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 difficulty has been revived as a consequence of dialogue concerning the acquisition of Greenland. So who received 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 immediately 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 counsel that the US was motivated by two components, a need for a spot to host navy 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 shedding struggle in Europe, and in no place to problem US supremacy within the Western Hemisphere. And I don’t see the Virgin Islands enjoying an necessary function in defending the canal.
In fact, that doesn’t imply it was a great 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, resembling 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 massive subsidies. The very last thing they want is one other cash pit within the Caribbean. I believe that the majority 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 immediately? 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 had been in a position to have a pleasant vacation within the BVI means that possession isn’t all that necessary—what issues is the power to make use of a useful resource. Thus for my part the US is perhaps higher off having a navy base in an unbiased Greenland, maybe even negotiating unique rights to navy use of the island (to maintain out China and Russia), quite 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, 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 web fiscal burden had 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 believe it applies extra the contiguous states within the decrease 48, the place low transport prices permit for a carefully built-in market. As a result of components such because the Jones Act, the US Virgin Islands are much less carefully built-in into the US economic system, making it much less possible that they contribute to our total prosperity. We do assist the Virgin Islanders, however there are in all probability extra utilitarian methods of serving to the folks of the Caribbean—resembling 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 present America a larger degree of geographic variety. However we have already got close by Vieques and Culebra, in addition to the a lot bigger Puerto Rico.
Right here’s lovely Culebra: