(Interviewed by Louis James, Editor, International Speculator)
L: So, Doug, there's a new Kim in North Korea. Did you see that he apparently went to school in Switzerland, as both you and I did?
Doug: I did see that. He's supposed to be 28 or 29 years old and attended a boarding school near Bern. Bern is in the German-speaking part of the country, but very close to the French-speaking area, so he could speak both of those languages – plus English, which every educated European speaks, as well as, almost certainly, someone who went to a boarding school there. So this Kim would appear to have some sophistication. You have to assume he was sent there in order to ensure that. But Korea has always been an inward-looking place. I believe well over half of all Koreans are surnamed Kim, Lee, or Park; there aren't a lot of foreigners or outsiders. They used to call it the "Hermit Kingdom" for good reason.
L: Do you think that's significant? Could a Western education be grounds for optimism that this new Kim will allow his subjects to arise from poverty at least a little?
Doug: Well, there were others before him educated in the West, with no visible positive effect – Ho Chi Min, for example.
L: Hm. I didn't know that. On the other hand, many of the rulers of Latin American countries are US-educated, and, while not hardcore free-marketeers, they do tend to understand enough economics to know that nationalizing everything is a recipe for poverty, not prosperity. Mexico is a good example of this.
Doug: That's true, but Correa, the president of Ecuador, is a counterexample. I remember when I met with the president of Bulgaria a few years back. He'd also been educated in the US and spoke perfect English. I'd thought we might have some common ground, but it was like fire and water. I'm not sure that there's a good correlation here, though I'm not sure anyone has done a statistical study. It's a question of the old nature vs. nurture argument, where I come down very much on nature's side. In my own case, I believe I'd be exactly who I am – in terms of moral essence – regardless of the accidents of birth and upbringing. Neither can you make a silk purse out of a sow's ear. I like to offer three famous examples of criminals from classical history: Alexander had Aristotle for a tutor; Nero had Seneca; and Commodus had Marcus Aurelius. A lot of good it did them…
L: I take your meaning regarding Alexander merely being an excellent plunderer, but I suspect that most readers are used to thinking of him as "the Great"… but okay. So, our conclusion for now would have to be, given the examples and counterexamples, that a Western education doesn't guarantee anything. It's unreliably neutral at best.
Doug: Anyway, as we discussed in our conversation on education, most of what passes for education today is just a meaningless mish-mash that no longer emphasizes the liberal arts – which originally referred to the body of knowledge a free man needed to know. And few people study the sciences, which at least tend to teach people something about how the universe really works. It seems to me that most take excruciatingly inane subjects, such as political science and gender studies.
L: Hm. So let's forget about his education. What about Kim's youth? As a simple consequence of being a relatively young man, he can't be as hidebound in last century's communist thinking as his predecessors. Any hope in that?
Doug: Well, I guess there's always hope. But just look at him: he's a porky little butterball. He doesn't have to be as fit as Bruce Lee or Jackie Chan, but looking like a doughball speaks of someone with no self-discipline, used to a life of indolence. It's out of step with a culture where not only is Taekwondo an obsession, but the average person is skinny as a rail. Further, he's likely to have picked up lots of bad habits from his scumbag father and his sociopathic associates. The outlook for sound judgment from the Baby Kim is not encouraging.
L: What I want to know is this: How did a country that's supposed to be a communist state – founded on the core principle of worker emancipation – get turned into a hereditary kingdom? How can that make any sense whatsoever to anyone, and how could anyone stand before the people and spout the necessary bullshit without dying of embarrassment?
Doug: That's actually a fascinating question. The sad fact is that most people still act like chimpanzees; they just aren't happy without a chest-beating leader and a place in the pecking order that supports him. For some perverse reason, people honor hereditary royalty, even though they're almost all swine. People seem to like "strong" leadership. The Germans loved Hitler, the Russians loved Stalin, and the Chinese loved Mao. Americans idealize their worst and most warlike presidents – with Lincoln and the two Roosevelts at the head of the pantheon. So, in the world of realpolitik, Baby Kim would be well advised to give the people what they apparently both want and deserve – good and hard.
L: Ve must haff order!
Doug: Yes, or God forbid, we'd have anarchy!
L: Note to readers who don't know Doug – he's being sarcastic.
Doug: Yes. And as we've discussed, most people conflate anarchy and chaos, even though they are actually opposites. But anyway, the human default mode seems to be to fall back upon reliance on a wise, alpha-male leader who can kiss everything and make it better. This is one of the reasons why in politics, the worst-case outcome is also the most likely outcome.
L: The vast amounts of evidence to the contrary notwithstanding.
Doug: [Chuckles]. Careful. You'll become as cynical as I am…
L: After the last two Kims basically plunged North Korea into a dark age, I don't understand how anyone could possibly say with a straight face that this Kim is just what the place needs.
