DeepSummary
The episode revolves around a paper by economists Fernando Artiaga, Desiree Desierto, and Mark Koyama, which investigates a historical mystery: why did one in five Spanish ships fail to make the voyage from Manila to Acapulco in the 16th century, a much higher rate than other routes at the time. The economists explored various potential causes like piracy, weather, and inexperienced captains, but the main culprit seemed to be corruption and rent-seeking behavior.
Spanish merchants desperately wanted to get their valuable cargo like silks and porcelain onto the limited number of ships, so they bribed captains to overload the ships and delay departure past the safe window, sailing into the monsoon season. While each party - the crown, merchants, and captains - had incentives to avoid shipwrecks, their individual risk calculations led to decisions that increased the overall risk.
The economists argue this case study highlights how corruption and misaligned incentives can lead to inefficient and damaging outcomes, contrary to models suggesting bribery efficiently allocates goods to those who value them most. The unique data sources used, like old ship logs and coral reef data, also showcase creative approaches in economic history research.
Key Episodes Takeaways
- A system of misaligned incentives and rent-seeking behavior led to an unusually high rate of Spanish shipwrecks on the Manila-Acapulco route in the 16th century.
- Protectionist trade policies restricting ships created artificial scarcity that incentivized corruption as merchants desperately sought cargo space.
- Individual rational self-interest of merchants, captains, and the crown undermined their collective interest in avoiding shipwrecks.
- Creative use of unconventional data sources like old ship logs enabled economic historians to investigate this centuries-old mystery.
- The case contradicts economic models suggesting bribery efficiently allocates scarce resources to those valuing them most.
- Seemingly small changes in incentives and regulation can have large unintended consequences when individual interests diverge.
- Economic history provides insight into unintended effects of policies by analyzing historic data through an economic lens.
- This illustrates the perils of generalizing economic theories without accounting for unique contexts and externalities.
Top Episodes Quotes
- “So, as you'll know from reading of the paper, like, 20%. 20% of voyages basically fail again.“ by Mark Koyama
- “They're shipwrecked, but what that means is they're lost at sea, or they hit some rocks off the coast of the Philippines, or they're so damaged, they've got.“ by Mark Koyama
- “Actually, it's like just one voyage. You can retire on it.“ by Desiree Desierto
- “So the merchants on that side want to restrict that. So a lot of lobbying, lobbying of.“ by Desiree Desierto
- “And the captain said, okay, give me more money. I will load more of your cargo.“ by Fernando Artiaga
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Episode Information
Planet Money
NPR
1/5/24
For, you see, one in five of the ships leaving from the port of Manila didn't make it to Acapulco. It's a shipwrecking rate much higher than rates for other routes of the time. And the mystery of the serial shipwrecking Spanish ships remains unsolved, until today.
Everyone involved with these Spanish ships were aligned in a goal: Don't wreck the Spanish ships. And yet, wreck they did. Three economists took a look at the incentives for profit and risk at the time, and found the key to unlocking this ancient booty (of knowledge).
Our show today was produced by James Sneed, edited by Jess Jiang, fact-checked by Sierra Juarez, and engineered by Cena Loffredo. Alex Goldmark is Planet Money's executive producer.
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