How North Korea Makes Money

How North Korea Makes Money


This video is sponsored by CuriosityStream. Use the link in the description to watch thousands
of documentaries and get access to our new streaming service, Nebula, at no extra cost. About a three-hour drive from North Korea’s
capital, Pyongyang, lies what might be the world’s most isolated ski resort. Masik Pass offers 11 runs and 4 lifts, plus
a gear rental shop. The attached luxury hotel features 120 rooms,
complete with a swimming pool, sauna, bar, and karaoke room. Snowmobiles were imported from China and chairlifts
from Austria, after a Swiss company refused to sell them, which North Korea called a “serious
human rights abuse”. The resort has four and a half stars on Trip
Advisor from genuine, happy tourists. The majority of its visitors, however, come
from within North Korea. While the country is almost exclusively portrayed
as a poor, starved relic of the past, recent reports from defectors have begun to paint
a much more nuanced picture. In reality, Pyongyang cafes are filled with
patrons reading from tablets and teenagers making phone calls, some driving BMWs and
Mercedes. The key to understanding who is really in
charge, whether a revolution will ever occur, and what daily life is like, is to see how
North Korea – both the state and the people within it – make money. After Swiss cheese, bad haircuts, and empty
buildings, North Korea is best known for seemingly wanting to end the human race in a giant nuclear
explosion. When Kim Jong-Un finds his country unusually
hungry or one of his yachts, in need of repairs, the country turns into that annoying kid on
the playground who will not shut up until you share your Hot Cheetos. Insults are hurled, threats made, and missiles
launched. Inevitably, the U.S. sees no choice but to
respond, agreeing to ease sanctions or grant food aid in exchange for a return to normalcy. Now, with their mouths freshly fed, Kim and
his compatriots will suddenly turn from murderous dictators to charming, levelheaded, although,
admittedly, stylistically eccentric… diplomats. Then, 6, 12, 18 months later, like clockwork,
we’ll all have Déjà Vu. But while Kim’s seeming obsession with nuclear
toys attracts nearly all the media attention, in reality, it’s just one of many strategies
the world’s most secretive regime has for accomplishing its much larger goal: staying
alive. The fundamental challenge for North Korea
is that it cannot truly, verifiably, and permanently give up its nuclear capabilities without becoming,
at best, irrelevant. At the same time, it cannot truly thrive with
the level of international sanctions that come with threatening to sink an entire U.S.
state. Thus, all three generations of leadership
have been forced to master the art of negotiation: to extract just enough aid to stay afloat
while never actually giving up its one and only source of leverage. Before founding the Democratic People’s
Republic of Korea, Kim Il-Sung was an unlikely leader. Having fought alongside Chinese communists
and later in the Soviet army, the first Kim was well prepared, militarily, but lacked
the more soft skills considered necessary to oversee a communist republic. His education was poor, Korean mediocre, and
understanding of Marxist theory deemed insufficient. Despite this initial hesitation, he was eventually
selected to lead the new state, although, with much oversight. Soviet advisors drafted North Korea’s constitution
and approved all of its major speeches in advance, making it a near-perfect puppet-state,
or, in gentler terms, a “Soviet Satellite Regime”. By the end of the Korean War, Kim Il-Sung
had become a national hero and icon – praise which fueled grander ambitions. His devotion to socialism soon morphed into
a strong sense of nationalism – a desire to be more than Moscow or Beijing’s puppet. Many Soviet officers were purged from government
positions and for several decades, North Korea intentionally positioned itself between the
Soviet Union and China, realizing it could play them off each other. Whatever Moscow gave or promised, Beijing
was sure to match, and then some, and vice versa. Both countries knew they were being played,
of course, but preferred this to the far worse alternative: ceding influence to the other. This dynamic of reluctant support, in fact,
has more or less continued to this day. Conventional wisdom portrays China as North
Korea’s only ally, or even puppet-state. The reality is North Korea hasn’t been a
true puppet-state for many decades, and with China, it has less a marriage and more an
opportunistic relationship. China’s strategic interests overlap with
North Korea’s continued existence, not necessarily success or prosperity. At a base level, what Beijing wants is nothing
– stability. By far, its worst-case scenario is a dissolved
or failed North Korea, after which, up to 25 million, unskilled, culturally dissimilar
refugees will flood into some of its most economically-weak North-Eastern provinces. Even worse would be the accompanying advance
of American forces on China’s doorstep. The North, in other words, acts as a nice
buffer from U.S. troops stationed in the South. As long as the North doesn’t push tensions
too high, China is happy more or less maintaining the status quo. Ideally, it would like to see Kim Jong-Un
follow its own example of economic reform and opening up, making it less dependent on
nuclear threats for survival, and potentially justifying a retreat by American forces. Realistically, though, China also knows its
influence is limited. China is indeed North Korea’s largest trade
partner, by a mile, but it’s easy to overstate the leverage from trade with a country whose
propaganda can offset almost any internal challenge. In simple terms, Beijing could destroy North
Korea – militarily or economically. It almost certainly also has a plan for regime
change should it ever be deemed necessary. What it lacks is the fine-grained ability
to influence it. And because China wants stability first and
foremost, it has no reason, currently, to use its blunt weapon, leaving it with limited
