The Economist ~ the Road to Recovery
Spite313
Dear friends,
I come to you with part two of my economic recovery plan. The more astute of you will have noticed that today is the first day where hospitals are only capable of healing battle damage, not normal health loss through working or not eating food. This is a coincidence, though from an economics perspective a happy one.
You will notice that though the price of Q1 food has dropped to £0.15 the price of Q2 food has risen to £0.50. Of course I anticipated this happening eventually, hence why we have a whole bunch of Q2 food companies idle and ready to open. However, if I were you (consumer) I would buy up 5-6 days worth of food now whilst you can, because prices are under a lot of pressure from increased demand. If you’re a Q1 food owner, try to upgrade, because Q1 does not cover working and training any longer.
Also expect gifts to face pressure globally because of this. Prices have risen by a fifth on average today alone. If you want to buy some gifts, do it now!
Onto the main body of the plan
To prevent excessive speculation, we are not going to elaborate too much on our plans. However there will be government stimulus applied to crucial markets over the next few days. This is a scheme designed to match public expenditure- so we need you to dig into pockets for guns and so on as well. Buy five Q1 guns today and fight where this tells you. Why do this you might ask? The government will be acting to maintain low prices, so you will be getting a bargain. In addition your spending will decrease the gap between total produced goods and total consumed goods.
(S + P) - C = Yd
(stockpiled goods + produced goods) - consumed goods = upward pressure on prices
Very simple erep formula here: If the number on the right is high then prices will not face pressure to change. As it moves towards 0 prices will begin to rise. Right now our consumption is below our production, and so each day the ‘stockpiled’ goods section rises. However, if C>P then companies will be profiting and will put that money back into wages.
Why companies should raise wages as soon as they make a profit
If your company makes a profit, now is the time to invest in future cashflow by increasing wages. Make wages as high as possible and message workers explaining that by spending their increased wages each day they will create higher wages for everyone. Believe me this is the best way out of this trap. The government can only support you so much.
Ministry of Profit
The Ministry of Profit will also be involved in this plan. Its main role will be to provide an export tunnel for our goods, which will soon be the cheapest in the world. Those goods are stockpiled in huge quantities, and batch sales of 100 - 1000 will be standard internationally. To buy goods directly from the Ministry of Profit, contact Jamesw.
A secondary role of the Ministry will be to promote investment in companies. If you’re a company owner and you want to expand but don’t have the capital, consider taking a loan from the government. We have very fair levels of interest and our loans are professionally contracted and backed by the biggest investment bank in the UK (obviously). You can take a loan of any size, provided your securable assets are great enough, and your request is approved by the bank of England. Remember, higher-Q companies make more profits, so you will be able to pay the interest on the loan easily.
To apply for a loan, contact the UK Commercial bank
Why not to hoard gold
The changes for V2 will be comprehensive and far-reaching, but I severely doubt they will bend the basic laws of erepnomics. One of these principles is that when hundreds of people open companies in Q1 and Q2 at once in one market sector then we end up with overproduction. Do you really want a situation where we’re all running crappy unprofitable tank companies because we saved our gold? It’s pointless.
Ordinary citizens should either sell their gold and use the GBP to buy products such as guns and food, or invest the gold by buying an existing company. Do not start a new company. New companies are wasted gold. Buy an old one, and make it work. Just whatever you do, don’t just sit on the gold, because hoarding is what causes recessions.
As you may have noticed there are currently a number of tax proposals going through parliament. Ultimately we will be dropping taxes to 20% income. The purpose of this is to stimulate spending. If spending rises sufficiently, we will look at further cuts in future. So it’s in your best interest to spend the extra income each day.
This program will last for many weeks, and the results will not be apparent immediately. Follow advice from the government, and we should survive this crisis and come out even stronger than before. Please subscribe to this newspaper for future updates.
Finally I’d like to apologise for the rushed tone of this article- as you can imagine we’re quite busy now!
