CHAPTER 22: The Long Game
Frédéric Trinité gazed from the window of the chateau his family had built in Geneva in the 16th century, renovated several times since. Its view of Lac Léman was spectacular, one of Europe’s finest. He meant to keep it.
Trinité strolled past fine family portraits, generations of faces strung up on the walls of the elegant and wide hallway. He opened the second to the last door, leaned his head around the door frame. “Anyone here?” he asked.
“Bienvenue, Monsieur Trinité,” said the tutor. “Misha, you may greet your father.”
A slim ten-year-old boy rose slowly, trying to conceal his happiness. He had beautiful big brown eyes fringed with long lashes—intelligent, somewhat soulful eyes. “Bonjour, Papa,” said Misha, extending his right hand with practiced solemnity.
Trinité shook his son’s hand, thinking, The child looks more and more like me every day. He smiled and tousled his son’s silky brown hair. The boy beamed, smiled, a sweet smile.
“How is my Misha doing?” Trinité asked the tutor. Misha’s smile vanished. He studied the pattern on the carpet; turned to the statue of Minerva, the goddess of wisdom holding her owl; caught the amber eyes of his favorite cat, an old black and tan Persian his mother had named Catastrophe.
“He is having difficulty with the concept of market and production interventions,” replied the tutor. “I am sure, with study, he will master it.”
Trinité walked to a monitor at the front of the room. It displayed a page from the Family’s approved curriculum, the section on Primary Level Global Economics. The tutor retreated to a corner and signaled for Misha to sit.
Trinité minimized the file on the monitor. “Misha, pay attention,” he commanded and Misha sat up very straight at his desk. He ignored Catastrophe purring in one corner, the clock ticking in the other; focused all his attention on his father.
“The Trinité family has prevailed for centuries because we see opportunities others cannot. We can create opportunities. Sometimes we work with others so it looks like there are many owners when the business is controlled by just a few of us. But this subject is more advanced. Next year, perhaps?” he asked the tutor who nodded.
The tutor thought about how, over centuries, the oligarchy manipulated markets, excluded many, consolidated gains. Caste systems, educational requirements, laws, treaties and tariffs, thought the tutor, his face revealing nothing. Ah, yes, and regulations, licensing, permits, certification schemes, debt for climate and nature swaps, sanctuaries, set asides. So many creative ways to control producers, production and market access. Some legal, some not—depends on the country.
“Market closures,” said Trinité to his son, “without a concomitant reduction in production, result in blacklisted product sold at a discount into the global market, dragging down wholesale prices for everyone,”—but never at retail, he thought, leaving it unspoken. “Big strokes, Misha,” he said.
Misha looked confused. His father looked at him sternly. “If you are very clever—and you are my clever boy, Misha—you can arrange for change to happen slowly so people don’t notice it or even rising prices. Sometimes it takes a very long time, but our family will live forever.”
Misha smiled, a sweet smile.
“Your great great grandfather Laurent Trinité developed this theory. I will explain it to you the way my father explained it to me. Misha, if you have 10,000 widgets…,” Trinité scanned the room, noticed Misha was holding a Hot Wheels with the distinctive red markings on the wheels. Trinité recognized it as a blue 1968 Hot Wheels Redline Custom Camaro, one of his collectibles. He frowned. Misha guiltily hid the toy behind his back.
Trinité wrote on the board with the stylus and it changed to tidy text:
EXAMPLE A: NON-EXCLUSIVE PRODUCTION
Camaro Redlines: 10,000
Producers: 1,000
Buyers: 100
“Misha, he said, “if you have 10,000 Camaro Redlines, manufactured by 1,000 producers, sold to a hundred buyers, is it easier to control the producers or the buyers?”
“The buyers,” said Misha. “There’s only a hundred of them!” That was easy, he thought.
“Very good, Misha.” Trinité changed the BUYERS from 100 to 10.
EXAMPLE B: NON-EXCLUSIVE PRODUCTION
Camaro Redlines: 10,000
Producers: 1,000
Buyers: 10
“What will happen to the price now, Misha?” he asked.
“The price will go up?” asked Misha, hesitantly.
“No, Misha,” said Trinité “You have just as many Camaro Redlines as before, but now instead of 100 buyers you have only ten. What will happen to the price of the Camaro Redlines? Think carefully before you answer.”
Misha thought it through and remembered his tutor’s coaching. “The price will go down because demand has decreased for the Camaro Redlines?” he asked, hesitantly.
Trinité nodded, encouraging him and Misha rattled off a memorized phrase, “By reducing demand, the producers’ ability to hold their prices erodes? Producers will compete against each other, lowering their prices, so they are not stuck with excess inventory?”
“Correct! Very good!” said Trinité. Misha beamed. In his corner, the tutor smiled. Trinité wrote another example:
EXAMPLE C: EXCLUSIVE PRODUCTION
Camaro Redlines: 10,000
Producers: 10
Buyers: 1,000
“Now,” said Trinité, “if you have 10,000 Camaro Redlines produced by ten producers and sold to 1,000 buyers, what is the easiest to control?”
“Oh, the producers, father,” Misha grinned. “There are only ten!”
Trinité smiled and changed the writing on the board:
EXAMPLE D: EXCLUSIVE PRODUCTION
Camaro Redlines: 5,000
Producers: 10
Buyers: 1,000
“Misha, we arranged for the ten producers to cut production in half. Très simple, oui? What will happen to the price for the Camaro Redlines?”
“It will go up!” said Misha with gusto. His father smiled.
“Très bien,” said Trinité, smiling. “Demand is unchanged, but we have half as many Camaro Redlines.”
Trinité paced slowly and Misha’s head followed him, back and forth. Like a tennis match, thought the tutor, hiding a smile.
“The terms exclusive and non-exclusive describe with market sector has the most power,” said Trinité. “If 10,000 companies are involved in production, the industry is probably, depending on demand, non-exclusive. If only five or ten corporations control production globally, the industry is probably exclusive.”
Trinité choose a book from a bookcase and handed it to his son, Behemoth: A History of the Factory and the Making of the Modern World.
“You’ll like this book,” he said. “Sometimes a product is hard to make because the raw materials are rare, or because one needs a lot of money, capital, to build or buy a factory. When our family chooses which industries in which to invest, it is very important to determine where we can capture control. We prefer investing in exclusive industries. Warren Buffet—you’ve heard of him?” Misha nodded. “He calls this businesses with a moat.”
Misha smiled. “Like a castle,” he said.
“Like a castle,” said Trinité and the tutor smiled. “Listen to your tutor,” said Trinité. Misha nodded. Frédéric Trinité kissed his son on the top of his head and said, “Put my Camaro Redline back in the cabinet, lock it and put the key back where it belongs. Today, Misha!”
“Yes, father,” said Misha, shamed.
The tutor bowed slightly as the great man exited the room. Trinité heard his son crying softly as the door closed behind him. “Là, là, mon petit,” cooed the Tutor.
Good, thought Trinité. Misha needs to understand how to appreciate value, along with his heritage.
