A Guide to the eUS economy: Part One
Day 579, 09:48
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Published in USA 
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by
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by Gaius Julius
"The economy depends about as much on economists as the weather does on weather forecasters."
-unknown
While I had some down time I decided to undertake a big task. It is my intention over the next 3-4 articles to compile a clear idea about what drives the eUS economy, what is the eUS economy and finally whats it the future of the eUS economy. Though I lack the expertise of some citizens such as One Eye and Jewitt, I would like to think I can give a fair assessment. Ive tried to include to make it simple and easy to understand so that everyone can understand. It is my hope that with this article eUS citizens will have a better idea of their economy. So lets begin.
What makes the economic clock tick?
The driving influences behind th eUS economy can be divided into three categories: The Citizen, the Business and the Government.
Joe Schmo doing his job
No not the actually guy in the game (though he is cool). Im talking about the average citizen. They drive the economy in two characteristic ways, they work and they spend. When a citizen works they produce a certain amount of something whether its a raw material or a finished good. Their productive ability is in part determined by their wellness level. This matters because in the eUS we are constantly investing in "wellness". Our programs include food, gifts and war games, all too insure that people have a higher wellness. Therefore one could say that in the long run our investment here will mean more products and more efficiency. The problem with the citizens influence over the economy is how they spend. The consumer economy is not characterized by spending but rather by saving. Most eUS citizens hoard their money for when they can eventually spend it on starting a business. As a result a good deal of wages and reward gold is not cycled into the economy but rather taken out of circulation permanently. This money is given back to the admins when peiple start companies or hoard it for other goals. This means that in theory the eUS economy is starved of a lot of potential consumer spending. This became especially clear in cases such as operation:HK , people chose to hoard their cash rather than spend it on extra weapons or wellness packs. What does this mean, well in the long run the eUS will continue to have sustained economic gains. The gold saved and invested will eventually reap benefits. However the massive economic growth and prosperity we always expect around the corner will never be driven by the citizens.
The Busy Business owner
The eUS has the second most companies in the world, second only to Romania. If one thinks about it this makes perfect sense. The eUS has the largest population in eRepublik, therefor it can be safely assumed that we have one of if not the largest market for goods. As a result industry and business are a driving force for the eUS economy. Everyday thousands of eUS citizens clamor to the marketplace for all kinds of goods. Hundreds of weapons, tickets, food stuffs and gifts are bought and sold daily, this action drives several actions. It gives citizens a good they need, it gives the government money from taxes and finally it provides business owners with continual capital to pay workers and buy items themselves. However business owners play part in a key aspect of the economy that is driven solely by them. Raw Materials has no citizen applications, yet if we look at the numbers it is crucial to our economy. If the three sectors of the economy each have an equal share in numbers of companies (not necessarily true, but a good measure) then we can assume there are about 500-600 land companies. Say only half of these companies are active, this would still mean that the employ hundreds of workers daily. Factor in salaries and sales and the land industry accounts for tens of thousands of USD daily in our economy. What conclusion can we draw from this? The concepts of free enterprise and ownership is crucial to our economy, without it our economy would grind to a halt, people would find jobs much harder to find and most importantly other aspects of eRepublik would grind to a halt.
The Big Bad Government
Everyone loves to whine about the stupid Government. I mean come on its easy to complain about the government stealing our money with taxes, spending it on those socialist programs and even...gasp! saving it for future wars. However if we really take time to consider the state of the eUS, one determines that ultimately it is government actions that drive our economy. Now before you jump on me for being a commi or a darn pinko think about it. What eRepublic mechanic most of all stimulates our economy? Well its simple...War. War makes people spend money war makes citizens buy weapons. In addition things like tickets and gifts also see a spike in sales. Without doubt every time the eUS is in major state of war we do much better economically. Wages increase, sales skyrocket and people are just generally more optimistic. However past the actually convention of war the government provides the most incentive and force behind the government. At this point the only two major ways to conceivably expand the eUS economy would be to break down our allies trade barriers or gain high Iron and Diamond regions. In the end it will only be the Government that can carry out these actions on behalf of the eUS economy. If you wanted to describe the eUS governments impact on our economy one could call the Government the 800 pound gorilla in the room. Why? Well the Government isnt an all powerful entity as I showed in the above paragraphs. However it is for now the most powerful, influential and knowledgeable factor in our economy. In the foreseeable future it will be actions taken by the government that will drive our economic engine. It is not because we are evil socialists or anything else. No simply put the game mechanics and the way we operate as a nation mean that the government is in some sense a focal point for the nations economy.
For a conclusion I will answer some pretty basic economic questions that people seem to like to ask:
Why don't we raise the minimum wage? Well simply put the only person who would work for minimum wage is the newest of new player. This player in terms of production is not worth much, as a result if minimum wage was any higher it would create an incentive for companies to not hire new workers. Furthermore within three days of starting to play eRepublik a new player can start working for higher wages, meaning the chance they will starve is 0.
