Understanding the problems of the economic module
Calangao
The economic module we have today was clearly built with the idea to generate a overproduction problem under peace. Starting a war should be the solution for this problem, creating the demand for items not consumed during peace periods. But we have been in a world war for two months, there are two war games with the participation of 2/3 of the existing countries and there is still an overproduction problem.
The overproduction problem under peace
There are 5 items for consumption in the game: food, gifts, weapons, moving tickets and houses. Weapons are clearly useless if there is no war. A very small fraction of players have a clear understanding of how gifts can help them save money during peace. The only reason to change location was to fight, or to vote, or to move definitively away from a country; but now with citizenship the demand for voting is greatly reduced. Consumption of food is limited to one every day and a worker with manufacture skill 1 and 50 wellness can produce 3 units of Q1 food in a company with 10 workers. So it is actually very easy to produce food enough for everybody. Houses are eternal and their only effect is to decrease the quality if the food demanded, which requires less production points and more food available. And the fact that houses are eternal create a problem that nobody will buy more than one house Q5 and the used lower quality houses are sold through donation competing the companies. That is: without a war the only possible outcome is stockpiling because of the lack of demand for items other than food.
How the war should solve the lack of demand
The standard fighting strategy with weapons requires either 5 weapons or 6 weapons and 10 gifts. For the 5 fights scenario, it requires 5.56 skill points in manufacture and 2.32 skill points in land (Q3 company in high region) to produce the 25 units of iron and transform them into 5 Q1 weapons, all companies with 10 workers and employees with 100 wellness. This is a total of 7.88 skill points just for one soldier to fight fully armed. In the second scenario, 6 fights, it requires 6.68 manufacture for the weapons, 4.46 skill points for the gifts and 4.63 skill in land to produce the raw materials, adding up to 11.14 skill points in manufacture and 4.63 in land, or 15.77 total skill for a 6 fights strategy with Q1 weapons. Anyone with less than 7.88 skill receiving 5 Q1 weapons a day to fight or more is being subsidized. The great majority of players are not even close to this skill level, which makes it a production impossibility today to supply all players with weapons every day. And many players fight with better quality weapons. For instance, 5 fights with Q3 weapons would require 23.64 skill points, and nobody has this skill level yet to be able to fight with Q3 weapons every day. So there are only two ways to fully supply players with weapons, sometimes with something better than Q1: (i) don't fight with weapons every day, or (ii) make some players to fight barehanded while giving the weapons to a selected group of players.
So, while in a peace period it is extremely easy to supply everybody with their basic needs, during a war period it is nearly impossible to supply most player with the very basic items for 5 miserable fights. Hence the war periods were supposed to heat the economy and solve the peace problems of overproduction, but at the same time it should heat too much to keep it as a continuous state of the world. Assuming most of the players would not like the idea of fighting barehanded while some others receive almost everything they produce.
The dream of self-sufficiency and the failure of the completely free market
It is pretty clear that players willing to fight will either join an army that will supply them with weapons using some resource like taxpayers money, or they will want to create a company to make more money than their salary. The preferred companies to start with are food, weapons and iron. Because most of them don't study the market well enough before doing that, now there are 26,976 companies in eRepublik (and counting) that demand 288,250 workers to operate in maximum productivity, while the world population is around 223,500, so around 130,000 gold wasted in vacancies in the equivalent of 6,500 closed companies. It is not uncommon to simulate a company with the salaries being offered in the market (not by trap companies) that are unprofitable by a very big margin in many countries, like Ukraine, Hungary, USA... Bankruptcy seems to be the way people learn in the game, not without creating instabilities in the job market before that.
The effects of war games, constant war, and the forgotten trivia
Almost everyone who joined the game after me never saw the trivia. There were five questions you had to answer each time you worked, trained or fought. Getting those questions right or wrong and the time you tool to answer affected the productivity, the training or the damage in battle. I never used the trivia in war because the module was suspended when I started playing and the trivia was removed when the war module came back. So working, training and fighting war more challenging tasks, but there was also a hack for the trivia to give you the answers, but not fast enough for the full bonus. A good memory could beat the hackers.
The end of the trivia made the last minutes of wars more important, because people could fight much faster without having to answer five questions for each hit. Wars started to pop up, countries trying to conquer regions for raw materials or just trying to solve an economic problem due to a prolonged period of peace. Very few countries had a daily battleground, like Romania and Indonesia, and the baby boomer of that moment: Hungary. The positive effects on the constant war for the wellness, ranking and demand were very clear and the war games came up. USA using resistance wars in Baja, the PEACE war games in Chile×Argentina, the USA war games with Ireland... The war games made the weapons companies to get stoned with constant demand stabilizing the prices during war periods and decreasing prices dramatically during peace.