leverage. So while there exists a clear power dynamic
between the two nations, neither is likely to do anything too dramatic. When Kim met with Xi Jinping in 2018, the
supreme leader was seen obediently taking notes while the Chinese president spoke. China has historically condemned its missile
tests and voted in favor of UN sanctions. And yet Xi recently made the first visit to
Pyongyang by a Chinese leader in 14 years. North Korea, for its part, understands the
need to, at a minimum, not anger the closest thing it has to a friend. It’s all too familiar with the cost of losing
an ally. After the collapse of the Soviet Union in
1991, North Korea suffered a devastating famine which ultimately killed somewhere between
200,000 and three million people. Before this, food was distributed via its
Public Distribution System – PDS – which had farmers surrender their harvest to the government,
who then allocated it amongst the population. This model worked well during the 50s, 60s,
and 70s, even making Chinese towns on the border jealous. In the 80s and 90s, however, the system came
violently crashing down. 450 grams of food rations per day in 1994
became 128 grams by 1997. Soon only six percent of the population received
any food from the government who promised to feed it. This, arguably, was the most pivotal moment
in the nation’s history, alongside the deaths of its first two leaders. The PDS has never fully recovered, leaving
most of its 25 million people to fend for themselves. Officially, Capitalism doesn’t exist here
– private property and trade are both highly illegal. In practice, however, it can be seen everywhere
– from those in poverty all the way to the highest levels of the regime. Almost everyone is assigned a government job,
and yet 62% of defectors surveyed in 2010 say they had worked unofficial, gray market
jobs. Married women can register as full-time housewives
rather than work an official job – giving them the freedom to start a private enterprise. Across the country, women can be seen in road-side
markets selling food, and homemade or imported goods like Russian cigarettes and Chinese
beer. Ironically, because of this, women’s rights
are surprisingly strong in North Korea, where they tend to make many multiples of their
husband’s income. As expected, the government is aware of this
illegal activity and could, in theory, eliminate it entirely. But having never recovered from a now-three
decade-old famine, most of the population has come to depend on private markets for
basic survival. Additionally, the majority of this trade is
conducted purely for material, not political, reasons. The poor simply wish to get by and the rich
only seek a more luxurious life – not an end to the regime. So the state simultaneously manages markets
through selective enforcement and also sometimes even encourages it. The “August 3rd Rule”, for example, allows
one to pay a fee and be exempted from official work – essentially profiting from instead
of cracking down on private enterprise. Still, there are limits. North Korean banknotes were ordered to be
exchanged in 2009 with a limit of 100,000 Won per person – wiping out many family savings,
and causing the closest thing North Korea has likely ever seen to a protest. This taught North Koreans not to trust their
own currency. So, today, most unofficial transactions involve
a foreign currency – usually the Chinese Yuan. And just as individuals resort to Capitalism
– so do government committees and departments. For decades, many offices have been given
limited or no resources, forcing them to generate their own. Anyone with any authority, therefore, is likely
to use their influence to start a business, sometimes using the national military as workers. Those who bribe the right people and play
the game well can become fabulously rich – even by international standards. These newly-wealthy families drive luxury
cars, own cell phones, and eat Western food in Pyongyang, which some jokingly refer to
as the “Dubai” of North Korea. In this way, and many others, North Korea
is two very different countries: the North Korea seen by the outside world, and the one
lived by the vast majority of its population. The North Korea of tall buildings and bright
lights you see in tours and pictures, and the one, only minutes away, of sprawling fields
and flickering, if any, electricity. The famous monument to socialism, and the
private shops selling Western clothes only blocks away. And, finally, an unwavering ally, on the surface,
who, in reality, is, at best, ambivalent. For now, the system works. Inevitably, though, someday in the future,
like the Soviet-era machines on which its factories run, North Korea will simply stop
working – for any number of potentially trivial reasons. In truth, it’s remarkable how long it has
worked. But, for the time being, this taped-together,
occasionally-in-need-of-kicking, jury-rigged machine keeps slowly, inefficiently chugging
along. For all of its strangeness, the genius of
North Korea, the reason for its survival – is its relative self-sufficiency. It knows how little say a small nation like
itself has in the larger world. Similarly, I and many of your favorite YouTubers
– from Kurzgesagt to Wendover Productions, CGP Grey, and Real Engineering – are very
much at the whim of YouTube as a whole and are creating our own, special place, away
from the algorithm. Rather than replace YouTube, Nebula is a new
place to watch your favorite channels without programmatic ads and with exclusives, like
my extra-long video coming soon. What’s especially cool about this is that
we’ve partnered with CuriosityStream, where you can watch thousands of documentaries about
science, technology, nature, and history, so you can get access to it AND Nebula at
no extra cost with the link in the description. So, for just under twenty dollars a year,
you’ll get access to thousands of documentaries and an email with free access to Nebula. You can even try both with the free trial
included in that same link in the description. Thanks to CuriosityStream for sponsoring this
video and, as always, to you for watching.

