Economics of Blackwater

Tyler Cowen's latest NYT column is out. It's about Blackwater as a contractor of the United States. This month's edition of his column is not as insightful as some of the past (his on inequality is superb). The key passage is (probably) this one:

Among many Iraqis, Blackwater and other companies have a reputation for getting the job done without much caring about Iraqis who get in the way. But part of the problem may stem from economic incentives. If Blackwater is assigned to protect a top American official, who is later assassinated, Blackwater may lose future business. A private contractor doesn’t have a financial incentive to protect Iraqi citizens, who are not paying customers. Ultimately, this reflects the priorities of the United States military itself. American casualties are carefully recorded and memorialized, but there is no count of Iraqi civilian deaths.

Read the whole thing, in particular if you're with a weak economics background.