Despite the surge in Somali piracy and encouragement from some employees of the U.S. government, commercial ships aren’t choosing to put armed guards on their vessels. And with good reason: given present conditions, anyway, it’s a bad idea.
As I discuss in The Invisible Hook, like their Caribbean forefathers, Somali pirates are in the business of making money, not harming hostages. Of the 815 hostages Somali pirates took last year, only four died and two were injured under pirate care.
Pirates aren’t treating hostages well because they’re nice guys. They’re treating hostages well because it pays to do so. A dead hostage fetches no ransom and pirates’ business model would collapse if they injured prisoners or allowed them to die. The economics of piracy has a simple bottom line: for all the problems piracy may pose, the threat of dead and injured innocents isn’t one of them.
That could change, however, if commercial ships starting carrying armed guards on their ships. Armed guards will of course defend against pirate attacks, potentially leading to fire fights that could jeopardize innocent sailors’ lives. The prospect of having to battle for their prizes will deter some pirates. But others will remain undeterred. And for the remaining industry, armed guards’ effect may very well be to increase the dangers that piracy poses rather than reducing them.
The profit-driven behavior of commercial shippers corroborates this possibility. Like pirates, commercial shippers also have strong incentives to keep merchant sailors alive and well: insurance costs. If armed guards reduced the dangers of piracy instead of increasing them, commercial shippers’ insurance costs would fall by employing guards instead of rising. But in this case commercial shippers would have hired armed guards already, which they haven’t. Commercial shippers don’t need government to encourage them to undertake the most profitable course of action.
The market has spoken: Even in today’s pirate-infested waters off Somalia, the low probability of being captured by pirates, together with the fact that pirates release their hostages unscathed, means it’s cheaper--and safer--to go without armed guards.
That's pretty much the lynchpin of your argument, and there's a problem with it. Assuming that an insurer will always make rational economic choices... especially with decisions about armed security... is a mistake.
Rather, you can expect a company to choose risk aversion over economic efficiency every time - or do you believe that issues like deterrence get debated when it comes time to set a policy rate?
And while we're at it, 'innocent' sailors choose to be where they are and do what the do. And invite attacks by being where they are. That they are then attacked is utterly unsurprising.
- Mikhail Koulikov
To avoid waters near Somalia, ships traveling from the Indian Ocean to the Mediterranean/Atlantic would need to round the Cape of Good Hope instead of cutting through the Suez canal. I have some doubts that route would be cheaper or safer.
Risk aversion is economic efficiency, especially when you can pay for the risk in small insurance premiums rather than a lump-sum.
I really don't understand this reasoning -- of course they do it for the money. I think all the captured sailors know that. What's the alternative explanation?
So a course of action where 10 crewmen are killed in firefights is way out then.
WE aren't paying anyone. The ships owners (and insurance companies) are choosing what's best for their crew, ship and cargo business. The point of a cargo business isn't to sail around the world despatching evildoers, it's to get goods from port A to port B for the miminimum per-unit cost.
Except that we don't know which is actually cheaper, because only one option has been tried. The shippers don't use guards because they haven't used guards in the past and they have a general idea of what happens when they don't use guards. They don't have any experience with using guards, so what would happen with guards is only conjecture.
Not using guards is more a matter of being comfortable with the current status than it is based on a rational analysis.
The risks of trying an unknown solution are part of the rational analysis. In an imperfect world where you cannot reliably map actions to outcome, you have to price in that uncertainty.
How does this work?
In the last thread we get a bunch of gushing comments about the mafia providing better alternative security than the police and that a merchant might rationally chose to pay for "protection" from the mafia because the Mafia is much more effective at stopping common thuggery than is the police.
But when it's pirates and we're doing it, it's wrong and must be stopped, and it's absolutely wrong to pay the costs.
I'm not saying the "millions for defense, not a penny for tribute" approach is wrong, but what's the difference?
If the "voice" of the market speaking says "let pirates be pirates," I think that's more an argument against markets than in favor of piracy.
As a business, it's not much difference whether I'm paying a tax to a just government, or graft to a corrupt government, or ransom to pirates. If the problem were getting worse, or my crews -- who are already willing to face the known separations from family, and the known risks of the sea -- were unwilling to travel those routes, I might act differently. I might get together with other shippers and form a better plan, but it's working for now.
I do wonder why it's legal to pay pirates, but IIUC illegal to bribe officials in areas where that is the custom.
Considering the US has been playing to a tie lately anyway, at much greater expense (a few decades ago a teacher told me that if we'd paid each North Vietnamese $10,000 to turn around, it would have been cheaper; decisive victories in Gulf War I and the fighting part of Gulf War II haven't helped), as long as they know we can make it expensive and painful for them if they don't play nice, it works. It would be good if the US sent better messages just how much crap we'll take before we start blowing stuff up.
The market has spoken SO FAR. Shippers are today willing to bear the cost (through insurance or direct probability) of the current level of risk. The market will adjust if the pirates raise that cost of shipping through Somali area waters above the cost of armed guards and all their inherent risk (or whatever option is next most costly).
A given commercial shipping company's decision to risk the large but unlikely-to-incur, one-time cost of paying a ransom rather than increase the base rate of normally conducting business is absolutely unrelated to the general security policy issue of how to deal with the Somali pirates. Indeed, why would this sort of business decision by a private company impact the course of action taken by government in this scenario?