100 Comments on "How North Korea Makes Money"


  1. The world is still waiting for a revolution to happen in the United States. Nobody doesn't understand why you don't overthrow your corrupt government and police state in the name of freedom. You keep electing the same corrupt rotten politicians, year after year after year. You pay such high taxes and get so little back – it all goes to the parasitic military industrial and prison complex and to fat cat politician salaries. Your public schools are brainwashing centers to indoctrinate people with patriotism, nationalism, and statism. Your media outlets all cower and laud the state and some.. like Fox News… are blatant outright propaganda organs spewing constant lies.

    Reply

  2. USA is more dangerous then any other country and only country to use nuclear weapons against Japan

    Reply

  3. Q: If you were China would you allow a nuclear tipped anything to share your border?
    A: No
    Q: So, who's really giving the launch orders…Kim or Xi?

    Reply

  4. How? I tell you how
    North korea is running by fearness and hate toward Capitalism countries like USA, not just dictatorships and military force

    Reply

  5. North Korea is, in fact, exactly the opposite of self-sufficient. There's nowhere near enough (above-board legal) meaningful economic activity to provide the tax base that would be required to allow the government to continue to operate, so it is absolutely dependent on foreign money, mostly from China. The CCP could effect regime change on a 2-3 year timeline by just doing *nothing*, i.e., by failing to provide economic support any longer. They don't, because the existence of the North Korean state in more or less its present form is politically convenient for the Chinese government (and the amount of money involved is, on the Chinese government budget, not that really all that much), but if that ever ceases to be the case, something will have to give.

    The Kim regime does have other sources of income. Counterfeiting operations, internet crime, remittances from North Korean citizens working in Russian prison camps, etc. But they don't add up to enough to cover the government's expenses. In particular, North Korea has a fairly large military (mostly infantry), which really needs to be paid enough to ensure they can provide for their families better than if they drum out or defect. A large percentage of the soldiers are in it mainly for the financial stability, so if the money dries up, the army's loyalty to the Kim regime would quickly become the kind of open question that tends to lead to a coup. You can't really run a totalitarian state without paying the military. Normally you pay them out of taxes, but this is North Korea: the lion's share of the on-paper per-capita income (discounting black-market activity) consists of salaries for top government officials and the military. There's no way to pay all that out of domestic tax revenue. Some governments can use debt to make up the difference, but there isn't enough investment money within the country to scratch the surface, so it'd have to be international debt, and North Korea's credit rating isn't exactly quadruple A.

