Mises Wire

Hostages and the Right to Pay Ransom

Mises Daily Article Aug 25 2015

In late June of this year, President Obama signed an executive order and presidential directive clarifying the administration’s hostage policy. Afterward he gave a statement to the press, in which he condemned threats of prosecution against families trying to pay ransom: “the last thing we should ever do is add to a family’s pain with threats like that.”

This follows a review into the government’s treatment of overseas hostages, which found that the family of James Foley, the freelance journalist beheaded by ISIS in August 2014, had been told that they would be taken to court if they tried to negotiate with the terrorist group.

Following the review’s publication, the president was faced with three choices:

(1) A policy of no-concession, whereby the government not only refuses to pay ransom, but continues to threaten the prosecution of private citizens who negotiate;

(2) A policy of laissez-faire, whereby the government does nothing — it neither pays ransom, nor interferes with the negotiations of private citizens; and

(3) A policy of concession, whereby the government foots the ransom bill.

The president’s statement indicates his administration’s support for policy number 2. This article compares said policy — of laissez-faire —with its rivals, policy 1 and policy 3, both of which have recently found public proponents.

No-Concession: Coercing the Victims of Coercion

Advocates of no-concession (e.g., House Speaker John Boehner) argue that if families are allowed to bargain for the release of their loved ones, it will send a message to rogues overseas that American hostages fetch a price. The number of kidnappings will increase as a consequence.

This argument fails on its own terms. While it assumes hostage-takers are rational, self-interested actors who respond to incentives, it does not afford American travelers the same courtesy, instead assuming that they would not act any differently in light of the heightened threat to life and limb. In fact, if the risk of visiting lawless, unstable regions has increased appreciably, then marginal visitors (e.g., amateur journalists) can be expected to cancel their excursions; more serious trippers, on the other hand, will spend more on security provisions.

There are now two forces acting, each in the opposite direction: rogues are increasingly on the prowl for victims, but trippers are fewer in number and more vigilant. Whether the number of kidnappings should fall or rise with the payment of ransom by families, then, is a matter of some ambiguity.

But don’t ransom payments enable hostage-taking groups the material resources necessary to kidnap more frequently in the future? This objection is vulnerable to the same counterargument: as rogues militarize, some American visitors will armor up, while others will cancel their trips. Just as the lynx population cannot expand indefinitely at the expense of the snowshoe hare’s, the hostage-takers face constraints — as they become stronger and more numerous, they will find the pickings less plentiful, because their prey has in turn become stronger or has simply stayed at home.

In short, a policy of no-concession asks that we tolerate the addition of government coercion to an already coercive situation; that we strip hostages and their families of their best hope for conflict resolution. And yet, in return, it does not even give us reason to believe that the total number of kidnappings should certainly drop. A sorry trade-off indeed!

Uncle Sam’s Deep Pockets

There are currently over thirty American hostages held abroad, and, quite understandably, it is their families who form the dominant lobby for a policy of government-paid ransom. How might we expect a policy of concession, practiced in some form by every country but America and Britain, to affect the number of kidnappings?

First, we should note that governments do not face the same budget constraints as private individuals, meaning kidnappers could expect to extract a far higher ransom. And even if the government-paid ransom were capped, it would still stimulate kidnappings by rewarding rogues with income security. By contrast, under the policy of laissez-faire which Obama has endorsed, hostage-takers enjoy no such certainty — they may find, after outlawing themselves and expending labor in the process of kidnapping, that their victim hasn’t the means to pay.

Furthermore, under a policy of government-paid ransom, Americans could be expected to visit dangerous regions in greater numbers, and to become less vigilant while doing so. It would, of course, still be unpleasant to be kidnapped, but it would be made less onerous if one knew one’s house needn’t be re-mortgaged to buy freedom. That is, government guarantee of ransom creates moral hazard, partly removing the incentive to guard against risk. Other things being equal, a policy of concession stimulates the kidnapping industry, providing it with more opportunities and a stable, generous bounty per head.

However, all other things are not equal between countries: that is the reason why, in spite of its government’s consistent refusal to pay ransom, the US had the second highest number of citizens held hostage in 2013.1 America’s foreign policy has made political targets of its citizens, with many being kidnapped and killed to influence military decisions. That is not, however, to discount the importance of government ransom policy; the country that beat America in 2013 was France — the French have intervened in places such as Mali and Libya, while at the same time paying out more in ransoms than any other nation since 2008. And that shows in the hostage nationality data.


Allowing families to negotiate without fear of prosecution provides some hope for those seized overseas; at the same time, the moral hazard associated with government-paid ransom is avoided. In short, it is a humane and level-headed response to the lengthening list of American abductees.

However, until such a day as American spears are beat into pruning hooks, citizens will remain in disproportionate danger of abduction while abroad. John Boehner, in response to Obama’s recent change in hostage policy, lamented, “... you could be endangering more Americans here and overseas.” If, like Boehner, one is truly concerned with the safety of citizens at home and overseas, one must consider the crucial role played by American military intervention and political subversion in creating hatred for the homeland and her people.

  • 1This source reports that America had nine citizens in the hands of hostage-takers in 2013. However, the U.S. government reported in 2015 that over thirty Americans are currently being held. In the interim, IntelCenter reports that only two hostages were taken: 0 in 2013, 1 in 2014 and 1 so far in 2015 (data on yearly kidnappings here. This demonstrates the difficulty of finding consistent data on American hostage-takings. It is government policy not to publicize hostages, so as to deny their kidnappers limelight and bargaining power.
All Rights Reserved ©
Image Source: iStockphoto
What is the Mises Institute?

The Mises Institute is a non-profit organization that exists to promote teaching and research in the Austrian School of economics, individual freedom, honest history, and international peace, in the tradition of Ludwig von Mises and Murray N. Rothbard. 

Non-political, non-partisan, and non-PC, we advocate a radical shift in the intellectual climate, away from statism and toward a private property order. We believe that our foundational ideas are of permanent value, and oppose all efforts at compromise, sellout, and amalgamation of these ideas with fashionable political, cultural, and social doctrines inimical to their spirit.

Become a Member
Mises Institute