Where is eRepublik economy headed to?

Day 1,025, 05:08 Published in Serbia Slovenia by Janez Grozni

I just wanted to login into eRepublik to take care of "what is left from once a nice bulk of companies" (meaning, 3 out of 6 Q5 companies somehow struggling to survive) and than this message awaited me:

Dear citizen,

Managers of the New World, we have great news for you! We have noticed the difficulties you have met when inquiring which citizens should be hired. In order to make your company management task easier and also to reduce the possible negative profits, we have improved the productivity formula. We have balanced the productivity balance by decreasing a bit the productivity of old citizens and greatly enhancing the productivity of new citizens. By this, we have manged to make all citizens worth to be hired.


The eRepublik team


I sincerely thought that the lack of demand is what is ruining eRepublik economy nowadays and I'd dare saying just about any player running any competitive company would agree with me... obviously not? Or why else would there be measures established to decrease the demand for the products even further?

I already forwarded a simmilar calculation to one of the eRepublik staff members, assuming lowering the productivity for the "veterans" wouldn't happen accordingly.

To exclude all the pricing factors, let's make an assumption one Guru** (11) is theorethicaly producing all the way from raw material to finished goods, all by himself.
By "what used to be established formula in V2", Guru** would need following ammount of hours to assemble following goods he would later consume within a month, all this of course under perfect circumstances with 0 gold booster, 100 health and happiness and optimal employment in the company factor:

-15 Q5 food per month, for the days he is not fighting. Our Guru is being relatively modest, nevermind the possibility of eating several pieces of food per day, I'll pick a cheaper option, assuming this certain Guru spends valuable hours at "residential district" to maintain his level of happiness.
To produce enough grain and all together assemble it into food that'll take him 18,6 hours of work
-3 Q5 tanks in a month.
We're basicaly all here to help our country in what is an invitable conquest of Tokio, Chilean capitol La Paz, Washington D.C. and Scotland within a week (... yeah, right). Our Guru** (11) of course is proud to fight for his country and there for mined the iron and made 3 Q5 tanks with for example 25 durability with it.
It took him 124 working hours to do so.
-Those 3 tanks with 25 durability enable him to fight for 75 times within a month, 5 times a day, assuming there are only 15 days of battle, using all 3 "70 heath first aid packs" untill he drops exhausted at 20 health. Not even getting back to optimal health every time, let's say he spends 6 Q4 pieces of food with max. health alltogether after those 3 first aid lacks and 3 more after he is done fighting to be able to start the next day with optimal health again (counting in Q5 house with +50 health bonus). 9 Q4 food pieces a day, 135 within 15 days, alltogether for 134 working hours in a month.
-Our beloved Guru** (11) is combining 2 houses, one Q5 adding +50 health each daychange after the fight and another Q3 with max durability just for the cheap health, he is losing every day by work/train/study.
Spending 15 days of each per month, that's equivalent 33 of his working hours per month in an ideal hypotethical economy to earn for both...

...but that's only hypothetical of course... in reality Guru** (11) pays taxes.

Won't go with any particulat country here, let's say a modest 10% income and 5% VAT would suit our calculation.
Aprox. 310 hours spent on work within a month to hypotheticaly afford all of the above (3 Q5 tanks, 15 Q5, 135 Q4 food and spending 15% of one Q5 and another Q3 house) multiplied with taxes = 358 hours of work in a month or basicaly optimum, 12 hours per day needed to purchase a set of relatively modest goods, described above.

...transfering this model into eRep economy, where an average business man would probably like at least some 10-15% of profit (now that, again, is modest), which will in "eRepublik reality" be calculated in the price by which our Guru**(11) will buy stuff... I'll spare you some lines, this article is getting too long anyway.

...along with the last fact, getting 5 gold from a HW medal a month (if getting that in the first place, having a life or even a girlfriend makes that quite a task)... maybee covers for that, some aditional food with happiness I didn't include in the calculation, maybee even a booster or two on the regular 4click or even booster on a battlefield... and that's about it.
Guru with only one star... or without it, let alone all the rest, would need more working hours to produce as much, which of course isn't possible, accordingly that leaves them with lower ammount of fights they are able to fund through their work.

If anyone has been accidentaly wondering, how come he has such hard time to afford to fight or just randomly "buy stuff", well that's the answer. You will never be paid more than you produce while also you'll never be able to afford nearly as much as you produce (to burst the bubble of any enthusiastic eRepublik communist).

