False Economy - Alan Beattie [121]
Efficient in theory, marketing boards are also a superb opportunity for corruption in practice. (Nor are developing countries' marketing boards the only suspect ones: the Australian Wheat Board was accused of paying bribes to the Iraqi government during the scandal surrounding the Oil-for-Food program.) They are often monopolies by design, with farmers compelled to sell their produce to them. Anyone running the state marketing board without proper supervision can set a price for farmers' output way below the market price and pocket the difference, or as much of the difference as is left after covering the marketing board's costs. Dismantling or privatizing the state marketing board was often part of the advice given to developing countries, notably in Africa, by the International Monetary Fund and World Bank. Sometimes this ended up with a corrupt public monopoly being replaced with an exploitative private one, or with no supply chain worth speaking of, but that's progress for you.
In Tanzania, as we have seen, the state marketing boards were famously corrupt and inefficient. Along with the disastrous collectivization experiment, they managed to send the rapid growth in Tanzanian agricultural output in the 1960s into reverse. One of the best examples is the government monopoly on clove, the sweet-smelling spice. In the middle of the nineteenth century, Zanzibar was the world's biggest clove producer. Sailors in the Indian Ocean reputedly could smell Zanzibar before they saw it, as the pungent scent drifted miles out to sea. But after independence, the state monopoly forced farmers to sell to it and paid them just 4 percent of the world market price, barely enough to cover their costs. Many farmers either smuggled out cloves to sell on the black market at a higher price or simply-gave up growing them altogether. Production dropped by more than half in the decade after 1965.
Cloves, coincidentally, are native to Indonesia. And in Indonesia, the marketing board for cloves was a notorious example of crony capitalism. It was run by "Tommy" Suharto, one of the president's sons, who amassed a large fortune for himself in the course of operating it and other monopolies. When the Indonesian currency and economy imploded in 1998 as part of the Asian financial crisis, dismantling the clove marketing board was one of the key demands of the IMF in return for emergency loans to help the country. It was the most prominent item in a long list of conditions and became symbolic, even within the IMF, of heavy-handed micromanagement.
But though his control was exploitative, it was not devastating. The clove industry was milked but not destroyed. During the Suharto years, Indonesia remained—as it is now—by far the world's biggest clove producer and exporter. There is a big difference in outcome between a form of corruption that regularly diverts a number of eggs from the golden goose to the dictator and his friends, and the kind that kills the bird.
Still worse is the kind of indiscriminate large-scale theft practiced by dictators like Mobutu, whose mismanagement of Zaire made Nyerere's Tanzania look like Sweden by comparison. Countries like Mobutu's Zaire look more like episodes of the old TV game show Supermarket Sweep, everything that is not nailed down being whisked away by the "winners." Any regime that looks unstable, as African and Latin American dictators have often tended to be, is liable to grab as much as possible before being kicked out of office. In the words of Mancur Olson, the theorist whose account of interest groups we encountered above,