Once again, Liberians, in 2017, will be electing new leaders to shape the country’s destiny. And, of course the voters are frustrated with the state of the country and are hoping that a new leadership will fulfill the promise of financing social programs.
Regrettably, unlike many other countries where politicians and supporters do focus on policies such as economic reform, Liberians are focusing on personalities based on what I have read so far. They believe that a change in leadership, for instance, will reduce price gouging and, or reduce low price offering for our natural resources.
Definition: Price gouging is when investors sell goods or services at a price considered to be unfair or exploitative, while minuscule price offering is when investors buy goods and services from, let us assume from a government, below a price and the offered price is considered to be exploitative and unfair.
In Liberia, prices are determined by market forces, however, the Commerce Ministry of Liberia is responsible to “… monitor prices and set price ceilings for certain essential commodities, including petroleum products, rice, cooking oil, cement, etc.,” according to Liberia Country Commercial Guide updated on July 26, 2016.
Within North America, states’ laws such as Oregon’s do preserve, and protect the common goods and services during an emergency, and a price cannot exceed15% of the original price…”
To discourage investors such as Liberian Firestone Rubber Plantation from offering exploitative price for countries’ goods and services, many countries have enacted laws, which prohibit investors from offering bribes in exchange for favorable deals.
However, instead of following the laws, Investors, wanting to increase profits, have and continue to offer bribes in exchange of overcharged price and, or offer minuscule. This practice, a form of corruption, is reducing revenue in many countries in Africa as detailed in the African Union Report, which stated that multinational corporations siphon $60 billion yearly out of Africa.
For example, Liberia, one of the countries examined in that Report, continues to face dismal budgetary problems, partly because investors paid low price for its natural resources.
In fact, (68) sixty-eight of the concessionary agreements signed between Liberia and investors are flawed, according to Global Witness. And predictably, the corruption story about the $500,000 bribes paid to Big Boy # 1 and Big Boy # 2 does indicate that investors would have paid a minuscule price to Liberia for its iron ore.
And simultaneously, while these same countries are receiving minuscule prices for their natural resources, they end up paying astronomical amounts to investors for goods and services.
For instance, the Liberian government paid contractors $4M for each of the 88 megawatts (i.e., $375M divided by 88 megawatts). The unit cost might increase from $4M to $17M (i.e., $375M divided by 22 Mega Watts) if the contractors do not build the additional 66 megawatts.
Even at $4M per unit, Guinea paid about half ($2.3M) of that amount for its 240 megawatts (i.e., $575M divided by 240 megawatts). Local investors also do overcharge the Liberian government. A landlord, for example, collects $375,000 for an office building, which would end up generating $15M (40 years multiplied by $375,000) for the Monrovia-landlord.
Well folks, price gouging or minuscule price offering is not limited to poor countries. In America, manufacturers have spiked the price of a drug from $40.00 in 2001 to $38,000 today, according to a 138 page Report published by a Congressional Committee headed by U.S. Senator Susan Collins and Senator Claire McCastkill.
Another price gouging in the United States that caught the attention of consumers in 2015 was the price of a drug called Daraprim. The price increased by 5,000 percent, from $13.50 to $750.00 overnight.
Since it is difficult to obtain reliable document from Liberia, let us review economic activities in America to help us understand whether reform policy might assist a leader to reduce economic pain.
In 2009, Americans, especially white Americans, frustrated over the harsh economic pains, swallowed the bitterness of racism and elected a poor black man to help reduce the cost of living such as the price of healthcare. And so, President Barack Obama government enacted the “Affordable Care Act to reduce the price of drugs. Instead, as the chart below indicates, manufacturers have spiked the prices of drug in the U.S.
The 2013 Comparative Price Report was published by the International Federation of Health Plans.
Overcharging price is not limited to the drug industry. Chief executives are currently overpricing financial products, a practice that was partly responsible for the 2008 financial meltdown.
However, unlike America’s 2008 financial debacle, which was perceived as a bump or cyclical economic correction, investors in Liberia have perpetually offered minuscule price for natural resources and at the same time extracted exorbitant price for goods and services sold to Liberia.
So, voters, war-weary, and hoping that a new leader would deter another war, elected an experienced and highly educated candidate, Ms. Ellen Johnson Sirleaf. Subsequently, she embraced the World Bank as the consultant and recruited high-paid advisers to fight price gouging and to prevent investors from offering minuscule price for Liberia’s natural resources.
Unfortunately, the democratic President, assisted by U.S. $10,000.00 per month salary-advisers and guided by experts of the World Bank and International Monetary Fund, did not succeed in preventing investors from exploiting Liberia, according to Global Witness. Why?
Before I share my view on the issue let us review the price of the drug (Gleevec), which is used to treat Leukemia as per the 2013 Chart and the inmates issue in America to understand the impact of an economic system. It is an economic system that created an environment for investors in the U.S. to charge $8,500 for Gleevec and other investors to charge $3,300 for the same drug in the Netherlands.
Also, no politician, even if bribe is exchanged, will approve a drug price, which jumped from $40 in 2001 to $38,000 today, nor will he/she consent to a price of a drug to increase from $13.50 to $750 overnight.
Now let us look at why the motive of huge profit affects price of goods and services. Decades ago, the Federal government did privatize the housing and the management of inmates in the America. An investor decided and exploited the opportunity until someone filed a complaint.
After participants presented the facts, “…the Pennsylvania Supreme Court in 2011 overturned about 4,000 convictions issued by Judge Mark Ciavarella, dubbed the ‘Kids-for-cash judge’ after he accepted $1 million in bribes from developers of privatized detention centers and then presided over trials that sent youth to those same centers,” according to Ms. Saskia Sassen in her book called “Expulsion-Brutality and Complexity in the Global Economy.”
I have repeated the views of many experts in different articles that profiteers will always offer bribes in exchange to spike a price of goods and services and, or to offer minuscule price for natural resources when government institute an economic system that allows profiteers to manage and, or own lucrative assets.
Certainly, I am aware that leadership’s characters such as honesty, hard work, patriotism, etc. can help to reduce exploitative price, especially the rising cost of housing in Monrovia. Yet characters alone cannot adequately and effectively address the complexity and intricacies of the flow of unfair price offering and exorbitant price.
For example, President William R. Tolbert and President William Tubman had different leadership characters, yet, investors, during the two separate regimes, did offer low price for Liberia’s natural resources and did coerce Liberia to pay astronomical prices for goods and services. Why so? The economic system was the same.
Regrettably, Liberia will continue to experience the exploitative prices because profiteers control the lucrative sector of our economic. Liberia would demand and receive better price if it became economically powerful by adding value to the country’s natural resources. But investors will not add value since that approach might reduce the profits of the related parties.
So, it is only the government that could add value, but that requires an increase of the role of our government. Therefore, as long as profiteers remain economically powerful at the expense of the government, they will use their position of influence to assist other profiteers or related parties to demand astronomical price for goods and services.
J. Yanqui Zaza, Contributing Writer
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