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nehemia

Keynes Or F.a Hayek?

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I did misunderstand your previous post, and for that, I apologize. However, I severely disagree with the sentiment that government can or should manage the economy. Government interference leads to graft, which in turn leads to waste, which in turn leads to tax increases, which in turn slows the economy.

 

To borrow a principle of physics, you can't make something from nothing. Somewhere between taxation and distribution, there's always a cost, and therefore, a loss.

 

I can see this going round and round :P

 

Government and business should meet in a happy middle ground - just where that point is though, is up for debate. Just like if a government has too much power it leads to the situation you outline, but if business controls all without regulation then the situation is just as bad, with unaccountable monopolies, privately owned armies, a judiciary that can be bought and sold, and huge gaps between rich and poor.

 

Government's role then, is to create a fair playing field in terms of competition, ensuring the delivery of necessary services which cannot return a profit, and to oversee areas that business cannot properly be held accountable through taxation (the police, the judiciary, the military, possibly health, infrastructure and education too). 

 

Government has no place ruling over manufacturing or commodity markets because they do not have the proper insights into supply and demand, nor any real incentive to get the figures right. Similarly profit is humanity's biggest motivator - greed is good... so long as it's regulated.

Edited by M0rdred

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In a video game, I am more tolerant of socialist practices. We are all here to have fun, and it's not fun to be broke and unable to do some stuff. But on the other hand, I hate inflation. The kind that every MMO I've played suffers through. For instance, a year in, and 100 Gold is a LOT of money. 3 years in 100 Gold is 'broke'. I hateses itsss!

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If the global currency is linked directly to game time, we'll see a strong deflationary effect over time: what you can buy with a unit of game time will increase significantly as the total wealth in the economy grows, so a vipday will buy your more and more goods as the timeline of the game progresses.

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Centralized anything creates more risk and relies on a smaller group of people not to screw around.  The stock market crash shouldn't happen in a game that relies on the barter system, though who knows if the VIP vouchers won't act like fiat money anyway?

 

I think the healthiest school of thought in an MMO like this is going to be Mises & Austrian Economics.

 

However, when running a guild of any size, I do recommend a basic level of Keynesian philosophy.  Store money and supplis to ease the economic burden, so the guild 'government' can deal with a really expensive campaign loss, etc.

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I'd like to remind everyone that what sets the Austrian School apart from most other major schools of economics is its methodology. Austrians see economics as a subset of philosophy, rather than as a science, and tend to make economic arguments which are deduced axiomatically. They are highly critical of "econometrics" and arguments which rely solely on interpretation of relevant data. There are non-Austrian economists who come to much of the same political and economic conclusions as the prominent Austrians, but without sharing their methodology.

 

Addressing the strain of political argument in this thread, I am compelled to reject the premise that "regulation" (varying levels of government interference and control in the economic and personal affairs) promotes the public good, or protects the public from the predation of robber barons. Rather, it is almost always the case that regulation is used to benefit a few politically well connected persons, be they rich plutocrats or vocal demagogues, to the detriment of the public interest. If our aim is to limit the power and influence of large corporate interests or the super-rich, then the greatest weapon the average person has at their disposal is market competition. Competition floods our would be robber barons with competitors, forcing prices down and quality up, while draining everyone in the industry of the profits they need to expand. If one firm were to dominate in this sort of competitive environment, it would have done so because it best pleased the hordes of relentless consumers with which it must contend. 

 

Faced with the nightmare of the free market, business owners tend to seek the shelter and sanctuary of government protection. The government, being populated by naive visionaries and self-important bureaucrats, is only too happy to help as it gives them a new venue for flogging whatever messianic cause they've concocted this news cycle. What results is a situation in which the largest and most politically well connected (or politically pious) firms are invited to write the rules which will govern their industry. Unsurprisingly, the new industry standard is whatever rules the largest firms had already adopted for themselves. When the law goes into effect, they will already be in compliance while their smaller competitors will have to incur an extra cost, making them less competitive and less of a threat.

 

Kevin Carson put it nicely: "If progressives didn't exist, big business would have to invent them."

 

TLDR; government regulation = pay 2 win irl

 

 

Returning to the economic possibilities of our beloved Crowfall, I think it'd probably be possible to identify some useless and abundant widget, claim it has a certain value, use that widget as currency for materials, finished goods and real estate, and kill anyone who disagrees with you. That last part is really important for establishing a Fiat currency standard. Typically, MMOs have currencies which are strictly controlled by the developers, sort of like how a central bank controls the monetary system of a nation state. Crowfall takes a step in an entirely different direction by removing npc vendors from the equation completely. This result is an acknowledgement that currency acts as a substitute for barter, and is itself a commodity. That commodity which best serves as a portable, convenient store of wealth and unit of account will become currency. In a way, its an acknowledgement of the Austrian view that money and credit, like the market itself, spontaneously arises from the conditions. It's just another form of emergent gameplay.

