Joo Yang on NPR’s Planet Money!

Zoe Chace (ZC): The founder of North Korea, Kim Il-sung, had a dream: that North Korea could be more socialist than any place on Earth, that the government could control every single part of the economy.

Robert Smith (RS): North Korea in this dream world did not need businesses. It didn’t need stores. It didn’t need money. The state would make all the decisions. The state would provide everything.

ZC: This dream of a North Korean state, it did not include people like Joo Yang.

Joo Yang (JY): Ok, my name is Joo Yang. I was born in 1991. And my hometown is Chongjin in North Hamgyong Province in North Korea.

ZC: Joo Yang was not political. She was not a dissident or a spy for the west. But what she did in North Korea was pretty revolutionary. When Joo Yang was just 13 years old, she started her own business. She started with socks and gloves. Moved to candies and biscuits. She sold her own home-brewed moonshine. She was like a one-woman 7/11. Hello and welcome to Planet Money. I’m Zoe Chace.

RS: And I’m Robert Smith. This was never supposed to happen in North Korea. People were not supposed to sell to each other — ever. Today: how market’s sprung up anyway. Joo Yang was born up in the far North of North Korea, up by the Chinese border in an industrial province known as the Iron City.

ZC: Today, she looks kinda like a young Korean pop star. She’s got this saucy little smile, she’s easily excited, makeup, long hair around her shoulders. She wears a bright pink dress.

RS: But when she was a child in the early 1990s, things were terrible in North Korea. There wasn’t enough food when she was growing up. People were starving.

ZC: Joo Yang says that when she was growing up she was taught that the United States was to blame for all the shortages. Korea was starving, she says, because of the international sanctions.

RS: Only later did she figure out that the North Korean government was actually the bigger problem.

ZC: Right. Let’s just take a moment to describe what was happening in Joo Yang’s North Korea.

Andrei Lankov (AL): The old communist government used to be, well if you like, more stalinist than Joseph Stalin himself.

ZC: Andrei Lankov is an expert on North Korea’s economy. He was born in the Soviet Union. He studied in Pyongyang and he says the shortages and the starvation that Joo Yang was seeing, it went back to that NK dream, of being more stalinist than stalin.

AL: The government essentially decided how much every citizen should eat, how much corn and how much ???, and how much rice, the government decided how many pairs of socks should be issued to a citizen, how frequently you should eat pork and so on.

ZC: I understand that, um, that North Korea almost wanted to ban money at one point, just…

AL: It came very close to, not actually essentially abolishing money, but to making money insignificant in the 70s, yes. Because basically, you could have a lot of money and you would be unable to buy anything.

RS: Just one example of how the rationing in North Korea worked: the state came up with a scale of how many grams of grain a day a person could eat.

ZC: 9 categories.

RS: 9 categories. So, 900 grams was the maximum, this was for workers doing hard labor.

ZC: 500 grams was how much a young girl like Joo Yang was supposed to get.

RS: Now, in order to maintain this fiction that the North Korean state could provide everything for it’s people—that it could actually feed it’s people—the state was totally dependent on aid from China and the Soviet Union. North Korea imported a ton of stuff (fuel and rice), and when the Soviet Union collapsed the cheap subsidies from Moscow disappeared. China also stopped sending aid to North Korea. And the North Korean state was devastated.

ZC: There was no fuel to run the factories. Without factories producing, there was nothing to sell. With nothing to sell, the state couldn’t buy food for its people. And people there began to starve. What would happen when they would go to a distribution center? What would they see?

AL: They said, “Sorry, we don’t have food. Goodbye,” if there was somebody inside. More likely they just saw a door—a locked door—that’s all.

RS: So, this was the world that Joo Yang grew up in—a world of shortages.

ZC: Joo Yang made the best of it. She was into clothes and pretty things, like 13-year-old girls anywhere. But there wasn’t much of a choice in what to wear in North Korea. Things that we would consider basic necessities became these little ways to show off your fashion sense.

JY: It’s very cold where I came from. The fashion items are socks and gloves. Those are the accents to your outfit. So, many people would purposefully show off their socks by keeping their pants short, including men. Because it’s so cold, everybody wears gloves.

RS: Joo Yang saw this and she thought, “Here is an opportunity. Here’s a problem to be solved.”

