How North Korea Became So Insanely Poor

in 1996 north korea was in the midst of one of the worst famines experienced by any industrialized nation in modern history but one idea arose in the high command of the government to remedy this issue in the harsh and mountainous north they started a mass campaign to breed mountain goats flush with the shrubs they graze upon it seemed like the perfect way to procure more food for the region within two years the goat population tripled but those shrubs that the goats quickly devoured held together the loose mountain soil during the annual massive rainfalls now without them the result was massive mudslides which destroyed much of the only irritable land for agriculture and the complete flooding of coal mines in just four years five to ten percent of north korea's entire population perished yet this is just one small example of a terrible decision in a country that arguably has the most mismanaged economy in modern times but the north korea you see on the news today with its starving citizens any leadership hell-bent on making nuclear weapons in a desperate last-ditch attempt to maintain power is largely a product of the last few decades while north korea and its tiny economy are now juxtaposed with the incredibly prosperous south korea which now has over 70 times the economic output things used to be dramatically different in fact for decades it was the north who maintained a political economic technological and military superiority over the south north korea free time was so much better off that it once was pointed to as a shining example of communism in the developing world and for a brief moment it was the most industrialized and advanced asian society from the quote-unquote ideal social estate to the worst place to live in the world this is a story of how north korea became so incredibly poor [Music] this video is sponsored by babel the number one language learning app have you ever wanted to learn a new language but worried about the time commitment and 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name of self-preservation there is a famous saying in both koreas that it is a shrimp among whales and that the peninsula has been invaded 900 times in the last 2 000 years for the last 10 centuries korea served as a tributary state to the various powerful chinese dynasties that were by far the most important asian powers if not global powers however china started a long and slow decline just as the europeans started to carve out as much of the world as possible this gave rise to a new asian power who sought to rapidly industrialize and modernize its military to be able to fend off the europeans by the late 19th century and early 20th it was no longer china but japan that threatened korea as korea could not stand alone it turned to the russian empire who is looking to expand their own influence in the region with russia's help korea started to industrialize itself reform its educational system and modernize its military but the russian empire was dying and no event encapsulated this better than its defeat in the russo-japanese war in 1904 the result of the embarrassing defeat was japan's uninhibited influence in the region and korea was not able to hold off any longer in 1910 it was now an official colonnade of the japanese from then until 1945 korea was treated with unimaginable exploitation however some important economic development did take place northern korea is incredibly rich in natural resources according to a goldman sachs report north korea is sitting atop an estimated 10 trillion dollars worth of mineral deposits and as such the japanese built large-scale mines and processing plants developed a thriving fertilizer industry made countless reservoirs and pumping stations to irrigate the fields and constructed modern power plants infrastructure throughout the country was improved to ship the much needed materials back to japan to aid in the war effort but japan's reign of terror came to an abrupt end in the very last months of the second world war 1.5 million russian troops launched a lightning invasion into manchuria in an effort to snatch up as much land as possible before the capitulation of the japanese empire at the same time hiroshima and nagasaki were erased by the americans weeks later the largest war in human history was over but immediately the stage was set for a new much longer spanning conflict much like the occupation of germany after the war korea was split in half and now existed under polar opposite political ideologies their new border then became the new frontline of the cold war the soviet union in control of the north quickly appointed kim il-sung a guerrilla fighter in the war who later became an officer in the soviet army during the liberation of korea he quickly began to build a socialist command economy modeled after and with the help of the soviet union land was redistributed those japanese industries were nationalized a social essential bank was created and a one-party communist state was instituted later all power was vested in kim il-sung who had become more of a god than a ruler to the north koreans in the south the united states created a democratic market economy although it would function more or less like a brutal dictatorship until the 1980s the north was blessed with almost all the natural resources most of the industrial capacity and 92 of the electrical power generation in fact for a brief moment in time north korea was by far the most industrialized in urbanized country in asia in the immediate aftermath of the second world war under japanese occupation north korea became an industrial powerhouse but the south had almost all the prime agricultural land and most of the consumer light industry the japanese had made the south into the breadbasket to feed its war efforts north korea all of a sudden did not have enough farmlands to feed its people faced with its immediate industrial upper hand but its scarcity of food and the worry that the south being backed by the largest economy on earth would catch up quickly kim il-sung combined with the support of the soviets and later the chinese launched an invasion in 1950 [Music] while initially it seemed like northern victory was inevitable united nations combat forces were able to push the north all the way back to the chinese border china worried about a capitalist foothold on their doorstep flooded half a million soldiers into the korean peninsula eventually pushing the front line close