On self interest
By Pat Utomi
EVIDENCE of the effects of low levels of rigor in public choice adorn the streets of Nigeria. The UNDPs Human Development Index provides succinct summary of this in Nigeria's location on the misery axis. Yet, to reason together that society's decisions may profit from collective endowments in wisdom, is a challenge for extant consciousness. One typical way of stifling discussion, in this pervasive mood, is to charge those who may seek to be part of public engagement on an issue, with having self interest. This has triggered a long time desire in me for comment on the issue.
I have long wanted to raise the point of how social advance has historically been a beneficiary of the interplay of self interest. Recent developments have made the allure of such a discussion irresistible, a fact given life by a recent encounter.
I was at the facility of one of the Oil companies not long ago and was approached by one of their young engineers. After a few pleasant statements he noted my comment on the bank capitalisation issue. Surely that must be because of your interest in the industry, he asked. Cynically suggested was that I would most probably not hold that point of view if I did not have that selfish motive. Also hidden in the comment was an imputation that one should be apologetic for advancing self interest. I suspect he expected either a meek response of the person ashamed of acting selfishly or the aggressive response of a self interested person with a seared conscience.
He must have been taken aback by my insisting calmly that I actually believed in every word I wrote and that I had said the same very words several years before I had any interest in the banking industry. A surge of nostalgia actually rose up my frame as I recalled a television reporter thrusting a microphone at me at an event at the Lagoon Restaurant when a previous capital increase was implemented, years before I came to be associated with the industry beyond being a detached public shareholder. My response was that a one size fit all policy was unmindful of the place of strategy in the enterprise so that whereas that new capital requirement may be too much for some merchant banks it could be inadequate for others. I also referred the young man to the statement attributed to Chief Sam Asabia, in my article, and indicated they could be accessed in print in my 1998 book Managing Uncertainty " Competition and Strategy in Emerging Economies. The book had in fact been written between 1996 and 1997, several years before any self interest.
I think though, that what flabbergasted the young man was not that I was able to show that my views had stayed consistent before and after an interest in the industry but my insisting that in spite of that, self interest was not a barrier to a logically argued, and impassioned position on issues. Indeed, I had insisted that part of the reason Nigeria had made so little progress as a country is because people who have self interest are usually too reluctant to engage in public discussion promoting their interest so that the benefits of all sides of the issue shape public consciousness and determine outcomes that advance the common good. This does not happen because we have too few selfish people. In my opinion, this tends to happen because many who should argue such positions owe their deep pockets to government and they know full well from their association with political authority that what dominates the domain is naked power rather than purpose and that vindictiveness goes with the territory. As such their past allows them to be cowed in the face of power to the detriment of what could have emerged from robust interchange in the market place of ideas.
This point is far from novel as it is the foundation of neoclassical economics and the essence of the argument in Institutional Economics on how market institutions evolve, a point so well marshaled by Nobel prize winning economist Douglass North in his 1990 book on Institutions, Institutional Change and Economic Development. Whether we like the idea of the unseen hand or scorn its imperfections, the fact remains that a superior option has been hard to find. Knowledge should therefore orient us to understand that we do good to the system when we take our self interest and advance issues, so long as we do not prevent other views on the matter from rising to the public fore, and discussion is kept civil.
When a few other young men from the oil company visited with me later the same evening of the encounter on the subject of self Interest I got a chance for another stab at the matter of public discussion and social progress. While self Interest is, in my opinion, a legitimate basis for public discourse, I told the group, people with a sense of history will also approach issues in the hope that basic principles can be established. Banks were easy to bash, I suggested, because the banks brought it on themselves. They in the oil companies earned more than those young men and women in the banking industry but there is'nt the public ill will that exists towards bankers because their lifestyles were not so palpably triumphalist, and their executives did not run around with sirens and motorcades as some bank executives.
After a while, talk went from sucking it to those cocky bankers, to what is so wrong with N25 billion. My response : Nothing. For some players N25 billion is still gross undercapitalisation. Nothing is wrong with that value. If there was a problem with it the bank I am associated with would not have started out with a strategy to have a 30 billion capital base by its seventh year in 2007. The point is that bank's strategy had it wanting to be a dominant player in consumer banking so that without any regulatory prodding it set such a target and even before it opened its doors had an understanding with a European investment firm that after three year track a review would decide an investment commitment towards this Business Plan goal. Those facts remain in the records of the bank reviewed annually. The point was it chose that size target because it was necessary for its strategy. Some others may have a different strategy.
There is no greater reward than seeing understanding stream past the face of a group of people who you know will some day provide leadership in several spheres in your country's life. There is life beyond self interest.
Utomi is of the Lagos Business School, Pan African University.
