Leeson points out that pirates needed to create a legitimate authority amongst themselves because the cost of having unhappy crew members was high. Even one disgruntled pirate could desert and expose the ship to the [...]]]> I just finished a fun book that I want to recommend. It’s “The Invisible Hook: The Hidden Economics of Pirates” by Peter T. Leeson. The author explores the Golden Age of Piracy (circa 1720) and shows how pirates overcame collective action problems. While there are many parts that are of interest to lawyers (for example, the pirate use of trademarks — the Jolly Roger — and crude advertising to enhance their brand of terror and encourage capitulation), the issue that I want to focus on is pirate governance.

Leeson points out that pirates needed to create a legitimate authority amongst themselves because the cost of having unhappy crew members was high. Even one disgruntled pirate could desert and expose the ship to the authorities. (And the penalty for piracy was death). So how did pirate gangs handle this?

First, pirate ships wrote up constitutions (pirate codes) that set forth the rules governing the ship, including punishments for certain offenses and the distribution of loot. Moreover, these codes required unanimous approval to go into effect, which ensured that everyone on the crew “bought into” the rules.

Second, pirate crews elected their captains and officers by majority vote. And these officers could be deposed by a “no confidence” vote at any time. This was an effective enforcement mechanism for the rules set forth in the ship constitution.

Third, pirates divided power between the captain (who was in charge of the ship’s navigation and tactics in battle) and the quartermaster (who was in charge of the ship’s internal operations). This was a formal or constitutional separation that was designed to prevent captain abuse, which was a common problem on merchant ships, by creating checks and balances.

There are lots of other nuggets like this in Leeson’s book. You should check it out.

Since ancient times, pirates have been considered public enemies under customary international law. This meant that ships were free to use force on the high seas to repel or capture pirates. Indeed, the phrase “public enemies” is still used in maritime contracts as a justification for non-performance in the event of a pirate attack. National governments sometimes authorized privateers to attack enemy merchant ships with letters of marque (the Constitution empowers Congress to [...]]]> Piracy is back in the news, and it’s not the intellectual kind. This is great for admiralty professors, and so I thought I’d take advantage of this brief moment in the sun to talk about some general legal issues involving pirates before discussing the ones operating off of Somalia.

Since ancient times, pirates have been considered public enemies under customary international law. This meant that ships were free to use force on the high seas to repel or capture pirates. Indeed, the phrase “public enemies” is still used in maritime contracts as a justification for non-performance in the event of a pirate attack. National governments sometimes authorized privateers to attack enemy merchant ships with letters of marque (the Constitution empowers Congress to issue these in Article One, Section Eight) but these immunity grants from domestic piracy prosecution have not been issued for decades.

Because piracy was difficult to deter, the law turned to the proverbial carrot and stick. For most of our history, piracy against American vessels or committed by Americans was a capital crime. Indeed, a fascinating case that I use in class is United States v. Palmer, 16 U.S. (3 Wheat.) 610 (1818), in which Chief Justice Marshall and Justice Johnson debated whether the federal statute at the time made piracy without murder a capital offense. (This is a wonderful case for those of you who are interested in contrasting methods of statutory interpretation.) On the civil side, the law of “maintenance and cure” provided that a crew member who was disabled defending a ship against a pirate attack was entitled to a lifetime of medical care, whereas normally injured sailors were entitled to nothing after the voyage ended.

With respect to the pirates in Somalia, two points stand out. The first is that there is some ambiguity in international law about what nations can do to suppress piracy within territorial waters or on land. While a country that harbors pirates can be sanctioned (much like a country that hosts terrorists), it is not clear that a casus belli exists just because pirates are there. Granted, one could make a powerful argument (at least it sounds good to me) that Somalia has not had a government for nearly twenty years, and thus there is no sovereignty to violate. Nevertheless, this legal issue might explain the lack of action so far.

The other point is political. My sense is that the real reason that no action is being taken against the pirates is that they are, sad to say, the only alternative to the radical Islamist movement in Somalia. Indeed, Ethiopia invaded the country a few years ago to prevent the creation of an Islamist there, and the pirates took advantage of the resulting vacuum to establish themselves. Does anyone want to eliminate the pirates and see what would happen next? I doubt it.

New Jersey has threatened to pull state pension funds from Delaware banks. Delaware officials, meanwhile, talked about calling up its National Guard to guard its border. . . . [A] New Jersey legislator wondered aloud about recommissioning the battleship New Jersey, now a museum on the Camden waterfront, just in case.

The majority agreed . . . that New Jersey could not authorize activities “beyond the exercise of ordinary and usual riparian rights in the face of contrary [...]]]> The state of Delaware has just won a major dispute with New Jersey in the Supreme Court, over a vigorous dissent by Justice Scalia. The dispute concerned New Jersey’s plan to build a “huge gas-processing plant on the Jersey side of the Delaware River.” As the NYT reports,

New Jersey has threatened to pull state pension funds from Delaware banks. Delaware officials, meanwhile, talked about calling up its National Guard to guard its border. . . . [A] New Jersey legislator wondered aloud about recommissioning the battleship New Jersey, now a museum on the Camden waterfront, just in case.

