Thursday, July 23, 2015

What Would Homo Economicus Do About North Korea?

Before I start, I think it is important to mention that the following blog post about the “appropriate” way to deal with North Korea is not an opinion that I personally share. Personally, every fiber in my being says that the only proper way of dealing with North Korea is to threaten it with disproportional, excessive, and over-the-top military action if the North Koreans ever threaten the safety and sovereignty of the Republic of Korea as they have in the past.

However, those are my personal prejudices at play – something that Homo Economicus would not suffer from.


What Motivates Homo Economicus?

Then where do we start? Firstly, I think it is important to define what Homo Economicus is motivated by. He is motivated by one thing only – maximizing his utility at minimal cost. This is the definition of being economically rational. It does not say anything about how a person can be rational ethically, socially, or humanely.


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Also, for this to work, I am assuming that Homo Economicus is Korean and currently lives in Korea. Interests and motivations can change depending on proximity.

So, for example, although many people think that the ideal solution for the ongoing Korean crisis between North and South Korea would be for the two countries to reunify into a single democratic republic at some point in the future, Homo Economicus would not care for that at all. Unless Homo Economicus is one of the dons CEOs of the chaebol class who would be able to purchase cheap North Korean property and assets from the new post-reunification Korean government, like they were able to purchase cheap South Korean property and assets under the Syngman Rhee administration, Homo Economicus would most likely suffer from financial hardships like the rest of the country should a sudden reunification take place.

Nor would Homo Economicus be moved by promises of future wealth, much less patriotism. Although many advocates of reunification admit that reunification will have its costs (their cost estimates tend to be comically low), they tend to sweeten the prospect of reunification by claiming that the Korean economy would enjoy an economic bonanza in the future.

Even if it were true that the Korean economy would benefit greatly in the future, Homo Economicus would still have to pay (a lot) for reunification one way or another. Besides, as the Time Value of Money has proven, ceteris paribus, having money now is always better than having money later.


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A Nuclear-Free Korean Peninsula?

So what would “maximum utility at minimal cost” look like in regards to peace on the Korean peninsula?

The end result has to be a cessation of all hostilities. However, Homo Economicus' version of “peace” is likely to be different from how everyone else perceives “peace.”

For one thing, would Homo Economicus think that denuclearization is a prerequisite condition for peace? That would seem unlikely. Assuming that Homo Economicus is Korean and lives in Korea, North Korea's nuclear weapons would pose no greater threat to him than its already existing arsenal of conventional weapons and WMDs. The only difference that North Korea's nuclear weapons make is that they will merely poison the rubble and corpses with radiation. Dead is dead. (A Japanese or an American Homo Economicus might reach a different conclusion, of course.)

So, would Homo Economicus prefer that the South Korean government adopt a more amiable position in regards to its negotiations with North Korea?


The North Wind and The Sun

We will have to look at the evidence. While the Sunshine Policy was in effect, the only time the North Koreans engaged in hostile acts was the Yeonpyeong Naval Battle that occurred in 2002. Six South Korean sailors died as a result, and the patrol boat, the PKM 357, sunk as a result of the battle. A movie about this naval battle was made just recently.

Since the Sunshine Policy was shelved, however, North Korean provocation has continued to grow. In July 2008, a few months after Lee Myung-bak had become president, the North Koreans killed a South Korean tourist, which effectively ended the Mount Kumgang tourism project. Of course, the North Koreans later sunk the ROKS Cheonan, which resulted in the deaths of forty-six sailors, and then shelled Yeonpyeong-do, which resulted in the deaths of two South Korean marines, two civilians, and millions in damages to private property.

If we look at this data, and only this data, I think it would be safe to assume that Homo Economicus would certainly prefer a return to the Sunshine Policy. However, that is not the only evidence that we ought to consider. After all, the Sunshine Policy came with its own hefty price tag, too. Case in point, the first Inter-Korean Summit of 2000 was marred by the fact that the South Korean government bribed the North Koreans with approximately US$200 million for the summit.


