I would strongly advise against directly comparing EVE’s economy with real-life economy. They do share some basic concepts - after all, the game’s devs drew inspiration from various RL economic processes - but that’s it. The real thing is way, way more complicated than what this simulation could ever dream to achieve.
Here are just a couple of the important differences:
According to the graph, a lot more stuff is produced and destroyed, yes. However, an item doesn’t have to be destroyed to be removed from the system. A player can build up his inventory for later use. A margin trader can hoard stock to keep market prices up. Finally, people often quit the game for various reasons. If they don’t return to EVE later, all the riches that remained on their accounts - both ISK and other assets - will never see the light of day again. These ways of consumption will never be accounted for in the graph abouve.
In real life, people pass away all the time, but their worldly possessions are eventually claimed by someone, unless the deceased had a maniacal habit of treasure burying.
In EVE, it’s very easy for the industrialist to convert his production lines to make something else, especially with T1 stuff. Basic minerals are the same, production facilities are the same. And the overall prices are relatively stable unless there’s a change in the loot tables and the current PvP meta. And even though the prices on what you’re producing might drop considerably, your blueprints and intermediary materials will always have some value. They aren’t subject to wear and tear, they don’t go technologically obsolete.
If all else fails, you can always go and do some VNI ratting to recoup your losses. If only it was that easy for professionals in real life…
EVE’s markets can be stale at times, but it’s usually a localized phenomenon affecting a certain amount of goods. And when those goods become cheaper, more people start thinking about using them in industry or PvP, which gives them a chance to recover. The real crisis in a game happens when people get bored and quit, but it’s a broader problem than the balance between production and destruction.
EVEs economy is even more irrational than RL economies.
The reason for that, is its all artificial, and its matrix is far less complex and far more constrained than RL.
Its an imperfect simulation, and cannot ever exceed its artificial parameters.
Its an irrational system, de facto, and hence what happens in it is also more likely to be irrational.
The subjective is inherently irrational, as it is by definition not objective, and only a fraction of the objectively rational.
Your subjective and mine will always differ, when measured against each other, whereas an objective perspective will reconcile them as rational on each of our parts, but only from that comprehensive perspective.
The EVE economy is irrational, because its an artificial construct. Its parameters/matrix are not subject to natural laws. Its a subjective system made manifest, virtually. It is rational in its own context, but only when viewed rationally/objectively as that which it is ie: an irrational artificial system.
There is no crisis and the markets are irrational.
Any T1 item is consumed for T2 production. In this process I am guessing the item is counted twice, once produced as a T1 item end product and secondly as a T2 end product. There is no destruction in this process, only consumption. This pretty much skews a graph like this nicely and considering the scale of T2 production this situation should never be discounted.
To answer your original thread question I would like to bring you back to some of your assumptions. You have a very perfect view of how markets work, not only in the self correcting and modelling sense but also in the information sense. You assume that traders know how much an item was manufactered for but they do not always.
Traders enter and exit markets, will liquidate in favour of a more lucrative opportunity and will look for aggregate net profit on a whole portfolio. You win some you lose some and dont discount strategic pricing. Also you generalise on the ships market but which market when? Im not sure how you have calculated your costings? I see profitability in T1 hulls all of the time manufacturing in highsec stations. There are many with better infrastructure than me that can vastly reduce costings to make more ships viable.
Your question was why are buy orders lower than costs and the answer is simply they are sometimes, not all of the time and not in all of the places.
Your discussion then moves to overproduction in Eve. There may be overproduction and stockpiling but T2 consumption is a large part.
It is my belief that the Eve markets have perfect qualities in limited places but on the whole are imperfect and easily distorted with the right amount of isk.
I am not talking about control, but economic growth and destruction is not a good approah.
Oh for God’s sake…
Of course and in watching this for coming up on a decade the worst was the Technetium debacle and even that didn’t “destroy the economy”.
No. Again, building up assets is not a bad thing. IRL, assets depreciate, in EVE they don’t so we have destruction. If depreciation we such that we could not accumulate these kinds of assets in any substantial manner a rational response would be…not too. One of the reasons we have growth is capital accumulation.
You don’t need to waster resources, ever. Especially so during a crisis. The desire to do this emphasizes another problem with how economic policy works, in advanced economies, which are typically democracies, voters tend to have a make work bias. That is they favor programs that “put people to work” but add very little to the economy. The thing is that labor is a valuable resource and like all valuable resources we do not want to waste it. This is why we have come up with labor saving technology and innovations (e.g. the assembly line). Businesses naturally seek to economize on all inputs including labor.
It is easy to see that the ex ante costs are supposed to $1.5 billion, but then the actual costs are $3 billion and the savings in terms of reduced traffic never materialize or the like.
Uhhmmm no. Considering the New Deal did not exist then that is not possible. In 1929 Hoover was still President and Roosevelt, the President who implemented the New Deal was not elected until 1932 and did not take office until 1933. Further, the New Deal did very, very little. It was, slightly more than, a continuation of the various policies started under Hoover…which clearly were not working very well. They were not working very well because the U.S. was pursuing two bad policies: contractionary monetary policy which lead to substantial deflation which result in a collapse in consumer spending. And a policy by the Federal Reserve to not act as a lender of last resort when unit banks became illiquid thus allowing tens of thousands of banks to fail taking peoples savings with them. And the banking failures were due to a boneheaded policy to limit banks to one branch and thus preventing the spreading of risk and creating a fragile banking system.
By declaring a banking holiday and going off the gold standard the U.S. economy started to grow at a tremendous rate. Then Roosevelt’s National Industrial Recovery Act was passed which set up the NRA and then economic growth pretty much stagnated for the remainder of the decade with unemployment never really falling below 15%. If it were not for Pearl Harbor and WWII Roosevelt may very well have been voted out of office in 1940.
Indeed. The Great Depression, which was world wide, was seen as a failure of markets and not of the benighted policies such as the cobbled together gold standard after WWII, the onerous war reparations placed on Germany that lead to hyperinflation, etc. Lord Keynes foresaw much of this and warned of it in his book The Economic Consequences of the Peace. Ironically though it was this book that lead to appeasement when Hitler took power as people, looking back, saw that the reparations were burdensome and felt that appeasement was a way to make amends. The reaction was generally uniform. A repudiation of markets, an increased belief that the future resided in a large and muscular administrative state with experts, in concert with big business, running everything and a general retreat from liberal ideals of freedom and individuality. To be clear, growth in the administrative state and the use of experts was already on the rise and along with it came horrifying policies. Even in the U.S. we had the absolutely disgusting eugenics movement (Britain too, in fact Lord Keynes was a major adherent) which is where we get today’s minimum wage laws, for example.
Those repercussions are still in play.
No affect is lost in the EVE closed aquarium.
Each leaves an indelible, irreversible change.
I never claimed the economy was “destroyed”.
The compounding effect of that, and other debacles, more or less prominent, nonetheless lead to an increasingly irrational system, as they pile on top of the previous. No system lasts for ever, and it can be said that the more errors/irrationality occur in it, the faster its collapse approaches.
As much as I agree with this analysis for copyright, I think your take on patents is outdated. When Leahy-Smith introduced inter partes review proceedings in 2011 the hammer came down hard on patent trolls and other upstream extractors. Take a look at something like this or any of the many, many similar analyses that have come out in the past few years.
Or, as further evidence that maybe things have swung a bit far to the opposite extreme, read the Oil States transcript or read whatever analysis you’d like. IPR has been so successful it’s actually posed a risk to itself.
While the technetium issue made some alliances very rich, I am not even sure how much of a problem it really was. I know I managed to run my T2 invention business just fine through most of it.
please guys take your matchsticks and go beat yourself on a ring. At least it will be funny.
And shillpost is not a good word to use on someone.
Also @Teckos_Pech answers to my simple questions were correct, though I don’t agree with him ; I don’t think we are having a correct discussion here . Please keep a respectful tone @Salvos_Rhoska and take a break if you need (the matchstick fight was a joke - but you can burn a few kitten if you want)
I don’t understand what was bad (or not) about this techtenium debacle ?
Technetium was a huge failure on CCPs part, as a bottleneck material for T2 manufacture, which was only available as sourced from the North/North East of Eden.
A cartel, known as OTEC (Organization of the Technetium Exporting Corporations), formed around this and got astronomically rich off price gouging and control of supply.
This was later corrected by CCP, but not before substantial damage to the games economy had been done, and CCP staffs complicity with certain players/corps being quesrioned multiple times.
Teckos is grossly understating how bad the situation was, and how bad it got, before it was remedied. It took years for the market to recover, and arguably it never has completely. Not to mention the isk earned still sits in OTEC member accounts.
