In light of the death of Kim Jong-Il, I rewatched a clip from the Vice Guide to North Korea–a funny, gonzo-journalism inside look at the Hermit Kingdom. I don’t know how much the documentarians know about libertarianism or economics, but the film gives one of the best illustrations of how government can be so unchained to reality that it literally becomes absurd.
Central planning of the economy leads to failure on a massive scale–in the year 2011, North Korea lacks the basic services that America fulfilled 80 years ago: food, water, and electricity. Why is that? Because the economy is directed by the government, resources are devoted where there is no demand, and we see whole towns abandoned and roads unutilized. “There is no nothing… nothing is happening anywhere.” It’s almost as if the entire country is one big, failed business enterprise that was never allowed to go bankrupt.
There is no market to incentivize fulfilling the actual demand for food and electricity, and then the North Korean people starve and live in poverty.
As I once heard Tom Palmer say: there are no causes of poverty, because that is man’s natural state. We must ask, what are the causes of wealth?