Why do we pay 20% income taxes? As I stated above the citizens of the eUS like to hoarde their money. As a result the kind of money to insure military superiority has to be extracted before it gets stored away somewhere. Yes its not necessarily fair. But unless 1000 eUS citizens start spending RL money and gold they have stored up in game, we cannot realistically expect to remain a military power without high taxes.
Why does the Government print money? Contrary to popular belief the Government does not print money to pay its bills. All of the money printed goes into the congressional budget office to manipulate the Monetary market. This manipulation does two things, first off it intentionally devalues the USD. This devaluation is done to make the USD more flexible for exporting purposes. The second things this does is make the eUS government money, yes that's right through playing the money market the eUS Government makes gold, once again not fair, but when you consider that this gold buys weapons and Q5 Hospitals I dont see much reason to complain.
Well that is about all I have, look for my next economic article in the coming days. I encourage you to ask questions and comment. Thank you!
-unknown
While I had some down time I decided to undertake a big task. It is my intention over the next 3-4 articles to compile a clear idea about what drives the eUS economy, what is the eUS economy and finally whats it the future of the eUS economy. Though I lack the expertise of some citizens such as One Eye and Jewitt, I would like to think I can give a fair assessment. Ive tried to include to make it simple and easy to understand so that everyone can understand. It is my hope that with this article eUS citizens will have a better idea of their economy. So lets begin.
What makes the economic clock tick?
The driving influences behind th eUS economy can be divided into three categories: The Citizen, the Business and the Government.
Joe Schmo doing his job
No not the actually guy in the game (though he is cool). Im talking about the average citizen. They drive the economy in two characteristic ways, they work and they spend. When a citizen works they produce a certain amount of something whether its a raw material or a finished good. Their productive ability is in part determined by their wellness level. This matters because in the eUS we are constantly investing in "wellness". Our programs include food, gifts and war games, all too insure that people have a higher wellness. Therefore one could say that in the long run our investment here will mean more products and more efficiency. The problem with the citizens influence over the economy is how they spend. The consumer economy is not characterized by spending but rather by saving. Most eUS citizens hoard their money for when they can eventually spend it on starting a business. As a result a good deal of wages and reward gold is not cycled into the economy but rather taken out of circulation permanently. This money is given back to the admins when peiple start companies or hoard it for other goals. This means that in theory the eUS economy is starved of a lot of potential consumer spending. This became especially clear in cases such as operation:HK , people chose to hoard their cash rather than spend it on extra weapons or wellness packs. What does this mean, well in the long run the eUS will continue to have sustained economic gains. The gold saved and invested will eventually reap benefits. However the massive economic growth and prosperity we always expect around the corner will never be driven by the citizens.
The Busy Business owner
The eUS has the second most companies in the world, second only to Romania. If one thinks about it this makes perfect sense. The eUS has the largest population in eRepublik, therefor it can be safely assumed that we have one of if not the largest market for goods. As a result industry and business are a driving force for the eUS economy. Everyday thousands of eUS citizens clamor to the marketplace for all kinds of goods. Hundreds of weapons, tickets, food stuffs and gifts are bought and sold daily, this action drives several actions. It gives citizens a good they need, it gives the government money from taxes and finally it provides business owners with continual capital to pay workers and buy items themselves. However business owners play part in a key aspect of the economy that is driven solely by them. Raw Materials has no citizen applications, yet if we look at the numbers it is crucial to our economy. If the three sectors of the economy each have an equal share in numbers of companies (not necessarily true, but a good measure) then we can assume there are about 500-600 land companies. Say only half of these companies are active, this would still mean that the employ hundreds of workers daily. Factor in salaries and sales and the land industry accounts for tens of thousands of USD daily in our economy. What conclusion can we draw from this? The concepts of free enterprise and ownership is crucial to our economy, without it our economy would grind to a halt, people would find jobs much harder to find and most importantly other aspects of eRepublik would grind to a halt.
The Big Bad Government
Everyone loves to whine about the stupid Government. I mean come on its easy to complain about the government stealing our money with taxes, spending it on those socialist programs and even...gasp! saving it for future wars. However if we really take time to consider the state of the eUS, one determines that ultimately it is government actions that drive our economy. Now before you jump on me for being a commi or a darn pinko think about it. What eRepublic mechanic most of all stimulates our economy? Well its simple...War. War makes people spend money war makes citizens buy weapons. In addition things like tickets and gifts also see a spike in sales. Without doubt every time the eUS is in major state of war we do much better economically. Wages increase, sales skyrocket and people are just generally more optimistic. However past the actually convention of war the government provides the most incentive and force behind the government. At this point the only two major ways to conceivably expand the eUS economy would be to break down our allies trade barriers or gain high Iron and Diamond regions. In the end it will only be the Government that can carry out these actions on behalf of the eUS economy. If you wanted to describe the eUS governments impact on our economy one could call the Government the 800 pound gorilla in the room. Why? Well the Government isnt an all powerful entity as I showed in the above paragraphs. However it is for now the most powerful, influential and knowledgeable factor in our economy. In the foreseeable future it will be actions taken by the government that will drive our economic engine. It is not because we are evil socialists or anything else. No simply put the game mechanics and the way we operate as a nation mean that the government is in some sense a focal point for the nations economy.
