Marc Andreesen points Alex Tabarrok to the Los Angeles Times and Davan Maharaj reporting from the Congo:
Posted by DeLong at July 13, 2004 11:00 AM | TrackBack | | Other weblogs commenting on this postMarginal Revolution: Living on Pennies: Here is a heart-breaking series of stories about living in poverty in the third world. The Congo is so poor there are no jobs just "se debrouiller — French for getting by, or eking a living out of nothing." Sweatshops in these countries would be a blessing but corruption, war and violence keep foreign investment away.
Even the corruption, however, is sadly understandable. The government has no money and so pays its workers with the opportunity to take bribes. And thus the country is trapped. The corruption tax prevents the people from starting businesses and accumulating capital, corruption can't be fought without funds to pay workers but there are no funds because corruption prevents the earning of income.
But even a society living on the edge needs civil servants. Men with government seals, such as Pancrace Rwiyereka, a grandfatherly former schoolteacher who runs Goma's Division of Work, engage in their own version of se debrouiller. They don't bring home an actual salary, but the majority still show up for work every day. A government job gives them the opportunity to demand money from businesses and members of the public. Their official jobs are a charade.
"Bribes are the answer," said a mid-level government employee in the finance department. "Why do you think we would never give up our jobs or strike to get our salaries?" Authorities require entrepreneurs importing goods to obtain stamps from at least six agencies: the main customs office, an immigration office, a health agency, a separate health office that certifies goods for consumption, the governor's tax revenue office and a provincial office that collects money from truckers for nonexistent road rehabilitation.
Thanks to Marc Andreessen for the pointer.
One needn't go to the congo to find this sort of thing. Something very similar takes place all over Russia, at essentially every government office and traffic stop, not to mention a depressing number of schools and college entrance exams. Corruption of this sort provides, I think, a very nice example of a stable non-efficent equalibrium which is very, very unlikely to work itself out w/o outside help.
Posted by: Matt on July 13, 2004 11:10 AMI think you can find a sort of legal style of this in California in the building permit process. As local control of taxes is limited and the fees are not there has been an increase in the number of hoops that a builder has to jump thru, each with its fee. Not the same as Mexico, Congo or any other 3rd and lower country but coming from a similar incentive. I live in "process" happy Palo Alto so that my color my perspective.
Posted by: dilbert dogbert on July 13, 2004 11:42 AMThey just had to get rid of the Belgian froggies,
didn't they?
Tabarrok's focus on corruption as the problem I is in error. Having worked in a number of exceedingly corrupt developing countries, I've seen huge amounts of evidence that petty corruption does not stifle investment or commercial activities that lead to capital accumulation. Nor does it necessarily hinder strong economic growth. Petty bribe-taking is a market-based activity: the takers quickly settle on a value that does not kill small commerce -- because then there would be no more bribe flow.
Tabarrok certainly knows that this activity in the least developed countries actually is the tax system, the way government is financed. War and violence are a far greater hindrance to economic activity than petty corruption.
Corruption's biggest stifling effect is when leaders demand so much from big-ticket investments like infrastructure and mining and big manufacturing that the foreign investors stay away altogether.
Finally: In some countries, 6 stamps from agencies for imports is only a dream.
Posted by: paulo on July 13, 2004 12:50 PMBrad quotes: The Congo is so poor there are no jobs just "se debrouiller — French for getting by, or eking a living out of nothing."
http://www.cnn.com/2004/WORLD/africa/07/10/conflict.diamonds.ap/:
According to investigators, Republic of Congo officials -- apparently seeking to evade taxes and hide revenues -- also were formally declaring the gem-quality stones in Switzerland at far less than their market price: just 98 U.S. cents a carat on average, compared to the average market price of $75.90 a carat for uncut, unset stones.
Man, you are all I worship and adore, Brad...
Posted by: El Gringo on July 13, 2004 04:43 PMCome on, this is the Republican rightwing wet dream- they have starved the beast!!! All you need is a small army and you too can be a player in your very own failed nation state! After all taxes are avoided with a small bribe- ain't life grand. People in the AngloSaxon influenced West would probably revolt and impose some order, but if you don't know what you are missing, you don't lift a finger to make a serious change- and those men with the guns like things just the way they are...This is modern Africa reverting to tribal chaos with an overhang of population from the colonial organization and Who public health programs of the 60's and 70's. Simple conclusions result- eliminate anyone who talks about the possibility of a better more efficient way (Eh, Fearless freedom lover Mugabe?), and ruthlessly exploit anyone who isn't rich enough or lucky enough to get the heck out of Africa. Capitalism requires capital, and if yours is routinely stolen or buried (how many people in that story referred to dead people who didn't die of old age?) you get poorer, and still poorer when the persons who used to produce surplus food (remember all of those living in the countryside where the war killed almost everybody- or took what modern stuff they had?).
Read the Economist- they keep reporting on this stuff and the West keeps right on ignoring this festring problem of Africa- after all many of our nursing home nurses are the best and brightest who keep bailing out to the west.
Don't care about it:http://www.onwar.com/aced/data/cite/congo1964a.htm
Posted by: El Gringo on July 13, 2004 05:41 PMWow. The Marc Andreesen?
Posted by: Ennis on July 13, 2004 09:19 PMIt's nothing new. My wife, raised in the Congo, knows at least part of the country's founding charter.
Widely known as Article 15, it simply states: "Debrouillez vous".
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