North Korea seems to be crazy, threatening to use recently acquired nuclear weapons against South Korea and the United States.

But the government of the Democratic People’s Republic of Korea (DPRK, the official name of North Korea) and its young leader, Kim Jong-un, are not crazy. Rather, the regime is ruthless and desperate.

Every country has its own peculiar balance between the strength of the state and the strength of society. In the DPRK, that balance is immensely lopsided in the favor of the state, to a degree rarely, if ever, seen in human history. It is a true totalitarian state in which the government controls nearly every aspect of life.

The regime is accountable to no one, either domestically or internation- ally. Thus, in North Korea we see authoritarian in its rawest form. This empowers the regime to harness the entire country to the goal of regime survival, pursuing unhindered whatever policies the leaders believe will support that goal. These include tolerating mass starvation, harshly punishing minor acts that suggest disloyalty to the regime, consigning up to 200,000 North Koreans to prison labor camps, and risking the population’s lives through brinksmanship with Seoul and Washington.

The regime is also desperate, for two reasons.

First, it is trapped in a failing political-economic system. While other formerly "communist" countries have moved away from excessive centrally planned and state-owned economies toward unleashing market forces and embracing globalism, the DPRK government is afraid to join the modern world through liberalization. Engaging with the world economy and allowing North Korean society greater access to wealth and information would quickly expose the facts that the DPRK government has badly mismanaged the economy for decades, that the Republic of Korea, or South Korea, has won the inter-Korean competition by a blowout, and that most of its propaganda claims are nearly the opposite of reality.

The second reason for Pyongyang’s desperation is insecurity. The DPRK government fears "absorption" by more populous, wealthier South Korea, and attack by the United States. North Korea has a numerically large army, but poor equipment and training compared to South Korean and U.S. forces. Americans see themselves reacting to DPRK aggressiveness, but for North Koreans, it is the opposite. They apparently believe they need nuclear weapons to compensate for the vulnerability opened by their weak economy and backward conventional forces.

With little leverage to extract economic handouts and political concessions from its adversaries, Pyongyang has learned to rely on extortion: raising tensions on the Peninsula until the adversaries cave in and pay up. The DPRK government does not want actual war, which would inevitably end in its demise. The goal is regime survival, not suicide.

U.S. policy must dissuade Pyongyang from expecting any benefit from bellicose behavior.

Seoul and Washington have declared that future lethal DPRK provocations will bring military retaliation, not economic rewards. They should stick to this principle because such provocations could lead to unintended war and therefore must stop.

Furthermore, U.S. policy should impose a cost on Pyongyang for its nuclear weapons program. Trade sanctions have not worked, but other methods are more promising.

One is to cut off the access of North Korean banks to the international financial system, which the United States has the power to do. A second is to openly discuss the possibility of South Korea getting its own nuclear weapons to counter the DPRK’s.

At the same time, Seoul and Washington should continually reiterate that a commitment to de-nuclearize will clear the path to North Korea getting improved political and economic relations with the regional democracies, thereby reducing its dependence on China.

This is an alternative and much-preferable way out of Pyongyang’s predicament.