Dr Strangelove or: How I Learned to Stop Worrying and Love Lana

Day 826, 15:02 • Published in USA Canada • by Buck Roger
You are being paid too much.

This sounds like a ridiculous statement coming in the face of steady price drops in the wage market and in the price of goods. However, the market has not yet found its equilibrium, and the "bears" are in full control here. You will continue to be paid less week after week.



OMGWTF GIVE ME MAI GOLDS!

No, you can't has your golds. The collective actions of the business owners and consumers of eRepublik have dictated that your labor isn't worth much in terms of the yellow stuff... and will probably be worth even less soon. Chiefly, of course, I refer to the steady exchange of currency, obtained from operating companies and working in companies that make products, into GOLD to be used for such services as those offered by Lana... and, thus, not buying the products.

MAKE IT STOP, MAKE IT STOP, MAKE IT STOP!

Anyone with two economically-inclined neurons to rub together will realize that there is one and only one necessary condition to making the downspin correct itself... the products that are made by companies... you know, the Food, Weapons, Gifts, Moving Tickets, Houses, and infrastructure... they need to be considered worth buying in terms of their GOLD value to more people that have the yellow stuff or who are considering getting the yellow stuff with their currency. We need a balance between these two factors in the market:

(1) The people who obtain GOLD and buy currency in order to buy stuff (the only thing you can get with currency right now, other than turning it back into GOLD).
(2) The people who obtain currency and buy GOLD in order to delete it (in lots of fun ways including Lana) or hoard it.

Without that equilibrium, the value of products in terms of GOLD will continue to fall.



I CAN HAS EQUILIBRIUM?

Yes, you can has. Here are three fundamental factors that can accelerate the coming of the new economy.

(1) Slash prices faster! The endgame here is to slash them so low that people consider taking those little 5 GOLD rewards and buying the 250-or-whatever Q1 Weapons or the Q5 House that money can buy if the prices get slashed low enough.

(2) Slash wages too! The endgame here is to reduce the value of labor in terms of GOLD and make fewer people willing to pass up so many cheap goods for the chance of paying Lana for a day or whatever else they do with GOLD. It also just gives them less to hoard.

(3) Raise the Income Tax! People are hoarding right now, so give them less to hoard and exchange for GOLD. They will also spend slightly less, resulting in faster price erosion.

And here are five conditions that can be used to support the equilibrium when it is detected and thereby halt the downturn.

(4) Coops. Hire people for 1 dollar and pay the rest in stuff. Yes, this is the army model. It specifically keeps inflation low and consumption high (as long as the companies don't compete with the private sector to sell). Armies are also a lot of fun for most people.

(5) Lower the Income Taxes temporarily. Say to 5% or lower. Put a lot of fanfare in the press about it and return it to a normal rate (not the higher rate suggested in point 3) a few months later. This is to signal to the people that it is time to start buying. Increased spending means that the bulls can have a few months in the sun, which is necessary to restore normalcy to the economy. People like to buy when they think prices will go up later.

(6) Temporarily raise the import taxes on Manufactured goods. This is a one-shot opportunity so it would have to be introduced at the right time, but the effect would be a temporary shot-in-the-leg for domestic prices. This would eventually correct itself as it has in every country that has protectionist measures but still has a depressed economy, but it is a corrective measure allowed to countries such as the USA.

(7) An honest-to-goodness war around this time couldn't hurt.

(😎 A baby boom couldn't hurt either.

Yes, I am suggesting that the economy has to be broken down even further before it can be healthy (enjoying a cycle of booms and busts as it normally does).

Update😛 If you can manage the tl;dr factor this young economist explains how the system works (and, with optimism, he agrees that the market has not yet "hit bottom&quot😉.



Should I Be Worried About the Long-Term Effects?

There are a couple absolute factors written in to the game that should concern you.

(1) The minimum wage is 1 dollar.
(2) The cost of a dollar is 0.005 GOLD to the government.

This means that skilled labor has to be worth at least 1 dollar for private industry to want it. It also means that the government has to value currency above 0.005 GOLD in order to sell it at a profit. What's a possible solution here?

(1) Government-operated skill 0 centers. The government is the only entity with access to the cheapest possible dollars in terms of GOLD. Let them subsidize skill 0 labor and also, incidentally, make whatever balancing of the professions they wish... and also make outreach to new citizens easier.

(2) Keep the value of the dollar in terms of GOLD relatively high. For the USA, at least 0.02 and hopefully 0.025. The primary reason is to keep the sale of currency profitable to the government. The secondary reason is that high-valued currencies have "tighter spreads" on the Monetary Market and usually leak less money to speculators.

(3) The main reason that you would want to devalue your dollar somewhat is so that the value is low enough that 1 dollar is worthwhile for private industry to spend on "slightly skilled" labor (no later than skill 4). An interesting thing about all this is that the skill 0 laborer might have a meaningful "minimum wage" in the future, one which is nearly on par with the wages paid to skill 1, skill 2, and even skill 3 laborers. This can only benefit the rate of consumption, naturally, as the new players would be able to consume (with their new citizen fee and minimum wage) more than they produce.

Or we could all just put our heads in the sand and hope we can change consumer behavior by persuasion or change the company by petition. I just don't see that happening.