C. Paul Hallwood

Realignment expectations and the US dollar, 1890-1897: Was there a 'Peso problem'?

We investigate dollar–sterling exchange rate expectations during the period 1890–1908. We show that the dollar faced a ‘Peso problem’ in that for much of the period financial markets expected it to depreciate against sterling, but this never in fact happened – i.e. expectations were persistently biased. Drawing on the economic history of the period we identify 11 ‘events’ which probably gave rise to realignment expectations. Once the dollars adherence to the gold standard was settled as a political matter in the 1896 Presidential Election expectations of dollar realignment abruptly subsided and United States interest rates fell relative to British rates.

A market in action: Fuzzy information and trade-offs between operating rules in the invited tender-bid procurement auction

The invited tender-bid procurement auction used by oil companies to procure intermediate inputs into oil gathering has to find solutions to several problems. Assesses the nature of these problems and the peculiarities of the operating rules designed to solve them. Develops an economic rationale for the rules, and discusses various advantages and disadvantages of the price-discovery arrangement. Utilizes the transaction-cost paradigm, some standard results from auction theory, and the concept of fuzzy information.

Perceptions of Market Efficacy, Transaction Costs, and Vertical Disintegration in Offshore Oil Gathering

Sample-survey information is used to assess aspects of the predictive competence of the transaction-cost paradigm. The extent of vertical disintegration by oil companies in offshore oil gathering is shown to be consistent with the revealed efficacy of the markets in intermediate goods and services. Market efficacy is assessed in relation to oil company perceptions of and other information relating to these markets.

The Political Economy of Financing Scottish Government

Can the UK survive widespread dissatisfaction in both Scotland and England with the financing of public spending by Scotland’s parliament? This timely book explains how fiscal autonomy could raise economic growth and efficiency in Scotland – to the benefit of both Scotland and the rest of the United Kingdom. The authors discuss how other reform proposals – which amount to cutting Scotland’s block grant – would fail as they would not be seen in Scotland as legitimate. They conclude that fiscal autonomy would be accepted as it reduces Scotland’s democratic deficit in public spending, and would go a long way toward reducing vertical and horizontal imbalances in the UK.

A Restatement of the Case for Scottish Fiscal Autonomy

In this paper, we rebut the case that Ashcroft, Christie and Swales [ACS] (2006) make in favour of the status quo fiscal settlement in Scotland that stems from the Scotland Act 1998. This Act in creating the Scottish Parliament and Executive effectively separated public spending by the Scottish government from the need to raise taxes to finance it; rather, financing comes from Westminster through the Barnett formula. We do not think that these arrangements provide a stable political solution in the UK, as is evidenced by the so-called West Lothian question - a matter that may be becoming of greater concern in England than hitherto. Scotland, therefore, should be forewarned that even if it does not move from the status quo, movement might anyway be forced on it.

Piracy in the Golden Age, 1690–1730: Lessons for Today

This chapter reviews the history of the so-called Golden Age of piracy, which lasted from ca. 1690 to 1730 and occurred primarily in the North Atlantic Ocean and Caribbean Seas. Many pirates during this time had previously been commissioned as privateers or agents of national governments charged with attacking and plundering the merchant ships of enemy countries, thereby blurring the line between piracy and warfare. When hostilities ceased, however, many privateers continued their activities as outright pirates. An important lesson from the Golden Age is that national enforcement efforts seem to have been quite effective in ending the threat. We contend that this is because international trade at the time was monopolized by England and France, and so enforcement had more of the character of a private good than a public good. Also, accepted law enforcement practices at the time allowed harsher and speedier punishment of pirates as compared to today.

Conclusion: The Mystery of International Legal Obligation

This chapter investigates the nature of International Public Law (IPL) and asks why it continues to permit certain types of lawless behavior like maritime piracy to persist. The proposed answer is that IPL is to a large extent voluntary in the sense that countries can choose whether or not to enforce it, and there is little consequence of choosing not to do so. The extent to which some enforcement does occur is because countries like the United States have a sufficiently large stake in maintaining order that they will unilaterally expend the necessary resources, while other countries will be content to free-ride on those efforts. At present, this appears to be the case with regard to the control of maritime piracy.

Reform Proposals: Part 1, Apply the SUA Convention to Piracy

This chapter examines the proposed application of the prevailing international law regarding maritime terrorism, as embodied in the SUA Convention, to maritime piracy. The main advantage of this Convention over the Convention on the Law of the Sea, which is the basis in international law for prosecuting acts of piracy, is that the SUA Convention contains features that would substantially increase international enforcement efforts. Among other things, these include a requirement for signatory nations to extradite and prosecute offenders, something that the Law of the Sea does not currently require. It appears that the main impediment to the application of the SUA Convention to piracy is its stated intent of addressing terrorism specifically, which apparently is perceived as a more serious threat than piracy.

Somali Piracy: For the Money or for the Honor?

This chapter examines the motivations of Somali pirates using an economic model of job selection. We specifically examine the question of whether the main motivation of modern-day pirates is specifically monetary gain or the larger goal of protecting Somalia’s national interests from over-fishing and other unfair practices by foreign governments, as some have asserted. Simple calculations suggest that monetary gains constitute sufficient motivation for most Somalis, given the high return piracy promises relative to legal employment, coupled with the low expected cost of sanctions.

Reform Proposals: Part 2, Apply Civil Aviation Laws to Piracy and Use the International Criminal Court to Try Pirates

This chapter discusses two further reform proposals: first, to apply the principles embodied in international laws regarding ‘air-terrorism’ to the problem of piracy, and second, to use the International Criminal Court (ICC) to try pirates. As with the application of the SUA Convention, application of air-terrorism laws to piracy would substantially improve enforcement efforts compared to the Law of the Sea. Likewise, use of the ICC to try pirates, it is argued, would reduce the incentives of nations that apprehend pirates to release them in anticipation of the high cost of prosecuting them at home. The reason is that the cost of prosecuting pirates in the ICC could more easily be shared by all countries, thereby reducing the incentives for ‘capture and release.’