Tyler Cowen just lately made the next remark:
I nonetheless am glad we purchased the Danish West Indies in 1917. Nor do I hear many Danes, or island natives, complain about this.
This challenge has been revived as a result of dialogue relating to the acquisition of Greenland. So who acquired the higher of that earlier deal? Or was it win-win? It’s not apparent, however let’s begin with just a few information:
1. In 1917, we paid $25 million in gold, which at this time is value a bit over $3 billion. (Denmark now has $5.6 billion in gold reserves.) That’s a non-trivial sum for a small nation, however definitely not a game-changer.
2. Experiences recommend that the US was motivated by two elements, a need for a spot to host army bases to defend the Panama Canal, and a need to forestall Germany from getting the islands.
For my part, these targets don’t justify spending numerous cash to purchase some tiny Caribbean islands. We may have used the Monroe Doctrine to forestall Germany from taking the islands. Germany was tied down in a dropping conflict in Europe, and in no place to problem US supremacy within the Western Hemisphere. And I don’t see the Virgin Islands taking part in an essential function in defending the canal.
In fact, that doesn’t imply it was a superb deal for Denmark or a nasty deal for the US. Even $3 billion is a modest sum for the US authorities, and the islands could have nice worth for different causes, akin to tourism. For a few years, it hosted an enormous oil refinery. Nonetheless, I’m assured that it was an excellent deal for Denmark, and doubtless a nasty deal for the US (though I’m much less assured in that declare.)
Denmark already has an enormous cash pit in Greenland, which requires giant subsidies. The very last thing they want is one other cash pit within the Caribbean. I think that almost all Danes would favor $3 billion in gold to these faraway islands.
The US case is trickier. The unique justification definitely doesn’t make a lot sense. However what about at this time? Aren’t these islands a pleasant vacationer vacation spot? Sure they’re. I’ve by no means been there, however my spouse and I loved snorkeling within the British Virgin Islands. So I see the attraction. However the truth that we have been in a position to have a pleasant vacation within the BVI means that possession isn’t all that essential—what issues is the flexibility to make use of a useful resource. Thus in my opinion the US may be higher off having a army base in an unbiased Greenland, even perhaps negotiating unique rights to army use of the island (to maintain out China and Russia), moderately than the burden of proudly owning the entire thing. So far as mineral sources, our corporations can negotiate agreements with a Greenland or Danish authorities consultant. What precisely does possession purchase you, apart from an enormous fiscal burden?
One good objection to my argument is that it proves an excessive amount of. If all areas with a internet fiscal burden have been undesirable elements of the US, then we’d must eliminate many states. There are economies of scale in having an enormous nationwide market and this helps the US prosper, even when some particular areas are under common. I settle for that counterargument, however I think it applies extra the contiguous states within the decrease 48, the place low transport prices enable for a carefully built-in market. Resulting from elements such because the Jones Act, the US Virgin Islands are much less carefully built-in into the US economic system, making it much less doubtless that they contribute to our total prosperity. We do assist the Virgin Islanders, however there are most likely extra utilitarian methods of serving to the folks of the Caribbean—akin to smaller per particular person subsidies to a bigger space.
One other argument is that it’s good to have some small idyllic Caribbean islands, to offer America a better stage of geographic range. However we have already got close by Vieques and Culebra, in addition to the a lot bigger Puerto Rico.
Right here’s stunning Culebra:
