6th

The economics of piracy

July 2009

In the end, what is the core driver of each pirate?  The argument could be made that it is economics.  While much of the discussion about piracy has been in the fields of lawfare, tactics, diplomacy, and a bit of the, whatchacallit, The Global War on Overseas Contingency Operations Infinitely Enduring Freedom’s Justice – or sump’n. Perhaps the Dismal Science has something to add to our knowledge base on piracy. Let’s go to the bookshelf. This sounds like an interesting – and timely book, The Invisible Hook: The Hidden Economics of Pirates

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Economist Leeson leads readers though a surprisingly entertaining crash course in economics in this study of high seas piracy at the turn of the 18th century. Far from being the bloodthirsty fiends portrayed in popular culture, pirates created a harmonious social order; through the application of rational choice theory, the author explains how a common pursuit of individual self-interest led pirates to create self-regulating, democratic societies aboard their ships, complete with checks and balances, more than half a century before the American and French revolutions brought such models to state-level governance. Understanding the profit motive that guided pirates’ actions reveals why pirates so cruelly tortured the crews of ships that resisted boarding, yet treated those who surrendered readily with the utmost respect. Both practices worked to minimize costs to the pirate crew by discouraging resistance that could lead to loss of life and limb for pirates and damage to either the pirates’ ship or the cargo aboard. Illustrated with salty tales of pirates both famous and infamous, the book rarely bogs down even when explaining intricate economic concepts, making it a great introduction to both pirate history and economic theory.

History, economics, pirates – tell me Eagle1, what is there not to like? For those trying to understand piracy today, this may be a good book to add to your list. Any ship in the 5th Flt AOR should have this in the Wardroom; awww heck, make that any AOR. If you want, via NRO’s “Between the Covers” you can hear John J. Miller interview the author here. Crossposted (and of course, anyone who is looking for a new book should browse USNIBooks collection first).




Posted by CDRSalamander in Books
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  • Ray Kilmer

    Sid,

    You are the one in another thread, and here, that has called me barbaric (although your attempts were underhanded as you stated I am the same or no better than barbarians, killers, rapist and so many other disgusting men and women) for stating that we should annihilate our enemies which you disagreed with.

    Let me be exact as possible, so that you might possibly understand what I am saying.

    I do not care what other people think or do as long as they do not harm (or in some situations attempt to harm) other people. You are the one that has the hatred of other’s ideas and are the one that keeps attempting to attack other people’s character instead of discussing their ideas. I do not agree with Nazism, but that would not keep me from defending the person’s life and their rights to free speech. So, I am the one that is willing to let people live by their own standards without harming them in any way, until they come and try and apply their ideas on me. Do you get it!?

  • Ray Kilmer

    Sid,

    You attack me, but expect me to not defend myself. Who is the the corrupted?

  • Ray Kilmer

    Sid,

    BB&T gives the money to the schools, last I remember the schools still get to choose who they put in the classroom. But, as omniscient as you claim to be, I would have thought you should have known that.

  • Ray Kilmer

    C-dore,

    I have not stated anything of the such. A rational person would recognize that they do not have the right to other people’s property, so they would not initiate force against someone else. The pirates do not recognize the right’s of other people so they are acting irrational by stealing from them. Our government, and others, are acting irrational when we do not hunt them down and annihilate them.

  • C-dore 14

    Ray,

    Are you saying that taking a calculated risk in pursuit of one’s objectives is irrational? Seems to me that the odds are in the pirates’ favor that little or nothing will happen to them as long as they stay away from French and American ships, don’t harm their hostages and if the ransom is lower than the cost of delay/loss of cargo to the shipper.

  • sid

    You are the one in another thread, and here, that has called me barbaric

    You have a real issue with this all about you thing…

    But thats ok, because that makes you an imperfect human like the rest of us.

    And you totally misconstrued what I said. What I sad was: that a military force composed of a band of individuals, motivated purely by self interest, would quickly devolve into a murderous rabble.

    This rabble would be particularly dangerous if they consider themselves superior to those around them.

    And that rabble -in a rational way- would find no problem whatsoever in engaging in the various forms of genocide.

    History has provided examples of such rabbles cloaked in military garb in action…1937 Nanking. 1939 Krakow. 1945 Berlin.

    Thats what I said. Never was about you.

    Finally, getting back to this discussion, I also say that the socio/economic picture in Somalia is a magnificent portrait of a capitalist society with the fewest regulatory impediments on the planet peopled by a population that is motivated by self-interest.

    Magnificently horrific portrait it is.

    Again. I am not talking about you.

  • http://cdrsalamander.blogspot.com CDR Salamander

    C-14 speaks with big medicine.