Tie?!? How much better a message can we send than killing or capturing every pirate who took the only ship under our flag that any Somali pirates have taken?
Did your $10K teacher include all the other proto-communists that would be incented to start a war to seek similar payments in calculating that it would be "cheaper"?
And how was this resolved? Do they now just have no guards and leave the vaults open for the robbers to help themselves?
What should we do if a Central American nation devolves into anarchy and pirates begin to feed off another shipping chokepoint - the Panama Canal?
So kidnapping on the high seas for ransom is now to be accepted as unavoidable and a normal cost of doing business, because apparently the whole world is full of PC wusses. Better that than have a few security guards and lots of pirates die because we stand up for law and order and civilized behaviors.
Want more piracy? Then lower their cost of doing business by making it easier and safer for them.
Another angle is a moral one. I don't begrudge those who make decisions based on the bottom line, thats their right and privilege under a capitalistic system. Were I in charge of such a company, I'd hope to be more protective of my employees.
Do we now accept extortion, kidnapping, and robbery as normal because it's cheaper to pay off the thugs, at least for now?
Look, the ability of the pirates, or of kidnappers, to collect ransoms depends on their willingness to treat their victims badly - probably killing them - if they are not paid. So what happens when someone can't afford the ransom? Or the price gets jacked up.
What amazing threads we've had here. Lawyers and libertarians happy to live under the rule of criminall gangs and pay extortion so long as the streets are safe. Hey, as long as the trains run on time.
(And save the "taxation is theft, all governments are criminal" rap. I've heard it.)
Markets are desirable because they lead to productive use of resources. They help society prosper by inducing people to behave in productive ways.
There is nothing productive about piracy. It is just a transfer of wealth from shippers to pirates. What the pirates do to cause this transfer is not productive. In fact it's a waste of labor, ships, etc. There's nothing to admire about the situation.
That analogy works if pirates are operating in American waters. We don't send troops to Mexico to rescue people kidnapped there.
It still begs the question. In an earlier post mafia protection was spoken of in terms of "informal governance" and compared to the fact that these pirates have an internal set of social norms that control their behavior among themselves, and even in relation to hostages.
There's more than one assumption about Mafia protection rackets that can be made. It might be the case that they are pure racketeering, there is no protection apart from protection from the people you're paying for it. The other perspective is that the Mafia is seeking a monopoly on criminal activity in the region, and "protection" from the mafia really is legitimate, that the Mafia is much more effective at preventing common street crime within its power than the police.
In a sense here we see a choice between methods of providing security. When one method falls short in providing that security, people create other methods. What's the difference between "private governance" as it were, and "public governance?"
One is obviously accountability, a private system like the mafia is more akin to a dictatorship. But can one really dissent on an individual level from the government? If you refuse to pay taxes that go to police protection, eventually the government's going to come (in the form of men with guns) and take action to force you to pay or put you in jail.
I'm just thinking of this as a set of ideas, not necessarily actually supporting the idea that mafia is preferable to a proper government.
While a free market should (in theory) lead to maximized utility, one has to understand when it appears long-term externalities are not being accounted for. I'd argue this is one of those times.
The companies are willing to pay ransoms because they don't see the problem getting worse or assume (perhaps correctly) the governments of the world will do something about it and for the short term, this is the prudent course.
It would seem that the pirate costs would be passed on to the consumer, so we all would be paying.
Even if the second assumption is true, so what? Why is the Mafia more effective? It's because their methods of enforcement, including deciding guilt and administering punishments, is not something we ordinarily find acceptable.
The police could make the streets safer too, if we didn't have all those annoying Constitutional rights and things.
And why exactly does the Mafia care about street crime? They don't, unless they are affected. So every neighborhood is supposed to have its own criminal gang to fight crime?
Heck, we've got our own problem with legalized "piracy" right here in the US that seems to be OK with many lawyers. It's called "nuisance lawsuits", where some lawyers make a good living by knowing where the corporate legal departments' settlement cut-offs are. File a frivolous lawsuit for X - Y dollars against a big company that chooses to settle any lawsuit under X dollars rather than go to court even with 100% chance of winning because it's cheaper.
Can a lawyer out there please explain to me what the difference is between permitting both piracy and legal extortion strictly because of cost/benefit considerations?
They certainly are passed on, just as pirate defence costs would be passed on as well.
I'm with the crowd that says "millions for defense, not a penny for tribute." Allowing piracy to flourish economically will only enable more of it. Every dime they take in is a dime which can be used to buy more and better ships and ammunition; their haul provides expansion capital for them... which means the problem can only get worse. At some point, it will get too large, and the economics of the situation would change. It would be better and cheaper to nip it in the bud now.
In most cases, the ship and its crew are capable of evading or repelling pirate attacks. High pressure hoses--for example--work very well in driving off pirates who are getting close enough to try and board a ship. An unarmed, alert, and well-trained crew can better handle an attempted pirate attack at sea than a poorly trained and unreliable armed contingent. I beleive one of the vessels that was captured last year (the one with the tanks and artillery) had an armed contingent on board. When the pirates stormed the ship, the contingent fled overboard, rather than resist.
There's no need for you to besmirch the pirates, geokstr.
I'll trade them our lawyers for every Somali pirate there is!
Who gets to decide what's acceptable?
