Nonsense, horsefeathers, and idle musings from a decade in South Korea (2002-2012).


28 November, 2010

STRATFOR: The Importance of the Koreas' Northern Limit Line

By Aaron
28 November, 2010

Here's a recent video from STRATFOR in which Rodger Baker explains the background and significance of the Northern Limit Line between the two Koreas - i.e. how it was originally drawn, why it irks the North, and why it continues to be a source of conflict. The video is well worth 3:40 of your day.



26 November, 2010

Considerations

By Aaron
26 November, 2010


Over at One Free Korea, Joshua Stanton has this excellent post on possible ways to handle the North Korean threat in the wake of the Cheonan and Yeonpyeong Island incidents. A teaser:

In the past, most of those who’ve called for strikes against North Korea sounded like people who’ve never lived in or particularly cared about South Korea, and who hadn’t thought through the likely consequences of things it felt good to call for. But now, there are thoughtful, well-considered arguments that a quick strike against North Korea’s artillery and missiles might actually be necessary to deter more provocations and save lives. This isn’t a view I’m prepared to support — in part because of the fear of civilian casualties on both sides, and also because I still question whether involvement in a North-South war really advances or protects America’s vital interests, especially when so few Americans correctly estimate just how ambivalent the South Korean people themselves are about the North’s aggression against them. Yet North Korea is emerging as one of the greatest threats to the security of the United States because of its proliferation potential. Every instrument of our global power has failed to suppress that threat so far, including military deterrence, interdiction and containment, and of course, decades of diplomacy.


Today, the idea of a lightning campaign of preemptive air strikes is no longer a view I’m ready to summarily dismiss, but it’s not an idea anyone should support without knowing the answers to a few questions that aren’t available without the right security clearance and a retrospectoscope.


Read the whole post for yourself to find out what those questions are and how they might be answered.


25 November, 2010

Casino Jack & the United States of Money

By Aaron
25 November, 2010



"When buying and selling are controlled by legislation, the first things to be bought and sold are legislators."
- PJ O'Rourke

One thing's for sure: Alex Gibney knows how to make a movie. His list of successes includes Enron: The Smartest Guys in the Room and the Oscar-winning Taxi to the Dark Side, among others. This year, he has released two more films that, taken either separately or, especially, together, stand to achieve the impossible: further degrade our view of politics and politicians. Client 9 traces the rise and fall of ex-New York governor Elliot Spitzer, while the other, Casino Jack, tells the tawdry tale of uber-lobbyist Jack Abramoff. Discussion of Client 9 will have to wait for another day, as I've not yet seen it, but Casino Jack deserves a few words.

The storyline of Casino Jack revolves around Jack Abramoff, a lobbyist of unrivaled skill whose tight relationship with the Republican Party made him one of the most powerful men in Washington throughout the 1990s and early 2000s. Abramoff's downfall came when he was convicted - along with two White House staffers, a congressman, and several aides - for his role in a massive corruption scandal involving Native American casinos. While the scandal itself is long and convoluted, the essence is not: Abramoff and his associates took millions of dollars from Indian tribes who hoped to secure licenses to operate casinos and, at the same time, to prevent rival tribes from procuring the same licenses and thereby posing a competitive risk. In the United States, the federal and state governments ultimately control when and to whom these licenses are issued, and there thus exists an incentive for Indian tribes to lobby government officials in the hope of receiving the right to operate these cash cows. Of course, your average American citizen, Indian or otherwise, isn't wise to the ways of Washington.

Enter Jack Abramoff.

Casino Jack is an excellent, if incomplete, view into the inherently corrupt - and corrupting - nature of politics. Since the time of Plato and Aristotle, the popular tendency has been to view politicians as "public servants" who faithfully execute the "will of the people" and rise above their own parochial concerns. James Buchanan, however, won a Nobel Prize in 1986 for showing that this view of politics is both naive and, more importantly, wrong. Buchanan, a pioneer in the field of Public Choice, views "politics without the romance" and shows that politicians, just like all other humans, are guided chiefly by their own self-interest, which most of the time amounts to being reelected. Gibney's film shows that, to achieve this goal, politicians must both bring the goodies back to their home districts and stay in the good graces of their party by raising plenty of campaign cash.

