President Sirleaf’s Annual Address to the Nation Revisited

By: Theodore T. Hodge


The Perspective
Atlanta, Georgia
February 11, 2015

                  



 
Ellen Johnson Sirleaf

After reading President Ellen Johnson Sirleaf’s annual address to the nation, I issued a scathing critique. I painstakingly pointed out the falsities of her claims, mainly on the subjects of Health and Education, two subjects to which she claims her administration attaches great priority. I challenged her on the grounds that she deliberately painted a rosy picture, giving the impression that conditions in the country are not that bad off under her able leadership. I proffered arguments to the contrary, and concluded that many of the false statements uttered by the president were done so for simple political expediency… to lie so blatantly is an unconscionable act, in my opinion.

For the sake of brevity, I was not able to comment on other subtopics of the speech. Here, I intend to examine and focus on the issue of natural resources and how this administration, just like the previous administrations before it, has failed to implement fruitful policies to benefit the nation. I will offer some advice…

This is what the president said: “Working with our sister Republic of Guinea, I will submit legislation to effectuate an infrastructure development agreement between the Government and West African Exploration (WAE) for the transshipment of iron ore from Guinea through Liberia. For several decades the Governments of Liberia and of Guinea have considered and explored modes of cooperation to facilitate the evacuation of iron ore from parts of Guinea near the Liberian border using infrastructure in Liberia.  This is a milestone in regional integration opening the way for stronger cooperation between our two countries and broadening the opportunities for large scale investment.”

 

What is wrong with this picture painted by the president? Two clauses stand out: “… for the transshipment of iron ore from Guinea through Liberia…” and “…the evacuation of iron ore from parts of Guinea…” It is quite painful and mind-boggling that our president, generally referred to as an Ivy-League trained economist, proffers the transshipment and evacuation of natural resources as economic policy to lead to infrastructural development and large scale investment.

Nothing could be further from the truth. As a matter of fact, the opposite of the statement made above is true. Transshipment and evacuation of a country’s natural resources lead to stagnancy, poverty and under-development. Selling a country’s natural resources and exporting same abroad on a constant basis is a clear and proven recipe for under-development; to call it a viable economic policy is boneheaded, to say the least.

Before I offer some constructive alternatives based on the study of economic history around the world, let’s examine further what the president said: “Liberia has a historical primary enclave economy, highly dominated by iron ore, rubber and timber; which subjects it to vagaries in global conditions and prices.  Over time, the structure has been changing, with the expansion of agriculture into more traditional tree crops such as coffee, cocoa and oil palm. Essentially, production of crops come from individual and small entity holders with limited capacity to produce on the scale that leads to industrialization. Recent effort by the Government sought to change this by promoting large scale oil palm, using the investment and the experience of Malaysia and Indonesia which have become emerging economic giants.”

 

That the nation Liberia is blessed with abundant (or perhaps sufficient) natural resources is an undebatable fact. History, however shows that our political and economic leaders, our national leaders --- although referring to the people who run our affairs as leaders is entirely misleading --- have put us on the wrong track of the path to development. Their policy, since 1926 and the coming of Firestone, has been to collect a few dollars from foreign investors and watch them whisk away our resources with amazing rapidity. Not only has the government allowed foreigners to benefit enormously by taking our raw products, refining them into finished products and reselling the products to us at exorbitant prices; they have had to use cheap labor sanctioned by the government. This kind of arrangement only benefits the foreign buyers while it demoralizes and disenfranchises the average Liberian, who gets poorer and poorer.

It is evidently true, as even the president herself has openly admitted above, that our natural resources, when sold on the world markets, are ‘subject to vagaries in global conditions and prices’. But how are the discrepancies to be corrected? How is it fair for the buyer to always determine the price of a given good? Surely, the seller is the victim in this sort of market imperfection and distortion.

It is quite understandable that past leaders were forced to adopt or accept such practices, but what is our excuse now for continuing to sell raw rubber, timber, cocoa, coffee, gold and diamond to foreign bidders without being able to analyze our economic condition with some degree of thoughtfulness? Why do we continue instead to just run things on automatic pilot controls as if doing things the same old way is a sacred obligation? Now, add to the mix the discovery of oil. We have no idea how much oil we are yet to potentially discover, yet our government is hastily signing papers to foreign bidders to whisk it all away, only to be resold to us as finished products marked up so high in price that the average Liberian will not be able to buy and use it.

