Mr Smith goes to Katoro

A nice illustration from Tanzania of Adam Smith’s praise of enlightened self-interest – but not laissez-faire.

Mark rightly gives points to Gordon Brown for providing arguments for Scotland to stay in the Union (as it in the end chose to do) based on principle and sentiment, not merely interest. Contrast the absence of Tony Blair, junketing with Davos Man (or worse) and Menton Girl  somewhere sunnier than Scotland. Brown’s argument was based on shared battlefields and domestic glories like the NHS rather than Hume and Hutton. But it was fair of Mark to say that it reflected the cosmopolitan, outward-looking values of the Scottish Enlightenment. Its leading lights, apart from Burns, were SFIK all Unionists and anti-Jacobites. The mathematician Colin McLaurin actually supervised, though unsuccessfully, the defence of Edinburgh against the Jacobite army rampaging its way south. The Scots’ combination of physical courage, industry, and respect for learning have made the world their oyster.

So here’s a small salute to the whole gang, represented by Adam Smith, Professor of Moral Philosophy at Glasgow University. (Scotland had four universities by 1600 to England’s two). His best known sentence must be this, from Book I, Chapter 2 of The Wealth of Nations:

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.

(The website is libertarian. They might try reading a bit more of him; he isn’t Rand at all.)

Perfectly illustrating the point, here’s very nice and cheering photograph of Mr. Edward Buta’s flourishing solar shop in Katoro, Tanzania (pop. 11,925). (H/t Tim McDonnell at Mother Jones.)

katoro-shop
Continue reading “Mr Smith goes to Katoro”

Annals of Commerce: seatbacks and clueless executives

I think we are now up to three flights diverted because of tiffs between passengers over reclining seats.  Discussion, in the air and in print, has mostly been in assertive mode: “I paid for this seat and you have no right to recline into it!/I paid for this seat including the  space above your knees; the button is on my armrest!” It goes downhill from there. Ronald Coase is famous for demonstrating that when parties claiming the same resource can negotiate, there’s no efficiency loss by unambiguously assigning the resource to one or the other. What matters for GDP is that either the farmer or the cowboy has the rights, and that they both know which.

He’s not as famous, but should be, for showing that there are a lot more cases where the parties can’t make deals, and government needs to consider, at least in addition to tradition, political power, and the like, ‘who will best use the resource?’.  Government here is the airline company, within some FAA constraints (like ‘no seats that recline into an exit row’), and it seems to me the rules are pretty clear: the ‘seat’ we are renting you is a trapezoidal solid that goes under the one in front and above the one behind you.  United, at least, says it forbids the use of the anti-recline device that has triggered the latest dustups. But it’s not clear that they have the managerial capacity to motivate underpaid, overworked flight attendants supervising a coach section full of angry, surly passengers to implement the policy, and it’s crystal clear that they don’t understand that when passengers start duking it out with each other because the airline has put them in an impossible position, it don’t do the stockholders no good.  It’s very expensive to divert a flight, and probably expensive to deliver a load of furious passengers who had a scary, miserable trip.

The rules worked reasonably well until the seats got so close together that some other stuff that used to be part of the deal disappeared, like the ability to use a laptop on the tray table, or travel with actual knees, when the seat in front came down (did you say “cross your legs?” What are you, some kind of nut?). The big problem here is not an angels-on-a-pinhead pilpul exercise in moral philosophy, it’s that airline company management is a dysfunctional culture mismatched to a competitive environment and to the predictable, known capacities of the customers it sells to, possibly crippled by a general IQ deficiency. Continue reading “Annals of Commerce: seatbacks and clueless executives”