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So although it is likely Homo Economicus would prefer the South Korean government to adopt a friendlier tone to bring the North Koreans to the negotiation table, considering the pattern of erratic behavior that the North Korean leadership has consistently shown in the past (how's that for an oxymoron?), it is unlikely that Homo Economicus would think of the present North Korean government as a reliable negotiating partner.

Then other questions have to be asked – chiefly, if not this North Korean government, then who would Homo Economicus want the South Korean government to negotiate with?


Pay No Attention To That Man Behind The Curtain!

It is important to note that since taking power in 2011, though it remains to be confirmed independently, it is estimated that Kim Jong-un has executed seventy of his officials. For every action, there is a consequence. And one of the consequences that Kim Jong-un has had to suffer for these frequent purges and executions has been the (assumed) loss of the support of the elites.

So, in order to maximize utility, Homo Economicus would likely favor the South Korean and American governments to engage in clandestine activities to promote, empower, and enrich these elites. Flooding the China-North Korea border with cash intended to be funneled into individuals' pockets should be easy enough to do. But if there is a worry that the cash could wind up in the hands of the North Korean leadership, perhaps Bitcoins or other crypto-currencies might be alternative options to consider.

After all, one of the first lessons that people learn in Economics 101 is that people will always respond accordingly to incentives. Everything else is merely commentary.


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It is no secret that in order to retain the loyalty of the elites, the North Korean leadership spends millions to keep them pampered. The question is, can the North Korean leadership afford to continue to keep them pampered? Considering the rise of North Korea's black market and the private kickbacks and corruption that North Korean officials are able to enjoy at the expense of this slowly emerging bourgeoisie class, the North Korean leadership might already be fighting an uphill battle.

If the North Korean government is having difficulty keeping its elites in check, the South Korean and the American governments might be able to nudge North Korea toward regime change, though not regime collapse, by providing at least a large enough portion of these elites, preferably the more dovish civilian elites as opposed to those who are in the more hawkish Korean People's Army, with sources of income and wealth that are independent from Kim Jong-un's coffers.

It could be argued that a North Korean government that is not run by a progeny of Kim Il-Sung will lack legitimacy in the eyes of the North Korean people, particularly the denizens of Pyongyang. However, it is very doubtful that Homo Economicus would be overly concerned with the preferences of the North Korean people.
Assuming that the next crop of leaders who would replace Kim Jong-un are more “moderate” and are willing to cease hostilities in exchange for the lifting of sanctions and the opening of trade relations, Homo Economicus would be more than happy for the South Korean government to re-adopt the Sunshine Policy and never even breathe a word about requiring the North Korean government to dismantle its nuclear program.

This also in no way assumes that the next crop of leaders would remedy the country's dismal human rights record or pursue political reforms beyond what they think are necessary to cement their hold on power. As long as Homo Economicus' goal is merely peace between the Koreas, the topic of human rights might not even register in his mind to begin with.


Arguing With Myself

That is, of course, my take on what Homo Economicus might think about the matter. Although I have tried to remove as much of my own personal biases as possible, I recognize that I might not have been very successful.

Which is why I think it is important to note that I could be completely wrong about the whole thing.

One possible reason that I think I could be dead wrong about Homo Economicus supporting regime change in North Korea is the lack of transparent information about the political players in North Korea. There are far too many factors that remain unknown about what is going on in that country.

For example, the elites could be just as bad or worse than Kim Jong-un. Or a regime change might cause a bloody conflict between the doves and the hawks within North Korea, which could potentially spill across the border into South Korea AND China. That would certainly give pause to any of Homo Economicus' machinations.

It's entirely possible that the lack of reliable information could compel Homo Economicus to assume the position that it is preferable to deal with the devil he knows to dealing with the angels(?) that he doesn't know.

Therefore, I readily admit that Homo Economicus might simply advocate a return to the days of bribing the North Koreans for peace.

What he chooses to ultimately do will depend on cost-benefit analysis. Only after quantifying various things such as the costs of bribing the North Koreans for peace (national humiliation does not count), the financial costs of dead soldiers and sunken ships and other military expenditures, the benefits of the dividends of peace, the opportunity costs of forgoing regime change, etc. would Homo Economicus make a final decision.