The pirates are in ships, right? Track them from the air when they leave the hijacked ship, and when they get back to dock* blow them out of the water. I'd bet the actual gunmen are not pocketing the lion's share of the proceeds--we should present them with the same choice they are presenting us: How long do they risk their lives for someone else's coin?
These aren't religiously-motivated suicide attackers like in Israel. They ought to respond to incentives like this.
* Waiting until they get totally clear shows them that (a) we know where they live, and (b) there is no amount of time they can delay the completion of the deal that will make them safe. If we hit them right when they release the hostages, they'll just hold the hostages longer. If we hit them days later, they'll know it's just a matter of time.
Two mounts would require two or maybe three operator/maintainers. Using US sailors, perhaps former Navy, total costs of employment and housing should be under $250k. Call the mounts one half million per, one million per ship, and another $100k for upkeep and ammo.
One million per ship to outfit, $350-400K per year for operations.
Very cheap after the first 10 pirate boats are defeated and 90% of them take up killing refugees or whatever.
"...deriving their just power from the consent of the governed."
Here's more about a version of the wonderful "market has spoken, they're only in it for the money" style.
link
If we allow the business model of the pirates to pay off, then we encourage piracy. When (NOT if) piracy increases, then the cost models will change, and we will have to change our policy then.
Violence is the last refuge of the incompetent. The competent use it early when it is more effective and less costly in terms of blood.(Cribbed from Lazarus Long).
The problem with going unarmed is the lack of respect that it engenders. (paraphrased from Machiavelli).
Dead pirates committ no crimes.
Piracy has been nearly eliminated as a threat to commerce. Let's keep it that way.
The argument was that paying the pirates was cheaper in a monetary sense than security, not that paying the pirates was rational. Forms of rationality which maximize value but not money (because they discount the value some money due to risks) do not rebut this argument.
To give an analogy, there used to be a time (such as, the 1980's) that when a plane was hijacked the common wisdom and advice was that the passengers and crew should remain calm and not intefere with the hijackers. This was based on the assumption that the hijackers would land the plane in a country friendly to them and let the passengers and crew go unharmed. This assumptions was historically accurate through the 1980's (and I guess the 1990's, though I recall fewer hijackings then), but I sort of doubt anyone would follow it now.
Going on the pirates/government analogy, by this reasoning there would be no such thing as police brutality. If pirates enjoy hurting people, then hurting people has value to them. This value must be taken into account when figuring out what pirates do.
You're also assuming perfect information. For instance, imagine the pirates take a hostage and charge more money than the hostage's allies are able to pay. If the pirates had perfect information, this would never happen (since the pirates don't benefit in this scenario). If the pirates don't have perfect information, sometimes they will do this, and then kill the hostage because nobody's paying.
You're also ignoring the fact that being free of pirates is a public good. Any single individual who chooses to fight pirates instead of paying bears all the costs of his fighting, but the fact that fighting pirates discourages piracy is a benefit which to some degree is distributed among everyone. (Not completely, of course, since the particular pirate fighter gets a reputation.)
Yes, paying off extortionists, kidnappers, and hijackers is often sensible, in the short run, for a single individual or organization, but it's a fallacy of composition to say that it's therefore good policy.
Right now, piracy is mostly some half-starved mooks in leaky boats, but if it becomes safer and more profitable, the profession will become more professionalized and thieves and thugs of all continents will want to get in on the action. They'll replace refitted fishing barks with cigarettes boats and small cutters; chain-guns and armor-piercing ammo will supplant AK-47s. Instead of just the coast of Somalia, it'll be every trafficked choke-point: Panama, Indonesia; perhaps eventually we'll come full circle and as Venezuela collapses, the Spanish Main will once again serve as a nest of buccaneers.
"An appeaser is one who feeds a crocodile, hoping it will eat him last."
“Everybody knew” that concealed carry in their state would lead to carnage, that letting airline pilots carry would cause them to flip out and shoot passengers, that letting off-duty cops carry would coast billions in liability, that allowing the “assault weapons” ban to expire would result in bodies stacked like cordwood, that... I could go on and on.
The fact that none of these horrors ever happened doesn’t keep “everybody” from knowing that college students would shoot each other over classroom disputes, employees would use guns to shoot up their workplaces, and licensees carrying in national parks would engage in poaching.
This may be a case where the market is not so rational. So? An armed, alert, and well-trained crew could do even better. You get what you pay for.
Only???
Pirates aren’t treating hostages well because they’re nice guys.
A mortality rate of ~.5% is "treating hostages well"???
I question the premise of this entire post.
I understand the issue of differentiating pirates from fisherman from Somali families out on a Friday cruise, but supposing the ship were flying some shipping equivalent of a rattle on a rattlesnake, or something to that effect? If someone enters my house at 3 am without my permission, I can make a reasonable inference that they intend to do me or my property harm. That inference may be wrong (there are always exceptions), but the person would otherwise be making that entrance knows that I can and will believe that they are up to know good, and I can therefore expect that they will either stay away or announce their presence in a non-threatening manner in some way. So, where's the door to the ship's house, as it were.
If a company did (1) - (3) above, I would think that the pirates, being economically motivated, would then avoid ships of that company and prey on ships of the other companies (e.g.; "Don't go near the orange ships with red stripes like Joe Bob the Pirate did, or you'll end up shark bait.") In fact, it would be reasonable to think that the company would not even need to arm all its ships - just some number sufficient to create enough of a deterrent effect and shift the pirate's predatory behavior to other companies.
