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Imports are OBVIOUSLY Killing Our Economy
5.
No, not really, but I can point fingers too!
So why are wages really in the trash?
A few months ago, the admins introduced Lana; the ability to buy strength. Suddenly, you have an ability to get ahead of everybody else's' strength and get stronger quickly. Everybody burned into their gold reserves, and no immediate economic consequence was seen. Lana's effect on the market would be subtle at first, but it made its mark. Everyday thousands of gold is spent on Lana. Suddenly you have thousands of MORE gold leaving the system, and less coming in. People begin to hoard gold for Lana, or for a rainy day. Regardless, gold technically got more valuable.
What we are witnessing now are the consequences of such a drain 3 months later. Less gold flows in economies, and more people hoard their own. This results in less consumption of gold on goods, such as weapons. When demand drops, prices go down for business owners to make a profit. This drives down wages until a new equilibrium is met with the demands of the market. What is that new equilibrium? I don't know, but I feel that it will have other consequences.
The USD is weakening due to several factors. A shrinking population is one, taking out consumers who would normally buy stuff and bring in gold through medals. Another is constant attacks to devalue by some people (one in particular, who can't separate rl economics from eRep economics).
I think there is another factor to consider: the one I raised above. As the prices of goods fall due to the market shift, lower skill jobs (skill 0 and 1, with skill 2 right behind), become unprofitable for business owners to operate. The government and private sector can't supply all of these jobs, and something needs to budge. The peg is one such way. When the peg (currently 1 USD = 0.027 GOLD) loses value, it causes inflation (goods cost more). This makes goods have a higher cost and allows business owners to operate.
On the subject of imports, I don't think they're killing us. Why? A few factors.
1. The United States has every active citizen at employment. Otherwise I, and the 50 other Congress members, would get nonstop notifications that there are no Skill X jobs on the market. We have too many jobs than citizens, which means we have a surplus of companies. We cannot "raise employment," because we are already at 100%.
2. Our manufactured goods aren't the cheapest in the world. Q1 guns for instance, are pricing 0.01-0.02 gold per weapon above the world average. So no, imports are not driving are prices down into the impossible profit range, the economy is just shifting.
3. A 1% tariff is still a tariff, which gives American business owners an advantage.
Overall, the forces of the market are forcing a new equilibrium and we'll just have to wait and see.
No, not really, but I can point fingers too!
So why are wages really in the trash?
A few months ago, the admins introduced Lana; the ability to buy strength. Suddenly, you have an ability to get ahead of everybody else's' strength and get stronger quickly. Everybody burned into their gold reserves, and no immediate economic consequence was seen. Lana's effect on the market would be subtle at first, but it made its mark. Everyday thousands of gold is spent on Lana. Suddenly you have thousands of MORE gold leaving the system, and less coming in. People begin to hoard gold for Lana, or for a rainy day. Regardless, gold technically got more valuable.
What we are witnessing now are the consequences of such a drain 3 months later. Less gold flows in economies, and more people hoard their own. This results in less consumption of gold on goods, such as weapons. When demand drops, prices go down for business owners to make a profit. This drives down wages until a new equilibrium is met with the demands of the market. What is that new equilibrium? I don't know, but I feel that it will have other consequences.
The USD is weakening due to several factors. A shrinking population is one, taking out consumers who would normally buy stuff and bring in gold through medals. Another is constant attacks to devalue by some people (one in particular, who can't separate rl economics from eRep economics).
I think there is another factor to consider: the one I raised above. As the prices of goods fall due to the market shift, lower skill jobs (skill 0 and 1, with skill 2 right behind), become unprofitable for business owners to operate. The government and private sector can't supply all of these jobs, and something needs to budge. The peg is one such way. When the peg (currently 1 USD = 0.027 GOLD) loses value, it causes inflation (goods cost more). This makes goods have a higher cost and allows business owners to operate.
On the subject of imports, I don't think they're killing us. Why? A few factors.
1. The United States has every active citizen at employment. Otherwise I, and the 50 other Congress members, would get nonstop notifications that there are no Skill X jobs on the market. We have too many jobs than citizens, which means we have a surplus of companies. We cannot "raise employment," because we are already at 100%.
