On September 14, 1723, the freighter Princess Galley, en route from London via Africa, entered the Caribbean Sea.
The ship was heavily laden.
Her captain spotted another ship, sails out, rapidly approaching. The other ship hoisted a black flag.
The skull and crossbones was just one of many designs used by early 18th century pirates. Other flags featured “bleeding hearts, flaming bullets, hourglasses, spears, cutlasses, and entire skeletons.” The purpose of all these flags was the same: “to emphasize the message that the pirates expected immediate surrender or that the consequences would be fatal.”
I have these details from “Under the Black Flag: The Romance and the Reality of Life Among the Pirates” by Naval Historian David Cordingly. It recounts the sad fate of the Princess Galley, whose escape attempt quickly proves futile. The pirates spent a full 24 hours systematically looting the ship, seizing anything of value, including food and paraphernalia. They tortured the ship’s officers to make sure they lacked nothing. For good measure, they also brought in two crew members with useful skills, a fellow surgeon and a carpenter.
While old-fashioned ship pirating still exists (Tom Hanks even made a movie of it), new forms have sprung up to achieve the same goals without the tarmac, raised decks, and risk of cutlass wounds.
Consider what are sometimes called “vulture funds.” These are companies that spot soft targets and then take them on board by taking a large stake, often paying for the investment by burdening the ship on board with debt. The hackers then systematically loot the company, taking their time, demanding the kind of big returns that can only be had by selling core assets, until the empty shell is taken to its final berth in court. of bankruptcy.
But the term “vulture fund” is unfair to vultures, which usefully feed on animals that are already dead. The alternative label “vampire fund” is more descriptive. But whatever term is used, it describes an age-old form of parasitism.
It’s hard, and maybe even impossible, to think of a money-making scheme that someone else hasn’t already come up with. Business practices that seem new today usually have historical analogues, though most are far less colorful than piracy.
The job of publicity canvasser has been around as long as there has been advertising, though the only canvasser to achieve lasting fame was fictional. Leopold Bloom, the protagonist of James Joyce’s novel “Ulysses,” wandered through 1904 Dublin, trying to convince business owners to place ads in the newspaper he was taking over.
Facebook, Google and their competitors are, among other things, advertising canvassers. They convince marketers to buy advertisements to accompany the material they distribute. Much of this material is user generated. But some are taken directly from newspaper websites.
Imagine what a great business it would have been in the days of Leopold Bloom to sell newspaper advertisements and then keep the proceeds for yourself.
“The United States continues to lose newspapers at the rate of two a week,” according to a recent report from Northwestern University’s Medill School of Journalism. Many factors are contributing to the ongoing disaster, from demographics to vampires. But it doesn’t help that a significant portion of the advertising revenue generated by newspaper articles never reaches the newspapers themselves.
Uber and Lyft are taxi companies that rely on apps instead of the old, inefficient phone and dispatch system. They avoid investment costs by requiring their taxi drivers to purchase, maintain and store their own taxis. These methods are different. But there’s nothing original about the businesses’ core business, which dates back at least to the horse-drawn carriages of the Victorian era.
One thing Uber and Lyft have going for them is the flow of new funds from investors, allowing them to operate at a loss. And what losses! Earlier this summer, Uber released a quarterly report — quarterly! — loss of $2.6 billion.
Uber can afford to bleed money because it has so much new revenue. Unlike its competitors, the old taxi companies, it does not operate a closed system, in which revenues should cover expenses.
The related terms “competition” and “anti-competitive practices” sound like opposites, but there is no fixed line between them. The effect of one, and the purpose of the other, is to drive other firms out of the market. US competition laws are drafted at a high level of generality, giving our courts considerable discretion in deciding which particular business practices are condemned as trade restrictions.
But almost any trade barrier is, from another perspective, a trade innovation. And everything old is new again.
Joel Jacobsen is an author who retired in 2015 after a 29-year legal career. If there are topics you would like to see covered in future columns, please write to him at [email protected]