Economy "Pieces"

[Andreas the Wise]

A work in progress, but I figured I may as well post it now as it might give people ideas for more stores. The first two sections (both already decided for Shireroth) done, just the headings for everything else.

Micronational Economics - Pieces

The following paper is intended to show various possible "pieces" of micronational economies. The major headings show each type of piece, and the minor headings the pieces that can be picked to fill that type. There may exist others, some pieces are incompatible with others of different types, and, of course, not all pieces need to be filled.

Base/Value of Currency
Post Based: An economy where the value of currency is linked to posting, and further money may be earned by posting. Post based economies can be fixed (i.e. you earn x per post) or variable (i.e. you earn an amount per post based on certain factors like its length).
Major Example: Novatainia´s old economy.
Vote Based: An economy where the currency is linked to voting in some national body, and earning further money increases the weighting of your vote. There may be certain cases where money does not count to any vote, or where some citizens can vote and others can´t (but their money still counts towards someone else´s vote).
Major Example: Shireroth or Babkha.
War Based: An economy where the currency is linked to the strength of the army one is able to raise. Generally losing troops does not lose one currency - it merely means later one can raise more troops.
Major Example: Toketi
Currency Based: An economy where the micronational government agrees to buy or sell its currency at a set value of real world currency. Though various nations say their monef a real world currency, they will rarely actually be willing to exchange real world currency for micronational currency.
Valueless: Any economy where the currency is not linked to anything else and has value only in the sense of what can be purchased with it. Every other `valued´ currency also has the value of what can be purchased with the currency, but intends to increase the value beyond this by linking it to something else.
Major Example: Most micronational economies, actually.
Notes:The purpose of having currency based on something other than merely what can be purchased with it is to increase the transactions, either by making people more willing to purchase or by making people more interested in earning. A post based economy encourages activity and, as the currency is easier to earn than a valueless currency, encourages people to spend more of it as they have more. Both vote and war based economies make their currency very valuable to their citizens and thus encourage their citizens to work harder to create goods to sell (and thus earn more currency). The effectiveness of these provisions depends on the nature of the citizens involved - a vote based economy will not help in a nation with a weak or unrepresentative legislature; and a war based economy will not help in a nation where the citizens are not interested in war (and also requires a system whereby citizens can easily initiate wars).

Closed/Open
Closed Economy: A closed economy has a set amount of money in circulation, and new currency cannot enter the economy (or if it does, is rapidly removed from the government account). Any currency type can be closed - where it allows extra money to enter (eg giving new citizens a starting amount, or paying citizens automatically for each post they make) an equal amount of money must be removed from the government account, thus keeping the amount of money in circulatiant.
Open: An open economy changes (generally increases) the amount of money in circulation as events dictate. Any currency type can be open (eg giving new citizens a starting amount that is not funded from the government account, creating funds to pay for each post made, or transferring money from another economy by deleting it on one forum/bank and creating it on the other forum/bank).
Advantages: An open economy has the advantage that it is simpler. Taxation need not be the only source of government revenue, a massive population increase is easily adjusted to, and foreign exchange can be done simply by deleting money on one forum/bank and creating it on the other. A closed economy has the advantage it is more credible and economically sound. It is credible in that governments cannot introduce large amounts of money into circulation on a whim (nor can general population increase do so) and so, especially with fixed exchange rates, a nation can´t suddenly become excessively richer than their trading partners. It is more economically sound in that inflation due to monetary growth does not occur (although empirical examples suggest the effect of this in micronational economies is minimal).

Taxation
Wealth: A tax levied on the monetary holdings of individuals at a point in time. Can be flat (i.e. a single % rate) or progressive (i.e. higher % for larger amounts of money).
Income: A tax levied on the income of individuals over a period of time. Can be flat or progressive.
GST: A tax levied on any good or service sold, normally as a percentage of the price.
Finance Exemption: A GST applying to all goods or services sold except for financial ones (eg Gambling, Share transactions etc) - instead applying the GST tax rate to profits from Financial services.
Per Region: A tax levin the leader of each region within a nation, leaving the leader free to raise the money to cover it himself.
Per Capita: A flat tax levied on every citizen of a specific amount, regardless of wealth.
Comparisons: Taxes are helpful to raise government revenue, but must be carefully examined to ensure they do not stifle private enterprise or defeat the purpose of the economic system. A wealth tax wouldn´t be used in a War or Vote based economy, for example, because the accumulation of money is an important feature of the economy. But in any other economy, a progressive wealth tax encourages spending as it penalises the hoarding of money. Income taxes generally take more effort to regulate and are pointless if the only income payer is the government. GST will only raise significant revenue if there are a large number of transactions occurring. Finance exemptions are a good idea if you have a GST. Per Region taxes work best where regions have some sort of economic allegiance to their ruler (eg they support him in war, or he votes for them). Per Capita taxes are the simplest but may be difficult to apply to very low income earners.

