 This is Mises Weekends with your host Jeff Deist. Hey ladies and gentlemen welcome back once again to Mises Weekends. I'm joined by someone I'm sure most of you know Michael Malis. He's an author. He co-writes a lot of books with celebrities. He's on Fox shows like Kennedy all the time and at least for our purposes he's perhaps most famous for his book Dear Reader which is an in-the-voice autobiography from the perspective of Kim Jong-il in North Korea so what we're talking about today is sort of in scare quotes the economics of North Korea because obviously Michael has been there and has a perspective that Michael I'm going to say I can't imagine there's more than maybe a hundred Americans or so who have even decided to go there since the Korean War but maybe I'm wrong you talk about it not being that easy that hard to visit. I'm sure it's more than a hundred to be fair I mean because it's been what 60 years but it's not a huge number at all. It's a pain in the ass. Well so what's interesting is it's difficult to find aggregate economic data about North Korea. GDP is this sort of you know put your finger in the air type prediction. Some people say it's about 30 billion dollars which is maybe a little over a thousand dollars per capita so what's interesting to me is is by that measure alone if that's ballpark true it's not necessarily among the five or ten poorest places on earth. Would you agree or disagree with that? I mean the poverty is not the problem do you know what I mean if they were just poor I wouldn't care about them one way or another so you know so to speak it's that's doesn't isn't what makes North Korea uniquely terrible well so when you when you arrive did they require you to exchange US dollars for their local currency? No no no so here's why North Korean tourism became a thing and this just speaks to something that all the listeners will be very interested in. Before the Cold War ended Kim Il-sung the great leader played the Soviet Union and China against each other and basically North Korea was a literal welfare state so what they did is they would have something called friendship prices so Soviet Union would send North Korea oil and North Korea in barter would sell them like crappy socks that Russians could have no use for and they would call it a wash so by this way they subsidized the North Korean economy however with the collapse of the Soviet Union no one neither China nor now Russia wanted to subsidize this insane regime so they without oil I talked about this in my book it was an inversion of that great Leonard Reed SAI pencil because without oil you can't run the factories without factories you can't produce fertilizer without fertilizer you can't grow enough food in this mountainous country and that led to a famine of one to two million people so which was a genocide so what they desperately want for them tourists is hard currency because obviously we're not big fans of the US Fiat dollars but the US Fiat is a lot less of a rights violation than the North Korean currency so they want you to spend your US dollars or RMB or euros because then that will something that will be a hold of value I think it's illegal for foreigners to use they have different currencies for different people so I believe it's illegal for foreigners to use North Korean currency so it's interesting they have the central people's committee they actually do have industries they're strictly planned it looks like they have some mining some degree of agriculture, farming, fishing did you I know you travel in the countryside up to the DMZ did you see much in the way of of anything industrious happening you know all these Kami countries there it's not like the hippies of the left they are real big on industry and factories and all this stuff the North Korean seal has like a dam you know these are like power wires so they took you you come to New York or even if I went to Auburn you're not taking me to the coal mine or you're not taking me to the Con Ed plant in North Korea oh yeah we went to the water bottling factory we went to the hospital one of the things that they make people go to is this barrage which is a kind of dam that they built and you have to climb like 10 stories of stairs they could tell you about this great barrage it's like the fourth biggest in the world or something and all the tourists who go there are like you're just showing me a dam you know I kind of looked at a picture of this back home so they're very big on their industry and very proud of it because that's their claim that before the great leader Kim Il Sung drove out the wicked Jap devils as they call them you know he brought industry to North Korea and turned it from an agrarian country into the 21st century that's a very Stalinist idea that you know once the communists take over they what was it Len's quote is that communism is socialism plus electricity why do you think that the Chinese don't do more why don't they sort of take them as a client state do you think you think North Korea is an embarrassment for China North Korea is clearly an embarrassment for China and I'll give you a couple of examples during the 70s they built a I think it's story statue of the great leader Kim Il Sung and Pyongyang you can see a photo of me next to that statue on my website and they played it in gold and the Chinese leadership at the time said you know we're communists maybe a giant gold plated statue isn't what we're about so they're like good point and they change