Trip Preparation and Good-bye

Picture 1: The 16 Masks of Liberia

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H. John Heinz III College resumes classes on Monday, August 23rd, 2010. The internship is officially over. This is my final post.

No longer a living document, this blog will now take on a different function. In the event that any future Heinz students are contemplating an internship in Liberia this blog will serve as a quick first reference. There are reading material links to the right, a picture gallery slide show, and 50+ blog posts ranging from food and culture to deeper policy issues like imports and exports.

In this final post I will attempt to answer the first question that all interns will ask,

“How do I prepare for an internship in Liberia?”

If you are a Heinz student, or another intern from another school, and you have been accepted to an internship in Liberia you will need to do two things:

1. Read
2. Pack

**

Trip Preparation Part One - Read

I suggest starting with the CIA World Factbook [1]. Without knowledge of the past and the people of Liberia you will lack the necessary context for your work.

After the CIA World Factbook I would suggest reading a few papers from the Center for Global Development [2]. They have Liberia specific papers and are a great resource.

After that, you should go to the Library for a few books written about Liberia, a list is already provided for you on the right hand side of the blog. I would suggest reading at least two of them.

Next to last, visit Lift Liberia [3] and download the PRS, Poverty Reduction Strategy. This document will give you a clean overview of the direction Liberia wants to be going.

Finally, you should leverage your personal networks. There is a good chance you will be able to meet someone in Pittsburgh happy to talk about Liberia.

**

Trip Preparation Part Two – Pack

Money

First of all, Monrovia is expensive. Luckily in 2010 we confirmed the existence of six (possibly eight) ATM machines in Monrovia. You will need to bring cash with you, but you do not need to bring your entire budget with you. Bring enough cash with you to get by for 3 weeks.

Medical

Next, you will need to get Malaria pills. I prefer the Malarone even though it is the most expensive option available. You should be looking into all available options for Malaria prophylaxis immediately. You will need to start taking your Malaria pills before leaving the USA, so take care of this now.

You will need to get a yellow fever vaccination shot. The shot can be gotten very easily about 10 blocks from Heinz in Oakland. If you need better directions you can ask someone at the Carnegie Mellon Health Services center at the corner of Forbes and Morewood. You will need to have your yellow fever shot ten days [4] before arriving in Monrovia, so take care of this now.

Get medical evacuation insurance. In the unlikely event that you need serious medical attention you will need some extra insurance to cover the cost of evacuation to the USA. Med-Evac insurance is not expensive and will cover your emergency travel back to the USA.

Clothing

On occasion you will get invited to serious government events. You need to bring at least one nice pair of clothes, probably two but no more than two. I brought two suits, one navy and one grey, and they served me well. Make sure to bring rugged shoes and work shoes, you will need both types. There are a few night-spots and dance clubs in Monrovia. If you feel like taking in some night-life, bring one pair of ‘heading out to the club’ clothes. Work attire will be business casual. Three sets of business casual attire is plenty.

Computer and USB thumb drive

You will need a laptop computer. There is no argument about this concept. You simply will not be able to function as a policy consultant intern or management consultant intern without one. Also, make sure to download any software you might need before the trip because even at the best speeds available in Monrovia it may take hours to download even the smallest programs. If you do not have a .pdf reader program, download one now. The internet may be too slow for file transfers, on those days you will need a USB thumb-drive. One Gigabyte served me fine.

Toiletries

You can find soaps and toothbrushes etc. in Monrovia, but due to the high price of importation you may be better off purchasing them in the USA. Also, bring one spare roll of toilet paper, as a precaution.

Weight

Find a way to check the weight of your bags before going to the airport. On the way back from Liberia we needed our bags to weigh less than 23kgs each. Check the airlines' baggage regulations after you buy your tickets.

Fun

Remember to pack something fun. If you have never experienced this kind of travel or work it is a very good idea to bring at least one fun thing that reminds you of home. I brought my hammock.

General Recommendations

Camping towels are light weight and absorbent. Head-lamps are very handy if the lights go out. Put some movies on your computer to watch. A small thermometer can be handy to check your temperature. Pepto-Bismal makes chewable tablets that are easy to carry and lightweight. Swiss-army knives or omni-tools like a Leatherman are useful but heavy. A spare disposable camera can serve as a fail safe if your regular camera gets lost. The beach is all around you, bring a swimming suit. A compact travel umbrella will be useful in the rainy season. A few powdered drink mix packs ,like crystal light, travel well and can be added to odd-tasting purified water. You will make friends... a few small gifts from the USA may be a good idea.

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[1] CIA World Factbook

[2] Center for Global Development

[3] Lift Liberia

[4] Centers for Disease Control and Prevention

Fufu Finale'

We are in Washington DC gathering information for our internship. It will be several days before our plane departs Pittsburgh for Monrovia.

“What’s your favorite Liberian food?”

“Fufu and soup.”

“What’s Fufu?”

**

We order Fufu at a restaurant in Monrovia. It is our first week of the internship and some co-workers invited the three of us to lunch.

Kenneth takes a wonderful picture of his Fufu to post on the blog. I try to eat the Fufu but it’s difficult.

“You don’t chew it, you swallow it with the soup.”

It isn’t the taste or texture that is causing me trouble. My stomach is upset and not used to these ingredients or these spices yet. I barely have a fifth of my meal before I stop eating. I vow to eat a meal of Fufu before I leave Liberia.

**

We are in Trice, a local restaurant with a rooftop bar and decent prices.

Trice serves very good Fufu according to Kenneth. Also according to Kenneth the Fufu goes down easier with a stout beer.

It is our last week in Liberia. I am working on my ‘bucket-seat list’, a list of things I want to do in Liberia before I get on a plane back to the USA. Fufu is one of the remaining items on my bucket-seat list.

I feel ready. I have been eating Liberian food for two months now.

My Fufu comes with a delicious goat soup. I learn to take smaller bits of the Fufu on my spoon and then dip the spoon in my soup. I eat almost the entire meal.

The meal is filling enough that one serving of Fufu and soup could feed a person for an entire day.

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This is my final post on Culture and Food in Liberia. It is fitting that the topic is Fufu because Fufu was the first Liberian food I learned about before the trip.

A definition of Fufu from thefreedictionary.com states:

n. Fu-fu

A thick, doughlike West African food made by boiling and pounding a starchy vegetable such as yam, plantain, or cassava. [1]

For a recipe to make Fufu follow this link:

AfricanFoods.co.uk[2]

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[1] thefreedictionary.com

[2] AfricanFoods.co.uk

'Potluck Dinner Ninja' Meets Imported Supply with Imported Demand

Hi,

This marks the 5th and final post in my series on game theory explanations for systemic problems in international development. I must warn you, this post is very different from the other posts. It is not so much about Liberia as it is about the type of work we are doing in Liberia. So if you are looking for a travel story please scroll down.

In this post I will be using the concept of a potluck dinner to discuss the value of voluntary exchange and using that framework to explain the problem of imported supply coupled with imported demand. I will also be introducing the concept of an Edgeworth box[1].

First up, you are probably wondering what a ‘Potluck Dinner Ninja’ is. The idea of a potluck dinner is that each person or family brings a dish to the dinner and then everyone shares. The two main benefits of a potluck dinner are (1) community bonding and (2) by cooking only one type of food you can try many other types of food. Usually a potluck dinner turns into a recipe swapping, neighbors talking, story sharing, joke telling - good old time. Now enters the Potluck Dinner Ninja. The Potluck Dinner Ninja brings a dish, but does not share the dish, nor does the Potluck Dinner Ninja sample anyone else’s food. The Potluck Dinner Ninja does not talk to anyone, but keeps to the shadows. The only evidence the Potluck Dinner Ninja even came to the dinner is a mysterious thank-you card left for the host.

The format of a potluck dinner is an economic masterpiece. Each person putting in some effort will receive in return much more gain than would be possible individually. By cooking your chicken, you can now try one neighbor’s tacos, someone’s homemade apple pie, someone else’s banana fried rice and if you feel adventurous maybe some squid. First, each person uses their individual skills (in this case recipes) and labor. Then, by sharing those goods in a voluntary exchange each person’s gain from that effort is multiplied. You yourself could not have cooked this many different types of food in ten hours, yet by the brilliant formatting of a potluck dinner you only spent two hours cooking. By the simple act of voluntary sharing you have created value.

Or, to use an Edgeworth box in three steps: [1]

**

Step 1 - Basic Graph



In a basic graph we measure from a starting point of zero in the bottom left corner. As the graph moves away from the starting point it means we have more stuff. Basic graphs can measure two items at the same time by placing those measurements on two different lines, usually marked as the X axis and the Y axis. The value of measuring two items at the same time is that we can now compare the two. The real value in a graph is the ability to compare two different measurements.

Step 2 - Graph with two Indifference Curves



An indifference curve is a line that compares two measurements at the point where you are equally happy. On line a we see two dots. Each dot represents an amount of chicken and an amount of tacos. One dot has more chicken than tacos and the other dot has more tacos than chicken. The point is that we like the two dots on line A equally. We actually like all of the spots on line a equally. We are just as happy with 8 chicken and 2 tacos as with 3 chicken and 5 tacos.

