Fake piracy or not, this ship took a detour. Its crew is safe, but its cargo is gone.
Read more. [Image: Kamran Jebreili/Associated Press]
In 1970, New York City played host to the fourth Consumer Electronics Show. The gathering featured some 200 manufacturers displaying an array of gadgets that is quaint by today’s standards, but must have been impressive at the time. As The New York Times described it, the conference’s audio section alone offered products ranging from “phonographic needles to the tiniest radios and TV sets, to giant high fidelity, stereophonic sound systems.”
There was another thing that was big that year, too: audio cassettes. In 1970, the Apollo astronauts had just famously used that cutting-edge technology en route to the moon, and the futuristic tapes, for the non moon-bound, represented an exciting new way to experience music. Cassettes were useful not just for listening to sounds, though; they were also useful for recording them—and manufacturers, apparently, were eager to sell that capability to the public.
What do Somali pirates have to do with climate change?
Not much, except that the threat of the machine-gun slinging bandits has ended critical oceanographic research on the seabed of the Indian Ocean—research that is crucial to our understanding of how and when, exactly, the world’s largest arid region dried out. Climate investigations off the Horn of Africa were suspended just weeks before September 11, 2001, after a scientific vessel, the Maurice Ewing, was attacked with rocket propelled grenades 18 nautical miles off the Somali coast.
But, amazingly, one final research vessel somehow passed through a phalanx of small-craft pirate boats in the Gulf of Aden unscathed.
The pirates still operating off the coast of Somalia have a relatively sophisticated PR machine, which includes spokespeople and a form letter to victims, politely explaining what they need to do to get their ship back.
The letter could use some editing, however. Ship owners hijacked by one group of pirates calling itself “Jamal’s Pirate Action Group” receive a form letter on letterhead adorned with a skull and crossed swords, which starts out with this greeting: “Congratulations to the Company/Owner,” according to Reuters’ Ben Berkowitz, who has the exclusive report on the pirates’ personalized stationary and form letter. The rest of the missive strikes an equally jarring tone, partly for their overly polite appeal and partly for the poor translation into English.
Read more. [Image: Reuters]
Here’s something that the econ model tells us shouldn’t matter: the going rate. In normal markets the going rate matters, but only because it provides the opportunities for substitutes and this creates the “law of one price.” For instance, when I go to a grocery store and see a loaf of bread for $4 I won’t buy it. An economist would say I forgo this purchase because I know perfectly well that the going rate for a loaf of bread is about $2.25 and so I can go elsewhere and get bread cheaper. Similarly if I go to the Honda dealer to buy a Honda Accord, it is relevant for me to mention price quotes offered by other Honda dealers for an Accord or even how much Toyota dealers ask for a Camry because it is entirely credible that I’ll walk off the lot and go to rival car dealers offering very close substitutes for this dealer’s cars. However if my sister is locked in a basement in Ciudad Juarez and the kidnappers can credibly commit to not letting her go unless I raise $x, it is completely irrelevant that in the past kidnappers accepted ransoms of $x/2 since I don’t have the relatively good fortune of dealing with a kidnapper who demands $x/2 but am stuck with one who demands $x. There are no other places where I can buy the freedom of my sister and so the only price that matters is the one being demanded by her particular kidnappers. (Note to any cartels reading this: I don’t have a sister).
"The first rule of kidnapping insurance: Don’t tell anybody you have kidnapping insurance." Good to know.