Doug: Maybe that's just what you say when there's a man with a gun pointed at you, standing just off camera. Or maybe it's just the natural reaction of a jackal when it's close to a hyena. That's in addition to the fact that Korean culture is about the most groupthink-oriented in the world. And perhaps the most nationalistic. It's quite appalling; even South Korea is a place I wouldn't even consider for a second home.
L: Yes… and I have to add that I had more than a few doubts about the sincerity of the hysterical tears we saw on television upon the passing of the previous Kim.
Doug: Sure. But there were masses of sincere mourners in the USSR when Stalin died. As far as I'm concerned, we're dealing with a mass psychological aberration. It makes me question whether the human race isn't speciating on psychological grounds, a bit like HG Wells' Morlocks and Eloi that David Galland discussed a few weeks ago. Beyond that, from a strictly economic perspective, it's a complete mystery to me where a country like North Korea – which, according to every report, has long been losing a battle with chronic malnourishment – gets the capital to build a serious arsenal of nuclear and other weapons.
L: I guess that even if you have a small GDP, if you take most of it and spend it on weapons instead of food, you'll have weapons.
Doug: Weapons and caviar and Johnny Walker Blue for the guys in the palaces. The weapons ensure that things stay that way. The soldiers and police are well fed, so they're happy to do as they're told – or else they'll be demoted back to being half-starved peasants. And they're deified in propaganda, just like their US equivalents. The North Korean people are responsible for their own slavery. I wonder if they'd even understand it if they watched the movie V for Vendetta.
L: I'm sure the guys on top deserve all their perks for doing such a good job taking care of the proletariat. But anyway, does any of this matter? North Korea has a new Kim, probably just as bad as the old Kim – does this affect the geopolitical balance of the world in any meaningful way?
Doug: Well, unless perhaps you happen to be South Korean, it's really not important at all. The only difference between the Kim dynasty and a gang of street thugs is that the Kims are accorded honors and standing as heads of state by the apparatchiks running other nation-states. I understand that when the last Kim died, the UN flew its flags at half-mast… one of thousands of indications of how terminally corrupt the UN is and how totally in need of abolition.
L: Part of the rules of the Good Old Boy's Club. We mustn't look too closely at the wrongdoings of other leaders, lest anyone look into our own. No matter how murderous or evil, we must give them due respect, so we get our own.
Doug: Yes. I'm trying to think of another example of a blatant criminal who died in office recently – seems like there are more who died after leaving office, like Pol Pot and Idi Amin. But I would assume it's SOP to do that for all heads of state.
Well, the good news is that the nation-state, as a form of social organization, is definitely on its way out. Cheap air travel, the Internet and micromanufacturing – just to name three powerful new technologies off the top of my head – are making it increasingly easy for people to live and work where they please. That makes it increasingly difficult for industrial-era organizations like today's governments to control them – as much as most people seem to want to be controlled.
L: I tell my students that in the not-too-distant future, governments will be forced – by people voting with their feet – to stop abusing taxpayers as slaves and start competing for them as customers.
Doug: A big improvement, although the state is still a parasite that serves little useful purpose. You're right, and that's the good news. The bad news is that they won't go down without a fight.
L: Kaddafi showed that. He went on fighting long, long after he had lost, simply refusing to believe that he had.
Doug: Just so. I wonder if the UN half-masted the flags for him because he was still in office when he got what was coming to him… maybe not.
In the current US electoral campaign, it's fascinating to witness the absolutely hysterical and visceral hatred that Ron Paul is generating from the chattering classes. And Ron is as good-tempered and mellow a guy as you could ever hope to find in politics. I'm afraid the transition is going to be…
Doug: Very messy, for all of us small mammals who have to hide while the dinosaurs are thrashing around in their death throes.
L: Sigh. So, back to North Korea. Nothing changes? No need to worry about the new Kim going psycho and starting a nuclear war?
Doug: As I see it, the US government is the bigger danger at this point. As nasty a place as it is, North Korea doesn't appear to have expansionist aims nor any interest in meddling in the affairs of other countries and killing other peoples. Actually, I understand that the North Koreans have been seeking a formal nonaggression pact for years – something I promise will never be reported on Fox News. Technically, the Korean War has never ended for them; it's just been a truce since 1953. But they would like some sort of guarantee that the US won't attack them. Of course the average US person would react by saying, "What? That's ridiculous! Those Koreans are bloodthirsty paranoid maniacs taking orders from a crazy dictator!" And there's a lot of truth to that belief. They certainly are paranoid – but rightly so. The indications are that the US would attack them, just like Iraq, if it thought it could get away with it. The US has massive naval forces in the area and lots of troops and nuclear weapons in Japan and South Korea…
L: The US certainly has attacked or invaded plenty of other countries that never attacked it, from Panama to Iraq.