Of course, other companies may not be too happy about that, since their ships would not be targeted at a higher rate, and I have no ides what the third or fourth order effects on the insurance markets would be.
How much would you personally pay to avoid the ordeal of being kidnapped by Somali pirates? Zero? That's the cost you seem to be assigning to such an experience. Or, putting the question differently, how much would you expect to be compensated for being forced to undergo such an ordeal? Zero? Is that the amount of civil damages you would award to someone who was forced to undergo the ordeal of being kidnapped?
You need to redo your economic analysis with all the extra costs you are making zero.
Considering that today people have tantrums because someone merely "offends" them, I don't see how you can dismiss the dishonor of paying tribute.
Media Piracy nyet
High Seas Piracy...meh.
I suggest the wrong lawyers are on this. Maritime Workers's Rights are being abused by insurance companies.
that is not true. the mafia is (obviously) a criminal organization. but they also have values. they tend to be (to put it mildly) rather old fashioned (especially in male/female roles and in the duty of men to protect women), and also very pro "public order"
you could argue that they only protect their neighborhoods (from graffiti , thugs, etc.) because they want people to like/respect/fear them out of respect for their effectiveness, etc.
i think that misses part of the picture.
they WANT to protect the women from thugs, and the grandmas from purse snatchers, and their neighborhoods from blight.
i am not saying they are a bunch of great guys. but i am saying they do have values.
And of course historically this is how things have gone - piracy in the 18th C. was ended by the Royal Navy, not by armed merchantment; the battle of Tripoli was fought by the US Navy and marines, not US merchant ships; and - to the extent that this is relevant - even the mafia is fought by agents of the state, not by individual merchants standing up and refusing to pay protection.
Yes, but at least two other people have pointed out, private shippers are highly constrained in their choices, in ways that are not discussed in the original post. If those restrictions were removed, you might very well see a different set of behaviors emerging. Or you might not. But I don't see any real attempt to engage with that in the post. Instead, the argument seems to be, "these shippers are making the optimal decision — if it wasn't optimal, they wouldn't be doing it." That doesn't strike me as particularly insightful.
I, for one, have absolutely no problem with shooting any pirate on sight. I just object to the notion that totally disinterested parties should substitute their judgment for that of the stakeholders.
Except that many continue to assert that the course of action chosen by the shipping companies and their insurers is quite sub-optimal.
You seriously think some minimal-wage Phillipino deckhand wants to risk getting shot to save his employers a cost that amounts to 1/3rd of 1% of their total costs? Above everyone else, it's the deckhands' best interest not to fight back because that's their best shot at getting out alive. Sure, it sucks to be taken hostage (although reports are that the pirates treat the deckhands very well, realizing that there's nothing to be gained from cruelty) and deprived of liberty for a few weeks while the insurers sort it out, but I'll take that any day over a firefight on open waters.
Most nations will not let armed ships just sail into commercial ports. You'd have to negotiate with each country individually (hoping that the military doesn't veto the idea) to make sure there are no misunderstandings.
Moreover, in Western nations, you'd be guilty of firearms violations anyway. I asked a Mass Statie about this a few weeks ago (when we first discussed this) and he said a seaman with a gun in his chest in the Port of Boston is guilty of violating MA statute (presuming he doesn't have a license). Of course, he also indicated that he personally would look the other way and thought most of colleagues would do the same, there are no guarantees.
And is consent mere compliance or affirmative consent? Even now half the country didn't vote for the current government? Do we have their consent or merely their acceptance of the current power scheme. BEyond that, if you live in the US and earn an income, are you really "consenting" to the US government? or are you legally obligated to comply and pay income taxes. On an individual level consent is largely illusory.
From that, I think it follows that compliance with a regulation, even under threat, is essentially equivalent to giving consent.
How about an alternative scenario, different in description but not in reality.
The Somali *Government* (despite the fact that no such thing really exists at present) declares that all waters within 200 miles of their coastline are Somali Territorial Waters and all ships sailing through waters have to pay a "tax" based on the number of crew aboard the ship. This will be enforced by the Somalian "navy" which will either stop and exact payment from ships in the zone, or will stop and hold ships until payment is delivered. Assume for the sake of the example that the government in question gives no creedence to international norms and doesn't yield to "soft pressure" on this point.
Assuming they want to sail through the waters, there are basically two options that any shipper could take.
1. They can stand on principal and say, "No, there's freedom of navigation, we're going to run the blockade and use force to resist any and all efforts to obstruct sea navigation through the zone." - they pack sufficient force to fight off any attempt by the somalians to stop them.
2. They pay the "tax," and contnue sailing through the zone.
-----
now this isn't exactly equivalent to piracy, but it is basically equivalent to a protection racket.
It may be a burden, but if a particular shipping company runs the numbers, and finds it will cost them $100k a year to pay the tax on all their ships, and $300k a year to sufficiently defend their ships to evade the tax.
again, externalities could still mean it's not the best option overal, but it's the rational one to take.
It is (probably) optimal given the current conditions of the market. The far more interesting question is what would happen if those conditions were altered. Now, it's possible that the costs of making those change aren't justified by the benefits, but that's an analysis that needs to be undertaken.