Unfortunately, Gibney's film falters at this point by laying the Abramoff scandal at the feet of "free market" and "conservative" ideologies, when in fact the scandal is indicative of the institutional structure of the American political system, regardless of party affiliation. For all their rhetoric, sleazy characters like Abramoff, Tom Delay, and Bob Ney are not interested in shrinking the size of government by eliminating rules and regulations. Quite the opposite: lobbyists make their living by manipulating regulations and finding loopholes that will benefit their clients while hobbling the competition, while politicians enjoy the power to decide who wins and who loses. The ability of government, at all levels and on both sides of the aisle, to hand out favors is precisely the dung heap which attracts the flies.

In Casino Jack, Gibney never gets around to asking why the government is in the business of deciding who can and cannot operate a casino, or whether this sort discretion might be at the root of the much of the corruption in American politics. Rather, the transgressions of Abramoff and associates is written off as a product of greed, right-wing ideology and arrogance. Thus, while the film is strong on exposition, it falters in its conclusion. The truth is that a concentration of political power - and regulation, license-issuing authority, and state spending are extensions of political power - tends to give more influence to those who can afford to lobby the holders of such power, be they Jack Abramoff or Goldman Sachs. As Fred McChesney writes:

If governments did not arrogate to themselves the right to outlaw or regulate gambling, there would be no need for government lobbyists. There are no Jack Abramoff's needed to persuade government to allow you to open a grocery store, or me to start a law office. Why? Because, for the most part, government has no ability to stop us from doing so. If government did not have the ability to siphon off tribal revenues by taxation, lobbyists would have no work in that area, either.

As government gets bigger—as it can dispense special favors or threaten to tax—lobbyists have the constitutionally-protected ability to sell their services to influence outcomes sought by their clients. Again to quote the Wall Street Journal, "Where opportunities for enormous, instant wealth are sloshing around at the discretion of bureaucrats and legislators, invariably is bad policy to be found." If one does not like what the Jack Abramoffs in Washington do, the only way to stop it is to reduce government control of gambling.

The important lesson of Casino Jack, which Gibney largely neglects, is that scandals such as these cannot be eliminated simply by electing "better people" or folks from a different political party, or by implementing more and more campaign finance rules (which, as the film shows, are all too easy to circumvent). This problem, this corruption, will exist as long as the government has the power to pick winners and bail out losers. Eliminate the government's power to issue gambling licenses, protect certain industries with import tariffs and quotas, or shower subsidies on political constituencies, and you'll eliminate the incentive to lobby politicians for such favors. Until then, we'd all better get comfortable with fellows like Jack Abramoff.


Note: Here's Gibney discussing Casino Jack with Robert Wright on a recent Bloggingheads episode.

24 November, 2010

North Korea & the China Connection

By Aaron
24 November, 2010


Following my post yesterday, I received several emails asking why China doesn't do more to encourage better behavior by the North Koreans. Certainly, North Korea owes its survival - both economically and, by extension, politically - to Chinese largesse, and China thus has more influence over North Korea than does anyone else. Why, then, doesn't China do more to put the kibosh on North Korea's deadly tantrums, such as those witnessed this year?

Briefly, despite being a chronic headache for China's leaders, the presence of North Korea offers at least four distinct advantages (no doubt there are additional benefits, and readers are welcome to suggest them in the comments). Each of these considerations, at root, stems from a desire to avoid regime collapse in North Korea and the regional chaos that would ensue.

First, North Korea provides a buffer between China and South Korea. China does not appear keen to have either a vibrant, liberal democracy, or a reliable ally of the United States on its border and South Korea - and, in all likelihood, a reunified Korea - is both. Presumably, a reunified Korea would no longer need U.S. troops, but just how much does China trust that the United States would willingly pack up and go home?

Second, as the United States seems determined to maintain its own sphere of influence in East Asia (historically China's turf), North Korea serves to keep U.S. forces tied down and occupied. To the best of my knowledge, South Korea-based U.S. forces can only be used in the event of an inter-Korean conflict - i.e. the United States could not, under current conditions, use its bases in South Korea in the event of a China-Taiwan conflict.

Third, any renewal of Korean conflict would likely send hundreds of thousands, perhaps millions, of North Koreans streaming into China, where as many as 400,000 (or as few as 11,000, depending on your source) North Korean refugees already reside. China can easily live without an influx of hungry, ill-educated bumpkins from across the Yalu and Tumen rivers.

