Category Archives: economics

by | 24 December 2016 · 8:32 am

Britain on the Eve of Thatcher, 1970s

From Strange Rebels: 1979 and the Birth of the 21st Century, by Christian Caryl (Basic Books, 2014), Kindle Loc. 360-398:

The postwar consensus endured because it worked—at least for the first few decades. The British economy grew steadily through the 1950s and 1960s, widely spreading the benefits of expanding national wealth. But by the 1970s, the bloom was off. Rising global competition had revealed the structural rigidities of Britain’s social-democratic system. The oil shock hit at a moment when traditional British manufacturing industries were already affected by painful decline. Once-proud working-class cities had turned into landscapes of blight, factory ruins defaced with graffiti. In the 1970s, the British economy tottered from one crisis to another. In 1974, in the wake of the Arab oil embargo, Conservative prime minister Edward Heath was forced to introduce electricity rationing and a three-day workweek. Unemployment surged and productivity sagged. British business seemed to have lost its way. Entrepreneurs fled punishing tax rates for more hospitable climes. Strikes punctuated the national news with benumbing regularity; the trade unions repeatedly demonstrated their enormous political power, contributing mightily to the fall of Heath’s government in 1974.

These were the problems that confronted James Callaghan as he assumed the office of prime minister two years later. His Labour Party had won the 1974 election under the leadership of Harold Wilson, who returned to Number Ten Downing Street after an earlier stint as prime minister. But Labour’s margin of victory in the election was narrow, and the best that Wilson could do was to form a minority government with his party in the lead. His administration soon foundered as it struggled to deal with the aftereffects of the energy crisis and the intensifying demands from the unions, his party’s most powerful constituency. By the time Callaghan stepped in to take the beleaguered Wilson’s place, inflation had reached a staggering 25 percent. Outside investors lost confidence that the British government would ever regain control over its finances, and the pound became so anemic that London found itself facing a full-blown balance-of-payments crisis. Put simply, the British state had run out of the foreign exchange it needed to pay for imports. Bills were coming due that the United Kingdom was not in a position to pay.

To his credit, Callaghan did not soft-pedal the causes. He inherited stewardship of the economy at a moment when the old sureties were crumbling. His chancellor of the Exchequer, Denis Healey, declared that Britain couldn’t go on spending its way out of crises. Callaghan’s son-in-law, an influential journalist by the name of Peter Jay, had even become a convert to the economic school known as “monetarism,” which deemed strict control of the money supply to be the only remedy for inflation. This flew in the face of the Keynesian principles of Britain’s postwar consensus, which placed a premium on combating unemployment through government spending. The speech that Callaghan gave at the 1976 Labour Party conference, authored by Jay, turned into something of a elegy for Britain’s postwar economic system:

For too long this country—all of us, yes this conference too—has been ready to settle for borrowing money abroad to maintain our standards of life, instead of grappling with the fundamental problems of British industry. . . . [T]he cozy world we were told would go on forever, where full employment would be guaranteed . . . that cozy world is now gone. . . . We used to think we could spend our way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candor that that option no longer exists, and that insofar as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy followed by a higher level of unemployment as the next step.

Finally, in November 1976, the United Kingdom was forced to ask the International Monetary Fund (IMF) for a $3.9 billion loan to tide it over through the crisis. The conditions included brutal spending cuts and across-the-board austerity measures. Back in 1945, the United Kingdom had been America’s partner in creating the international economic system that had brought the IMF to life. Now London was calling on the fund for help in an existential crisis. It was the first time that one of the world’s developed countries had ever asked for IMF support. (Nothing comparable would happen again until 2008, when Iceland was forced to follow suit during the global financial crisis.)

This was a humiliation of epochal proportions. A country that had been at the heart of the Western economic and political system found itself reduced to the status of a banana republic. Callaghan diagnosed the problems but was unable to come up with a remedy. Something always seemed to get in the way: the resistance of the unions, the global economic climate, the accustomed way of doing things. The old ideas no longer worked—that much was clear. But where were the new ones? Britain was waiting for something to give.

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Filed under Britain, democracy, economics, energy, industry, nationalism

by | 23 December 2016 · 3:53 pm

Hua Guofeng and the Two Whatevers, 1977

From Strange Rebels: 1979 and the Birth of the 21st Century, by Christian Caryl (Basic Books, 2014), Kindle Loc. 2594-2619:

In the wake of Mao’s death, the colorless Hua surprised everyone with a sudden show of initiative. Allying himself with two established party elders, Army Marshal Ye Jianying and veteran functionary Li Xiannian, Hua engineered the arrest of the Gang of Four. It was a startling gambit even by the Byzantine standards of twentieth-century Communist conspiracies. Hua had started by splitting off one of the Gang’s key allies, a man by the name of Wang Dongxing, who had risen with the Gang’s help to become the head of the party’s Praetorian Guard, the 8341 Special Regiment, which provided for the security of top officials. Hua and Wang arranged for two of the Gang’s leaders to be called to a special session of the Politburo. They were arrested at gunpoint as they stepped into the room. Jiang Qing, Mao’s widow and the Gang’s leader, was taken into custody in her bedroom; one of her personal servants is said to have spat on her as she was led away. Under orders from Hua, the People’s Liberation Army quickly moved to disarm the heavily armed militias and the powerful media machine that Jiang’s faction had built up over the years. The Cultural Revolution was finally coming to an end.

Yet what was Hua offering in its place? This was not immediately clear. Hua certainly understood that the country could no longer afford permanent revolution. Adopting a strategy originally envisioned by Zhou Enlai, he declared that China should push ahead with “the Four Modernizations” (science and technology, industry, national defense, and agriculture). He moved to restore the economy’s animal spirits by ordering a huge surge of investment in industry and agriculture. Like Gierek in Poland, Hua seemed to believe that part of the solution involved taking big foreign loans for flagship projects; also like Gierek, he seemed to have few concrete ideas about how these loans would be paid back.

Hua’s program did result in tangible growth. But it also led to big budget deficits and scandalous waste, since it failed to tackle many of the serious problems of management and organization bequeathed by Maoist excess. Hua had the right idea, but he was still, in essence, relying on mobilization and slogans rather than substantive economic policy. Some of his critics belittled the program as another Great Leap Forward, a utopian exercise with little practical foundation. Hua, for example, urged a rapid increase in the output of steel, which duly materialized. But to what end? What, precisely, was the underlying economic strategy?

Hua had eliminated the Gang of Four. He tried to revive the economy. But he seemed hesitant to put an end to the broader legacy of the Cultural Revolution. In February 1977, a few months after Mao’s death, Hua’s supporters published a statement containing a conspicuous quote: “We will resolutely uphold whatever policy and decisions Chairman Mao made, and unswervingly follow whatever instructions Chairman Mao gave.” This credo came to be known as the “the two whatevers,” and its adherents, “the Whateverists.” Like many factional nicknames, this one contained a large grain of truth. Hua’s legitimacy stemmed from the fact that he was Mao’s chosen successor. That counted for a lot. But it also limited his freedom of maneuver. He could not chip away at the memory of the Great Helmsman without undermining himself.

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Filed under China, democracy, economics, nationalism, philosophy

by | 23 December 2016 · 3:51 pm

Quoting Mao Against Mao, 1978

From Strange Rebels: 1979 and the Birth of the 21st Century, by Christian Caryl (Basic Books, 2014), Kindle Loc. 2656-2682:

In May 1978, the prominent national newspaper Guangming Daily published an article with the innocuous title “Practice Is the Sole Criterion for Judging Truth.” The piece was quickly picked up by a series of other publications, including the leading army newspaper. The title sounds dull enough, but it went off like a bomb. The article, collectively authored by a team of academics working under the direction of rising party reformer Hu Yaobang, argued that Communist ideology was not the only yardstick for determining what was true. If Marxism was indeed a scientific theory, as it claimed to be, its findings ought to be tested through experiment: apply them to reality and see if they worked. Marx had said that the social and political prescriptions derived from his theory had to be subjected to constant empirical testing to make sure that they coincided with the dictates of historical materialism. And just to be sure that everyone got the point, the authors of the article undergirded their argument with a slogan from Mao himself—the one they used as the article’s title.

They were, in short, using Mao’s own words to undermine the central Maoist postulate of the Cultural Revolution, namely, the idea that the imperative of “revolution” overrode all else, including professional expertise, scientific knowledge, or economic efficiency. To many Chinese, the article’s paean to pragmatism sounded like a healthy dose of common sense after years of hysteria. Yet this was exactly what the Whateverists did not want to allow. After all, during the Cultural Revolution, Mao and his adepts had followed a rather different principle: for them it was revolutionary zeal, directed against the entrenched establishment, that had become the decisive litmus test for the correctness of policy. It was this same mind-set that had led to the persecution of countless engineers, managers, scholars, and scientists on the grounds of insufficient “class consciousness”—with devastating consequences for the Chinese economy.

