Tyler Cowen not too long ago 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 situation has been revived attributable to dialogue relating to the acquisition of Greenland. So who bought the higher of that earlier deal? Or was it win-win? It’s not apparent, however let’s begin with a couple of information:
1. In 1917, we paid $25 million in gold, which right now is price 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. Reviews recommend that the US was motivated by two components, a want for a spot to host navy bases to defend the Panama Canal, and a want to stop Germany from getting the islands.
For my part, these targets don’t justify spending a number of cash to purchase some tiny Caribbean islands. We might have used the Monroe Doctrine to stop Germany from taking the islands. Germany was tied down in a dropping battle in Europe, and in no place to problem US supremacy within the Western Hemisphere. And I don’t see the Virgin Islands enjoying an essential function in defending the canal.
In fact, that doesn’t imply it was deal for Denmark or a foul deal for the US. Even $3 billion is a modest sum for the US authorities, and the islands might have nice worth for different causes, equivalent 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 possibly a foul deal for the US (though I’m much less assured in that declare.)
Denmark already has an enormous cash pit in Greenland, which requires massive subsidies. The very last thing they want is one other cash pit within the Caribbean. I think that almost all Danes would like $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 right now? 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 enchantment. However the truth that we had been in a position to have a pleasant vacation within the BVI means that possession isn’t all that essential—what issues is the power to make use of a useful resource. Thus for my part the US could be higher off having a navy base in an unbiased Greenland, even perhaps negotiating unique rights to navy use of the island (to maintain out China and Russia), slightly than the burden of proudly owning the entire thing. So far as mineral assets, our corporations can negotiate agreements with a Greenland or Danish authorities consultant. What precisely does possession purchase you, aside 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 had been undesirable components of the US, then we’d need to do away with 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 beneath 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 intently built-in market. As a result of components such because the Jones Act, the US Virgin Islands are much less intently built-in into the US financial system, making it much less seemingly that they contribute to our general prosperity. We do assist the Virgin Islanders, however there are most likely extra utilitarian methods of serving to the individuals of the Caribbean—equivalent to smaller per individual subsidies to a bigger space.
One other argument is that it’s good to have some small idyllic Caribbean islands, to present America a higher degree 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 lovely Culebra:
