North Korea's Cut From Small Businesses Goes To Its Nuclear Program North Korea is known as one of the most closed down socialist economies in the world. But even still, there is a small class of budding entrepreneurs. We learn how that works.

North Korea's Cut From Small Businesses Goes To Its Nuclear Program

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Let's focus for a moment on North Korea. I mean, North Korea the country as opposed to North Korea's nuclear program. At a moment of confrontation, it's worth trying to understand. North Korea has a communist system where the state owns everything and capitalism is blasphemy, yet Stacey Vanek Smith from our Planet Money podcast learned there are North Korean entrepreneurs.

STACEY VANEK SMITH, BYLINE: Jessie grew up in North Korea in a town called Hessen. It's right on the border with China.

JESSIE: (Through interpreter) When we open the door and go outside, you can basically see China there.

VANEK SMITH: Jessie is in South Korea now. We spoke to her over Skype through a translator. And she goes by Jessie to protect the family she still has in North Korea. Jessie was just a girl when the terrible famine happened in the mid-'90s. Hundreds of thousands of North Koreans starved to death. And people started scrapping together anything they could and coming together and trading in markets to survive. When Jessie was 8, she started picking wild raspberries and selling them at the market. And she still remembers the first time she got her own money. She used it to buy something special for her mom - a peach.

JESSIE: (Through interpreter) And I saw her eating the peach. She looked really happy, and it made me really happy. That's when I realized that I wanted to make a lot of money to make her happy.

VANEK SMITH: By the time Jessie was in her teens, she was trading goods across the border with China, smuggling out animal skins and pine nuts and bringing in sausages and soap.

JESSIE: (Through interpreter) The business was prospering on a whole new level.

VANEK SMITH: A whole class of entrepreneurs like Jessie was born out of North Korea's famine. And the government let it happen. Nicholas Eberstadt is a political economist with the American Enterprise Institute.

NICHOLAS EBERSTADT: From the North Korean leadership standpoint, it was a devil's deal that had to be struck to prevent the total breakdown of the state.

VANEK SMITH: People like Jessie became known as the donju. The word means lords of money.

EBERSTADT: Donju are like North Korean yuppies.

EBERSTADT: When Kim Jong Un took power, he had two main goals - expand the missile program and grow the economy. And he started actively encouraging the donju, even letting them do business with companies in South Korea and China. It worked. The economy grew. Now, North Korea's economy is still tiny - Wyoming's economy is bigger. But the effect of this growth was noticeable, says Paul Tjia. He's a Dutch business consultant who has worked in North Korea for years.

PAUL TJIA: You will see much more traffic than in the past. And sometimes you even come across traffic jams. And I see fat North Koreans now...

VANEK SMITH: You see fat North Koreans? (Laughter).

TJIA: ...Which was quite rare in the past.

VANEK SMITH: The donju were getting wealthier. The government was taking a cut of everything the donju made. And a lot of that money was going straight to the nuclear program says political economist Nicholas Eberstadt.

EBERSTADT: You have to assume that the really rapid increase in the tempo of the testing has something to do with getting more funds to do it.

VANEK SMITH: But the donjus' position is tricky. They operate in a legal gray area. The state can seize everything they have at any moment. After all, it technically owns it all anyway. And that eventually is what happened to Jessie.

JESSIE: (Through interpreter) It felt like the sky was falling for me. Everything just evaporated in a snap of a moment.

VANEK SMITH: Jessie decided to leave North Korea. The donju were always a contradiction in North Korea's socialist regime but their profits helped fuel it. Now though, with sanctions tightening, Jessie says everything is getting harder to get and more expensive. And that little donju class is struggling more than ever to survive.

Stacey Vanek Smith, NPR News.


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