A Terrorist Reads the Global Economy

Day 679, 15:34 • Published in Canada Canada • by John A Kelly



“We need to find common goals to fight for together. We need to decide on the direction and make everything necessary to reach those goals.” -- Zoli, Gondolatok / Thoughts (Day 67😎

Canadian weapons manufacturers have gone public with multiple calls for war to increase sales of weapons and citizens are demanding battles (even training wars) to raise wellness. Wages are falling faster than productivity, inventory is rising and many born or who started companies after WWIII started are beginning to panic. (As an aside: If you were born during the war there are two things you must accept right now: first, you were being paid WAY too much and your wages WILL go down, and second, 70% wellness is not "starving to death" during peace time, stay above 50%.)

Welcome to the Great Depression: This is what follows the end of war and, not uncommonly, is the CAUSE of war in the first place. As Calangao explains in Understanding the problems of the economic module (Wanted Dead or Alive), over-production is an inevitable result of peace-time (and training war) economic production which we typically expect to be resolved during the over-consumption of total war. While often forgotten amid PEACE propaganda which focuses on "for the lolz" and silly accusations of empire-envy, resolving the crisis of over-production in the eUS was a key rational rationale for Canadian Bacon, French Toast and Taco Bell (the cumulative parents of World War III).

In Overproduction crisis: too much gold have been spend in WW3 (One day more), Two-Four-Six-0-One demonstrates the the phenomenon of global over-production with graphs by product and industry. With few exceptions, stocks have risen world-wide and are now at a 6-month (or all-time) high (check this yourself at http://ereptools.net/companies/worldstock). Two-Four-Six-0-One argues that this is the result of over-spending of gold during World War III and the inevitable inflation of gold values, but I'm afraid I must disagree.

In-game production is not a function of the relative value of gold, but of production skill and wellness. It follows that over-production is a result of a global increase in median-age of the (active) eRepublik population and the fact that regular battles kept wellness near 100%, resulting in a near doubling of worker productivity, in much of the eWorld. (This is independent of price levels and exchange rates.)

As Calangao demonstrates in Understanding the problems of the economic module (Wanted Dead or Alive), it takes “a total of 7.88 skill points just for one soldier to fight fully armed... Anyone with less than 7.88 skill receiving 5 Q1 weapons a day to fight or more is being subsidized. The great majority of players are not even close to this skill level, which makes it a production impossibility today to supply all players with weapons every day.” This assumes over-consumption, however, which requires that income is redistributed so that players below 7.88 skill points can consume above the value of their production (and consequently, of their income).

In other words, it is the the failure to redistribute income downward which has retarded the ability of citizens to over-consume on a personal basis, resulting in a consistent global surplus of production above consumption. This is how we ended up with a supply glut after a period of mass wealth destruction (in the form of weapons, gifts, moving tickets, hospitals and defense systems). To some extent, war-time gold expenditures by governments have allowed high-power soldiers to consume above their production, but this has not been sufficient to avoid a consistent increase in the stocks of Q5 weapons.

In Gondolatok / Thoughts (Business Magazine), Zoli writes that “because we are facing over production we must shift our focus from quantity to quality. People with higher skill should work in higher quality companies”. While this is especially true in Canadian food industries (where higher quality food will be necessary to maintain elevated wellness in our economy during peace-time), it is unlikely to solve the problem of over-production created by a free market (unless inexperienced company owners upgrade before selling stock and inventory, thus destroying prior production on a massive scale).

The RL solution to this “crisis of capitalism” is one unavailable to us by game mechanics: debt-financed consumption which has powered the RL USA's consumer economy for the last 40 years, allowing the USA to consume surplus production on a global scale (which in part explains impact of the credit crunch last year).

As I see it, we have two options available to us in eRepublik: first, government intervention to use high income taxes to supply low-productivity workers above their ability to produce; or second, semi-feudal organizations in which high-productivity workers transfer wealth to low-productivity workers in a patronage system. The first option is common in PEACE countries, where the ministries of defense use the comments on battle orders articles to distribute weapons to low-level citizens (i.e. See the eRussian military). The second option is not entirely unlike the ilitary “resistance organizations” which sprang up in eCanada and the eUSA near the beginning of the war (i.e. SPF Bear Cavalry, Bruck's Canucks, etc). If you have other alternatives, I hope you'll write them up in your newspaper with a trackback (or leave a comment).

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Author's Note: As usual, if you like it, vote and subscribe, that's always nice. But if you have a newspaper and find these ideas interesting, please consider giving this article a trackback. Trackbacks are evidence that I have contributed to the global discussion, but votes I can get by posting images of pretty girls.

Speaking of which...


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UPDATE DAY 682 After two days in Canada's Top-5, this article is off the front page. This update adds a few links I've collected for future publications which deserve responses but were not covered in this article:
Wilhelm Gunter. "Will a Prolonged Peace Lead to Depression?". (The D'Arcy McGee Herald). http://www.erepublik.com/en/article/will-a-prolonged-peace-lead-to-depression--964482/1/20
Sage Marshall. "War: What Is It Good For? Absolutely Everything!". (Life & Living). http://www.erepublik.com/en/article/war-what-is-it-good-for-absolutely-everything-1-964331/1/20
Craig Rossiter. "The Economy". (The Independent). http://www.erepublik.com/en/article/the-economy1-945219/1/20
Zoli. "Free Burgenland + What I would change in eRepublik". (Business Magazine). http://www.erepublik.com/en/article/free-burgenland-what-i-would-change-in-erepublik-924474/1/20
valyfl. "[RO/ENG] eR Crisis - Unbalanced Game". (Dezvaluirea). http://www.erepublik.com/en/article/-ro-eng-er-crisis-unbalanced-game-853446/1/20
Pete1. "What's Happening?". (Light of Knowledge). http://www.erepublik.com/en/article/what-s-happening-1-787341/1/20
UPDATE DAY 698 "Blueprints for a Green War" (The Economist Manifesto) http://www.erepublik.com/en/article/blueprints-for-a-green-war-987818/1/20
"El correcto uso de los impuestos de importación" or "The proper use of import taxes" (Cambio 16) http://www.erepublik.com/en/article/el-correcto-uso-de-los-impuestos-de-importaci-n-989102/1/20
UPDATE DAY 708 "A Look into the eRep Economic Module" by Hekter (Constructing the Future) argues that overproduction results from training wars and can be addressed by services and added industries. The most novel idea: making newspapers a commercial concern.