Pirates are awesome. Economics: also awesome. The combination?
Check out this report: The Economics of Piracy. It uses data from 1500 Somalian pirates to look at the future of international piracy. An excerpt:
Pirates would appear to be the very essence of rational profit maximizing entrepreneurs described in neo-classical economics. Expected profits determine decisions based on the information available. The supply of pirates, therefore, is closely related to the expected benefits of being a pirate and the associated risk adjusted costs.
Yep. You read that right. Pirates are economics bad-asses.
The paper, which looks primarily at Somalian pirates, explores piracy in several arenas, and concludes that incidents of piracy will substantially expand in the coming years, primarily due to the rising income disparity betwen pirates and non-pirates.
How big a problem is piracy? In 2010, the cost of piracy to the international community was between $4.9 and $8.3 billion. Off the coast of Somalia, the total income to pirates, from piracy, was between $75 and $238 million in 2010.
Thinking about hitting the high seas as a Somalian pirate? You can expect to earn between $168,630 and $394,200 over a five year career. If you choose the next best legal alternative, you’ll probably make $14,500 – over your entire working life. At those prices, piracy doesn’t look so bad.
To combat piracy, the paper recommends the formation of a Global Contract Group, as well as new developments to asymmetric law and law enforcement.
Check it out. Worth a read.