If we move from the curve with two dots to the curve with one dot we get more value. We prefer the indifference curve that is farther away from the bottom left corner. Any spot on line b is preferred to any spot on line a. We prefer 5 chicken and 5 tacos to all options on line a.

Line b is better than line a.

Step 3 - Edgeworth Box



In an Edgeworth box we have two sets of graphs with indifference curves put together. The bottom left corner is where you have no stuff, but your neighbor has all of the stuff. The top right corner is where you have all of the stuff and your neighbor has none of the stuff. Your goal is to move towards the top right corner and your neighbor’s goal is to move towards the bottom left corner.

We start at the dot in the bottom right corner. You have 10 pieces of chicken and your neighbor has 6 tacos. As you trade chicken for tacos both you and your neighbor both move to a higher indifference curve. As you trade you are both better off.

This is why we love trade. We get more value without creating more goods. You didn’t cook more tacos and I didn’t cook more chicken, but miraculously we are both better off from this voluntary exchange.

As we move towards the center of the Edgeworth box both You and your Neighbor gain value. Behold the economic miracle of voluntary exchange modeled as a potluck dinner.

**

Now that we see how fantastic a potluck dinner is, by contrast we can appreciate the irrational nature of the Potluck Dinner Ninja.

The Potluck Dinner Ninja does not join in conversation, does not experience the value multiplying effect of sharing food. The Potluck Dinner Ninja does not move to a higher indifference curve, does not build social capital by talking with neighbors. What would be the point of even coming to the potluck if you don’t share food or talk to people?

Or to put it into a decision matrix:



The rational choice is to Share in the potluck. Now behold the irrational nature of the Potluck Dinner Ninja.

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What does the Potluck Dinner Ninja have to do with imported goods in developing countries? Well…

A developing nation can sometimes experience large gains in import consumption. It only makes sense. If your nation can no longer make sugar, or salt or bread or anything, you will need to import those items. The supply of those items is imported, not made locally. Developing nations will necessarily go through a process of needing imported goods, and I am not arguing against imported goods. The problem I want to address is bubble-markets from imported demand coupled with imported supply.

Imported demand is essentially all of the market place activity created by ex-pats. These people are temporary and their demand for the goods they purchase is also temporary. When these people leave, their imported demand will leave with them. Imported demand doesn’t have to be bad. When new people enter a system they will purchase goods, and if they purchase local goods local merchants will prosper. Hopefully the local merchants will in turn purchase more local goods with that money. The local economy would then grow and when the imported demand leaves, the system remains relatively stable.

But, if the imported demand is entirely met by imported supply, like importing Swedish fish for the Swedish Ambassador, when the Swedish Ambassador leaves then the market for Swedish fish collapses. No one locally buys Swedish fish; no one locally makes Swedish fish. The good will simply disappear. When goods disappear the economy contracts. The bubble bursts.

IF the market demand for foreign goods is met entirely with a foreign supply, economic collapse will happen to those goods when the foreigners leave. The bubble-market bursts. We can now see markets for goods demanded solely by foreigners supplied solely by imports as Potluck Dinner Ninjas. They bring their own food, eat their own food, and then leave.

This is a serious problem because every small contraction in the economy is magnified in a developing country. A robust economy actually needs products to fail from time to time, but for less stable economies this system of predictable failure is not good.

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How can we avoid this situation? How can we get local people to start producing these imported goods? How can we get foreigners to start purchasing local goods? Why hasn’t the free market corrected this aberrant behavior on its own?

Because I am studying at a policy school I am apt to make a policy suggestion. We need to either stimulate import-replacing production [2] (get local people to start making these imported goods) or stimulate expatriate consumption of local goods (get the foreigners to buy local stuff). We can’t, however, just mandate a change in behavior because that may lead to even worse market conditions. We don’t want to use tariffs or subsidies except as options of last resort. What is a policy analyst to do?

The market will probably not correct itself in this situation because the best and brightest local business minds will be concerned with earning profits. The best profits will be in supplying foreigners with imported goods. The business talent will be siphoned away from establishing local markets, almost like an internal brain drain. Local people do not have to leave the country to effectively leave the local economy. The market will not be able to correct itself when its best minds are off earning money in foreign currencies.

My suggestion is to target the tax code to treat import-replacement start-up businesses as time-deferred non-profit organizations. I know that’s an awkward mouthful, give me a chance to explain. Essentially, for any new business that seeks to supplant an imported good we create a separate tax code. This special tax code would treat the business like a non-profit for the first 5 years (or some other number of years). Unlike a non-profit, however, the money owed on taxes does not go away, it is time-deferred. After 5 years the new business owes those back taxes and if it can’t turn a profit it will go bankrupt, as it should. This policy is close in concept to the current idea of Special Economic Zones [3] except that in this situation the special tax breaks are temporary and targeted to import-replacing business start-ups, rather than to geographical regions.

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Citations

[1] Gaus, Gerald F.(2008) On Philosophy, Politics, and Economics. Thomson Wadsworth, 2008. pp. 75-78.

[2] Jacobs, Jane (1984) Cities and the Wealth of Nations: Principles of Economic Life. New York, Random House 1985.

[3] wordiq.com

Snail Redemption and Palava Sauce

I go into the kitchen to get my knife. I need to cut up the snail on my plate.

Back at the table we (Kenneth, Andrew, and I) all agree to take a bite of snail on the count of three.

Andrew’s two Liberian friends are amused that we are making such a big deal of this. They eat snails all the time.

“One.”
“Two.”
“Three.”

We all take a bite and chew. I find the snail to taste like a baked clam but with firmer flesh. The flavor of the Palava sauce compliments the snail.

I also enjoy the small personal victory of eating an African snail.

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In a previous post I shared my attempt to cook giant African land snails. What happened afterward, that I haven’t previously shared, was that I failed to eat those snails out of a mix of poor cooking and irrational fear.

To explain, I was afraid that I would get sick from eating the snails even though logically I knew that to be foolish. I had boiled the snails so long that nothing could’ve survived. But fear favors type 1 statistical errors, ‘false positives’. It is very easy to be afraid of everything, because you can never be wrong. If I never eat a snail I can never get sick from eating a snail. I may be robbing myself of a gratifying life experience, but at least I can never be wrong.

In addition to being afraid, I cooked my snails in a French style. The problem with that is:

“Those wanting to cook classic Burgundian butter and garlic-laden escargot should be wary of the Ghanaian Tiger Snail and the Thai Apple Snail which is delicious if prepared in classic Asian and West African dishes, but unsuited in taste and texture for French cuisine.”[1]

(this article was discovered by Kenneth a week after my snail cooking debacle)

SO, I was afraid of eating snails and when I took a bite of my snails cooked in a French style they tasted terrible. I threw out my snails.

I had been hoping for a chance at snail redemption since then.

A new opportunity to eat giant African land snails arose when two of Andrew’s Liberian friends offered to cook us Palava sauce while we watched and learned. As with many Liberian dishes multiple meats were used. The four types of meat used in the sauce were chicken, beef, snail, and fried fish.

The sauce is made with Palava leaves boiled in palm oil. The preparation style is similar to Cassava leaf, using a two-pot method. One pot is used to boil the greens in oil. A second pot is used for the meat. The last step is to combine the two pots and continue cooking until ready.

Here’s a recipe for Palava Sauce.

African-Recipe-Secrets

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[1] Winemag

Mineral Riches and Deficiencies

Mineral Resources

In 2008, Liberia's 3rd largest export category was Precious Stones and Metals. About $21 million USD were exported from Liberia that year. In the 1st quarter of 2010, gold production increased by 10% year-over-year to just over 5400 ounces, between $5 million USD and $6 million USD in value. Diamonds increased by about 220% from the same period a year prior to 4920 carats. Both are good signs because even the first quarter revenues would keep this as the second largest export category. These amounts are small by world standards, but even small outputs are meaningful in a post-conflict society.[1]

The United Nations had placed a ban on diamond exports from Liberia from 2001 to 2007. Diamonds had previously fueled the civil conflicts that plagued the country in the 1990s. Charles Taylor, the deposed president, has been charged by The UN with waging war on Sierra Leone to get at that countries mineral resources, particularly diamonds. Since then, Liberia has joined The Kimberly Process, an international scheme to prevent diamonds from funding war. Despite the position of the precious gems in past wars, they remain a great asset to Liberia and a proven source of wealth.[2]

Less glamorous minerals are also very important to Liberia, particularly iron ore. I recently spoke with a man who works for a Chinese iron firm and got great insight into the current and future investment. His company expects to employ 3000 people in Liberia when the mine is fully operational, 700 of those will be Chinese. It has already invested $23 million USD to secure rights to exploit reserves and must spend another 40 million before operations begin. The firm is still just prepping the logistics to start operations. Liberia lacks basic infrastructure that minerals firms need to operate efficiently, so the firms must plan well to make their operations successful.

Both BHP Billiton and ArcelorMittal, two of the largest basic metals firms in the world, have committed to $3 billion USD and $1 billion USD investments respectively (Liberia's current GDP is less than $900 million USD). Liberian ore is expected to go to Europe and China primarily. Each firm has people on the ground and I've even seen job postings from the firms in country (few private sector firms list jobs in newspapers here. Most postings are for aid organizations). Yet, because of limited infrastructure, the firms are some time from full sizable production.[3, 4]

Much of the investment will go toward infrastructure. Liberia needs enhanced rail and seaports to effectively move ore from the country's interior to the sea. The Central Bank of Liberia also cites electricity and water infrastructure as primary impediments to growth in extractive industries. These mining deals should help to remedy the problem.

