Liberia's Economy: Decorated Greedy System

By J. Yanqui Zaza

The Perspective
Atlanta, Georgia
August 29, 2006


As the efforts to reform our economic commence, several writers have opined their choices between market-economic or capitalism-"the trickle down concept"- versus mixed capitalism. Proponents of a market-oriented system believe that prosperity would spread, affecting everyone because capitalism would limit government role and allow entrepreneurs to invest and efficiently manage mineral resources, transportation, manufacturing, utility, education, etc.

Those who advocate for mixed economic state that such an economic system would empower the government not only to enact strong regulations, but it would, at least, manage certain services such as education, health, utility, etc. (J. Yanqui Zaza, The Perspective 4/5/05). Mixed economic enthusiasts say it is only government that would care for the helpless; more so, capitalists would use kickbacks to buy public on the cheap and make regulations difficult and expensive for government officials to implement.

However, before we identify and implement an effective economic system it would be necessary to understand what we already have. Regrettably, we have not or are ashamed to recognize it. Even, those who benefited from the spoils are indicating, for whatever reasons, not to know the system (as someone called it a "predatory economy") that ruined Liberia. Now Liberians, apparently unaware, are embracing the same old system a decorated "greedy system" (that is how the former US President, the late Herbert Hoover called capitalism) hoping that it would finance social investment, a bridge to sustainable prosperity.

Is it not the use of the capitalist system that has made the culture of greed to permeate our society? Is it not because of greed that, even after we executed 13 former government officials publicly, and subsequently fought a fourteen-year vicious civil war, our representatives are still signing unscrupulous agreements and concessions? It is clear that since 1847, capitalists continue to operate all of Liberia’s major economic activities ranging from rubber, to mining iron ore, to wholesale to construction, etc. The transportation industry and government's offices are owned and operated by capitalists. Even our education was and is still controlled by capitalists. In fact, one could argue that because government did not invest in high school from 1847 until in the 70s, Liberia did not produce sufficient skilled manpower, an incentive for employers.

Strangely though, even some Liberians who were victims of the spoils of capitalism are not accepting the capitalist system as the culprit of our demise. Also, some foreigners, for whatever reasons, have begun to preach the fortune of a "decorated capitalism." Paul Wolfowitz, the President of the World Bank has added his voice to the views of Liberian capitalists. While visiting President Ellen Johnson Sirleaf, he said a new system (i.e., capitalism or privatization) could be an effective tool to fight corruption. He also asked Liberian lawmakers and all Liberians to swallow the bitter pills of capitalism and should not expect too much too soon. But the world economic expert did not tell his audience how bitter and ruinous the spoils of capitalism are.

If the consequences of capitalism are so severe, why do good citizens or institutions operate within such a system? Greed. However, if capitalists are “damn greedy," according to President Hoover, why is it that the World Bank, an advisor to debtor countries is also serving as an agent of creditors, the greedy capitalists? So is it conceivable to believe that the Bank assisted twenty-three greedy capitalists (chief executives) who made from $230 million dollars to $1.2 billion dollars as wages in 2005? Or is Wolfowitz unaware of the link of the rise of economic disparities and the netting of $33 trillion dollars in wealth in 2005 by few of its employers/capitalists? (J. Yanqui Zaza, Perspective, 7/04/06).

Joseph Stiglitz, a former World Bank economist, has predicted that the policies of capitalism channeled through the World Bank would ruin other developing countries. He added that similar policies inflicted economic ruins in countries of South America, where associating with the World Bank has now become a political baggage.

Wolfowitz did not only fail to say how few-connected individuals or groups usually exploit the loopholes of capitalism or privatization. He also failed to link how borrowed funds stolen by capitalists affect social investment in developing countries. At a recent US-Senate Congressional Hearing, for example, witnesses stated that the World Bank's corrupt system did encourage Washington-based consultants to siphon funds allocated for eradicating Malaria in Africa. (NY Times, 6/28/06). Senators were outraged to hear that only one percent of the 2004 budget was spent on medicines, one percent for insecticides and six percent for mosquito nets, while the rest of the budgets went for administration, etc.

