Price Gouging/Minuscule Price Offering: Liberia Paid $4M Or $17M For One Megawatt But Guinea Paid $2.3m; Americans Pay $38,000 For A Drug Today That Was Sold For $40 In 2001

By J. Yanqui Zaza

The Perspective
Atlanta, Georgia
January 14, 2017

                  




 
 
 
 

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.

Drug per Month

Canada

UK

Spain

Netherland

US

Enbrel (Autoimmune)

$1,600

$1,100

$1,300

$1,500

$3,000

Copaxone (MS)

$1,400

$892

$1,100

$1,100

$3,900

Gleevec (Leukemia)

$1,100

$2,200

$3,300

$3,300

$8,500

Humira (arthritis)

$1,900

$1,100

$1,400

$1,400

$3,000

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, if 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.

jyanqui@aol.com


Kandajaba Zoebohn Zoedjallah
"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." J. Yanqui Zaza


Mr. Zaza,

Your assertion above corroborates and buttresses our argument regarding our nation´s current political decay or rotteness, and the need for renewal.

We hope opportunists, aspiring decision makers, or aspiring policy makers, loyalists, ideologues, and partisans are "listening"!

Tomorrow is Sunday, we hope "sleepy Joe" does not end up sleeping on this tomorrow while in church for his aides to end up telling people "the VP is praying", as shared by Mr. Martin Scott on these pages few hours ago. We find it extremely difficult to stop laughing at this episode. .Not actually because of Joe taking his nap in church, but rather the response from his aides..."he was praying" What a prayer!
Kandajaba Zoebohn Zoedjallah at 03:12PM, 2017/01/14.
Martin K Scott
Comrade J. Nikita Zaza,

You say that "Price gouging is when investors sell goods or services at a price considered to be unfair or exploitative," But how about those NON-investors who "sell their goods and services at a price considered to be unfair or exploitative"?? Aren't they guilty of price gouging too?

For example:

a) Is your mentor, Comrade Amos Sawyer, GRC Chairman, guilty of Price Gouging the Liberian Taxpayers, when he arbitrarily increased his salary by 270 percent (from $US1,500 to US$4,000) in 2006?

b) Is Liberian government guilty of Price Gouging the Liberian people when they keep increasing charges for government services?

c) Are prostitutes guilty of Price Gouging when the price for their services rise dramatically because demand for their services exceeds their immediate supply?

Bonus question: What are prices for? And what role do they play in the economy?


Martin K Scott at 11:00PM, 2017/01/17.
j. yanqui
Hi Mr. MARTIN K SCOTT,

My good friend, I have joined many others who continue to discuss principles and issues of our beloved country, but, on the other hand, you have and continue to trivialize many of these important issues. If I may remind you sir, you, others and I have a responsibility to help our country search for the problems and possible solutions in order for those who are in positions of influence to help guide the country to a prosperous status. I am sure you will agree with me that the fear/reluctance on the part of the majority of the Liberian citizenry to ask relevant questions and recommend possible solutions for the way forward did encourage those who were in positions of influence to carry out ill-advised policies, subsequently, breeding the chaos in Liberia that all of us are fighting now to correct.

Speaking the truth does not and will not reduce your status, rather such a practice would help us move forward. For example, it would help those who are in positions of influence if you and I reminded them that the idea of paying excessive salaries and, or bonuses to advisers of President Ellen Johnson Sirleaf was advanced and promoted by the World Bank and IMF. In fact, Liberian lawmakers (i.e., a Liberian House of Representative Committee) held a Hearing at which time members of the Committee did express their displeasure about the excessive salaries. Presumably, when the Sirleaf government did not accept the lawmakers' advice to reduce the US $10,000 to US $20,000 per month paid to privileged advisers, they (lawmakers) demanded higher salaries. Now, Liberia's salary is about 70% of the government's total expenditure. Salary expenditure as a high percentage to the total governmental expenditure is not limited to Liberia. Salaries paid in many countries in Africa such as Ghana and Kenya, constitute a significant percentage to the total governmental expenditures as per budgetary documents.

Why is the World Bank and IMF recommending the policy of excessive salaries and, or bonuses for governmental employees? They, deceptively, argue that high salaries paid to advisers does discourage corruption. Does such a theory hold to be true? Not so, argue many experts. This is because many of the culprits of financial debacles decades ago were individuals who got high salaries? For example, the 2008 financial meltdown was engineered by high paid chief executives on Wall Street.

Once again, big business is advocating a questionable economic policy in the United States. Big business claims that those individuals with experience gained from profit-making institutions are better managers of governmental functions than those individuals with experience gained from working within governmental offices. And so, I guess, following the advice of big business, the "So-called Champion" of the Poor White Class, billionaire Donald Trump has appointed many individuals who have gained experience from profit-making institutions to help him (President-elect) manage the affairs of the Federal functions of the United States of America.

This theory is not true as indicated in my previous article. I stated that President Sirleaf's government is failing because she selected dependent individuals, who were not loyal to the country. It is obvious that those individuals with experience gained from profit-making institutions usually are loyal to the chief executive of the corporation and not loyal to the corporation. This is because the chief executive of a corporation has the discretional power to promote and, or dismiss a subordinate. As evidenced in Liberia, many of President Sirleaf's appointees were either appointed to positions they had limited knowledge about, had limited experience for the positions or were family-members, thereby, requiring them to dependent/rely on the President's advice in running these different agencies and ministries.


So, why did President Sirleaf government accept the World Bank's ideas to pay excessive salaries to privileged lieutenants and appoint dependent subordinates to positions of influence? I am sure you have your own views.

In any case, let us visit the views of an American. So, I invite you to read some pages of the book called "Expulsions:Brutality and Complexity in the Global Economy authored by Ms. Saskia Sassen, which might help you to understand why the World Bank and IMF are recommending and enforcing these ill-advised policies.

On page 88, she wrote: "But is is important to remember that it often is and was the vested interests of foreign governments and firms that enabled the corruption and weakening of these states…And good leaders who resisted Western interests did not always survive…IMF and World Bank restructuring programs prepared the ground for the systemic deepening of capitalism…deepening how those restructuring programs partly enabled the ease with which foreign buyers can purchase land in many countries subjected to such programs…"
j. yanqui at 11:15AM, 2017/01/19.
Andrew Worth
J. Nikita Zaza,

Regarding the price of drugs in various countries, you fail to recognize that the major impactor on the price of drugs in a country is the source, in the US virtually all of the drugs used are domestically produced by corporations with patented rights to those drugs, in short: the suppliers of each drug has a monopoly. The situation in the rest of the world is very different with generic drugs, with India being a major producer flooding the international market outside of the US.

Regarding the prices paid by foreign corporations in the exploitation of Liberian resources, I don't have figures for how much the prices paid for those resources in Liberia compares to how much is paid for them in other countries, but assuming that you're correct and less is paid to the Liberian Government for the same resource than is paid to other Government, the question becomes: Why is this the case? My answer is that it is the fault of the Liberian Government, either as a result of poor negotiation techniques or as a result of cash payments too the Liberian decision makers.

Regarding the cost of the Mt Coffee hydro power station rebuild, again if the cost of the rebuild was higher than it could have been the fault lies within the Liberian Government. The simple fact is that getting anything done in Liberia costs far more than it should, the demand for "cold water" from Government employees is endemic, paperwork excessive, the requirement to follow "correct" procedures pervasive, to get anything across the "Free" Port of Monrovia is virtually an exercise in futility, and to top it off there're those cash payments to decision makers to select the "right" contractor to do the job.
Andrew Worth at 12:44PM, 2017/01/29.

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