North Korea

The Wall Street Journal has an interesting story this morning about North Korea abruptly rejecting all food aid immediately. Instead they're going to rely on their reported record harvest. The story is interesting in and of itself, however, the broader story is yet another refutation of the Communist society and the power of free markets to topple them.

Much of the focus was on agriculture. Collective farms had to deliver a portion of their output to the state-run Public Distribution System for sale to citizens at subsidized prices. But the rest could be sold at higher prices in the market. Farmers also were permitted to till private plots and sell produce in small markets that had sprung up around the country.

All this appears to have helped boost food production, augmented by big grain shipments from China and South Korea. By last year, many North Koreans were obtaining much of their food from the market, while the government's distribution system was withering.

Kim Jong Il apparently couldn't handle his distribution system withering. If he can't control the food there might be other forces around to challenge his authority:

The revival of the ration system also gives the government an important tool to control the population. "The government's influence over its people has diminished with the rise of the market," says Lee Young Hoon, an economist who tracks North Korea for South Korea's central bank. "The government doesn't want to stand by and let this happen."
...
Taking control of food sales also allows the government to clamp down on flows of money that have created rival power centers. "Some in the elite started making money. And power groups started to form around the flow of cash," says a senior U.S. official involved in North Korea policy. "There is a high level of discomfort with the redistribution of wealth and the new loyalty groupings that have been forming around people with access to money."

This seems like one last gasp for the Dear Leader. If this rationing system doesn't work well, some of the other people who have gained power through the market system might have enough power to topple the government, or at least carve out a more free market approach. Kim Jong is no dummy, he knows if there is any kind of free market, he can't last.