JY: One of my friends at school had relatives in China. When her family came back from visiting her relatives, they brought a lot of pretty clothes and socks from China and my friend sold them at our school. She said, “Hey! My mom brought really pretty socks from China, would you like a pair?” My friend always has the best clothing, socks, gloves. Like, I remember, what is that character with the cat and the mouse? Tom & Jerry! Those characters were on the socks. Then, I saw her selling the socks and I had an idea. I thought, “Maybe I could buy some socks from her and sell them in my village for a profit.” So I bought some really pretty socks from her for let’s say, 1000 Korean Won for a pair and sold them for 1500 Korean Won.

ZC: For Joo Yang, all of this was new. There was no going rate for imported Tom & Jerry socks. It wasn’t obvious what the price for anything should be. So, a buck fifty? 1500 Korean Won?

JY: People said, it’s really pretty, but was too expensive, and I was only able to sell a few pairs. So, I brought the price down to 1300 Korean Won and a lot of girls in my village who wanted to wear pretty socks began buying them from me. So, I was able to make some profit little by little and it was fun. It was exciting.

RS: I want to point out that in doing this — trade in socks — Joo Yang was technically a criminal. Private enterprise of any kind was totally illegal in North Korea. It was a crime to accept money for goods and services, food especially was never supposed to be bought or sold.

ZC: But, people did it all the time. They sold food and clothing to their friends. That is how people survived in the 1990s, when the state could not provide. And by the time Joo Yang was selling socks, her neighbors also had started these little shops that were sort of hidden, like they just looked like any house on the street. There was no sign outside saying, “socks sold here,” “price chopper,” whatever. But if you walked down the street and you looked in the windows, you would see these Chinese products—mooncakes, biscuits, candies, liquor. You would know that’s a store. You would go inside, there’d be a shelf with a couple school supplies or makeup.

RS: Joo Yang had another crafty way to advertise, basically, and get customers. She found people who wanted to buy things at work. Her sock and glove business was going well; she was selling to friends. And as she got older she was given an official job in a warehouse. Now, like lots of jobs in North Korea, she didn’t have anything to actually do all day in the warehouse. They would just go in the morning and check in. But she opened up basically her own little kiosk in the corner of the government warehouse, selling cigarettes and other little things.

ZC: I kept asking her, “Weren’t you scared? Didn’t you have to keep it a secret and she was like, “You do not get how this worked. This was not a secret. This was a quid pro quo. The state security department officials were not paid enough by the government, and so they survived off the bribes from people like me whose stores they were supposed to be regulating.”

JY: I would always carry some cigarettes with me to give them as a bribe in case I got caught. You don’t have to bribe with money. Like, some people would ask, “Do you have babies?” And then they would bribe the government officials with baby clothes. In my case, I would always carry some expensive cigarettes and if I needed to travel, I’d tell them where I’m going and then secretly put the cigarettes in their pockets.

ZC: And the North Korean state itself was growing more and more reliant on these illegal entrepreneurs as a way to keep people happy. These big, full street markets developed in North Korea. Some of them were state-sanctioned. There were walls. There were places to sit. There were little kiosks in there. There were more rules at those markets like “no selling rice.” Other markets were completely independent with NO rules.

RS: Joo Yang moved into the big time — wholesale. Cigarettes and socks were fine, but Joo Yang saw that she could act as a middleman to the vendors in these markets. She would brew her own liquor and sell it to the vendors. She traded in pigs. She’d buy baby clothes in a wholesale market and then sell them at a mark up to her friends in the other marketplaces.

JY: It was fun being able to make money.

ZC: It’s amazing what Joo Yang was able to do, because remember, there’s no infrastructure for this kind of market capitalism. There is not a business school. There is no legal system to enforce contracts. There’s no copyrights. There’s no easy way to advertise. No official way to get loans or protect your investment.

JY: There are no banks in North Korea so people keep their money at home. Also, because there is no bank, people are touching these bills so much and the bills are getting old and worn out so what I did was put the old and crumbled paper money in the floor, which was this traditional Korean heated floor, and covered the money with a piece of linoleum from China. Then, every time I lifted the cover, I could see this nicely flattened pile of paper money—which kept coming! I began to buy more and sell more. The business grew and it was so much fun!