Finally, and perhaps most intriguingly, the largest population of ethnic Koreans living outside of the Koreas resides in China, mostly in the area just across the border from North Korea. One of China's challenges in recent decades has been to prevent secessionist movements in places such as Tibet and the Uighur west. Less discussed, however, is the population of Yanbian Prefecture (see my crude map above), the population of which is approximately 40% ethnic Korean. In the event of reunification, these folks might latch onto nationalist ideas of their own - a thought which has surely crossed China's mind.

It's fine to argue, as William Pesek does today, that to become a responsible global citizen, China must "dock [Kim Jong-il's] allowance and restore some sobriety to the Korean Peninsula," but this ignores China's very real, and entirely understandable (if not symapthetic), concerns. As I wrote yesterday, North Korea is a pain in the ass for just about everyone, including the Chinese. For China, however, such an irritation is better than any other alternative currently on offer.


Note: For more on China's role on the Korean peninsula, I recommend this generally strong - and very readable - 2003 paper by David Shambaugh.

23 November, 2010

Superheroes Discuss the North Korean Attack

By Aaron
23 November, 2010

For those of you who aren't much on reading, here's the video summary of my previous post:

North Korea to Suffer Finger-Wagging, Stern Warnings After Latest Attack on South Korea

By Aaron


Here we go again.

For the second time in 2010, the North Korean military has fired upon - and hit - South Korean territory. Back in March, the South Korean Navy corvette Cheonan exploded and sank in the Yellow Sea, an incident which subsequent investigations pinned on a North Korean torpedo. An act of war? Evidently not.

Not content to destroy military targets, North Korea yesterday shelled Yeonpyeong, a small South Korean island which sits right across a narrow channel from North Korea. While the island is home to South Korean military installations, it is also populated by about 1,000 civilians, mostly fishermen. Firing on Navy ships is one thing, but shelling a fishing village is downright foul. But is it an act of war? Unlikely.

The waters around the island have long been subject to dispute, and frequent South Korean military exercises in the area never go down well with the North Koreans. Add to this the ongoing succession drama of Kim Jong-il's son and heir, as well as recent revelations that the North is enriching uranium, and...well, it's anyone's guess what might have provoked the North this time.

Meanwhile, South Korea is promising missile strikes on the North should any further attacks occur. Sounds serious, no? But, of course, tensions have been high on the Korean peninsula for more than sixty years, with North Korean belligerence - and promises of South Korean reprisals - almost an annual tradition. By now, most residents of South Korea have become inured to the North Korean threat, and I daresay that any recurrence of war on the peninsula would surprise no one as much as those of us in South Korea.

Hell, a war might even surprise the North Koreans. After all, why should Kim Jong-il and his crew fear retaliation for this latest attack on South Korea? The North Koreans have repeatedly, and literally, gotten away with murder over the past several decades and suffered no military reponse. Examples? How about the 1968 attempt to assassinate the Korean president, Park Chung-hee? Or the 1968 commando raid on South Korea? Or the 1969 North Korean commando raid, which killed seven Americans and a South Korean? Or the 1974 assassination attempt on Park Chung-hee, which left his wife and a schoolgirl dead? Or the 1976 axe murder incident along the DMZ? Or the 1983 assassination attempt on President Chun Doo-hwan in Rangoon, which killed 21 people including several South Korean government officials? Or the 1987 bombing of Korean Air flight 858, which killed 115 people? Or the 1996 landing of a North Korean Navy submarine near Jeongdongjin? Or the 2002 naval clash in the Yellow Sea, not far from yesterday's exchange?

The point of this litany is twofold: first, North Korea suffered no military consequences from any of these acts, so why should this latest artillery attack be any different? Second, this is by no means the first time that North Korea has targeted civilian areas, and any number of those acts listed above could qualify as more egregious than what happened yesterday. I say this not to downplay the serious nature of yesterday's attacks, but rather to show that tensions have been much higher on the Korean peninsula in the past than they are now.

North Korea is secretive. North Korea is dangerous. North Korea is a pain in the ass. The North Korean leadership, however, is not irrational. They know they can needle, prod, and provoke the South Koreans within certain bounds and nothing - outside of sanctions and stern, vacuous warnings - will come of their actions. Indeed, Kim Jong-il can sell the attacks to his people as an example of his ability to protect them from the imperialist devils of the world. While there's always the danger that one of these events could escalate beyond anyone's control, North Korea does not stand to benefit from all-out war. The same goes for South Korea, China, Japan, and the United States.