Our president mentioned Malaysia and Indonesia as “emerging economic giants”. True. But has the president and her economic staff ever bothered to explore the secrets behind these countries’ economic boom? To anyone who has bothered to do any research on these emerging economic giants, including Japan, South Korea and Singapore among others, their economic policies and the secrets to their economic successes are an open secret. I’ll give you a hint: It does not amount to simply selling your raw natural resources and buying finished imported goods.

Two excellent books are in circulation now for all to read and understand this question of how developing countries can propel and transform themselves from marginalization to economic prosperity. The first is “How Rich Countries Got Rich and Why Poor Countries Stay Poor”. The author is Erik S. Reinert, a Norwegian. Dr. Reinert is an award-winning economist, winner of the European Association for Evolutionary Political Economy. The second book is titled: “Bad Samaritans: The Guilty Secrets of Rich Nations and the Threat to Global Prosperity.” Its author is Ha-Joon Chang, a brilliant South Korean economic historian and an award-winning author as well.

 

Dr. Reinert writes: “Between raw materials and the finished product lies a multiplier: an industrial process demanding and creating knowledge, mechanization, technology, division of labor, increasing returns and --- above all --- employment for the masses of underemployed and unemployed that always characterize poor countries…”

He writes further: “In the 1700s, it was a rule of thumb developed for economic policy in bilateral trade, a rule that rapidly spread throughout Europe. When a country exported raw materials and imported industrial goods, this was considered bad trade. When the same country imported raw materials and exported industrial goods, this was considered good trade.”

In its April 2011 edition, the magazine NewAfrican dedicated its cover story to this very topic and reviewed these two books. Under the heading, “Cracking the Code: Unlocking Africa’s Secret to Wealth”, Osei Boateng writes: “…wealthy nations have a tendency to force upon nations theories they themselves never have followed and probably never will. Throughout the two books, the two authors go to extra lengths to provide incontrovertible evidence showing that today’s rich countries got rich because for decades, often for centuries, their ruling elites set up, subsidized, and protected dynamic industries and services, as national policy. They did not leave anything to chance or wait for God to do it for them as Africa tends to do these days.”

We are seemingly doing everything to keep our people marginalized and economically subservient. We are doing the exact opposite of what sound economic policy demands: We are exporting all our raw materials and importing finished goods at intolerable prices and the president is wondering why our economy is stagnant, or even regressive, why our so-called economic partners thrive at our expense. Should the picture not be clear to someone who comes with so much purported academic credentials and an impressive track record from the corporate world?

There is an economic principle referred to as Emulation; the theme runs vividly in these two books. For the layman’s terms, emulation is described thus: “to try to equal or excel; imitate with effort to equal or surpass; it also means to rival with some degree of success…”

There is also an alternative economic principle known as ‘comparative advantage’. The principle is thus defined: …”Comparative advantage occurs when a country can produce a good or service at a lower opportunity cost than another. This means a country can produce a good relatively cheaper than other countries.”

The essence of the two books is that Europe and America used one economic principle (emulation) and imposed another (the concept of comparative advantage) on developing countries, mainly African and Latin American countries. But here is the interesting point of observation, emerging Asian economies such as Japan first, followed by others like South Korea, Singapore, Malaysia, as well China, decided to play the game differently.

A toolbox of Economic Emulation and Development based on the two books was produced by the magazine NewAfrican and partially reproduced here with all courtesy and attribution:

We are told, after a thorough reading of history, that “For several years, England’s economic policy was based on a simple rule: import of raw materials and export of industrial products.” Evidence is also replete that Britain remained a highly protectionist country until the mid-19th century; they used the idea of emulation… “Bringing their productive structures into those areas where technological change was being focused. In this way, they created rents (a return above ‘normal’ income) that spread to capitalists in the form of higher profits, to labor in the form of higher wages, and to governments in the form of higher taxes…”

Now, Britain and its capitalist fellow heroes, including the United States, and their so-called international or “global” organizations, such as the World Bank, the International Monetary Fund (IMF) and the World Trade Organization (WTO), apply the phenomenon of “Kicking away the ladder”, as described by Friedrich List who said: “It is a common clever device that when anyone has attained the summit of greatness, he kicks away the ladder by which he climbed up, in order to deprive others of the means of climbing up after him.”

I bring this to a conclusion by quoting one of our authors, Dr. Chang, who said:
“If you want to understand the causes of American and European prosperity, study the policies of those who created it, not the advice of their forgetful successors.” Other countries that not too long ago were considered backward and undeveloped have learned this lesson only too well, and so should we. Selling our natural resources is not a viable policy that leads to economic development and prosperity.

Theodore Hodge can be reached at imthodge@gmail.com

Flahn Momoh Dualu
Theo, I actually bought Dr. Chang's book - always been lazy to read it. Will definitely read it now. I will also buy the other book as well. Great critique as always. All I can say is: WE NEED A BOOK FROM YOU! I will buy the first 10 copies!
Flahn Momoh Dualu at 05:51AM, 2015/02/13.
aminata
We saw it from far way. We assumed and it is now practically shown that Madame Sirleaf only graduated from her Ivy League university with a micky mouse economics degree. Thanks for proving our hunch with so many examples. Thanks for your points in the article.
aminata at 08:27AM, 2015/02/13.
Theo Hodge

Thanks, brother. Nice to know you feel that way. Actually, hopefully it won't be too long before you are holding a copy of my first book titled "The Rubber Republic" n your hands. It is ready for publication...

I'm also working on the second, "Power to the People" to be published in due course as well. I hope you will also but 10 copies of that as well. Smile...

My brother, time is flying and I have been very frustrated by the lack of effort in the direction of book publication by our intellectuals. I have waited and waited and have come to the conclusion that if I want it done I'm gonna have to do it myself. I'm on that quest.

Thanks again for reading the few articles I have written. Thanks for your support. I will move into the big arena and write stories for a larger audience. Hopefully by establishing my legacy, I will be telling the stories of those we admire in common and about whom nobody writes. On my honor, I promise to do my best.

Wish me luck... and don't forget to buy those copies. Wink, wink...
Theo Hodge at 08:30AM, 2015/02/13.
Theo Hodge

Correction: In the above, I meant to write "buy" instead of "but"... Typo error...

Thanks to both of you, Brother Dualu and Sister Aminata. Thanks for your support; thanks for reading...
Theo Hodge at 08:35AM, 2015/02/13.
Flahn Momoh Dualu
As long as it's coming from, copies, plural, coming my way. Again thanks. We really appreciate you efforts.
Flahn Momoh Dualu at 11:09AM, 2015/02/13.
Elliott Wreh-Wilson

Yhis essay is not just criticism, it a must read for third world policy makers and economics students. We look forward to the publcaton of your books, Theo.
Elliott Wreh-Wilson at 09:44PM, 2015/02/13.
Theo Hodge

Thanks, Dr. Wreh-Wilson. Coming from you, that's high praise. Must read for Third World policy makers and economics students? Thanks again.

The books are forthcoming; hopefully, will be worthwhile.
Theo Hodge at 10:42PM, 2015/02/13.
Kpanneh Doe
Theo, thanks for this very fine piece exposing the economic flaws and thinking in the President's annual message. Liberia's economic and finance managers would do well to read this piece as well as Drs. Chang and Reinert's book that offers fresh and new thinking on how developing countries can break out of their current economic malaise. A Liberian economist and friend has shared with me that our best hope for real economic development is to shift our emphasis from an export-based economy to one that focuses on developing our human resource capacity. This should begin with our children who would turn six(6) years old in 2017. Looking forward to reading your upcoming book--"The Rubber Republic".
Kpanneh Doe at 10:42AM, 2015/02/14.
Theo Hodge

Thanks, Kpanneh. The truth is so obvious we have to wonder what our "leaders" are thinking. Singapore went from Third World to First in twenty-five years. We, in Liberia, take twelve years to be short-term... Go figure.
Theo Hodge at 12:42PM, 2015/02/14.
rose roberts
Well said. "Education is a journey not a destination." Perhaps a gift of these books to our govt Ministers will make a difference. I doubt they will have the time to read them after running the streets and engaging these talk shows...grandstanding.
I have read these two books. These are books among others for our government officials to read in order to make educated decisions and not just go with the flow like a log or..."yes ma" minister.
To date I have asked 15 ministers what type of books they read.... there general answer was,"I only read the daily paper...I too busy." For them, education becomes a destination.... the country suffers. So be it.
rose roberts at 07:26PM, 2015/02/14.
Kandajaba Zoebohn Zoedjallah
Yes, Ellen´s greedy, selfish, deceptive, vain, incompetent, corrupt, and visionless mindset. Yes,our so called leaders of the past have failed flatly eventhough not as worse as Ellen with the economic sector.

