The cruise industry demonstrates much of what works well in the industrial economy. The debacle of the Costa Concordia – 11 people confirmed dead and at least 23 missing, and a financial loss of as much as $1 billion – shows some of the ways that the economy can malfunction.
The loss of life from the accident off the Italian coast is tragic, and the loss of money is remarkably large for a business that has global annual revenues of around $34 billion, according to Cruise Market Watch. That is not a big business by global standards; airline revenues, as calculated by the International Air Transport Association, are 17 times larger.
Still, the cruise trade is large and familiar enough to provide an illuminating microcosm of the modern economy at work.
The industry started with a little entrepreneurial imagination – Ted Arison, who founded Concordia’s owner, Carnival Corporation, in 1972, believed that there was a mass market for cruises. He was right about this little corner of the consumer culture – cruises are now a popular luxury. Affluence is what now animates the industry – cruise customers must have ample amounts of both money and leisure time.
But the idea would not have borne fruit without technological ingenuity – ever larger ships with ever more luxurious features for customers. Investors willing to take risks were also necessary: Carnival and its rivals had to raise money to build ships that did not have a guaranteed market.