Look, the only way Somali piracy will end is with a ground war. That is the simple truth. The pirates are more mobile than the rest of the population. Any attempt to disrupt their operations by targetting ground basis alone will harm civilians much more than pirates. Really, solving the problem means a large number of troops on the ground. Unless the lawless zones are eliminated on the ground, there is nothing serious we can do. Such a war will also look a lot like Iraq after the fall of Saddam and will not be a quick or easy victory.
Re: "And of course historically this is how things have gone - piracy in the 18th C. was ended by the Royal Navy, not by armed merchantment; the battle of Tripoli was fought by the US Navy and marines, not US merchant ships"
But merchantmen often where armed and played a role in containing piracy and an indirect role in it suppression. With merchantmen armed, the pirates need a bigger concentration of force to intimidate or overwhelm the merchantmen. That bigger concentration of force makes an easier target for navies than the same level of force more thoroughly dispersed.
Oren -
Re: "Except that many continue to assert that the course of action chosen by the shipping companies and their insurers is quite sub-optimal."
It probably isn't suboptimal from the direct short term perspective of those making the decisions. Guarding every, or even most ships would probably cost more, perhaps a lot more, than the expected cost of paying off the pirates (the expected ransom cost, multiplied by the chance of a ship being captured per passage of the area, multiplied by the number of passages in a given time frame). Also the potential legal complications are a consideration (although that could be considered a case of the law, the courts, and government policy, incentivising a sub-optimal policy by the shipping lines).
But paying off the pirates makes the pirates more capable and active over time. Its possible that the long term cost of paying off the pirates is higher even narrowly for the people who pay them off, and its fairly likely that the overall long term cost is higher.
I'm not sure that that's true. We could also increase the costs of piracy significantly (by capturing and killing them whenever we can). That may not totally end it, but it's likely to reduce the amount of piracy significantly. I'll freely admit to not knowing enough about the situation to evaluate the practicality of such a course, but it's not obviously unfeasible.
It's already happening. They're using mother ships to make the intercepts as much as 1,500 km from their home ports. There have been suspicions that they have a rudimentary intelligence system that relies on insiders to tip them off about the routes and cargoes of ships. If it gets more prevalent, I suspect we'll see Dashikas (DshK 12.7mm machineguns) ZSU twin 23mms mounted on the mother ships. Both are common as dirt.
Anon1111:
There's a well established and universally recognized method for doing that. It's even become part of our idiom, "A shot across their bow." A burst of .50 MG into the water is a pretty unmistakable signal that you are not welcome to the party, and no one need be injured. Persisting in the face of such an unequivocal message is pretty clear indication of hostile intent. Give them the full nine yards (which is, I believe, where that phrase came from, the length of the belt on a WW-I Vickers gun).
Hat tip to samizdata ():
Here you see REAL CAPITALISM at work:
My hat tip goes to samizdata:
samizdata
And you find the REAL CAPITALISM solution at
somali cruise
Sorry for the inconvenience and I hope that the above home page is an inspiration to some of the more serious 2nd-amendment fans here around...
I expect that if the robbers were hitting banks in Manhattan at the same rate, the calm with which certain academics and businessmen view the situation off Africa would be less evident.
1) Why should the choice be all tribute or all combat? Isn't some uncertainty for the pirates good for the rest of us? If they really don't know the real risks, they may be better deterred. Analogous to the argument in favor of concealed carry. Not everyone has to pack iron for the general public to benefit.
Even if one in ten potential victims is capable of blowing the pirates out of the water, doesn't that change the pirates outlook? There is no need to allow this to turn in to a firefight with equally armed sides. It isn't a sporting event where fairness is desirable. Surely a maritime arms race can be won over the pirates.
2) Whatever happens, it isn't in a static environment. The risks and rewards change all the time, so what is the "right" approach can vary all over the place. Do ship owners who pay the ransom get favorable tax treatment, or do they get raked over the coals for paying bribes? Is the insurance a cost of doing business, or an unnecessary expense willfully incurred by a board failing in its responsibilities? Do some countries start issuing letters of marque? Article I, Section 8, paragraph 11 of the U.S. Constitution authorizes Congress to "grant Letters of Marque and Reprisal. Perhaps it's an idea whose time has come again?
How well does concealed carry work against organized, determined criminals who operate in groups?
If we start seeing some armed ships, pirate groups will begin treating all ships as if armed and will vary tactics appropriately. More likely than not, this means more sailors on unarmed ships getting killed.
I think ships in this case should be unarmed. If we want to stop piracy we should go the ground war route. If not, we should allow the status quo to continue.
Those are disinterested parties who substituted their judgment for that of the stakeholders.
Nick
To set a pirate watch you will have to pull union workers out of bed (which would cost premium time) for the duration of the transit. Just using my old hourly rate that would cost a minimum of about $550 for 5 hours of pirate watch for one person (that is 5 hours of watch and the 30min call out requirement at premium time - double hourly rate). On a normal cargo vessel of over 500' you would need at least 5 additional personnel (besides the normal watch standers)for a comprehensive pirate watch (both bridge wings, port &starb midship and a stern watch).
That also doesn't take into account the legally required amount of sleep and down time when off watch in a 24hr period.
On top of that, i don't know of any seamen or officers who would be willing to stand at the rail with a water hose trying to shoot pirates off when they have been using AKs or other small arms in the past. Fire hoses work pretty well when the pirates are only armed with machetes, but when they have fire arms, no seaman in their right mind is going to stand there with a water hose (i would have been tossed overboard if I had ordered my ABs to do that).
