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Pirate Economics

Well, the pirate standoff off the coast of Somalia has ended, and it ended well. One pirate surrendered, three pirates dead, and Captain Phillips once again free. No ransom paid, no concessions made, just a simple demonstration of resourcefulness and resolve.

The real hero here, despite his protestations, is Captain Phillips. First, he led his crew in successfully resisting the pirates as they boarded. Next, he traded his own freedom for that of his crew when he allowed himself to be made the pirates’ prisoner. Finally, he broke free and dove overboard in an attempt to escape before Navy snipers freed him.

The whole scenario serves as a stark reminder that when Western powers face threats from nominally weaker opponents, such as pirates or terrorists,  those opponents have access to a trump card that too often brings our military juggernaut to a grinding halt: hostages.

The pirates of Somalia are taking up piracy for the same reason Willie Sutton robbed banks: “that’s where the money is.” And by taking hostages and using them as human shields, they have found a way to check the vast military force that could be brought down on them.

The problem is an ancient one, tied up in basic economics: whatever you subsidize, you get more of. If you pay a ransom (or make some other type of concession) for hostages, you guarantee that there will be more hostages.

Concession to kidnappers is a short-sighted solution. Yes, you get these particular hostages back — but with the increased odds that there will be more hostages in the future. After all, nothing succeeds like success. Another example would be Gilad Shalit, the Israeli soldier kidnapped by Hamas several years ago. He’s still being held (if he’s still alive), and Hamas is still making demands of hundreds or more prisoners for his freedom — and boasting that it will kidnap more Israeli soldiers to serve as bargaining chips.

There is no easy solution. As long as we make it abundantly clear that we will always back down when innocents are threatened, we guarantee that more innocents will be threatened. Because as long as the pirates and the hostage-takers are rewarded with ransoms for ships and people, they have absolutely no reason to stop.


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