But we should also be REALISTIC and take into account the issues of STRUCTURE AND AGENCY. That is, with the international economic structure fixed on the WORLD SYSTEM THEORY where exportation of raw materials on the cheap from smaller countries not enjoying such distinctions as AGENCY - that is to say the ability of a given actor - Liberia, Malaysia, Indonesia, to act to realize their respective or individual national interest or goals, THE ECONOMIC EXPEDIENCY OF RATIONALITY AND INCREMENTALISM must be considered when it comes to such POLICY DYNAMICS as underscored By Mr. Theo Hodge etc.

Yes, Malaysia´s industrial success, and major exports of manufactured goods, rubber, and palm oil are a fact, but Malaysia has become reliant on immigrant labour, as Indonesia is still the world´s largest exporter of plywood. A hint is quite sufficient.

Thus, yes,considering our current situation, for now "foreigners will have to benefit enormously by taking our raw products, refining them into finished products and reselling the products to us" while our ports, employment, and other sectors or subsectors of our infrasctural developments and living stndards are SYNANIMOUSLY improved as dictated By the WISDOM OR THEORY of RATIONALITY AND INCREMENTALISM!

All the same, Mr. Hodge´s commentary scintillates a ray of hope for Liberia as compared to that of Togba Nah Tipoteh´s - intended principally to cover Ellen´s greedy, selfish, deceptive, vain, incompetent, corrupt, and visionless mindset!
Kandajaba Zoebohn Zoedjallah at 04:01AM, 2015/02/16.
Kandajaba Zoebohn Zoedjallah
What about, the dictates of POLICY DYNAMICS - context, structure (world system theory imposed By the big countries), and agency, Mr. Hodge? This should not imply we support the visionless and or corrupt mindset of Ellen Johnson Sirleaf!
Kandajaba Zoebohn Zoedjallah at 06:13AM, 2015/02/16.
Kandajaba Zoedbohn Zoejallah
The international economic Structure, agency, and context, must be taken into account as we adress policy dynamics whether we have a good leader as X or a bad leader as Ellen Johnson Sirleaf.
Kandajaba Zoedbohn Zoejallah at 03:28AM, 2015/02/17.
James Netter
The essay is very insightful and thought provoking. I enjoy the approach that Theo often deploys in looking at the issues that afflict the Liberian society (education, health care, job creation, the fight against corruption, and so forth). For one thing he stays clear of ethnic pogroms and feminist epithets, and stays on course with the hard core issues. This is the kind of talk that Liberians who mean well and like to see their country prosper would like to engage in. However, a few mind boggling questions that came to me while I was reading the essay are,

1. How can Liberia attain full economic dependence, when she lacks the infrastructures of industrialized nations to tap her own raw materials and process them to finished goods? I asked this question because, for centuries the industrial powers have tightened their grip on third-world economies to the point where there is no transfer of critical and strategic knowledge and technology to Africa, as it is feared that Africa might likely pose a threat to them on the world market. For example: one can see the economic up rise and dominance of China, Singapore and other countries of the Asiatic realm today.
2. How can one change the mindset of the legislators in a society like ours where democratic principles and values were never practiced since its founding? Where does the change process start? I hope that my comments are not seen as insults, but I ask this question against the backdrop of illiteracy and backwardness within our society. People have been voted into the Liberian congress simply because of their tribal affiliation. Nonetheless, they lack the elementary art of crafting meaningful legislations to benefit our people.

3. What constitutional provisions are there to lay the framework to guide the voters, the majority of whom are also illiterate, to vote for qualified candidates? The Liberian congress has legislators who were voted for because they either directly or indirectly participated in murdering members of rival tribal groups during the civil war as avenge for their tribe. So, they are seen as heroes of those tribes; therefore, awarding them senatorial and representative positions regardless of their education, experience, brilliance and wits is seen as a psychological and tribal victory.