Prioritizing “practice,” as the authors of the new article demanded, thus represented an implicit challenge to those who considered themselves to be the keepers of the chairman’s flame. If this new argument won the day, unwavering loyalty to Maoist slogans would no longer be the deciding factor in career advancement or political struggle. Professional skill, managerial competence, or scholarly acumen would come to the forefront. Deng, who does not appear to have been directly involved in the publication of that article, was quick to see its uses in his reckoning with Hua. Since his return to the center of party life, Deng had already been putting a different Mao quote at the center of his speeches: “Seek truth from facts.” This, of course, was a dig at Hua and his adherents, who continued to stress that truth was whatever Mao had said it was. Among the things that Deng had learned from his long years of involvement in party intrigues was the importance of defining the terms of debate. He now set out to deploy his “good,” pragmatic Mao against the “bad,” doctrinaire one of the Cultural Revolutionaries. Would the party cling to the Mao celebrated by the Gang of Four, inflexible, rigid, and dogmatic? Or would Chinese Communists reach back to the earlier version of Mao that was now held up high by Deng and his friends—a Mao who had (allegedly) celebrated the virtues of practicality and sober realism?

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by | 16 December 2016 · 10:22 am

1979, A Turning Point

From Strange Rebels: 1979 and the Birth of the 21st Century, by Christian Caryl (Basic Books, 2014), Kindle Loc. 236-279:

These five stories—rich in event and grand personalities—would be worth telling in themselves. But do they really have that much to do with each other? Surely, Britain’s first female prime minister has nothing in common with Iranian Shiism’s leading militant cleric. And what could possibly unite the bishop of Rome, the budding Islamists of Afghanistan, and the leader of the Chinese Communist Party? The fact that they lived through the same historical inflection point, one might argue, does not mean that their stories are linked. Coincidence is not correlation.

In fact, though, they have much more in common than at first meets the eye. The forces unleashed in 1979 marked the beginning of the end of the great socialist utopias that had dominated so much of the twentieth century. These five stories—the Iranian Revolution, the start of the Afghan jihad, Thatcher’s election victory, the pope’s first Polish pilgrimage, and the launch of China’s economic reforms—deflected the course of history in a radically new direction. It was in 1979 that the twin forces of markets and religion, discounted for so long, came back with a vengeance.

Not all of the historical figures whose fates converged that year necessarily thought of themselves as conservatives, and none of them tried to turn back the clock to some hallowed status quo ante. This is precisely because they were all reacting, in their own ways, to a long period of revolutionary fervor that expressed itself in movements ranging from social democracy to Maoism—and it is striking that they were all variously denounced by their enemies on the Left as “reactionaries,” “obscurantists,” “feudalists,” “counterrevolutionaries,” or “capitalist roaders” who aimed above all to defy the march of progress.

There was a grain of truth to these accusations. The protagonists of 1979 were, in their own ways, participants in a great backlash against revolutionary overreach. Deng Xiaoping rejected the excesses of Mao’s Cultural Revolution in favor of pragmatic economic development—a move that, despite Deng’s disclaimers, entailed a gradual restoration of capitalist institutions. Khomeini’s vision of an Islamic state was fueled by his violent repudiation of the shah’s state-led modernization program (known as the “White Revolution”) as well as the Marxist ideas that dominated Iran’s powerful leftist opposition movements. (The shah, indeed, denounced the Shiite clerics as the “black reaction” in contrast to the “red reaction” of the Marxists.) Afghanistan’s Islamic insurgents took up arms against the Moscow-sponsored government in Kabul. John Paul II used Christian faith as the basis for a moral crusade against the godless materialism of the Soviet system. And Margaret Thatcher aimed to roll back the social democratic consensus that had taken hold in Great Britain after World War II.

