coincided with the Great Leap Forward, Mao’s misguided experiment in jump-starting the Chinese economy. Like so many catastrophes, it was the result of ambition run amok. Mao was a utopian who hoped to create not just a new society, but new, improved human beings. He believed that people could transcend their individual desires for the greater good and through collective enterprise boost their living standards and the country’s output. This was to be accomplished by herding 700 million people into cooperative farms.

Even to a child as young as Delek, it was obvious that Mao’s reforms were doomed to failure. The Chinese cadres in charge of the Tibetans had no experience with herding and even less with farming at high altitudes. Most of the Chinese troops came from lower-lying regions; they didn’t realize that barley was the only grain that thrived in the plateau and that the higher altitudes couldn’t support crops at all and were better used for grazing. Giddy from Mao’s exhortations, they denied the expertise of the people who had lived off the land for generations, insisting that the Tibetans were backward. “As the Han are the bulwark of the revolution…any thinking against learning from the Han nationality and welcoming the help given by the Han nationality is completely wrong,” expounded one propagandist at the time. The nomads were made to hand over animals to the collectives that didn’t know how to keep them alive, and to farm land that would never produce crops.

The result was years of failed harvests and dead animals. Grasslands where the crops failed were now stripped bare of vegetation, exposed to the winds that swirled through the plateau spewing dust into the air. The Communist cadres didn’t understand that the Tibetan way of sustenance required both nomads and farmers; in order to obtain enough nutrition, people needed to swap their animal products for grains, and that required markets. Now the markets were closed. Buying or selling grain was forbidden. Internal travel restrictions were imposed so people could no longer barter goods with other villages. When Delek’s mother returned from Lhasa, she would saddle up a horse in the dead of night to visit a cousin in another village with whom she could trade some butter for barley to prevent her family from starving. She only dared make the trip a few times a year.

Unlike Han Chinese, Tibetans had little experience with famine—the exception being the Long March interlude of 1935 and 1936 when the Red Army decimated their food supply. In the past, Tibetans were poor, often poorly nourished because of the scarcity of fresh fruit and vegetables, but they rarely went hungry.

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by | 8 November 2021 · 5:15 pm

Amur River Boom and Bust

From The Amur River: Between Russia and China, by Colin Thubron (Harper, 2021), Kindle pp. 265-268:

The enormous silence of the river, its shrinking human populace and its virgin forest, give the illusion of return to some primeval Arcadia, of recoil from a stricken present. But to its inhabitants it means desolation. For almost four centuries the Amur has been the stuff of dreams, but also of promise forever delayed. In the mid-nineteenth century, especially, there arose in Russia a grand and delusive exhilaration. Just as in the seventeenth century the Cossacks were lured south by rumours of a Daurian river valley spread with wheat and sable-filled forests, even silver and precious stones, so the accession of the initially liberal Czar Alexander II, in an empire that had been stagnating for thirty years, released a groundswell of intoxicating hope. Momentarily Russia turned her back on Europe, with its old humiliations, and found a visionary future in Siberia’s east.

Suddenly the immense but little-known Amur loomed into brilliant focus. Here would be Russia’s artery to the Pacific, a titanic waterway flowing, as if by providence, from the belly of Siberia into an ocean of infinite promise. The trading concessions wrenched from China by the British and French, the prising open of Japan, and above all the arrival of a young and vigorous America on the opposite coast, would surely transform the Pacific into an arena of world commerce. Russians had watched the American advance westward with awe. It seemed to mirror their own headlong drive across Siberia to the same ocean, and now the two countries might flourish together in a shared oceanic commonwealth. There was even heady talk, in Siberia, of a political alliance.

With Muraviev-Amursky’s seizure of the Amur from a helpless China in 1858, the vision of an eastern destiny became euphoria. The Amur, it was declared, would become Russia’s Mississippi, and Muraviev was hailed, without irony, as ‘one courageous, enterprising Yankee’. Such dreams climaxed in the energies of the American entrepreneur Perry McDonough Collins, quaintly named his country’s ‘commercial agent’ on the Amur. ‘Upon this generous river shall float navies, richer and more powerful than those of Tarshish,’ he announced, and at its mouth ‘shall rise a vast city, wherein shall congregate the merchant princes of the earth’.