Also, i think a pretty big misconception from Mr. Leeson is that the Pirates are ransoming the crew. In most cases they are ransoming the ship and its cargo, the crew just happen to be on board (though in the many pirates went for the Captain's safe). I don't know if anyone else has sailed internationally on any tramps, but the fly-by-night operations that own (or lease) those vessels don't care about the crew very much. I think Mr. Leeson is applying US sensibilities to maritime shipping companies and that is sorely misplaced (for the most part).
The benefits of deterrence only directly affect the ships- they no longer have to pay severe insurance premiums. The public might receive a secondary benefit as they won't need to recoup this expense through higher shipping fees. However this price reduction only happens is if there is a competitive market that forces both the shippers and retailers to give let the public receive some of this benefit.
Similiarly, the expense of putting armed guards only directly affect the ships, however the public will feel secondary costs as the ships charge more to recoup this expense (and active competition might reduce the degree to which this happens).
This is a non sequitur.
Pirates already fire on ships with rifles, machine guns and rocket-propelled grenades; fortunately very few sailors are injured or killed by these. Having armed guards on ships would simply mean that ordnance would go in both directions instead of just one, and I fail to see how that increases the danger to mariners. In fact, this is the seaborne equivalent of telling citizens they should not use firearms to defend themselves or their homes, or that women should just lie back and enjoy it, because resistance is just too dangerous.
Further, armed resistance by some ships doesn't alter the risk-reward calculus for pirates holding crewmembers of other captured ships. Once hostages are taken the pirates must safeguard them to collect their ransoms and prevent retaliation, just as is now the case.
It IS true that INEFFECTIVE armed resistance skyrockets the risk for the remaining crew members of THAT SHIP. I don't believe there is any reason to conclude that it increases risk for everyone.
Bullshit.
Mariners go wherever their jobs require them to go, just like anyone else. They are no less innocent simply for passing through a high-risk area.
The problem with piracy is not that it (might) harm innocent civilians. It's that it is taking someone else's property, and then extorting money from them. Such conduct is both illegal and wrong. And stopping it is worth some possible harm to innocents.
It would probably not be too hard to have a couple of armed security guards on board when passing by Somalia; they could then depart before the ships enter any ports where firearms are not permitted. Cheaper too, if the guards immediately boarded another ship going the opposite direction.
The benefits accrue to them as well. If they successfully repel pirates, they don't pay the ransom. Thus, this is not "a classic tragedy of the commons."
In any case, even if the public good is taken into consideration, we should always make a cost benefit analysis. Armed guards or military interventions cost a large amount of money. Besides, the ground war through US, and ten years later, through Ethiopian troops have been tried and it did not end this problem. What makes anyone think any military intervention there is easy?
The same way that the mafia and various drug cartels are different from the single mugger on the street acting alone.
Agreed with your points.
The question is: since we weren't willing to stay the course before, are we this time? Military intervention won't be easy and it won't be cheap. It will cost us a great deal in money, human life, and even perhaps national morale. If we fail it will also hurt our position the next time around.
There are good reasons to keep the status quo for the moment. I am not at all certan that military action is practical at the moment without a draft, given our commitments elsewhere in the world. At the moment though it would also be unwise. What was the line from Babylon 5? "Only an idiot wants to fight a war on two fronts. Only the heir to the throne of the kingdom of idiots would want to fight a war on twelve fronts."
Umm, no.
The benefits accrue to consumers generally as lower prices.
And the outgoing fire would be vastly more effective, simply due to the greater stability of the ship. According to some brown water Navy veterans I've spoken with, firing an unstabilized machinegun or a rocket launcher from a small boat, is little more than an expenditure of ammunition. It is hard to hit something as big as a tanker with an RPG outside it's safe-arming distance. When you do, the damage is minimal. The Tanker Wars of the Persian Gulf illustrated how difficult it was to destroy a tanker with an Exocet anti-ship missile.
OTOH, a few 0.5 inch holes in the bottom of a runabout make it a definitely not-fun experience.
There is the pacifist argument that resistance tends to increase your risk by inciting violence.
The biggest disadvantage to arming vessels, would be the increased cost of adding watch keepers and gun crews. You could easily double the crew of a vessel. Pirate Roulette is cheaper.
Tatil:
I suspect the ransom is paid, not by the ship owner, but by the insurance carrier. The marginal cost of Pirate Roulette is just a small cost of doing business. The short term cost of arming the vessel is significant. Tragedy of the Commons.
It depends on what you are trying to accomplish. Building civilization in a tribal society is a waste of effort. But a thunder run through the pirate support bases is cheap and effective. Shoot the place up. Sink all the vessels. Do damage, then bug out. The areas will depopulate. No supporting civilians, no pirates. It's the way pirates have been dealt with for hundreds of generations. It ain't pretty, but it works.
We won't do it, of course.
einhverfr
The biggest is that there are very few US flagged vessels involved. Let the Greek Navy and the Liberian Navy defend their flagged vessels.
It depends on what our objectives are. If it is solely to suppress piracy, it can be done with air strikes, battalion sized Marine raids and naval cutting-out operations. If we're trying to bring the joys of Western Civilization to a tribal society, it's a fool's mission.
I agree that it's not a tragedy of the commons, since there is an individual benefit, but there is also a significant positive externality (fewer attempted pirate attacks). Thus, if we want to maximize welfare, we would be well advised to look into lowering the costs of resisting piracy as much as possible (by facilitating the availability and use of shipboard weaponry).
