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Thursday December 11, 2008 7:58 am

Werd: Pirate - Part Three

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Where, precisely, is the line crossed that separates Robin Hood, the hero to the lower class, from Robin Hood, terrorist?

As usual, it seems to be a matter of perspective.  If you were sending gilded coins to your dear mother by way of carriage to pay for her The Plague medicine and Robin Hood up and stole your ducats, surely you would see Hood as the terrorist.  Even if the money Hood swiped was going to pay for the conspiracy to infect the lower class with The Plague, chances are that the sender would want Hood’s head on a platter.  I guess the overriding feeling is that if people take things that belong to you, you tend to want revenge or at least want to call them a thief, hoping that they will be prosecuted so you can get back the money that rightfully belongs to you.

But, if you are struggling to make ends meet as a cobbler and you can’t afford your child’s The Plague medicine, then when Hood arrives at your door with a burlap sack full of free money, surely you would sing his graces.  Thanks to the beneficence of your green-suited savior, little Sally will live to see another day.  So what if some highfalutin dingleberry lost the spending money for his elaborate vacation?  Is his happiness more important than little Sally’s health?  From the viewpoint of the cobbler’s eye: Hood is a hero.

All of us have either found ourselves in moments of Hood-worship or Hood-hate.  If we follow the genealogy of the dollar bills in our own accounts, surely we will find some dollars buried in our past that have known thievery and charity.  Some times our lives are subsidized for our benefit and some times we subsidize others for their benefit. 

Read More | Ladhe burns his bridges

Back to pirates.  Back in ye olden days, if you wanted to say, ship tea to the colonies, you needed to raise some capital.  So you would form a joint stock company and sell shares of the company to raise the capital for the trip.  The capital would pay for buying the ship, hiring the shipmates, and fronting the cost for the tea before it is sold.  After you sell the tea, you take the profits and pay back the stock holders and divvy up whats left to finance later trips, or give the CEO a bonus, or give the shareholders a proper windfall.  Pirates, of course, were aware that ships were essentially vehicles of capital.  If you caught a trade ship on the way there, you would probably use ransom as a tool to extract the wealth, whereas if you caught the ship on the way back, you could take the chests of gold that paid for the tea.  Either way, the pirate understood that wealth existed even when gold coins, particularly, did not.[1]



If pirates didn’t recognize the wealth on the seas, the trading companies would have seen some short-term gains, certainly, but we can see that the long-term affects of a world without pirates undermines the entire system of financing high trade on the high seas.  The very fact that pirates recognize the wealth not only of gold coins but also of invested capital demonstrates that pirates are engaging in a part of the economic system.  If pirates were against the system of economy as we know it, it seems much more likely that they would organize protests against monetary systems.  Instead, they have crafted a business of their own that utilizes their particular skill set to maximize their profits.  When you think about it, what sort of capitalist could object to such a world view?

Certainly not Andrew Ladhe.  Ladhe was the very successful manager of a hedge fund company until he retired at the peak of the recent stock market crash (and, more specifically, the burst of the credit/housing bubbles).  On his way out the door, Ladhe wrote a scathing goodbye letter to the financial industry:

I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America. [See full text here.]

Now, if you asked a proponent of capitalism in 2003 if Ladhe was good for the world of economics, the answer surely would have been a resounding, “Yes!”  After all, Ladhe was making money hand-over-fist and in the hedge fund industry, which has been described thusly:

Rick Lake, chairman of Lake Partners, a Greenwich, Conn., hedge fund consultancy and creator of multi-fund portfolios, boils the hedge fund phenomenon down to its essence. They “offer the hope of consistent returns regardless of the direction the market,” he says. [See full text here.]

So if you bet earlier this year that the value the market was giving to American homes and American creditors was inflated, you would have been rewarded (as Ladhe was in September and October) with the fair compensation that the market provides for such foresight.  That is: if a ship travels along a faulty, dangerous course, the pirates help the ship to correct its course.  The pirates provide traders with the incentive to run a tight, secure ship.  Suffice to say that without the financial expectations of the captains of industry, pirates would cease to exist.[2]  Sure, a world without pirates may be more pleasant and less violent, but a world without ships trading goods is pretty much Communist: and no one, especially pirates, want that.

[1]The recent Somalian pirates live in a world where there are very few gold chests: most of the money that is paid for shipment of goods move electronically (the stealing of which requires a different skill set than the average skill set of your average pirate).  Therefore, ransom make sense for the Somalian pirate in need of a McMansion.
[2]Indeed, eventually the same capitalist forces would find a way to act as pirates against competing entities.  We would know them as privateers.

PIRATE SERIES
Pirate - Part One
Pirate - Part Two
Pirate - Part Three
Pirate - Part Four
Pirate - Part Five

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