it to bronze so that was one of the problems that they had between China and North Korea but North Korea in their propaganda and in their worldview they revel in the fact that they're a country that's the size of Pennsylvania obviously they wouldn't use that reference and they are defying China the United States Russia Japan they call themselves a shrimp among whales so the fact that China will say do this and that the Marshall Kim Jong Un concerned the population say look we're getting pressure from all these other countries that are bigger than us but I'm so tough I'm so great I'm defying them and he has a point. When you look at the people you met who obviously your guides and some other people you met were relatively fortunate by North Korean standards and clearly they're steering you around as to where you can go but did you gain any sense of sort of the personal economics of individuals there are they their habitations their heat air conditioning diet I mean all these things we hear about but we don't you know it seems very amorphous to us how they're sort of day to day personal economics are I mean they they took us to a farm and we there was like a model family you know what I mean a grandma and grandkids the grandkids are filthy I mean quite literally filthy I mean the home is fake because they've got a TV and all this other stuff but everywhere you go in North Korea everywhere there is a crack on the wall a stain on the carpet some rust in the in the bathroom even on everywhere you go there's a fly even on the on the plane there was a fly which is like a such a biblical symbol of evil and corruption you go to their Central Park they have this big fountain the water is not running the lights aren't on it's covered in mildew I mean the decay and the scent like I have I brought that books from North Korea you can smell that decay in these books it's impossible to describe it's almost like a seller but worse so when you're in Pyongyang at night capital city right any capital city the fact that half the buildings don't have electricity I mean and this is as good as it gets so everywhere you go this idea that some people have in the west that you go to Pyongyang and it's like going to Epcot it is not at all like that it is completely just decaying and I think one of the reasons is if you're pointing out that things are broken or wrong that in effect is criticized in the government suddenly so people know how to keep their heads down and their mouth shut you don't want to be a troublemaker although I was called a troublemaker by my guide but that's okay well how do they even have if we think about the economics is sort of a concentration camp how do they even have black markets I mean you talk about seeing people at the airport bringing western electronics but what do they have to even trade on a black market so a lot of times people go to China and bring back food so what one of the good things about the weakness of the regime is that the thugs the police the enforcers are much more susceptible to bribery because basically it works like a tax you'll have a black market in a public square it's open you know open air the cops will come down he gets his cut looks the other way and you have this exchange and the government every so often tries to crack down but since they can't provide food their hands are essentially being tied so this is a great example of kind of this you know a lot of libertarian talk about agorism you know having the black markets supersede the state of Korea and what's very very healthy about it is you can tell me all day long and convince me that the great leader Kim Il Sung is the most wonderful person to ever live that's fine you're not going to be able to convince me that it's great that my kids are starting I mean that's a very hard sell to make so at the end of the day you could have this cognitive dissonance that yet great leader Kim Il Sung is the best person ever it's the Americans fault that we don't have food fine but I'm still not going to obey the law because I'm going to make sure I have food in my and what's really sick about you know there's so many layers of people with North Korea during the 90s when the famine hit and they refused to allow food in the people who were the most loyal were the first ones to starve because they thought food's coming food's coming I trust the leader he's always provided us in the past and the ones who are like this is nonsense I got to look out for number one those are the ones who managed to get food so I mean this talks about how the totalitarian state perverts any sense of decency and sanity in in peaceful relations between human beings what's interesting to me is the mysteriousness surrounding Kim Jong-il usually excuse me Kim Jong-un usually they're you know in a lot of poor countries the leaders live in in these gilded palaces and are very ostentatious with their wealth and their roles Royce's and such whereas here you said you know you don't even really know which government building is which and there's no great palace for the supreme leader right I mean they weren't even told that he existed until I think it was 2009 so the leadership is not something that's discussed in the sense that we can talk about you know the Kennedy family or the Clinton dynasty or the bushes they are treated as this kind of supernatural almost entities so the fact that recently Kim Jong-un is trotting his life around this is a very recent development during his lifetime it