This week’s Econ in the News brings us to the murkier realm of North Korea. As markets increase in prominence, reports of taxes and bribes being imposed on these markets by the North Korean government have also increased in frequency. The result is something known in Korean as a “grasshopper market”, in which small groups of illegal traders sell goods from sidewalks. Just as a grasshopper can flee in an instant if it senses danger, so, too can these traders evade inquisitive government officials by vanishing within seconds.
As reported by ChannelNewsAsia, these informal markets have been in place since elderly women started to sell crops by the roadside in the 1980s. Since the large famines in the 1990s, even more residents have begun to create markets in a fashion that I call Lotus Flower Capitalism.
The lotus is famous for rising above the mud in which it roots to produce a stunning flower. In my view, Lotus Flower Capitalism aptly describes the grassroots formation of free enterprise, with market trade flourishing thanks in part to the muck and mire of a diminished authoritarian regime. With underground-economy grasshoppers and the legal market participants, an increase in beautiful, less-restricted exchanges of goods can continue to emerge.
Ultimately, these grasshopper markets and Lotus Flower Capitalism bear witness to the age-old laws of Supply and Demand, and this increased freedom to trade should help better allocate resources in North Korea. As they flit between sales and the shadows, I wish the entrepreneurial “grasshoppers” the best of luck.