For a conclusion I will answer some pretty basic economic questions that people seem to like to ask:
Why don't we raise the minimum wage? Well simply put the only person who would work for minimum wage is the newest of new player. This player in terms of production is not worth much, as a result if minimum wage was any higher it would create an incentive for companies to not hire new workers. Furthermore within three days of starting to play eRepublik a new player can start working for higher wages, meaning the chance they will starve is 0.
Why do we pay 20% income taxes? As I stated above the citizens of the eUS like to hoarde their money. As a result the kind of money to insure military superiority has to be extracted before it gets stored away somewhere. Yes its not necessarily fair. But unless 1000 eUS citizens start spending RL money and gold they have stored up in game, we cannot realistically expect to remain a military power without high taxes.
Why does the Government print money? Contrary to popular belief the Government does not print money to pay its bills. All of the money printed goes into the congressional budget office to manipulate the Monetary market. This manipulation does two things, first off it intentionally devalues the USD. This devaluation is done to make the USD more flexible for exporting purposes. The second things this does is make the eUS government money, yes that's right through playing the money market the eUS Government makes gold, once again not fair, but when you consider that this gold buys weapons and Q5 Hospitals I dont see much reason to complain.
Well that is about all I have, look for my next economic article in the coming days. I encourage you to ask questions and comment. Thank you!
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Comments
Pertamaxx?
Brilliant!
These are articles that need to be in the media. Not constant military updates.
Good analysis in layman's terms.
Voted. Already subscribed.
Curious and curiouser... I wonder why have a simple 1 tax for all? And you think people hoard just to hoard? They SAVE the money so they can a) buy better products b) want to create a paper c) own a company some day.
You think government knows what to do with the money? All you say here is how a company can get richer and the individual gets shafted...
I hope you explain why we have a single tax for imports on products that should be bought from US Companies and not from foreign? I am not saying protective tariffs, but something that makes selling imports a bit more expensive for foreign companies and allows the US Government to reap the rewards.
All I see here is a FREE MARKET Manifesto, something I do not agree with and how can you say people do not know what they are doing and then say they run the economy?
Dude, are you a RL economist? Between you and one eye, I imagine two guys in a dimly lit room with calculators and large blackboards full of equations, and at the bottom it says = eRepublik.
Way to break it down so the normal guy can understand it. Voted and already subscribed.
Great article. Very helpful for those of us growing up in the game.
Voted and subscribed.
@zagarius: Im sorry I think you read the wrong article, this isnt a manifesto, its a realistic explanation of how the economy functions. I wasn't bashing people for hoarding money, they have a right to. Im just saying that it means that citizens do not have dominance over the economic engine. As for your free market manifesto I obviously say in here that givernment investment and influence is GOOD. Please read before you type. Thanks!
Great article Gaius!
Voted.
Government action to drive the economy - spoken like a TRUE Hamiltonian federalist.
Voted.
http://www.erepublik.com/en/article/bruno-for-president-835663/1/20#comments" target="_blank">http://www.erepublik.com/en/article/brun[..]ments
Great Article! Very well thoughtout
Voted
"Contrary to popular belief the Government does not print money to pay its bills. All of the money printed goes into the congressional budget office to manipulate the Monetary market....The second things this does is make the eUS government money"
I have always held that the printing of money on this way is a tax. That's not to say it's strictly a bad thing. A stable currency produces certain benefits, and it's a tax with the minimum affect on consumption, and it is the most progressive tax possible in the game. Just the same, it takes money out of citizens pockets (holders of USD rather), and puts it into the hands of the government.
Also, War is good overall for the economy imo, but there are certain downsides. Admittedly, going from war to peace isn't the easiest thing though.
Good article though.
i hope you use the next article to rip apart this free market garbage thats ruining so many of us. did they ever fix that?
I would like to humbly submit that a fourth actor is a group of citizens committed to change. By properly organizing and learning the game's rules, I believe it is possible to create an eCommunity of eCitizens stronger and more moral than any eGovernment in the eWorld. eAmen. eEnough eOf eThat.
This article partially inspired me to write one of my own. It's my first so go easy on me.
A World of Bullion Bounty
by Phyrexia
http://www.erepublik.com/en/article/a-world-of-bullion-bounty-837393/1/20" target="_blank">http://www.erepublik.com/en/article/a-wo[..]/1/20
It's intersting that here when you start a company or organization the gold goes to the admins. In RL the Government would get a cut, usually in licensing or registration fees. Seems to me a portion of whatever is paid should go to the eGovernment.
Voted, Subscribed. I have to say Bravo! Great article i actually understood everything you talked about and hopefully i will be able to put it to good use. Thanks!