At the same time, it was easy to underestimate just how much these leaders had actually absorbed from their opponents on the utopian Left. A conservative can be defined as someone who wants to defend or restore the old order; a counterrevolutionary, by contrast, is a conservative who has learned from the revolution. John Paul II, who had spent most of his adult life under the Communist system, knew the Marxist classics intimately and devoted considerable intellectual and pastoral effort to countering their arguments—knowledge that helped him to shape his program of moral and cultural resistance. (It also left him with an intense interest in the politics of the working class that informed his patronage of the Solidarity movement—as well as feeding a deep skepticism about Western-style capitalism.) Khomeini and his clerical allies appropriated Marxist rhetoric and ideas wherever they could, forging a new brand of religious militancy that railed against colonialism and inequality; socialist notions of nationalization and state management later played a large role in the Islamist government’s postrevolutionary economic policy. (One historian describes the resulting synthesis as “revolutionary traditionalism.”) Afghanistan’s jihadists borrowed from the Communist playbook by building revolutionary political parties and comprehensive ideological systems to go with them. Margaret Thatcher, who studied at Oxford when Marxism was the reigning political fashion, fused her conservative instincts with a most unconservative penchant for crusading rhetoric, ideological aggression, and programmatic litmus tests. It was precisely for this reason that many of the Conservative Party comrades-in-arms who accompanied her into government in 1979 questioned just how “conservative” she really was. As for Deng Xiaoping, he insisted on maintaining the institutional supremacy of the Communist Party even as he charted a course away from central planning and toward state capitalism. Cold War historian Odd Arne Westad describes Deng’s reform program as “a counterrevolution in economics and political orientation the likes of which the world had never seen.”

It was entirely in keeping with this spirit that Thatcher proudly reported to a Conservative Party rally in April 1979 that her political opponents had dubbed her a reactionary. “Well,” she declared, “there’s a lot to react against!” It was, indeed, precisely this peculiar spirit of defiance that gave the year its transformative power. The decisions of these leaders decisively defined the world in which we live—one in which communist and socialist thought has faded, markets dominate economic thinking, and politicized religion looms large. Like it or not, we of the twenty-first century still live in the shadow of 1979.

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Filed under Afghanistan, Britain, China, democracy, economics, Iran, Islam, nationalism, philosophy, Poland, religion, war

by | 3 December 2016 · 8:23 am

British–German Army Rental Contracts, 1776

From Hessians: Mercenaries, Rebels, and the War for British North America, by Brady J. Crytzer (Westholme, 2015), Kindle Loc. 326-348:

By January 1776 the British Empire had drafted agreements with five separate German princes including the regional powerhouse of Hesse-Cassel and its sister state of Hesse-Hanau. Along with these treaties there were also signed agreements with Brunswick-Wolfenbüttel, Anspach-Beyreuth, and the Principality of Waldeck. Later in 1777 the empire would ultimately settle terms with the relatively minor state of Anhalt-Zerbst, bringing their final treaty count to six separate German entities. Although these states would all furnish armies to sail to America and fight George Washington’s Continental Army, like all things in the Holy Roman Empire not all were equal in their contribution. The Landgrave of Hesse-Cassel Frederick II supplied the single largest armed force, 16,992 men, for a total sum of £2,959,800. The Duke of Brunswick provided 5,723 souls for £750,000, and Hesse-Hanau lent 2,422 men for £343,000. Margrave Karl Alexander of Anspach-Bayreuth sent 2,353 men, and signing over the least amount of soldiers were Prince Frederick of Waldeck at 1,225 and Prince Frederick Augustus of Anhalt-Zerbst at 1,160 for £109,120.

The treaties originally signed with the six individual German princes differed from each other in specifics, but all effectively offered the same general terms. The armies were “rented” for a term of six, seven, or eight years and the agreed-upon subsidy would go directly to the landgrave, duke, or margrave who ratified the treaty. The individual soldiers forced to serve in North America would receive none of those funds, but would be paid by the British Empire at roughly the same rate that they would pay their own regular soldiers. While the treaties were agreed upon in principle there were still small line items to be negotiated. One such point of contention was that some of the German princes demanded that London pay the soldiers’ salaries to the princes directly; British administrators balked at this assertion as they were almost certain that the dishonest German rulers would simply pocket the money for themselves. Another issue was the inevitable matter of wartime casualties, in which the British offered to reimburse the states for each man lost. Perhaps the most startling development, though, came from the inclusion of a contracted casualty reimbursement; for every man killed or wounded their prince would be additionally compensated in turn. The German soldier traveled to the New World knowing that he was, quite literally, worth more dead than alive.