Even before Muraviev’s land grab, St Petersburg was rife with reports of foreign merchant ships making for the Amur. Soon a lighthouse at De Castries was raised to guide them. A fleet of steamboats began plying the once-quiet waters. The lower river valley was declared a free trade zone. And the fulcrum of these hopes was the newly founded port of Nikolaevsk at the Amur’s mouth, which Alexander and I were approaching on the lonely Meteor. For a few years German and American trading firms went up here, housed in stout log cabins with iron and zinc roofs. A library of over four thousand books was assembled, with recent Paris and St Petersburg newspapers, happily uncensored. The officers’ club flaunted a dining hall and ballroom. Life was reported delightful. The Nikolaevsk stores were selling Havana cigars, French pâté and cognac, port and fine Japanese and Chinese furniture. Susceptible minds twinned the town with San Francisco. And Perry Collins, of course, went further, looking forward to the day when St Petersburg itself would be replicated on the Amur.

Then, within a decade, harsh realities broke in. Far from being a riverine highway, the Amur was revealed as a labyrinth of shoals, shallows and dead ends, and for seven months of the year was sealed in ice or adrift with dangerous floes. Even cargo boats of low draught might not reach Khabarovsk, let alone Sretensk. And the river mouth offered no simple access. The straits between the mainland and the obstructing island of Sakhalin made for hazardous steering, especially from the tempestuous Okhotsk Sea. Ships sank even in the estuary. As for the Amur shores, for hundreds of miles they were peopled only by a sprinkling of Cossacks, natives and subsistence farmers, many forcibly settled on poor land, and open to the floods that still ravage it. For its inhabitants, this became a cursed river: not the ‘Little Father’ of Russia’s affection, wrote a dismayed naturalist, but her ‘sickly child’. The structures of commerce that worked elsewhere – the trading houses, the shipping agents, the free zones – had been imposed upon an indifferent wilderness. In the simple, brutal realization of those most disillusioned, there was nobody to trade with and nothing to trade. Within a few years the agents and flotillas were gone, transferring first to De Castries and then to the ice-free harbour of Vladivostok.

As for Nikolaevsk, even Collins had expressed misgivings. Its waterside was so shallow that ships had to drop anchor half a mile offshore, and their cargo was transported by lighters to a swampy coast. In winter the town was blasted by Arctic blizzards and lay sometimes six feet deep in snow. Even the reports of foreign commerce were exposed as delusion. The shipping had never been significant. Within a few years Nikolaevsk became a byword for boredom, immorality and petty scandals. In its celebrated officers’ club, remarked a worldly sea captain, the newspapers were few and several months old; it compared poorly to a low German beer house. The great explorer Nikolai Przhevalsky equated the whole place with Dante’s hell.

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by | 27 October 2021 · 6:29 am

Caught Between Russia and China

From The Amur River: Between Russia and China, by Colin Thubron (Harper, 2021), Kindle pp. 26-27:

Into Soviet times this ritual of homecoming quietly continued, a lifeline more profound than simple nationhood. Then the 1930s Terror brought a bewildering dislocation in which the Buryat identity became itself a crime, and people burned or hid their genealogies, erasing their own past in a severance that is even now unhealed. ‘We lost our inheritance.’ He is talking in a sombre monotone. For him, his people’s authenticity springs from the steppelands. ‘But our nomad children go to boarding schools now, where they learn Russian or Chinese curricula. Soon they no longer remember how they enjoyed riding a horse or milking a cow. They probably don’t even know what a cow is.’

I stare at him, at his formal suit and tie, and wonder how many urban dwellers feel their true homeland to be a remote campsite where the earth throbs under them. Yet his grandfather was not a herdsman, he says, but a talented journalist. He was the wrong class from the start.

