Business And Economy Archive
Thread: Economic Reform
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Beldraen
Tue Jan 18, 2005 6:29 pm
#14
ofim wrote:I think your also missing the point that Crafters don't "print" the money in the game.....the combat charecters do, we can only charge what the combatants can afford based on the quality and rarity of the item. Any type of reform has to take into account both ends of the cash flow, crafters aren't going to charge less so combatants can keep most of the money and combatants aren’t going to spend money on way over priced things they can't afford.
None of the above are the real cause of issues in this game. There is no such thing as people being able to say that "people are crazy to pay such prices." In any trade, the two people made what was considered a legitimate (or "fair") trade or they would not have made the trade in the first place. It takes two to tango. The real issue is inflation because it acts as a money distributor, generally from the poor to the rich. The economic basis in the real world is the money supply is supposed to reflect the resources within the economy; thus, I can trade my hide in for cash with the expectation its fair value will be held when I use the cash to buy a weapon. Inflation occurs when the money supply increases outpaces resource generation. Given the fact that money is printed on whim (not to mention the rampant money duping), SWG left the vast majority of people behind. Funny enough, it is because of money printing that the "mortals" can survive. There is a distinct two-tier status: those that have stayed on top of inflation and have 100's of millions in the bank and those that have not and only survive by printing the cash they need where they can. At any rate, until a fiscal policy is established, it's all meaningless ranting, anyways. Anyone who thinks that money sinks are a viable game mechanic obviously flunked basic economics. That is our real problem: Even if an effective policy were determined, it is highly unlikely that the developers would implement it (or just perhaps successfully).
Message Edited by Beldraen on 01-18-2005 07:31 PM
Phaelyn
Tue Jan 18, 2005 10:45 pm
#15
Beldraen wrote:
ofim wrote:
I think your also missing the point that Crafters don't "print" the money in the game.....the combat charecters do, we can only charge what the combatants can afford based on the quality and rarity of the item. Any type of reform has to take into account both ends of the cash flow, crafters aren't going to charge less so combatants can keep most of the money and combatants aren’t going to spend money on way over priced things they can't afford.
None of the above are the real cause of issues in this game. There is no such thing as people being able to say that "people are crazy to pay such prices." In any trade, the two people made what was considered a legitimate (or "fair") trade or they would not have made the trade in the first place. It takes two to tango. The real issue is inflation because it acts as a money distributor, generally from the poor to the rich. The economic basis in the real world is the money supply is supposed to reflect the resources within the economy; thus, I can trade my hide in for cash with the expectation its fair value will be held when I use the cash to buy a weapon. Inflation occurs when the money supply increases outpaces resource generation. Given the fact that money is printed on whim (not to mention the rampant money duping), SWG left the vast majority of people behind. Funny enough, it is because of money printing that the "mortals" can survive. There is a distinct two-tier status: those that have stayed on top of inflation and have 100's of millions in the bank and those that have not and only survive by printing the cash they need where they can. At any rate, until a fiscal policy is established, it's all meaningless ranting, anyways. Anyone who thinks that money sinks are a viable game mechanic obviously flunked basic economics. That is our real problem: Even if an effective policy were determined, it is highly unlikely that the developers would implement it (or just perhaps successfully).
Message Edited by Beldraen on 01-18-2005 07:31 PM
You seem to be referring to the Gold Standard which many countries, including the US held to for a long time. However, with the country using a basis of a Gold note (1 paper dollar = a set amount of Gold), prices and value of the paper money was definitely tied to whomever could amass the most Gold - A situation that was never in the game mechanics to begin with. A false standard was applied from the very beginning with each character being given X amount of credits, and then being able to earn X amount of credits on missions. Now, to simulate a skill based economy, as you progressed in your chosen profession, your mission payoff should increase - BUT, in the game, it didn't increase except through grouping with large amounts of other players. This caused the beginning inflation to begin with. A completely artificial payoff level based on numbers as opposed to a payoff system based on Skill. Each profession should have been given the ability to make more money as they rose in ability, with a hard salary cap at the top level. If you were a double/triple master, whichever profession had the highest cap would be your default. This would have kept the thrill of being in a GROUP as the main mechanic of combat (and fun), but kept everyone's payoff at the end tied to their individual caps.