President Wolfowitz’s efforts to address the concerns have come too late and maybe ineffective. On April 11, 2006 he did promise to root out corruption. He said the anti-corruption campaign would also be directed at the World Bank and its affiliates such as those corrupt Non-governmental Agencies (NGOs) owned by the World Bank.

However, in the case of Liberia, Wolfowitz did not say if the World Bank would audit its fiduciary role and the disappearance of the $520 millions of dollars donated in February of 2004 to build infrastructure in Liberia. Or how and why did Liberia incur $3.5 billion dollar debt, since the Bank along with it affiliates was involved in many of those loan agreements? Neither did he inform his listeners that civil workers in Ghana are now demanding higher wages because capitalism has increased the cost of living, instead of curbing corruption as pronounced.

Importantly, Wolfowitz did not say why Sierra Leone, which had implemented policies of the World Bank back in 1994, and a recipient of $640 million dollars and $800 million dollars in 1997 and 2005 respectively, couldn't feed 74% of its 6 million people? Or why would a country, with enormous resources, owing just $1.6 billion dollar external debt, and is scheduled to host its third democratic election in less than 12 years, is now on a brink of disaster? The International Monetary Fund’s Press Release NO. 06/94 dated May 10, 2006 states that poverty remains pervasive in Sierra Leone, particularly in rural areas, and poverty-reducing efforts have yet to make notable progress.

Was Mr. Wolfowitz’s visit necessary for Liberia to join the club of privatization? No. Liberia announced the privatization program during the Taylor Regime. More so, the signing and enactment of GEMA by the Liberian Legislature in 2004 should remove all political obstacles to the program of privatization. Additionally, the coming into power of President Sirleaf along with her appointment of an economic team, all of whom who embrace the theory of capitalism and privatization, should ease the concern of the proponents of privatization. To the excitement of proponents, President Sirleaf’s Unity Party is now using the advice of former business to strengthen capitalists' crew.

Capitalists agree that inadequate funding of social programs creates gross disparity in living standard, an ingredient for breeding corruption. However, they point out that they would contribute to investing in social programs by paying their share in royalties and taxes. Unlike former capitalists of LAMCO, Firestone, Bomi Hills, etc, they argue that they would be less greedy, wouldn’t overcharge customers, wouldn’t give kickbacks to public officials in exchange for sweet heart deals, wouldn’t lobby Legislature to enact anti-people’s policies, wouldn’t influence the election of dictatorial leaders, wouldn’t undermine leaders who invest in social programs, etc.

The argument sounds good. However, if capitalists in general were greedy, why would capitalists in Liberia be less greedy? The records of capitalists are clear. Lydia Polgreen stated that African Countries say capitalism has yet to improve their lives and they are disenchanted with policies of the World Bank. (NY Tines, 8/18/06).

Even in the United States of America the theory of capitalism is not being fulfilled. The US Treasury Secretary, Henry Paulson admitted recently at a US Congressional Hearing that economic inequality in the US is rising. He concurred with countless reports, which indicate that the US government’s regulatory agencies and watchdog institutions have failed to stop capitalists from undermining social programs. The Center for Disease Control and Prevention, for example, states that the quality of food is poor that 30 to 40 percent of today’s children will have diabetes. Also alarmingly, in search for higher profits, US capitalists are relocating to countries with cheap labor, at a time when a significant number of professionals such as doctors, engineers, electricians, builders, accountants, etc are cutting corners for more profits.

Let us try the mixed economic system which is practiced by some countries of Europe, Canadian, Japanese or Chinese at least for a change. I believe that without an economic system that narrows the gap between the privileged few and the less privileged majority, instituting democratic principles alone would not prevent another crisis in the future.

© 2006 by The Perspective

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