Posts Tagged ‘import’

The Economics of Piracy

Friday, March 4th, 2011

pirate-ship.jpg
(photo credit: paulhami)

Sometimes it’s true: the best way to deal with a bully is to ignore him. But everyone’s got to have a back-up plan, and it looks like the U.S. is getting fed up with the Somali pirate industry.

  • Back in 1801, when pirates still wore stockings, Thomas Jefferson decided to end America’s policy of paying off pirates for safe passage through the Mediterranean. The Tripoli-based scoundrels demanded bigger fees, but all they got was a war with the U.S.
  • Today may be another turning point; Somalian pirates have been a menace to shipping companies for years, but never before have they been so violent. The recent murder of four vacationing Americans raises the question of just how much the U.S. is willing to take to avoid a major conflict with an ugly enemy.
  • The U.S. is hesitant to take military action against the pirates because it’s just too big a job for an army that’s already stretched thin. The ocean is immense, piracy has roots throughout the “failed state” of Somalia, and there is no other viable economy to replace piracy with once it’s eliminated.

Facts & Figures

  • The average ransom for a captured ship is $5 million
  • The average amount of time hostages spend in captivity is 6 months
  • The “red zone” occupied by predatory Somalian ships is bigger than 1 million square miles of ocean

Best Quote

“Of course, I do not know what the U.S. will do in response to this latest atrocity. But Jefferson advocated an armed response and eventually war against Tripoli for far less provocation.” – Frank Lambert, professor at Purdue and an expert on the Barbary pirates

What do you think?

What company could come up with a profitable pirate-control product?

Get to it!

Check out the damage done as of the end of February 2011 in this New York Times infographic. The red numbers show number of vessels currently occupied by Somali pirates, and the white numbers show the number of civilians held hostage on each.

nytimes-pirates-graphic.jpg
(credit: Bill Marsh and Scott Garapolo/The New York Times)

An Import is…

Wednesday, September 23rd, 2009

An import is something that is brought into a country from another country. For example, true Champagne is only produced in the Champagne region of France, so if you want it and you live outside of France, you have to import it.

An Export is…

Monday, August 10th, 2009

An export is something made locally that’s sold and shipped to a foreign country. Tech companies in the Silicon Valley in California make computer chips that are exported to be used in computers all over the world.

Free Trade is…

Wednesday, July 22nd, 2009

Free trade is when countries can buy and sell goods with one another without any government barriers like tariffs or, at the extreme, an embargo. That doesn’t mean you get stuff for free, it just means the government isn’t adding any extra costs to your purchase.