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eRepublik - Online Strategy Game

Learning The Ropes: Minimum Wage Explained

1,828 jour, 19:02 de Ian E CoIeman


Est. 2010
Thirty-seventh Edition: Sunday, October 28, 2012

New World vs. Real World



One of the most common mistakes made by new players (and some old) is to try applying real world concepts to the dimensions of eRepublik. Now while this is understandable since at a first glance there may seem to be many parallels, ultimately eRepublik’s mechanics deliver an extremely different environment – one that calls for drastically different ideas and ways of thinking.

To better understand this, let’s take one of the most common examples: minimum wage.



Real Life Minimum Wage

Minimum wage is a real life concept that most of us are probably familiar with. It is the lowest wage that an employer is allowed to pay employees.
In real life, minimum wage is used to ensure a more livable income, based on an index of the costs of basic living, for workers in “unskilled jobs”. These are jobs where the labour market (the people who are willing and able to work) is much larger than the available jobs. This creates a supply and demand relationship that favours employers and drives down the wage that must be paid to attract workers to fill the unskilled jobs.




eRepublik Labour Market

In eRepublik there are two things to note concerning the labour market:

1. Every citizen has the same production output when they work in a factory. There is no skill factor.
2. In eIreland’s free market there are more jobs than there are unemployed workers.

These two factors combine to create a supply and demand relationship that favours workers and drives wages upward as free market employers compete for labour services.



This means that employers are paying just about as much as they can before no longer making a profit by operating. Given this, minimum wages above the current levels would cause (any semi-competent) employers to fire all of their employees and run solely on their own labour. Either that or we would see market prices shoot up to compensate, thus causing inflation, devaluing our currency, and decreasing the purchasing power of workers – which would defeat the point of minimum wage increases.

So, in our current economy, if you care about our free markets, you don’t want to raise minimum wage above the normal levels.

BUT THERE’S STILL MORE TO THIS!



Why These Lines?

Let’s go back to note number two from our eIrish economic model.

“2. In eIreland’s free market there are more jobs than there are unemployed workers.”
Why is this?

Well the long and short of it is, that communes are the major reason for this. In fact, communes define the working economic model of eIreland.



"OH NOES COMMUNISMS!" you say! Well, calm down for just a second and let’s remember the golden rule: real life doesn’t into eRepublik.
So for a starter let’s look at why communes are so popular in eRepublik vs. Real Life.



Real Life Economic Models

In real life, communism is tricky because it requires central planning. The needs of citizens have to be calculated down to how many nails to manufacture and how much vodka to produce. Because different workers have different outputs, which can be hard to measure, wealth distribution becomes an issue without an objective measure of economic worth like that offered by free markets. Marxism was a product of the industrial revolution, at a time when the full complexity of a modern global economy couldn't be fathomed.



Capitalism on the other hand works on the basis of supply and demand for both labour and goods – this works well when it comes to complex economies where a central authority could never comprehend every factor as well as many self-interestedly motivated specialized organizations – it’s not perfect, but our real life economic realities explain why it is used.




eRepublik Economic Models

In eRepublik, we have basically 2 products, and 2 kinds of raw materials. An economy like this can be more easily planned – we know exactly what each citizen needs. In that way at least, this game's economy is very simple. We also don’t have to worry about differences in labour – the lvl 1 citizen and the lvl 50 citizen will do equal work and can easily be given equal pay on those grounds. So right off the bat, the economic features of eRepublik are much more in favour of communes that the features of real life. In addition, communes in eRepublik are not run by the state exclusively. In my opinion, what we call communes are more like corporations where citizens make an investment, and collect dividends.




Why We Use Communes
Given this games economics, why do we use communes? Well here are some good reasons for a start:

1.Communes can be based out of other countries to take advantage of resource bonuses.

2.Members avoid income tax because they are paid in untaxed goods rather than taxed currency.

3.Total production can be allocated based on need or by debt, which is ideal for military unit supply.

4.Commune leaders generally don’t look for a profit margin, so that workers are effectively paid more.

5.Communes are more insolated against market flux – X amount of work results in Y amount of direct production regardless of market activity.

6.Communes can be more efficient since they encourage citizens to pool their funds for upgrades that one citizen on their own would have a hard time accomplishing.

7.As a culmination of these factors, communes often offer more than you would be able to buy with the currency you earn at a freemarket job.

Users invest in the system and collect dividends. Communes compete against each other for investment by being more efficient and offering better service… sounds kind of like capitalism to me ;)



There’s a reason why every nation in eRepublik now uses communes as the centerpiece of their economies. They work extremely well in the eRepublik economic model. Some citizens then supplement communes economic contributions by running their own factories on their own labour and selling it on the free market.

Having our minimum wage as low as possible allows our nations communes to operate more efficiently and effectively by allowing them to exchange goods without leaking currency unwontedly. Raising minimum wage would either have no effect on our free markets, or have a negative effect on them.


What Did We Learn Today?

First: That we should leave minimum wage alone and support our nations communes.

Second: Never assume that real life concepts and ideologies will translate flawlessly into eRepublik strategies. Look at the mechanics first and construct your views from the inside-out, not the outside-in.




End Notes

Need help researching eIreland? Check out the official wiki of eRepublik:
http://wiki.erepublik.com/index.php/Ireland

Have questions about how things work? Check out Irasians NC Guide:
http://www.erepublik.com/en/article/-tutorial-read-me-2129973/1/20

Need help with eRep Jargon?
http://wiki.erepublik.com/index.php/ERepublik_Dictionary


Cheers,
Ian E Coleman



 

Commentaires

binksy
binksy 1,828 jour, 22:37

i miss work skill
i could live nice and comfy back then

Starkad Rorlikson
Starkad Rorlikson 1,829 jour, 03:53

Communes in eRepublik (and eIreland) work for two reasons:

a) They are tax evasion schemes,and thus provide a higher output for the people participating in this scheme (of course on the expense of the eIrish government)

b) Distribution of goods is easier and more transparent.

As far as the difference between real life and eRepublik economics is concerned....there actually isnt much of a difference. Setting minimum wage levels above what is the "fair" wage will create unemployment.

Ian E CoIeman
Ian E CoIeman 1,829 jour, 12:34

Well I think communes work for the reasons I outlined, among which was the fact that they don't have to pay tax. This is an issue that I also have with communes, since those who choose to own companies still have to pay these taxes and I agree that this is unfair.

And I think you're totally off base with the differences between RL and eRep economics. Everywhere you look there are drastic differences.

 
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