to its original borders the front line grinded to a halt and little progress was made over the coming years in the face of neither side seeing an ability to advance further an armistice was signed that is still in effect to this very day meaning the united states is still technically at war with north korea but kim il-sung badly miscalculated his war effort and most of the north's advantage was swept away by u.s carpet bombing campaigns in fact the united states dropped more explosives on north korea than they had dropped on all nations combined throughout the entirety of the second world war those modern japanese industries and mines ceased to exist as historian charles k armstrong put it north korea had been virtually destroyed as an industrial society in the aftermath kim set out to finalize the transition into a complete command economy all farmland and all private property was taken by the state markets were outlawed and almost all freedoms were curtailed of course except for those in the ruling class from then on all prices and all goods all funds and all jobs were to be dictated by the government exactly the same as in the soviet union but this was even an impossible task for the soviets to do efficiently and even more so for the less technologically advanced north koreans to make matters even worse under japanese occupation no native koreans held significant administration positions meaning there was a severe lack of experience and no real way to produce accurate economic statistics so when a socialist government was now tasked with deciding every single aspect of the entire economy there is no hope of it working how do you know how much steel you can produce if you don't know how much iron is being made how much coal is being transported to factories and how many workers you have at your disposal how do you know what to price food if you have no idea how many hungry mouths there are to feed or how productive your farmlands are despite this north korea to the surprise of the world would enter its economic golden age [Music] the north korean economy from the end of the war until the 1970s grew at a titanic 15 a year quickly dwarfing the small agrarian economy of the south but how is it possible that this small nation that was just bombed back into the stone age was now able to become one of the fastest growing economies on earth the resurgence of north korea was due in large part to a unique set of circumstances at the heart of it all was the religious-like dominance of the entire nation by kim il-sung he quickly started to rewrite history banned religion persecuted his political opponents and ultimately became the supreme authority of the land he warped the marxist leninist theories to his own advantage and to work better with traditional korean beliefs this new political dominance was rooted in the ideology of juche which roughly translates to self-reliance kim argued that the true peak of civilization was contingent upon being freed from the chains of reliance on other nations the way to achieve this was by placing all trust in him and by carrying out tremendous sacrifice for the state the ideology heavily borrowed from korean confucianism with concepts of hierarchy as the basis of order and social harmony coupled with heavy propaganda the image of the state in kim himself was warped to resemble that of a family patriarch with a deeply embedded cultural tradition of family and respecting your elders it was the perfectly crafted means of social control over the north koreans this provided the perfect foundation in which to control and guide the restoration of the nation and economy however ironically and against the notions of self-reliance north korea's resurgence was wholly dependent on dramatic amounts of help from the other socialist nations it was given hydroelectric dams railroads irrigation systems and industrial equipment from the soviets and food oil and fertilizer from the chinese from 1950 to 1960 north korea would receive a massive at the time 1.65 billion dollars worth of patron aid mostly from the soviet union not only that but china and the soviets forgave north korea of its wartime loans and even sent tens of thousands of free workers to rebuild infrastructure restorate destroyed factories and revive croplands along with its vast resources cheap labor and a huge demand for commodities by other socialist nations meant north korea could gain quick money by selling raw resources to them within two years after the war the economy was larger than it had ever been before and by the 1960s it was producing exponentially more of everything than south korea who was just starting to build their own heavy industry but how and why did north korea receive so much economic aid kim was able to walk into stalin's office provide a huge list of economic needs to which stalin would often accept but why initially it was quite simple korea was a microcosm of the much larger cold war the soviets and chinese did not want a strong prosperous and united capitalist korea on their doorstep and they also wanted to send a message to other potential socialist nations that they would be looked after by the communist world but well into north korea being rejuvenated and strong enough to fend for itself the aid just kept coming this was due in large part to the souring relations between the soviet union and china after stalin's death in 1953 the next in line nikita khrushchev took on destalinization reforms which angered and threatened china's leader mao zedong from there both competed to be the champion for the developing socialist world and thus both could not afford to lose north korea as an ally kim was then able to teeter back and forth between the two when aid was offered and thus preferential trade deals free capital and resources and access to equipment and technology kept on flooding in north korea was able to thrive economically because it was constantly being stimulated by socialist competition and kim's fierce iron grip politically meant he could carry out rapid industrialization and militarization of the whole country but north korea's unprecedented growth hid the abhorrent structural flaws and catastrophic economic decisions that would lead to it eventually becoming the worst place to live in the world from the very beginning kim il-sung was obsessed with building heavy industry as in his mind it would provide the economy the self-reliance he treasured so dearly heavy industry is traditionally defined as capital-intensive