Many thanks for sharing your brilliant thoughts with our reading public. Stay on course and avoid indulging in personality battles! Your messages are not falling on deaf ear. Ellen’s term might be over tomorrow, but Liberia still remains. I am checking out some of your recommended authors.
James Netter at 11:03AM, 2015/02/19.
James Netter
The essay is very insightful and thought provoking. I enjoy the approach that Theo often deploys in looking at the issues that afflict the Liberian society (education, health care, job creation, the fight against corruption, and so forth). For one thing he stays clear of ethnic pogroms and feminist epithets, and stays on course with the hard core issues. This is the kind of talk that Liberians who mean well and like to see their country prosper would like to engage in. However, a few mind boggling questions that came to me while I was reading the essay are,

1. How can Liberia attain full economic dependence, when she lacks the infrastructures of industrialized nations to tap her own raw materials and process them to finished goods? I asked this question because, for centuries the industrial powers have tightened their grip on third-world economies to the point where there is no transfer of critical and strategic knowledge and technology to Africa, as it is feared that Africa might likely pose a threat to them on the world market. For example: one can see the economic up rise and dominance of China, Singapore and other countries of the Asiatic realm today.

2. How can one change the mindset of the legislators in a society like ours where democratic principles and values were never practiced since its founding? Where does the change process start? I hope that my comments are not seen as insults, but I ask this question against the backdrop of illiteracy and backwardness within our society. People have been voted into the Liberian congress simply because of their tribal affiliation. Nonetheless, they lack the elementary art of crafting meaningful legislation to benefit our people.

3. What constitutional provisions are there to lay the framework to guide the voters, the majority of whom are also illiterate, to vote for qualified candidates? The Liberian congress has legislators who were voted for because they either directly or indirectly participated in murdering members of rival tribal groups during the civil war as avenge for their tribe. So, they are seen as heroes of those tribes; therefore, awarding them senatorial and representative positions regardless of their education, experience, brilliance and wits is seen as a psychological and tribal victory.

Many thanks for sharing your brilliant thoughts with our reading public. Stay on course and avoid indulging in personality battles! Your messages are not falling on deaf ear. Ellen’s term might be over tomorrow, but Liberia still remains. I am checking out some of your recommended authors.
James Netter at 11:08AM, 2015/02/19.
James McGill
The essay is very insightful and thought provoking. I often enjoy the approach which Theo deploys in looking at the issues that afflict the Liberian society (education, health care, job creation, the fight against corruption, and so forth). For one thing he stays clear of ethnic attacks and feminist epithets; moreover, he stays on course with the hard core issues. This is the kind of writing that I would encourage Liberians who mean well and like to see their country prosper to engage in. However, a few mind boggling questions that came to me while I was reading the essay are,

1. How can Liberia attain full economic dependence, when she lacks the infrastructures of industrialized nations to tap her own raw materials and process them to finished goods? I asked this question because, for centuries the industrial powers have tightened their grip on third-world economies to the point where there is no transfer of critical and strategic knowledge and technology to Africa, as it is feared that Africa might likely pose a threat to them on the world market. For example: one can see the economic up rise and dominance of China, Singapore and other countries of the Asiatic realm today.

2. How can one change the mindset of the legislators in a society like ours where democratic principles and values were never practiced since its founding? Where does the change process start? I hope that my comments are not seen as insults, but I ask this question against the backdrop of illiteracy and backwardness within our society. People have been voted into the Liberian congress simply because of their tribal affiliation. Nonetheless, they lack the elementary art of crafting meaningful to benefit our people.

3. What constitutional provisions are there to lay the framework to guide the voters, the majority of whom are also illiterate, to vote for qualified candidates? The Liberian congress has legislators who were voted for because they either directly or indirectly participated in murdering members of rival tribal groups during the civil war as avenge for their tribe. So, they are seen as heroes of those tribes; therefore, awarding them senatorial and representative positions regardless of their education, experience, brilliance and wits is seen as a psychological and tribal victory.

Many thanks for sharing your brilliant thoughts with our reading public. Stay on course and avoid indulging in personality battles! Your messages are not falling on deaf ear. Ellen’s term might be over tomorrow, but Liberia still remains. I am checking out some of your recommended authors.
James McGill at 09:06AM, 2015/02/20.
Michel
Excellent website you have here, so much cool information!..

جدة
Michel at 04:09AM, 2017/03/26.

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