2. Our manufactured goods aren't the cheapest in the world. Q1 guns for instance, are pricing 0.01-0.02 gold per weapon above the world average. So no, imports are not driving are prices down into the impossible profit range, the economy is just shifting.
3. A 1% tariff is still a tariff, which gives American business owners an advantage.
Overall, the forces of the market are forcing a new equilibrium and we'll just have to wait and see.
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5, 4, 3, 2, 1, 0.
First Denied
A slim advantage might not be a good enough advantage. Who knows? Perhaps changing it could do more good than bad with the new economic problems we face today.
o/ Woxan
(one in particular, who can't separate rl economics from eRep economics)
lolwut? seem to be another mantra coming through here. Rl economics and eRep economics? Is eRep economics something to do with buckets?
Damn, I need to learn how to brainwash people by repeating the same sentence enuff times and hope people start to believe in it.
I was referring to Alby, who attempts to graft rl Austrian economics into eRep, which won't work.
I agree. Admin doesnt listen. KILL LANA Even if you dont listen. Voted so much, votejuice came out of my..eyes.
How can we help the Frivolous gold spenders?
The US won't have unemployment simply due to the minimum wage. Employers will just simply keep lowering their wages. And 1% is like 1-2 pennies on the dollar for imports. And keep in mind that the imports take money out of our economy and into others, which weakens the dollar even more.
Woxan, come on the US forum economics section. There is one whole big thread on this.
Yes, I saw Tim Young, I'm a moderator of those forums, I prefer to stay out because it's a cyclic argument.
Economics is just a skillset to analyse complex situations. There isn't such thing as rl maths and eRep maths and so there isn't rl econ and eRep econ.
If you know your econ well, you'll look to model the situation accordingly.
From where I stand, it isn't a cyclic argument but the stuff > gold is invented by one dude who doesn't know any economics at all but just keep repeating it if anybody says anything differently. He can't argue back because he has total lack of understanding of basic concepts.
Gold is everything. It is a form of stuff because it can be changed into stuff. Gold can buy stuff so why would stuff > gold?
He has aboutly no bases for his argument except something to do with buckets lol
The problem with the US economy is not all about import taxes but a large part of it is. And with global downturn the US is the first to be hit because your low import taxes means you get global shocks asap.
Vote hard- very nice article. I agree except for the part about weaker currency. The currency is just a pass through value, prices are ultimately tied to gold- move the PEG the pass through prices adjust back to gold- noone will get any lasting advantage...
Yeah AVScorp, but in order for wages to still be profitable, they have to fall to meet in terms of gold. A weaker peg means the currency is worth less in gold, allowing the wages to reach an equilibrium.
I for one found this to be very informative.
Of course we know it's Lana!
I agree with your point that it can't be tariffs which drives down prices. US prices track international prices. Why? We can all buy international via orgs, especially for raw goods. So borders in erep don't make a whole lot of bite anyways, so why throw up a bunch of tariffs? If prices are higher here, people will just get their goods elsewhere.
And speaking of how borders in erep don't matter, this is a global problem, so I don't see how the U.S. alone is going to be able to change anything. It will take a mechanics change from the admins.
@ Tim Young, what Woxan means is strategies that worked well in real life countries like Austria might not and often does not work in erep. For example, I can use my understanding of real life economics and history to say that tarring are bad because they interfere with the markets in a way that causes market inefficiency and loss production; and, that this loss of production would be as disastrous as the Smoot-Harley tarrifs that helped cause the great depression. That arguments for tariffs are arguments for an great edepression. However, that might not bee the case at all. It could be that eRepublik has different core qualities that means that protectionist measures that wreck economies in real life actually help. (though I doubt it.)
woxan, removing the peg will make life difficult for everyone (to budget the spending/cost/wages) and do nothing for the economy. If you know some economics 101 - you will know that inflation does nothing...coz at the end, USD will be as worthless as the Greek dollars before the goons...