A surprisingly large and increasing number of players that simply don't care about anything but food Q1 shows up with the war games. And when the real war came up they kept fighting barehanded. They solved the supply problem in a continuous war environment, but precisely because of them the economy don't runs smoothly without a major conflict. With all the conflicts we had the last 2 months, the price of weapons Q5 fell from 1.2 gold a piece to 0.88 gold a piece. Q4 weapons fell from 0.74 gold to 0.54 gold. Q3 went from 0.47 gold to 0.37 a piece (numbers taken from ErepTools). And the world stock of weapons is going up. This is a completely strange consequence due to a counter-intuitive behavior of players.
General suggestions for the new economic module
We have history enough in the game to have war for a reason. The new economic module should have a challenge per se where supplying the citizens' needs during peace is already a scarcity challenge. Because every single product has a military application, foreign trade is often blocked, and this is something that could change as well. Specialization in production could be broader than the individual skill in a way that countries can have more gains from foreign trade.
Comments
Voted.
(and then i'll read it 😛 )
A pretty good assessment. I think one of the problems is going to and from war production is hard. Back when there wasn't constant was there was much higher demand for all q houses and high q food, as well as more gifts demand. But of course habits that we've acquired are a bit hard to get rid of.
I suppose another way of dealing with this would be another tweak to the wellness formula, making it (even) harder to maintain high wellness (possibly especially during war), to increase demand for wellness boosting products. Many of the companies you list are probably inactive if not outright banned, but the fact remains that in most countries there are simply too many.
More foreign trade would be good, and I think that bringing back trade agreements are the most realistic way of increasing trade. More competitive advantage would be great as well.
Also, It's occurred to me that we could make the capital of companies degrade over time. That is they become less efficient either over time or with use without further investment. I'm sure the admins would love that since it's another gold sink.
Aside from that we would need to have products added that were somehow in demand, but effectively useless. (You can make this claim for houses I suppose, not useless but very out of line to their cost.)
Anywho, good article, I mostly agree.
Very good article Bro, completely agree.
The only solution is the atomic bomb.
SILENT LEGES INTER ARMA!
Good article. Clever analysis and good advice.
What? I can recognize an enemy's excellence. This is good work!
Lol Reiji 🙂
Anyway, good article, as always.
Excellent. Nice Calanagao, again.
You are the man!
really good.
voted and suscribed
Great article! V&S
voted as usual! This is full of win. Thanks again Amigo, this is a very informative read.
Great as often. Congratz.
Nice article!
Nice article.
V+S
good !
It so interesting as this article!
http://www.erepublik.com/en/article/overproduction-crisis-too-much-gold-have-been-spend-in-ww3--959523/1/20" target="_blank">http://www.erepublik.com/en/article/over[..]/1/20
Nice research and good article. Keep up the good work!
Nice 😉
very good!
Excellent article!
The trivia was very bad, because a lot of people can not speak english, so a lot of new player left this game. And for example the USA can make more productivity because everybody can speak English there
@Desci: I agree. And the trivia went down because there were more problems than benefits. But with all the problems the trivia had, it also served as an authentication system. I bet that if we had a captcha or "click the open circle" to work, train, and fight, then we would have a different economy today.
Good article Bro.
There's no such thing as an "overproduction problem" in economics.
"UH OH, we have too much stuff so the prices are too low! Quick, let's start destroying and/or stopping the creation all these extra manufactured goods so we can stay wealthy!" This is what follows if we go down that trail of thought.
Also, you have to have an actually accurate simulation of a free market to have a "failure of the totally free market"--this isn't the case currently. The current system is so bad, it needs to be scrapped almost entirely.
I don't disagree that the economic module is currently massively stupid. But I don't think that 'overproduction during peace' was intentional by any means. The economic module is just a very, very poor model of a real life economy.
Advocating war (a form of wealth destruction) simply to keep the economy running, when industries should simply self-adjust to peacetime production (by relocating workers if need be), isn't helping the game's admins see how unrealistic and silly this economy is.
It can't be helped I suppose, since war in this game is actually a good thing in some ways when it should be bad in all ways.
I should also say--the problem isn't "overproduction", the root problem is having such an unrealistic economic module in the first place. It doesn't simulate a free market of any kind, or the reality that scarcity of goods will always exist, very well at all.
Garoa😛 I'm a defender of the free market in real life. It is pretty much the opposite of what I do in the game. Real life and game are completely different things and, in my opinion, I don't need a simulation of something I already have.
The argument makes sense only if you refuse to look outside the capitalist point of view, where consumption is the primary drive. Any "overproduction" problem, if there is such a thing, can be solved by means other than war. Redistribution, for one, at times when new countries emerge and their populations glut when PTO groups arrive and hoard jobs and food, it is plain there is no "overproduction" problem in those times and places; truly, such countries suffer from "underproduction", which means people leave the country to find work and decent food. National guidance of production, for another, where industries work as unified guilds, either with or without direct governmental oversight, can alleviate "overproduction."
