Tuesday, December 05, 2006

Kim Jong Il shows big government leads to big corruption

This latest story comes as several underwriting companies suspect North Korea of running a huge scam:

A growing number of major underwriters around the world strongly suspect that communist dictator Kim Jong-Il's regime is running an elaborate major insurance and reinsurance scam on them, to the tune of tens of millions of dollars or more.

The alleged fraud involves a wide variety of North Korean industrial and personal calamities where insurers have been presented with perfect government-controlled documentation of accidents, including deaths, along with carefully gathered photographic evidence, all compiled in a startlingly brief time.

That paperwork is coupled with a resistance to letting foreign insurance adjusters examine some of the most crucial physical evidence, except after long delays and under a watchful eye, if at all.

Some people will just dismiss this story as another case of corruption, which is all because crooks and bad guys are in power. Very few people will stop and pause to realise that the main cause of corruption is having a large and powerful government. Corruption cannot exist in a free system where only voluntary transactions occur.

If there were a small and accountable government with a free press and private enterprise, scenarios such as these wouldn't occur. Why does corruption seem to happen in the developing world so often? Why did Saddam need to be bribed for Australian wheat exports to be sold to Iraq ? Why does every new business in Indonesia need to bribe a government official to get the go-ahead ? Well.. because these developing nations have large and unaccountable governments. People with connections to the government, to the party in power, receive protection and special privileges. North Korea is an extreme case, where the Dear Leader lords it over the rest of the population.

Death is hardly a rare thing in North Korea, where millions are estimated to have expired from famine, flood and government repression in the past decade — but the number of apparently ordinary people in the dictatorship who have suddenly been found to have foreign-backed life insurance is raising insurers' eyebrows.

The chief concern is that only the Kim Jong-Il regime — a government that is known to be brutal, unscrupulous and desperately short of foreign currency — controls the information required to trigger the payments.