African pirates living along the Indian Ocean on the coast of Africa have been harassing passing ships for years. They chase a ship with fast boats, board it, take the crew hostage and then negotiate a ransom, which may run into the millions of dollars. You are familiar with this behavior if you saw the Tom Hanks movie, “Captain Phillips”.
Shipping companies and the insurers who insure their ships have tried for a long time to find ways to stop these pirates, with little success. That is because they never took economics and are unfamiliar with the economic tools we have learned.
I have uploaded a number of resources to to used.
o a few articles about the scope of the problem, from Vanity Fair, the Economist and Al Jazeera America, as well as the Wiki page for “Somali Piracy.” These are long, but they read quickly and provide a wealth of background material. o a recent article from the Atlantic magazine, entitled “The Pirate Economy”. I would use this article as your main source – it has lots of facts and figures that you should rely upon.
Propose a solution to the problem using the tools of economics.
I want you to:
? describe specifically what you propose and how it would work – in detail. Who runs the program? Who pays for it? How would you know if your proposal is successful? ? describe the conditions that must be in place for your proposal to work; ? discuss the obstacles that might prevent your proposal from working at all – what are its limitations? Why might your proposal NOT work? What unintended consequences could there be?
The Rules (you know them by now)
o be no longer than 2 pages, double spaced (that’s about 1,000 words). It can be shorter, if you think you can do a good job in less space;
o be typed using Times New Roman 12-point font, 1” inch margins.