#855: The Poop Cartel What happens when a group of economists applies the number one rule of economics... to number two?
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#855: The Poop Cartel

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#855: The Poop Cartel

#855: The Poop Cartel

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Here at PLANET MONEY, we all have our pet obsessions. Mine is cartels. I will admit it. I am fascinated by cartels - when businesses get together and decide not to compete, decide that they are too powerful and too special for the law of supply and demand, like OPEC does for oil. And what I love about cartels is that they are set up because of greed. I mean, who wouldn't love to charge more for your product? But then someone always gets too greedy and starts to cheat. They stab each other in the back - fini. And so I was thinking about this, the life and death of cartels, when I heard a story from my friend Jeff Mosenkis, who works for this group called Innovations for Poverty Action.

JEFF MOSENKIS: You could call it Nerds Without Borders.

SMITH: Nerds Without Borders - it's a nonprofit that helps get economists to help out with problems in poor countries. And Jeff was telling me about this one particular cartel that his group had encountered in Senegal, the poop cartel.

Yeah, who is this poop cartel that you speak of?

MOSENKIS: So you've seen in the way port-a-potties get serviced here - when your port-a-potty is full, you've probably seen the trucks that come by with a tanker truck with a vacuum hose...

SMITH: Their big vacuum with a big hose. Yeah, yeah.

MOSENKIS: And they suck it out and clean it.

SMITH: Yeah.

MOSENKIS: And it's the same thing in Senegal. Like, households have a latrine pit that's, you know, kind of like a big port-a-potty. And when it gets full, you need to get it cleaned out. But it looked like these trucks were perhaps fixing their prices. They looked like they were...


MOSENKIS: Prices were permanently high instead of maybe a competitive market that you'd expect to see. And obviously, that put it out of the reach of a lot of people who needed it.

SMITH: Move over, OPEC because there's price-fixing in Senegalese poop. Innovations for Poverty Action sent a ragtag team of economists to Senegal, each with their own skills, each with a single mission - could you create a more efficient market by turning the poop cartel truckers against each other?

MOSENKIS: A poop war.

SMITH: This - this I had to see.

ADAMA NDIONE: Hello, and welcome to PLANET MONEY. I am Adama Ndione (ph), and I am a Senegalese journalist. And I am 35.

SMITH: And I'm Robert Smith. And since we're giving ages, I am 50 years old.

NDIONE: (Laughter).

SMITH: I'm an old man.

NDIONE: No, you're not that old. Fifty years old is not that old.

SMITH: It's pretty old. It's old.

NDIONE: Pretty old but not old.


SMITH: Adama is going to act as our translator and guide and give us the grand tour of the outhouses and toilets of Dakar, Senegal. Jokes aside, defecation is a serious business here in Dakar. If you cannot get rid of the poop in a clean, efficient way, then you are wading in it during rainy season - sewage in the streets. But you can't get rid of the poop without going through this big, greedy cartel. Today on the show, a story of economic jujitsu - what happens when a group of economists try to bring back supply and demand, the No. 1 rule of economics, and apply it to number two?


SMITH: No matter where you live in this big world, whether you are old or young or poor or rich, one day - you don't know when - you're going to go to the bathroom, flush the toilet, and it won't go down. In Dakar, Senegal, when this happens, you have a major problem because a large percentage of the houses here use septic tanks - big, concrete-lined pits out back that contain all the sewage. And when your toilet starts to overflow in Dakar, it means your pit is full, and you need someone to remove months' worth of crap. You need a guy. And so you have to come here.


SMITH: Adama brought me to the parking lot behind Dakar's national football stadium. It was built for soccer fans. But instead, a bunch of very dirty, unwanted businesses have set up permanent shop here.

NDIONE: All this space has been invaded, but it belongs to the - it's a domain of the stadium.

SMITH: I see people dumping garbage, there's car parts, looks like taxicabs are getting fixed over here - just a moment. I want to get this.


SMITH: Horse-drawn carts hauling metal junk - then over in the corner, there are these big tanker trucks with tubes on them. These are the poop trucks. In Senegal, they call them manque-douches (ph), toilet suckers. That's literally what they do. They suck toilets. These trucks are the single-best way to deal with sewage here in Senegal because they're quick, they're relatively clean, and they bring sewage to a treatment plant. Standing out in front of each truck is a smiling trucker waiting for very desperate customers to come in.

CHEIKH GUEYE: Hello. My name is Cheikh. (Laughter).

SMITH: Cheikh owns two of these toilets suckers. He's dressed in this immaculate bright green shirt. Maybe because of their particular business, I found poop truckers to be very fastidious about their appearance. There are a bunch of these truckers standing around the parking lot in front of their big vacuum trucks. They mostly work for themselves, and they often sit here all day long without a customer, without work.

So in economic terms - a large supply of trucks, not that much demand. So you would think, oh, as a customer, I can walk around and negotiate the best price. But that is not how the system is set up. They are all members of an association, and they want to collectively charge as much money as they can. Cheikh says you cannot blame them. They have to drive all over this huge city. And because they're big and dirty and obvious, they get stopped by the cops.

GUEYE: (Foreign language spoken).

SMITH: Wait. We're talking about bribes? They ask for bribes?

GUEYE: (Through interpreter) Yeah, we cannot escape from that.

SMITH: What makes these truckers a cartel is that they've agreed to not actively compete with each other. If a customer comes in and one of these truckers gives them a price, then the customer is not allowed to go from driver to driver to get a lower price. It's take it or leave it.

GUEYE: (Through interpreter) When someone comes to visit us, we charge them a price. And we're working together, so you have to - we have to get united.

SMITH: It's like a brotherhood of truck drivers.

GUEYE: (Through interpreter) This is - in fact, this is how we work because in whichever garage you go, they get united, and they agree on a standard price.

SMITH: Usually, $40 to $60, depending on the size of the pit. There is not some Internet site you can check to see whether you're getting a good deal or not. Sure, there are other parking lots like this one around the city, and you can spend half the day trudging from one to another, but they may offer you the same high price. From the truckers' perspective, they may lose a bunch of customers this way - they may sit idle - but as long as they keep the prices high, they make more profit.

Now, this would just be a financial pain in the ass, except for a lot of people in Dakar, $50 can be a month's wages. They literally cannot pay for it, and so the cartel prices force them to turn to another solution. It is illegal, and it's terrible for the environment. But it's extremely common around here. You can hire some poor sap to empty your septic tank by hand. Adama and I went to search for one of these guys.

We left the paved streets of Dakar and went into one of the small neighborhoods. There's dirt-lined alleyways here. It gets narrower and narrower as you walk. The houses are mostly unfinished cinder blocks. We didn't know if we'd be able to find someone who would actually admit to being an illegal pit-emptier, but Adama had a brilliant idea. He starts to ask groups of teenage boys.

NDIONE: (Foreign language spoken).

SMITH: And one of them says, oh, I know exactly who you're looking for. And he leads us over to this courtyard.

NDIONE: They don't miss anything. So...

SMITH: (Laughter) They're the best reporters.

NDIONE: The best reporters and the best sources and the best guides, the best fixers.

Salaamu alaikum. (Unintelligible).

SMITH: And there, sitting in the courtyard shade, is a man without shoes or a shirt, with a shovel by his side.

NDIONE: (Speaking French).

JABI: (Laughing, speaking French).

SMITH: It's like he was waiting for us. And he's so excited to try out his English that he sort of interviews himself.

JABI: What's your name? My name Jabi (ph). My name is Jabi. Where do you live? I live in Senegal.

SMITH: Jabi is the most outgoing person I met in Senegal, maybe the most outgoing person I have ever met. He gets us buckets to sit on. He offers us something to drink. And he explains that his job has a very specific name.