Liberia's major industries are often very dangerous for employees. Not only are they places where people die, but the work is hard and worker's bodies are greatly strained as a result of the work. This is often true for mining and harvesting the agricultural cash crops rubber and cocoa. It also poses a problem for the government of Liberia to protect workers in industries that can easily exploit them while it must push for economic growth. The balance is tough but a challenge that Liberia must face.

1. Liberian Central Bank Economical Financial Bulletin: 1st Quarter 2010
2. Kimberley Process: Liberia enters the diamond trade
   
3. ArcelorMittal Liberia
4. $3.5bn push into Liberia's iron ore lode

What does it mean to be Liberian? - part two of a two part series

About a month ago I wrote a post laying out a plan to enrich my understanding of what it means to be Liberian. I went about after crafting four questions and asked anyone who might have an answer to them.

When asking people that live in Liberia what it means to be liberian I got some interesting answers with many common themes. Those who are not indigenous - Lebanese, Indian, Fula or others working with international organizations - gave an answer that usually involved a snide critique of the Liberian-ization policy. If you are not "Liberian" you are unable to gain citizenship, or even permanent residency. You are not allowed to own property, but you can own a business; which you have to pay 16 times as much to register. And each year you have to renew your residency and business. Long-term business planning is thus very difficult and there are many disincentives to making long term capital investments. Although I think this policy is in poor taste and perhaps even racist, for the purpose of this post, my learning was that politically there is a strong since of what it means to be "Liberian". This policy is very popular and is unlikely to change anytime soon.

The answers received from those born in Liberia or re-pats were a bit less critical of the nation's policies on citizenship and residency, but were equally enlightening as to the contemporary political and social context.

A reminder of the questions that I asked:

• What does it mean to be Liberian? 
• What makes you proud to be a Liberian?
• Who are the role models of young Liberians?
• What does Liberia look like in 15 years?

These questions when asked to Liberians gave them pause, and seemed difficult to answer. Many seemed surprised I was asking them. There weren't overwhelmingly similar answers, like what I would expect if someone asked the same question to Americans. 

After over 200 years of history, us patriots in America have a relatively harmonious idea of what it means to be American. Our youth, have relatively similar lists of who are their role models. Unfortunately Lindsey Lohan is on many lists. What evokes pride, may very slightly depending on who you ask. Glen Beck or Keith Olberman opinions may vary a bit, but their answers most likely would contain some common values. And the answer to what does America look like in 15 years is very obvious - pretty much the same as it does now. For good or for ill.

Back to Liberia.  It seems that connection to one's ethnic group, is paramount to Liberian nationalism. There is much pride in the ethnic group that one is from. The reasons varied but included a pride in place; the geographic area one was from. A common mother tongue or voice and since of connection ran deeper than values or ideology. 

Beyond ethnic ties, overwhelmingly what it means to be Liberian is to be born here. This was the obvious answer I was trying to avoid. But this overwhelmingly is the view that to be Liberian you must be born here, or have parents who were born here. This seemed to be the sentiment that led to the Liberian-ization policy.

However, an interesting answer I received to the question, "what does it mean to be Liberian?" did not involve geography or ethnicity. The answer was, "to be Liberian you must hold the development of the country in your heart." I think this is a very prescient answer for the times. There are so many people from so many different countries that are here, in Liberia, working for the betterment of the country. If one chooses to make this their home, holding liberia in their heart. Would they be Liberian? Legally, no. But in the persons eyes, who gave this answer, they would be countrymen!

I received an almost poetic response to the question about Liberian role models. A man said, "Many Liberians start their journey well, but we as people do not finish the journey well." He went on to give many examples of Liberians who at the beginning were worthy role models. They showed promise and had the potential to create positive change. However many were overcome by greed, and set personal gain before the good of their country. Throughout Liberia's history this is a story that is told again and again. And is still seen in todays political and social landscape. Many public figures serve for personal gain. Not to improve their country, but instead to gain status, and line their pockets. At least this is the common view. 

What will Liberia look like in 15 years? It depends on how today's leaders finish their journey? Will they finish well - unscarred by rumors of corruption and putting self before country?

I think much of the countries hope lies in the leadership of President Sirleaf. I think overwhelming she is seen as someone who has put country first, by Liberians and those in the international community.  But I, like many others, wonder how her time as the leader of this country, will transition to the next generation. Will she finish her journey well? 

This country, overwhelming needs people that Liberians can look up to and emulate. A group of founding "fathers" and "mothers" that are not corrupt. That are seen as and do hold Liberia in their heart, and put service to their country before personal gain. For too long Liberia has been abused by selfish leaders. I look forward to seeing what the future holds. 

So, what does it mean to be Liberian? 

I think the answer is still working itself out.

Preparing Goat Soup In Liberia

The original article that is reprinted here with permission from Sunny Nyemah on behalf of 'Business Index' appeared in Vol.1 No.07 Tuesday, March 25 - June 1, 2010. All rights reserved by 'Business Index'. 'Business Index' is available for purchase in Monrovia. Contact at businessindex@yahoo.com.

Preparing Goat Soup In Liberia

Liberians celebrate Independence Day on July 26. It is the biggest holiday in the country. Other holidays celebrated are New Year (January 1), Thanksgiving (the first Thursday in November) and Christmas (December 25).

Goat Soup, according to most people, is the national soup, served on important occasions. Coffee is also served after special meals. Some former Presidents birthdays are celebrated annually: J.J. Roberts (March 15) and William V.S. Tubman (November 29) are national holidays, while William R. Tolbert, Jr. (May 13), Samuel Doe (May 6), and Charles Taylor (January 29) birthdays are celebrated by families and admirers.

However, each county celebrates a president's birthday on a rotating basis, so that a county celebrates only one president's birthday a year. A county is lucky if it gets to celebrate the birthday of the current president because of the extra money and publicity that county receives for the festival.

Goat Soup
Ingredients

2 pounds goat meat (can substitute lamb or beef)
Hot peppers
2 medium onions, sliced
2 quarts water
3 tomatoes
8 ounces tomato paste
Salt, black pepper

Procedure

Cut up the meat into 2 [to] 3 inch pieces.
Marinate with peppers, salt, black pepper, add onion for about an hour.
Add water and boil until meat is tender.
Add tomatoes and paste and cook until tomatoes are soft.

Mealtime Customs

In Liberia, the table is set with turned over plates and glasses with a napkin on top, so that the guest may turn over the clean dishes for use. Those at the meal greet each other by shaking hands.

While shaking, they take the middle finger of the other person's right hand and snap it up and down. This tradition comes from the days of slavery, when the slave owner would break a slave's finger in order to establish ownership. The handshake (or "snapshake") celebrates Liberia's freedom from slavery.

The cook brings out all the food at once, and stays seated at the table during the entire meal. All dishes remain on the table until the end of the meal. Most Liberians will eat with their fingers, although American customs have brought utensils to the dining rooms of many city people.

A typical Liberian dinner consists of dumboy or fufu served with palm butter and palava sauce, meat stew, country chop (a mixture of meats, fish, and greens cooked in palm oil), jollof rice, and beef internal soup. Rice bread and sweet potato pone are served for dessert, and ginger beer is drunk throughout the meal. Coffee is served only on special occasions.

In the city of Monrovia, there are some modern restaurants, but in most towns there are small "cook shops" that offer stews and fufu. Most cooking is still done outside on a stone hearth.

"Uh-oh. I hope this wasn't food aid."

I show Amos the peanut butter I purchased.

“Oh yes, I know this. They use it in refugee camps.”

“Refugee camps?”

“Yeah. You just open the packet and (slurp sound).”

“Uh-oh. I hope this wasn’t food aid.”

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[1]

I was heading to waterside for some local peanut butter, but it was getting late. Part of basic safety and security protocol one learns in Peace Corps is that you avoid 5 things:
1. Unfamiliar or dangerous locations
2. Walking alone
3. Walking at night
4. Walking with visible valuables
5. Walking home drunk

I really wanted peanut butter but the trip would take me past sunset and then I would be walking alone at night. I decided to try the local stores instead.

Three shops said they had no peanut butter. One or two street vendors had jars of peanut butter, but the jars cost $3 and don’t work as well for peanut butter soup as the local peanut butter.

On my way out of the last shop, just as I had decided to walk home, a man called me back and said he knew someone who had peanut butter. He took me up the street to another street vendor and showed me a small foil packet of peanut butter. He asked for 25 Liberty, which is the right price for local peanut butter in that quantity. I happily made the purchase and walked home.

After showing the peanut butter to Amos I was concerned that I had accidentally purchased food aid.

In the office the next day, I overheard someone talking about a shipment of ‘plumpy-nut’ going to a refugee camp. I became far more concerned that I had purchased, and now eaten, food aid intended for malnourished children. I decided to look up ‘plumpy-nut’ online.

As it turns out ‘plumpy-nut’ is definitely a food aid product. Had I known at the time I wouldn’t have purchased it. It is very likely that I am now the unwitting end-user of a black market in food aid peanut butter.

