“Liberia’s Precarious Situation-Do We Really Know Our Problem?”
By John S. Morlu II
We, Liberians, have been at many critical crossroads during our hundred plus years of existence. However, the juncture that we have reached today presents us with challenges that are more far reaching, and exacting. How we navigate our way through these challenging times will demonstrably make or break us. We can choose to move forward optimistically and create a future that is characterized with hope and prosperity for all Liberians, or we can move further back into history with disdain and retardation. I fervently believe that the overwhelming majority of Liberians will choose the former option. We can’t afford to fail. So, in order to move forward and create the kind of opportunities that will benefit all Liberians, we need to perform a realistic assessment of our current quandary to adequately diagnose the problems that sicken us, and earnestly address them. Basically, we must engage in the kind of constructive national dialogue that allows us to correctly pinpoint our country’s problems so that we don’t prescribe the wrong medications.
As a student of Economics and Finance, I usually approach a situation by formulating a general theory that I believe can withstand empirical testing. So here goes my prognostication. Liberia has two significant problems, collectively referred to as: Proposition I: ineptitude, corruption and waste, and Proposition II: a severe limitation in one of the critical ‘factors of production’.
Let’s look at Proposition I. Liberia’s major problems under Proposition I result from the lack of qualified people in government positions. The graph on the right is a rough encapsulation of the various problems the country faces, and demonstrably, ineptitude is the greatest problem we face as a country. What this means for the country is that those in positions of authority are technically challenged, making them incapable, even with the best intentions, for them to run an efficient bureaucracy, or develop strategies that will position the country in a manner that improves the living standards of all Liberians. For example, how many of us know people who are currently in high positions in government that lack the necessary training, education or experience in the areas in which they serve. Please stand up and be counted!
The second most significant problem facing Liberia with respect to the first proposition is corruption. Well, I really don’t need to go into name calling…but we all know who has or is stocking the people’s money in foreign banks. The important point is that as these funds careen out of the country through the back door, little is left for the government to provide even the most basic services for the neediest amongst us. Even less is left to invest in productive assets that would invariably lead to higher economic growth and improve our standard of living.
Waste is the third biggest problem facing Liberia under the first proposition, and has continued to handicap government as it seeks to deliver services to Liberians more cheaply. Again, how many of us know of Liberian government officials, who when traveling abroad on official or unofficial government duties, travel first class and choose to stay in the most expensive and luxurious hotel in Europe, Asia and the Americas, charging the Liberian people for their excess. Please stand up and be counted! Why does a government official from a poor country like Liberia need to travel first class and stay in Washington, D.C. at the Watergate, or in New York at the Waldorf Astoria?
I have had the benefit of traveling as part of a team throughout the former Soviet republics on assignment to work on United States Department of State and USAID sponsored projects. We were told to travel economy class and avoid staying in five-star hotels. Even colleagues, who were direct U.S. government employees, did likewise. If a rich country like the United States can be economical in how it spends taxpayers' money, why in the world will a poor country like Liberia always try to live above its means?
Now let’s turn our attention to proposition II. In economics 101, we are taught that each economy has four factors of production. Whatever the product, whatever the service, a country will need some combination of all four factors of production to be successful.
Land is often described as the free gift of nature. As a factor of production, land includes natural resources such as minerals, oil, coal, the sea, the fishes in the sea, plus land itself. Labor includes the skills of those who work, as well as the quantity of people who work or who are available for work. Capital means money invested into a business. But because the money invested does not just sit in a bank, but is turned into productive goods that are used within the business, a businesses capital can include, machinery, buildings, vans, computers etc., as well as cash. Entrepreneurship is the ability to combine the other factors of production and then to use them to provide profitable goods or services that will lead to higher standards of living in the long run.
So, what is most important for long-term prosperity and economic viability is to have more of the economy significantly biased toward the last factor of production, namely entrepreneurship. However, as the graph above clearly demonstrates, Liberia is severely deficient in that factor of production. In performing a status analysis, that is very bad news. A dynamic model, on the other hand, looks at the change over time in that factor of production that is so significant for sustained, long-term economic growth and prosperity. A cursory review of the data and anecdotal evidence suggests that Liberia has failed miserably in making noticeable improvement in that area, even if we were to adjust for the war period.
In conclusion, by now, the reader will have made the deduction that all of the problems are not unique but rather they are all inter-related. However, the two propositions just present a framework that will allow us to begin thinking holistically about the broader problems that we face. As we all know, a proper identification of a problem indicates that you are roughly 90% away from resolving it. Misdiagnosing the problem, however, can lead to catastrophic consequences for the whole country. So, let us all begin this national dialogue. My next article will present some of the causes of the problems and provide suggestions on how we can collectively begin to address them.
About the Author: John S. Morlu II - MBA in Finance from Johns Hopkins University, M.A. in International Commerce and Policy from George Mason University, and Certified Management Accountant (CMA).