By the winter of 1776 the British Empire had contracted nearly eighteen thousand German soldiers to travel to North America and suppress the growing revolt that was stirring in the Atlantic colonies. Of those men over half were provided by Hesse-Cassel, therefore the term “Hessian” would be generically applied to all German auxiliaries employed in the New World. For the unlucky soldier commanded by his feudal lord to travel across the sea and battle the American rebels there was little hope; they were doomed to fight a rebellion for which they stood to gain nothing.

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Filed under Britain, economics, Germany, labor, migration, military, nationalism, North America, war

by | 2 December 2016 · 3:52 pm

Europe’s Rent-an-Army Era after 1763

From Hessians: Mercenaries, Rebels, and the War for British North America, by Brady J. Crytzer (Westholme, 2015), Kindle Loc. 280-95:

The close of the Seven Years’ War saw a great reshuffling of Europe’s imperial hierarchy, and with each great power attempting to reestablish itself within the new geopolitical order. The 1763 Peace of Paris established the northern kingdom of Prussia as the supreme German state in the region and its ruler Frederick the Great proved to be a magnetic and respected enlightened politician. To the south Prussia was challenged for regional superiority only by the long-standing European power broker of Austria.

As Prussia and Austria gained prominence in central Europe in the wake of the postwar reorganization, the smaller polities began to do whatever was necessary to maintain relevance in an ever changing world. For those left out of the Austro-Prussian sphere of influence, there were few ways to remain competitive in the international arena. There were few natural resources to sell on the open market and because of their tiny territorial possessions, few found realistic opportunities to expand their wealth. While they lacked the commodities typically associated with increased revenue through wider economic pursuits, it seemed the only true domestic product that many of the smaller states of the Holy Roman Empire had to offer were the people themselves. With a large population held in subjugation due to an adherence to a dying feudal system, many regional German rulers began exploring new ways to turn their otherwise shrinking revenue streams into hefty channels of profit. Their means of doing so became known as Soldatenhandel, or the soldier trade. Typically speaking, the small states of the German empire, like Hesse-Cassel, bolstered their army’s numbers through either conscription or hiring mercenaries themselves, but few ever considered actually renting their armies to outside powers. When it was discovered that there was a market for such an unusual practice as Soldatenhandel, the kings and lords of the German countryside began to dramatically increase their draft totals. By 1776 in the simplest terms the otherwise insignificant German states made themselves relevant to the great powers of Europe by offering their own citizens to the highest bidder.

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Filed under Austria, Britain, economics, France, Germany, labor, military, war

by | 26 November 2016 · 3:45 pm

Ice as Alternative Currency in North Korea

From The Girl with Seven Names: A North Korean Defector’s Story, by Hyeonseo Lee (William Collins, 2015), Kindle Loc. 2689-2705:

On one occasion, my mother called me with an alarming question. Normally we spoke on the weekends, but this time her call came during the day while I was at work. She sounded excited.

‘I’ve got a few kilos of ice.’

‘What?’ I sank down in my seat, out of sight of my colleagues.

She wanted to know if I had connections in China who could sell it.

Ice, or crystal methamphetamine, had long replaced heroin in North Korea as the foreign-currency earner of choice for the state. It’s a synthetic drug that is not dependent on crops, as heroin is, and can be manufactured to a high purity in state labs. Most of the addicts in China were getting high on crystal meth made in North Korea. Like the opium of the past, crystal meth, though just as illegal, had become an alternative currency in North Korea, and given as gifts and bribes.

‘Omma.’ My voice was a furious whisper. ‘Do you know what that is? It’s highly illegal.’

‘Well, lots of things are illegal.’

In her world, the law was upside down. People had to break the law to live. The prohibition on drug-dealing, a serious crime in most countries, is not viewed in the same way – as protective of society – by North Koreans. It is viewed as a risk, like unauthorized parking. If you can get away with it, where’s the harm? In North Korea the only laws that truly matter, and for which extreme penalties are imposed if they are broken, touch on loyalty to the Kim dynasty. This is well understood by all North Koreans. To my mother, the legality of the ice was a trifling matter. It was just another product to trade.

She said one of the big local traders brought it to the house because he knew I was in China and wondered if I could sell it there.

‘Give it back to him. Never get involved. There are bad people in that trade, and they won’t care if you’re caught.’

