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 subject has been revived resulting from 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 present 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. Studies counsel that the US was motivated by two elements, a need for a spot to host navy bases to defend the Panama Canal, and a need to stop Germany from getting the islands.
For my part, these targets don’t justify spending plenty of cash to purchase some tiny Caribbean islands. We may have used the Monroe Doctrine to stop Germany from taking the islands. Germany was tied down in a dropping warfare 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 vital position in defending the canal. Â
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 might have nice worth for different causes, comparable to tourism. For a few years, it hosted a giant oil refinery. Nonetheless, I’m assured that it was an excellent deal for Denmark, and possibly a nasty deal for the US (though I’m much less assured in that declare.)
Denmark already has a giant 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 like $3 billion in gold to these faraway islands. Â
The US case is trickier. The unique justification definitely doesn’t make a lot sense. However what about at present? 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 vital—what issues is the power to make use of a useful resource. Thus in my opinion the US may be higher off having a navy base in an impartial 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 a giant 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 need to do away with many states. There are economies of scale in having a giant 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 permit for a intently built-in market. As a consequence of elements such because the Jones Act, the US Virgin Islands are much less intently built-in into the US financial system, making it much less probably 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—comparable 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 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.Â
Right here’s stunning Culebra:
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