An Eventual Korean Unification? It’s Complicated…

… and it’s not going to happen. I attended a conference in Seoul last week, and all outward signs are that the Koreans there view themselves, with those in the North, as a part of one Korean nation, one people, temporarily living under divided government. The people refer to their country as Korea (not South Korea, or by the country’s official name, Republic of Korea), and they refer to themselves as Koreans. When asked, they will tell you that they view those in the North as fellow Koreans, and that their thinking of their country this way represents their long-standing hope of eventual reunification.

But talking to people at the conference (mainly academics and government employees) about the prospects for unification, while holding the “one Korea” ideology in the abstract, they thought unification was a bad idea. It would place too much of a burden on the South.

They have seen the results of the German reunification. Immediately after unification the East German currency was substantially overvalued compared to the West German Mark, resulting in a substantial transfer from West to East. Then a unification tax was placed on the former West Germany to help fund the reconstruction of the former East. That tax is still in place more than two decades after reunification. The former East Germany still lags behind the former West, and remains an economic burden on those in the former West.

The economic distance between North and South Korea is even greater than the distance that existed between East and West Germany, and the result of unification would be a substantial economic burden placed on the South. People in the South see this, and they don’t want it.

South Koreans are justly proud of the substantial economic progress their country has made in the past half century, and they are not inclined to use their new-found prosperity to bring the North’s backward economy into the twenty-first century. These would not be short-term costs, but, like in Germany, would be burdens that would last for decades.

This problem is insurmountable, especially because there is no particularly compelling reason for reunification, other than the “one Korea” ideology that is as much a desire for less belligerent relations between the two Koreas as it is a desire for a single Korean government. Korea has been divided now for more than 60 years, so most Koreans have never lived in a unified Korea. To them it is just an abstract idea they have heard about throughout their lives.

The ideal solution, from the South Korean perspective, would be for North Korea to move toward the adoption of more market-friendly economic institutions, as China and Vietnam have, and as North Korea integrated itself into the world economy it would become more interested in increasing its economic well-being than using military provocations to rally domestic political support. In this scenario, South Korea would be a trading partner, not a source of economic transfers.

So, despite the “one Korea” ideology, when pressed about the actual procedure by which it could be realized, the answer is, it’s complicated. Nobody wants to come out and say it can’t be done, but it can’t be done.

Randall G. Holcombe is a Senior Fellow at the Independent Institute, the DeVoe Moore Professor of Economics at Florida State University, and author of the Independent Institute book Liberty in Peril: Democracy and Power in American History.
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