Thursday, September 17, 2015

An economic case against the Bermuda Triangle

Had the TV on the other night (just to have it on), tuned to one of those secondary cable channels. They were running those "Ancient Aliens" shows. One of the episodes had to do with the Dragon's Triangle (Devil's Sea) which is the Pacific Ocean's equivalent of our Bermuda Triangle. One of the "experts" the show referenced was the author of a book about both places and the show repeatedly talked about all of the unexplained ship and plane disappearances that have occurred in both of those areas. That hundreds of ships and planes have been lost under "unexplainable" circumstances. About how compasses go "crazy" in these areas, and how they are the locations of numerous unexplainable phenomenon.

The case against these two areas being anything other than standard, normal patches of ocean can be made with two simple words: insurance premiums.

If either of these areas really was a location where there was a statistically significant greater loss of ships (with cargo) and airplanes, the bean counters that work for the insurance companies that insure cargo ships and planes (and their cargo) against loss would surely be aware of it. If there was a statistically significant greater risk of a vessel or plane (with cargo and crew) that transverse these areas "disappearing", the insurance premiums for vessels that travel those areas would be significantly higher than for those that avoid these areas. Cargo ships are quite expensive, the cargo they carry can be worth millions and millions of dollars. The shipping companies value their ships, their crews, their cargo, their reputations, and their profits enough that they would surely avoid these areas in an effort to save all of these things that they value. Reacting to these adverse incentives, the number of vessels traveling through these areas would greatly diminish in a rather short amount of time, reducing the "reported" losses until those losses returned to a more normal level and traffic would likely not return to these areas until the costs of using those routes (to include insurance premiums) returned to a more normal level.

What about the military? The military values their equipment and personnel at least as much as commercial businesses do and their equipment can not only be more expensive than commercial vessels they also contain more of and more valuable (as in expensive to train and maintain) crew members. If the military were to suffer increased losses of equipment and personnel in these waters, you can rest assured that either a) they would issue warnings, restricting traffic and travel in these areas and/or b) undertake extensive investigations to determine the cause of these increases in losses. Neither of these two events have taken place. There are no restrictions in traffic through these areas and there are not "endless" stories in the paper about lost military vessels and crews that defy explanation. With the adversarial press we have in the US (as well as England), if there was malfeasance of this sort going on, we would hear about it.

We don't even need to get into commercial air traffic (i.e. passenger airplanes / jet planes). Delta, USAir, Spirit, Jet Blue, etc. don't avoid these areas and overfly them daily. If there were an increased possibility of plane and passenger loss with the accompanying replacement costs and lawsuits, these would most definitely be "no fly" zones.

Economics doesn't lie...

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