Thursday, June 02, 2005

Spreading the Word 2

From Moscow Times, Moscow 2 June 2005

"Getting Adam Smith Right"

In response to "Saving Russian Energy from Reform," a comment by Gianguido Piani on May 30.


Piani makes a strong case against some serious problems of electricity supply in Russia. That he drags Adam Smith into his case is unfortunate.

Smith did not exclude roles for government in his "Wealth of Nations." The roles he envisioned far exceed the boundaries set for the state by those who have misused his legacy and portrayed him as a laissez faire zealot, which he was not. He never used the words laissez faire, nor did he support it as a general policy.

From his "Wealth of Nations" we can deduce how Adam Smith might have considered the situation described by Piani that applies to interruptions in electricity through inadequate investment by private owners.

For exactly the same reasons that Smith opposed monopolistic pricing and, interestingly, supported laws restricting lenders to an official maximum of 5 percent interest, he would have approached excess profits and inadequate investment in electricity in the same manner.

If food suppliers or electricity companies promise to supply customers with goods but do not deliver, leaving customers without their dinners and the means to cook them, they likewise commit fraudulent acts and should be liable for them.

Gavin KennedyRiccarton, Scotland


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