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[1] http://en.wikipedia.org/wiki/Plumpy%27nut, accessed on July 27, 2010.,

Rock-Paper-Scissors Meets Freedom of the Press in Developing Democracies

Hi,

This marks the fourth installment of my series on problems facing international development as explained through game theory (with some artistic license on the idea of game theory). As always I must warn readers that this post is quite academic and not nearly as fun to read as the rest of the blog. If you found your way into this sentence by accident, I am kindly pointing out the exit.

In this post I will examine the complex inner workings of the children’s game Rock-Paper-Scissors and compare it to the fragile and necessary democratic government check and balance system supported by a free press. I will also cover the concept of zero-sum games.

The game Rock-Paper-Scissors is simple, elegant, a classic. Two players choose one of three options simultaneously. Rock, Paper or Scissors? That is the question. Rock defeats Scissors, Scissors defeats Paper, and Paper defeats Rock. If both players make the same choice the game is a tie.

Or to put it into a decision matrix:



It is no accident that Rock-Paper-Scissors ends up in almost every textbook on game theory. There is a surprising level of complexity at work here.

First, you must play the game with simultaneous moves; otherwise it doesn’t work. If the game is sequential, whoever plays first will lose. If I have to play first and I choose Scissors, then you choose Rock, you win. If I have to play first, you win. If you have to play first, I win.

Second, the game is a zero-sum game. When Player A wins a point it is the same as Player B losing a point. If you add +1 and –1 together you get zero. When you sum the scores from both players the total will be zero in a zero-sum game. The dangerous thing about zero-sum games is that you can only gain at the expense of the other player. In a zero-sum game you must become adversaries.

Third, the game rewards erratic behavior and punishes predictability. If you always play Rock, then I will know to play Scissors. If you never play Rock, then I will always play Scissors. I can never lose by playing Scissors (if you never play Rock, and Scissors vs. Scissors is a tie) and on occasion I will win against Paper.

Another beautiful thing about Rock-Paper-Scissors is that you cannot be ‘good’ at the game. You can be ‘bad’ at the game by being predictable, but you cannot be ‘good’ at the game. No amount of study will make you a better player.

Now here’s where I make a jump in logic. Let’s take Rock-Paper-Scissors and apply it to a social setting. Instead of Rock being a choice, Rock is now a person. Same with Paper and Scissors. They live in harmony because they have achieved a social equilibrium. No one can use their personal leverage without consequences. If Rock starts attacking Scissors, Scissors has no immediate way to retaliate. Scissors will have to start attacking Paper so that Paper will start attacking Rock. When everyone is attacking everyone there is no advantage to conflict, no one can gain, everyone loses. No one in this group can gain by conflict because everyone is vulnerable to someone either directly or indirectly.



Let’s go one step further and imagine that Scissors and Paper decide to work together. After all, Scissors and Paper are crafty (thank-you. arts and crafts puns, I'm here all week). Instead of a three-player game we now have a two-player game. Rock is alone and can only play Rock whereas Scissors and Paper are a team that can choose to play Scissors or Paper (they always play Paper).



Now the contest is unfair. The team of Paper and Scissors will always win against lowly Rock. Rock versus Paper, Paper wins (Scissors cheers). Now there is a way to benefit from conflict. The team of Paper and Scissors can defeat Rock and steal Rock’s property. But wait, once Rock is removed, what is to stop Scissors from attacking Paper?

We have veered into the very hypothetical and it’s time to come back out. The point I am trying to make is that a harmonious social system can be built on mutual accountability. Furthermore, someone defecting from the system in search of personal gain can threaten that harmony.

What does this have to do with freedom of the press in developing democracies? I’m getting to that but I need to make one more connection first.

The nature of a functioning democracy is one of checks and balances. It is simple and elegant. The Rock-Paper-Scissors society lives in harmony because of checks and balances. It is simple and elegant because everyone is accountable; no one can act with impunity. Now substitute Rock-Paper-Scissors for Business-Government-Citizens.



Government regulates Business. Business employs Citizens. Citizens elect Government. Simple, elegant. More than the simple one-way power dynamics, there is also a second set of feedback loops.



SO, now every part of society is accountable. Citizens can elect Government to regulate Business, but Citizens can also boycott Business. Business can choose to hire and fire Citizens and also lobby the Government. The Government can regulate Business and is also the body that polices the Citizens.

However, just like our Rock-Paper-Scissors society from before, no one group can defend itself if the other two team up. A Government-Business team will be able to control Citizens easily. A Business-Citizens team can control Government. A Citizens-Government team can control Business.

And with that last connection made, the frame-work to discuss freedom of the press in developing democracies is set.

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Why is a free press so important to a developing democracy? Why does its absence create so many problems for international development?

Well, the delicate balance in the ‘democracy as Rock-Paper-Scissors’ model requires something I didn’t list earlier. Something is missing: information.

People need information to act upon their interests. Government naturally collects information by way of administering its duties. Business also naturally collects information because of how vital good information is to a competitive market system. The Citizens, however, are not cohesive and do not naturally gather information on their own.

Who steps in to correct this? A Free Press.

A Free Press is necessary to keep the balance. No one needs to be a villain to throw the system out of balance, a simple lack of information will accomplish as much harm. Without a free press to supply information the citizens become vulnerable and vulnerability creates the potential to gain from conflict.

Remember, government naturally collects information, business naturally collects information, but the citizens do not. Some system must be in place to supply the citizens with information.

Political parties can provide the role of information gathering but we need to respect the difference between opinion-based editorial content and fact-based journalism. If the best source of information in a country is opinion-based, then the political discourse in that country may become overly opinion-based. Information gathering by political entities is a band-aid solution, we need something better.

A Free Press is necessary to keep the balance between government, private business, and citizens. All policies concerning freedom of speech in developing democracies should err on the side of tolerance, if the goal of that policy is to encourage democracy.

One could argue that curtailing freedom of speech is necessary to creating stability, even in a democracy. My argument, to the contrary, is that by curtailing freedom of speech the resulting lack of information also creates instability by weakening the citizens. Moreover, once the delicate balance maintained by a Free Press is lost, regaining it will be difficult.

A Super Market Woman (Video)

Packed goods are synonymous with high quality in Liberia. This comes from two factors, safety and consistency.

The most pervasive example is safety. Bagged or bottled water means disease-free water. In a place where illnesses like dysentery are major killers, placing a high value on processed goods can save lives.

Consistency of quality helps consumers believe they will get what they expect. Packaged goods do not vary greatly from one purchase to the next. In contrast, the open-air markets have bulk goods with low prices, but unknown value. Half of the beans in a pound could be inedible. The buyer doesn't know which half. The good portion may be perfectly safe, but the cost is double what one initially expects. Contamination is uncommon, but far more likely than something from a western style factory. The risk factor also adds to the cost and lessens the appeal of the purchase.

While Liberian's place high value on packaged goods, few Liberians produce them. Jacqueline's Productions is one of the few and an example of a product that can work.

Jacqueline, the proprietor, started making snacks 2 years ago after a trip to Benin. She tasted a coconut and ginger snack and decided to make her own. After a lot of trial and error, she developed a few recipes and started selling in open-air markets. She's expanded to about 7 varieties of snacks and several local super markets distribute her snacks.

She wanted the quality of her product to be high, so she got help on the business end of her project. While she learned about bookkeeping and commercial kitchens, she also looked for commercial packing. She had to go to Togo to find it.

Jacqueline's Productions now has an industrial label with a bold logo and an ingredient list too. While Westerners expect this and laws mandate it, it is not a part of market culture in Liberia. Also, 50% of people in Liberia can't read, so text on packaging doesn't have much meaning to many. Machine packaging and labeling set Jacqueline apart and achieve the goal she set, to be professional.

Jacqueline's products could be exported to America and the western world. Legislation like The African Growth and Opportunity Act (AGOA) and Aid organizations, including USAID, are helping African businesses like Jacqueline's to do that. They reduce barriers to entering the market by providing technical assistance and access to capital. They also subsidize travel to trade shows and for trade missions. Trade shows aren't just for the biggest players in industry, small businesses like Jacqueline's can have their lives improved dramatically through the contacts they make at a show.

It's a complex process, but the potential rewards are worth the expense and while Liberia's packed good industry is just beginning, Jacqueline proves that it can work.

If any of you are in the Washington D.C. or Kansas City area in early August, check out the The African Growth and Opportunity Act Forum for more insight into African business.

Further reading:

• USAID AGOA Garments
• The African Growth and Opportunity Act
• USAID Liberia

Cassava Leaf and the WorldCup Final

Tonight two things are afoot. First, we are learning to cook Cassava Leaf. Second, the final WorldCup match is on TV and a wager is riding on the outcome.

Amos tells us how to start the meal.

First we need to cook some chicken the same way we cook pepper soup, but with less water in the pot. Once the meat is boiled and seasoned we need to take a second pot filled with water and add the green mushy cassava leaf. We then will boil the cassava leaf until it no longer has ‘that smell’ and to me that smell is like freshly cut grass. The next step is to add palm oil, which is red in color, to the cassava leaf and boil for a few more minutes. The last step is to add the seasoned meat from the first pot into the second pot and continue cooking until it is the right consistency. This last step is a matter of feel, and accordingly we plan to leave that to Amos.