Keep confident, trust your government and spend money!
Iain Keers
Minister of Economics
Comments
really good article
😁 good article as always 😁
Great article
Taking the credit for my plan.
Bloomin' Keers
Voted and I'm joking.
Great article, what happened to the link after 'apply for a loan'?
good article
another excellent article, if I wasn't communist then I would do what you say 😛.
Are you aware that what you are trying to do is moving the country to a Pareto Optimal point which is not a Nash Equilibrium? i.e. if all people act together, all will profit; but if an individual doesn't cooperate with others, he/she will profit even more.
I hope you will be able to make people more altruistic and make this happen. In my opinion, the only working economy in eRepublik is possible by the establishment of a trusted bank/commune so that gold doesn't stay idle, but is used as capital and generates profit. Good luck with the plan. I'm looking forward to see the results.
Great article 🙂
Sorry, if I am spoiling something here, but I find it very optimistic to hope that company owners will be naive enough to raise wages as soon as their profits increase. To maximize their short-term profit, they just have to pay lowest they can according to labor market conditions. Raising wages will help overall economy, but each producer himself will be better off keeping wages as they are and still getting all the benefits provided by producers who raised wages (and lost some profit due to this). Tragedy of commons...
NPP
Your usage of the Pareto Optimum theory seems to be a bit off kilter. I understand your point about those not participating, but the simple solution to that is the stick. If this doesn't work we'll simply flood the markets with nationalised goods and maintain low prices as an alternative. Also I don't see what game theory has to do with this at all!
Kemal ->
Your point is similar to mine. Also, idea abot trusted bank/commune is good (we try to do this in eLatvia, our central bank accpeted deposits some time ago, and still provied citizens with loans). For this to work effectively, good stuff at this organisation is needed (truested, experienced people with spare time for game), as well as stable government (so that theft from this organsation is impossible).
NPP
Iain ->
Threat to flood market with cheap goods from nationalised companies has to be very credible in this case. Producers will understand, that it will cost a lot for government to keep prices low (and as far as I know, eUK public finances were depleted a lot during recent military events), and for most of them best alternative will still be not to raise wages.
Why? Doing so can produce two outcomes for every producer:
1) government chooses not to flood market with cheap goods. In this case all the produces who have not raised wages increase their profit greately until labor and goods market reaches their equilibriums.
2) govenment floods markets with cheap goods. In this case all producers suffer the same (both who raised and did not raise wages). But most of them have good alternatives - add produced goods to stock and wait for better price (as government cannot keep flooding market with cheap produce forever - this will negatively affect public finances and destroy industry under question in eUK), or sell them in other markets.
Cost of not raising wages has to be really really high, in order to force producers to unite and decide to collectively raise wages - and I do not see a stick large enough within eRepublic mechanics in order to solve this tragedy of commons problem.
IMHO,
NPP
>If your company makes a profit, now is the time to invest in future cashflow by increasing wages. Make wages as high as possible
h0h0h0
I will cross that bridge when it comes to it Nakts, but you argue most effectively for putting an end to capitalism. My own politics say I should simply do it, but we must give the capitalists a chance to put their country first.
>If this doesn't work we'll simply flood the markets with nationalised goods and maintain low prices as an alternative.
please tell me this is a joke
There has to be an alternative present GLaDOS. As I have said, if company owners raise wages or spend their GBP on consumables there won't be a need to intervene, but there has to be a stick as well as a carrot.
Imma laugh when you're broke in three months. <3
Dishmcds, why don't you go kiss up to admins a bit more <3
Iain: Why don't you come up with ways to uselessly spend moar money?
I'm actually quite curious to how you intend to "save the economy", when no country in Erepublik is capable based on their Gold reserves, or economic plans, and there are some pretty smart people out there, believe it or not.
go away Dish, and come back when you have something positive to say.