    They NEED that foreign money to keep coming in.

    Reply

  6. The nartator can articulate virtually every words, but his antonnation is by far the worse! He should narrate in regular , natural speed. Instead, he seems deliberately slow down his speech. HAVE TO REWIND the video very often in order to grasp what's the meaning. Utterly harsh narration as for a (native) speaker!

    Reply

  7. 7:16 Wrong, the system wasn't either working. It NEVER works. The country simply lost it's main sponsor.

    Reply

  8. USA nukes Japan, twice, threatens everybody, including directly North Korea, with turning them into molten radiated slag, has enough nukes to kill earth a thousand times over. Also USA has invaded either directly, or through proxy, pretty much all of earth at some point or another from WW2, also has roughly the same amount of foreign military bases as there are square kilometres in Singapore.

    North Korea decides to build a nuke to offer a tiny bid of a deterrence against the USA aggression, the USA shouting loudly 'EVIL NORTH KOREA'

    Reply

  9. Russia:
    "Capitalism is bad!"
    Secretly practices capitalism
    China:
    "Capitalism is bad!"
    Secretly practices capitalism
    Vietnam:
    "Capitalism is bad!"
    Secretly practices capitalism
    North Korea:
    "Capitalism is bad!"
    Secretly practices capitalism

    I'm noticing a pattern here

    Reply

  10. Big Advertisement for Nebula a new Couriosity way of Drawing you in to purchase a new viewing platform dmh

    Reply

  11. Our great leader needs no money, for he fills the bellies of our citizens with the North Korean Dollar, printed endlessly to make everyone a billionaire!

    Reply

  12. Its you tube there every kind of people, and they speak what ever they believe, with no knowledge and information about communist system.

    What if I say your food distribution systems come from Communistic system?

    Keep goung you are the brest

    Reply

  13. North Korea took Pres. Clinton and the old hag Madaline Albright for a walk in the park she cut a deal with Kim Sr. mouth balled their reactor for billions in US aid then double crossed these two a -holes and restarted the reactor and nuked up…

    Reply

  14. Women and men both have the same equality in North Korea, because… " ain't NOBODY got rights in North Korea" ( except Kim Jong Un, of course)

    Reply

  15. No wonder people nowadays are incredibly ignorant, they receive bad info from channels like this one.

    North Korea doesn’t “make money”, it expropriates. Regular North Koreans are enslaved, imprisoned, or killed at the whims of the State. Whatever trade there is, they do it at risk of extortion or death by enforcers and/or bureaucrats.

    This video doesn’t do justice to injustices most people in NK suffer. It is a veritable hell on Earth.

    Reply

  16. Weird how on every video in recent years, comments are either memes or lame jokes, no one adding anything useful to the subject anymore.

    Reply

  17. North Korea is that kind of country where if the power goes out in a building, the whole nation goes out too.

    Reply

  18. Until they N.Korea say their story, all these others are just meh. Like always, miscinceptions.
    Wish we could get various perspectives from them.

    Reply

  19. This has ZERO to do with how NK makes money, at least up to the 5-minute mark. That's when I got bored and decided the rest wasn't worth wasting my time on. Lousy effort.

    Reply

  20. Soviet puppet? LOL That made me laugh. Since the old ancient days, north korea is being controlled by Chinese dynasties. Not surprising that their decendants are ignorants including their leaders. But don't get me wrong, I don't hate NoKor people. Just their idiotic punk ass leaders.

    Reply

  21. dude, you ruined it at the end by clearly showing this video is simply a self-promoting content for your new money making platform

    Reply

  22. Huh, so you have a communist dictatorship trying to totally oversee every aspect of life, and when that doesn't work the people return to capitalism naturally. Gee, where have I seen this before?

    Reply

  23. That's an oxymoron, North Korea doesn't work, that's why their citizens still suffer from old world diseases like TB….

    Reply

  24. So the only way North Koreans can't starve is free market capitalism, a western Ideal.
    Imagine my shock

    Reply

  25. typical commie society, 10% at the top regime people, the rest dirt poor. How do you explain the only fat guy in NK is the dear leader??? That regime is a shame for human kind.

