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House Scheduled for Lecture on Micro, Macroeconomics?

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According to a local daily newspaper (The New Dawn, January 10, 2014, “House to summon Finance, CBL”) reports that “The House of Representatives (of the National Legislature) is expected to summon Amara Konneh (the newly-anointed ‘African Finance Minister of the Year’) and the Central Bank Governor, Dr. Mills Jones to provide explanations on the rapid rise in the (foreign) exchange rate and the general state of the (Liberian) economy . . . what has happened to the economy of late . . . due to (cause) the alarming increase in the (foreign) rate of the US dollar against the Liberian dollar”?

Well, on the state of the nation’s economy, Finance & Economic Planning Minister, the Honorable Amara Konneh, just told the Liberian people that “real (Liberian) economic growth remains on solid footing”, with economic statistical support (The Analyst, January 7, 2014). Similarly, Dr. Mills Jones of the Central Bank, in refuting claims of “economy in disarray”, held that “significant” progress has been made in the nation’s economy “as evidenced by our growth averaged at 6.9% in the past six years . . . debt burden is relatively low . . . inflation rate is in single digit (New Democrat, December 9, 2013}”.

Thus, these officials, professional economists and financial management experts are and will be happy to explain, in detail, the state of the nation’s economy and its finance and budgetary plans. This encounter will be in classic, Ivory-tower, micro/macroeconomic, and the latest, financial management/budgetary theoretical terms, with high-sounding, professional parlance  that are likely to overwhelm, above and beyond the possible comprehension of the average Member of the House. Yes, with graphs, functions and statistical analysis, the professional team will confirm and support their arguments that “real (Liberian) economic growth remains on solid footing”, and “as evidenced by our growth averaged at 6.9% in the past six years . . .”

However, since Liberian “economic growth remains on solid footing as evidenced by our growth averaged at 6.9% in the past six years”, a “feel-good”, clean bill of good health based on these, positive statistical analysis, then “what has happened to the economy of late . . . due to (cause) the alarming increase in the (foreign) exchange rate (among other economic variables) of the US dollar against the Liberian dollar”, with a profound, real negative impact on the buying power of Liberians on the ground?

Perhaps the answer to this question is found in the statement by CBL Governor, Dr. Mills Jones, when he stated (New Democrat, December 9, 2013) that “. . . since the beginning of 2013 the (Liberian foreign) exchange rate has come under pressure with a depreciation of more than 8% due largely to 17% deterioration of Liberia’s Terms of Trade, and increased demand on (for) imports”.

But what, really, in our layman’s understanding, is this “Terms of Trade” or (TOT)? Economic Thought and literature hold that TOT is the ratio of export prices to import prices, indicating the amount of imported goods and services an economy (Liberia, in this case) can buy per unit of exported goods and services,  expressed, simply, by export prices over (divided by) import prices. For example, let Liberia export only iron ore and import only automobiles, then Liberia’s TOT=Px/Py, where Px is the price of exports and Py is the price of imports.

The improvement of this ratio, that is where Px, the price of exports, is larger or more than py, the price of imports, Liberia benefits, because Liberia can buy more imports for any given level of exports. Thus, a rise in the prices of Liberian exports (goods and services) in the international markets increases Liberia’s TOT, while a rise in the prices of imports decreases Liberia’s TOT. This, I believe, was or is the thrust, as expressed by Dr. Jones of the CBL.

In other words, one of the critical requirements for the improvement of the economic health of our nation is organized effort for export.

There are several, economic variables – exchange rate, balance of trade, etc. – that may influence TOT, according to economic thought and reality. For this reason, these variables are subjected to intense monitor, analysis and manipulation by economic planners and central banks, in order to achieve pre-determined, desirable goals.

Our Major Problem

However, our “problem with us is us”, according to former Vice President Ben Warner. For the entire history of our existence as a nation, we depended, entirely, upon imports – from food, clothing, construction materials, etc., etc. Socio-cultural patterns of behavior and thought of the “with it”, elite Liberians here at home and those in the USA (now clambering for dual citizenship, not surprising) have been and are brainwashed such that they want and endeavor to be more American than the Americans.

It is in this respect that economic planning comes into play – designed, pre-determined, desirable goals and outcome through manipulation of economic variables – exports and imports, in this case.