Unfortunately, we can't simulate a Gold standard -And it's too late to institute a salary cap, UNLESS it were tied to the new CU. With a salary cap, people know ahead of time what they were capable of making per day - which in turn lets the Merchants know what the market could afford. Right NOW, the sky is the limit, as in any Free Market economy. With a set salary cap, and the limitation of what their "job" pays, the limit on sales pricing is dictated automaticallyby the created economics of the system. merchants wouldn't charge the sky, because they would know the sky.. Is too high to attain.
BUT - I disagree with you heartily that there is a "distinct 2 tier system", at least as far as the server *I* am on goes. Yes, there are the ultra rich - there are the dirt poor.. But there is ALSO a thriving "middle class" that are somewhere in the middle....
Fidgiter
Wed Jan 19, 2005 8:30 am
#17
A well written post but I have to disgree on some of it. I think you do hit on a very important aspect of the economy and that relates to buyer and seller exposure.
In the current system a consumer would need to travel Shop to Shop, City to City, Planet to Planet scanning each and every vendor along the way to find the "Best Price". It takes too long and people often just settle into a shop they know has what they need at the quality they want and pay what is asked. As long as people buy the crafter will sell.
My proposal would be to have a specialized vendor available to merchants which can be registered using advertising 4. The specialized vendor would be hard capped at 50 items and no merchant could have more than one specialized vendor. Each Major (NPC) City would have a "Sales Guide" terminal.
The "Sales Guide" terminal would be able to perform searches for specialized vendors on the planet the terminal is located in. The consumer could select the class of product and do comparisons of comperable products on the planet then pick and choose what suites their budget and needs best. Once a merchant draws a consumer that consumer can then browse their other vendors.
In this system the NPC City has an additional draw, crafters would have a business incentive to have "Sales" to draw consumers to their shops and consumers would be better able to make informed decisions when shopping.
I think you are off the mark about resources.
The demand for resources has be strongly influenced Demand which is driven by new products and grinding. When vehicles came around the price of steel and aluminum rocketed due to demand. when the Jedi Grinders had to hammer through crafting professions the price of gemstone, metal and ore went through the roof. When shipwrights were grinding their way to master the price of steel was astronomical.
The opportunity cost of creating a product includes the price the crafter could fetch for selling the raw material on the market, the loss of materials through schematics and mistakes and the maintenance on storage, factories, harvesters and power.
When a crafter sets a price on a product they consider this opportunity cost. They will either sell at or above the opportunity cost, elect to sell below opportunity cost or drop from the market. Those who drop from the market effectively reduce supply and this props up the prices assuming that demand remains the same.
Prices adjust over time. Resource prices are dropping and as crafters use their stockpiles of resources the opportunity cost of their making the product drops and this in turn leads to a drop in prices. It isn't an instantaneous adjustment particularly given that crafters are just in the blind about the competative pricing of resources as consumers are of final products.
In conclusion, the key to economic gains for the galaxies involves having mechanisms which will better enable consumers and crafters to make informed decisions. If consumers know the best deals they can seek them out and if crafters know the best deals they can adjust prices to be competative.
CaboFS
Wed Jan 19, 2005 9:26 am
#18
Ya, a nice way to do this would be to add an aditional tab to the NPC Bazzars that would allow you to see all the items listed on private vendors. I think that alone would take care of it and I douubt it woudl be that difficult to impliment.
Beldraen
Wed Jan 19, 2005 10:19 am
#19
Phaelyn wrote:
You seem to be referring to the Gold Standard which many countries, including the US held to for a long time. However, with the country using a basis of a Gold note (1 paper dollar = a set amount of Gold), prices and value of the paper money was definitely tied to whomever could amass the most Gold - A situation that was never in the game mechanics to begin with. A false standard was applied from the very beginning with each character being given X amount of credits, and then being able to earn X amount of credits on missions. Now, to simulate a skill based economy, as you progressed in your chosen profession, your mission payoff should increase - BUT, in the game, it didn't increase except through grouping with large amounts of other players. This caused the beginning inflation to begin with. A completely artificial payoff level based on numbers as opposed to a payoff system based on Skill. Each profession should have been given the ability to make more money as they rose in ability, with a hard salary cap at the top level. If you were a double/triple master, whichever profession had the highest cap would be your default. This would have kept the thrill of being in a GROUP as the main mechanic of combat (and fun), but kept everyone's payoff at the end tied to their individual caps.Unfortunately, we can't simulate a Gold standard -And it's too late to institute a salary cap, UNLESS it were tied to the new CU. With a salary cap, people know ahead of time what they were capable of making per day - which in turn lets the Merchants know what the market could afford. Right NOW, the sky is the limit, as in any Free Market economy. With a set salary cap, and the limitation of what their "job" pays, the limit on sales pricing is dictated automatically by the created economics of the system. merchants wouldn't charge the sky, because they would know the sky.. Is too high to attain.BUT - I disagree with you heartily that there is a "distinct 2 tier system", at least as far as the server *I* am on goes. Yes, there are the ultra rich - there are the dirt poor.. But there is ALSO a thriving "middle class" that are somewhere in the middle....
I am not referring to the gold standard. It was a misguided belief that value is money is backed by the ability of a government to pay on its debts. If the government held enough of a commodity that was non-perishable, desirable, and generally fixed in quantity, people would believe in the currency. What was figured out was that the value of the currency is belief in the currency to remain stable for purchase of any form of goods (purchasing power). People believe in the dollar because the U.S. government has never defaulted on a loan and performs very good fiscal policy. Fiscal policy is not necessarily about caps or legitimacy of pay.
A fiscal policy is the statement, "What kinds of activities do we consider beneficial and detrimental in our economy and what actions should we take when each's activity become significant enough that we need to do something about it?" This means that we have to measure the economic activities, decide what activities we wish to track, and actions we should take if those activities become significant. For instance, inflation has been huge in this game. One of my complaints is that the bazaar has only reflected a 200 Consumer Price Index (C.P.I.) when it is acutely obvious that inflation has been well higher than that. It is my belief that the bazaar should be raised so that most common goods should be tradable through the bazaar (like a create of food, stims, etc).
Another point made in this thread is about increasing merchant/consumer contact. What this person is really saying is the Marginal Propensity to Consume (MPR, rate people spend versus save) can be increased so that the Magnifier Effect is increased. An increase in the Magnifier will lead to faster shifts in money, which is one way can (not necessarily will) work against inflation.
My over all point is that people tend to provide technical solutions (we should raise bazaar limits, we should use caps, we should have greater money sinks, crafters should be be paid more, etc) without having a framework/model/policy that allows us to say what our ultimate goal is. After all, if we have no fiscal goals, how can we know if what we are doing actually does what we want it do?
IntoTheGarbage
Wed Jan 19, 2005 11:44 am
#20
I get the strong feeling that a lot of you did not really read my post. (It was kinda long winded
) The ONLY changes I am proposing are to:
- increase advertising;
- open the NPC cities to player merchants; and
- give merchants the ability to access any vendor in the galaxy. (advertised or not)
The results would certainly increase competition, and therefore push prices down. I believe that it would especially push resource prices down because they are highly inflated right now, and because these changes would make it very easy for any player to make money selling resources.
I think the increased competition and lower prices are a slam dunk result. I realize that the increase in resource sales is far more theoretical.
But consider how easy it would be to make money. Plant a harvester. Come back in a week and collect your resources. Place the resources in a basic robot vendor in the basement of your house. Within a day or two, some merchant will have bought it. Even at only 2-3 cpu, I think players would do this. But this is just my theory, if you think they would not, I am open to hear your arguments why.
I am not claiming that all resources will be uniformly cheap. The laws of supply AND demand will still apply. Increased supply of all resources will push all resource prices down, but the higher demand for high end resources will keep their price above the price of low endgrinding materials.
I am also most certainly NOT:
- advocating price controls
- lobbying to abolish lot trades
- saying that ANYONE is price gouging
For my part, I am a pure crafter. (MDE, MSW, MArt, and part Merchant.) I have made piles and piles of money myself, and found that it was not even remotely challenging. I want getting rich and staying rich as a crafter to be fun and challenging, and I want non-crafters (my word for combat characters 
) to enjoy their interaction with crafters. Those are my only goals here.
Message Edited by IntoTheGarbage on 01-19-2005 10:45 AM
mistereous1
Wed Jan 19, 2005 7:36 pm
#21
I think you're all neglecting the single most important factor in the SWG economy.
TIME
We're in a unique situation, we have the ability to go out and make as much money as we want, simply by spending more time. Why don't people travel far when they're looking for an item? I could travel from Naboo to Lok go through 20 vendors in ten cities and find a good for 50k cheaper. However, using that same amount of time, I could have run ten missions and made twice as much as I've saved.
Which is why location is important. Where are the most vendors...where the majority of the people are. Coronet, because Corelia is the biggest transfer zone (pre JTL), Theed because it's the easiest travel location, The mining outpost on dantooine, because that's where most of the groups form. People have to spend less time looking for what they want.
Even in today's economy, I can finish an 11k baz nitch mission in 2 minutes. So would it really make sense for me to spend fifteen minutes to save 5k credits???
Why are resources so high, because it takes my time to hunt for a location and manage my harvesters. It's not the input costs, it's the time I spend that I want to be compensated for.
A credit isn't the commodity, time is the commodity. You're selling your time. When I buy an armor exp tape, I'm estimating the time it would take me to recover the cost of the exp tape. The loot camper is estimating how long it would take for him to find another item. The selling price is when we agree on how much time it would take. The medium of exchange is credits.
The problem is each individual will value credits based on how long it would take them to make it, so if I only play a few hours a week and it takes me two weeks to make 100k credits...then I'm going to be willing to shop more for bargains and find the lowest price. I may spend a few sessions looking through a few vendors at a time each time I log in. If I'm a rich crafter and I make 2 million credits in a day's time, the value of the credit is a lot less to me, so I can afford to compensate the loot seller with what he wants for his time camping.
This is the reason I was against the solo nerf. The economy was pretty well stable. Yes you could find one vendor that has goods for 300k and the same goodon anotherfor 200k. But that's because the incremental value for adding one credit is insignificant. It takes thousands of credits to make a noticable difference what's the difference in 100k 4 janta missions, 15 minutes tops.And nowyou have created a situation wherethose with millions are worth even more than they wereand those who don't will have a lot harder time attaining it, because you've made credits harder to get. But you still haven't addressed the difference between the person that plays 6 hours a week and 6 hours a day.
Derku
Wed Jan 19, 2005 7:56 pm
#22
IntoTheGarbage wrote:
1) Make the act of buying and selling basic items a simple matter for players who just want to buy their equipment so they can play the way they want to play.
Issues
Ok the next important step is to list the issues. I am not going to even attempt an exhaustive list here, I am just going to list those issues for which I can suggest solutions.
1) Resource pricing. Resources can be harvested for about .5-.8 cpu (credits per unit) and are sold for 4-10 cpu. A profit margin of over 1000%! This is not the fault of the players, they are charging what the market will support. Clearly though, resource prices are way out of proportion, since they are the foundation of the economy, this throws the economy into chaos.
Resources
The most disruptive factor in the SWG economy is the price and availability of resources.
Why are resource prices so high? Every single player can place as many as 10 harvesters and sell the resources as a source of income, so why hasn’t the market been flooded and prices forced down? There are several reasons.
First, most players who dedicate their lots to harvesting are crafters themselves. This is because many players would rather use their lots for houses, ships etc. However, the crafters usually don’t sell their resources, but use them for their own crafting, or keep the resources in their inventory.
Third, simply harvesting and selling resources is not that much fun. If you actually dedicate the skill points to being a merchant, yet do not become a crafter. (If you were a crafter, you would use the resources yourself, not sell them.) All you wind up doing is monitoring your harvesters and stocking your vendor. It’s not very engaging when you think about it.
First of all I admit I did not read your entire post. But from what I read these things are what I find wrong:
Buying and selling items couldn't be any easier. I don't see how anyone could make it easier.
Good resources sell for a high price that is true. But I know a few vendors on Scylla that sell resources for 1.5 to 2 cpu. That doesn't include resources found on the bazaar. You can find cheap resources on there also.
You sort of prove why resources can be priced so high. Not many people dedicate lots to harvesting. If a few people monopolize the market they can price things how they want.
Harvesting resources was not made to be fun. That is why there is no dedicated profession to this area. It isn't very hard to gather resources with harvesters up.
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