large-scale manufacturing that requires heavy machinery and facilities this produces steel military equipment ships chemicals construction etc but kim allocating 80 percent of all resources to developing heavy industry came at the cost of consumer goods and most importantly agriculture even stalin who himself overemphasized heavy industry was concerned with north korea's lopsided economic growth that's because this heavy industry relied on mobilizing the rural farming population to work in factories but this then diminished the food producing capabilities of the nation but as we discussed prior we know that north korea even in the best of times is hardly capable of being self-sufficient in food production due to its lack of irritable land and harsh climate this would not be too concerning as any economically rational plan would use its newfound industrial strength to trade for food products but this is counter to the regime's ideology of self-reliance and thus this never happened this then made north korea fully reliant on the untenable aid it received from other socialist nations to feed itself the next terrible decision emerged again from the ideology of self-reliance in the form of what is called the cholima movement the north korean's lack of sufficient economic data led to significant shortages all the time of course kim's answer to the problem was in the form of mass mobilization in which the nation would rely on quote revolutionary zeal to make up any economic shortages in which the spirit of the revolutionary cause would allow for superhuman productivity that would outpace any other nation in essence when north korea was short on steel food coal or any other factor of production they would mobilize the population to work longer and harder to make up for the shortfalls coupled with a regime that has total social control and is willing to imprison your entire family for minor mistakes it's easy to see how not being okay with your extra work could put you in a dangerous position an example of this mobilization is school children being forced to harvest rice and the doubling of coal mining ships in the 60s when north korea was building massive power plants to meet the energy goals laid out in the official economic plan north korea would persistently use the cholima movement to address the massive inefficiencies in the command economy oftentimes this meant avoiding the implementation of more productive but expensive equipment instead using brute force to address economic shortfalls this had the added benefit of greater social control over the population [Music] the over-reliance on the heavy industry and the utilization of massive labor movements would come under further strain toward the end of the 1960s as the cold war heated up having a society with the goal of self-reliance meant that north korea would allocate dramatic amounts of resources to the military as such and in response to the heightened tensions north korea would undertake a massive military buildup in the militarization of the entire culture all men ages 15 to 45 and all women aged 18 to 35 were mandated to serve in the military this of course dramatically strained the rest of the economy this then leads us to the next major mistake instead of slowing down military spending addressing the fundamental imbalances to the economy even as the cold war tensions cooled in the 70s north korea started to take out mountains of debt to finance further heavy industry and the military buildup due to the easing of cold war tensions in the 70s western european nations were now open to the idea of lending to north korea 80 million was borrowed from the french to build a fertilizer plant 160 million from the united kingdom to build a cement factory and 400 million from japan for heavy plant equipment in just five years north korea took on 1.2 billion dollars of debt for which they had no capacity to pay back and they didn't as a result no country would lend to north korea by 1976 any rational economic leader would try and utilize its vast resources to balance its budget and economy but north korea had a problem despite years of political instability south korea by the 80s was undergoing its economic miracle and democratization this was a huge problem for the north korean regime as its grip on power could easily be broken if the north koreans saw the burgeoning middle class and rapid increases in quality of life that the south was now enjoying for the first time in their histories the south was now better off than the north and rapidly pulling ahead this was symbolized in the 1988 olympic games hosted in seoul in response the north ramped up terrorist activities assassination attempts and despite its now stagnant economy it carried out insane mega projects a few of these include an 1100 square mile land reclamation project off its coastline an attempt to build the largest dam in the world a supermassive hydrothermal power plant an entire industry surrounding vivalon a strange material that's durable and highly heat resistant and the most emblematic of the time the rue young hotel the hotel was to become the tallest in the world cost 2 percent of the entire economy and like all the other makeup projects it failed miserably it now has been uncompleted for over three decades and for a while the government tried to cover up the skyline dominating abandoned hotel using photoshop these projects were way too costly unneeded and in some cases flawed from the very inception they were all at least partially funded by the soviet union but as the 80s wore on that funding began to dry up and all of north korea's terrible mistakes were about to collapse the entire economy [Music] by the early 90s north korea still had a massively lopsided economy it was allocating a vast majority of its budget to the military it had not made significant attempts to pay off its debts and just like in the aftermath of the korean war it was still heavily reliant on other social estates to feed and fund itself but the world was changing rapidly the soviet union under the weight of political liberalization in a faltering economy finally collapsed in late 1991 and china was undergoing reforms now seeing north korea as more of a nuisance than as an ally trade with the russian federation collapsed six-fold food imports and aid completely stopped and previous loans were no longer being forgiven maybe most importantly russia was no longer willing to give oil to north korea at preferential rates and the