(Spoiler: never)
I would rather not see a flood of nationalised companies.
whatever this is, it sounds interesting
Iain ->
Well, I myself beleive capitalism is not the optimal economic system in eRepublic, as economic agents ineterests in the game are more collective than in RL (do good for motherland), and for other reasons (most of them are described well in one of Your last articles).
Some time ago I was looking into creating economic system in my eCountry, where big part of companies in country would belong to government (country, nationalised). For private companies, government would regularily make tenders to provide goods, thus setting market price. Government would then provide these goods to armed forces and nationalised company workers, as well as export them. Such approach would not solve Lana problem (it probably cannot be solved without doing it by hurting other eCountries), but would allow to better plan and manage country's industry, so that there are no shocks in the market, which might force unoptimal outcomes (too many producers going out of business, etc.), and country could quicly shift to other industries/comapny qualities, if market conditions are good for this (this could be important when V2 is launched, as there should be some first mover advantages out there).
Two greatest problems with this approach - physical distribution of goods, and fair redistribution of gains to economic agents...
NPP
that's the point amirite? If everyone acts in the countries best interests then we won't have a problem with it.
There is not a great deal of support for planned economy in the UK sadly, however I am looking at several private alternatives.
Iain ->
Well, there is a correlation problem here I think - people, who are most likely to engage in entrepreneurship in eRepublik, are also the people, who most likely are willing to invest some additional time and effort in order to make their ingame avatar stronger and better equiped than those of their fellow countrymen. Even those, for ehom main interest/challange in the game is economic module, probably value proifit higher than national interests.
IMHO,
NPP
You would be surprised NPP, but we can only do our best.
Nice to see you're still butthurt because people don't wholly like your Nationalisation plans.
Why I used the Pareto Optimum terminology:
eUK's economy isn't doing very well. You have a system in mind which will stimulate the economy, which is overall a good thing. A Pareto Optimal point, i.e. weakly better for everyone vis-a-vis the status quo.
To attain this outcome, you say that the firms should start offering higher wages from the beginning to help the recovery to speed up. Suppose you are a firm, and every other firm is contributing to the plan. If you don't contribute, you earn a lot more than when you contribute. Hence contributing is strictly dominated. So you deviate. The others will do this too. Hence not contributing to the plan by all firms is a Nash Equilibrium. Contributing to the plan by all firms is not a Nash Equilibrium.
This is game theoretic through and through, because the overall health of the economy is a public good. The government needs to set the incentives right, and this cannot be done with "we will flood the market" argument. An overall worker strike would be more credible, but still not enough. It's all about incentives: You either convince them by patriotism and whatnot (the carrot), or with credible threats (the stick).
I'm just concerned about how reliant on individual action your plan is. Apart encouraging spending by lowering taxes, what direct government action do you advocate?
There is considerable government action underway, and once completed we will publish a report. However at present doing so would open us up to people doing, as the estimable gent above has pointed out, a Nash-Equilibrium on us and trying to guess what we're going to do next 😛
Flooding the market with nationalized good will make the government incredibly expensive to manage. The private companies won't be able to compete with the gov. so they would go out of business. You take their money and make them have less money to give you the next time around.
Killing all private companies will destroy your tax base. Without taxes, you can't (possibly can but barely for a short while) sustain the government companies and it all comes to a crashing and burning stop when there is no government and no private sector. There are no jobs, goods, or fun....
I think Nicoli Pace needs to read my article on nationalisation.
Just a quick note: two clickers buy 1 piece of food a day and don't use weapons. Exactley how do you want them to consume more? the most of the people who fight with weapons are in the navy and the ones outside the navy al have a dream to become a General Manager.
sounds like the kind of think that will work
The vast majority of 2 clickers do use weapons. If you go to your employees you'll notice they have done damage, and mostly not barehanded. Citizen damage is the bulk of all damage. Also, consuming higher Q products is the equivalent to consuming more productivity Hofkens, so if they eat Q3 bread not Q1 they're consuming quite a bit more.
good article