Coasean kidnappings and the bargaining range

One of the highest ransoms ever paid — US $60 million for the two Born brothers in Argentina in 1975 — was negotiated by one of the captives himself: Jorge Born.  As a company insider, he knew how much money could be raised, but it still took seven months before his captors were convinced that they had truly squeezed him dry.  When it finally arrived, the father felt he had no option but to accede to the memorandum signed by his son and his kidnappers.  So negotiators work extremely hard to avoid parallel negotiations and bat away unhelpful interventions from the hostage.  It is not surprising that some victims despair.

That is from the new and interesting Kidnap: Inside the Ransom Business, by Anja Shortland.


Last time we had a thread here about blackmail there was a surprising number of people that were pro-blackmail. This is contra to Bezos who was obviously against it. This seriously made me reconsider libertarianism. Surprise me again. Should kidnapping be legal?

One scenario where kidnapping should be legal is if you have a lot exogenously generated, inelastic hostage situations. If policy makes it really hard for ransom negotiators, then abductors will be quicker just to murder their prisoners.

From a utilitarian perspective, on net you have to balance out the deterrent effect on abduction in the first place with the lives saved after the abduction has already occurred.

In our day and age, I'd say the utilitarian balance leans against legalizing kidnapping for ransom. However in something like medieval feudal Europe the calculus may be different. They pretty much had a constant background amount of low-level warfare. A lot of people were captured in battle all the time, and the process of ransoming prisoners was quite accepted and on net saved a lot of bloodshed.

Maybe we could revive the weregild since incarceration is the worst.

The main argument for legal blackmail is that you're already allowed to share information freely. You're not allowed to apprehend people against their will, so the comparison falls flat.

Should kidnapping be legal? read the below. If this is not in TC's book, he should toss the book. - RL

What is even more astounding is that of the 18 highest ransoms paid to kidnappers throughout history, half of them were paid for individuals kidnapped in Argentina! [SHOWING TO ME THAT IN ARGENTINA THEY DON'T ENFORCE ANTI-KIDNAPPING LAWS. THE SAME IS TRUE IN GREECE, BECAUSE UNDER GREEK LAW IF THE VICTIM IS NOT HARMED AND ANY RANSOM MONEY IS RETURNED, EVEN AFTER ARREST, THERE'S NO CRIME.-rl]

In a bizarre twist, Jorge Born later formed a business partnership with one of his former kidnappers, Montonero strategist Rodolfo Galimberti.

The kidnappers are usually less wealthy than the kidnapped. Should it be illegal to imprison, or threaten to imprison, someone unless that person pays a ransom or tax that can be redistributed to someone else? Isn't that what welfare states do? Note: this is not an argument to legalize kidnapping.

Why is kidnapping so rare in the modern United States? My vague recollection is that it was in the news a fair amount when I was a kid (e.g., the Getty kidnapping), but it seems quite unusual these days.

To be precise, kidnappings in custody disputes and for sex crimes (or other motivations in which the kidnapper wants a person around) remain a problem in the U.S. But unlike in some Latin American countries, kidnapping for ransom is no longer in the news here in the U.S. For example, in Wikipedia's list of noteworthy kidnappings, the last one in which the word "ransom" appears is 1991.

In the mid-20th century, famous families like Lindbergh, Hearst, and Getty suffered kidnappings.

In contrast, celebrity families in Latin America still get kidnapped. For example, last year everybody was praising Benicio del Toro's vaguely anti-Trump Oscar speech about how bad borders are. But I pointed out that Del Toro didn't set foot within the borders of Mexico for 17 years after his father had been kidnapped and he borrowed a million dollars from James Cameron to pay the ransom. Del Toro moved to the lowest crime neighborhood in Southern California.

Interestingly, Del Toro's dad got rich from winning the Mexican national lottery. Unlike most lottery winners, Del Toro Sr. then used his fortune to make a bigger fortune in business.

All truth, but I think it's another del Toro: Guillermo.

Private security cameras are omnipresent in urbanized zones. That makes successful money drops much more challenging than was once the case.

Even with the technology available in 1932, they caught the Lindbergh kidnapper dead to rights. The serial numbers on the ransom cash were recorded.