Other Ways To Raise Government Capital
Property: The government sells property in each town. An individual who has bought property is allowed to create a thread for their house, business, or other thing on the property. Can produce considerable proceeds:
Inflation: If the economy is closed, the government can merely print more money and tax via inflation.
Licensing: The government allows certain industries to operate only after they have purchased a license (eg Lawyers, Orbat writers etc). They may also need to qualify.
Patents/Copyright: The government artificially restricts the amount of goods of a particular type that may be produced, or restricts the number of producersfor a fee to the copyright/patent holder.
Military Workaround: In a non-war based economy, the government creates an official war system whereby citizens have to purchase the right to command an army, and pay more to command larger amounts.
Voting Workaround: In a non-voting based economy, the government creates a market for votes whereby citizens can purchase a unit of voting power. After the initial float, these units can then be purchased from other citizens to change the balance of power.
Subforum Rent: Companies or organisations may have a subforum of their own in exchange for a regular rent.
Other Admin Fees: The admin charges fees (going to the government) for tasks such as adding smileys or styles.
Notes: Property is only of use (but has been highly successful) where citizens are willing to RP, and aren´t already the leaders of a particular region for them to develop. Inflation is frowned upon internationally. Licensing can only be used where there is already an interest in that industry, otherwise it is a barrier to that industry starting. Patents/Copyrights are useful where citizens fear others will start a shop almost exactly like them. The work-arounds require, as the original, that citizens have an interest in war/voting. Subforums require forum software that can support them, as does Admin Fees (depending on the services rendered).

Banking and Interest
Automated: An electronic bank which automatically pays interest to account holders by "creating" the money for the interest. Only suitable in open economies.
Closed: Any bank which pays interest from other monetary holdings (eg share floats) and doesn´t create money.
Investment: A bank in a Voting or War based economy which uses its funds for voting/war purposes, or lends out cons amounts of these for one off votes/wars.
Comparisons: An automated bank should be differentiated from a phpbank - it is automated by merit of automatically creating interest out of nowhere. Such a bank can only be run by the government, where as a closed bank can be run by private citizens (and can compete with other closed banks). All banks can loan (if citizens are interested) but investment bank specifically loan not for the use of funds but for the power the funds entail, and may "loan" temporarily while retaining overall control of the funds.

Stock Exchange
Standard: A stock exchange where citizens may trade companies existing in the nation. Stocks may or may not pay dividends based on company profits.
Simulated: A stock exchange with simulated companies and using some sort of program or formula to change the prices of stocks at regular intervals and thus simulate the real world exchange. May or may not pay dividends based on money raised from the initial float.
Practical Investment: A stock exchange where stocks are floated because the funds from the stocks go to the owner of the company to help run the company (usually only for Financial companies which require large starting capital). May or may not pay dividends based on company profits.
Resource Based: A stock exchange with simulated companies linked the MITO trading resources of the nation. Through the use of a formula involving the amount of resources consumed/traded dividends are paid from the initial float.
Comparisons: All stock exchanges suffer from the problem that there are only a small number of people trading (compared the millions on real world stock exchanges). A standard stock exchange often suffers from `imaginary´ stocks where company stocks are 100% owned by the creator of the company and thus serve no purpose. A stock exchange attempts to overcome the basic problem by changing the prices arbitrarily - but this can be hard to achieve objectively. Practical Investment obviously only applies to select types of companies. A resource based stock exchange avoids the arbitrary price changes of a simulated one, but encourages more real trading by ensuring the regular payment of dividends based on an objective formula, and paid from the money originally raised by selling the stocks. Very rarely do companies ever reach the level where more than one person has a direct say in its running via the amount of stocks they own.