RS: You know, the government of North Korea was never quite comfortable with all of this. I mean, it allowed the businesses to exist. It needed them to exist. It allowed the markets to stay open. But as the businesses grew bigger and bigger, the government discovered that some of these vendors were actually getting rich, at least by North Korean standards. Their linoleum floors were bulging with money.

ZC: So, on November 30th, 2009, instead of looking the other way, the government decided to crack down.

RS: The North Korean government decided to issue a new currency. They wiped two zeroes off the old Korean Won and they printed up a bunch of brand new notes.

ZC: Think about this for a minute. All those bills that people had stashed away in their floors, they were now worthless. The government would only allow you to exchange about 40 dollars worth of the old currency for the new currency. So, no matter how much money you’ve made in business, no matter how rich you had gotten, you now had 40 dollars. That is all.

RS: And the rest of the currency, the currency you couldn’t turn into the government, all of that, all those profits—worthless. People threw their money into the street; they threw it into the river. This was officially a victory for communism. Now, everybody in North Korea basically had the same amount of money again.

ZC: Except this did not destroy the marketplace at all. If anything, it had the opposite effect. People did not trust the new currency, which had been sort of exposed as a sham. So, they bought up as much rice and other commodities as they could get. The price for all the commodities shot way up, way past what the government had wanted because the demand skyrocket so suddenly.

RS: And the markets actually accelerated. People traded more; they moved money around more quickly, in and out. And instead of saving in currency, which as they learned could disappear at any time, they saved their wealth in hard assets. They would buy, like, a bike to deliver products or cigarettes to trade.

ZC: It was totally obvious that this economic chaos did not come from the United States or economic sanctions or the weather. This was just a horrific example of central planning.

RS: For Joo Yang, it was time to get out. And, I don’t mean just to get out of her business. I mean to get out of North Korea—to escape. One of the benefits of running a business in North Korea was that Joo Yang actually knew really well what the outside world was like. She’d seen all these DVDs of South Korean dramas. She’d been secretly listening to South Korean radio. Joo Yang had gotten hold of some pretty rare products for North Korea. She had a Toshiba laptop, an electronic English-to-Korean dictionary.

ZC: In 2010, Joo Yang crossed the border into China. She said it wasn’t easy. She was caught in China and this missionary organization had to bribe the Chinese government to get her on a plane to Seoul, South Korea.

JY: I cannot even describe the feeling in words. For the first time, I saw the big nose and big eyes of the American people in the airplane. You know you are supposed to sit tight with your seat belts on in the airplane? I didn’t sit still. I walked around the aisles back and forth looking out this window and that window. Oh! and the airport! I heard Incheon airport is one of the best of the world and when I walked into the restrooms I didn’t even know how to get the water going. And then the faucet just knew it and pushed the water out automatically—wshhhhhh! And how the toilet would flush automatically. I really wanted to pinch myself to check if I was dreaming or not. Ohh, everything was amazing.

ZC: When I told the story of Joo Yang to Andrei Lankov, the North Korea expert, he says he thinks of North Korea now like Europe back in the 17th century: people basically inventing how to operate a market on their own, build up the infrastructure themselves. Remember, Andrei Lankov grew up in Soviet Russia. He studied in North Korea. He’s a left-wing guy. But, I was just thinking and I had to ask him, like, do you think people will always develop markets on their own? Is some form of capitalism inevitable?

AL: I hate what I’m going to say. I’m afraid that this is inevitable, at least on the current stage of the human development. The communists and the radical left wanted to run things differently. They wanted to build a paradise and they ended up producing a real hell for the common people they sincerely wanted to help. So, I’m afraid, that it’s human to trade.

RS: It’s human to trade.

AL: Do I necessarily like it? No, I don’t. Nonetheless, I believe that the experience of North Korea is showing that, well, it’s the only game in town.

RS: Today, Joo Yang lives in Seoul, South Korea. She’s in a country filled with business people and entrepreneurs and all the infrastructure that she never had in North Korea and with all that competition, she is still killing it. She’s on a South Korean TV show that teaches South Koreans about North Korea. It’s called, “Now on My Way to Meet You.”

ZC: She is a star.

RS: She’s a star.