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Rob
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Pete, I agree with your privatization plan for the most part, but add a couple of suggestions regarding implementation. Namely, I think that the WHOLE Gulf does not have to be privatized for your plan to be effective. Instead, only a "strip" inside the troubled waters should be privatized. Any ship passing within this "strip" would pay a fee and be protected by the private firm. This kind of division would also make it more feasible for the private firm to protect the ship than if they had to protect the whole Gulf, and would also make their services more excludable than if they had to patrol the whole ocean (i.e. they could set up "toll booths" in the middle of the strip). Additionally, for those who choose/find it cheaper to provide their own security, they can just go around the strip and pay nothing, but proceeding at their own risk. Heck, kind of think of it, we could even privatize two or more separate strips and let private firms compete for who has the safer route. Would be pretty interesting... With that said, is piracy really such a big problem? It seems very isolated, and may only be a "fad." In that case, larger security measures by ships for just the next 5-10 years may kill off the pirates' ambitions. In other words, they'll find some other "career" that will take them away from piracy, hopefully stimulating growth in the country. Right now piracy is too profitable for them to do other things, but once we raise the costs on them we can make them reconsider their other options (disclaimer: I don't know much about the Somali economy, so cannot make suggestions on the alternatives myself).
Pete, I just came across this article about Richard Posner questioning free market capitalism in his new book. I'm a law student and greatly respect Judge Posner's opinions/economic senses -- he always seems to be on the ball. So when I hear something like this from him, it really raises a lot of questions in my head that maybe "we" are on the wrong side of the argument. Of course, I'd like to hear your take on it (either here or in a separate blog post) -- I imagine others would also find this interesting. I haven't read Posner's book yet, but I'm looking forward to it. Here's a link: http://www.huffingtonpost.com/2009/04/20/judge-richard-posner-disc_n_188950.html