fieval goes west, monopolies
fieval goes west, monopolies
an economic lens to the greatest film of all time
Lately, I’ve been thinking a lot about this scene from Fievel Goes West:
Cat R. Waul, of course, is a robber baron, a monopolist of the Gilded Age. An era where, much like Kanye West in the early 2010s, a veneer of prosperity masked deep depravity and a way of life which would eventually destabilize and lead to a shift of political sentiments. What I really like about this scene is how thoughtful Cat R. Waul is about eating Fievel. He realizes that while he has all the power, he could extract more value over time by actually foregoing current profits (profits here being a delicious buttered mouse). Delayed gratification strikes again! Cat R. Waul might be a bad cat, but he’s a good businessperson. This is classic smart monopolist behavior.
Smart monopolies know who to target. Monopolies exist at the will of the state. J.D. Rockefeller monopolized the US oil supply for decades until the Supreme Court forced his company Standard Oil to break up (The Sherman Antitrust Act). As in, the state changed the rules. Prior to the Antitrust Act, Standard Oil was permitted a monopoly. Afterwards, it was not. Why did the Antitrust Act get passed? The simple answer is pressure. Pressure from consumers, laborers, farmers, and other stakeholders. People in power want to stay in power, and when Standard Oil became a threat to social stability, change happened. For decades, though, this pressure wasn’t enough to trigger a change. How did the Gilded Age monopolies survive this long? Why didn’t discontent in the system build faster? The answer is that they behaved like Cat R. Waul - they were careful to bend, but not break, their customers.
Here’s the price of oil during the Gilded Age:
Isn’t that strange? Standard Oil controlled 90% of the nation’s supply, but the prices people paid at the pump (or whatever they had before the pump) actually came down over time. Some sources contend that consumers were paying more hidden fees, but looking at the above chart, it’s clear that Standard Oil wasn’t raising prices as much as they could. Rockefeller could have tripled the price of oil - he controlled the entire supply. But like all smart monopolists, he knew that wasn’t in his best interest. Higher energy prices would mean lower economic growth, which would mean lower long-term oil demand. Plus, ultra-high prices would make his company a villain in the public eye, and the state would put a target on his back. Any monopolist that wants to survive must artfully manage how much profit they take, so that they can take more later.
Great monopolists are exploitation virtuosos. Consider the case of railroad prices in the 19th century. Railway monopolies had two key classes of customers. Farmers who used rails to ship food, and industrialists who used rails to ship goods. Farmers, mostly small-scale, had little political power and little economic power. Industrialists were organized, politically powerful, and rich. The railways knew they could price gauge farmers but not industrialists, so they invented rate discrimination. They just charged farmers way more:
In Minnesota, local farmers paid 25 cents per hundred pounds of grain going to St. Paul. But elevator operators shipped grain at 12.5 cents per hundred pounds between the Twin Cities and Chicago. (source)
The Robber Barons exploited vulnerable populations like farmers, but were careful not to exploit more powerful populations. As a result, the railroad monopolies went on for decades, making their owners some of the richest people in history, before finally getting regulated. Only a bad monopolist will rip off all their customers. A good monopolist only rips off some people.
In conclusion, Cat R. Waul is unhinged and easily one of the top 5 scariest Disney characters of the 1990s. King Louis is #1 as he wanted to wear Mowgli’s skin (I mean, wtf was that about) and Ursula is a close #2 as she haunted my dreams for the better part of my youth. But make no mistake - Cat R. Waul would cut out your tongue and stick a UPC code on it if he thought it would sell.