Microeconomics + its application to Micro(national)economics

[Andreas the Wise]

http://docs.google.com/Doc?id=drwj4wm_9d4z5hsdk
The document is a google doc instead of a post so that it's easy to edit, and because I can't be bothered to make the diagrams again in paint ...

Anyway, this is a serious look at micronational economies and why they fail. Next I'll look specifically at Post Based and .... what I'm calling Service Based Voting economies (ie the Shireroth/Babkhan system). I'll also see about the possibilities of other systems ... Toketi, I think, could do well with a War Based economy, but that wouldn't work on Novatainia.

If anyone knows any other micronational economic systems that ACTUALLY WORK (defined as people continue to use after initial interest in the first month of operation) then I'd love to hear about them.

[Yvain Wintersong]

I like the way you think, but do you have any evidence for the rule that people will want something if it's described well and accompanied by a pretty picture? The amount of work I would be willing to put in to get a "car" remains zero no matter how well-described it is or how nicely drawn the image may be. Maybe another possible law of demand might be that people want something if getting it makes them look powerful in some way. MCS land, for example. Your magic items in Gralus wizard tournaments, for another. Any analogue of those magic items that works in SNARL recwars, most likely.

[Erik Mortis]

What is the one thing people want in micronations? Power, position and fancy titles.

[Yvain Wintersong]

The one thing we want is power...power and position...the two things we want are power, position, and fancy titles...three things! The three things we want are power, positions, and fancy titles...and a fanatical loyalty to the Pope! Among our many wants are...

[Jonas]

The one thing we want is power...power and position...the two things we want are power, position, and fancy titles...three things! The three things we want are power, positions, and fancy titles...and a fanatical loyalty to the Pope! Among our many wants are...

The great Pope!

I don't want (much) power, I want an active Shireroth! I want a Kaiser above me!

[Kaiser Hasan I]

Erik is correct. That's why the Shireroth/Babkha model works, it rewards people with power for being active and productive. The only thing that troubles me is that it seems people in this community are a lot less productive than they were 5 years ago. Ofcourse that might just be me.

[Liam conToketi]

What is the one thing people want in micronations? Power, position and fancy titles.

This is why I instituted a special court simply for titles bought with obscene amounts of money in Toketi!

[Andreas the Wise]

I like the way you think, but do you have any evidence for the rule that people will want something if it's described well and accompanied by a pretty picture? The amount of work I would be willing to put in to get a "car" remains zero no matter how well-described it is or how nicely drawn the image may be. Maybe another possible law of demand might be that people want something if getting it makes them look powerful in some way. MCS land, for example. Your magic items in Gralus wizard tournaments, for another. Any analogue of those magic items that works in SNARL recwars, most likely.

I thought I did, and now I'm not sure whether it's the realness or the envy or the power ...

My evidence was actually non-micronational - other simulated economies like Neopets or World of Warcraft. On Neopets (which I did when I was much younger) there were items called Paintbrushes, which you could get and make your neopet a different design. They sold for anywhere from 100 000 to 250 000 neopoints. Which is an incredibly large amount of money for that world. All you get is the chance to make your neopet a different colour - a pretty picture. And yet it's incredibly valuable.
The picture bit is not essential, but the making it real, more than just a line of text, is important. Manuel's loot shop sells loot for exorbitant prices. Admittedly, I brought it in when people had run out of things to spend money on, but still, most people wouldn't spend 5000 NCU (the equivalent of 500 posts) on an item just because it's expensive - it was (I think) because I sold the character of Manuel, made the items more real and attractive, that they became popular.
Now, admittedly, there are some things that, no matter how good they are, you won't want - like I've never wanted a car micronationally, and never intend to buy one. But Yvain, if you had the choice between an item for 50 erbs, and the same type of item, beautifully explained with backstory, for 51 erb, which would you buy? Maybe my law goes to far in saying that's the primary reason for increasing demand, but it's certainly a significant reason for increasing the 'value' of an item in people's eyes.

And I'd actually say Erik is not always right. Some people want power and position. Some are quite happy just participating in the micronation, and have no real interest in power or position. But I'll write more on that in 'A Pragmatic Economy'

EDIT: And how can I forget the lovely paint pictures of Battleships, Tanks and space stations from New Brittania and Riponia? You can't say they don't value their units more because it has a paint picture ...

[Andreas the Wise]

Actually Yvain, reread it, and you missed the largest part of the rule. The rule says people will demand more if it's real or linked to something real. This is real in the sense of 'tangible' or 'with practical worth'. The car bit, with the pictures, was merely one example. The second example explained that people would buy property, not because of pictures, but because they got a thread for themselves (something 'real') and could show it off, thus allowing for envy. This example doesn't make much sense to Shireroth as virtually all of us are nobles with our own land. In Novatainia, however, it makes perfect sense - it is (or was up till a week ago) a constitutional monarchy, with a working parliament. Land was bought from the government, not given to people. So people bought land and made their own thread about it, and people came and visited their house etc.
The rule doesn't list the examples of voting power, but that's another one covered by the 'It's not real' law. The paper goes on to explain what is real, and power is listed there, see? So if something you can buy is linked to something real ... like say, voting power, then demand increases. I just didn't use the voting example because I knew I'd go onto writing that out in detail in my next paper. But just for you I'll make that bit clearer.