supply of it went from 3.5 million tons per year to just 45 000. this would have a catastrophic ripple effect throughout the entire economy the now complete shortage of fuel meant that coal mining ceased power plants went offline and chemical fertilizer was no longer able to be produced as such much more water was now needed to irrigate the fields and that meant hydroelectric power plants needed to stop running transportation was halted electricity generation stopped completely and industry was unable to function in just three years the entire economy contracted by 50 percent food was no longer being given for free from other socialist nations the farmlands were now unproductive and it was almost impossible to even transport harvests without fuel the population took to cutting down forests for the winters to stay warm and this made the environment unable to cope with torrential rains coupled with the goat breeding program in historic rainfalls meant that floods and mudslides took out the remaining farmlands to make matters even worse the floods destroyed underground stockpiles of grain north korea was undergoing an apocalypse its people had no food they had no freedom and they lived under a brutal totalitarian regime north korea was now the worst place to live in the world and millions perished in a case such as this it would make sense for a nation to take out loans to weather the rough times but as north korea ruined their debt reputation in the 70s no nation was willing to take the risk it could have sold its vast resources to the world but because industry was already crippled and because of extreme sanctions placed on it from its nuclear weapons program it could not rely on trade as a result north korea did something it hated more than anything it made an international plea for aid to which it would receive despite receiving 70 of all needed food from international humanitarian efforts until the year 2000 it made outrageous demands refused to make concessions and ultimately never reformed to fix the structural problems out of pure necessity it for the first time allowed for markets and minor trading however this was only because the central government had no resources in which to distribute to the population but why did north korea not change today we have witnessed the fall of the soviet union in eastern bloc the reformation of the chinese economic system and the numerous dictators that fell during the arab spring but so did north korea they have learned that opening their economy or political structure even just a little would start a never-ending tidal wave of further reform just like in the soviet union they do not have the stomach to risk the economic reforms that china undertook and in response to the arab spring they have tightened social control over their population north korean leadership knows that reform will ultimately improve the lives of their citizens but reform and revolution of a dictatorship never ends well for the elites in charge while the nation starved the next leader kim jong-il imported luxury watches built personal palaces ordered 100 white mercedes limousines and dined on the finest italian cuisine making the necessary changes would have saved his people but would have likely meant his death in the end to his limitless consumption we can see now why change never occurred but with the fall of the soviet union and the subsequent economic calamity how does north korea still exist there are two things currently keeping north korea still afloat one means of making money that we have not yet discussed is state-sponsored illicit activities north korea started in the 70s but ramped up dramatically in the 90s the manufacturing and distribution of drugs fake us currency sold weapons to international terrorist organizations and partook in human trafficking and slave labor in their prison camps in fact because of the unique conditions in which a nation state is actually partaking in these illegal activities north korea is making drugs with some of the highest quality in the world and making counterfeit currency that is said to be better than real dollars it harbors international criminals and employs them this then gives the criminals access to state-sponsored distribution and protection and they give north korea plausible deniability when caught the money generated from these illicit activities is hard to estimate but it has likely brought in billions of dollars to which the regime can then continue to prop up its massive military and hold on power the second thing keeping the nation from collapsing is china while china now sees north korea as a nuisance the last thing they want is a massive humanitarian crisis along their border and the nuclear crisis that would inevitably ensue china is supplying energy and food to make sure this doesn't happen since he came to power in 2011 kim jong-un has largely kept north korea unchanged and in fact is trying to rein in the markets that emerged from the crisis in the 90s north korea and its leadership are trapped by the ideologies that created it and thus cannot reform without risking collapse north korea stands as a reminder that nations governed by a small elite fixated on retaining power and gatekeeping the keys to truth are were true human suffering lies the 20th century gave rise to socialist command economies north korea is the last remnant of that dying political system for now the people of north korea suffer and will continue to do so until the regime inevitably collapses [Music] [Applause] oh [Music]

Channel: Casual Scholar

Views: 3,160,729

Keywords: North Korea, kim jong un, South Korea, North Korea Crisis, North Korea Economics, Economics, Casual Scholar, Cold War, North Korea History, kim il sung, kim jong il

Id: CJKNwhhOTV8

Length: 27min 30sec (1650 seconds)

Published: Fri Aug 19 2022

Reddit Comments

[u/tjabo125]

Thank you for sharing that. Was not expecting to watch a documentary on North Korea after coming home from the bars but glad I did.

[u/ReddFro]

Nice watch.

Too many hyperbolic perfect this, inevitable that, but very informative. I knew they had counterfeit US currency, but didn’t realize how much criminal activity they currently sponsor or how much aid they had received from the 50’s on. What a cluster F of a nation.

Not sure how they’re the worst place to live when places like Afghanistan and Yemin seem constantly war torn, but does sound truly awful.

[u/mikeevans1990]

That was cool as hell.

[u/derekjoel]

TL;DW - NO GOATS