<a href="http://www.erepublik.com/en/edit-article/imports-are-obviously-not-helping-1212590" target="_blank">http://www.erepublik.com/en/edit-article[..]12590</a>
Yay Alby!
1 gold = 1 USD
Carr De Vaux, I'm not advocating removing the peg, I'm saying that economic forces are forcing the peg to be lower. I think 0.025 is a good place to mark it in the ground.
Inflation does have benefits. It makes lower skill job offers profitable, allowing them to exist bountifully on the market. Hyperinflation is a whole 'nother story.
interesting i my self just started and am working for 1.14 usd an hour and im totaly broke we need to break our dependace on impoorts if we are going
where this debate should move:
<a href="http://www.erepublik.com/en/newspaper/the-word-now-178985/1" target="_blank">http://www.erepublik.com/en/newspaper/th[..]985/1</a>
you know imports dont really hurt any one that bad it dosnt take money away from eus companies because its the cheapest companies that sell the most anyway, why imports almost force companies to sell there goods cheaper or other wise they just wont sell anything.... im looking at it from a consumers view, the companies might not make a huge profit but the consumers dont eather i mean the wages are set and the change if we take out imports then how will any consumers get ahead i mean we dont really get ahead as it is we live off of our wages and if the price for everything goes up and our wages stay the same eus will lose players out of frustration.... curently the profits for companies are going down but if we take out the imports i believe that the prices will go up making it even harder for any one who dose not own a company to make a living.... if food suddenly cost .80 usd then we will have a problem
Good article Woxan.While I realize this is a global problem, I believe we should 100% cover OUR asses, if thats not raising imports.....so be it (i believe itll help slightly, but thats just me) . I am glad you are looking into SOMETHING. I like to think we all are in agreement that doing NOTHING isn't the answer.
@Aurelius Ambrosius - um.. I can give you rl economics histroy does not equal eRep economics history.
If you say tariffs does not work irl... in what situations and what are the aims? If you know your econ well, you'll model the situation accordingly.
I believe in unilateral free trade in rl but not in eRep. eRep is a game about nations vs nations and not about raising the living standard for eWorld and since all industries are exactly the same across all countries there are no real benefits to free trade.
Also, since you can't set trade barriers to particular countries you can't really set low import taxes as other countries will benefit from your country.
I can't see any arguments why people want to lower import tax apart from damaging their country.
@Joskewi - oh but they do make a difference. not everybody can afford orgs and if you close import tax it means it makes it harder for people from other countries to sell to your country.
frag her
THIS IS ALMOST IT
I <3 you.
Serbia and Hungary is ruining other Phoenix countries by having so high import taxes. Brazil has one of the lowest average salaries (if not the lowest) in Phoenix, they had this about 2 months ago, when they had high in every resource.
DONT LEAVE USSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSS SSSSSSSSSSSSSSSSS
CRY
Bye...leave
"woxan, removing the peg will make life difficult for everyone (to budget the spending/cost/wages) and do nothing for the economy." Remove the peg? lolwut?
Woxan, what the hell! The economy is hurting, and we have low tariffs! Why can't you put two and two together?!
In related news, I can't tell the difference between coincidence and causation.
The import tariffs, they do nothing!
Perhaps the problem is that the Admins sell Lana's service. Perhaps we need ecitizens to have the ability to create "training companies" and sell higher levels of strength. That way the gold people spend on training will cycle back through the economy.
And shouldn't training for higher strength drain more wellness per day?
The military takes 200-300 of the HIGHEST skill workers in the country out of the economy and puts them to work at low wages for military companies. Not only that, these same people do not buy weapons on the open market.
How much does that affect the economy? I can't add more than 2+3=4, but is this a problem for the economy?
Common Sense! Finally!
Yes this is true and my article kinda adds onto this
.http://www.erepublik.com/en/article/our-economy-is-not-doing-well-1214455/1/20
But yes Lana is draining all our gold. But people never stop to think that if you buy q1 weapons instead of strength you'll do more damage.
blacktuesdaycrashmaxxxx
It's not about RAISING EMPLOYMENT but RAISING WAGES. We have an oversupply of weapons and other goods. Having 1% import taxation under such circumstances makes no sense.