Exchange Rates
Equivalent Currency: Either where two nations have a united currency (and thus exchange is 1:1) or between currencies of the same type. In this case, arbitrary exchange rates may be easily calculated - eg in a Post Based economy, if one nation earns 10 per post and another 1 per post, the exchange rate is 10:1.
Flat: An agreed exchange rate where any amount of money may be deleted in one nation and created in another at that rate.
Flat but Closed: An agreed exchange rate where governments initially exchange a large amount of currency with each other and then will trade that to citizens at an agreed flat rate (ensuring no currency is created or deleted).
Market Exchange Rates: No single exchange rate exists but each exchange is negotiated with a middleman who holds (or has an interest in holding) both currency types and will trade them with the person wanting the other currency.
Complicated Formula: A flat exchange rate that is worked out based on a formula taking into account: the relative development of the economies; relative purchasing power and/or the relative size of the economy (i.e. amount of currency in circulation).
Trade Credits: Ignoring any currency exchange and merely handlinternational transactions by having the governments exchange MITO Trade Credits.
Comparisons: Equivalent currency exchanges are the easiest to work out but generally require Open economies (as does Flat). Flat but closed exchange retains this simplicity for closed economies. Market Exchange rates are the most economically progressive type (as it thus creates another private industry) but relies on rich dual citizens. Where there aren´t such people, governments can exchange funds but do it on a case by case basis. Complicated formulas are hard to agree on. Trade Credits are generally only suitable for large government purposes, not for individual transactions.

Actual Stuff to Spend On
Selling Votes: Those who hold voting power (whether by virtue of wealth in currency, holding workarounds, or just having seats in vote making bodies) can sell their vote on particular issues. If they impose a higher price when they strongly object to an issue, this evens itself out as they can pay more to others to vote the way they want for other issues.
Orbats: Preparing orders of battle for individual citizens for a fee.
Weapons: Designing and selling weapons or items for use in war. More effective where citizens cannot just create their own units out of nothing (or where weapon designs are really good).
Loot: For the rich - selling highly expensive and otherwise pointless items to that people may gloat on them. More effective where the item in question is really loot stolen from somewhere else.
Images: Designing and producing images for a fee. One of the most common micronational industries.
Media: Designing and producing media such as videos, radio shows etc.
Story-writing: Writing backstory, legends or other prose for a fee.
Legal Services[/b:393x]: Looking up laws, as well as providing legal representation in trials.
Accounting: Where complicated tax laws exist, doing accounting for businesses.
Resources: Instituting some sort of internal resource trading system, and buying/selling resources.
Houses: Where property can be purchased from the government, allowing private industry to design and sell the buildings placed upon this property.
RP Use Items: The large range of items that have use only for micronations which roleplay big events (eg buying a submarine to do underwater archaeology, buying a gun to go hunting etc)
Gambling: Working out forum based gambling options. Can also allow betting on sporting events or predictions.
Vehicles: Selling cars, trains, boats or other vehicles, whether for RP purposes or not.
University: Running training programs which give qualifications at the end, and charging a fee for entry. Only useful where there is already interest in universities, or where the qualifications are required to do other things in micronations.
And many more ...: The imagination of private industry is the only limit, really. Economies based entirely on fictional goods CAN work - consider trading gold in WOW, or items in Neopets. However, people are far more likely to buy goods the more "real" they are/seem - where they have practical uses within the micronational world. For more info, see my other economic essays.

[Andreas the Wise]

Finished. Don't know if it gives you any ideas, my Kaiser ...

[Kaiser Loki III]

(head spins slowly)

This is a lot to digest.

Prompt me after a while.....

[Andreas the Wise]

Er ... its just everything you could have in a micronational economy summarised into one easy reference work ...

[Kaiser Loki III]

Very well done. We can use this as a template to work from.

[Andreas the Wise]

That's the idea. Some of it might give people ideas for industries or further reforms.

It also allows me to justify starting work on the next greatest micronational holy grail ... an active international economy via the Commonwealth. Since market exchange rates solve the problem of vote based/war based/other based economies coming together.

Just think, that a Tokian over in New Shirlan on the extreme east of Keltia could buy a car produced in Batavie on the far western edge of Benacia. That a Novatainian in New Myzoria could purchase an image produced by a Shirithian in Hyperborea. That a Shirithian could purchase a camel from Babkha and not only be sure that it doesn't let Babkhans steal our voting power, but also that it's effectiveness has been vetted by the Vizierate of Truth and Fair Commercial Dealings. And that a Natopian can trade resources with any nation in MITO.

Now that would be an impressive basis for the commonwealth.

[Ari Rahikkala]

Just pointing out (I'm sure you noticed yourself) that every item in "Other Ways To Raise Government Capital" except inflation also contributes to the value of the currency. Actually, it'd be kinda interesting to see a micronational currency whose value came entirely from licensing fees, subforum rents, administrative fees, RPish property, etc..

(in other words: "Valueless" in the base/value of currency dimension is a misnomer. I think the proper word is... fiat?)