JABI: I am a baay pelle.

SMITH: A bi-pell (ph)?

JABI: Wow. A baay pelle.

SMITH: What does that mean? I mean, what does it literally mean, baay pelle?

NDIONE: Baay pelle means the father of the shovel because baay means of father. Pelle is shovel. So baay pelle, the father of the shovel.

SMITH: You're the father of this shovel? This is your son?

JABI: Wait, wait, wait (laughter). Wait, wait.

SMITH: Father Shovel is a time-honored job in Senegal. Jabi says he'll get a knock on his door, often in the middle of the night. Someone's toilet is overflowing. They are desperate. And he grabs his buckets - probably the ones we're sitting on - and his shovel, and he heads out into the night. Jabi starts showing me, right in his own courtyard, how he does his job, how he sort of pokes around to find the corners of the concrete pit.

JABI: (Speaking French).


SMITH: He demonstrates how he lowers a bucket down with a rope and sort of scrapes months' worth of waste out of the pit and hauls it out one bucket at a time.

Where do you put the excrement?

NDIONE: (Speaking French).

JABI: (Speaking French).

SMITH: Yeah. This is the problem. Father Shovel takes these buckets filled with feces and urine and God knows what else, and he takes them outside the house. He'll dig a very big hole - in the street, essentially, and he will dump bucket after bucket of sewage into that hole in the street. Now, nobody here likes this situation. The neighbors get mad. The owners of the house are embarrassed. The government tries to crack down on it. I expected Jabi to be somewhat defensive about his job. But he says, listen. He knows. He knows that this can make people sick in the neighborhood.

JABI: (Through interpreter) I think they are definitely right because it can cause some diseases. In fact, young children playing on the ground, sometimes they can use this sand to play with it and something like this, in which this can cause a lot of disease to the children. So - and even ourselves who are working with this, it's a danger for us.

SMITH: But what can you do? - he says. Someone has to clean out the pit. It is full. And a lot of his neighbors can't afford the truck, the toilet sucker. And Jabi charges half the price. Now, there have been public service campaigns to stop Father Shovel. Sanitation nonprofits have come into the country and tried to educate whole neighborhoods. Sewage inspectors prowl the back alleys looking for these holes, giving out tickets. But nothing seemed to work. The people I talked to in the neighborhood said, of course we would rather use a truck. We just need it to be a little cheaper and, frankly, easier to get in touch with. So how do you fight economic logic, artificially high prices and high transaction costs? The Senegalese government thought - all right, we're going to have to ask an economist.

MOLLY LIPSCOMB: My name is Molly Lipscomb. I'm an associate professor at the University of Virginia.

SMITH: Molly had become interested in West Africa as a Peace Corps volunteer. She specializes in environmental issues in developing countries. And she had some theories about what might work in Senegal. She assembled a team, along with IPA, Innovations for Poverty Action, and she translated all of this poop talk into economic speak.

LIPSCOMB: So there's definitely a market power issue. And this issue is compounded, in terms of the efficiency consequences, by the externalities that your sanitation issues impose on your neighborhood.

SMITH: I'm going to translate that back. When poop trucks cost too much, then crap flows in the streets. One classic way to deal with a market power imbalance is to even the playing field. And Molly first thought, maybe we can get neighbors to band together. Maybe she and the government could help people get a better price from the toilet suckers. But when they showed up at the parking lots to make deals, the truckers - the truckers, of course, they thought, hey, American economist with a government contract? We can charge even more money.

LIPSCOMB: The prices that people were talking about when we started were in the $60 per desludging range.

SMITH: Oh, you were getting taken.

LIPSCOMB: Yeah. So that's what we thought.


LIPSCOMB: And so...

SMITH: So you start to think about ways in which you could get the service cheaper.

LIPSCOMB: Exactly.

SMITH: (Laughter).

