The Economy: Past, Present, and Future

Day 843, 21:27 • Published in Greece Canada • by Buck Roger
Once upon a time, Iron was king. It was jealously guarded by a few nations. On the side of EDEN, they were Spain and Greece. On the side of PHX, they were Hungary, Indonesia, Brazil, and Iran. Among the supposedly neutral, there were Ukraine and Peru. The key feature for most of these nations is that they enjoyed fabulous wealth because they held a resource that was by far the most in-demand in the game yet did not have the Land labor force necessary to supply it in the same way Grain, Oil, or Wood could be supplied. This was especially the case within the EDEN sphere of influence, where several large nations (such as the USA) possessed only the others.


(This graph and all others are created with particular concern for Greece within the world economy.)

The world has changed since then. Spain, Greece, Hungary, and Brazil along with Peru and Ukraine still have their High Iron (or China's High Iron). But the populous giants Russia (which took its natural regions back from Indonesia and Hungary) and more recently the USA (who kicked out Indonesia and who rents it from India) and Serbia (who replaces Iran) also acquired High Iron.

Imperialism has distributed the High resources with breathtaking efficiency. Whereas in the summer of 2009 the Iron could be found for 100% more than the cheapest raw material, Grain, with a difference of 6 thousandths of a GOLD (about 0.006 to 0.012), today Grain can be found trading for only half a thousandth of a GOLD difference (20% more; about 0.0025 for Grain to 0.003 for Iron).

And that is just the beginning of the end for Iron's dominance as we will see when looking at the future that the admins envision for v2. Oh how the mighty have fallen...


(Q1 Weapons are always an interesting market, being the primary consumable in v1.)

Isn't the Whole Economy Stuffed?

Not exactly. Certain parts of it are in deep recession, while others can be fairly said to be "looking up" despite the fact that the value of their products also fall in GOLD terms. This is because we must learn to separate two different phenomena: First, the relative value of stuff to the value of GOLD (and currency, which is pegged to GOLD). Second, the relative value of stuff to each other. Both are important and powerful forces, but the factors affecting them are almost entirely different.

The first factor is what makes all the graphs point downwar😛 GOLD is becoming more and more valuable relative to stuff in general. In other words, it's becoming harder and harder to milk the economy (whether you're an employee, company holder, or government) for GOLD. The reason is quite simple: there are too many people trying to do the same thing, which is to conserve their resources and save up (or, if spending, to spend by using GOLD). Until these people create an equilibrium with the people who are buying stuff, the value of stuff will continue to fall. (We don't have to deal in too fine a detail with why GOLD is deflated; Constantinos has written a good article already.)

The second factor is what makes the graphs interesting, for the potential investor and for policy makers. What industries are relatively more prosperous? Which raw materials and finished goods are in more supply than others relative to the demand?


(The red bars indicate the relative change in Greece over the last 56 days; all changes are negative. As you can already see, Houses of every Quality and high-Quality Food are the least affected industries by the economic downturn, and this is before v2 is here and even before the impending changes to Wellness.)

Hey, I Want To Make Money!

And I want Greece to create as much wealth as possible and to keep a trade surplus that is as high as possible. In the past, it has been possible to do so primarily by relying on Iron as the engine of the Greek economy. As long as we exported Iron to our allies (typically through purchase on our own domestic market by Organizations) we had a huge surplus and could afford not only to import the other raw materials (which we must do, practically speaking) but also to send jobs in Construction and Manufacture abroad. This wasn't an entirely deliberate plan. The market decided these things for Greece, by tempting generations of young citizens with the lure of higher wages for Land workers.

Today this just isn't the case. Land workers in our country don't make more; they make less. This can be demonstrated with two graphs, one from the perspective of the company holder and the other from the perspective of the worker.



Note my phrase "unit of work," which I define as the amount of work required for a Manufacture worker to create one Q1 Food. All the other products in every Quality can have their necessary work defined relative to this. To recap the game mechanics: Gifts are 2 units, Weapons are 5, Tickets are 10, Houses are 200, and you multiply by the Quality to get the total number of units of work (so that, for example, a Q3 Weapon requires 15 units of work).


(This theoretical skill 4 worker is at 90 Wellness, has 4.0 skill, and is in a company at Max Productivity. I don't sample the labor market directly because it tends to lag as an indicator and is, moreover, prone to arbitrary spikes and dips.)

Yes, you can even define the value of Land work relative to the value of a "unit of work" in Manufacture or Construction, despite the different rules, so long as you pay respect to each quality of a Land company. When working at a Q1 Land company in a High region, the output of the Land worker is 1:1 with the output of a Manufacture worker, which is to say that the same skill and wellness that make 5 Q1 Grain will make 5 Q1 Food. But the higher Quality of Land companies bring greater efficiency. The exact multipliers are 1.8 times, 2.4 times, 2.8 times and 3.0 times for Q2, Q3, Q4, and Q5 respectively (relative to the Q1 Land company). This means that the worker in Land can supply up to three workers of the same skill in Manufacture or Construction. This has consequences.

If the number of Land workers on a certain raw material far outstrips the demand of its corresponding industry, then those Land workers will be paid less because the raw material will become worth less. This has been true for almost the entire history of the Grain industry because Grain is distributed widely throughout the map but is very "inelastic" in consumption (a maximum of 5 per person per day and an average consumption that's much closer to 1).