  • Grampa Bluewater

    Ray:

    You have a real gift for dead pan humor.

    I can almost see one eyebrow go up, like Raymond Massey used to do, as he asks archly “So you think ‘people should go and hang-out with their enemies?’.”

    That was a real kneeslapper. Anybody would think you never heard of market research, or that you thought everyone who held a different opinion was an enemy, rather than someone who hasn’t seen the wisdom of your cause, you know, someone you want to convince.

    “I will not be self-deprecating which is just stupid.” Subtle, and ironic. And I thought you couldn’t kid a kidder.

    With talent like that, have you considered running for office in someplace like, say, Missouri?

  • UltimaRatioReg

    Just looked at my 401k. I might post a blog called “the piracy of economics”.

    I know, I know. Henny Youngman I ain’t.

  • A. Johns

    UltimaRatioReg:

    You should write a blog concerning that topic because it is directly related to this topic. It should highlight the legalized plunder of the wealth producers by the government that is supposed to protect them.

    Have Sid find John Alison’s speech concerning this issue for you it will add value to your post.

    Alison and BB&T did not want or need a government bailout for their bank it was forced on them. BB&T recently announced to its shareholders that it was lowering its dividends, for the short term, so that it can pay back the government’s forced bailout.

    The rationally self-interested reason for doing this is to get the government out of the business of running banks.

    Keeping watching that 401k because as long as the government has its fingers in it, it will take everything of value from it. Unless, of course, some of your 401k is BB&T stock :)

  • sid

    You should write a blog concerning that topic because it is directly related to this topic

    Echoing the advice the good CDR gave you I see, “other brother.”

    None of this a thing to with the economics of Somali Piracy.

  • Ray Kilmer

    Sid,

    Loving of one’s life and becoming angry when someone attempts to discredit my good character through the mis-stating my thoughts and ideas does not prove that I am “imperfect,” it only means that I am human. And being human is what you seem to fail to understand as man is not evil nor disgusting nor does man making incorrect decissions make him imperfect, as I have stated before making epistemological/knowledge mistatkes does not make one imperfect. Knowing that one makes mistakes and ethically choosing to do nothing to correct them is an example of being imperfect or evil.

    If a group of men did not consider themselves to be superior to those that are trying to enslave them, then they deserve the enslavement they get from those other men. Some men, like some governments are superior to others, that is reality. The government and men that recognize individual rights are superior and worthy of praise or defending while the one’s that do not deserve the opposite.

    Your examples from history (…1937 Nanking. 1939 Krakow. 1945 Berlin.) only demonstrate what happens when religious or irrational people act without long-term thought. Which has been defined many times and you still evade those definitions.

    Once again, I am on subject, the subject that you keep stating your hatred of man and that he is evil by his nature and cannot live without someone or some supposed super natural entity regulating and scaring him into doing what is right. I have totally disagreed with you and demonstrated that man can live a moral live without any of the items that you mention, the problem is you irrationally keep evading those facts.

  • A. Johns

    Sid,

    accepting the premise that Somali Piracy has a viable economy is like talking about a flat earth, or that flat earth being the center of the universe.

    Anyone making such an attempt gets hopelessly lost in contradictions that are nearly impossible to resolve.

    UltimaRatioReg’s comment was a spark of rationality that should be looked at, that is all.

  • Ray Kilmer

    Grampa Bluewater,

    The next time you decide to quote me how about keeping the full context of the quote. Someone that thought of themselves or their ideas in a disapproving way would not have the self-esteem nor the courage to stand up and speak.

  • A. Johns

    Sid,

    do you agree with Peter Leeson’s answer to the question below.

    http://freakonomics.blogs.nytimes.com/2009/04/20/pirate-economics-101-a-qa-with-invisible-hook-author-peter-leeson/

    The Invisible Hook is more than just a clever title. How is it different from Adam Smith’s invisible hand?

    In Adam Smith, the idea is that each individual pursuing his own self-interest is led, as if by an invisible hand, to promote the interest of society. The idea of the invisible hook is that pirates, though they’re criminals, are still driven by their self-interest. So they were driven to build systems of government and social structures that allowed them to better pursue their criminal ends. They’re connected, but the big difference is that, for Adam Smith, self-interest results in cooperation that generates wealth and makes other people better off. For pirates, self-interest results in cooperation that destroys wealth by allowing pirates to plunder more effectively.

  • A. Johns

    Sid, do you agree with the following answer to the question below.

    http://freakonomics.blogs.nytimes.com/2009/04/20/pirate-economics-101-a-qa-with-invisible-hook-author-peter-leeson/

    The Invisible Hook is more than just a clever title. How is it different from Adam Smith’s invisible hand?