(this hottie says: keep reading)

Purchasing habbits of eRepublik "noobs" compared to the "veterans"
Can't back it up with numbers, but it's still a matter of common sense.
By veterans I mean players sticking to eRepublik for few months or above.

An above average "rookie" will mostlikely:
1. Wonder where the market is in the first place
2. Wonder what on earth to actually do with his money
3. Have dreams of creating an extremely succesfull business empire, saving every available cent to start one
4. Spend 2 gold on useless newspaper, without any clue what to do with it
5. Save the money, just to watch the pile getting bigger... it's always good to be rich, right?
6. I don't have an exact info, but I personaly would say 80% of new players quit within a month... producing some goods and taking most of the cash to eHeaven

An average "veteran" will in most cases:
1. Realise by now where the market is
2. Know exactly what is he going to buy for the next 3 weeks (or more) forward
3. Either builded up a succesful business empire or eRep economic laws already bursted his bubble about the easy income by running a company
5. Spend every cent he can in a defense of some unknown region behind the god's back, he never heard of before, thus learning the geography as well
6. If he didn't quit yet, he has a tough skin and is an addict, like most of us are... mostlikely he is staying for some more time

Considering all this, does rewarding a "rookie" with higher productivity, while lowering the productivity of the "vet's" have any sense, considering the market is stacked with products and majority isn't able buy them of? While a big part of "rookie savings" never finds a way back to the market?

by eRep:By this, we have manged to make all citizens worth to be hired.

Maybee, but by making the production function flat for the older players you're also decreasing their income, purchasing power and consequently severely lowering down the demand for finished goods on the markets. 1%, 2%, 3%, more? doesn't matter, whoever has any insight into economics knows 1% can mean a hell lot in the big picture (through multiplication process).

Also... marginal propensity to consume is the basic thing, eRepublik demand relies on * (explanation below). It's safe to say, on average, veterans will spend more of their funds for consumption, while marginal propensity to save will be on average higher with eRepublik newcomers. Decreasing the available income of the veterans and increasing the available income of the newbies will therefor relatively increase savings and decrease spendings. When counting in marginal propensity for cash eternaly rotting on someone's dead account/quitting eRepublik which is extremely high with the new players, you'll also get more cash pulled out out of (some) already unsolvent companies -> economies.
1%, 2%, 3%... once again, it's a wheel in the wrong place, two wheels in a wrong place for all together 4% lower monthly demand and that'll easily multiply into 10% lower employment within a month at the same wages, or either same employment with wages going even futher below 10%.

* unless you want to increase the average sum from the treasure maps, that'd neutralise the implimented changes when it comes to demand and I don't think that's really reccomendable when it comes to RL incomes.

(these four... emm... two say: keep reading... or else...)

When an individual has to save money for 10 days to afford a competitive Q5 tank, compared to doing so for 3 days, the purchasing decision will be much faster in the second case, sharply decreasing average daily/weekly/monthly (whatever you call it) savings", the longer the time needed to save the money, the tougher is the purcharing decision. Not to mention workers still working only once per day, that's fix and that brings much needed liquidity into companies, instead of waiting for that 1 poor Q5 Air unit to be sold in a random day for the company to be able to breathe.

When I was describing the productivity of a Guru**, that is by now I guess already known for his modesty when it comes to purchasing habits, my guess is that he isn't really modest by choice.

Person could say higher productivity that brings higher demand are mutualy neutralised and that the lack of demand for goods won't improve this way, but the differences in marginal propensity to save between various eRepublik players, I believe reasonably suggested differences in purchasing behaviorism as well as relatively improved liquidity, DO make a huge difference in the long term.

Productivity formula is not all to be fixed, many more stuff need polishing, before the economy will work the way it should, but the recent change of the productivity formula was still wrong and will in future proove harmfull.

Now please. I have no idea where you're headed to.

I am sure an in depth analyse of potentialy succesfull eRepublik economics model wouldn't cost more than something like "40-50 gold packs for 60 €".
I do believe it is worth it. Try outsourcing with the economy model, since all this, to my honest belief, isn't leading anywhere.

Please sign a petition in order for eRepublik team to outsource some macro-economists that'll help them work things up.


Janez Grozni