Pros and Cons of a Planned Economy & Shortcomings in our Economy

Day 306, 13:53 • Published in USA USA • by Nave Saikiliah

The hardest thing for smart players to grasp when they first start playing erepublik is how simple everything is. The economy is simplified, the political process is only a few functions and votes, training and working is a click of a button.

The second hardest thing for smart players to grasp when they first start playing erepublik is how complicated everything is. The basic supply and demand envisioned at first is strung out with monetary markets, taxes, lack of incentives -- a whole mess of complications and problems.

Moving on, there are a few reasons why planned economies tend to fail in real life. The invisible hand of the free market tends to work better than the iron fist of the government in almost every case.

First of all, the economy in real life is ridiculously complex. There are millions of different products, hundreds of variations for each product, countless disparities of prices, billions of workers. Try organizing that yourself! The best way for all that to function is greed. Each person, by acting in his own self interest, tends to do what is best for the whole. Beautiful, huh?

Well, that's not entirely correct. People are irrational, markets are virtually never fully efficient; it's just better than anything else. There are almost always ways to improve the system -- too bad the world is too complex and it's inconceivable to improve each market one by one.

In eUSA, we have six markets and probably 1000-1500 real people (based on the amount of workers). Out of those six markets, one is specially tailored to the government (hospitals) and for one, quality makes virtually no difference (moving). In other words, erepublik's economy is deceptively simple -- simple enough to manage.

Second of planned economies' shortcomings is this small issue of incentives. Remember, a planned economy isn't necessarily communist; trust me, I'd be the last one to want to treat anyone else equal to me 😃. However, if central planning took over this economy, would people be less inclined to work hard and would it affect things? No. In erepublik, working is simply pressing a button. As long as we don't create incentives to NOT click that damn button, incentives won't be a problem.

Furthermore, in real life, people who work have been in this world for at least ten years. While I won't pretend the average human being is anything close to smart, years of experience helps to make up for it. In this little game of ours, the average user is a month old, tops. Most of the players in erepublik know nothing. This is not an elitist statement -- it is fact. And if you are smart enough to comment about this, you are not one of those aforementioned players.

You would think that the process to becoming a business owner would weed out the noobs from the experienced players, but that is simply not the case. Most business owners know nothing, at least if eUSA is anything like it was a few months ago (all indications show it is).

I would be willing to bet that the majority of business owners do not know how to calculate productivity. The problem back in the day with prices is that business owners did not know that they were losing money on each sale. Imagine how frustrated I was. "Price higher, please... so you don't go out of business!"

If America implemented a central planning system, a few things could be done.

First of all, the central planning agency could look from above and evaluate exactly how much production should be used in which industry. Then it could shift resources from one inefficient industry to a more efficient one. With the proper means of information (I'll finish with this), this task wouldn't be too difficult, not with six industries and five quality levels.

Second of all, we could focus on maximizing productivity. The always flailing gift industry could be invigorated as a consequence of simply making the best of the system. If we invested in the gift industry and means of dispersing wellness to the best workers, we could increase what we produce. If we increase what we produce, our wallets and inventories grow.

Last, we could create a more team based environment in America. Sure, competition helps the economy -- and there will always be a sense of competition. But, a common goal of maximizing our resources will create a sense of kinship that will really come in handy when the stakes are raised in V1.

Before any of this is possible, the admins would need to perfect the way we can receive information. They were working on updated XML files with information about every individual (I used it to create a [a url=http://www.erepublik.com/article-263291.html]list of citizen productivity[/a] back in the day). As soon as V1 is launched, the admin can get back to it and we can work on a means of utilizing it.

Even if we never switch to a planned economy, I hope I conveyed that there is a lot we can learn from it. We shouldn't dismiss it based on its stigma from real life.