She never asked me again.

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Filed under China, drugs, economics, Korea

by | 26 November 2016 · 3:40 pm

Chinese Attitudes to North and South Koreans

From The Girl with Seven Names: A North Korean Defector’s Story, by Hyeonseo Lee (William Collins, 2015), Kindle Loc. 2520-2531:

About a week after receiving my [illegally purchased] ID, I found a job that paid almost four times what I earned as a waitress. I became an interpreter and secretary at a South Korean tech company that made compact discs and LED lights. Its office was in Koreatown. My boss was one of the South Korean directors, and part of my role was to accompany him on visits to clients and manufacturing plants. I noticed that the Chinese looked up to South Koreans and addressed them respectfully. I had usually known them to scowl down their noses at North Koreans.

Everything had happened so fast. Overnight I had gone from waiting tables to sitting in boardrooms, interpreting in negotiations, learning how a modern company operated, and the culture in which business was conducted. I was meeting clients and buyers from Taiwan and Malaysia, and mingling socially with South Korean co-workers. The friends I’d made while waitressing knew me as In-hee. In my new job I used the name on my ID card and documentation, Sun-ja. I would have to take care that these two worlds never collided.

The company’s products were manufactured in a plant that was modern even by Shanghai standards. The process was kept entirely dust-free. To enter we passed through a special machine that blew contaminates from our clothing. The South Koreans treated me well. I could not bear to imagine their reaction if they’d known I’d grown up in the bosom of their archenemy. At times this felt surreal. We were all Koreans, sharing the same language and culture, yet we were technically at war.

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by | 26 November 2016 · 10:03 am

North Korean Career Hopes

From The Girl with Seven Names: A North Korean Defector’s Story, by Hyeonseo Lee (William Collins, 2015), Kindle Loc. 1455-1466:

You would expect between school friends a more honest conversation about our hopes for the future, and what we wanted to do with our lives, and that did happen, to an extent. But by the time we were ready to graduate, we had learned to trim our expectations in line with our songbun. Our choices fell within a certain range. In my class, the few of us with good songbun either took the university entrance exam or, if they were boys, went straight to military service. A few were able, through family connections, to land good jobs with the police or the Bowibu. More than half the students in my class were in the songbun ‘hostile’ category. A list of their names was sent to a government office in Hyesan, where officials assigned them to mines and farms. One girl from this group took the test to enter university, and passed, but was not permitted to go.

My good songbun meant I could plan. My dreams were private and modest. I wanted to be an accordionist. It’s a popular instrument in North Korea and a woman who could play it well had no difficulty making a living. That would be my official career, but, like my mother, I also wanted to trade, start an illicit business, and make money. I thought this would be exciting. I also knew that it would be the only way to ensure that my own family, when one day I had children of my own, would have enough to eat.

My mother fully supported the accordion career choice, and found a musician from the theatre in Hyesan to give me tuition. She said my father would have been pleased, as he’d always enjoyed accordion music. This made me cry.

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Filed under democracy, economics, education, Korea, military, music, nationalism

by | 26 November 2016 · 8:50 am

Life in a North Korean Border City, 1990s

From The Girl with Seven Names: A North Korean Defector’s Story, by Hyeonseo Lee (William Collins, 2015), Kindle Loc. 296-306:

When I was growing up Hyesan was an exciting place to be. Not because it was lively – nowhere in the country was noted for its theatre scene, restaurants or fashionable subcultures. The city’s appeal lay in its proximity to the narrow Yalu River, Korea’s ancient border with China. In a closed country like North Korea, Hyesan seemed like a city at the edge of the world. To the citizens who lived there it was a portal through which all manner of marvellous foreign-made goods – legal, illegal and highly illegal – entered the country. This made it a thriving hub of trade and smuggling, which brought many benefits and advantages to the locals, not least of which were opportunities to form lucrative partnerships with Chinese merchants on the other side of the river, and make hard currency. At times it could seem like a semi-lawless place where the government’s iron rule was not so strong. This was because almost everyone, from the municipal Party chief to the lowliest border guard, wanted a share of the riches. Occasionally, however, there were crackdowns ordered by Pyongyang, and they could be brutal.

People from Hyesan were therefore more business-minded and often better off than people elsewhere in North Korea. The grown-ups would tell me that we were fortunate to live there. It was the best place in the whole country after Pyongyang, they said.

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