I'm sorry, but this is nothing more than an attempt to legitimize constant warmaking, imperialism, mercenary clans, and roving PTO groups. It's the so-called Theocrats seeking to legitimize their actions.
http://www.erepublik.com/en/article/overproduction-crisis-too-much-gold-have-been-spend-in-ww3--959523/1/all#comments" target="_blank">http://www.erepublik.com/en/article/over[..]ments
Stop being a pinhead Arjay. Even Reiji can recognize this is an analysis of economic module, nothing specific to theocracy nor South Korea. Go dump your thoughts in that tissue paper you have because it is the only proper place for what comes from your so-called brain.
Arjay, we don't have to legitimize anything that is already legitimate. I'd jump off the fail train before you're too deeply involved. You should probably take your self fulfilling, so-called "heroic" role to another cause. It's going to get old constantly losing this battle.
@Arjay, not everything is about you. Please STFU unless you have something meaningful to contribute, k thx.
Over production won't necessarily exist, but the fact remains that almost all consumption is for basic needs and war, there are very few wants aside from these. In rl, I can make or buy a tv, car, painting or whatever, thnt basically stimulates the economy and improves quality of life, but isn't essential. There isn't a real parallel here. Perhaps we could make it necessary to buy certain new products to do thing like shout, make ads, change your avatar, etc. But those things don't exist as of now.
Can someone traduce this to spanish?
:'(
Now published in Spanish in Spain and Argentina.
Very good article, as always.
I mean what Arjay says is true is that this could be viewed as a justification for warmaking and stuff. But the fact of the matter is that after a period of prolonged war, the economy is in a sort of 'war mode' and taking it out of that into peace causes problems. In eRep as in real life.
I don't think this article was very political, I think it recognizes some problems in the economic system here and was a very well-written analysis at that.
I think Reiji is dead on. Creepy huh?
REJI IF YOU WRITE ANOTHER COMMENT AGAINST THEOCRACY, WE WILL LIBERATE ALL SOUTH KOREANS REGION FROM JAPAN, OK?
IF YOUR COMMENT IS THE OFFICIAL POSITION OF THE GOVERNMENT OF JAPAN, WE WILL DECLARE JAPAN AS OFFICIAL ENEMY OF THEOCRATIC NATION OF SOUTH KOREA.
YES THIS IS A THREAT.
"ack when there wasn't constant [.....] as well as more gifts demand. "
I noticed the contrary. Gift sales went up when the war began (in a country where there wasn't any wargame but involved in the war). I think that more gifts are bought by relatively high ranking player wanting to fight 6 times in time of real war than by low-level player with a low wellness in time of peace.
"Also, It's occurred to me that we could make the capital of companies degrade over time. That is they become less efficient either over time or with use without further investment."
Most companies barely scrap by. Few make a significant profit (and it has been so for quite a while now). Implementing this would make managing companies unprofitable. I guess you're thinking that for this reason it would reduce their overall number, by I don't think so. There are too many companies because new players want to create companies for the most part, in my opinion. More experienced players either found a profitable market or eventually give up because it's not worth it (quite a lot of time spent on managing for a low return, by comparison for instance with their daily salary that requires only one click). This would deter the second category, but not the inexperienced players who would keep creating (or buying) companies, and operating them at a loss (it's quite obvious that a lot of companies are already operating at a loss). I think the net result would be as many companies, but with an even larger proportion poorly run.
Indeed, war games kill the demand for gifts and houses since there is no need for them to keep the wellness. Q1 food is enough, unless you are a player like me that wants to be with 100 wellness every day and fight as much as I can. Consumption of gifts is much higher when there is an important battle, like the ones for Asturias or California, when the 5 regular fights are not enough. That 6th fight represents the equivalent of 4 weapons Q1 in the production of gifts, and because there are not so many gifts companies, they run out pretty fast.
Over-production is an endemic problem in all market economies in which productivity increases or durable products are manufactured.
In the RL, over-production regularly precipitates a crisis of capitalism which motivates the constant pressures to open new international markets, develop new products and was the very reason "consumer capitalism" was invented in the 20th century. In RL business-speak we say "market saturation" but that's a euphemism which hides "over-production" so we don't have to deal with the unpleasant contradictions of capitalism.
Garoad repeats a complaint of many naive free market advocates:"UH OH, we have too much stuff so the prices are too low! Quick, let's start destroying and/or stopping the creation all these extra manufactured goods so we can stay wealthy! This is what follows if we go down that trail of thought."
In fact, that is not entirely unlike what happens in RL. Even if you ignore the $600K USD cruise missiles and $3 bullets (and the billions of dollars in jobs their production creates), over-production also explains why countries with $4/day in GDP per capita are export markets and the RL USA exports grain (and pays farmers not to grow).
There are all kinds of reasons why the eRepublik free market is flawed (mostly, IMHO, it is too efficient and clean), but a periodic crisis of over-production is not one of them. That phenomenon might actually be one of the most accurate outcomes of the model (and you'll find it present in the RL international economic situation).
Very cool. I must go over this one more time, and will comment, as I had some similar ideas regarding what's going on, in the eco-military sphere.
Excellent article, very well stated.
Food is too expensive and Q5 houses aren't even in the market from what I can see.