[Kaiser Loki III]

MITO?

[Ari Rahikkala]

The Micras Initiative Trading Organisation. Its site explains it better than I can, but in short: It's using the MCS resource map to develop a system of resource trade, one that's separate by default from all other economic systems. It's more or less run by Andreas, which is why it mightn't be common knowledge that we were one of its first member nations . I don't know if he plans to eventually connect it up with other economies - it could be somewhat nifty, and very problematic, if he did...

[Hesam Jayatar]

Andreas,

As Shah of Babkha I've summarily appointed myself as a delegate to Shireroth regarding Economics and Trade. If you agree, I'd like to continue working on the economic system with you as we seem to do well at it.

Thoughts?

[Andreas the Wise]

I'd be delighted to have your assistance, Hesam.

@Ari - and guess where most of them came from Property was hugely successful in Novatainia (dunno if it'd work in Shireroth, where we're all counts and barons etc anyway), until it got to the stage everyone had several houses ... so I just legislated you had to buy property to run a business from and sales continued ... (Novatainia actually runs entirely off other ways + GST)

[Hesam Jayatar]

Actual Stuff to Spend On
Selling Votes: Those who hold voting power (whether by virtue of wealth in currency, holding workarounds, or just having seats in vote making bodies) can sell their vote on particular issues. If they impose a higher price when they strongly object to an issue, this evens itself out as they can pay more to others to vote the way they want for other issues.
Orbats: Preparing orders of battle for individual citizens for a fee.
Weapons: Designing and selling weapons or items for use in war. More effective where citizens cannot just create their own units out of nothing (or where weapon designs are really good).
Loot: For the rich - selling highly expensive and otherwise pointless items to that people may gloat on them. More effective where the item in question is really loot stolen from somewhere else.
Images: Designing and producing images for a fee. One of the most common micronational industries.
Media: Designing and producing media such as videos, radio shows etc.
Story-writing: Writing backstory, legends or other prose for a fee.
Legal Services: Looking up laws, as well as providing legal representation in trials.
Accounting: Where complicated tax laws exist, doing accounting for businesses.
Resources: Instituting some sort of internal resource trading system, and buying/selling resources.
Houses: Where property can be purchased from the government, allowing private industry to design and sell the buildings placed upon this property.
RP Use Items: The large range of items that have use only for micronations which roleplay big events (eg buying a submarine to do underwater archaeology, buying a gun to go hunting etc)
Gambling: Working out forum based gambling options. Can also allow betting on sporting events or predictions.
Vehicles: Selling cars, trains, boats or other vehicles, whether for RP purposes or not.
University: Running training programs which give qualifications at the end, and charging a fee for entry. Only useful where there is already interest in universities, or wherehe qualifications are required to do other things in micronations.
And many more ...: The imagination of private industry is the only limit, really. Economies based entirely on fictional goods CAN work - consider trading gold in WOW, or items in Neopets. However, people are far more likely to buy goods the more "real" they are/seem - where they have practical uses within the micronational world. For more info, see my other economic essays.

I think this bit needs to be addressed before the great leap can be made to international trade. Looking at your list, there are a number of feasible "markets" which can be addressed. The problem I see resides in how the individual nations work.

Suggestions such as Universities, ORBATs, etc... would (in my opinion) yield the greatest market trade. However, to achieve these, regulation would be necessary.

Universities: In order for the university market to work, you'd need a number of new elements:

1. A legal requirement for certain qualifications before taking up a position in government. (JUDEX needs law courses, Minitrade needs economic courses etc...)

2. Individuals willing to put in the time to offer these courses and people willing to pay for them to qualify for jobs.

I think shireroth might be the only micronation around right now, which has the luxury of having more people than positions. Which makes this an ideal test ground.

Thinking about the university idea recently, I came up with an interesting alternative. Instead of hiring teachers etc.. why not simply grant qualifications to anyone holding their positions right now? From that point, Shireroth would work on the apprentice system. for example:

- Andreas is the Minitrade.
- Andreas decides he wants to eventually retire.
- Andreas puts out an ad in the market saying he's looking for an apprentice
- Someone answers the ad and Andreas charges them 500 erb to apprentice.
- The new apprentice must complete a short course to ensure they understanstem
- In return, when Andreas retires, his apprentice becomes the minitrade.


Thoughts?

[Kaiser Loki III]

Ahem.

Has there been a formal repudiation of the Babkhan joke about annexing Shireroth? I'd just like to see that before the Shanasha goes wandering in the bowels of our economy, even if he was its Daddy.