‘One evening, in 1941, he thought he was among friends and said he hoped Hitler would win the war so that the Reds would stop oppressing Mongolia. That night the KGB took him away. He vanished into the Gulag. In those days Germany was closing in on one side, Japan on the other. No one felt safe. My grandfather returned only with the death of Stalin in 1953. He died three months later, peacefully, at home, as if this was what he’d been waiting for.’

‘Does your father remember him?’

‘My father never spoke of it. I grew up in ignorance. Then came the fall of the Berlin Wall, and Gorbachev’s perestroika, but that all seemed far away to us, not like with you. But we had our own revolution and in 1991 our archives were opened. Then I was able to read my grandfather’s interrogation. And suddenly all that had happened struck home. We were very Sovietized, you know, very brainwashed. And when I read, I broke down and wept.’

In this time of resurgent nationalism people’s anger found its target not in Choibalsan – long promoted as a patriot hero – but in the distant abstraction of Stalin.

‘Yes, some of us hate Stalin. But we don’t mind the Russians, you know. We quite like them.’ He suddenly frowns. ‘I don’t quite understand this either, after everything they did. Perhaps it’s because they brought us culture, European culture. They gave us medicine and education. We started from very low down, you see, started from almost nowhere. A century ago we were at the mercy of the Chinese, and they robbed us . . .’

This still astonishes me. The Russians crushed the Mongolians’ native culture, devastated their monasteries and almost liquidated their elite. Yet it is the Chinese, dominant in the country for three centuries until 1921, who are regarded with visceral loathing and distrust. Their instruments of torture are lavishly displayed in the state museum, beside the account books of their avaricious traders. And it is the merciless usury of Chinese merchants that has endured in people’s imagination. Half the country was said to be in their debt. There are Mongolians even now who believe themselves haunted by long-dead Chinese, warning them away from buried treasure. Neither lamas nor shamans had been able to exorcize them.

Soviet propaganda may have prolonged this old antipathy; but it was the avalanche of Chinese immigration early in the last century that turned the country to violence and at last into the arms of Russia.

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by | 14 October 2021 · 5:36 am

North Korea’s Masters of Money

From The Great Successor: The Divinely Perfect Destiny of Brilliant Comrade Kim Jong Un, by Anna Fifield (PublicAffairs, 2019), Kindle pp. 147-148:

Private property ownership is still technically illegal in North Korea, but that hasn’t stopped the emergence of a vibrant housing market. Sometimes people lease out the right to live in the apartments assigned to them by the state; at other times, masters of money sell the apartments they’ve been allocated in these new developments for substantial profits.

As a result, real estate prices have soared, with prices in Pyongyang increasing as much as tenfold. A decent two- or three-bedroom apartment in the capital costs up to $80,000, but a luxury three-bedroom apartment in a sought-after complex in central Pyongyang can fetch $180,000. It is an unimaginable sum in a country where the official government salary remains at about $4 a month.

Another reason for the real estate boom is the almost complete lack of a banking system. The masters of money can’t stash their cash in an interest-bearing account or investment fund, so they channel it into bricks and mortar.

Ri Jong Ho’s entrepreneurial good fortune began in the mid-’80s, when he began working for Office 39. By earning money for Kim Jong Il’s slush fund, he was enabling the Dear Leader to buy all that cognac and sushi. That made Ri an important person to the regime, and he lived a good life as a result.

His last job was in the Chinese port city of Dalian, not far from the border with North Korea, where he was the head of a branch of Taehung, a North Korean trading company involved in shipping, coal and seafood exports, and oil imports. He had previously been president of a ship-trading company and chairman of Korea Kumgang Group, a company that formed a venture with Sam Pa, a [notorious] Chinese businessman, to start a taxi company in Pyongyang. Ri showed me a photo of him and Pa onboard a private jet to Pyongyang.

As head of the Dalian branch of the Taehung export business, Ri would send millions of dollars in profits—denominated in American dollars or Chinese yuan—to Pyongyang. In the first nine months of 2014, until his defection in October that year, Ri said he sent the equivalent of about $10 million to the regime. Despite all the sanctions, the US dollar is still the preferred currency for North Korean businessmen since it is easiest to convert and spend.

