April 03, 2013

North Korea: Dangerous, but Not Crazy

Follow-up to From 1914 to 2014: The Shadow of Rational Pessimism from Mark Harrison's blog

Is the North Korean regime crazy or calculating? Here is a timeline of North Korea's actions since March 10, when I wrote last.

  • March 11: North Korea revokes the armistice ending the Korean War in 1953.
  • March 12: Kim Jong Un places the North Korean armed forces on maximum alert.
  • March 20: Attacks on South Korean news and banking websites, possibly from North Korea.
  • March 27: North Korea cuts a military hotline to the Kaesŏng special region (a joint economic project with South Korea).
  • March 29: Kim Jong Un places the North Korean armed forces on standby to strike U.S. territories.
  • March 30: North Korea warns of a state of war with South Korea.
  • April 2: North Korea will restart weapons-related nuclear facilities.
  • April 3: North Korea closes entry to the Kaesŏng special region.

In various ways, these are all costly actions. Some are financially costly to Pyongyang, such as restarting nuclear facilities and disrupting Kaesŏng-based production and trade. Other are reputationally costly, because they stake out positions that are hard to retreat from without loss of face. All of them have a common element of danger -- the risk of triggering a ruinous catastrophe.

Why is North Korea doing these things if they are so costly? In a common interpretation, the North Korean regime is crazy. They don't understand the world or know what is good for themselves. I think this is unlikely.

On the basis that the North Korean leaders are not insane, there are several possible ways to think about their actions and understand them, but in the end they all point to the same outcome.

Opportunity cost. While the measures listed above are costly, North Korea believes that it would not find a better alternative use of the resources consumed or put at risk as a result of their actions. There are few profitable opportunities for production in the world's worst economic system. Investing in confrontation may well be, for North Korea, the better alternative.

Diminishing returns.In the past, North Korea has extracted billions of dollars of aid from South Korea and the West by holding its own people hostage and showing a willingness to play with fire. The problem with this strategy is that Western countries and their Asian partners have learned how it works. As a result, the North Korean strategy has run into diminishing returns. Pyongyang can continue to extract an advantage only by going to greater and greater lengths. This means taking greater and greater risks with peace.

Rational pessimism (That's what I wrote about here). North Korea's leaders see two scenarios. In one, there is a peaceful future in which their regime will inevitably disintegrate and howling mobs will drag them into the street and tear them to pieces. In another, there is a high probability of war in which millions might perish but there is some faint chance of regime survival. You wouldn't jump at either, and you might not rush to make a choice. Still, ask yourself: If you were Kim Jong Un, and push came to shove, which would you prefer?

- 2 comments by 1 or more people Not publicly viewable

  1. Lucas

    Greetings from Brazil. I’m 16 years old and i’m keeping up the news about all this mess. So please tell me what you think .I had some ideas of what some nuclear disaster would cause to the world. First of all , the fisical problems related to radiation . We all know that if a nuclear war really happen , but that war only includes the three nations related (NK , USA , SK) the radioactive cloud probably would spread across the globe causing , not only genetical problems in humans and animals , but messing up with the soil . Ok , we all know that . Taking that point out , what would happen if ,for exemple , Ny , or Detroid , or maybee LA was hit ? there will be massive evacuations and economical dissorder across the entire us , so ,the entire world economy spins around the dollar .I’m so Sorry about my terrible english , and if you can understand what i v wrote please send me an email ! Tnx

    04 Apr 2013, 04:44

  2. Mark Harrison

    Lucas: The effects of nuclear weapons depend on various factors: not only their size, but also whether they are exploded in the atmosphere or on the ground (which reduces the radius of some effects and increases the fallout). There is an accessible discussion here:


    Even small nuclear weapons are colossally destructive. The unit of measurement of the destructive power of a nuclear weapon is the megaton (equivalent to one million tons of conventional high explosive). All the conventional explosives dropped on Germany in World War II amounted to two megatons. The atomic bombs that destroyed Hiroshima and Nagasaki in 1945 were around 20 kilotons (20,000 tons equivalent) of conventional explosives. For comparison the largest (Soviet) bomb ever tested was 50 megatons.

    There have been various studies of the worldwide effects of a nuclear war. A summary of the classic study that eventually gave rise to the concept of a “nuclear winter” is here:


    Multiple nuclear explosions would put a lot of dust and ash into the atmosphere. The persistent effects would include radioactive contamination, which tends to be local, and cooling effects on the global climate. As the number of explosions increases, it’s thought that the climatic effects would become relatively more important. Our climate models aren’t that exact yet, so it’s hard to be sure at what point that would become the case.

    As for economic effects, the important thing to bear in mind is that the market economy is decentralized by nature, and can generally adapt to localized destruction. All-out thermonuclear war among superpowers might possibly bring about the end of our world. An atomic war confined to East Asia would be locally terrible and would have global effects, but without causing civilization to collapse.

    I hope this helps. I can’t email you because I don’t have your address.

    05 Apr 2013, 22:20

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I am a professor in the Department of Economics at the University of Warwick. I am also a research associate of Warwick’s Centre on Competitive Advantage in the Global Economy, and of the Centre for Russian, European, and Eurasian Studies at the University of Birmingham. My research is on Russian and international economic history; I am interested in economic aspects of bureaucracy, dictatorship, defence, and warfare. My most recent book is One Day We Will Live Without Fear: Everyday Lives Under the Soviet Police State (Hoover Institution Press, 2016).

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