To a layperson, that seems rather excessive for watch for a fairly specific threat if one utilizes technology. Perhaps ordinary cameras, perhaps FLIR, perhaps night vision, perhaps drones, perhaps computer analysis of images to help identify threats - I'm not familiar enough with the conditions and/or the technology and/or cost to have a good grasp on what might be appropriate, but it seems so 1950's to have this many people staring out into the ocean with their eyeballs. Anything that gets close to these ships, at least the big ones, is a cause for concern of course and a response would be required but wouldn't there be a few minutes to get defenders on station once a threat is identified?
If this theory is correct, then the solution would be to force commercial shippers to carry armed guards or subsidize the carrying of armed guards.
this is a rehashing of the "she deserved it" rape defense.
"your honor, she was wearing a revealing dress and walking down the street at 2 am. clearly, she was not 'innocent'. she invited attack by being where she was. that she was attacked and raped is utterly unsurprising"
when the insurers refuse to write reasonable policy covering ransoms, we'll talk. Until then, it's idle speculation.
How could a sovereign nation be disinterested by armed vessels sailing into their ports? They don't give a fig about whether you shoot pirates or not, but they have every right to dictate what vessels may and may not dock in their waters based on whatever criteria they see fit.
If there were any market forces preferring the ability to arm merchant vessels, countries would compete against each other by offering more liberal policies.
Wrong. Most of the pirates board silently, at night, with 0 bullets fired.
Maritime insurance relating to piracy is 1/3rd of 1% of the shipping cost. Shipping costs amount to less than 5% of the cost of most consumer goods. Consumers do not notice piracy now and would not notice piracy if the actual cost (not just media coverage) quadrupled tomorrow.
Yup, maritime insurance covers the ransom.
While we are at it, there's the short-term costs, the added hassle of not being able to go into gun-unfriendly ports, the added labor, the added hazard pay and the non-desirability of your posting increasing your labor costs generally.
You forgot the most important part of Patrick Henry's cry.
Why don't you let the ship's crew decide whether their liberty (with which the pirates have no quarrel -- they would just as well let the hostages leave the ship since the ransom value of a ship and cargo far exceeds a dozen deckhands) is worth defending at all costs. The pirates aren't a tyrannical government, they don't care one whit for the deckhands either way.
Plus, they aren't even the ones being robbed -- it's the shipper's insurance company that pays. Your statement is like exhorting a 7-11 clerk to take a bullet for the cash register -- it's not his money to defend.
Perhaps, but almost certainly false given the huge logistic and labor costs and the absolutely pitiful value of the ransom in the scheme of things.
The pirates have a very strong incentive to keep their ransom demands down beneath the threshold where it becomes worth it for shipping companies to do something other than pay. They are nowhere near that threshhold.
Lib,
On most commercial cargo vessels, FLIR or any type of cameras are completely out of the questions (no shipping company would spring for that type of technology). I have never seen a shipping company even provide night vision (most captains that i know just buy their own). Radar can work, but because the size of most pirate vessels (2-4' cross section, fast craft blend in to the waves) they can easily be missed or not even seen on a Radar (you tune a radar to ignore any signal from waves). Because of that you need a visual lookout to spot most pirates (they also tend to approach vessels at night). Commercial vessels just don't have the technical equipment for a reasonable pirate watch. Like i said above, no one in their right mind would run on deck and use a fire hose on some pirates when they have AKs, RPGs or any other type of fire arms.
The reason that pirates choose choke points is because they tend to require slow transits (probably about 10kts) and the vessels are restricted in their ability to maneuver. Anyone who sails deep sea can tell you that it is almost impossible to see all the small vessel traffic on a radar at night if they don't have any lights on (not counting a very calm night where you have the gain up). It is VERY common to see fishing vessels in coastal waters with their lights off (better for their fishing) drifting or making minimal headway, especially around 3rd world counties.
Governments are not subject to the market in this way, because if a government policy proves unprofitable for the country, they can always make up for the loss by collecting taxes or fees (or even by invading their neighbors). And in practice, the decision not to allow the weapons will be made by some bureaucrat. The bureaucrat doesn't personally lose any money when his decision causes the country to lose money, so he has no incentive to compete, and the generally inefficient nature of governments prevents the governments from just competing by reducing the number of bureaucrats.
Eventually the big payoffs to pirates who win the piracy lottery will attract enough pirates to where the payments and the inconvenience of having ships tied up in Somalia instead of moving cargoes will cause shipping and insurance companies to look for some alternative to pay offs. It seems that there might be some ways to make the pain happen sooner before piracy becomes a more serious problem. My first suggestion would be something that governments are always happy to implement, raise taxes. Institute a large tax on ransom payments and on insurance for ransom. By large tax I am talking on the order of 300%. When negotiating the ransom payments, knowledge that the payments will cost four times as much as the pirates will get is going to be an incentive for the people paying the ransom to negotiate a bit harder.
Someone mentioned Letters of Marque. The only way this worked in the past was when it could be made to pay. I think that it could be made to pay in the current day if the modern day privateers can take possession of the ships and their cargoes from the pirates. The Somali pirates are just trying to get some ransom from the shipping companies but somebody with a legal Letter of Marque could presumably sell a prize ship and its cargo in the world market for significantly more than the pirate usually get. The insurance companies will have to pay off on the full value of the ship and cargo rather than the pirate ransom which, so far, has been considerably less. The ship owner no longer owns the ship and the owner of the cargo will also be out of luck except for what they collect from their insurance companies.