So how do you break a cartel? You could encourage other competitors to come into the market. For instance, OPEC is a lot less powerful now that the U.S. produces so much oil. But in Dakar, these giant toilet suckers are pretty expensive. And it's hard to set up shop on your own. Outsiders do not want to take on this cartel. No, if there was going to be more competition, then they were going to have to get the existing drivers to compete against each other. There was one way. The drivers all had cellphones, these basic, old-fashioned dumb phones that could just get texts. And she starts to think, what if you could somehow get around this brotherhood problem, the cartel, and directly connect customers with individual truckers via the cellphone - using your cellphone to go directly to a driver. It sounds familiar.

Do you hate it when ppl call this Uber for poop?

LIPSCOMB: (Laughter) No, no. You know, Uber is a very well-functioning market, and I think they've done great things for transportation. So if this is Uber for poop, that's great.

SMITH: The small problem with using that metaphor is, at the time, there was no Uber in Dakar, Senegal. In fact, most people didn't really use their phones to shop for any kind of services. They're going have to build a whole new system for getting desperate customers in touch with poop drivers, and then they're gonna have to teach everyone how to use it. One of the members of Molly's team, Sarah Nehrling, started to go out to these parking lots and to meet with the drivers, show them what it would look like to bid for jobs using text messages.

SARAH NEHRLING: The training was amazing. We had, I think, four different grouped trainings, where we invited the designated truckers and we walked them through how the bidding process would go.

SMITH: What was their main question for you?

LIPSCOMB: Why? Why make this change?

SMITH: Yeah? Because at this point, like, things are going pretty well for them. They're in demand. They set their own prices.

LIPSCOMB: I told them, imagine all of the people who are sitting at home with their pits overflowing. These are people who are not going to come to your garages even though they're potential clients. We want to help you get access to these clients who have never visited you and may never visit you if we don't help them understand who you are, what your work is and that there's an easier way to get your services.

SMITH: The researchers were super transparent with the drivers. They said, you may not be able to charge as much, but think of all the new business. Meanwhile, another member of the team, Josh Deutschmann, he was helping set up a brand new call center in downtown Dakar.

JOSH DEUTSCHMANN: There's a window on the left side. There's a single desk on the right. And there's one of our operators sitting there with a little headset plugged into a cellphone.

SMITH: On TV, the government started to run these animated ads with a phone number. There was a sort of graphic of somebody holding their nose and then a stick drawing of Father Shovel with a big red X through it and, for some reason, a rainbow-colored toilet sucker.



SMITH: And when you called in, the operator would answer...



SMITH: ...Ask a few questions about your location and your pit.



SMITH: The operator would send out a short text message to 10 or 15 randomly selected truckers. It would say something like medium pit, Medina Gounass neighborhood. And truckers had an hour to send back a text with their best bid. It was an auction - lowest price wins. The truckers could have just stuck with their cartel, with the brotherhood. They could have compared bids on their phones and all sent in a high price. They could have all sent in $60, but that's not what happened. Sarah Nehrling was hanging out with the truckers in the parking lots, and she could see cracks forming in the cartel right before her eyes.

NEHRLING: We'd see someone whose phone would vibrate - a trucker - and he would just kind of step to the side and say, hold on you guys. I got to take this. And then he'd go behind the truck. And we were told that they were bidding. So sometimes, just so, like, other truckers didn't know that you had received a bid, you'd say, oh, you know, my cousin texted me. Or you'd say something to walk away and then respond to the bid.

SMITH: Back at the call center, Josh Deutschmann could see a market being born.

DEUTSCHMANN: There were a couple of guys that figured it out right away. They figured out - OK, here's the price that I think can win in this neighborhood. They started winning a lot of jobs. And then over time, you started to see these - more and more truckers that maybe initially they would send bids but they were totally outlandish - they were never going to win. But then they would start seeing, OK, this is the price that wins in this neighborhood. Maybe I can undercut that a little bit next time.

And just watching sort of the real-time process of competition unfolding over the space of weeks and months was was really, really exciting.

