Kidnap: Inside the Ransom Business

by Anja Shortland

Kidnap for ransom is a lucrative but tricky business. Millions of people live, travel, and work in areas with significant kidnap risks, yet kidnaps of foreign workers, local VIPs, and tourists are surprisingly rare and the vast majority of abductions are peacefully resolved - often for remarkably low ransoms. In fact, the market for hostages is so well ordered that the crime is insurable. This is a ransoming a hostage is the world's most precarious trade. What would be the "right" price for your loved one - and can you avoid putting others at risk by paying it? What prevents criminals from maltreating hostages? How do you (safely) pay a ransom? And why would kidnappers release a potential future witness after receiving their money?

Inside the Ransom Business uncovers how a group of insurers at Lloyd's of London have solved these thorny problems for their customers. Based on interviews with industry insiders (from both sides), as well as hostage stakeholders, it uncovers an intricate and powerful private governance system ordering transactions between the legal and the criminal economies.

Genres: Crime, Nonfiction, Economics

262 pages, Hardcover

Published April 7, 2019

Reviews

[Harold · Rating 3 out of 5]

This is a poorly organized and written book on a fascinating subject, the economics of global kidnapping. What appears as a totally unregulated market, has a structure and guiding principles which are not apparent to the uninitiated. This is a basic course in how markets become established, and grow, even outside the normal governmental framework. This is capitalism at its most basic. It reads like a PhD thesis (as if I know), with well researched information, and many good insights, stuck together with awkward transitions and muddled passages. It is like a cookie with very good chocolate chips and too much bad dough. A lot of chewing but it occasionally pays off.

[Christine Woods · Rating 5 out of 5]

Admittedly parts of the book were beyond my very simplistic understanding of economic systems and game theory, and the utterly FASCINATING content is occasionally presented in a deceptively sterile manner. But. One of the most fascinating books I've read in ages. Highly, highly recommend. I didn't grasp what I was picking up when I started and I'm absolutely enthralled with Shortland's studies. Very dry, but absolutely worth the read on such a bizarre corner of the international extralegal market.

[Cold · Rating 5 out of 5]

Interesting anecdotes about the ransom industry framed nicely within institutional economics and polycentric governance. The argument begins with Protection Theory: those who control violence in an area will extract a protection fee one way or another. This cover states (taxes), corporations operating where the state monopoly on violence has broken down (via routes including corporate responsibility schemes), and kidnappings. The next section zeroes in on kidnapping and the role of insurance covering the negotiation process, fee inflation, the UN resolution on payments to terrorists etc. Then she turns to the question of how Lloyd's of London syndicates maintain discipline and achieve a social optimum in spite of formal rules (unlike the property rights required for Coase's Theorem).

I'll likely buy a few copies for brothers who'll enjoy the anecdotes, even if the social science might fly over their heads.

[Pete · Rating 5 out of 5]

Kidnap : Inside the Ransom Business (2019) by Anja Shortland is a fascinating investigation of how kidnapping works and how it can be constrained and the damage minimised.

There is an excellent episode of the Econtalk podcast where Shortland is interviewed about the book.

The book has four sections: Kidnap for Ransom as a Business, Why People are Kidnapped for Ransom, Making Kidnapping Insurable and When Kidnaps Go Wrong.

The modern business of kidnapping is described first. Thousands of people are kidnapped globally and in about nine out of ten kidnappings the victim survives and is returned. In about four out of five cases a ransom is paid. A very small proportion of kidnappings involve foreigners. The book disproportionately describes these. Partly because they are more likely to be involved in the insurance business for kidnapping that the book describes.

The fascinating way in which Lloyd’s provides insurance for people going to foreign countries is extensively described. It is, as Shortland says, an incredible example of relative order being made through economics. Loyds provides insurance and also requires that people going into dangerous areas take appropriate precautions. Should this go wrong the insurers then provide negotiators. These negotiators work hard to get people back without paying ransoms that are too high. They have a very high success rate.

The book delves into the business of Somali piracy in detail. The way in which syndicates are formed that capture ships and how ransoms are paid in fascinating. Hostage taking in Columbia is also described.

While criminal kidnapping can be constrained fairly well political kidnapping by terrorists is described as highly problematic and a practice that more often results in bad outcomes. Shortland does point out that the boundary between political and criminal kidnapping is often unclear.