Doug: Yes, and whether the rulers of such places are good people or bad people is not the issue; the US now provokes and attacks on the flimsiest of pretexts, and few people anywhere dare protest.
L: With the US deploying ever-more-advanced technology in military applications, I wonder if it might get to a point at which US leaders imagine that they can take out North Korea's leadership so fast there won't be enough time for the remnants to make a nuclear response. If destroying Iraq over imaginary weapons of mass destruction was good PR, taking out North Korea would have to seem like great PR. And this is an election year, after all.
Doug: I'm sure the bright boys in Washington are actively thinking about it. But I have to step in and object to the sloppy use of the phrase "weapons of mass destruction" that we see so often in the mass media. It used to be that these things were called "ABC" or "NBC" weapons – "Nuclear, Biological, or Chemical" weapons. They were just a special class of indiscriminate weapons. The only actual weapon of mass destruction among them are the nukes. If you want to talk about a real weapon of mass destruction, that would be a sweeping B-52 raid. I hate to see the nomenclature corrupted and misused in that way. It's done for political purposes, much the way the whole terrorism thing is. If you corrupt the language that describes things, you corrupt the way people think about them.
At any rate, the fact that North Korea has nuclear weapons – no matter how primitive and ineffective they might be – is a fairly good guarantee that the US will not act preemptively. Too many missile commanders could have standing orders that could not be stopped by taking out the leadership. And that guarantees that other countries are working to acquire such weapons and gain that same protection. If Saddam had actually had nukes, the US would never have dared to attack him. That actually encourages other regimes to go nuclear.
L: So, what happens to North Korea?
Doug: Frankly, I don't know, but I suspect it ends with an economic collapse.
L: But aren't they already pretty much economically collapsed?
Doug: Yes. It's much like the USSR that way. The USSR collapsed in 1990 because the people got news from abroad from travel, newspapers, books and TV, while technologies like the fax and the personal computer allowed them to spread dissatisfaction. News from abroad increasingly percolates into almost every nook and cranny of the world – unless you're going to run a completely closed off and backward police state. North Korea is much, much more poor, backward, and isolated than the old Soviet Union was. But even so, people there are becoming more aware that their standard of living is lower than it is abroad, in good part because of improvements in China and word seeping in from the South. At some point, I hope a critical mass will be reached. It may take some time yet, but left to its own devices, it'll collapse, just as the Soviet Union did. North Korea is actually a non-problem; it'll take care of itself. It's a threat to no one, except maybe the South Koreans – and insofar as it's a problem at all, it's their problem, not that of the US.
L: Well, if North Korea is largely a non-problem, is there another conflict you see as being more important?
Doug: That would be Iran. The US is beating the war drums louder and louder – has been for decades, actually. To read the popular press, it seems to be building up to a genuine crisis. This could be the year when, either by intent or by accident, the pot boils over.
L: As I said, it is an election year, after all; time to wag the dog.
Doug: That's right, and war is the health of the state, especially in an election year. There's also Pakistan and other potential conflicts. None of these countries are very savory – they're not beacons of freedom. But neither are they any threat whatsoever to the US. It's actually literally insane to start a war – bankrupting the US and turning it into a police state, pretending it's under attack. The US has a dozen aircraft carriers poking about the world now. They are about as welcome off foreign coasts as foreign aircraft carriers would be on station off the east or west coast of the US. The natives don't like it at all; they actively dislike it and resent it.
Not even considering the economic realities we face, which I think are going to be especially nasty, I think 2012 is going to be a particularly dangerous year, geopolitically.
L: Right, then… Investment implications?
Doug: Buy gold. Buy silver. Diversify your assets internationally. Nothing new to our readers. But I have to say again that the gold stocks are starting to look genuinely cheap, and I think the chances are excellent that there's going to be a real mania bubble in the gold sector. That's been in the cards for some time, but now current pricing makes them particularly attractive before what's coming next. What do you think?
L: Well, you're singing my song, of course. That's pretty much what I just wrote about for tomorrow's issue of the International Speculator: With the stocks cheaper and the price of the underlying commodity – gold – up, it certainly looks like a great buying opportunity. The producing miners are making bunches of money, which will catch the attention of broader markets when most other sectors are losing profitability. That will enable and encourage larger companies to go out and buy successful exploration companies, to replace depleting reserves… it all looks very good.
Doug: I do think that many billions – out of all the trillions of new currency units being created all around the world – are going to pile into the gold sector.
L: I hope you're right – that's the way I'm betting, both in the newsletter and with my personal investments.
Doug: Good for you – me too.
L: All right then – thanks for another sobering conversation.
Doug: My pleasure.
[Junior gold stocks offer spectacular profit opportunities for those not afraid of volatility; this is especially true of mining companies that get bought out by majors. Right now we've got our eye on seven tiny firms especially ripe for takeover.]