Unfortunately, I do not have that data on hand
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What Do You Think?

So, here's my question to you. Do you think that any of these proposed actions would be beneficial? Are they even desirable? Would they be effective? Are they even realistic?

If you think that Homo Economicus might behave or think differently, feel free to let me know why in the comments section below.

4 comments:

  1. "But if there is a worry that the cash could wind up in the hands of the North Korean leadership, perhaps Bitcoins or other crypto-currencies might be alternative options to consider."

    Until Cisco enables China or the NK regime to inject vulnerabilities into the currency stream to shift ownership of the currency...

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  2. Whst about a Reunified Korea that decides to KEEP nuclear weapons, as a hedge against possible USA-based re-destabilization?

    Also, would there exist a risk of Korean Homos economici being bought off by Japanese Homos economici, causing a variation of 2009 Lost Memories?

    Along the lines of fiction, could Homos economici of Korea be more Ferengi than in the USA? Or be more dangerous the current wealthy Koreans might be deemed?

    Consider these: Exploitation begins at home. Greed is eternal. Let no one get in the way of profit. War is good for the economy. Peace is good for the economy. A wise man smells profit in the wind. Every once in a while, declare peace (it confuses the hell out of your enemies...) And other Rules of Acquisition... (I can dare risk to bring fiction into this since a key figure in Star Trek production is a member of an ethnicity accused of being preeminently good with money and behind-the-scenes power, and he reportedly used that history to comedically inject the Rules of Acquisition, which were a inside joke yet reflection/commentary on the power of money and assets.

    I suspect that the price of being a fervent Korean Homo economicus is in becoming a Homo-go-impoverish-us, since minions and handlers of the acquired assets won't be free to hire, retain, and monitor. Or, to come up with Gangnamian portmanteaus, KorEngi (Korean Ferengi). (This could become a present-day college course — at least in Los Angeles, maybe even a tele-course for Koreans in Korea looking to to assimilate technological and economic distinctiveness...)

    Also, although Homo econimicus does not address rationality or sanity, fairness, snd generosity, st what point would the North and South separately and a Reunified Korea spectacularly implode?

    And would the force of mixing Confucian, Buddhist, Shaman, Judeo Christian, and other systems with Reunification and Homo economicus overwhelm Korea? How will elites of the North live along Christian South Homos economici? Very delicately? In denial? After all, wouldn't any exploration of Korean Homo economicus be required to factor in how extreme Korea Koreans can (at least from outside perspectives) be when they choose to?

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    Replies
    1. Until things change drastically, Homo Economicus would not favor reunification because it would be too costly. Therefore, whether or not a reunified Korea would become a nuclear power is moot.

      A theoretical Japanese Homo Economicus might attempt to buy off a Korean Homo Economicus if the Japanese HE thinks that that would be in his interest. But the Korean HE would need to weigh the costs and benefits of accepting the bribe. We have to remember that HE are not influenced by patriotism.

      The Ferengi and Homo Economicus do share some similarities. However, the Ferengi fail in the sense that they are greedy to the point that their greed usually leads to their downfall. Homo Economicus, however, is not greedy. Not like the Ferengi anyway. Homo Economicus always seeks to maximize his utility. Therefore, he would be well aware of the need to adhere to the rules that dictate diminishing marginal utility.

      "At what point would the North and South separately and a Reunified Korea spectacularly implode?" I didn't understand this question.

      We have to remember that I am not suggesting that people try to live like a Homo Economicus. Human nature won't allow it to happen anyway.

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  3. http://quantitativepeace.com/blog/2009/01/ferengi-rules-of-acquisition.html is where I ended up when "Profit is its own reward" came to mind.

    WRT my "implosion" thought, I was entertaining the idea that a KHE might suffer an meltdown/short circuit if for a brief moment a "reconcile these" pause inserted itself.

    But, I suppose a true KHE would just have to be taken out as one was in "3 Days" (which I watched over 4 sessions)..

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