The role of governments and the UN in making rules that appear to sound good but that have been counterproductive is very interesting. The Loyd’s model of trying to avoid getting kidnapped with expert security advice but then negotiating and paying ransoms with professional involvement is contrasted to the reality of panicked politicians massively overpaying.

Kidnap is a really fine book that gives an excellent description of how kidnapping can be managed and controlled by institutions likes Loyd’s.

[Oki · Rating 5 out of 5]

Kidnap is a fascinating book for anyone interested in any of the aspects of niche economics/ freakonomics, organized crime, the realities of life in the developing world, poverty, the diversity of social norms / mores, survivalists, the insurance industry, the intersection of the private and public sector in resolving disputes, and probably a few others that I'm forgetting. Anja Shortland argues convincingly that the existence of an orderly, legally operating private sector does not promote kidnapping and other similar enterprises, but rather helps fill a gap in security in developing parts of the world where the government is powerless to maintain certain levels of law and order that we take for granted in the developed world. Not only that, she explains why external governments and groups of governments (such as the UN) are actually usually counterproductive when it comes to regulating or even limiting such crime in foreign countries; and even tend to exacerbate the situation when they get involved. Coming from the naive position that almost all casual readers will find themselves in I find her arguments completely convincing. I would like to hear a critique of her thesis from someone knowledgeable about the topic, perhaps from an academic or government perspective, but a quick search of book reviews and reviews of the book doesn’t turn up any intelligent counter to her overall logic and conclusions. A tip for the reader before reading: make sure that you pay close attention to the author's definition of “protection” and “protector” in the first few chapters. The rest of the book will be very confusing if you do not completely understand that before you continue. I had to go back and reread that section when I got lost.

[Je Ha · Rating 5 out of 5]

Thrilling. Accessible. Insightful. I truly loved it.

Among the remarkable things was the author’s use of theory. Too much and a book gets bogged down in boring navel-gazing. Too little and a book feels like a string of accidents or anecdotes. Here, the insights on how governments/institutions/markets work is intelligently wedded to examples specific to her subject (the ransom business).

I had one complaint. She seemed committed to the argument that the Lloyd’s of London insurance professionals and the vendors they hired were a force for good. I’m guessing that there must be arguments suggesting the opposite. I can see the moral argument suggesting that paying money to rescue a loved one (or valued employee) warrants the harm caused by subsidizing terrorists/thugs and thereby financing their next kidnapping. But the other views deserved more discussion. Ms. Shortland seemed to reserve her criticism for those that paid above-market rates. I found little analysis of the argument that any payment in any amount is problematic.

I also wondered about the vendors employed by the insurance carriers. Her explanation that these people are doing the absolute best they can to save lives in impossible circumstances is perfectly plausible. I was curious to hear the other argument - that they are deeply invested in protecting their credibility/reputation with the bad guys and this creates conflicts of interests. Would a vendor destroy his credibility/livelihood if a carrier “double-crossed” some terrorists?

Everything I know about the subject I learned from Ms. Shorthand. I’m grateful for the education.

[Mary Whisner · Rating 4 out of 5]

The author, a professor of political economy, specializes in "tricky markets." And what is trickier than the market for hostages? Fascinating look at a complex structure--stakeholders, insurers, crisis response specialists, pirates, terrorists, organized crime.

[Dan Turkel · Rating 4 out of 5]

Quite dense and academic, lots of discussion of protector theory, mutually enforcing reputational contracts, unstable marketplaces, and polycentric private self-governance designs. Still quite fascinating and insightful.

[Garrick Infanger · Rating 3 out of 5]

Written more like an economics textbook—the concepts were fascinating if the storytelling was lacking. Looking at kidnapping through a lens of markets and motivations was great

[Josh Paul · Rating 5 out of 5]

I'm not totally sure how to rate a book like this. It's five stars in the sense that IF you want to read a book on the microeconomics of the kidnapping/ransom business, this is the one to read.

[Roberta Westwood · Rating 3 out of 5]

Intellectual

This book was interesting, but on the intellectual side. Lots of insightful examples, so ultimately worth a listen, but I tuned out plenty. Wasn’t fond of the narrator.