[Rudolf Höhnli]

I want to give an opinion on microeconomics. My experience with micronations inclines me to think the elucidated "Pragmatic Economy" is problematic, because it ignores the real market of micronalism. The Model of Pragmatic Economy is a artificial market model that would impose on the natural market of micronationalism. It doasn't work. Let me explain what a natural market is:

All micronations stay in competition. They all want the limited resource"citizens". Player can choise their micronation, micronation can't. In large every micronation is happy about new citizen. So it have to provide the citizens with fun, interested plots, nice forumstyle and so on. If you start up Pragmatic Economy concept you get a competitive disadvantage against micronations where resign such a concept. Your citizen emigrate or reduce their activities in your micronation.

In my experience only very few citizens are interest in economics. A elaborate system dragoons citizen into working. Even if all micronations would do it your vantages were meager. A sophisticated economic system paralyses activities.Of course, some components could be spices in the game. Especially in established nations with lots of citizen. For example own sobforums. But the standard using of forums shouldn't be in the pay of citizen. You would scare the new citizen who cautiously approach your micronation. But for the most part, economic systems are poison in micronations.

Nevertheless I also present you a little system of whom I think it works. citizen get a private banking account. There aren't company accounts. If a citizen done any commercial act - contract for delivery for example - he get money (for example 10000,- per contract. 5000,- for trade in equities and so on. Payments are fixed but the bank director has got elbowroom. Every month the savings will be halved (50% taxes). This is very important to keep the dynamic. Every month a rankinglist is proclaimed, a list of the richest citizen. With the money you can buy some noessential thinks from the ruler and you can pay services from other citizens. In this way only volunteers are involved. The others lie under the necessity of doing it. It's a simple system. Of course, it's rather intuitiv.

[Andreas the Wise]

Rudolf, I'm not sure you understand what I mean by a Pragmatic Economy. Some of your stuff sounds a lot more like simulated economies, which I've said fail. A pragmatic economy works on a national level on real transactions between real citizens - it's as natural a market as you can get. If done well, it adds to the experience for citizens. If done poorly, it just dies, but doesn't actually effect why citizens are in the nation. And pragmatic economies are anything but complicated. They're (currently) either post based - where you reward activity with money, or vote based - where your money is your voting power. In both, citizens can sell things if they want, and the government can pay citizens to do things. Post based economies are certainly optional - they don't affect your participation in the nation. Vote based ones do, but I wouldn't speak out against them because our Kaiser's rather got his heart set on it ...
Economies where you have to have money to do things, especially if it's something like you have to do a job to get money to pay living expenses (buy essentials, as you call it), is what I refer to as a Simulated Economy, and say is going to fail. "You would scare the new citizen who cautiously approach your micronation," sounds almost exactly like what I said in the thing about simulated economies ...

[Rudolf Höhnli]

Oh sorry, I only flew over the google text and your exposition. I know a similar text who is based of ideas about paying for "essentials" in micronations. So my perceptionplaed a trick on me. Maybe we aren't really contrary.

I think, post based economies doesn't work really. Maybe it works at the beginning. But later nobody posts to earn money, unless the purchasable thinks are very interesting. To offering such things for free gives the micronation a competitive edge. why shouldn't a micronation sell it? Also I think, post based economies aren't attractive for for economics-freaks, because it doesn't based on strategic rulings of economy. Likewise service Based Voting economies. When I was economics-admin of a micronation in the past, I searched all kinds of economic-systems to give my nation more financial touch. It was difficult.

[Andreas the Wise]

Oh, it's certainly not based on any other text, I wrote it all myself. I am studying economics at uni and have been involved in reasonably working post based economy, so I know what I'm talking about.

I agree post based economies can slow after a while, but so can all. What I've found is that the post based ones I've been in actually last longer than those who just start a bank and 'pay' people for jobs and have no other way to get money (As opposed to vote based, which actually have a purpose for the money). In the end, it depends on the micronation. If you read 'A Pragmatic Economy', the companion, it explains some of this more.

[hypatias mom]

Andreas--

I'm impressed with the depth and thought that went into the production of your two economic papers. I think you have shown decisively that you are the most qualified and the most logical person in Shireroth to put into practice the Kaiser's economic proposals. You have a much more encyclopedic knowledge in this field than any other micronationalist I have read. You will make a good economist. I hope you will be able to help rectify some of the ills of our macronational economies after your graduation.

[Andreas the Wise]

Thanks very much Hypatias Mom.

[hypatias mom]

You are quite welcome, Andreas. Most RL economies could use a level-headed, clear-eyed economist to prevent some of the more egregious problems in the governments' budgeting systems.

[Jonas]

Yes, Wall Street is in troubles now. Help them!
Malarbor demands it!

[Andreas the Wise]

I'll just make sure the ASX is alright first ...

[Jonas]

You have saved the economy, Andreas!

[Liam conToketi]

Yes, Wall Street is in troubles now. Help them!
Malarbor demands it!

Now that mortgage rates are going down, this isn't so much of a problem.

Either way, though, the US economy is trash. I'm gonna get done with college and immigrate to Japan...

[Jonas]

That doesn't help. If the USA economy collapse, it will take everyone with it (Europeans, Japs,...)

Look to the the governement budget of the USA. Terrible to see how high the debts are, nobody can compete with that (we, Belgians, can't and we hadn't a governement for months!)!

[Liam conToketi]

That doesn't help.

Not the way I plan to live...

[Jonas]

That doesn't help.

Not the way I plan to live...

Héhéhé