The Eric Tetralogy: 3: The Firehose Up

A subsaga of FTC the Fairy Tale of Capitalism

Our planet is much like the Fairy Tale of Capitalism, but not quite.

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Oresund Map (1888, Public Domain)
In our last episode we envisioned Eric’s future Monop emerging from a future war. We saw the Boston Tea Party disrupt the British East India Company tea Monop. We saw Rick Santelli’s modern Tea Party align Workers with the Aristocrats and their Staffs to influence government. The Workers brought votes, and the Staffs brought intellectual charm. The Tea Party gained political power via seats in the legislature. The Staffs used that power to minimize government interference with the income source for their patron Aristocrats, the Firehose Up.   

As you probably know, the Fairy Tale of Capitalism sometimes uses one term for two meanings. One meaning of "Firehose Up" refers to the more or less complex system of an Aristocratic household’s incomes from Capital (owned properties and wealth), Supercompensation, and all other income. The household employs a Staff, also known as the “family office”, of accountants, investment advisors, business managers, lawyers, portfolio managers, and lobbyists (or contracts with providers of some of these services) to assure the assets are well managed, with optimal accounting and legal practices applied to the Capital and Labor income of the household. Thus the Staff assures they can give quarterly reports of increasing after-tax income from the household’s well-maintained Firehose Up. King Eric’s Firehose Up evolved from ancient customs maintaining the King’s property and incomes by the might of the King’s ships, soldiers and police. With centuries of improvements, the modern Firehose Up became a system of complex conveyances transporting portions of GDP and the greater part of GDP growth to the Aristocrat, with legal authority maintained by the might of the government’s ships, soldiers and police.

The other meaning of "Firehose Up" refers to all Aristocratic income sources as enabled and optimized by law, regulation, public policy, custom, convention and tradition.

In generations preceding Margaret and Eric, after disappointing results from war, hard times befell the monarchy of Denmark. To make ends meet, the King pawned southern counties. After a large part of these debts were paid, Margaret presented the pawn tickets. She wanted the lands back. Many kings and Aristocrats who loaned money to Denmark conveniently forgot the pawns and repayments. They said “What collateral? Those weren’t loans. Those were sales!”  Via many meetings, letters and conference calls, she reacquired some lands, but negotiations continued tediously.

On coming to the age of majority, the handsome, strong, daring and impetuous Eric of Pomerania lept to the saddle without touching the stirrups, like a western movie white-hat pursuing the bad guys. He declared diplomacy had produced little, and something about “make Denmark great again”. Then he went to war to get the lands back. The wars drained the treasury, weakened the military, and lost a little more land rather than reclaiming it.

King Eric retreated to long, sulking strolls on the cold, foggy beaches of northern Denmark. One annoyingly sunny day, he saw the bluffs of Sweden on the far side of the Oresund and a merchant ship moving through the strait, having no other way to navigate from the Baltic to Holland and Britain. For centuries, pirates had waylaid vessels in this strait. In a flash of insight, King Eric realized he could chase out the pirate riff-raff, and make the strait safe, and make the Oresund a valuable thing no one else had, and collect Monop rent! “Set up a toll booth!” he ordered an officer.

Eric levied a clever toll. He required masters to stop their vessels at Helsingor and declare the value of the hull and cargo to the officer there. Eric’s officer determined the Sound Dues rate depending on origin and destination of the voyage, the nature of the cargo, applicable treaties, bribes and other considerations, but in any case a small fraction, like 0.5% or 1%. Multiplying the rate by the master’s declared value gave the amount of Sound Dues the master had to pay to transit the Oresund. But there was a catch. The officer could choose to buy the hull and cargo at the declared value. If master declared a low value to minimize the Sound Dues, and if the officer chose to buy, and if the declared value was less than costs, then the master couldn’t repay his investors. If the master declared too high, then the amount of Sound Dues was high, then the officer took the toll, and the master kept the vessel, and the high toll reduced the profits of the voyage. These incentives kept the masters’ declarations close to marketplace value. The masters grumbled and paid the annoying but tolerable toll.

The Sound Dues conveyed robust royal income from the merchants to King Eric’s treasury. Eric used his possession of scarce feasible alternate trade routes to shift to himself part of what would otherwise be the merchants’ profit from each voyage. Eric was a Monop. Eric was an Aristocrat. Eric had an excellent Firehose Up.

Elizabeth I of England (circa 1590,
National Maritime Museum,
noncommercial use with attribution permitted)
As with Eric, Monops dated from the most ancient times, though FTC tends to overlook them. A monarch (as with Eric) or local gangster (as also with Eric as we will later see) would protect an underling in her role as sole provider of some article of trade. The monarch would get a devoted ally, and maybe an additional source of revenue. On the other side of this trade, the underling gets the services of some police or soldiers to suppress competition and the opportunity to maximize profits without limitation.

Monopolies emerged in grand style during the reign of Elizabeth I of England, decades after Eric’s Oresund Sound Dues got underway. She’s dead now. She granted a variety of monopolies. Interesting among others was what later people would call an IPR Intellectual Property Right granted to Tallis and Byrd to print and publish music. But that’s another story.

Luridly and directly affecting matters of state, Elizabeth loved the 2nd Earl of Essex. No one could imagine why, since his volatile personality made Essex the most ill-behaved courtier in her realm. Anyway, he needed an income, so she gave him the Monopoly on sweet wines, by which he received the taxes levied on the wine. When he rebelled and attempted to depose her, she came to her senses and chopped his head off.

Elizabeth ruled long before the Old Ones. You may remember, for the Old Ones, competing buyers and sellers always existed, and so it is in FTC. However, some heretic Professors deviated from orthodox FTC with apocryphal songs about Monopolies and Monopsonies. The more elaborate songs told how these existences were trivial or beneficial to the Society. These songs spun off a subgenre on “natural Monopoly”, Monops for which the scarce good is a huge network, but that’s another story.

Even in Elizabeth’s time, complaints of abuses of Monopoly were heard in the House of Commons. During the decades before the great wars, legislatures began emitting general anti-Monopoly laws. Governments used these laws to constrain or take control of Firms acting as Monopolies.

Even so, Staffers would tell their children “Wise children try to corner a market.”

We come to the end of another episode. Will Eric find happiness in Cecilia’s arms? What happens when ideas become Monops? Who is Cecilia anyway? All will be revealed in the next episode of FTC the Fairy Tale of Capitalism.

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Several friends read my prepublication drafts. They provided criticism and comments that improved this article. I'm grateful for their help.

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