In ERep we have an extremely simplistic economy. It removes the vast majority of variables that exist in the RL macro economy... I would imagine that protectionist policies would work just fine... A tarriff would increase demand for US Goods+Svc and drive the prices up, demand for employees up, wages up.
Likewise, a devaluation of the USD would likely result in US Goods becoming more competitive internationally, driving up demand for USGoods, demand for employees in the US, US wage levels.
Note, however, that all of the proposed changes to "fix" the eUS economy with increased tarriffs and/or a devaluation of the USD "fix" the eUS at the expense of other eNations. The only true fix for this GLOBAL economic downturn is for the admins to make changes, diversify the economy, create more goods that are CONSUMED or increase the consumption rates of current goods. Make houses last only a set period of time... let citizens fight more often (and use more guns) by decreasing exp/fight from 2 to 1, wellness cost from 10 to 5, etc.
Lana..such a whore.
^ Daphne sighting! And she said 'whore'! *runs to mark his calendar*
Also, pre-Income tax US purchasing power is still the best in the world despite critics of our 1% tariffs and our tax revenue is #1 in the hood, G.
NOBODY SAID ANYTHING ABOUT LANA!!! I have lost 2 gold too, for nothing! Too late now!
This article has convinced me to spend my gold on lana!
On your points:
1. (Full employment) You mis-read the situation. Full employment should mean wages go UP because demand for labor exceeds supply. Yet wages are dropping, because prices for products continue to drop. Prices are dropping because supply of goods exceeds demand.
2. (Manufactured goods aren't the cheapest in the world) Using Q1 weapons as the example, you only show half the data here. The other half: Every nation with lower prices (except one) has higher import taxes than the eUS.
3. (1% tariff is still a tariff) Technically true, but it is not level with tariffs set by our EDEN allies or the rest of the world. Not even close. Put another way, eUS companies are at a competitive disadvantage because they cannot EXPORT to grow the way others can export to the eUS.
This last point is the core fallacy of low import taxes. It's not 'free' trade when all goods are inbound & few goods are outbound. There needs to be a balance there & the current path -- a glut environment -- only compounds the folly of 1% import taxes.
Thank you, Woxan for posting this
wow. really? First of all yes the prices that we have here in the United States is higher than the rest of the world, which is why foreign companies can price even lower than American companies do when they enter our market. So actually you're wrong when you say that our high weapons cost is indicative of a working economy. It's only beneficial to foreign companies who would otherwise sell it for a lower cost in their own home country. But here in the United States the government has taken a liking to these foreign companies and is ensuring that all companies overseas can make a profit in the United States, at the expense of American owners of course.
Here are some applicable words from Joseph Schumpeter, whose work, rather than Hayek's lays claim to be the greatest of the Austrian economists:
from <a href="http://en.wikipedia.org/wiki/Joseph_Schumpeter" target="_blank">http://en.wikipedia.org/wiki/Joseph_Schu[..]eter</a>
An ‘automatic’ gold currency is part and parcel of a laissez-faire and free-trade economy. It links every nation’s money rates and price levels with the money-rates and price levels of all the other nations that are ‘on gold.’ It is extremely sensitive to government expenditure and even to attitudes or policies that do not involve expenditure directly, for example, to foreign policy, to certain policies of taxation, and, in general, to precisely all those policies that violate the principles of [classical] liberalism. This is the reason why gold is so unpopular now and also why it was so popular in a bourgeois era. It imposes restrictions upon governments or bureaucracies that are much more powerful than is parliamentary criticism. It is both the badge and the guarantee of bourgeois freedom—of freedom not simply of the bourgeois interest, but of freedom in the bourgeois sense. From this standpoint a man may quite rationally fight for it, even if fully convinced of the validity of all that has ever been urged against it on economic grounds. From the standpoint of etatisme and planning, a man may not less rationally condemn it, even if fully convinced of the validity of all that has ever been urged for it on economic grounds."
Long live Federalism and the once and future Bank of the United States