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.)

Tanzania is a very poor country; GDP per head is $1,715 (Wikipedia), presumably lower in the countryside. Many of Mr. Buta’s customers in the villages must be living off $5-$10 a day. The electricity grid stops in the towns, and there isn’t the money to expand it to the villages in non-geological time. But electricity is so valuable, for phone charging and lighting, that very poor people will cough up for small solar kits.

Nobody here is acting out of altruism. As Smith says, self-interest is dependable. Charity aid workers come and go, but Mr. Buta will be in his shop next week and next year, as long as it still pays. But he’s pretty safe. The gear will get better and cheaper, with learning and economies of scale. What’s next? Bigger setups to run TVs and fridges, I would guess. Somebody will market a fridge with high thermal inertia, that can stay cool overnight. A better-capitalised competitor like WalMart may muscle in and grab his market. That’s capitalist life, and could happen in any business.

The off-grid solar market in rural Africa, on this evidence, is now self-sustaining. Governments can kill it by interfering, through tariffs, domestic content rules or red tape. If they leave well alone, it will do fine. Score a big one to Adam Smith.

Wait a minute, though. The story fits the paradigm of enlightened self-interest reasonably well, but not that of laissez-faire. Consider some of the critical steps in the history of solar power.

  • 1954: Invention of photovoltaic cells at Bell Labs. AT&T was a profit-making corporation, but running a great institute of blue-sky physics can’t be explained by self-interest. Prestige? Noblesse de monopole oblige? Directorial whim?
  • 1950s-1960s: The Pentagon and NASA provide a niche, high-price market allowing commercialisation and small-scale industrial production.
  • 1970s-1980s: Following the first oil crisis in 1973, MITI in Japan support development of panel systems for general use (Sunshine Programme); $6bn a year in the 1980s.
  • 1991-2014: Germany adopts EEG law in 1991, offers high 20-year feed-in tariffs for solar power from 2000. Installation boom from around 2005. Legacy liability of solar FITs to expiry over $100bn.

Mr. Buta and his customers should give thanks to Jean-Baptiste Colbert’s interventionist principles as well as to those of Adam Smith.

Author: James Wimberley

James Wimberley (b. 1946, an Englishman raised in the Channel Islands. three adult children) is a former career international bureaucrat with the Council of Europe in Strasbourg. His main achievements there were the Lisbon Convention on recognition of qualifications and the Kosovo law on school education. He retired in 2006 to a little white house in Andalucia, His first wife Patricia Morris died in 2009 after a long illness. He remarried in 2011. to the former Brazilian TV actress Lu Mendonça. The cat overlords are now three. I suppose I've been invited to join real scholars on the list because my skills, acquired in a decade of technical assistance work in eastern Europe, include being able to ask faux-naïf questions like the exotic Persians and Chinese of eighteenth-century philosophical fiction. So I'm quite comfortable in the role of country-cousin blogger with a European perspective. The other specialised skill I learnt was making toasts with a moral in the course of drunken Caucasian banquets. I'm open to expenses-paid offers to retell Noah the great Armenian and Columbus, the orange, and university reform in Georgia. James Wimberley's occasional publications on the web

4 thoughts on “Mr Smith goes to Katoro”

  1. There you go. Flip those incentives and subsidies for the fossil fuel industry over to solar and wind and the problem fixes itself

    1. AFAICT Tanzania does not have fossil-fuel subsidies, as far too many developing (and rich) countries do. Electricity, supplied (sort of) by a monopoly operator, is absurdly under-priced at 8-9$c/kwh, a subsidy to town-dwellers that explains the lack of grid expansion. Would you really advise Tanzania to set up renewable subsidies for rural solar at the expense of health clinics, schools for girls and rural roads? I wouldn't. Their best policy is to do nothing, and let the invisible hand, through Mr, Buta's visible ones, spread solar microgeneration. They are of course free-riding on the American, German and Japanese taxpayers who paid to develop the technology. Fine by me.

  2. Before she passed, my lovely mother, as gentle a soul as ever lived, used to refer to Tony Blair as "That greasy little turd."

    Also Adam Smith was about as far from Ayn Rand as is possible to be. It's fun to imagine his incredulous disgust upon hearing her "philosophy," always assuming we could penetrate his Scottish accent.

    1. But, but, Tony Blair is the greatest humanitarian of our times! GQ said so!.

      (but, seriously, what a waste of talent and opportunity. Or, perhaps, what a successful use of talent and opportunity, but to self-interested or perhaps profoundly misguided but sincerely intended aims)

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