HELM Linkshells and the economy

[Isanov]

Re: HELM Linkshells and the economy

While its true that such a LS leaving would create a supply shortfall and thus higher prices, it would only ammount to prices returning to thier pre LS level, perhaps a little higher if the LS-induced low prices caused more people to start crafting.

$3 gas is due to the in-ability of the companies to meet demand, due to rarity of gas, cost of extraction from new fields and a severe lack of new refineries (paticularly in the US). In the game, we dont have a problem finding resources because the RPoints are in set locations. We might see a rise in extraction costs (sickles, picks) but it should be fairly minimalist. We will only see a lack of "refineries" if people stop turning the raw materiels into ingots/lumber/etc, which if nothing else the crafters themselves can do.

While its true such an action will increase demand, it wont increase beyond the market's willingness to pay it because, unlike oil, resources are not a necessity to playing the game.

Even if the LS were to disband, the high demand will ensure that someone else will take its place. Worst that could happen is a high demand is created, LS falls apart, and then the costs (of materiels) would eventually re-balance to where they are today.



You know, this should not even hurt the low-lvl players who refine raw materiels into resources; the cost of crystals will increase enough that farming will more than make up for thier loss in income.

[kuu]

Re: HELM Linkshells and the economy

You don't ramp up production in a day, even in ffxi.

Certainly you can do it faster then real life, but nontheless it's still an undertaking.

Mainpower has to be aquired, trained, and managed. And profits have to be properly split, haggled, and generally make it worth it for people.

The issue here is fluctuations, the core of economics.

Back to oil. If Lowering $3->$2 in days will fix short term it will not solve the problem of it raising to 3 for in another 6 months, and then dropping in the next.

The point is balance. As long as it stays at $3 people may bitch and whine, but car makers, refinerys will, and general society will learn to live with it, by creating more fuel efficent cars, engery alternatives, budgeting, long term contracts etc. If you jump around with prices, none of that works.

This is the true nature consumer confidence. Price is not the issue, rather the rate of the price change over time. I won't buy a car, because I don't know which model to buy, because I don't know what gas prices will be 4 yrs down the line. Should I buy a higher price better milege one? but if price of oil drops again, I'll feel stupid. Should I buy a low milege cheaper one, and hope it will drop? Should I buy a use one, and wait for a price drop, etc.

Same in FFXI-verse. Once a HELM lowers price of say 1k ore to 500g ore, all related economy are set in that price. In 3 months if it every goes back to 1k, the result will disrupt all surrounding economy in the short term.

[Isanov]

Re: HELM Linkshells and the economy

You don't ramp up production in a day, even in ffxi.

Certainly you can do it faster then real life, but nontheless it's still an undertaking.

Mainpower has to be aquired, trained, and managed. And profits have to be properly split, haggled, and generally make it worth it for people.

The issue here is fluctuations, the core of economics.

I agree, it is all about the fluctuation of economics. Unfortunately we must acknowledge that, though FFXI has a realistic economy, it is not 100% realistic. The only cost of ramping up production (of raw materiels) is in the forming of the LS. Its more dufficult to find members capable of HELMing in difficult areas/refining harder materiels, but its not much of an issue. Its not to hard to show a new member how to mine/lumber/etc.

Back to oil. If Lowering $3->$2 in days will fix short term it will not solve the problem of it raising to 3 for in another 6 months, and then dropping in the next.

Lower the price and the price of manufactured goods drop. Increased demand causes prices to increase. higher demand causes more eutreupeneurs to go HELMing (unlike oil which is a expensive, involved business). Even if it gets to the point that 30% of characters are buying materiels, more common HELMing or a 2nd LS will meet supply. There is nothing stopping supply but the willingness of people to HELM.

The point is balance. As long as it stays at $3 people may bitch and whine, but car makers, refinerys will, and general society will learn to live with it, by creating more fuel efficent cars, engery alternatives, budgeting, long term contracts etc. If you jump around with prices, none of that works.

All economics is a balance. Increase supply costs and it balances out with higher costs of goods. Drop the price and the prices of goods drop. Fluctiation exists in any economy and is where speculators make thier money. If such a LS dropped prices, when they jumped back up they wont raise higher than they are without the LS, and the extra profits will either be passed on to the consumer or pocketed by the crafter.

This is the true nature consumer confidence. Price is not the issue, rather the rate of the price change over time. I won't buy a car, because I don't know which model to buy, because I don't know what gas prices will be 4 yrs down the line. Should I buy a higher price better milege one? but if price of oil drops again, I'll feel stupid. Should I buy a low milege cheaper one, and hope it will drop? Should I buy a use one, and wait for a price drop, etc.

Would you avoid buying a Darksteel Helmet because the cost of ore may go up or down? Yes the price may drop at sometime, it may drop without an increase in resource-supply. You choose to wait, no big deal. Consumer confidence in a piece of armor is assured because we buy it to protect us, not as a financial investment.

Same in FFXI-verse. Once a HELM lowers price of say 1k ore to 500g ore, all related economy are set in that price. In 3 months if it every goes back to 1k,
the result will disrupt all surrounding economy in the short term.

Prices will go down across the board for all items related to X materiel. When supply decreases the Prices will go up across the board. This is the chaotic nature of capitalism.

[kuu]

Re: HELM Linkshells and the economy

I agree, it is all about the fluctuation of economics. Unfortunately we must acknowledge that, though FFXI has a realistic economy, it is not 100% realistic. The only cost of ramping up production (of raw materiels) is in the forming of the LS. Its more dufficult to find members capable of HELMing in difficult areas/refining harder materiels, but its not much of an issue. Its not to hard to show a new member how to mine/lumber/etc.

No it's not but it is harder to keep it non stop. You gotta have people train, and willing, and rotatable. Just like a HNMLS isn't build in a day, neither is anything else that requires long hours and nonstop, and clear cut glory.

Lower the price and the price of manufactured goods drop. Increased demand causes prices to increase. higher demand causes more eutreupeneurs to go HELMing (unlike oil which is a expensive, involved business). Even if it gets to the point that 30% of characters are buying materiels, more common HELMing or a 2nd LS will meet supply. There is nothing stopping supply but the willingness of people to HELM.

Untrue, if they're two HELM, and one goes away, supply will drop roughy 1/3 if not 1/2. One person doesn't magically replace another, There must be transistion of resources, in this case labor. People must come in and leave their old post. give up one job for another.

I can't empty a trash bag without a new trashbag to take its place. Anyone can do it, but it will require more then point to someone.

People must form a new HELM, trained, stablize, and systematically pull the hours. Just because one telewhore tells me to take over doesn't mean I'll take over. I have other ways to make money, and I don't have the williness to pull the same hours.

All economics is a balance. Increase supply costs and it balances out with higher costs of goods. Drop the price and the prices of goods drop. Fluctiation exists in any economy and is where speculators make thier money. If such a LS dropped prices, when they jumped back up they wont raise higher than they are without the LS, and the extra profits will either be passed on to the consumer or pocketed by the crafter.

Would you avoid buying a Darksteel Helmet because the cost of ore may go up or down? Yes the price may drop at sometime, it may drop without an increase in resource-supply. You choose to wait, no big deal. Consumer confidence in a piece of armor is assured because we buy it to protect us, not as a financial investment.

Prices will go down across the board for all items related to X materiel. When supply decreases the Prices will go up across the board. This is the chaotic nature of capitalism.

Untrue. There is what undercutting means. The moment you try to increase profit without increasing supply, you're either 1: barrier of entry blocked competition, or 2: gong to be undercutted. There's only so much from material to final prouct profit you can make before you'll be undercutted.

And yes infact, if price of materials drops/raise large enough the crafter will leave. There is also a grey area, but such is the 1st rule of economics "Opportunity cost". For every thing you do, you give up something else you could be doing. If price fluctuates enough in your craft, you will leave it for greener passures.

No one is stupid enough to stick to a craft if given enough reason to leave.

Consumer confidence is waiting, but waiting is devestating in a economics. because, Things have to sale for every moment you don't sell you lost money, in one form such as inv space, to worse, excess supply, to even worse, non performance. Opportunity cost101.

Finally to go 180 on your biggest quote. FFXI comforms very well to Economics. Economics is first and foremost about society, not about capitalism, or tangable/intangible.

IF FFXI does not have banks, then we take banks out of the variable. If ffxi does not have taxes, we take that out, if it has no transportation cost, we take that out.

FFXI actually works better for economic theory, then real life because there are much less to account for.

FFxi economics in many ways is a much simplier system then rl Anyone who studies economic and/or business should be able to look at ffxi much much easier then rl. You simply change your model before applying to it.

Just like HS Physics everything is taught in a frictionless surface, so is FFXI, it's a lot less intensive then out there in the murky murky world.

[Isanov]

Re: HELM Linkshells and the economy

Undercutting of the lowered price wont occur if there is a high demand (from the LS disbanding). Nobody sells ingots for $900 when demand has driven the price to $4000.

undercutting may cause people to sell them for 3900, then 3800 and so on. Eventually there will reach a price that most sellers are un-willing to sell below, which will become the medium sale price. This is how the economy balances.

And when I say FFXI is not realistic, I dont mean banks, transportation costs and whatnot. FFXI is undoubtably simpler, yes. Its also unrealistic because resources are unlimited, sales are focused on four markets (for the most part), there is no employee costs, there is no variance in products (+1's are different items), etc...