But Iron Is Better than Grain, Right?

It has been. However, if you look at the changes announced by the admin, first to Wellness and then in the v2 economy module, Iron is the only clear loser.

(1) Diamonds is being promoted to Titanium and is being awarded half of the Weapons industry (Helicopters and Tanks). Big Win!
(2) Grain is becoming more important after the removal of extra Hospital wellness and even more important in v2, when Food will have customization points and gifts will be gone. Win!
(3) Wood is becoming more important for all the same reasons as Grain. It is also becoming more important due to the expiration of Houses and infrastructure. It is also, for whatever reason, becoming stone. Win!
(4) Oil is becoming more important in v2 because Moving Tickets are being redesigned to make higher-Quality tickets feasible. Win!
(5) Iron is being cut off at the knees in v2 because it is the colossus industry of today but is supplying only two of the four future Weapons industries (Rifles and Artillery). Big, Big, Big Loss!

For countries that depend on Iron, such as Greece, we can attempt to minimize the impact by encouraging our fighters to specialize more heavily in the products that require Iron. However, not everyone will see it that way. Titanium is practically certain to be more valuable at the start of v2. Not only is it concentrated in fewer countries (Russia, Canada, Australia, South Africa; the last one being occupied at present) but the companies just aren't there in the same quantity as they are for Iron. The admins can "discover" more resources of Titanium (hopefully they will) but they aren't taking away the huge amount of company infrastructure that favors Iron production, and they are necessarily cutting into its value by making Weapons into four industries where Iron supplies only two of them.

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(I pity the fool who promotes inefficiency in the market...)

Is There a Silver Lining?

Well, the good news is that it's not too late to prepare for v2. And by prepare, I don't mean building companies primarily, although that may be a part of it. What I mean is building our labor force. We can't change the distribution of skill in Greece at the last minute, but we can start to shift its weight around.

As we all know, many of our oldest players are in Land. So are, in fact, many of our youngest players. It is in the second group that we have responsibility over, to take steps to promote a labor pool in Greece that more appropriately meets the demands of the market. This allows us to create more wealth and to keep the balance of trade moving in and out of Greece positive.

There are some who believe that the market itself will take care of this. However, this is mostly false. The market is very bad at it. This is because most players make their decision when they are literally skill 0, and most of them never change their mind. Meanwhile, every skill 0 job is a "loser" for the private industry that has chances of paying off about a week later, if the employee stays with the company.

What we need is for non-profit initative to step in and make judicious balancing of the skill 0 labor. The government is in the best position to fund it and also in the best position to represent the many competing interests in such decisions, so I would prefer it to be a government-led non-profit initiative and recommend such. The Land job market is the one that needs the least favorable skill 0 jobs and can rely on the existing labor market and the large number of people (there are always people who pick randomly, who role play, or what-have-you) who will do Land no matter what. The other two job markets, Construction and Manufacture, are the ones that need to have skill 0 job offers that outcompete Land.

Construction cannot be favored too much because it should remain smaller than Manufacture, but it must become available! It is an absolute shame that Greece has the best-paid jobs at high skill for Construction but very rarely has skill 0 jobs in that sector. A skill 0 job center (Q1 Houses company run at a loss with employees well beyond 20) is an immediate priority for Greece. It should be balanced with offers for skill 0 Manufacture, and below them both should be offers for skill 0 Land (which must be there to prevent higher-Quality Land companies from killing young workers).



TL😉R Summary

(1) Iron has become less important and will become even less important, especially when v2 introduces Titanium and the quadripartite Weapons industry.
(2) Land is simple and remains simple in v2. It's a very basic commodity industry, where the Greek marketplace for Iron always tracks the world marketplace, and where even the Quality is only a multiplier. Manufacture and Construction are getting Customization Points, which means more opportunities for differentiation in a marketplace (and an increase in the possibilities for inefficiencies of the market to be exploited), which means that the importance of Manufacture and Construction work, relative to Land, is increasing.
(3) Keep in mind that every Land worker needs 2-3 people of similar skill in Manufacture or Construction to make a product with their raw materials. This is just a fact of the game, and it means that efficiency is achieved when a bit less than a third of the world works Land. (There is a slight global surplus of Land workers; it's not just Greece. It's bearable because many are in countries with no High resources or only High Grain.)
(4) Keep in mind that Greece very strongly protects against imports of finished goods. To do so without harm to ourselves, we need more workers in Manufacture and Construction so that they can make the stuff we buy on the domestic marketplace. This helps the trade deficit-surplus equation even more than Land does so long as the domestic work in Manufacture and Construction is more valuable, as it is now.
(5) As a result of points (1) through (4), for the economy of Greece to prosper, we must develop our domestic Manufacture and Construction industries, which have lagged behind Land historically. At the moment, the most inefficient (i.e., lucrative) industries are Houses and high-Quality Food.
(6) So what do we do? Companies can be made any time. The fundamental mix that needs to be considered is the skill makeup of our labor force, and we can start on that now. It's a very inexpensive move relative to the rewards, but it is a long-term process.

Please subscribe to the Ministry of Trade GR newspaper ... it's brand new!

This is in my personal newspaper, and, even though I began compiling the data referenced here for my work in the Ministry of Trade, it is not an announcement of Greece but rather an editorial article. I hope to invite comment and intelligent discussion.