[Andreas the Wise]

I think he has. Apart from someone getting *cough*Pirating*cough* the sword ....

Hesam, you're quite right that those areas would need more regulation. I'm not sure to what degree I could do an economics course well (short of telling them to read my papers), though a law course would probably not be too hard (you'd need that qualification to even represent people in court, let alone be Judex).

On the area of Orbats, how about the following:
Shireroth works out a simplified SNARL-esque ruleset for internal conflicts.
Citizens purchase the "right to bear arms" in 1000 point lots from the Government.
Once you have the "right to bear arms", you can only fill it by purchasing units from licensed Orbat shops. You can't just make it from scratch, even for basic units [or we list a few basic units you're allowed to use without purchasing better ones, but that's all]. Also, those who own an orbat shop have to pay the government for things they buy from their own shop (even if we give them, say, a 30% discount). Paying from your own shop is a Novan tradition to ensure people don't just create shops then use their own stuff for free to abuse the system.

From then on, those who wanted to rise up against their Duke in a proper civil war (or even against the Kaiser) use those units and can attack at any time (like CITRA). You could also opt to just continue having story civil wars like Jonas and I are.

Make sense?

[Hesam Jayatar]

Has there been a formal repudiation of the Babkhan joke about annexing Shireroth? I'd just like to see that before the Shanasha goes wandering in the bowels of our economy, even if he was its Daddy.

Kaiser Loki,

I am Shahanshah of Babkha, thus a royal cousin. Please do me the credit of speaking to me as a peer and not one of your subjects. If you don't warrant my presence in discussing the economy with your minitrade, I'm perfectly happy to invite him to Babkha and we can continue our discussion there.

Andreas,

I like your concept of the ORBAT regulation, my one concern with ORBATS is dealing with tech levels: Modern, Futuristic, fantasy, ancient etc... How do we mitigate these issues? I assume as well that all Shirerothian ORBATs could be drafted in times of war?

[Malliki]

Kaiser Loki,

I am Shahanshah of Babkha, thus a royal cousin. Please do me the credit of speaking to me as a peer and not one of your subjects. If you don't warrant my presence in discussing the economy with your minitrade, I'm perfectly happy to invite him to Babkha and we can continue our discussion there.

A smile from a child: 100 . A gentle summer breeze in the evening: 200 . A Babkhan who attempted a coup and wants to be treated with respect in the very nation he attempted it in: PRICELESS!!

[Andreas the Wise]

I like your concept of the ORBAT regulation, my one concern with ORBATS is dealing with tech levels: Modern, Futuristic, fantasy, ancient etc... How do we mitigate these issues? I assume as well that all Shirerothian ORBATs could be drafted in times of war?

We could allow only a limited number of licenses for different tech levels - eg two Futuristic companies, two fantasy companies, three modern companies etc. Whether that you have to all fight in one period in any given war is a matter for the war rules.
As for in times of war ... yes, the government could certainly hire orbat companies to produce national orbats, but I think the best thing would be to completely separate external and internal orbats. International Wars require a very specific style of fighting and thus orbatting and a lot of the stuff you can get away with as a lone internal person doesn't work as well when you're trying to be part of a coherent team internationally.

My own Minister of Defence is working on orbat "chunks". Like a 10000 point chunk for a contingent of tanks, or a 5000 point AA/missile defence chunk etc, with the idea that in war times we can easily put them together to make full orbats for our citizens. Shireroth could do something similiar, but I'll leave that to Prodigy. Certainly such "chunks" could be commissioned from orbat companies.

[Kaiser Loki III]

Hesam, you are my royal brother.

This is how I talk to my brother.

You are Shanasha in Babkha. Here, you are a knowledgeable guest whose welcome is wearing thin.

I want a formal retraction or go home and talk to the walls, which of course are listening.

[Andreas the Wise]

Not to appear disloyal or anything, but Corey never quite got around to rescinding the Mango-Camel pact, so here he's a guest with diplomatic immunity. We wouldn't want to cause an international scene ...

[Kaiser Loki III]

........rescinding the Mango-Camel pact.......

No, not at this time.

However, a guest who becomes a nuisance may be declared Persona Non Gratia and gently escorted to the airport.

[Hesam Jayatar]

Fair enough,

Then I'll go back to Babkha, Andreas if you wish to continue this conversation please don't hesitate.

Jacobus, you're welcome for the Kaisership,

[Oroigawa Koreyasu]

Corey never quite got around to rescinding the Mango-Camel pact

It was generally accepted that that would have been a foolish plan of action.