E-letter: Splitting in two

There are some interesting observations to be made around the Yellow Sea, all of a sudden.

Taking North Korea first, it appears as if Kim Jong Un may actually agree to defuse tensions. Irrespective, I have never understood what he is. Possibly, in addition to using his friends and family for mortar practice and dog food, as we hear, he is an idiot.

Kerry Knudsen

Here’s why. I did some research and discovered that North Korea’s per capita GDP is estimated to be $1,584 in U.S. dollars per year. South Korea’s is $37,709.

Why is this? Is it because of available resources? It would be hard to argue that, since North Korea has more land area by 20 percent, and comparable coastline. Its population, however, is only about half, which may have to do with diet, health and gulags.

Here’s the thing. I am no student of North Korea, so have no experience to share, but what if North Korea took a page from its Chinese ally and opened up the economy to some citizen-ownership of businesses and an incentive to make money and sell stuff? On the one hand, it could hardly make things worse than they are currently reported, and if the country only made 20 percent of the per capita GDP as does South Korea, ($7,462), that would be an increase of approximately 470 percent.

Viewing a landscape accent from the back, it seems to have an uncanny resemblance to Kim.

From the despot’s point of view, he could tax the difference at 50 percent, which would make him look like a savior compared to the status quo, and pocket an additional $94 billion, which is more than double what he’s grossing now. In fact, if Trump offered to match North Korea’s entire GDP in trade, that would be less than 10 percent of the trade deficit (not total) the U.S. has with China.

 

Speaking of China, I see that Xi Jinping has anointed himself emperor for life, in the mode of Vladimir Putin, Hugo Chavez, Fidel Castro, Uncle Joe Stalin. Mao Zedong and Vladimir Lenin. Until last week, he was only general secretary of the Communist Party of China, president of the People’s Republic of China, and chairman of the Central Military Commission.

China is fascinating. For starters, it’s a vaguely capitalist economy in a “communist” government. When you go there, you find that Mao is revered and is not seen as a dictator or a communist. He is seen as the emperor of the last dynasty. His face still adorns the currency and, allegedly, the central committee rules by asking itself, “what would Mao do?”

The same is true of Chavez when you go to Central America. Sitting in the airport at El Salvador, you can watch non-stop rants from the now-dead dictator, excoriating all republics, with particular focus on the U.S. And the common people buy it.

Now, it appears all that may change.

 

Politics is fascinating and has a radical effect on people and the world. Back in the 16th Century, an Italian courtier named Niccolo Machiavelli wrote The Prince, a treatise on politics that has been a major resource and influence on world-wide political thought since. The Prince is not a “nice” work. Not at all, and Machiavelli is almost universally viewed as a “bad guy.” In fairness, he probably was making observations, rather than suggestions. Italy in the 1500s was an unpretty place if you had a weak hand. Nonetheless, the work has been influential, and it’s worth knowing what people are reading out there.

In The Prince, Machiavelli make the point early on that there are only two types of government: a republic, and a principality. I asked Conrad Black some months ago what he thought of that, and he does not agree. He sees communism, socialism, dictatorships, democracies, republics and others as separate and distinct options. So, if you disagree with Machiavelli, you are in good company.

However, what if Machiavelli was right?

Let’s pretend, just for a moment, that he was. In that case, all forms of government would either be governed by “the many,” or republics, by whatever name, or by “the one,” or principalities, by whatever name.

Mao, Chavez, Lenin, Castro and the rest promised government by the people. Look it up. And, while Mao killed approximately 60 millions of his citizens, the people in China give no evidence of either knowing that or believing it. When you speak with them, you often hear such oblique references as, “my uncle died in the famine.” Such is the fate of people kept in ignorance. I have always wanted to ask tour guides who saved China from Japan nearly 80 years ago. They certainly have no love for Japan, and always cite the plunder and killing when you visit the Forbidden City.

Back to politics, and let’s not leave Hitler out of the conversation. Talk about a despot that won’t die!! He was another that promised a totalitarian welfare state. And likely he produced it. We will never know, since rulers and democracies carry the seeds of their own destruction.

It is fascinating that after all we know of history, we still seem to be split in two politically, no matter which country you are in or what economic system. There are people that believe government should take care of them, preferably by taking from others, and there are people that make stuff (like money) and want to be acknowledged and rewarded for their work.

One group looks to its prince; the other looks to its peers.

Interestingly, it appears that principalities – now we’ll start calling them dictatorships – and republics are not permanent. Germany in the ʼ30s went from democracy to dictatorship, as did Cuba, Venezuela and others. Russia went from dictatorship to dictatorship, as is fairly common in history. Canada, India, Scandinavia and others went from (benevolent) dictatorship to democracy. And so on….

So the Chinese move is an interesting one. There has been much speculation whether China was moving toward democracy since it allowed people to own businesses and keep money, or capitalism. Xi’s move last week seems to counter that. According to reports, the general people want another dynasty. They want to be ruled by a “benevolent dictator,” or a “good king.” And I wish them the best. Nothing better than benevolence and goodness in my book.

And there have been a few good and benevolent emperors. The problem is, when they end up being neither, such as good-ole Hugo and Uncle Joe. Care to buy a gold mine in Venezuela?

It will be interesting to see how this plays out. In the intermediate term, I expect our competition with China will ease. I think Trump’s view of trade will keep Xi dancing, and I think there will be challenges to his power, since there always are. Canadian businesses are likely going to stay under the radar, while Chinese, Syrian, Venezuelan and others garner a bit of negative scrutiny from countries more aligned with the “republic” point of view.

In fact, we might take a lesson from Old Uncle Joe and see opportunity in chaos.

For now, I’m betting on the republics.

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