Years ago, I had the opportunity to ask former Secretary of the Treasury Lawrence Summers a question. As he walked in one direction and I in the other, I waited for our paths to cross and then said that I taught economics and wondered what he thought was the most important idea my students could learn. Barely pausing, he said, “the power of the market,” and continued onward.
Reading about the ascending price of African ivory as it moved from the bush to its final destination, I thought about how “the power of the market” propelled that ivory across a continent.
The Path of the Ivory
In order to learn about the (illegal) ivory trade, National Geographic planted their own fake tusks in the real supply chain. The tusks were made by a taxidermist who copied confiscated tusks from the U.S. Fish and Wildlife Service. Inside the fake tusks, he embedded custom-made GPS devices equipped with satellite tracking.
Our goal right now is to trace the fake tusks’ path and price as they moved across Africa.
Step 1 is the bush where real ivory tusks sell for somewhere between $66 and $397 a pound.
The Beginning of the Ivory Trade Supply Chain
(Yellow dots indicate payment sites in the bush.)
Step 2 takes us to a consolidation hub in the southeastern section of Central African Republic. At a consolidation hub, the ivory would have been sold for somewhere between $220 and $496 a pound.
The Middle of the Ivory Trade Supply Chain
(Red dots indicate consolidation hubs and major transit areas. Black lines are trade routes.)
With Step 3, we have the ivory ready to be exported. In the National Geographic article, after 53 days and 592 miles, the fake tusks had not yet reached their final African stop. Here the price again bumps up, this time to as much as $882.
The African End of the Ivory Trade Supply Chain
(Red stars and dots indicate export hubs or major markets. Black lines are trade routes.)
The real price pop though is in Asia where the tusks could fetch $4630 a pound.
Our Bottom Line: The Power of the Market
As the price for illegal ivory increased from $66 to as much as $4630 a pound, the market provided the incentive to keep the ivory moving from the bush to its final destination.