Good question. Maybe it's harder to move large volumes of money between financial institutions and without it being tracked?

The Lindbergh kidnapper and most of the Hearst kidnappers went to their graves at a young age, which might have some deterrent effect. Getty's kidnappers skated because they were Mafia. The infrastructure of ransom kidnapping seems to suggest that it thrives when the state fails to enforce basic law and order -- Mexico, Italy, 70s California.

Most of the Hearst kidnappers went to their graves. It's amazing how inept and lenient were California authorities in dealing with Emily Harris. In a jurisdiction which means business about law-and-order, she'd have been executed no later than 1981.

Is this where the Coase theorem finally unravels?

60 million......from 1975, that's a lot.

I remember another famous case. Kidnappings are always about money. But in this case it was never clear if the kidnapping was about the ransom money or the equity to lead a bank.

On 1994 Alfredo Harp Helú was kidnapped. At the time he was the president and largest equity owner of Banamex, the largest Mexican bank at the time. The bank was acquired by Citi some years later and yielded a cool 1 billion USD to Mr. Harp. Mr. Harp is also a cousin of Carlos Slim Helú.

The ransom negotiation was lead by the board of directors of the bank and supported by an insurance company. The case became a thing of public interest when letters from the captive banker where leaked to the press by the kidnappers.

The letters from the captive had a transparent meaning which was a call to the bank board of directors to ignore the counseling the of the insurance company . The captive requested to the negotiators to forget about ransom insurance and just pay from his own money.

Additionally, the letters had some emotional phrases such as "I prefer one day of freedom over all the money in the world." Phrases like this lead to great speculation at the time because it was widely know there were power struggles in the largest Mexican bank at the time. Somebody else wanted to be president of the bank, take different decisions, etc. So, was it a transparent display of distress (please help me!), or some double entendre conceding he declined his bank director position to someone else?

Could kidnappings be used to solve the kind of disputes you solve at a board of directors' meeting? The question remains unanswered.

The Slim Helu extended is pretty interesting, although you wouldn't know from the American press. Carlos Slim bailed out the New York Times from financial ruin in 2009, after which he was treated in the American media as a respectable but rather dull figure. I didn't realize until years later that his children are surnamed Slim Gemayel and that Slim's late wife was a member of Lebanon's most notorious Fascist warlord dynasty, the Gemayels. When Carlos Slim's cousin-in-law Bashir Gemayel, the President-Elect of Lebanon, was blown up in 1982 during the Israeli invasion of Lebanon, setting off a horrific massacre of Palestinians by his Phalangist followers, the New York Times' obituary was headlined: "Bashir Gemayel: He Lived by the Sword."

But all that fun stuff was memoryholed after Carlos Slim saved the NYT.

The father should have publicly disinherited his sons, after saying he had discovered they were stealing from him.

Doesn't an estate tax have the same effect?

As in other cases, I am puzzled by the description of this bargaining over ransoms as "Coasean."

Is there something I'm missing, or is this just a tic?

Ransom kidnaps are down because there are no longer enough public phone booths where the kidnapper can anonymously hiss payment directions through a handkerchief or distortion filter -- and then mock the cops who are racing in vain to set up a trace.

At any rate, it's good to see that someone has finally written a how-to manual on the subject.

This is hard to measure, but before cryptocurrency was valuable, there was significant physical risk in the payoff-and-return half of the crime, and if you're going to to do that part, on the margin, maybe the abduction-and-maintenance half of the crime isn't so much more risky.

But now the risk of getting caught or killed while getting paid is much less.

So are would-be ransom kidnappers doing simple extortion instead?

Kidnapping for ransom in Brazil ( what the Brazilians called "sequestration"), was in past times all too common (the famous MMA fighter Vitor Belfort's sister was a tragic victim), until Captain Bolsonaro made it unmistakably clear that it was not "OK" . Criminals are now required to obtain honest employment and obey all laws else be subject to traditional Brazilian summary street execution. The middle classes and most right-thinking Brazilians endorse his necessary and just measures.

Trump's America has much to learn from our friend to the South.

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