For a Cassava Leaf recipe follow this link:

African-Recipe-Secrets

All of this action is going on in the kitchen, but simultaneously Spain and the Netherlands are playing for the cup. The wager we have riding is that I believe the game will go to penalty kicks, and Andrew believes that this won’t happen. All shots on goal, on either side of the field, are now very tense. To every missed shot I reply, “good D, good D.”

We finish step one of the Cassava Leaf. Step one is very similar to Pepper Soup so it’s easy.

The first 90 minutes of the match are over, the score is zero to zero and we are moving into overtime. The wager still stands and I am now only 30 minutes away from winning the bet.

The grass smell subsides and the entire 250ml bottle of red palm oil is poured in. The chicken in the first pot is poured into the second pot. The first pot is rinsed out and now it is time for Andrew to make rice.

The first half-period of overtime ends. The score is zero to zero. I am now only 15 minutes of no goals away from winning the bet.

The rice is now finished. The Cassava Leaf is now finished. Amos is a good cook and we are eager to learn what we can. Andrew’s rice turns out well too. It’s time to eat.

We serve ourselves to Cassava Leaf and rice and sit down to watch the last 15 minutes of the match. With barely 6 minutes left to play, Spain manages to get a shot past the Netherlands’ goal-keeper. The match will not continue to penalty kicks. I lose the bet.

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I had as much fun collecting the ingredients for this meal as I did learning it. I got to see the machine that grinds the cassava leaf. It’s a small motorized grinder with a feeder funnel at the top with a side chute. As new leaves are pushed into the top, the bottom-most leaves get pushed into the grinder and come out a wet green paste. The person operating the machine, a boy about 12 years old, seemed very good at his job. I had to wait in line to get my cassava leaf from him.

I also found out how difficult it can be to get palm oil if you don’t know where to go. I simply could not find any palm oil in the stores. I had to go to the open-air market on Benson street.

The Rubber Market

Liberia's export economy is dominated by rubber. The Firestone Natural Rubber Company along with a few other firms ships over $200M of goods from Liberia each year. Rubber exports accounted for 88% of Liberia's exports in 2008. In 2010, the volume of trade has increased over the previous year and the price on the world market has increased also. New plantations have come online this year to diversify the industry. These are great signs for Liberia because the rubber industry is country's largest private sector employer with 6,500 employees and vital to its economy.

Firestone not only employs many people, it provides services as well. The company has over 16,000 students enrolled in its primary and secondary schools. It also has 17 medical facilities and a retirement program. Nothing else that I've heard about in the private sector matches it.

While Firestone is the best show in town in dollar terms, it has been accused of human rights violations including using child labor. Stopfirestone.org prods the company to make improvements and the prodding has had some positive results. Firestone recently stopped workers from carrying latex on their shoulders. The activist group asked the plantation to end the practice in a January 2010 letter and 6 months later, the company has shifted its procedure.

It is good that Firestone is able to increase production, provide services for its employees and that a vocal group can criticize its practices and get results. Firestone's power could and would completely censor a group like Stopfirestone.org in many countries. Liberia is demanding respect for its citizens and economic reality. Business and fairness both seem to be making progress here.

Sources:

• Stopfirestone.org
• Central Bank of Liberia Balance of Payments 2009
• Firestone Natural Rubber Company Stat Sheet Narrative
• IMF Commodity Prices

My Heinz Training Pays-Off

Siafa Hage, Special Assistant to the Minister for Policy and Aid Coordination, asked me if I was doing anything. At the time I had only time-variable work, work that needs done but in no specific order with no specific deadline, so I said no. Siafa then invited me to go on a site inspection.

We visited a work site for a public works style project, cleaning out a canal in Monrovia, one of the many projects all over Liberia under the program. I just watched and listened to Siafa as he explained to the workers that he was there to make sure they were getting paid as planned. We then drove to a nearby office and watched some of the workers walk in and receive their pay. It was a routine kind of visit just to make sure that policy was meeting action. You can write the nicest paycheck policy in the world, but if no one uses the policy in action it’s a very expensive piece of paper.

A few days later, after the site visit, Siafa asked me again if I was doing anything, again I said no. Apparently I had made a good enough of an impression that he asked me to help with an assignment. A press conference was coming up soon and they needed posters.

I was put on a three-person team tasked to create a series of slides. The slides would then be turned into posters. I read lots of files and prepared an accurate but simple presentation of the information within hours. It was fast-paced and team-oriented policy analysis. Here was something I had been training to do over the past year.

When I looked at the budget, the numbers ‘looked’ wrong. Specifically, the budget was actually better managed than it first appeared from the data. So this is weird on two levels. First of all it has been my experience that when you find something odd in a budget you need to revise your appraisal downward instead of upward. Second, that I had somehow gained the capacity to ‘look’ at numbers and understand them intuitively. This new-found ability I attribute solely to Heinz and the quantitative-skills training focus. I was an English major in undergrad after all.

The work I did was edited some and then transferred to vinyl banners for the press conference. Here are two pictures of me with my favorite poster from the set. In the first picture you can see the ocean behind me because the Ministry of Planning and Economic Affairs is practically on the beach. In the second picture you can see the entrance to the ministry.





I may have been overly sparse on details in this post for discretion sake. I apologize. The banner, however, was used in a press conference so I know it's fair game.

The Cocoa Market

The Commodities Market

On July 6th, The Financial Times of London issued a report on cocoa, Liberia's second largest agricultural export. It reported that even though prices of the commodity were near a 30 year high, the supply of the crop should decrease partly because of poor farming practices in Côte d'Ivoire which produces 40% of the world's cocoa and on increased demand in North America. Prices of cocoa have already risen 150% in the past 3 years. The combination should make the market ripe for hedge funds to exploit.

On July 17th, The FT reported that a hedge fund had taken control of 7% of the world's stock of cocoa. While it didn't predict a new future price, the hedge fund surely thinks that it will make a substantial profit on the trade. The prices will be passed to consumers.

Potential for Liberia

Liberia should gain from the chocolate lovers misfortune. Liberia is next to Côte d'Ivoire. They share a border and soil that is excellent for growing cocoa trees. Another 30% of the world's cocoa grows in West Africa, but very little from Liberia. Liberia's cocoa exports were just $1,373,000 in 2010, well under potential capacity (Côte d'Ivoire exported over $1 billion in cocoa).

Like other agriculture, cocoa farms were abandoned during the war years. Human capital with cultivation knowledge fled as well. This places Liberia at a disadvantage compared to its neighbor but it is not as far behind as it seems. Because of Côte d'Ivoire poor farming practices, Côte d'Ivoire must replace most of its trees in current production. Also, Côte d'Ivoire's producers are usually very small and fragmented. This legacy and corruption in Côte d'Ivoire give Liberian producers room to reinvent the cultivation process in West Africa with economies of scale and transparency.

The war's destruction prompts many to speculate that Liberia should be 30 years ahead of its prewar condition. Few nations in West Africa are where they could have been. Furthermore, histories that come with legacies like corruption are hard to disrupt. Liberia has great opportunity to reinvent the system because it must start again. Cocoa is one example of opportunity. The prices are right and supported by geography. The market awaits its move.

Sources:

• Cocoa
  Published: July 6 2010 09:45 | Last updated: July 6 2010 14:28
  http://www.ft.com/cms/s/3/a9b9943a-88cd-11df-8925-00144feab49a.html
• Hedge fund develops taste for chocolate assets
  By Jack Farchy in London
  Published: July 16 2010 22:33 | Last updated: July 16 2010 22:33
  http://www.ft.com/cms/s/0/e50feefc-9120-11df-b297-00144feab49a.html
• Falling cocoa yields in Ivory Coast
  By Javier Blas
  Published: May 28 2010 23:08 | Last updated: May 28 2010 23:08
  http://www.ft.com/cms/s/2/28e00036-67a0-11df-a932-00144feab49a,dwp_uuid=a712eb94-dc2b-11da-890d-0000779e2340.html
• Intensified Cocoa for Sustainable Development in Liberia
  Dr. James Gockowski
  Sustainable Tree Crops Program
  http://trend.ag.utk.edu/international/IntensifiedCocoaSustainableDevelopmentLiberia.pdf
• Liberia 2009 Balance of Payments

Balance of Payments

A balance of payments is an economic statement that records the value of inflows to and outflows from a country. This includes the value of goods and services, incomes to be paid, money transfers and debt. Goods, such as lumber or rubber, and services, such as health care and education, are familiar to most. Money transfers include donor funding, remittances and debt are a bit more obscure.

In the United States, the terms balance of trade and trade deficit are often noted in media to track goods. These are a subset of the balance of payments. Economic powerhouses don't have to worry about things like debt in the same way that poorer countries do, so the broader statement is forgotten in common reports. But to a poor country like Liberia, things like money transfers really matter.

These things matter because Liberia and many countries like it don't produce enough goods and services to bring in enough income. So, most of the money that keeps the country going comes from outside of the country as foreign aid.

Foreign aid to Liberia totaled $1,317 Billion USD in 2008. The United Nations Mission in Liberia, UNMIL, contributed $646 M while other UN organizations gave $136 M. Individual foreign governments gave $263M and the European Union gave $77M. This is huge amount is not debt, but humanitarian gifts. The World Bank estimates its GDP to be only $830 M USD, so aid outstrips trade.

