SOMETIMES, a course of action appears so stupid, so self-defeating that it is dismissed as inconceivable by all right-thinking people. North Korea’s demented sabre-rattling is a case in point. Surely, most sensible souls will argue, a country’s leadership cannot be so stupid as to be threatening the US with nuclear war?
As death wishes go, this one would take some beating. And aren’t we meant to be worried about Black Swans – unexpected disasters, unknown unknowns, jumping out at us from left-field – rather than slow motion train crashes, such as that of North Korea, a country that has been known to be a danger for decades?
Maybe. But the language that is emanating from North Korea is reaching new levels of madness, suggesting that some parts of its establishment may know that the game is up and would prefer to go down in a blaze of glory. If so, the logic of mutually assured destruction – which prevented the cold war from spiralling out of control and destroying civilisation – would cease to hold. Apparently irrational behaviour – in the sense of launching a war doomed to certain, catastrophic defeat and the overthrowing of the regime – would no longer be impossible. It is worth remembering that North Korea, the last real communist dictatorship, is presently the most evil regime on earth, happy to consign its enslaved people to quasi-stone age poverty and cutting them off almost completely from the rest of the world. It is, of course, unclear to outsiders what North Korea’s real plans and capabilities are – does it genuinely have the capacity to inflict crippling damage on its neighbours, as seems likely, or is its military a bit of a joke? It would be unwise to count on the latter.
The human costs of a war on the Korean peninsula would obviously be catastrophic, with vast numbers of innocent people dying and prosperous, hard-working South Korea facing devastation. Politically, all eyes would be on China; Beijing’s ability to rein in Pyongyang will be its biggest geopolitical test since becoming a global economic power. If it flunks it, the repercussions will be huge, both domestically and internationally. China would be forced to take part, in a massive way, in any war. How the Chinese authorities, public and economy cope with such a conflict would turn out to be a major question.
The economic impact, while of course secondary to the human one, would also be massive, far larger even than the disruption that followed Japan’s recent nuclear catastrophe. An integrated world economic system, based on just in time production and global supply chains would cope very badly with war in South Korea, a crucial link in the modern global economy, especially for technology firms.
Adjusting would take ages, triggering chaos. The global markets may be relaxed about North Korea for the moment but that would soon change. For Western economies struggling to grow, this would be a nasty blow.
Nuclear war on the Korean peninsula would be the greatest failure of the global geopolitical system in 70 years. Wars are inevitably horrible; it is a nonsensical myth that killing people and destroying capital and property is good for capitalism. War is sadly occasionally necessary but is always a perversion of the classical liberal ideals – the promotion of individual liberty, prosperity and voluntary exchange – that true free-marketeers believe in. We must all hope it doesn’t come to it, and that reason prevails. But businesses, investors and politicians all need to pay a little more attention to what they would do if, tragically, the worst were to happen.
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