A New Economy

Day 2,671, 05:54 • Published in USA USA • by Arkandy
When I stated in my last article that things have changed a tad since I last played half a decade ago, I made a massive understatement. The economy module is nearly unrecognizable in terms of behavior, usage, and design from back when I played. Not that this is necessarily a bad thing, but it's more to get used to nonetheless.
Two things have really stuck out to me in terms of the new economy module. The perfectly competitive raw materials market, and profit margins. These two factors are probably the biggest when it comes to how one structures a company and it's production. Understandably then, I'll have to re-assess our strategy in terms of how Arkcorp will be structured, especially in reference to the new model. I'll break down what I've seen just from my last week or so of being back, and I encourage any reader to contribute their views and critique mine in the comments. What's running a business if you can't talk about the market with others?
First off, raw materials. To my knowledge, these didn't exist when I last played. Personally, I love the idea of having companies dedicated to just extracting materials. The way that regions used to be set up, raw materials makes perfect sense. If I wanted to open FRM (food raw material) company, I'd pick a country/region that best assists my output. With the new system, however, I get all of those bonuses in any connected region. Normally this would be a reason to rejoice! Why would a business owner not want all regional bonuses wherever they worked? This is true, there are reasons to enjoy multiple resource bonuses regardless of location. For instance, now you can expand into other markets, start different types of companies, locate in the state you want to without suffering bonus loss, the list goes on. It's not the bonuses themselves that create the problem we have in our market today. It's their effect on profit margins that do.
Profit margins are the possibly the only reason companies exist. Who's going to pour capital into venture if it's not going to have anything but a negative return? While bonuses are fantastic for production, and increase the amount of product available, profit margins for companies suffer. Now if companies could still turn a decent profit given a good amount of capital investment and location, I'd say the trade-off of lower profit for more production is a good one. However, at least here in the eUSA, We nearly have what economists call a perfectly competitive market. This means that no matter what “advantages” you have over your competition, your prices are going to be the same as the current market prices, and there's going to be practically no price elasticity for you to work with. So if I extract 250 RFM and the current market price is .02 USD and I try to sell those materials for .03 USD, that product will not be moving any time soon. Companies in perfectly competitive markets only make profit when moving massive amounts of inventory, because of the incredibly low profit threshold. This makes startups like Arkcorp incredibly hard to get rolling in the early stages without a decent amount of capital.
Another important effect that low profit margins have on the economy is the hiring of employees. I was shocked to find in most markets, especially in factories that take in raw materials and spit out products, that a worker doesn't even cover their own wage in their day at work. In fact, managers who just convert RM into low-quality product usually suffer a loss, even when they do it themselves(unless they're the ones supplying the RM). While this isn't true for all markets it's a trend for the majority of them and is something that should be addressed. Why is the eUS wage hovering around 60 USD when production of lower level materials doesn't come close to paying for that? My hypothesis is that it's higher quality factories that employ workers. RM and low level production just can't sustain a workforce, and thus is makes more sense for the manager to just work them all themselves. This creates what I call a “non-economy”. There aren't really workforces, but rather super-industrial single citizens, that produce many resources themselves. Companies are now essentially single-player functions.
I could go on, but I'll save the rest for the next article. I'll also quickly announce that Arkcorp has it's first business, an Aluminum mine. While it's not much, it's a start. I hope you all enjoyed the first official edition of the Arkcorp Business Journal! Let me know what you think by commenting, and if you're so inclined, endorse the paper! Every dollar goes right back into the eUS economy.

Cheers!
-Arkandy
CEO Arkcorp Industries

edit: I'll be out of town for the week, more articles when I return!