was not clear at all how many wives Kim Jong-il had he even became a bigamist because as I talk about my book his first wife was kept secret from his father the great leader Kim Il-sung because she was born she had she was previously married and so on and so forth so he got married again secretly so this family is not there's no books at the airport where you can learn what I mean yeah there are books about Kim Jong-il was like as a kid but this does not bear truth to reality well at least judging by you know your Korean guides your host that it doesn't seem like that like Koreans go around thinking that they're part of this communist ideology or even worshiping the Kim family that they're more just seeing themselves as Koreans and this is what they have to do is it did you sense any sort of sort of open ideological thought or is this just getting through the day I think when you're dealing with elites in cities just like here you're going to have you know how like in New York and I'm speaking so from Brooklyn and this is not something I admire but there's this snide contempt for like the heartland right it's just like oh we're better than them so when the people who I talked to in Pyongyang my guide she very much saw herself as this urban cosmopolitan figure she knew about slang from South Korea she was trying to present herself and in a sense she was because to even step foot in Pyongyang by law you have to be very high up in North Korean society so if you're living there and I mean let alone interacting with foreigners you are off the charts in terms of your status in that country that's being a celebrity effectively so she very much was aware of her status and here's one telling story in North and I was I was very much trying to empathize with her and see things from her perspective especially having been born in the Soviet Union at one point she talked about how during once a year everyone by law has to go the countryside and help with the rice harvest and naively I said oh that sounds really nice and Jeff you can imagine that actually it could be something that's fun like we're all doing this together maybe like a 4th July thing and she looks at me she's like yeah it's great and you know I felt stupid because you realize this woman who's like a millionaire and she has a lot of skills and like as Fru Fru as it gets for her it's like green acres it's like I gotta go with the hit and I asked her I said you know back home we look down on people at the countryside is it the same thing here she's like she literally said of course and it's which is so interesting because so much of their propaganda is the farmer the guy in touch with the soil these are the true people and she's like I mean the disdain from her was about this you know their propaganda is to create what they call a monolithic ideological system the idea that everyone in North Korea thinks with one mind it is not that way at all they are so normal and trying to be normal in the most abnormal country at Earth I was shocked and delighted by how easy it was to have a conversation with her. Well you know they're so close even compared we talked about the former Soviet Union but the Soviet Union had the entire West to look at in terms of prices technology media clothes music you name it I mean here we talk about the impossibility of calculation in a socialist system here other than a little trickle maybe of goods from China but otherwise how do they have an economy do they actually talk about the Central People's Committee they actually brag about their 5 and 7 year plans? Not anymore so here's another good example so you know what's funny with these commie states is that every so often they'll have a new movement right Sankovite I think was the Russian one like oh now we're going to start all working harder and faster at the same time even though that was our plan 3 years ago and our plan 10 years ago so they had something called the Cholima movement which you know it's funny because they'll steal an idea from Russia and pretend it's original so it's like oh it's completely different because ours has the symbol of a pegasus so the Cholima Cholima is there it's a pegasus it's their symbol of speed and I asked my guide I go what do you want me to send you from abroad if I could send you something and she said a Porsche and I said lady I'm not sending you a Porsche she said immediately she's quick I said lady I'm not sending you a Porsche and don't ask me to send you Cholima either she goes we have the original one here what do I need you to send it to me for so she was very very quick so again every so often they'll have these arguments but that has fallen by the wayside and that used to be very much the case and the great leader Kim Il Sung there would be the first 5 year plan and the 3 year plan I talk about this at length in my book and the big argument was are we going to have heavy industry or light industry it's these very kind of old school communist arguments and now I think that is not a thing whatsoever I think the congress meets very rarely and it's much more of a year by year situation. You know I saw some of your back and forth on Twitter with various people since obviously North Korea has been in the news with the Olympics and everything do you think that there are concentration camps secret concentration camps that maybe even your host didn't know about I mean do people whisper about refer to things or their gulags you know places where criminals are setting