If I Were a Member of the North Korean Elite, I, Too Would Be Buying Up Gold and Chinese Real Estate

One of the least recognized moral responsibilities assumed by authoritarian states is the responsibility for misspent words and wealth they choose to get into the business of controlling.  For example, when the South Korean government  dabbles in the control of objectionable speech, whether for political or nationalistic reasons, it assumes responsibility for the decision to license, by omission,  (and sometimes,  even to subsidize) other objectionable or  controversial speech.

To a much greater extent, North Korea, which aspires to a higher degree of central economic planning than any other state, is responsible for  its misspent national  wealth when the great majority of its people enters winter  on the brink of famine.  In a planned economy, after all, one is not even permitted to accumulate independent wealth without fear of the  forceful intervention of the state.  The greatest part  of the North’s resource misallocation  is its stunning profligacy when it comes to arms spending.  Reader James Chen also points us to this Wall Street Journal piece (subscription required) on the promiscuous decadence  of North Korea’s  ruling class, the class whose war against  the other classes  has now  killed millions.

A North Korean businesswoman with heavy makeup and a bouffant hairdo studied herself in a mirror as she modeled fur-lined leather coats at a small store in this frigid northeast border city.

During a three-day excursion late last month, the woman also tried on shoes and looked at large-screen television sets before buying furniture and fresh fruit and heading home to Pyongyang, North Korea‘s capital city.

The United Nations has called for a crackdown on luxury-goods shipments to North Korea as a way of pressuring the country to drop its atomic-weapons programs, which came under new fire after an October nuclear test. But even as a new round of arms-control talks gets under way in Beijing today, some of the country’s elite are heading to stores in China.

If anything, the uncertainty about the flow of fancy goods appears to have whetted the appetites of some privileged North Koreans — whose impoverished country cultivates a Spartan socialist image.

In Dandong, North Koreans, many wearing lapel pins with a picture of North Korea‘s founding dictator, Kim Il Sung, stroll through hotels and department stores. Signs are often written in Korean, with storekeepers advertising computers, karaoke machines and the erectile-dysfunction drugs Viagra and Cialis.

A few North Koreans have bought new cars at a Toyota dealership near the Dandong customs checkpoint, according to a salesman. One man paid about $50,000 in cash for a luxury sedan.

Gold is also gaining a following. Wang Xiaoju, a saleswoman at the jewelry counter at Xin Yi Bai Department Store, says North Korean women come in nearly every day, mostly to buy gold chains and other gold jewelry.

So much for the  spartan,  monastic image of the  cadres who lead the guerrilla state.  So much as well for China’s good faith in enforcing U.N. Resolution 1718, which banned the sale of “luxury goods” to North Korea.  Which of these items does not fit that definition?  If Republicans ruled China, someone might even call them unilateralists. 

A more interesting development is the fact that members of the elite are buying up real estate in Dandong, just across the Yalu River from Sinuiju, North Korea, and also one of the dingiest cities in the Chinese rust belt.  At least one apparatchik reportedly paid $100,000 cash for an apartment overlooking the river.  That, and the purchases of gold, evoke the sound of rat  feet  scratching against  the floor of a leaky  cargo hold.  The regime also appears to be losing its ideological stanglehold on the elite, who have considerable access to the outside world.

These days in Pyongyang, members of the ruling class are ferried around in imported cars and live in well-appointed — and well-guarded — apartment complexes. Their children race around city parks on in-line skates and play American computer games.

Says Mr. Pak: “If you can afford to pay, there’s nothing you can’t get.”

The question is how much this matters.  If  the elite’s  access to this relative luxury has purchased their loyalty, it won’t.  On the other hand, those with their backs against the wall are more likely to resist than those with a way out, and much more than those who prefer the comforts of Beijing to bleak Pyongyang.

The people in North Korea’s blighted Northeast have fewer choices when things turn for the worse.  They can die in place or face the deadly  risks of crossing into China illegally.  Their backs are against the fence.  It is a formula for creating revolutionary social pressures, and I would like to believe that somewhere in Chongjin, a Korean Madame Defarge is knitting.