 

Now, let's say that gold and silver are the most commonly accepted currency items in the Eternal Kingdoms, but one Kingdom decides to ban the use of any currency in their realm save for a special widget they created. If they could find a way to make it impossible to counterfeit (unlikely), and expel anyone caught using gold or silver as legal tender, then they'd effectively have a Fiat currency system in place. I doubt it'll work though.

 

On another note, I think there'll be far less trade and commerce going on in the Campaign worlds. Instead, many guilds will opt to distribute resources and gear within their guild or alliance as needed. That's what will probably end up being the case in the Dregs: pure military survival mode. Campaigns with less punishing rulesets will probably see more market activity and commerce.

Edited by soulein

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Soulein, I think I love you. The post you made regarding RL economics is a much more eloquent way of putting together what I was thinking and was too lazy to type. After reading your summary, I'm glad I got lazy as your post says it so much better.

 

When the market crashed in late 2008, I remember talking to some friends of mine who were very left leaning, but also helped to grow a local business from just over 10mm/year in gross sales to just shy of 100mm/year (since, they've grown it to nearly 600mm/year). They were in favor of the government propping up big businesses until I made the point that if the government failed to do so, or at the very least, forced an overhaul in leadership, then it would give the opportunity for young, intelligent, entrepreneurs like themselves to step in and save some of these companies by, you know, actually running them well.

 

After a few minutes of thought, they both did a 180 and agreed with me.

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I'll be the rothschild of this virtual world, you will give me welfare money in the form of subsidies and free worker slaves for doing nothing but existing, or i will close down the servers with the help of my friends with jackboots and political persuasion.

Edited by billybowl

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I'd like to remind everyone that what sets the Austrian School apart from most other major schools of economics is its methodology. Austrians see economics as a subset of philosophy, rather than as a science, and tend to make economic arguments which are deduced axiomatically. They are highly critical of "econometrics" and arguments which rely solely on interpretation of relevant data. There are non-Austrian economists who come to much of the same political and economic conclusions as the prominent Austrians, but without sharing their methodology.

 

The Austrian school is not one I was actually familiar with (particularly their treatment of economics as a philosophy rather than a science), so thank you for posting that it was very enlightening. I still do not agree with much of what was said, but I appreciate being told about them, it has opened up some new perspectives in my thinking. For example, it certainly does explain the power of business lobbyists within government. 

 

The point I disagree most vehemently with though, was that the markets are essentially democratic. They are far from it. Companies like Standard Oil during the 1800 dominated precisely because they were so big. They brooked no competition from others because they simply bought them out - this is precisely why government is important in their role of mediating. Only they have the public sanctioned power to regulate and break monopolies down. Standard oil was split into multiple smaller, competing companies and suddenly the oil market became "free". That said, even now it is exceptionally difficult for new players to enter, because the current ones are still so big and powerful. Can you imagine a smaller entrepreneurial oil company trying to compete for oil rights against Esso, Shell or BP? I can't. 

 

Likewise we get consortiums appear who try and get around government monopoly laws. Just look at airline alliances... these are there only so that they can fix prices. You need only look at the difference between European cheap flights (Easy Jet and Ryanair) Vs those in the US. The price differential is quite exceptional.

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Haha, thanks for linking that! I studied these guys and others for my degree, Keynes all the way for economics.

 

You can keep your broken window fallacies and unicorn land where you can eat your cake (print money) eat it too (spend it) and not get fat (inflation). 

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Which model of economy should we use? I'm afraid of the 1929 Big crash repeating itself.

 

This is a false dichotomy. They are both naive to different aspects of the real world.

 

People who follow Keynes recognize the artificial basis of wealth but naively ignore the self-correcting nature of abusing that artificiality (primarily inflation).

 

People who follow Hayek recognize that central planning can easily cause more problems than it fixes but naively ignore the problems with laissez-faire economics (monopolies, etc).

 

This reminds me of the western medicine vs eastern medicine "debate" where people seem to presume that only one can be right. Each has their strongest area and any real study will look for the areas where each works best and try to find the best ways to balance the two.

 

Personally I'm a fan of Taleb's approach; focus on how the relationships between boom & bust instead of just boom or bust. He has his own glitches, of course, but he's focusing on improving the weakest areas of the existing primary theories. http://www.fooledbyrandomness.com/

 

So many false dichotomies out there. 

CopperStall

Edited by CopperStall

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Monopolies don't exist in free markets; they only occur where government regulations forbid competition with the monopolist. In true laissez-faire there's nothing to stop any upstart from competing with an incumbent; if a practical monopoly arises due to having a uniquely superior product it will only last until someone else comes up with a competing product that offers equal or greater value.

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lmao....

 

ummmm..if unregulated the market will inevitably draw towards monopoly...as Friedman found out after the south amer8can experiment....

 

sorry...the math is there....supply side boycowmanure just does not work....all systemics need both positive and negative feedback for proper function

 

the only thing on earth that has continuous growth with no regulation is cancer....and you see how well that works out for the host system eh?

 

hayek/von Mises and all the freshwater types have admirable goals...but seem to lack basic math skills as well as the ability to recognize actual reality....I give Milton Friedman credit from at least learning from his mistakes....

 

just my opinion here...but you need BOTH supply AND demand in the equation of economics.....IS-LM modelling takes both into account and provides accurate and predictive models.....there is a track record for review....supply siders on the other hand have a 30 year record of being completely wrong on every test...

 

just my thinking here...take it for what it's worth

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Monopolies don't exist in free markets; they only occur where government regulations forbid competition with the monopolist. In true laissez-faire there's nothing to stop any upstart from competing with an incumbent; if a practical monopoly arises due to having a uniquely superior product it will only last until someone else comes up with a competing product that offers equal or greater value.

 

Saying that "monopolies don't exist in free markets" is precisely on par with saying "everyone is equally benefited by communism". You're confusing theoretical human beings with real ones. Even John Smith stated very clearly that a perfect free market is impossible in the real world. Free market is an incredibly useful and powerful tool in the areas where it is able to function but it has areas where it falls apart. The easiest example is monopolies & oligopolies. This is not a sudden realization; you have to stay pretty isolated in the echo chambers of the religiously laissez-faire to avoid discovering this eventually.

CopperStall

 

 

CopperStall

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Here is a video of Tom Woods lecture presented at the Mises Institute in Auburn, Alabama, on 24 July 2014. If you would like to learn a little about the Austrian schools view of what happened with the robber barons and the progressive era.

 

https://www.youtube.com/watch?v=-VA9VZeox3g

Edited by OTR

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This is a false dichotomy. They are both naive to different aspects of the real world.

 

People who follow Keynes recognize the artificial basis of wealth but naively ignore the self-correcting nature of abusing that artificiality (primarily inflation).

 

People who follow Hayek recognize that central planning can easily cause more problems than it fixes but naively ignore the problems with laissez-faire economics (monopolies, etc).

 

This reminds me of the western medicine vs eastern medicine "debate" where people seem to presume that only one can be right. Each has their strongest area and any real study will look for the areas where each works best and try to find the best ways to balance the two.

 

Personally I'm a fan of Taleb's approach; focus on how the relationships between boom & bust instead of just boom or bust. He has his own glitches, of course, but he's focusing on improving the weakest areas of the existing primary theories. http://www.fooledbyrandomness.com/

 

So many false dichotomies out there. 

CopperStall

 

First off, this thread is fascinating, and I look forward to reading more from you all.

 

Secondly, I think, like in all situations involving people, that the Art of the Excluded Middle is especially relevant here. There are reasons for regulated economies, and there are reasons for laissez-faire economies. Trying to balance the pros and the complementary pieces with the cons is key here.

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Here is a video of Tom Woods lecture presented at the Mises Institute in Auburn, Alabama, on 24 July 2014. If you would like to learn a little about the Austrian schools view of what happened with the robber barons and the progressive era.

 

https://www.youtube.com/watch?v=-VA9VZeox3g

Much love for Tom Woods.

 

Note that he references Gabriel Kolko, a socialist historian, who comes to many of the same conclusions about the progressive era as libertarians and "old right" conservatives.

Edited by soulein

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To an extent, yes. Business however tends to be focuses only on their interests, while the government is concerned with a far bigger picture.

 

Yes the bigger picture as being their own power base and not the care of the people.   Mostly pure capitalism is the closest we get for taking care of the little person by them having to take care of themselves.  Any other form and they are slaves to either, the state, the company or oligarchs in-between. 

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/facepalm....

 

and then there's the M.I.T. folks...and their pesky numbers and empirical data....as opposed to the "gut feelings" of some freshwater types...

 

just for the Record...links are in the article for a lot of the , you know...factual goodness...

 

http://nyti.ms/1GkfuVp

 

WARNING: wonky stuff that involves math and reason involved in the posted linkage....

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