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Dear friends,

Welcome to another edition of the Economist Intelligence Unit. Today we are looking at the Portuguese economy for the second week. These reports overlap a little to make the data sync, so there will probably end up being five altogether, though it will only cost 4 since it’s the whole month being commissioned.

Today’s report has been paid for and commissioned by CaioMario. If you enjoy the report, send him a nice message thanking him.[/b]

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To get a report of your own, simply send me a message and we can discuss payment. It costs 10g a week per country to build the report. If you buy four weeks you get a month’s worth of reports (slightly longer than four weeks) for the same price. A low price for the kind of professional analysis that is lacking in erep these days. I’d happily do it all for free, but I have so many demands on my time that it’s unrealistic.

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This week we’ve seen a decline in global income. I got accused by someone who will remain anonymous of not giving you enough wall-of-text in the last article. Personally I always thought people preferred to just see the pictures, but if you want me to lecture about boring stuff I will 😛

This week we’ve seen a global decline in aggregate demand on the world markets. Most countries now have their income tax set to 1%, though a few still hover around 5-10%. Why is this?

Well put simply, the income tax only taxes citizens on income they generate by working on the marketplace for another citizen. At 10%, this is around 10-20 currency per citizen. Now let’s scale that up to a country sized amount. In Portugal there are around 600 voters at election time. We can assume that on the average day, 600 people have the brains to log in and vote/work/train and so on. So that’s 12000 PTE for the government (at 10% tax). A tiny amount really.

The vast majority of income isn’t generated by people anymore, it is generated by the bot. With just that income tax figure and the total tax income we can see that. Each citizen earns around 200 PTE per day in tax in Portugal. That means as I said that the “pool” of money generated each day by humans working for each other is about 120,000 PTE. Assuming everything was bought and sold by citizens, that would be the max amount of currency to be redistributed on average each day as people sold their products and bought those of other players.

The reality is that Plato buys the vast majority of everything on sale. That is how citizens can earn 20k PTE each, despite their being a limited amount of human money in the market. But what amount of spending each day is from Plato? It is impossible to tell with accuracy, but I can make a few guesses. Portugal has 10% tax on income and 10% tax on products (VAT). It also has 15% import tax, but I will put that to one side and accept there will be a certain margin of error created by ignoring it. Very few “normal” players own licences, and those who do usually own them in big powerhouse countries like Poland, plus whichever country they came from originally.

EDIT: According to Gudrun Schyman the money generated from import tax doesn’t reach the treasury if Plato buys it. Apparently this has been rigorously tested. At the time the bot started I mentioned this bug to the admins but as they didn’t get back to me I had assumed it was still active. That’s one ticket getting 1 star 😛

So the income of Portugal is around 83,000 PTE. If we say that 12,000 of that is income tax, that means that 61,000 comes from VAT. That means that total sales on average must be around 610,000 PTE of goods per day, not even counting raw materials which has no VAT. Since the “human” injection of capital is only around ten times the income tax estimate of 12,000, we can assume that a minimum of 490,000 PTE of finished goods are bought by Plato each day. That’s a ration of 1 : 4 in human : bot. If we guess that the same amount applies to weapons raw materials, we can further calculate the approximate value of raw materials bought by Plato by extrapolating from the estimated finished goods production.

The way productivity formulas are derived means that each PTE of finished goods cost is made up of about 8% profit, 35% wages and the remainder in raw materials costs. 57% of 610,000 is around 347,700 PTE, which works out as about a million raw materials each day used by human companies. Remember that about 80% of those raw materials go to weapons later deleted from the markets by the Plato bot. Everything over that first million are also deleted by Plato. How much that is we can only guess at, but since raw materials companies far outnumber finished goods, especially amongst new citizens, we can expect that overproduction is even greater than it is in finished goods. Conservatively using the 4:1 ratio we already have, we can guess that Plato adds more than a million PTE to the Portuguese economy each day. It’s an amount which is disgusting really, and it makes me wonder how much Plato is also involved in the money markets, since such an obscene amount of money should surely be causing greater inflation than it already does.

Although this is just meant to make a point rather than give accurate numbers, ThomasRed has done an article recently which accurately tracks spending by the bot. It shows that the older, smaller countries tend to be top heavy with supply, and the bot buys more. Nothing new, but puts figures on the actual spend which is rare and difficult to get these days.



So anyway, back to aggregate demand. In eRepublik we have a bizarre kind of demand, whereby demand is directly proportional to supply. The more supply of a good, the higher the buy rate. This is because there is a reserve price on the market below which Plato will buy. In many smaller countries like Portugal, this is 0.33 currency. As the bot was disabled for a few days, that price dropped rapidly as overproduction created a genuine supply-demand situation. Since WAM is “free” to do and therefore the bottom line of profitability is limited only by the cost of 10 health and the players own value-placement of said 10 health, the price of WAM products would continuously drop until they hit a trough price. This would be good for sellers of rarities such as Q6 weapons but cripple everyone else. As a result virtually everyone stockpiled goods during the bot downtime, partially due to the fact they wanted a better price and partially due to the fact they simply couldn’t sell.