    In Adam Smith, the idea is that each individual pursuing his own self-interest is led, as if by an invisible hand, to promote the interest of society. The idea of the invisible hook is that pirates, though they’re criminals, are still driven by their self-interest. So they were driven to build systems of government and social structures that allowed them to better pursue their criminal ends. They’re connected, but the big difference is that, for Adam Smith, self-interest results in cooperation that generates wealth and makes other people better off. For pirates, self-interest results in cooperation that destroys wealth by allowing pirates to plunder more effectively.

  • sid

    accepting the premise that Somali Piracy has a viable economy

    So, why are you bothering with this discussion Rick?

  • Ray Kilmer

    For those that care to think or rethink their premise,

    Let us attempt a this problem from a different angle.

    Rationality and ethics are for the individual and to demonstrate that let me use a hypothetical situation. If a person is stranded on an island by themselves they would be responsible for their own survival and happiness. If that person decided to evade the fact that there is no one else on the island then it would not be long before they started to starve or feel the negative effects of different types of weather. When no one else is around to carry the irrational person they cannot evade the facts of reality and get what they deserve. In other words, when no one else is around to carry or provide for the irrational person their irrational choices are not rewarded.

    Each man would have to recognize the nature of reality, the nature of his situation and the nature of man if he is going to survive and possibly achieve happiness. The man stranded on the island would have to think of ways to get food, provide for protection from the weather and possibly provide for his defense, whether against animals or at sometime in the future other men. If man fails to use his most essential attribute, reason, he will not survive long on this island alone. In othe words man must choose to apply reason, act in his rational self-interest, in accordance to the nature of reality or he will die. On a stranded island man does not need to ask to take the rational actions needed to maintain his life or enhance his life as he just does what is needed.

    This does not change when man chooses to live in society as man must be left free to apply reason in accordance to the nature of reality and his own nature. Choosing to live in a society does not give anyone rights over another person’s choices or property. Living in a society does have benefits if the society is rational and hence moral. It is only in an irrational and immoral society that being irrational and immoral brings rewards. Only in a society that rewards people who do not use their most essential attribute, reason, does it seem that people are acting in a self-interested way. When people in society choose that they have the right to others property, to other people’s efforts, and are rewarded by their non-actions with the effort of other people will it seem like they are acting in a self-interested way. And only when the men that are allowing others to rule them, take advantage of them, agree to be enslaved by other men, or do not stand up and defend their right to their own life, will it mistakenly seem like those that are getting the reward from other people’s efforts seem like they are acting in a self-interested way. But, as Aristotle stated more than 2,400 years ago, “there are no contradictions in reality, only in man’s mind.” So, when one comes to contradiction they should recognize that they have made a mistake in their thoughts and they need to check their premise and start searching for the correct ansswer.

    Good day, good premises.

  • UltimaRatioReg

    Sorry, Sid. Much as I might agree with A John’s economic assertions vis a vis governmental intrusion, my attempt at humor had nothing to do with the blog post. (Grampa made me do it.)

    Somali pirates will find the potential rewards to be worth the risk to a far greater extent than we will anticipate. Beware those with nothing to lose. But that isn’t the problem.

    If the piracy effort off Somalia presents a way to threaten western security or make (literally) boatloads of cash for the loss of a few teenage/twenty-something men with no real future, then the bad guys (pirates) will be joined by BAD guys. Which, of course, they already have been. Then, the piracy problem moves from an annoyance, to an inconvenience, to a threat, to a serious threat. That is precisely where it has the potential to move when people with bad motives and big capabilities subsume such activities.

    The idea that we can go in and “fix” Somalia is preposterously naive. But fight the pirates we must. And fighting means killing.

  • sid

    Let us attempt a this problem from a different angle.

    Ray, I’m so happy you have it all figured out.

    URR, I don’t disagree with you. The Somalis will have to “fix” themselves. Although I will say that the HoA, back into Chad, is a festering boil that deserves more effective international focus than what exists now.

  • sid

    Sid, do you agree with the following answer to the question below.

    Rick, save your lectures for the ARI group hugs.

    In the meantime, stow it in a tight dark space.

  • A. Johns

    Looks like someone lost their mind, their temper, and who knows what else.

    You are a class act, Sid.

  • C-dore 14

    Ray,

    Have to say that I agree with you that the rational choice for us would be to hunt down the pirates. I’ve taken that position for some time much to the shock of my liberal neighbors. Being a “glass half full guy” I’ll be satisfied in the near term that many Somali pirates are probably doing some OJT on how to recognize the U.S. flag so they can stay away from the ships that fly it.

  • Grampa Bluewater

    URR:

    Don’t blame me because you were having too much fun pulling the wings off Ray.

    And stay stay away from the legs, you claim jumper.

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