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Before I begin:
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Greetings my fellow Americans,

For the most part I stayed out of a lot of the economics debates in eRep because well I have plenty on my plate at the moment, and I have other goals to spend me time on. However, reading PigInZen’s article yesterday Economic Armageddon I thought "you know I’d like to contribute to the discussion", because no change occurs (and I'm not talking just about this topic), unless we choose to discuss it and present ideas, counter ideas, move the process along.

Now to give you a little insight into my background in RL I am the CEO of a small/medium sized corporation and have a decent number of employees. While most of my educational background is in the technical arena I do hold degrees in both Business Administration and Finance. Now I hear you, this isn’t RL this is eRep. We’ve had plenty of people come into this game that are economics majors at university, or whatever and think the way we do things is totally crazy, and this is the way you should do things blah blah blah. But see I’ve had the luxury of having been around a while now (I was born during WWIII) and understand the game well, and have seen many changes to our economy of this time.

As for eEep I’ve operated for some time a pretty decent portfolio of companies (something like about 1,700g in assets) and in the last month due to a convenient situation recently did some expansion and investing in some other people and bonds. Like PiZ mentioned about hoarding product I’ve done the same, I’ve poured quite a significant amount of money into the enterprise because I feel keeping people employed is more important to me than shutting down a significant portion of my enterprise. Most of my companies are all US based, and those that aren’t are RM companies that supply my US finished goods production. So it’s a nice blend, and helps maintain some balance to the overall cash flow. I’ve not complained or trash talked decision makers about me not making the profit I feel I should be. Of course that’s my goal like anyone else, because I had always been turning around and using my spare capital to either expand my operations or invest in someone else to help them launch a project or whatever. So as you can see for me it is more about reinvesting profits than self hoarding money. I’m pretty much a WYSIWYG kind of person, and my persona here in the eWorld is the same in RL.

Now hopefully you are still with me, and thank-you for entertaining my babble, but sometimes I think it helps to understand where someone is coming from before going on ramblin’ about change.



Now I respect the policy decisions we have made over time, and I’m friends with some of those that are and have been responsible for our policy we have today. So this article is far from a I think your wrong, I’m right, so change it stance. The rational we have maintained about why our import taxes are so low, actually makes some sense. In times of war the increased availability of materials and goods, and helped us greatly to fight harder, heal more cost effectively, and move around the world less expensively. However, due to a variety of factors, many of which PiZ’s points out well in his article have effected the normal paradigm of our economics.

I have felt for some time I would have liked to have seen at least in the finished goods market an across the board increase of our import taxes to 5%. This is still significantly below the global average, and such a small increase based on analysis I’ve done myself on a variety of factors; I do not believe it would deter imports by any significance if at all. While it would not mean a huge addition to our government’s coffers, but a 4% increase is 4% more than 1%. It all adds up in the end, much the same reason the policy to raise the VAT on Food from 8% to 12% was presented and passed in our Congress.

But wait if you call in the next 5 minutes….. oh wait sorry was drifting and accidentally changed the channel. So here’s what I’m really getting at PiZ’s just offered the follow proposal, for a matrix of our import taxes:

Weapons - 15%
Food - 15%
Gifts - 15%
Tickets - 20%

Grain - 15%
Oil - 15%
Iron - 15%
Wood - 15%
Diamonds - 1%

I’d like to offer a counter proposal, though to be honest I would support either because quite frankly it doesn’t take much time to make course corrections via law proposals once this is implemented.

Weapons - 15%
Food - 15%
Gifts - 15%
Tickets - 15%

Grain - 8%
Oil - 10%
Iron - 10%
Wood - 10%
Diamonds - 1%

So you are saying well this isn’t THAT drastic of a difference, no perhaps not, however, there are some specific reasons why I want to increase RM import taxes at a reduced ratio in relation to finished goods. But first, my reasoning behind my difference in MTs is because from sampling the market over the last day, and just some general observations from the past, it seems to be less saturated with foreign sellers, thus less of a threat. Therefore, why not just make it the same as the rest.

Having watched some things for a while, I’d like to start the tax rates on RM companies lower, because of a few factors. For one, this will be a pretty significant shift in our policies and exactly how far it will alter our economy is not known. We can project and estimate till we are blue in the face, but until we take the jump, and say “hey we’re going to try this”, there just are some variables you can not predict. Second, my observations are that there is significantly greater finished product on the market than the RM reserves. Taking in account the ratio of RM needed to create finished product of each type, I believe this proposal will create a good balance. The last thing we need to do is create a material crisis while we are field testing this new paradigm shift in our policies. If we run out of materials, we will halt production. Now while we have major overstock of finished goods that not a big deal, but would create a problem quickly. Halted production means job loss, and we want to reduce stock to more manageable levels, not create other potential problems. Hence, why I believe we should increase our import rates of RM products, at a different rate then finished goods.

The bottom line is either it will work or it will not, this is certainly not a fixed change that can never be changed again. All change will bring a degree of market flux, and require a few days to adjust and balance itself out again. I say we field test the above proposed matrix, give it at least a good week, and make course adjustments as required from monitoring the market over the selected time span. Then you can rinse, repeat, making adjustments, monitoring, etc. until we find the right formula per product, for our current situation. Or worse case scenario we can try it, it fails miserably, we caulk it up as a experiment in eRep economics, toss it out the window, and return to our old policies.

Change always comes with risks, however, unlike law making in the real world, the risk here to our market is honestly minimal. It does not take months to make course corrections should we decide to just do it, and make it happen.