Chart of the week: the chasm between the two Koreas

published 5 January 2018

For all capitalism's faults, state socialism is no alternative, as the Frankfurter Allgemeine Sonntagszeitung's Rainer Hank points out: a glance at the gaping chasm in GDP per capita between the two Koreas makes that clear.

The North has barely made any progress since 1950. South Korea's economy is now around 40 times bigger than the North's, while the average five-year-old boy in the North is almost four inches shorter than his Southern counterpart. Under 5% of the North's roads are paved. Taking over its decrepit neighbour would cost the South around $1trn, or 75% of GDP, says The Economist.

Viewpoint

"After a decade or so of extremely low interest rates and easy money, [the US Federal Reserve is] becoming increasingly aware that distortions will have been building up in both the financial system and the real economy. In other words, they are likely to become more "Austrian"... following the school of thinking led by Friedrich von Hayek. The Austrian school argued that public policy intervention, including well-intentioned monetary laxity, can cause serious distortions, often in corners of the financial system that you are not necessarily keenly aware of. The problems only become [clear] once interest rates have risen This is a real danger now."