The Economics of Privateering and of Piracy

Theodosia and the Pirates

The title Theodosia and the Pirates is meant facetiously. Jean Laffite and his close associates were not pirates. The phrase was used to conjure up all those salacious stories of what may have happened to Theodosia Burr Alston once she and the Patriot disappeared from the pages of history. But I had her meet up with Jean Laffite, instead, and rather than being captured, she was rescued. Only the most prudish of readers would regard what happened to her in the pages of my novels as a fate worse than death.

But beyond the issue of whether Theodosia did anything wrong in associating with Jean Laffite comes the more intellectually challenging issue of determining whether Jean Laffite did anything wrong by plying his trade as a privateer. Was he, as so many eminent historians still allege, merely  a pirate?

This very much turns on the meaning of the term pirate. Is a pirate just a "sea robber" (שודד ים) as I was brought up to believe? Or is there more to piracy than this? If you have a special license to rob people at sea, does this absolve you from the accusation of being a pirate?Is a letter of marque enough? And where does earning a living come into all this? Are you a pirate only if you make money off robbing people at sea? If you do it for a higher cause, does it mean you are not a pirate?

Take the fictional pirate, Ragnar Danneskjöld, from Ayn Rand's  Atlas Shrugged. Seen as a patriotic pirate, he robs government vessels and repays 100% of the money taken from citizens by the government back to those whose money it was. I remember that when I first discussed this with my father, he laughed and said: "That's not a pirate! It's an altruist! He doesn't get paid for his work." In order to make his work pay, Ragnar Danneskjöld would have had to have taken a cut of the taxpayers' money that he was returning.

And therein lies the problem: you cannot get justice without paying for it, one way or another. You can't win a lawsuit without paying the court costs and the attorney fees. You can't win a war, without paying for the war. And once you pay for it, it does not feel entirely like justice. Everyone wants freedom to be free of charge. But it can't be. There's a price. There is always a price.

Jean Laffite ran a viable business. He had vessels he kept up and crews who were given a share in the profits. He sold goods on the open market. He had a family to support. When his business was manufacturing gunpowder, he got paid for the finished product over and above the price of the raw ingredients. When his business was privateering, he ran it for a profit, too. He may have charged below market for the goods he sold, but it was still more money than it cost him to get it from those he  plundered. He made enough to support his crews, his employees, his partners and his family. He was a better businessman than most capitalists. 

Is it bad that Jean Laffite made a profit? Should he have merely donated his services free of charge? In my opinion, anything that appears to be "free" usually carries hidden fees. When war is not financed privately, it is waged at the expense of the public and it ends up costing much more.

Who should pay for Waging War?

Who should pay for every lawsuit? The losing side should be saddled with attorney fees and court costs. That way, they will have lost something real, not simply what was not rightfully theirs in the first place. Who should pay for every war? The loser. That and only that will keep the peace from being broken again hastily. 

When privateers are used in battle against the enemy, they naturally cause the other side to bear the greater financial burden of the war. No taxation against one's own people is necessary. Instead, the people get to buy plundered goods at below cost, helping to finance the privateer's establishment. It's a win-win situation. 

Privateers are law abiding businessmen who only plunder the enemy. There is a price for every war. Privateering makes sure that it's the enemy that pays that price. And what if a war is unwinnable? Then there is no profit in starting it in the first place. And no privateer will go to war under such conditions. This is another reason privateering helps to put limits on war.

Why did I call it Theodosia and the Pirates ? Because throughout the long story, we get to see through Theodosia's eyes as the true meaning of piracy is understood. We witness the slow evolving process as  Theodosia discovers for herself that Jean Laffite is no pirate at all, but the greatest patriot she has ever met, greater even than her own father.