Another economy crisis
Day 1,177, 03:30
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Published in Canada 
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by
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by Semper5
Last changes that were implemented in the economic module greatly affected the global economy in a negative sense. Therefore, it's my obligation to say a few words about plans and future business operations of following companies:
Stephan Macchi Cuisine
Jogurtovi i Acidofilovi
CCR Grain
CCR Iron
So let's start....
As you probably already know, eRepublik game developers recently implemented the last major changes represented by land slots as a new feature. From now one, one has to own a free land slot in order to start or buy a company. As far as I'm concerned it was a great idea that might have limit massive growth of number of companies out there. But rather than that, administrators apparently decided to implement it in a way that resulted in totally opposite consequences. Despite the fact that the price of a land slot is a one thousand of local currency, administrators decided to give 3 land slots for free to every one of us. In addition, the amount of gold needed to start a company is decreased from 40 to 10 gold. Those facts results in further massive growth in number of companies at the market, because now everyone wants to own a company(s), even newbie. But it seems that many of those "fresh made businessmen" out there doesn't actually have enough knowledge about economy and they don't really understand how economy works. In order to run a successful, profitable business, a company needs to meet certain requirements and those are:
a) Workers
b) Raw materials (if needed)
c) Working capital
d) Market to sell to
Due to lack of knowledge, most of fresh started company managers don't meet those requirements. First of all, they don't have enough cash reserves as a working capital needed for company to be solvent. But as they need workers, they started to post unreasonable job offers in circumstances that could be called a war rather than a healthy competition. On the other hand, since many of those company managers doesn't have enough money as working capital, they also start a price war at the marketplace, continuously decreasing product prices just to get (and stay) on the top of the list of offers, in order to sell as fast as they can to collect some money to pay wages.
So, most of industries are currently unprofitable. Means most of companies are loss-making. Running such companies in longer terms leads to insolvency (if are not already), and at final it leads to bankruptcy.
But calculation is so simple: profit = total daily revenue minus total daily production costs (which includes the cost of consumed raw materials, wages and taxes). If the result is positive, the company is profitable. If the result is negative, the company is unprofitable. If the company is unprofitable that means the owner not only doesn't make any earnings, but actually losing money every day. Keep such company running is more than stupid. But who am I to judge? I'm just telling the facts. Just take a look at Companies for sale list and ask yourself why those people selling their companies. Would anyone sell a company that actually makes profit?
So, where we are in this story? What about companies I manage and you work in?
I'm glad I can say we are solvent. Planning is a half of job done. And I have long terms plans done a long time ago, as well as short time plans. During last global economy crisis I've made a solid stocks of products and raw for continued production. I've also secured enough cash reserves as working capital. Consequently to these facts, we will survive a new global economy crisis we are facing. As a result of all I said here, what we all can expect is that many companies go bankrupt very shortly. Because such an unbalanced economic situation is unsustainable, the natural law of supply and demand will restore balance automatically. Until then, we are continuing all of our production, but will not selling at current prices. We are going to fill our warehouses until prices get stable again. During this period there will be no wage increments, which is understandable, I believe. But nobody will get fired and hopefully there will be no wage decrements too (I can't guarantee it but I will do everything I can to maintain wages at current level).
Despite all the above-mentioned, if anyone wants to leave to take a chance in some other company for a dollar or two more, I can't stop him. If any of my current employees wants to leave, please let me know and I'll give him a severance pay. But once you leave, there's no coming back. What I appreciate the most is loyalty.
EDIT:
I forgot another important factor, and that is a currency devaluation as a result of massive sales of valute for gold, which makes non-profitability situation even worst. It impoverishes a state, it impoverishes a society and it impoverishes every individual.
So, instead of making profit, those players actually destroys standard of living.
Semper5
PS
If any of my employees has started a company on his own and need help in the form of advice feel free to contact me.
PSS
Crap, I need to make a new design for my newspaper. xD
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Comments
good article but you should use some bbcode to make it more readable
vote anyway
Great article, although you left the fact that company owners can work in every single one of his companies and therefore they can still sell their products close to zero and still making profit.
Voted
Excellent article.
Very good points.
Well done.
CloveR333:
Yeah, I forgot to write a few words about that too. Well, it's not that simple, there is a catch called productivity. Working in own company as the only employee makes company productivity quite low. On the other hand, working as a manager takes 10 points of wellness for every company you work in as a manager. Those wellness points you have to recover by consuming food. And food is not for free. You need to count it into profit calculations as a production cost. So, it's actually questionable can anyone make any real positive profit that way or it's a kind of "Sisyphean work".
Groovy
good article
good and real article
Great article.
Good analysis. V+S
Have the administrators changed the game modules that much? To me it seems like most people feel they have implemented changes to what was a fair system that had no major influx and was sustainable, unlike this unstable atom bomb that currently exists.
On another note, good article sir.
