Friday, May 03, 2013

Forget Bitcoins

Here comes the Choco Pie:
The Choco Pie is a mouth-drying, individually wrapped slab of cake, marshmallow and chocolate, and in South Korea it is as important a part of childhood as Britain’s Mars bar or the American Twinkie. It is manufactured by the Orion company of Seoul, exported across Asia, and consumed in an arc of countries from Japan to Uzbekistan. In 2004, South Korean manufacturers began to set up factories in the North Korean city of Kaesong, an unprecedented experiment in co-operation between the fraternal enemies, and the core of what the South Korean government called its Sunshine Policy. Along with South Korean managers, manufacturing technology, telephone lines and a motorway, they brought the Choco Pie.
Within a few months, the bosses from Seoul began slipping their North Korean workers a Choco Pie or two as a perk. In part, this was a response to the Kaesong wage regime: rather than being paid directly, salaries were processed by the North Korean authorities, which then handed over the money minus hefty deductions. The Choco Pies were a small piece of South Korean largesse, but it was difficult at first to know how enthusiastically they were being received. The fact that Orion wrappers were nowhere to be found in the rubbish bins of Kaesong might have suggested indifference, but the opposite was true: the local workers, most of them women, had quickly realised that the Choco Pies were too delicious and valuable to eat. Kaesong employees, the best paid in North Korea and among the worst paid in Asia, were hoarding their pies, and selling them on at remarkably inflated prices: as high as the equivalent of $10 a piece, a large proportion of their monthly take home pay. The cakes found their way onto the black market in Pyongyang; corrupt soldiers in Kaesong, who routinely exacted ‘fines’ from the South Korean managers, began to accept, and sometimes require, payment in chocolate and marshmallow. By some estimates, 150,000 Choco Pies were being dispensed in Kaesong every day.
 Translated: once again, money is anything the people think is money: decorated paper, stone wheels, digital blips, even shiny pieces of metal.  And not even the most repressive of governments is any better than so so at controlling it.  It's all adumbrated in a famous econ paper which had the air of novelty when it was published, though it is pretty much conventional wisdom today.

The excerpt is from  Richard Lloyd Parry, "Advantage Pyongyang," reviewing Victor Cha, The Impossible State in the London Review of Books for May 9.  The whole thing appears to be ungated; it's worth a read.

And BTW, what is it with the LRB?  The showcased items for the week, along with Parry, are James Meek on the Cyprus haircut and Donald MacKenzie on the Whitehall heist bank restructuring of aught eight. Oh, and something about a former prime minister.  For a literary rag isn't this all getting a tad financial?


Anonymous said...

Both your links are to the Camp Radford paper - the one that is supposed to go to the LRB doesn't.

Gee, I guess that means I have to actually go find it. Grumble, grumble, grumble.

Buce said...

Thanks. Corrected, I think.

Edwin Steussy said...

I loved Chocolate Pies when I was in South Korea. Not a great unit of currency, but neither were nylon stockings in 1946 Germany.

Ebenezer Scrooge said...

Primo Levi discussed concentration camp currency. I don't know if he preceded the Camp Radford paper, but Levi at his best was drier than any economist could be, discussing more lachrymose subjects than any economist would dare.