SMITH: Because remember, the price is going down, and more truckers are participating. Even Cheikh, the truck owner I talked to about the power of the brotherhood and the need for high prices, he got into the auction. He bragged to me about his strategy for winning.

GUEYE: (Through interpreter) Generally, what I do is I wait until there are only 10 minutes left.

SMITH: Ten minutes.

NDIONE: Yes, only 10 minutes left.

GUEYE: (Through interpreter) If no one takes the offer, then I propose a price. And then immediately, I go so that I have this market.

SMITH: You said earlier that the truckers were united. Did the text messages - did the auction make you less united because you were competing with each other for price?

GUEYE: (Through interpreter) Even though we used to be united - but now it's a competition. And you need to work hard in order to get something in your business.

SMITH: The economists ran the call center as an experiment for a couple of years, tweaking the system every once in a while. Is it better to have truckers just give their best bid or have them give multiple bids over the hour? How many is the perfect number of truckers in an auction? You know, you want enough to have competition, but you don't want so many that it feels hopeless, that you never win. Eventually, Molly ran the numbers. Did the phone auction make a dent in the thing that mattered? Did it make a dent in prices?

LIPSCOMB: The call center - it brought down prices by about 7 percent versus the price that a given household would have paid in the market.

SMITH: Seven percent - how should I feel about that? - seems like a small number.

LIPSCOMB: Does it? (Laughter).

SMITH: I don't know. I guess I don't know.


SMITH: I would definitely like 7 percent off my plumbing services.

LIPSCOMB: Remember that the 7 percent is average. So some neighborhoods are getting, you know, 12 percent or 11 percent.

SMITH: OK. And that number does not include the transaction costs. People using the phone auction were saving a half days' worth of travel and negotiating in that big stadium parking lot. Molly says the key thing is that even a small reduction in price can change behavior. Remember, a lot of people in Dakar would really prefer to use the trucks anyway, but they can't afford it. Even Jabi, the father shovel I talked to, said he would call a poop truck for his own pit if he just had more money.

Molly is still working on the numbers, but she figures that up to 20 percent of people may switch from shovel to truck if they can ramp up this project across the city and get prices down. Big question now is, what's going to happen to the system? The experiment is officially over. The researchers have gone home. The government of Senegal ran the call center for a while, and now they're moving it over to a private company that will probably figure out a way to take a little cut of the business for themselves. But to me, the take-home lesson is that the poop cartel will never be the same. The experiment showed that cartels have a weakness that can be exploited. Once you see your fellow trucker stepping outside to undercut you in a text message, you are more likely to undercut him next time. It is brutal. But you know the old saying - competition happens.


SMITH: If you have a great story about economists riding to the rescue, drop us a line. We're planetmoney@npr.org. We post a link to every episode on Facebook, by the way. You can go there, leave a comment on the post, mix it up with the other PLANET MONEY listeners.

One personal note, if I may, you'll be hearing a bit less of my voice on the podcast over the next year. I'm going to be on a Knight-Bagehot Fellowship to Columbia University in their business and journalism schools. You should stay in touch on Instagram and Twitter. I'm @RadioSmith.

Our show is produced by Sally Helm and Taylor Haney. Bryant Urstadt is our editor. Alex Goldmark is our senior producer. I'm Robert Smith. Thanks for listening.


NDIONE: Wow. Look, he's opening the...

SMITH: Oh, yeah. He's opening the valve with, like, a giant - looks like a giant wrench.

NDIONE: It's going to come splash us. It's going to splash us.

SMITH: It's going to come splashing out.

NDIONE: Yes, yeah.

SMITH: We should get back a little bit.



SMITH: You know, it doesn't smell like human waste. It smells like - it's sharp, sort of like bad milk.

NDIONE: Rotten milk or something like that. OK.

SMITH: Yeah, it smells like bad food really.

NDIONE: Yeah, yeah. True.

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