It didn’t matter that there were supposedly stringent international sanctions in place. Ri’s underlings simply handed a bag of cash to the captain of a ship leaving from Dalian to the North Korean port of Nampho or gave it to someone to take on the train across the border.

But Uncle Jang’s downfall at the end of 2013 spooked many masters of money, including Ri. He and his family escaped from Dalian to South Korea and then eventually to the United States.

He clearly made a tidy sum of money for himself on the sidelines of his official job. The family lived a comfortable life in the Virginia suburbs. But even in the United States, Ri was cagey about meeting me and careful about what he said. “There are so many other stories, but I can’t tell you all them. Do you understand?”

He gives occasional public speeches about the North Korean regime—and much more private advice to the American government—while his children work on their English and study to go to an American university. They want Ivy League or, failing that, Georgetown.

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by | 12 October 2021 · 8:24 am

North Korea’s Caste System

From The Great Successor: The Divinely Perfect Destiny of Brilliant Comrade Kim Jong Un, by Anna Fifield (PublicAffairs, 2019), Kindle pp. 120-123:

Why, then, if so many North Koreans know about the outside world, and know that the regime is lying to them, has the system survived? The answer lies in the unparalleled brutality of the regime, which has no compunction in meting out severe punishments for the smallest hint of disaffection.

To enforce the lie that he’s the best man for the job, Kim Jong Un has perpetuated North Korea’s political caste system with zeal, rewarding those deemed most loyal to him and ruthlessly punishing those who dare question him.

This caste system is another legacy of his grandfather. When he was creating his ideal state, Kim Il Sung borrowed some of the feudal practices of the Chosun Dynasty, which had ruled Korea for five centuries until almost 1900. He adopted the Chosun-era system of guilt by association. It is this system that, even now, can lead to three generations of an entire family being imprisoned, sometimes for life, for one person’s wrongdoing.

He also stole the discriminatory class system called songbun from the Chosun era, dividing North Korea into fifty-one different categories that fall into three broad classes: loyal, wavering, and hostile.

To this day, in Kim Jong Un’s North Korea, the loyal are given every advantage. They are the 10 to 15 percent of the population who are considered the most politically committed to the system and have the most interest in it continuing. They get to live in Pyongyang and receive better schooling, including the possibility of attending Kim II Sung University. They are set up for plum jobs and have a head start on Workers’ Party membership. The loyal caste live in better apartments, wear better clothes, eat better and more food, and are more likely to be able to visit a doctor who actually has medicine.

At the bottom are the hostiles: the Japanese collaborators, the Christians, the skeptics. They comprise about 40 percent of the population and are generally banished to the inhospitable mountains of the north, where winters are unbearable and food is scarce even by North Korean standards.

These “undesirables” have no social mobility and no hope of advancement. Their lives revolve around a collective farm or factory—an assignment that, for the last few decades, has meant fending for themselves.

In between the loyal and the hostile is the wavering class, the ordinary people who make up about half the North Korean population. They exist in a kind of limbo. They have no chance of going to college or having a professional job, but if they’re lucky, they might secure a good assignment during their military service that will help them work their way to a slightly better standard of living.

Someone born with bad songbun has no hope of moving up the social hierarchy. The upper levels, however, can plummet all the way to the bottom if they put a foot wrong. Through this system, and the constant threat of being demoted down the classes, Kim Jong Un has been able to maintain power.

If you’re a member of the loyal class—living in Pyongyang and able to earn some money on the side of your ministry job to send your children to university—you would think twice before openly questioning whether the leader could really drive a car at age five or criticizing the decision to spend millions on nuclear weapons instead of on hospitals and schools. There is always someone to keep an eye on you and report if you’re not sufficiently devoted to the regime. At the grassroots level, it starts with the inminban, literally “people’s group,” a kind of neighborhood watch system. Each neighborhood is broken down into groups of thirty or forty households, with a leader who is always an interfering middle-aged woman. It is her job to keep an eye on what people in her assigned households are up to. North Koreans like to say that the leader of their neighborhood group is supposed to know how many chopsticks and how many spoons each house has.