The majority agreed . . . that New Jersey could not authorize activities “beyond the exercise of ordinary and usual riparian rights in the face of contrary regulation by Delaware.” Justice Antonin Scalia . . . professed to be flabbergasted by the majority’s reasoning. What was so “extraordinary” about a wharf to unload liquefied natural gas, he asked. “Would a pink wharf, or a zig-zagged wharf qualify? How about one for the transfer of “tofu and bean sprouts”?

It all reminds me of a classic 2002 article by Jon Chait charging Delaware with persistent disregard for other states’ interests. . . .

The practice of charging road tolls is an archaic holdover blighting much of the Northeast. But Delaware has taken it to a grotesque extreme. Whereas the I-95 tolls amount to less than five cents per mile in New Jersey and four cents per mile in Maryland, in Delaware they cost an exorbitant 18 cents per mile. Which isn’t surprising because, in a deeper sense, Delaware’s tolls epitomize the state’s entire ethos. The organizing principle of Delaware government is to subsidize its people at the rest of the country’s expense.

[But not] all the instruments of Delaware’s rapacity take the form of meddlesome, high-handed government exacting inflated costs on out-of-state visitors. When need be, the state’s avarice can also be fed by the exact opposite. An example of this latter technique is Delaware’s enticement of much of the banking industry to relocate within its borders. It did so in 1981 not only by offering special tax breaks–the standard formula that states and localities use to woo industry–but by eviscerating its usury laws, which limit the interest a bank can charge for loans or credit cards.

[S]till, perhaps the prime example of what Louis D. Brandeis called the regulatory “race to the bottom” is Delaware’s biggest scam: incorporation fees. It so happens that in excess of 300,000 corporations–including half of the Fortune 500– incorporate in wee Delaware. . . . Delaware propaganda suggests it is primarily a function of the state’s efficient bureaucracy and legal system, which includes a chancery court (a chamber specializing in business disputes). This is partly true, but it ignores the overriding factor:. . . its laws are specifically crafted to appeal to the interests of corporate executives.

All of this is deliberate state policy. A hundred years ago, in fact, the great trusts preferred to incorporate in New Jersey, not Delaware. It was only when New Jersey, under the progressive-era governorship of Woodrow Wilson, altered its laws to take account of interests (other than management) that corporations began to flee across the Delaware River.

Jon Chait’s laments will be no surprise to those who run the “race to the bottom” blog. (As Tim Glynn notes, “Delaware’s jurists are willing to go beyond the traditional norms of judicial behavior to advance Delaware’s interests.”) Nevertheless, I may just end up on Delaware’s side in this particular dispute. New Jersey’s proposal doesn’t exactly sound enviro-friendly–and as one who commutes through the chemical tanks of Kearny, NJ on a daily basis, I’m not exactly confident in the state’s environmental record.

O the posh posh traveling life, the traveling life for me

Pardon the dust of the upper crust – fetch us a cup of tea

Port out, starboard home, posh with a capital P. . .

Admittedly, for those of us crushed into coach, there was always a happy flipside to the narrative: the profligates up front were paying so much more for their seats, effectively subsidizing the rest of us.

But that subsidy effect has been on [...]]]> Travel has always served to remind us of the divisions our “classless society” tries so hard to downplay. Sam Walton may have driven an old truck, but you’d be hard-pressed to find most top executives or trust-funders flying in less-than-first-class digs. As the song in Chitty-Chitty Bang-Bang put it,

O the posh posh traveling life, the traveling life for me

Pardon the dust of the upper crust – fetch us a cup of tea

Port out, starboard home, posh with a capital P. . .

Admittedly, for those of us crushed into coach, there was always a happy flipside to the narrative: the profligates up front were paying so much more for their seats, effectively subsidizing the rest of us.

But that subsidy effect has been on the wane in recent years. And now wealthy fliers have found a new way to effectively assure that the rest of us are subsidizing them:

Corporate jets pay a fraction of the taxes and fees that commercial airliners do. The F.A.A. estimates that private planes, which include both corporate jets and weekend fliers, account for 16 percent of the air traffic control system’s overhead but contribute only 3 percent of the fees earmarked to run the system.

***

The Air Transport Association has . . . created a Web-based ad campaign featuring a fictional traveler, Edna, complaining about the fee disparity while the computer screen displays waves of corporate jets filling the skies before and after sporting events like the Kentucky Derby and the Masters golf tournament.

It’s enough to wilt the mint in your julep. As the campy YouTube ad sloganeers, travelers like “wearing big wigs, not subsidizing them!” Edna (pictured above) wonders “Why should the rest of us pay ten times more using the same services?”

Fortunately, the FAA has heard her pain, and is planning on “sharply increasing the fuel tax for private jets and also hitting corporate fliers with extra charges to land at any of the country’s 30 most congested airports.”