This money has been spent to stabilize the country. Much of it has helped to reestablish the government and to provide a military force that no local militias can match. Half of the vehicles on the streets are marked as a gift. Many new schools and hospital are gifts as well. The money has helped the country immensely.

The balance of trade report makes the plaques on buildings and donation decals on trucks make sense. It helps explain that there is enough money flowing in to make Monrovia rents like those in New York. Big organizations have a lot of weight and it seems to be necessary to pull a country out of conflict.

Source: Central Bank of Liberia 2009 Balance of Payments

"Hey white man, you want to get by?"

“Hey white man, you want to get by?”
I don’t know how to respond for a few seconds. This is the first time in my life I have been called ‘white man’. Apparently my patient waiting has been misunderstood.
“NO. No, I want to buy some bread.”
“What kind of bread?” I can see now that his wheelbarrow of bread holds two varieties of bread.
“How much do they cost?”
“This one is 25 dollars. This one is 35 dollars.”
“35 Liberty?”
“Yeah, 35 Liberty.”
The 35 Liberty bread has the look of being fresh baked with a nice crust. In comparison the 25 Liberty bread looks like an over-sized hot dog bun.
“I’ll take one of those.”
He wraps the 35 Liberty bread in a piece of newspaper. Then places that into a thin plastic bag.

I take the bread home and it is delicious. Not much compares to warm fresh baked bread purchased from a wheelbarrow.

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I have tried several times since that day to find that man again and purchase more of his bread. No luck.

When I visited the Chamber of Commerce in Monrovia to talk to someone about the current climate for business I learned that one reason so many vendors choose to be transient and sell their goods out of wheelbarrows is that they can avoid having to pay taxes and registration fees.

The cost to register as a business in Monrovia is $400 USD, just to be a petty trader.[1] Unless you know your business will make at least a $400 USD profit this year it really is the logical move to become a wheelbarrow business. The system creates incentives for businesses to remain informal, un-taxed, and uncountable for GDP.

Also, I want more of that bread.

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[1] http://www.mof.gov.lr/doc/QBI-1%20FORM%20%20(QUARTERLY%20GROSS%20INCOME%20DECLARATION%20).pdf, accessed on July 8, 2010.

The Tragedy of the Commons Meets Post-Conflict Property Rights

Hi there,

This is the third installment of my series on explaining problems in international development through game theory. In this post I will explain my favorite concept from the world of economics, ‘The Tragedy of the Commons’, and how it relates to the very tricky subject of property rights in a post-conflict situation. I will also cover the difference between a sequential move game and a simultaneous move game.

As before, I am warning anyone new to the cmuinliberia2010 blog that this post represents some of the driest and most academic writing here and that if you want to read something ‘fun’ (or in the Victorian English ‘droll’) I suggest scrolling down past this post immediately.

Now then, The Tragedy of the Commons is about sheep and common grazing land. The commons is an area of grass that several sheep owning families all claim equal ownership over, it’s common land. All of the families have sheep and all of the families use the commons to feed their sheep.

Let’s imagine things are in equilibrium. All of the families are poor but happy (or not miserable anyway) and are kind of like serfs tied to their land. Nobody tries to sell more sheep than their neighbor. Nobody works harder than they have to because there’s no point, any extra profit would go to the landlord anyway. Suddenly, however, the serfs are all freed from their contracts to the landlord and now may reap the benefits of their labor by making money. The profit motive arises. But, even though the concepts of private ownership and profit motive have been introduced into this system the old system of common land persists. Now the system is in disequilibrium, the eloquent Tragedy of the Commons explains why.

(Paraphrasing) Each family has the ability to purchase more sheep, grow more sheep, and make more money. But the land has its limits; if every family starts grazing more sheep at the same time the land will become over-used. So the individual has a choice, to graze more sheep or to maintain the status quo of no new sheep. If the land is over-grazed there won’t be enough food for any of the sheep, the sheep die, all of the sheep herding families will become destitute. From freedom to destitution in two easy steps.

Or to put it into a decision matrix:



Clearly anyone can see that disaster awaits if everyone grazes more sheep. Because the danger is simple to see, theoretically we could avoid it in a sequential move game. But this is not a sequential move game, this is a simultaneous move game, and that makes a big difference. Let’s say the land can handle 10 sheep. 10 sheep = good, 11 sheep = death (to simplify things a bit I am replacing the gray area of destitution and ecological decay with death). In a sequential move game, when the move to graze the 10th sheep happens the next player would have a simple choice between the status quo of no new sheep or death. Remain at 10 sheep versus death.

Or to put it into a decision tree:



In a sequential move game the choice is simple. Once the land has reached capacity no one would start grazing new sheep (in theory). But that’s not the situation we are in. We are in a simultaneous move game where everyone decides at the same time what to do (think rock-paper-scissors) and has to trust each other not to over-graze the land, dooming the whole community. Ask yourself, how much do you trust your neighbors? Would you trust your neighbors not to endanger your life in exchange for wealth? I’m not just being cheeky; some of us really like our neighbors.

What the Tragedy of the Commons is telling us is that under certain circumstances people acting on their own best interests will ruin their own environment. If ‘everyone’ owns the land then it’s really the same as no one owning the land. When no one owns the land then no one protects the land, but everyone still has an incentive to use the land as heavily as they can. Ergo … death, decay, destitution.

So how do we escape the Tragedy of the Commons? That’s a question that truly depends on context. Some people suggest moving to a pure private ownership model because if someone owns the land then at least that person will have a reason to protect the land. Some people suggest abolishing the concept of private property altogether. Some people suggest a middle-ground between public and private such as a land co-operative or a profit sharing corporation or a rotational ownership system etc.

To me, however, trying to ‘solve’ the Tragedy of the Commons is silly. You apply insight from The Tragedy of the Commons to more realistic policy concerns; you don’t solve it. The real insight is that the policy combination of common goods with no ownership and no protection coupled with private ownership and profit motive leads to decay. To ‘solve’ a problem you need context. SO, here’s my problem, property rights in a post-conflict society.

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Property rights in a post-conflict society are difficult to handle. Who is to say who really owns a piece of land? If you apply the historical concept - where ownership is based on who was living there first, how far back in time do you go? And what happens if someone else shows up 20 years later with proof of having owned the land earlier still? If they now own the land but you still own the house, what happens? How can you create stability in ownership by the historical concept when there’s always more of the past? Another tactic could be to auction the land, but that obviously favors the elite over those whose only possession was their land. A robust system of legal arbitration would be nice, but that seems like a luxury when your nation is rebuilding itself. Also, a rush to use a court system before it is transparent and accountable could lead to corruption very quickly.

When people build houses on public land during a war, what can you do? There is no law. Either everyone owns the land equally or no one owns it. Either way there are no police to enforce property rights or remove squatters. And then when the war ends, who owns the land? Who owns the land? From a technical standpoint the old government is dissolved as the peace process replaces it with the new government. How can the new government lay claim to public land from a dissolved former state? And where do the people go if you take their land? This isn’t just a technocratic problem of ownership; people’s lives are involved.

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Well, if we go back to the concept of simultaneous moves versus sequential moves I think it may help. If we simultaneously grant ownership to everyone for the land they have now, right as the conflict ends, then people who stole property (land-grabbed etc.) during the conflict would prosper. If we simultaneously try to arbitrate all of the land disputes in the entire nation, thousands if not millions of court cases depending on the nation, even a vibrant and transparent court system wouldn’t work for that many cases. A simultaneous move to collectivize all of the land and abolish public property would be backsliding on reform and lead to a more severe Tragedy of the Commons scenario where no one owns anything, thus no one protects anything, and the entire system is doomed to decay. Frankly, a simultaneous move solution doesn’t seem possible.

But what about a sequential move? What about one house? Just one house. We could set up an entire court to handle the ownership arbitration of one house, and invite the press to see how the system works. It would be a long and messy process, it needs to be a long and messy process so the public can see it and understand it. Establishing the ownership of one house creates the boundary line for one plot of land, but also partially creates the property lines for their neighbors. The sequence moves forward and we arbitrate the ownership of the next house, then the next house, and so on.

The concept between public and private ownership is still on the table too. If a community decides that a co-op land agreement makes the most sense, the sequential court system provides an arena to handle that. I am not advocating public over private ownership or private over public ownership. I am advocating for a sequential court system when it comes to post-conflict property rights.

Infrastructure

Liberia has an infrastructure deficit. It is being addressed with huge investments for its main port, major roads and in telecommunications.

The telecommunications market is robust and much further along than other infrastructure. 4 major companies offer services and they have very competitive pricing for basic service. For prepaid voice services, the cost of entry is low. You can purchase credit in $5 USD increments and a sim card only $5 USD as well. This is a few day's pay for many in Monrovia, but it also makes it well within reach of nearly all families in the city. Even in interior towns, the phone service is adequate. Calls to the US are $0.05 to $0.10 per minute. The rise of mobile voice communications has been a good first step in modernizing Liberia and a path that other infrastructure can follow.

Data services, the other half of modern telecom, is well behind its voice counterpart. This problem is commonly known as The Digital Divide. The January 2009 Report of the ICFA-SCIC Monitoring Working Group places Africa as 16 years behind North America in its Internet access. It also states that the gap is widening due to common problems of developing nations like protectionism, inadequate human capital and unreliable electricity. Finally, the last mile, or how individual users connect to the telecommunications system, is also a great hurdle. These problems are all common to Liberia, but the country has taken steps to remedy the issues.

Liberia's internet access is mostly through 2004 era mobile phone technology with slow speeds that remind me of late 1990s dial-up service. This connects to satellite service that is slow compared to land cables. The service is prohibitively expensive at $60 per month for basic service and doesn't include voice service. This is only enough for a single user, not enough to share. The speed increases if you are willing to pay $100 per month or more. This gets you speeds that should be similar to mobile internet speeds currently available in the US. This is considered business class service, but is insufficient for anyone who has experienced broadband service in a developed country.

This situation should improve by late 2012 when the ACE, Africa Coast to Europe, submarine cable comes online. It should reduce the cost and time it takes to send data from North America to Africa by more than half (Internet End-o-End Performance Monitoring). Liberia has signed an intent to be connected to the cable along with over a dozen other countries and will pay $25 million of the $700 million cost for the cable. This is one of several major submarine cable that will go online in the next two years. Although the ACE Liberia has purchased access, it must physically connect to the cable, a process that has not been resolved. So, while the African market should support a respectable profit over the next several years, Liberian could still be let out if its internal market isn't organized internally.

While this should end the frustration of Westerns adjusting to life in Liberia, it should allow Liberians to become more acquainted to modern western communication. Currently, Liberian university students don't have email accounts and lack computers. The Liberian government doesn't have standard email either. Even ministers list Yahoo.com accounts on their business cards. Less expensive access should allow these groups to afford service and offer it reliably thanks to the ACE cable.

The ACE cable appears to lessen the gap between Africa and The West, but The United States is already rolling out its next generation of technology. The gap extends beyond the physical technology to the innovation that comes from making productive use of it. Moving to a culture of producers instead of simply consumers is a great challenge. The first steps toward great advancement have been laid.

Resources:

• The future of African Telecom
  African Undersea Cables
• Internet End-to-End Performance Monitoring
• New E. Coast of Africa Fibre
• PingEr project

"Do they have coffee in Liberia?"

“Do they have coffee in Liberia?” I ask at least three people in Washington DC.

H. John Heinz III College organized a day trip for the three of us to Washington DC so that we can do two things. First, we need to get our Visas from the Liberian embassy. Second, we need to talk to people about Liberia itself so we might know what to expect when we land, especially work wise.

Right now, In addition to large policy issues facing Liberia, I am very concerned about coffee. I need to know whether or not to pack my French press. The space in my suitcase is precious and I need to know if I can get local coffee beans, otherwise the press is useless.

From the day’s conversations I get the general feeling like there is coffee in Liberia and that yes packing my travel size French press is a good idea.

Back in Pittsburgh I pack my French press and hope for the best.

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After we arrived in Liberia several people told us that there was no coffee. I spent my first days in Liberia believing that there was no coffee.

Then we met a guy who grows coffee. The problem was that he didn’t roast the coffee himself, he just sold the raw beans. We thought about asking him for some raw coffee beans and roasting them ourselves. Kenneth has a vague idea on how to roast coffee and I used to work as a Barrista, like all English majors before me, and theoretically we might have figured it out. Realistically though, we didn’t have the equipment or the time.

Dejected I gave up on coffee. This happened sometime during our first week in Liberia.

At the end of our first week we went to a supermarket called Abi Joudi and right there on one of the shelves was a local brand of roasted coffee grounds, ‘Liberian Express’, packaged in a simple brown paper bag. I brewed a cup in the morning.

I’m not exactly a coffee connoisseur, so I can’t tell you what the coffee tastes like in terms of Ethiopian versus Columbian. I can tell you that it’s good coffee for a good price from a local supplier being sold in the supermarket. This is very good news. The capacity for local production of coffee exists, so if the local demand for coffee goes up a local producer could benefit and create growth.

The American Tax

Americans are greatly appreciated in Liberia. There is much respect afforded us. We are perhaps seen as well educated, perhaps rich (at least in relative terms), and representing an established well-being, that can not be threatened or taken away, by civil conflict or war. We in a sense represent comfort and stability. And this is what Liberian’s widely want.

On arriving to Monrovia, I knew that I would stick out. As a white man descendant from English, Irish, Scottish and French, I knew by my appearance I would perhaps seem out of place in Africa.

Walking down the streets its true, I am usually the one that is approached by people. Most do not come out directly and ask for money, but stealing a page from Steven Covey’s book 7-Habits of highly effective people, and focus on building a relationship. It usually begins with introductions and handshake, and then they ask if I wouldn’t mind if they walk with me. And of course I don’t. It is great to hear their stories.

There are also many people on the streets selling goods – scratch cards, trinkets, pots and pans, shoes, produce etc.; and providing services – shining shoes, changing money etc. And there are well-established business houses usually called So and So’s Business Center. When entering contract with the proprietors of these businesses and requesting a price for a good are service, they most often pause and look at me. Seemingly calculating how much they could ask for, with out me just walking away.

The other day we walked down to the waterside market. Travis bought some snails; I procured a large pot to make chili for some of our Liberian friends. I thought I got a good price. I paid L$850 which is roughly US$12. I would have paid much more in the states even shopping at Walmart – or so I told myself. We got home and the girl that cleans, Travis and Kenneth’s apartment asked how much I paid. I told her. And I found out I overpaid. She said the pot would have cost her L$500 (US$7.5).

Being new to the area, I am not quite sure what the appropriate prices are, and I am easily swayed into thinking that I am paying what is a fair price; finding out later it is not. I usually check with Liberian’s whom I have known for a while. They recognize that I do indeed pay more than they would. But they also seem to think this is acceptable, if not the way it is supposed to be. I am calling this premium that I am asked to pay for goods and services the white man tax, but do to some comments by some friends of mine, it might be more accurate to call it the American Tax.

National Capacity Summit Banner as Metaphor

It was a privilege. I was invited to the National Capacity Development Summit on Tuesday the 22nd of June. The event was held in Monrovia's city hall. I helped out with a few tasks, took notes on the day’s events. I got to hear many top-ranking members of the government speak including the Vice President and the Chief Justice.

'National Capacity' is like human capital or work skills. A serious problem facing Liberia is a lack of skilled labor in important sectors, especially health and education. To remedy this the Ministry of Planning and Economic Affairs, working with others, spent 18 months interviewing people across Liberia to draft up a plan to increase National Capacity. The summit marked the end of the process and the public sharing of their findings in a document called the NCDS, National Capacity Development Strategy.

In the morning before the guests arrived, during setup, two men from the city hall work crew made an attempt to hang a large banner that read “National Capacity Development Summit”. The banner would’ve hung up on the back wall of the room providing a nice backdrop for the table of distinguished guests. After trying and failing to hang the banner for an hour, as the guests started to arrive, the two men decide to unhook the banner from the sagging side and tuck the banner around a corner and out of sight.

When the summit broke for lunch the two men who tried to hang the banner in the morning came back and succeeded. As a metaphor you can’t get much better.

Did they know how to hang a banner at the beginning of the summit? No. Did they get the job done on time? No. Did they keep trying until the job was done? Yes.

Two Liberian men developed the capacity to hang a banner during the National Capacity Development Summit.

Righting Liberia's ship. But will it ever sail?

When working on my project for the Ministry of Commerce, I found my self researching extensivley on Industrial Policy. A name that kept coming up was that of Dani Rodrik, a professor at the Kennedy School. Serendipitously I met a someone who attends the school and has taken a course with Dr. Rodrik on Industrial Policies. The other day we met for coffee; my intention was to pick her brain for every bit of wisdom. Being a student at Harvard, she is very bright, and made what I think was a very appropriate analogy - working in Liberia is like plugging the wholes in sinking ship, with few qualified hands on deck. This is something that I want to explore and further ask the question, will the ship ever sail?

I don't want to get lost in the analogy and not provide any analysis, but it is important to make a distinction. Liberia is no longer a "sinking" ship. As I have explored in my previous posts there was a time when Liberia was in a disastrous political, social and economic condition, but that time has largely passed. The holes have largely been plugged and the intention now (and has been for sometime) is to establish the framework that will hopefully patch the holes for good.

Is Liberia on a course of sustainable development? And, will it ever sail? Is what being done currently by the government and various aid agencies beneficial or is it patching wholes that will only become unpatched months or years from now.

There are an immense number of NGOs, volunteer and aid agencies, as well as the UNDP, providing the social services that the government or local agencies are unable to provide. Many of the most competent people in government, salaries' are being supplemented by these same organizations. The "hands on deck" who are largely patching the holes (policy wonks) and bailing the water (aid and social service providers) are largely foreign nationals and here for a short period of time. This is not to say that there are not locals serving in these roles as well, but the major thrust as I see it is coming from human capital imports from other countries.

I have been reading a book by Jane Jacobs, Cities and the Wealth of Nations. She argues that the path to economic development is through creating import-replacements. I would argue this holds true for the civil service. If the country largely depends on the expertise of others for long, the civil service will not be able to staff the framework that is being developed by the very competent leaders of the government with the help of the human capital imports.

The great news is that The Government is acutely aware of this issue. Travis just the other day attended an unveiling of the National Human Capacity Development Plan, by the Ministry of Planning and Economic Affairs. In this plan they lay out how they development of the civil service of Liberia, will occur and how staffing of the Ministries will occur moving forward.

I hope that this plan is successfully implemented, but I would look for much of it to be undertaken after the 2011 elections. Many in the ranks of the Government Ministries are hold overs, in place for political reasons and not necessarily for merit.

Once those "on deck" are more capable of implementing plans and taking note of the many reports that have been written, it is more likely that the "ship will sail"; and the government will more effectively establish an environment that is enabling and supportive of sustainable growth, instead of itself being a barrier.

Minnesota in Liberia

I moved from Saint Paul, Minnesota to Pittsburgh to attend Carnegie Mellon one year ago today. It was a big step personally and a long distance to travel so that I could gain skills to make a better life for myself. The life I had was very good and Saint Paul is a great city, but my future was more important than my past. Although I only lived in Minnesota as an adult, it is home.

While I knew that The Twin Cities has a large Liberian population, I didn't realize the extent of its Liberian connection until getting to Liberia. I've met two deputy ministers who've called Minnesota home. I was very surprised when the minister who coordinated our arrival knew the organizations on my resume. They are not national organizations, so I don't expect people to be familiar with many of them. The minister took some pleasure in his full awareness. The conversation and familiarity were a welcomed start to my time here.

I've come across Minnesota connections both in my work and on the street. For work, I've spent a lot of time combing import data. One of the first example documents that I received cleared used clothing and other miscellaneous items for import. The seller lived in Brooklyn Park, Minnesota, a Minneapolis suburb and home to a sizable Liberian community. The document acquainted me with the import process and it alerted me to one of the by products of migration - cultural artifacts.

Dokoflag, the local term for second-hand clothing, is the best example because it is on every street of Monrovia. Today, as I entered the Ministry of Commerce, I met Gray. I introduced myself because he was wearing a t-shirt with Eagan CCM Squirt Hockey emblazoned on it. Eagan is a Twin Cities suburb. The day prior, I saw a man wearing an SEIU Local 284 t-shirt; it's a labor union with an office in South Saint Paul, just a few miles from Eagan. During my first week, I saw a man in a 2007 Twin Cities Marathon 10 Mile finisher shirt. I also own that t-shirt because I ran in that race and finished well. I'm sure the man in my t-shirt didn't participate.

Each example of dokoflag reminded me that as people flow out of a place, they keep many connections and send things back to their place of origin. Exchanges keep taking place. The path over which they travel seems to get more extensive. Sometimes, human capital returns and runs a ministry or even becomes president. Dokoflag is just the most tangible example.

Between meeting ministers and other government staff that have lived in Minnesota, seeing import documents with familiar suburbs and dokoflag, I'm reminded of Minnesota often. It is amusing to encounter unexpected connections a quarter of the world away. I escaped the state and now it chases me.

I'm tempted to find out the total value of imports by US State since I have access to the system. I'd like to compare the geographic distribution of Liberians to the import data. I'm sure that some expected patterns would emerge. Until then, my eyes are open for signs of home.

Today's temperatures:

	Monrovia	Minneapolis
Temperature:	28c	29c

More on dokoflag

The words and images on dokoflag lose much of their meaning outside of American culture. No one plays ice hockey in Monrovia, few are in labor unions and I don't think any organized race exists. The shirts just have to look nice enough to wear about town. Many dokoflag look new.

Dokoflay extends beyond t-shirts to any type of clothing. Sometimes its more Nordstrom Rack than Goodwill. Liberians buy dokoflag, so these may be second hand but they are not threadbare.

For more information on topics in this post:

Liberia's Balance of Trade including info on used clothing

Minneapolis Star Tribune: A People Torn: Liberians in Minnesota a multi-part report from 2007

The Tragedy of the Lemons Meets Aid NGOs

Hi again,

Here is the second installment of my series on game theory explanations for the difficulties facing international development work. I will be comparing Aid NGOs to the Tragedy of the Lemons while also introducing the concept of decision trees.

Two quick words of caution to the reader: First, this is dry-reading in comparison to the rest of the blog, so if you want fun please scroll down. Second, at no point should you mistake economics for a science. Science is a permanent search for temporary truth built on a rigorous process of empirical data collection and consensus by peer review. Economics uses sciences like math to further its cause, but economics remains to this day philosophy.

To begin, ‘The Tragedy of the Lemons’ is a well-known economics lesson about the importance of measuring the quality of goods. The first important thing to know about the Tragedy of the Lemons is that ‘lemon’ is slang for a used car in poor condition.

Okay. Imagine you want to buy a used car. You go to a used car dealer. You are presented with two used cars for sale but you cannot measure the value of either. These two cars look exactly the same. You also know that 1 of the 2 cars is a ‘lemon’ and the other is a quality ‘pre-owned’. You know that the ‘lemon’ is worth 500 dollars (an arbitrary number) and that the quality ‘pre-owned’ car is worth 5,000 dollars.

The essential choice in this situation is how much would you be willing to pay for an item that could be worth 500 dollars or 5,000 dollars. You have no way of knowing which car is which. Also, the seller is a decision maker. They choose which car to sell you given the offer you make, or if to sell to you at all.

If you offer the dealer $500 the only car they would sell you would be the lemon, because no seller will intentionally operate at a loss (in the realm of economics) and would not sell you a $5,000 car for only $500. They would lose $4,500.

Or, to put it into a decision matrix:



The Seller will do better by selling you a lemon in either situation, ($4,500 dollar loss versus fair deal, $4,500 gain versus fair deal). The rational choice is for the Seller to choose Lemon. The buyer will understand this and make their choice between the remaining two options ($4,500 loss versus fair deal). The rational choice is for the Buyer to offer $500.

Or, to put it into a decision tree:



First the Buyer decides between their two choices, then the Seller decides between their two choices. The outcome is the same as the decision matrix, but decision trees can be helpful as a visual alternative or when dealing with multiple decisions in a sequence. The important thing to learn about game theory here is that the order in which moves are made influences outcomes. The Seller having the final move gives the Seller an advantage.

Also keep in mind that the car seller is not a villain. They will sell you a $500 car for $5,000 out of pure economic interest, the same way that you would happily purchase a $5,000 car for only $500.

What is tragic about this situation is that when the only rational choice for both players is to buy and sell ‘lemons’ then the market for the superior good disappears. Yes, better cars exist, but who will buy them and who will sell them?

The nature of the game is tragic; it leads to a world of ‘lemons’.

In contrast to the lemon world is one where we have a mechanic who can tell the difference between lemons and pre-owneds (for a fee) and suddenly the economy all starts working again. Shirtsleeves are rolled up, roses blossom and all the world’s children prosper.

Or, to put it into a decision tree:



Basically, you must be able measure something that is valuable in order to promote its value. Otherwise you destroy the market for valuable goods and all of society suffers for the loss. Also, this measuring system can be its own business.

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It is here that I make the argument that the Tragedy of the Lemons concept can be applied to Aid NGOs. Aid based Non-Governmental Organizations. Aid NGOs fit the Tragedy of the Lemons concept well because we all know what an Aid NGO looks like from the outside, yet there are little to no truly useful ways to measure the quality of an NGO (see what’s under the hood). They all attempt to do good things, but how can we know who is successful and who is a ‘lemon NGO’?

By comparison, for-profit business is easy to measure. Did you make money? Yes. How much money? This much. It’s right here on our audited statement. Did you help people? Yes, by providing goods and services people wanted. In the business world the non-performers are weeded out. On occasion the importance placed on profits over ethics will lead to bad business practices, but poor performance is never tolerated in business (in theory).

In contrast, we cannot measure the value of Aid NGOs against each other. This causes two very difficult problems for the international development community and developing countries. First, you can’t get rid of the ‘lemon NGOs’ without losing the valuable ones. Second, you can’t target more money to the better NGOs because you don’t know which are which.

Moreover, Aid NGO work that is poorly managed is worse than no aid at all because aid money can lead to inflation, market distortion, and lost opportunities to have spent the money on something more useful. Worse still, the loss of trust among the local community for unmet promises from the ‘lemon NGOs’ will make it more difficult for well-managed Aid NGOs to operate.

We have no way of knowing which NGOs are succeeding at their missions and which are simply causing inflation with their high salaries paid in foreign monies. Well-managed NGOs bring human development (safe water, access to food, human rights, etc.). Poorly managed NGOs create market bubbles in the countries that can least afford them. But, to backtrack from hyperbole, it’s not a bipolar system of good and bad. There is a spectrum that ranges from the truly wonderful to the truly incompetent, and not all NGOs are well paid.

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The Tragedy of the Lemons is solved by a wonderful mechanic who simply knows what cars are worth. The mechanic tells you the value of a car, for a price. The mechanic runs a private business built to support the existence of another business. I propose that The Tragedy of the Lemons meets Aid NGOs can be fixed in the much the same manner.

If we can prioritize funds to better performing NGOs, if we can remove the ‘lemons’ from the system, then we may be able to preserve the most important aspect of development work, the local communities’ trust. To do this we need a series of measurements supported by a network of smaller private groups, much like a credit bureau supports banks. Private enterprise created to measure the effectiveness of Aid NGOs.