Two Approaches

In our view, there are two reasonable, very urgent, but long-term approaches (will require investment in effective/efficient transport/communications) These are:

A. Production for home (Liberian) Consumption & Food Security

1. In order to reduce and, eventually, eradicate our dependence on imported goods and services, we must begin with production of food – rice (our staple) cooking oil orange/pineapple/tomato/grapefruit juices; we can grow, produce/process for export such tropical food products as rice, corn, cassava, potatoes, plantain, banana, eddoes, palm oil, corn oil, processed palm butter, bitter balls, egg plant, pawpaw, cabbage cucumber, onions, peanuts/peanut butter, leaf lettuce, processed cassava leaves, potato leaves, collard greens, palava sauce, fish and fish farming, raise goats, cows, cocoa, coffee, poultry/poultry products and related, tropical food products that are producible here in the country.

Although we have more land than people, citizens nationwide, buy and live on imported rice bought from shops in county capitals; the city of Monrovia is something else!

2. Our Traditional, Liberian Attire

Reference to our Liberian, traditional attire, it can be said that it was only after the 1980 Event and, particularly, during our Peace Process travels to many African, capital cities that Liberian leaders and trend-setters became conscious of the dignity of our African-Liberian, traditional attire – the elegant, colorful, flowing gowns with various, African, artistic designs for men, as opposed to western, Brooks Brothers or Botany 500 American suits; and the classic, also elegant, Lappa Suits of similar color and designs, for women as opposed to western, skin-tight, body-hugging dresses with see-through, push-up bras. Now, there is a young, Liberian businessman in Philadelphia, Pennsylvania, USA, who markets Liberian, traditional clothing and what he promotes as “made in Liberia”.

Finally and more importantly, the Liberian President, Mrs. Ellen Johnson-Sirleaf, has added a touch of class, dignity and symbol of approval to the classic, Liberian Lappa Suit that she had worn and continues to wear proudly at national/international gatherings.

B. Production For Export

1. Endowed with more than our share of natural resources and a storehouse of trained/experienced and trainable human resource, in relative terms, in all areas of technical disciplines, Liberia, like all other neighboring states, could and still can embark upon the development of organized production for export, beginning with cocoa, coffee, tropical food products such as banana, plantain, pineapples, orange juice, etc., to elegant Liberian clothing and fashions.

The Critical Question

The question, then, becomes, why did we and have we not organize production for export, since we have had all that it could and would have taken, and continue to have all that it will take today – (1), the Need; (2), Knowledge – Education, training/experience & commitment; (3), Resources – human, natural & financial assets, together with the willingness of our partners-in-progress who have been with us throughout all these years, with commitment to continue – to organize production for exports?

Because, in our view and based on the facts of history, a policy change from dependence on imported, foreign goods and services to independence arising from organization for production of goods and service for home consumption and export would strike a contradictory blow at the very core of the nation’s historic, Liberian Political Economy, dominated and controlled by the very few and very powerful, political ruling class and their foreign friends and, therefore, unacceptable.

These facts indicate that almost all members of the political, ruling class/officials of government had been and are posted in positions of trust in government and the economy in which they dominated and controlled, continue to dominate and control all decision-making of the nation’s political economy. Moreover, almost all members of the ruling class were and are citizens of foreign countries, predominantly, the USA with their allegiance/patriotism mortgaged to the foreign country. Therefore, organized production for exports was or is not only against their best economic interests, but also against their political interests.

In his presentation entitled, “Making The Case For Dual Citizenship in Liberia”, December 7-8, 2012, Dr. George K. Kieh, Professor of Political Science and former Dean of the University of West Georgia, USA, argued that The Political Economy of Liberia provides the context for why some Liberians migrated to other countries . . . and acquired (naturalized) citizenship”.

“At the base”, Dr. Kieh held, “is (or was) a state whose central mission has been to create propitious conditions for the predatory accumulation of wealth by the owners of multinational corporations (e. g. Bong Mines, Firestone, Liberian Agricultural Company, LAMCO) and other foreign-owned businesses . . . and Liberian state managers and their relations . . . On the other hand, the state has visited deprivation and misery on the overwhelming majority of Liberians . . . The related feature is the unfair and unjust distribution of wealth and income. For example, in the 1980s”, he argued, that “about 6% of Liberians (members of the ruling class) owned and controlled about 65% of the national wealth . . . “

Given this condition, a change in policy of dependence on foreign imports to independence, through organized production for home consumption and exports, is necessary for the economic health of the nation. Are the planners and economic gatekeepers up to the task?

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