She is responsible for registering overnight visitors—in North Korea, a person can’t stay at a friend or relative’s house without notifying the authorities—and often, together with the local police, conducts dead-of-night raids to ensure there are no forbidden guests or that residents like Man-bok or Jung-a are not watching South Korean movies. She inspects everyone’s state-issued radio to make sure they haven’t tuned it to anything other than the state station. She checks cell phones to make sure they don’t contain unauthorized music or photos from the outside world.

She also encourages neighbors to report on one another. If a family is thought to be eating white rice and meat suspiciously often, people might wonder how they’re making their money.

…

North Koreans live in a system where every aspect of their lives is monitored, where every infraction is recorded, where the smallest deviation from the system will result in punishment. It is ubiquitous, and it keeps many people from even raising an eyebrow at the regime. The neighborhood leader needs to report transgressions in order to stay in good stead with the higher authorities, especially the two main security agencies.

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by | 11 October 2021 · 5:25 pm

North Korea’s Market Economy

From The Great Successor: The Divinely Perfect Destiny of Brilliant Comrade Kim Jong Un, by Anna Fifield (PublicAffairs, 2019), Kindle pp. 100-101:

Chinese-style reform and opening—allowing information to flow in at the same time as loosening up on the economic controls—was not an option for Kim. Allowing the population to have access to the truth would mean they would also see that the Great Successor was, in fact, not so great. But small economic “improvements”—North Korea doesn’t call them “reforms” because that implies there’s something wrong with the system—pose relatively little risk.

Instead, he allowed the markets, called “jangmadang,” to blossom.

From the smallest of towns to the biggest of cities, there’s at least one bustling marketplace. Across the country, these markets have become the center of daily life. They are overwhelmingly run by women, who, once married, are no longer required to work in state jobs. So while their husbands go off to coal mines without electricity or hospitals without medicine, the women make proper money.

People with permission—or with enough money to buy permission—to travel to China cross the Tumen River and bring back rice cookers, high-heeled shoes, solar panels, deworming tablets, colorful shirts, cell phone cases, and screwdrivers. Sometimes they bring literal kitchen sinks. About 80 percent of the products in North Korea’s markets are made in China.

Those who can’t travel set up shop as hairdressers or bike repairers, open restaurants, or sell homemade sweets. Some entrepreneurial types make money by renting out their cell phones for calls to South Korea or their apartments to couples wanting some privacy.

These markets have become the biggest agent for change that North Korea has ever experienced. People across the country have seen their living standards improve—just as Kim Jong Un promised. Maybe things didn’t improve as much as many citizens, such as Mr. Hong, wanted, but they’re still heading in a positive direction. There is now a middle class in North Korea.

There are now more than four hundred government-approved markets in North Korea, double the number that existed when Kim Jong Un took over the country. The city of Chongjin alone has about twenty. The markets in Sinuiju and the “smugglers’ village” of Hyesan, both close to the border with China, as well as those in the port city of Haeju, have all grown rapidly and visibly in recent years. Satellite images show new markets popping up all over North Korea and old markets moving into bigger, newer buildings.

With an average of fifteen hundred stalls in a market, there is stiff competition to secure a prime spot. A good stall in a prominent place in Hyesan was going for about $700 in 2015—an astronomical sum in North Korea. But there is so much demand for stalls that even these expensive slots are being snapped up as soon as they become available.

At every turn, there is someone seeking to make money from the markets. The security services extract bribes from those seeking to cross the river into China. The supposedly communist authorities have embraced the decidedly capitalist concept of tax. People running stalls in the markets must now pay 10 percent of the value of their sales to the market management office. South Korean researchers estimate that the authorities rake in about $15 million a day in stall rental fees from merchants, while other estimates suggest the state can earn almost a quarter of a million dollars in a single day by levying taxes on stall owners.

Each market is run by a manager, someone who is almost always a man and who is well connected with local bureaucrats. This is a powerful role that comes with the opportunity to make a lot of money—and, of course, an obligation to pay kickbacks to higher-ups who put them in the job.

As the state economy has failed, with industry grinding to a halt thanks to a lack of electricity or raw goods, the markets have become the lifeblood of North Korea.

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