At the same time we saw a few days of unlimited workers which rapidly built up the global supply of high Q weapons. Once the bot reactivated prices began to rise and stabilise at a higher price. At this point people dumped products onto the market, causing a glut of supply and activating the Plato bot to buy it all. The consequence of this was a huge increase in government VAT income- until it reached record levels of treasury income. As the market stabilises and supply reduces, that income also reduces. Hence this week we’ve seen a trough as the dumped products are exhausted and people began to rebuild stock using the new economic model given to us by the ineffable Plato.



So we see a gradual decline of income over this period for the reasons discussed above. Although average income dropped sharply in PTE, the value of gold also dropped, meaning that the final balance sheets are barely dinted by the drop in demand. Certainly within the 10% variance week-on-week I’ve come to associate with medium sized economies.



Well this is very interesting. I have had to put the two columns side-by-side here instead of the usual stacked formation, because donations actually exceed 100% of income, and I lack the MS Word skill to work out how to make a comprehensible graph out of that information.

This is interesting because last week Portuguese congressman only made one donation- something I commented on in my article. This week they have made a donation every day it was available for them to do so, meaning that they’ve donated a full 600,000 PTE from their treasury, which is more or less exactly 120% of income. They signed 4 MPPs which constitutes 6.86% of income over the week.

Last week the effective daily income of Portugal (PTE donations for the week multiplied by the gold value, divided by seven) was about 10.6 gold. This week it is 67.18g. Although income has dropped, the amount of that money available for use has increased.

Income per citizen has reduced by about 10 PTE to 136.19 per capita. This is nothing to worry about. The Portuguese treasury has decreased by -139,906.88 over the course of the week thanks to all the donations, and finishes at 5,247,825.27 which is still five million too much in my opinion.



Much of the world money markets are shy and bruised after the rush for gold last week. As such many of them have far less gold than they would normally have. Maybe a cheap gold offer could fix this (hint hint admins) but until then expect to see some pretty big changes day-to-day.



The day-to-day change in gold value is as much as 120 over this period. That’s a huge amount- nearly 10% variation. When you’re buying gold, spending more than 100 PTE more per gold you buy because of demand being high is a lot. These sort of offers make ordinary non-gold buyers struggle to pay for training. It is a good idea to take a risk and buy a lot of gold (10g) when the market is a little stronger and hold out for these periods. Not much help now, but something to bear in mind for the future!

In some ways this game reminds me of Metro2033, where the “currency” ingame is bullets. You can literally shoot all your money away. People who train daily often find that the gold they carefully save ends up being shot away during times like this. I didn’t like Lana when it was introduced and nothing has changed since then. It’s a bad form of subscription service, and is crazily overpriced compared to other games when you consider even buying the 100 euro pack it costs something like 35 euros each month just to gold-train. For people who have a large enough income you can try and use the crippled money markets, but again it is difficult when that path is steadily decreasing the value of many currencies.



Well the interesting story on the markets this week is the raw materials. As in Sweden, people seem to have out-bought the bot in many cases. I guess this is because the profitability of both Q5 and Q6 companies increases demand.

[img]Remember the bot price is 0.33, so for most of the week the price of both raw materials was above the bot price. That isn’t to say the bot didn’t buy anything, just that the amount of goods at the bot price was low enough that they were bought within a few hours of being posted so didn’t register here.[/img]

On the other hand weapons prices have remained stable, which in fact means that demand in this sector has been low all week, except for the 15th and 16th where a surge in sales pushed the price above the ambient bot price. When the market is under “normal” levels of demand the majority of goods will be sold at the standard bot price which is clearly around 36/48 PTE.



Again food is colossally boring. Nobody but Plato here folks. Nice flat lines regardless of changes in other factors such as wages or FRM prices. That’s because most people sell extra food they’ve produced via WAM rather than employing people. Costs are low, and in any case prices are steady.



Wages have risen steadily against all expectations. I expected them to level around the 200 mark, but they’ve risen to 211. This is partly because the inexplicably high bot price of goods in Portugal is pushing them up. As the bot price is 48 PTE for Q6, this means that the profit margins for a Q6 company are still very large and hiring employees to “stock up” on their work now is a good idea. I guess a lot of people are doing so in the hope of storing up against future wage rises. However this is a false economy, because when people have hundreds of workers to assign (as many will soon) competition in the job market will decline. Therefore it will always be a guess as to when to employ. With profits still good at the current rate however it’s not really a worrying question for most.



Here we can see weapons profits over the week. As you can see, Q6 profits are huge and Q5 is still profitable to employ in-against the trend internationally. A Q6 company can easily make 1600-1800 PTE per day profit, however this must be considered against the low value of PTE and the high profitability (and much lower cost) of having a stack of saltpetre mines.



Well it’s been a long article (2300 words or so) and I’m tired and sick so I’ll be you all adieu. I have wall-of-texted you a bit this week. It’s not really the function of the article for me to lecture (since it’s supposed to be a simple country report) but if people want it I’ll try and include more analysis and other features alongside the stock article.

Please bear in mind these articles require a lot of work, and also that they are funded by someone out of their own pocket. Remember to thank CaioMario since it’s his generosity which makes it all possible. So I’ll see you soon!

Ate logo, bonita!

Iain