Professor James Davis surveys the North Korean situation on Lawfare and has some thoughts on situation resolution:
One of the most robust findings in the field of behavioral economics is the difference between what people demand to sell something they already own and the price they would have been willing to pay for it. For example, my wine-loving investor friend might not be willing to bid more than $750 for a desirable bottle of Bordeaux, but when received as a gift wouldn’t sell the same bottle for less than $1000. Somehow the mere fact of owning something makes it seem more valuable. This “endowment effect” runs counter to classical understandings of utility and leads to the expectation that there will be fewer market transactions than standard economic theory predicts. Reinforcing other psychological processes, it contributes to a strong bias toward the maintenance of the status quo.
The bottle of wine is a metaphor for nuclear weapons. Lovely.
The endowment effect can help us understand the international impasse over North Korea’s nuclear weapons program and suggests it will be even more difficult to reach an agreement to end Pyongyang’s nuclear program than is often assumed.
Many commentators point to the international agreement that closed off Iran’s route to developing nuclear weapons as a model for North Korea. In the dispute with Iran, the challenge was to put together a package of sanctions sufficient to convince Tehran to forgo acquiring a nuclear weapon. Initially comprising a ban on the supply of nuclear-related materials and technology, as well as the freezing of foreign assets of individuals and companies involved with Iran’s nuclear program, sanctions subsequently were extended to include a ban on arms sales, the servicing of Iranian ships and aircraft and the freezing of state assets. Taken together, U.N., E.U. and U.S. sanctions were the most severe ever imposed on a single country. Their cumulative effect wreaked havoc on Iran’s economy. And they worked. The price set by the international community for Iran’s acquisition of nuclear weapons was higher than Iran was willing to pay.
Drawing analogies is always a difficult business in International Relations. As I noted earlier, Kim is looking at the past to see the future, and sees the United States as having demonstrated duplicity and dishonesty in the cases of Iraq and Libya, which both aspired to nuclear weapons, then gave up their ambitions for promises – which were broken. He has a reasonable excuse to desire nuclear weapons, purely as a deterrent. Meanwhile, Iran is NOT a country run by a dictator/madman. Rather, it’s a limited (or damaged, if you like) democracy in which power does not reside exclusively with the Supreme Leader, but is distributed and somewhat reassignable, if only to those who are sufficiently Islamic. Their excuse for coveting nuclear weapons, while also including prestige, was to become predominant in their region, which includes nuclear powers Pakistan, Israel, and India – but they don’t need it for survival.
And note this, from the interview by Jeff Baron of Mitsuhiro Mimura on 38 North:
Dr. Mitsuhiro Mimura: North Korea is the poorest advanced economy in the world—but what’s important to understand is that, while it may be poor, it is still an advanced economy. In that respect alone it is unique in the world. And that is an important source for the pride the North Korean people take in what they see as their country’s achievements.
JB: The poorest advanced economy? Can you explain that a little?
MM: By standard economic measurements, given that the North continues to emerge from its past as a feudal society and then Japanese colonial rule between 1910 and 1945, North Korea is a developing economy.
That said, they have built a comprehensive production structure including both labor-intensive and capital-intensive industries. They are able not only to produce capital goods to run their society, like railroad locomotives and carriages, cargo vessels, turbines and generators for power plants, numerically controlled lathes, but they also make most of the things needed for military use, from small arms to ballistic missiles and nuclear weapons, trucks, jeeps, destroyers, and diesel engines.
In other words, they are somewhat self-sufficient. It’s true that their food situation is probably still problematic, but it seems to me that sanctions, no matter how much they hurt both in pragmatic terms as well as blows to the national prestige, will have limited impact on North Korea. Iran, on the other hand, was in serious trouble, as its population is considerably more educated, restive, and sensitive to issues of liberty in its many facets; North Korea has just a small bit of history in terms of independence, as noted earlier here.
Professor Davis suggests this is just an exercise in costs:
But if the question confronting the international community in the Iranian deal was determining the price at which Tehran was no longer willing to pay to acquire nuclear weapons, the problem in North Korea is establishing a price for which Pyongyang would be willing to relinquish an existing nuclear arsenal. And all other things being equal, the price demanded will be higher than North Korea would have accepted to forgo the program in the first place. Because of the endowment effect, North Korea values the weapons it now has more than it did the prospect of acquiring them.
Does this mean that there is no room for a deal? No. As long as the international community, and more particularly the United States, place a higher value on a nuclear free North Korea than Kim Jong Un demands as compensation for ceding his nuclear capabilities, agreement is possible. Given that American leaders view both the risks of a nuclear armed North Korea and the costs of launching a preventive strike against Pyongyang as unacceptably high, there should be a price at which both sides are willing to cut a deal.
But the conditions differ, which Professor Davis is trying to minimize. But I think there’s a big difference between nuclear weapons are key to my survival and nuclear weapons would be good for our national prestige. The latter, while important, is not strictly a necessity, and as Iran, more hooked into the global economy than North Korea, suffered, it could see that.
All of which makes the analogy less workable. As long as Kim sees nuclear weapons as the ultimate key to his regime’s survival, I think he’ll stick with them. Unless Trump’s commanders can come up with some sort of canny military solution that involves minimal casualties, I see this situation going on for a very long time, in the absence of some sort of advanced technology that can actually disable nuclear weapons from a distance.
