Who commands the strait commands the trade of nations

The BBC reports that the United States has launched a third consecutive night of strikes on Iran, while the UAE has condemned what it calls a 'brazen' Iranian attack on tankers in the region. The Hill adds that President Trump has announced a twenty-percent charge as part of a threatened naval blockade of the Strait of Hormuz. I did not live to see this strait, but I knew its principle well enough: every chokepoint on a trade route is a private toll booth erected on a public highway, and whoever holds it can tax every nation on earth without their consent.

Consider who actually pays such a tax. It is not the admiral, nor the president, nor the supreme leader. It is the woman in Seoul heating her home, the smallholder in West Africa whose fertilizer arrives by ship, the factory worker in Birmingham whose inputs travel by tanker. Mercantile restrictions — whether they arrive as a chartered monopoly, a corn law, or a naval blockade — always impose their heaviest cost on those who had no voice in imposing them. This is the first truth of political economy, and no quantity of flags or slogans alters it.

I wrote, in the Wealth of Nations, that the monopoly of the colony trade had raised the rate of profit in the trades it favoured and turned capital from every other channel. A blockade of the Strait of Hormuz is a monopoly of the most violent kind — it does not merely favour one set of merchants over another, it threatens to withdraw from the world economy the very medium through which exchange is conducted. The inference I draw, though I cannot claim to have witnessed these events, is that the cost in disrupted supply chains, elevated energy prices, and suppressed trade will fall most heavily on nations and peoples with the least capacity to absorb it.

There is also the question of the tanker itself — that instrument of peaceful commerce. The BBC notes that the UAE has condemned attacks on tankers as 'brazen.' I would go further: a ship carrying oil under a peaceful flag is the embodiment of the division of labor extended across nations. One country extracts, another refines, a third manufactures, a fourth consumes; and the whole arrangement, when it functions, makes every party richer than they would be in isolation. To attack that vessel is not merely an act of war; it is an act against the principle of exchange itself.

What institution, then, is adequate to discipline such a conflict? Here I must speak with the humility appropriate to one who did not design the instruments of modern diplomacy. But the institutional question is the right one. In my own time, I argued that defense was the first duty of the sovereign — not as an end in itself, but as the precondition for the rule of law that makes honest exchange possible. The sea-lane is a public good in the most literal sense: no single merchant can protect it, and if it is closed, none can trade. The framework that keeps it open — treaty, international law, multilateral security — is worth more to commerce than any tariff schedule, and its collapse would cost more than any trade war.

I am often quoted by those who wish to be free of every public institution. I ask them to read me more carefully. The invisible hand operates within a framework of law, contract, and security. Remove that framework — set fire to the strait — and you have not freed the market. You have destroyed the precondition for its existence.