Economics 2: International Trade
Radsoc
In this article we're going to analyze international trade.
Country E is a net exporter. Country I is a net importer. Country E with Currency C1 sells products in Country I with currency C2. For this E receives an amount of C2 from I.
The loss of C2 from the circulation increases deflation in I. C2 is useless in E and has to be traded for either C1 or Gold.
C2 is traded for C1:
There has to be a demand for C2 on the market. This demand is created by people/companies who for some reason want C2. It could be companies from I who export to E or people from E who move to I for example. But as E is a net exporter and I a net importer, and as E exports more to I than what I does to E in this case, with the effect of moving people negligable , there will be more C2 than C1 on the market.
The amount of C2 on the market will increase, subsequently the amount offered for each C1 will increase with it. Which means that the value of C2 decreases compared to C1, which makes products from C2 more expensive.
C2 is traded for Gol😛
As before there has to be demand for C2 on the market. And as in the earlier case the conclusion is that C2 loses price compared to the one of Gold (and all other currencies with it), unless Gold is produced (bought or from gifts and invitations) at a steady rate in I. The effect will be that I hands over its gold to E, making I poorer.
That's why it's important to make sure an economy has a trade surplus or is self-sufficient. Otherwise it will end up in the crisis which involves many countries who have a Imports/Exports>1 right now. An economy can protect itself from this kind of effect by increasing import taxes at the cost of inflation granted that the imported products were bought and therefore cheaper than the local ones. Most countries will probably be unable to do this and their only option to solve the problem will then be to create wars which will increase import prices and thus increase consumption of local goods.
The only way to be completely sure a country's economy is in the hands of its citizens and not some foreign or local merchants, to avoid wars, and to make sure currency doesn't devaluate is to have a strong democratic economy - a planned economy. Established planned economies aren't affected by uncoordinated market decisions and crises like those we see in most market economies at this very moment. That's why you should support political parties that advocate the abolishment of the market hegemony, and the introduction of economic democracy.
Comments
\"C2 is traded for C1\". That isint something that happens in Erepublik, so you can exclude that.
You dont have to vote for a party that uses only planned economy to achieve what you are mentioning in this article. FBS stands for a mixed economy. That means that we can keep all the enjoyable parts with the market economy, and also control the economy in a way that benefits all.
And using export/import as an arguement for a total planned economy is kind of strange since Sweden is the biggest exporter in Erep, and at the same time self-sufficient. This under the FBS´ mixed economy.
And you havent mentioned the import/export problems with an erepublik planned economy. Foreign exporters can more easily undercut the Swedish prices when the competition from businesses is taken away.
Mixed economy for the win!
\"A mixed economy is an economic system that incorporates aspects of more than one economic system. This usually means an economy that contains both privately-owned and state-owned enterprises, or that combines elements of capitalism and socialism, or a mix of market economy and planned economy characteristics.\"
Sometimes you find offers directly between C2 and C1, which means that C2 for C1 happens here too, but C2 for Gold is a lot more common.
I also believe that a planned economy is a lot more efficient. Instead of having a huge spread of employees you gather them in fewer companies where profit isn\'t required. I think someone showed that the production increased dramatically that way by referring to the algorithm. There will be more room for lower prices and/or higher wages than in privately owned business where the owner requires profit.
Yes, the production will rise with bigger companies - that is a fact. But the main argument for not having a planned economy is that people would stop playing, and with that the production would go down.
There\'s alot more arguments against planned economy but not even the person who developed the in-game algorithms can convinve these leftist people of the merits of a free economy in Erepublik.
This is of course their ideology speaking and not their sound judgement, why if you believe in a system to work IRL it must also do so in Erepublik, right?