@Master Auron:
Actually yes, they have. If you understand how decreasing gold amount for starting a company from 40 to only 10 gold and what consequences are, you can get a picture how huge those changes are.
Everything would be just fine if there's no those free land slots. Or if the company starting price remained the same. But after last changes starting a new company became far to easy. I would refrain from speculation about why administrators done this, although I have my opinion about it.It doesn't matter anyway. What is important now is how will we adapt to it.
"So, most of industries are currently unprofitable."
This has been the case since I joined erepublik, and I am sure long before then it was the case. Why is this so alarming now?
The Erepublik economy is a ponzi scheme that has been running for AT LEAST 2 years.
It is a miracle that it has yet to fully collapse, but also a curse, as the longer we go without total collapse, the worse it will be when it finally comes. The Admins stave it off by having bots buy products, but as they print the money they use to buy products and not buy it from the monetary market, the final collapse will be worse.
IT will be no Great depression when it happens now, but an Economic Apocalypse and no amount of war to burn products will save us from it.
Plugson, you so wrong. And here's why:
eRepublik is not a game like C'N'C or similar games where you play against the machine and your personal benefit is only what matters. eRepublik is a totally new concept game with a strong social concept. What that means? That means that one can benefit only from a strong society. You just can't make it on your own. And what you suggest destroys societies, making them poor and weak. And poor society makes all individuals to be poor too.
What you suggesting is an economic system that existed centuries and centuries ago. In a time that actually there was no economic system at all. It was the time when everybody produced at home, in quantity only for personal use. There was no surplus of products, there was no market, there was no economy.
But nowdays we have an economic system that is based on two major principles: surplus of products and division of labor. If we give up those principles and do what you suggest, we would be heading back to middle ages. Do we really want that? There's no progress in such concept, it would be downgrading the whole society to a level of tribes at Third World countries.
Once again, if there's no making of surplus of products, if there is no division of labor, if there's no trading, if there's no investments and making profits - we will became poor country and a poor nation. And that is what eCanadian currently doing to themselves.
Jacobo, you're right about admins, but I didn't want to start any discussion about them because this article could be deleted and I could earn a FP.
Futuremore, it's not about what and why admins done, we are not able to make any influence to what admins do. So we shall focus to what can we do in present situation and at current circumstances. Whe shouldn't bother ourselves discussing on things we can't affect. That is just a waste of time.
Semper, I agree with that diagnosis. Yes, we are reverting back to a feudal economy.
As for the lack of social gaming, managing employees is not as social as creating working partnerships. What I am proposing is that experienced players with high productivity, extra stock, and a willingness to help new players should work-swap and do product exchange with developing citizens.
For example, I work at a Level 7 experts grain company, giving him close to enough grain to support his food company. In turn, he works at my company to produce grain that I sell him for basically free (it cost me nothing to produce it and he made it himself).
By creating working partnerships, we foster the social aspect of the game and help boost active new players.
Another possible social aspect to the worker-manager model: a grain bank.
I employ 1 newish citizen at each of my grain companies and sell back to them the grain they produce. I make no profit, but these new players now have access to a much cheaper source of grain that they can use to make food for themselves.
Yes, it's old fashioned barter system with feudal overtones. The game has changed. Why keep looking at the box as if it's still a capitalist market system?
I was saving up for ages for my companies. I was finally making upwards of 150 CAD a day (which is the most I've ever made). And then this update comes out and I'm losing money. This is terrible. God damn it.
@Dylan Fraser:
It's not the end of the world, my friend. You just have to adapt. If you're losing money, and you're unable to make a stock, you should temporarily stop your production in order to stop losing money. Your company remain yours, it won't get away. Once the economic situation get stabilized, you can restart your production. That would be smart to do.
Just give all the money to TCO, problem solved. We don't ever have money problems so we're clearly doing it right.
I dunno, man, you complain in one article about people stealing your stuff so you demand more honesty and integrity. Now you're saying greed motivates all people and we should rely on a capitalist market to solve our problems. Why not go for a happy medium?
You wrote:
"Idon't know if eCanada have any tutor program for new players. There should be an instructor (tutor) assigned to every new player. Instructors should then teach and guide new players through their first steps in the game."
Funny you should ask. This is what I have been working on. My first "student" purchased his first food company yesterday after migrating his iron co. to grain. I am working at his grain company and he is working at mine as a fair-labour swap (actually he benefits from my higher skill).
With the extra grain we produce together, he is now feeding himself 75 Q1 food a day. This allows him to fight, stockpile, or sell ~ all of which improves his situation in the game.
Call it communist utopia and laugh. I'd rather think that the worker-manager model offers alternate ways to help support new players.
This is the most fun I've had in eRep in forever. The approach is creative and social. Perhaps I should worry how this affects the fatcats and govt. coffers, but I am not, because I'm playing this as the game currently is, not how people evision how it "should" be.
enjoyed and voted
Great article. Something newbie players should know
profit=quantity*(price of product/VAT-price of raw material per product)-labor