What comes of yesterday's attack, then? Probably nothing more than more stern, vacuous warnings to Kim Jong-il ("try that just one more time and I'll, I'll...not be happy") and hand-wringing about a North Korean problem for which no good solution exists.


16 November, 2010

The Deflation & the Burr-Nank

By Aaron
16 November, 2010

This made me laugh, and I reckon if a person can find the humor in monetary policy, he can find humor in just about anything.



15 November, 2010

Gambling with Grandma's Money

By Aaron
15 November, 2010

Years ago, back when I lived in Oregon, I knew a fellow whom we might politely call a scumbag, but whom, for the sake of the story, we'll call Rick. Actually, his name was Rick. Every week, Rick would swipe a few dollars from his grandmother's purse in order to buy Powerball lottery tickets.

"Look, man," he explained, by way of justification, "if I win, I'll buy her a new house. And even if I lose, she never misses the money."

Not that Rick was broke: he had a decent job and supported himself without trouble. He simply preferred to gamble with other people's money. Hell, he didn't want to waste his own hard-earned cash on lottery tickets.

I was reminded of Rick the other day while reading this recent story in The Washington Post about United States Secretary of Energy and Nobel Prize-winning physicist, Steven Chu. Handed $36 billion in stimulus money, Chu has been puddle-jumping around the US, handing out grants and low-interest loans to "jump-start new technologies and greater energy efficiency."

Of course, if these new technologies actually offered the prospect of greater efficiency - and thus of profits - they wouldn't require government support. A profit, after all, is simply a sign that you are using your resources efficiently, producing more than you sacrifice. Private investors, especially those in the venture capital markets, make their living by looking at young or ailing firms and foreseeing future efficiency and profits. Even if, say, a solar energy company is not currently profitable, investors might reasonably look into the future and see positive returns at some future date, which would thus justify a certain investment. Yet, if private investors see no potential in this company or its technology, how is it that a government bureaucrat is able to divine such promise?

When private investors balk, however, the urge of businessmen is to run to the state for help, as happened last week in the lead-up to the G-20 summit in Seoul. As the Joong Ang Daily reported, Ditlev Engel, CEO of Vestas Wind Systems, came calling on the G-20 leaders, urging them to expand subsidies for research and development in renewable energies. What Engel is in effect saying to these governments, however, is this: "No private citizen will voluntarily fund my project, so please use your powers of taxation to force them to give me the money."

And, too often, the average private citizen looks at such government "investments" and thinks, "well, private markets aren't stepping up, so of course the state should do something." What these folks who advocate government subsidies to alternative energies are actually saying is that, like Rick and Ditlev Engel, they're happy to gamble with someone else's money.

Well, who isn't?

Give me a thousand dollars and send me to Vegas - I'll be happy to try my luck at the blackjack tables. But Vegas on my own dime? No way.

Moreover, those who support such subsidies are essentially saying that they'll invest their own money in such technologies if their money is taken from them by force (i.e. through taxes). Given control of their own money, however, they wouldn't go anywhere near these so-called green energy investments. I only wish we could run an experiment and find out how much of his own money Steven Chu would be willing to invest in the companies that are, via him and the US Department of Energy, receiving so many taxpayer dollars.

According to Chu, however, Americans, the ingrates, just don't know how lucky they are to have a Nobel Prize winner looking out for them: "People don't appreciate what's going on, that we are laying the groundwork for prosperity."

Just like Rick's grandmother should have been more appreciative of his efforts to get her a new house.



(h/t: Arnold Kling)

11 November, 2010

Gary Becker on the Economic Crisis & Stimuli

By Aaron
11 November, 2010

As I mentioned recently, my attention has been consumed elsewhere of late and I've thus resorted to letting others provide the content for this site. Today, then, we have Dr. Gary Becker speaking a few weeks ago with Peter Robinson about the financial/economic crisis. The content of the video is a relevent follow-up to my previous post, and especially the comments to it.




10 November, 2010

The Broken Window Fallacy

By Aaron
10 November, 2010

Short on time of late, I nevertheless offer this little gem: