The Beginning of the Economic Problems in North Korea

The government refused to admit that there was an economical problem in order to keep the respect of those within the nation and outside the nation.

Most jobs that were available were offered by the state and even they didn’t offer nearly enough money to live on. The only other way to earn money was by setting up your own market, as there were no large independent business’s; even this was ineffective as there were very few things that could be sold legally and even that was shunned upon.This means the government could ensure that most would work hard and show complete allegiance to the regime every day just to receive coupons which can be handed in to the state run stores.

However this system failed  in the 1990s when people began to realise the economy was failing. The rations were becoming smaller and more sporadic Koreans were forced to look at other ways to get food. The appeal of buying from the black market increased as the quality and availability of food from the state stores decreased;the foreign food on the black market is often of better quality and cheaper. The more successful the black market is the more people consider becoming a part of it, both as buyers and as storekeepers.

Another piece of evidence the people were presented with about the fall in the economy in the 1990s was the fact that there was no longer money to buy resources for people’s jobs. It became a domino effect ,once the material for the clothes could no longer be made at one factory there was no longer anything for the employees at the the clothes factory to do. Eventually the government ran out of money to pay their employees.

They were kept at work under the false pretences that the lack of resources was temporary, keeping the citizen’s faith in the economy. Employees had to arrive on time for work everyday because otherwise they risked being punished; if it was up to a week and they didn’t have a good reason then they would be sent to a labor camp. They were kept at work to stop them from working at black markets and other places that would take the money away from the government.
Electricity began to run out, at first it would go of randomly, then it would come on randomly, eventually people began to realise that the electricity wouldn’t come on again.

North korean Coupon

 

Why a One Man Show Never Works, Especially in Economics

The Economy of North Korea is ‘centrally planned’; meaning most of the money is controlled by the government, citizens can only buy from government stores and they only receive money from their state jobs. The problem with this is whilst an entrepreneur their mistakes as their company will suffer because of them a dictator isn’t the one realises who pays for his mistakes so he often doesn’t realise the full effect of his mistakes until it is too late. The dictator’s of North Korea don’t use the things that are made in factories, so they don’t realise that whilst the citizens will use the products as they have no choice they won’t sell any exports because everyone else has better alternatives. This results in no money from abroad. Meaning the government can’t afford to lose money through exports. They are always guaranteed food to eat and a comfortable bed to sleep in so the don’t have to be fully aware of the food they are taking away when they yet again develop their nuclear program.