Tuesday, August 8, 2017

The Original Cartels - Whaling Vessels

How many of your read Moby Dick?  OK, not that I’m suggesting you follow my lead on this, but I never read the book, even though I was assigned it, twice I think.  But I have watched the movie (instead of reading that huge book) and I did get far enough into the book to get to the part where they join the crew.  Upon joining the crew of the Pequod, Ishmael receives a 300th lay and Queequeg gets a 90th lay.  That means that Ishmael gets 1/300th of the profits, while Queequeg gets 1/90th or 1.11%.  Queequeg gets a much bigger share because as a harpooner, he is vastly more valuable to the ship as a whole compared to Ishmael who is a sailor who has never been on a whaling vessel.

This is also how the cartels of Fletnern work.  The cartels are better known for the caravan business, especially as it is run out of Forsbury, but the whaling ships do work this way as well.  Splitting the profits of a business venture tends to incentivize the employees to maximize profits, and to watch the others to make sure they aren’t stealing or goofing off.

But the point is - if you go to work for a business, you get a salary.  If you go to work for a cartel (and you have a skill that is of value to them), you get a share of the overall profits.  Let’s compare this to other jobs:  farming (share cropping) - you do all the work and you actually get to keep maybe 50% of your profits.  Sheep herding - you’re pretty lucky if you get fed and clothed, but you’re probably working for your parents, so that’s that.  Fur trapping - Well there you get to keep your profits, or at least the profits you are able to get from the trading posts.  Here on a whaling ship, you get a piece of the profits and you don’t own the ship

So, why?  Well, the whole watching each other thing!  Also, the incentive thing.  That really cannot be overstated, because this is dangerous work.  People die on whaling expeditions, OK, not all the time, but it happens!  Sometimes the whale wins.  Sometimes the ship catches fire while they’re trying to render the blubber into oil.  Sometimes they don’t find any whales.

That’s a big part of the issue here.  When we’re talking about a cartel, you share in the fortunes, but you also share in the losses, well, not the loss, but the lack of profits.  Outfitting the ship with all the supplies necessary to undertake the voyage requires a massive amount of money.  That money gets “repaid” first.  Anything left over is profit, and those profits are split.  So if there aren’t any profits, then nobody gets paid.  That’s a pretty big risk for someone to take with six months to a couple years of their life.

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