big numbers. There's clearly concentration camps you could see them on Google Earth there's a great organization called Human Rights in North Korea every year they'll have a different an update on the concentration camp system and there's different levels of camps some you get to leave some your death sentences I've heard very many conflicting reports from North Koreans I've spoken to and research about how much do the North Koreans know about these camps what is very known is every so often people disappear with their families and I spoke to one of my a refugee I knew and I said what did you think of this and she's like it was a good thing because clearly they did something wrong and you know they broke the law and we can relate to that because there's a lot of times if you see someone on TV going to jail you think okay it's a good thing they're going to jail you don't put two and two together that what they may have done is listen to a CD of you know South Korean music or something like that it's something that you have that you know you're taught a certain thing since you're a kid but yeah they very much are aware at any but that's the other misconception it's not the kind of thing where you know Jeff if I steal a pencil I'm going to camp it's not binary that like as soon as you do something wrong you're going to camp there's levels of punishment so people live in fear yeah going to camp but also a very common punishment is oh you're a college professor you trade the party now you're going to work be a farm hand for the rest of your life so yeah that's a far cry from the camp but it's still quite a step down that now you have to work the earth and you'll never have a second set of clothes. Do you think there's any chance I mean what would it take to get mobile devices into North Korea what would it take to get Wi-Fi beamed in from Cuba I know they have cell phones what would it take to open up in terms of communication internet so that that's what they have now is you'll have people in the northeast is where the people who are most disloyal to the regime are forced to live and there's the border between that and China is very porous so you will have like people who are in South Korea will call these brokers using like Chinese cell phones and communicate with their family back home and this is a very big mechanism for information to be getting into North Korea so one of the great things about information is if I want to smuggle guns if I want to smuggle drugs you know guns will set off a metal detector a dog will smell drugs information you can't bottle that up it costs nothing to move it costs nothing to transmit I tell it to you I still have it in my mind so it's very very very hard to control information especially in a gossipy culture like North Korea and that's been a very healthy thing where you know there's an expression I forget the exact expression but it's something how like you know how the walls have ears so people are very paranoid and there's certain things you just do not discuss unless it's with your family but there's levels you know so and there's also you know and I knew this growing up coming from a Soviet household how you can you know do double talk and tell tell the information but you have plausible deniability like for example you know back in the day my mom called her mom in Russia and would be like oh does your neighbor want to come visit America in March oh no that's bad weather in America you know what I mean even though someone's listening on the phone and everyone knows what's going on but you could still play dumb so there's all these little tricks that they have to work around the sensors and that's why in many ways the North Korean propaganda has changed and their hold is really weakening on the people year by year well last question for you is about demographics I read an interesting article from this hedge fund manager who says well there's a billion gallons billion barriers of oil in Korea and they have reasonably young demographics are people having kids I mean is it a is it a young country in that sense is there any hope that the demographics are going to change things I mean as sick as it sounds I would bet money that the old people died off because it's going to be very you're not having medical care it's going to be very easy to I mean life expectancy is not going to be very high so yeah people are having kids absolutely and that is and again it's the younger people are becoming much more cynical because they don't remember the so-called good times under the great leader Kim Il-sung he died in 94 when there was kind of food on the table when you did have you know China and the Soviet Union kind of protecting the North Korean regime when Kim and I talked about this in the book also when Kim Jong-il shortly before he takes over they had a propaganda campaign called let's eat two meals a day because they said having three meals a day is unhealthy so no one needs to be told this do you know what I mean so it's it's a very they don't remember what it was like when North Korea was strong and proud Well Michael Malis we're about out of time thanks so much for that I can't recommend the book enough my dear reader an unauthorized buyer for my son my 11 year old son loved it be sure to follow Michael Malis on Twitter and subscribe to his YouTube channel because he's going to start doing live feeds at YouTube so Michael thanks a lot again for your time ladies and gentlemen have a great weekend