Thursday, May 03, 2018

North Korea as a South Korean company

A recipe for the unification of Korea

The North Korean leader Kim III has played too much with his nuclear playground – and it broke down. The rocks are collapsing and new nuclear tests are probably impossible.

So he concluded that he can no longer conquer the world with these weapons. Instead, he must search for the most profitable way to peace. So he suddenly seems to be the world's biggest fan of South Korean and Swiss food, a marketeer of North Korean noodles, and he wants to share the Nobel peace prize with Donald Trump and/or the South Korean president.

It's great and North Korea really seems to be screaming: "We finally want to be raped and conquered by you, our rich Southern brothers". At least that's what I have heard in between the lines for several weeks. However, South Korea doesn't seem to care. For most South Koreans, North Koreans are just some strange poor animals – rather than compatriots. That's a pity.

The desire to spend lots of money is limited in South Korea. In this way, the situation differs from the seemingly analogous case of the reunification of Germany in 1990. West Germany was really hungry – from the beginnings in 1949, its constitution assumed that East Germany was just a temporarily disordered (Sovietized) part of the Federal Republic of Germany and it would be reincorporated at some point. For decades, this view of the West German constitution looked like mere partisan propaganda – but in 1990, it became the reality.

East Germans knew it was a matter of common sense that the West German system was better and they wanted to be richer; West Germans didn't know what to do with their money and they wanted their country to be larger. The desire for unification was almost universal.

West Germans spent a huge amount of money to reincorporate East Germany. Much of it was unnecessarily generous and/or wasted. People were worried that the expenditures could lead to a crisis in West Germany. But 25+ years later, it seems clear that West Germany could have afforded the spending. They could have afforded to promote the East Germans' savings by giving them 1 real German mark for 1 fake (communist) one – although the market thought that the ratio was some "5 or 10" to one.

OK, it was an exercise in social engineering, huge spending. West Germany was getting a somewhat cheaper labor (although this advantage would have been higher if the drive for egalitarianism wasn't that fast and artificial) and new capacities so the excessively generous donations weren't really wasted. But South Koreans aren't really this eager. They are less dreaming about some Korean expansionism, too. One reason is easy to understand: the populations of the capitalist-vs-communist Germanies were four-to-one or so; the ratio is two-to-one in the Korean case.

So to artificially promote the North Koreans to rich South Koreans would be much more costly, relatively speaking. South Koreans can't be as generous as the West Germans even if they wanted. I think that even without this difference, South Korea shouldn't be as generous as West Germany was.

How should the transition be administered? Some stories from Germany could be taken as examples. But I would propose something else. I would declare the unification overnight – but on that night, North Korea would become a stockholders' company within South Korea (that would be renamed as United Korea, UKO). It means that for the following days or months, North Korea could very well function as it did. It's a company that has managers – some communist leaders – who could do things just like now. But their North Korean laws would be downgraded to internal regulations that are valid within the company.

People in North Korea should be given stocks of their companies. Some stocks would come with the power to decide (communist member parties could get some); others would be purely material. In a voucher privatization, North Koreans could buy and sell stocks of some companies on a broker service. It could be like the Czechoslovak voucher privatization – except that the trading could be done just like in the normal e-broker services on the Internet (our privatization took place right before the Internet era so the Czech Post had to be involved, there were rounds that took weeks, and the "trading" was a bit cumbersome). Each adult North Korean could get some 1,000 tokens and he or she could try to buy and sell some stocks. Some of the companies would have separate stocks; but there would also be the North Korea Corporation with its stocks that would cover all the assets that can't be naturally divided to corporations. North Korea Corporation would partly work as a non-profit organization – it would still be expected to feed its people, the North Korean citizens.

After some time of trading, lots of the actual houses, factories, land, companies would be privatized and South Koreans would control many of them. They could gradually change the internal rules of the North Korea Corporation and make it compatible with the South Korean laws and traditions. North Korea would get naturally dissolved within the United Korea. But some of it could be left as an experiment. Even South Korean commies could get employed by the surviving North Korean Corporation – the best proxy for a communist society.

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