    Reply

  26. Here is how the DPRK makes money and the steps for it.

    Step 1: steal it

    Step 2: steal it

    Step 3: I have almost forgot

    steal it

    Reply

  27. Pyongyang is almost the only city where N.korean citizens are "prosperous." The rest are struggling and cant say a word about suffering or, they risk being put in labor camps or the latter. You also didn't mention the accusations of North Koreans (basically govt sanctioned) making meth on the Chinese border. Granted, this isnt confirmed and I doubt it will ever be unless there's a collapse of the country and people speak up. Which is also unlikely since they've been programmed since birth. I can understand why you wouldn't since it isnt officially confirmed and it's just slinging mud. As for the system works, the only two things I can see for system working is them being able to deter invasion and, their "God" leader getting whatever he wants like a little kid. I guess you could also say the capital's citizens are content with their bellies being filled while they hide their heads in the sand. I dont blame them, I'd honestly probably do the same thing if I was in their shoes.

    Reply

  28. Pyongyang is very different from the rest of the country, just be aware of that. The capital is very comfortable compared to much of the country, although there are occasional improvements.

    Reply

  29. If China, North Korea's closest neighbor, isn't worried about nuclear weapons, then neither should America.

    And this video is wrong on several points.

    Reply

  30. North Korea negotiate with the lunatic-in-chief? Has anyone told them that the lunatic-in-chief is the world's worst negotiator?

    Reply

  31. polymatter, you sound like your freaking 15, who the fuck are you to judge, you don't know jack shit about anything.

    Reply

  32. please tell me who in the fucks teenagers are driving BMWs in dprk? Govt employees who take advantage of the system while everyone else starves. Every video shown in this doc has no cars on the road and only bicycles.

    Reply

  33. So Pyonyang is just late 80's St Petersburg or Moscow, some people barely eat and others are rich and live in luxury.

    Reply

  34. Starting at 1:35 didn't the France and Britain give land in appeasement to Hitler and contribute to building up of his army to take over Europe and then he used that army along with Stalin to conquer Poland and begin ethnic cleansing of Jews and other minorities, in a similar fashion how to the US is building up north korea/people's liberation army through trade?

    Reply

  35. That was very interesting. I had no idea that a black market had come to play such a dominant role in North Korea. It does make sense though. I have often wondered how the regime, or, for that matter, the population itself, has been surviving all this time. Now I can see it. The day will come however when the status quo can no longer be maintained. One of two things will happen. Either North Korea will be occupied by China, or it will reunify with South Korea. When the two Germanies were unified, East Germans were astonished at the material prosperity and individual freedom enjoyed in the west. If the Koreas are reunified, that phenomenon is going to be repeated on a grand scale. People engaged in subsistence farming, who don't even get to keep their crops, and have no electricity or indoor plumbing, are going to be confronted with gleaming modern cities, automobiles and electronic appliances, available to all. It will be like taking medieval peasants and plopping them down in modern London or New York. Anthropologists will have a field day studying it, although since most of them swing hard left, they may have great difficulty interpreting what they see.

    Reply

  36. Money is not made. The title should be how does North Korea circumvent sanctions and embargoes to trade goods and services . After all you cant do anything tangible with fiat currency.( it has no utility).

    Reply

  37. They don’t wanna blow the world with nuclear. They just wanna develop it for self defence and they have every right to do it.

    Reply

  38. Since I know this won't apply to people of other ethnicities and nationalities already know this… Dear White Guy, your portrait of North Korea is self-serving, racist and factually selective. Account for the US war on Korea, how US sanctions are actually an act of war, if you really want to undertake Korea. After all, North Korea's maybe ten nukes won't destroy the world. But the US's 60 thousand definitely can. Sincerely, the not-whites.

    Reply

  39. Right off the bat you state bullshyt. The US has tormented North Korea since the beginning of time. Smaller nations have no choice but to defend themselves or be assimilated into the Central Banking system of the US. Every one of you willfully ignorant bigots need a dose of your own medicine – you need to be born in remote nations like NK and see how you like being threatened or occupied or 'destroyed' by a bullying force like the United Terrorists of America. Only cowards blame the little guy.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *