Is Greenland for Sale?

Published October 9, 2019

President Trump recently suggested that the United States buy Greenland.  Denmark emphasized that the world’s largest island is not for sale.  Regardless of whether buying Greenland offers value, Mr. Trump’s proposal represents progress in international relations and raises interesting questions regarding property and markets.

This is not the first time we have inquired whether Denmark might sell Greenland; President Harry Truman asked in 1946.  Land purchases clearly have precedent in American history: the Louisiana Purchase from France in 1803, the Alaska Purchase from Russia in 1867, and the Gadsden Purchase from Mexico in 1854.

Some commentators who engaged with President Trump’s proposal raised the question of an appropriate sale price.  We would be purchasing the sovereignty of the territory, not each piece of property.  Greenland would become a U.S. territory and the current property owners (presumably) could maintain ownership.  (However, land claims under Mexican law in parts of Texas were ignored after Texas joined the Union.)

Throughout human history, kings, emperors and nations have taken land via military conquest, with payment in blood.  America has also expanded via war, acquiring the future states of California, Arizona, Nevada, Utah, and parts of Colorado and New Mexico from Mexico and Puerto Rico from Spain.  The American Revolution resulted in our first land acquisition, independence from England.

Wars have frequently redrawn the map of Europe.  Germany seized the French provinces of Alsace and Lorraine after the Franco-Prussian War.  France’s desire to reclaim these provinces helped ignite World War I.

Economic freedom begins with secure property rights.  If you own something, others can only acquire with your voluntary consent.  This produces the buying and selling of markets.  Nations should deal with each other similarly, as opposed to through force and conquest.

Unfortunately, individuals and nations have often tried taking territory and other possessions by force (or by enslaving others).  Might makes right has too often been the guiding principle.

Underestimation and discounting of the costs of war have encouraged nations to pursue conquest.  Psychologists have documented the pervasive nature of overconfidence bias.  The combatants in wars have often expected quick and easy victory, making conquest appear inexpensive.  And the leaders who decide on war rarely do the fighting and dying.

Psychology also complicates the selling of land.  People form sentimental attachments to family homes or farms and possess patriotic and nationalistic feelings.  Sentimental attachments likely contribute to the use of eminent domain by governments to force sales.  And Greenlanders do not want to lose their national identity as part of Denmark.

Selling land I think also touches fundamental views about how to live life.  For thousands of years, people, tribes and nations have tried forcibly to take others’ land and possessions.  People have long had to protect their possessions.  We are likely hard-wired to stand our ground and protect what we own.  And we also may perceive our self-interest as requiring fighting to protect what is ours.

Market exchange has arisen only recently in human history.  A real estate developer’s offer to buy our land is not the same as a bully’s or bandit’s threats.  Yet the deep connection many people feel to their land may make the offer sound like a threat.  Sentimental attachments and perceived self-interest combine to make the price of purchasing land very high, when people are even willing to sell.  People who want to use land for valuable purposes may rationalize using force to take it.  Today this primarily occurs through eminent domain, which is far less disruptive for society than bloodshed.

Economic freedom requires secure ownership.  Land owners can rightfully refuse even a very generous offer, and for any reason.  Yet markets require that owners willingly sell land.  That the world’s most powerful nation considers buying instead of conquering a territory is a testament to human progress.  President Trump’s offer for Greenland may not be generous enough, but it certainly is not preposterous.