Of course, my impression of maritime law as it applies to prize ships may be completely off but I think that once a ship has surrendered to pirates, the previous legal owners have lost their legal claim to it.
That logic doesn't say much about the industry as a whole (let alone international security). At some point, its possible that the entire scheme will fail- perhaps the insurance companies stop offering piracy coverage etc. The logic that applies to individual shipping companies doesn't say much about the industry as a whole, we see this all the time. It's called a death spiral.
Worse still is assuming this threat is static instead of increasing. From an international standpoint we have to consider the range and number of pirates is increasing constantly. What happens if they grab an oil tanker and threaten to dump an Exxon Valdez into the Gulf of Adan if not paid off with some arbitrarily huge sum of money? What happens when groups in other shattered nations decide to get in on the act?
Nick
His argument is it is not currently viewed as economically efficient to put guards on ships. His conclusion is that it is a bad idea to put guards on ships.
The problem is twofold:
First, the economics of his argument are myopic. Permitting the current success rate of piracy, given the opportunity costs for the pirates and potential pirates (i.e., horrid levels of poverty), encourages more piracy. The status quo is fertile ground for pirate growth. Nipping the problem in the bud, while harboring high upfront costs, is, ultimately, more efficient.
Therein lies the classic reason for government involvement. Individually, the ship owners currently lack a sufficient economic incentive to combat piracy. By the time the short term economics encourages guards or other mechanisms, the numbers of pirates will be greater, their methods more precise and their power more widespread.
The second reason the conclusion is invalid is that it ignores negative externalities. Somalia's economy can't be piracy. If the current economics encourage many of the best and brightest in the country to go into piracy, other, more sustainable and beneficial, fields will suffer from want. Corruption and crime breeds corruption and crime.
Feel view the negative externality portion of the argument from a moral or purely economic perspective. It fits both ways.
I like how you gloss over the major problem with a "sure, but". Like the joke "Sure, Mrs. Lincoln, but aside from that, how did you like the play?"
Governments don't compete in a "market" in the same way that companies do, and to suggest that governments don't allow armed ships because the market decided that is ludicrous.
They are disinterested in piracy, but sovereign nations take a keen interest in who sails into their ports with armed ships -- they are stakeholders in the physical integrity of their national waters.
My original point about stakeholders is that the shipping companies bear the costs of piracy and are therefore entitled to respond to it without outside interference however they please. For people like us with no stake in the game to substitute our judgment about what they should do about piracy seems to me unwarranted (of course, we can debate what we would do if we were them, or consider the pros/cons, but many on here take a hard line on coercing the shipping companies one way or another). The various port authorities are agnostic about what should be done about piracy but will not allow that concern to override their basic territorial sovereignty.
Ken, the concept of "market", at least as I understand it, includes all the external forces that effect the trade of goods and services. So, if the ports in Kenya don't allow guns (as is their right), it's the market's job to find the optimal solution given the constraints. You might as well complain that they put a large port in Mombassa instead of Lamu but either way, as a shipping company (probably not as an internet commenter, but we have it easy) you have to deal with that fact and plan accordingly.
No, I'm suggesting that the market should be able to adapt to whatever conditions are thrown at it and make the best choice given the constraints they cannot change.
Not true. You suggested that the governments themselves were competing in a market, one government against another, and the fact that governments continued to have such policies showed that the market supports them:
All you (or anyone else here) would need to do is read through recent news accounts of pirate attacks to see that my statement is true.
Did you consider that the attacks that make the news might not be a representative sample? There were 114 attempts this year. Bullets were fired in 2 of those (3 if you count the pirates that turn on each other).
That's a pretty bold statement. Essentially you're saying that every political outcome is the revealed truth of the market.
Yes tie. I'd score Korea as a tie, and that's being generous in Vietnam. That seems to be where we're going in Iraq. I suppose we kicked butt in Granada.
As for US-flagged ships, we may have achieved market segmentation. It's like the two hunters being chased by a bear, and one stops to put on his sneakers. If we assume rational Somali pirates, marking a few ships as not easy targets will work. If the US Navy is willing to offer that protection regularly.
Nobody is suggesting that it's impossible to set things up so the pirates think it's a bad idea; the suggestion is that the shippers are choosing not to do that now, because paying the tolls is cheaper.
Since the end of the COld War, blue water surface Navy's are very scarcely to be seen in some of the traditional pirate waters, such as the Malacca Straights, Indian Ocean, and even in the Carribean. As a direct result, pirate depredation in these waters has risen dramatically, as they perceive no effective counter to the force they *the pirates) can bring to bear on their victims. Even though the primary cash generator is ransom, and not plunder, they always employ the threat or display of deadly force to achieve their aims.
Armed merchantmen are not substitutes for purpose built vessels, with crews of trained Naval sailors and officers, chartered to rid the seas of these vermin. Of old, international sea law was very liberal towards naval intervention in cases of piracy, including the attendant executions of pirates from variously flagged yardarms.
We should make it so again.
Ship hunting is such a haphazard business that the Somali pirates, like those of old, rely on information bought from port workers and others of when good prizes shove off and for what next port.
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