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Author: lani
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6 Comments
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Hi all.
This article is inspired by two things, people complaining that the recent changes during the Summer Update by Those who Serve has had a negative effect on the economy of Tyria, which I contest and Nogame's Economy in an MMORPG: Making More Money guide which I do not contest. However, Nogame gives the Liberalist's view on economics and I feel that such should never be unaccompanied by a moderate-socialist's view :-) I first submitted this as a Guide
First a bit about how the economy of Tyria can be likened to real life.
Tyria basically has what is known as a Banana Republic Economy. This means that there's an easy to get product which can be sold at extremely high profit rates, nearly 99% and it's possible to generate more money almost overnight. It's further known for very little government intervention.
On the surface, this looks like an ideal economy, but it tends to favour only a few, while the vast majority of the populace lives in squalor.
This here is a Lorenz Curve. It shows the inequity of wealth distribution in any given population.
The blue straight line represents a situation wherein everybody has the same wealth or income. This is not an ideal, except maybe in a communist utopia, as there would be not be much ambition to achieve then. Wealth is one of life's great motivators. It is however desirable to keep the curve reasonably close to this line, the more it bulges, the more people have very little and a few have very, very much.
Now how does this relate to Tyria?
Well, Tyria as said is a Banana Republic, but it suffers from inflation.
Inflation means that money lowers in value. Usually because there's too much around. in real life there's only so much to go around and governments use taxes and other means to try to keep money from de-valuating. How can there be too much money you'd think. Well, When there's too much some things automatically happen. Liberalist's like Nogame are the first to pick up on this and start asking more for their high-profit margin luxury products. Prices go up. No problem if you've got the extra money. But some other things happen as well. Prices of basic necessities (bread, water, electricity, pizza, coffee, Internet-access, that kind of stuff) follow suit and become more expensive as well. The price increase generally isn't followed by an increase of income, at least not naturally. This is generally where Governments must intervene to keep the lower income population capable of buying their basic necessities.
This also happens in Tyria. And although it may come as a surprise to some we do have both lower and higher income groups in our population. The Lorenz Curve of Tyria is in fact very, very bulgy.
Tyria unfortunately does not have a benign government who supports the poor. Ascalon got Seared, Rurik's a beggar-prince himself, the White Mantle doesn't seem to care and The Shining Blade are hopeless idealists. Now, this doesn't immediately pose a problem until the prices of basic necessities start to rise above the buying power of the lower income groups. That's beginning players by the way. Our high-income group constitutes the Farmers. That's how one can tell this is a virtual economy :-) In most games, the basic necessities are represented by Health & Mana potions. Fortunately, but also unfortunately (I'll get to that later) Tyria doesn't have this. However, the roll of basic necessities is filled by common crafting materials and such. In general a new player must get his armour through gathering drops and supplementing this by buying materials.
When the prices of these items soar, like they did, it's the newbies in the game who suffer the most. In real life, the higher income groups would start to suffer as well at some point, but in a game like Guild Wars the higher incomes have the means to supplement their wealth through the infinite money symptom and the universal rule that wealth begets more wealth. The newbies however, don't have that option. Yes they will become full grown eventually, but they'll be replaced by other newbies to. Now Those who Serve care about newbies, even if we wouldn't. For one these people bring in real-life income for Those who Serve, but they'd also like to keep the buying of game-money for real money to a minimum.
The whole problem was inherent in the game system from the start, but the Farming phenomenon increased it. Through Farming more high-value products became available and more money. So people started asking more for their products, so they could buy other expensive products. This would've been less of a problem if we bartered more (i.e. Trade items for items instead of cash) or if we had a transparent market where people can buy at the lowest pirces. So basically the very existence of Farming created and perpetuated the need for Farming, just to be able to buy the goods from other Farmers.
So we had huge, and I mean HUGE inflation in Tyria. Gold was worth less than dirt almost. So at some point Those who Serve decided to intervene. In real life a government has several means to reduce and/or regulate the amount of currency. One of which is Taxes. In games like Guild Wars however, money is infinite. This creates the need for something else / more.
What is needed is something called money-sinks. I.e. Products or services you can buy but not resell. In Real life you buy consumables like the aforementioned bread, coffee and pizza and eat it, or services like movies, charming ladies in back-alleys and such. The idea behind it is that after your partaking, the product, the service or the lady is gone, and so is your money. In a game these would be great money sinks but people don't eat much virtual food and well, there's always the female elementalists. Most games use Health & Mana potions for this, hence the mixed feelings on the lack of potions. I find it fortunate because it removes a needless character-management layer from the game but unfortunate as the game-system now has to cope without an obvious and well tested money-sink. Despite the lack of Potions Those who Serve had some money sinks from the start, but needed more. Armour, especially the 15K variety, has been a money-sink from the start and there's always been a kind of toll on UW and FoW locations.
During the Summer Update some new Sinks and other measures were introduced.
There's now a Guild-membership fee which is either a toll or a tax (not sure which). Other new money-sinks are the bonuses you can get at various statues of the Gods of Tyria when your area enjoys their favour.
The Green Items were a means to stabilize the higher end economy a bit. Because these items are always the same and reasonably good, a more or less fixed value ought to materialize. With random drop items, this is harder to accomplish as the inherent value is well, random. In effect the green Item market has become more transparent. Almost everyone knows the specs on these items, or can look them up quickly at one of the many sites listing them. We can't yet compare prices as we often do for supermarkets or other real-life retailers, but we have a firmer idea of what each item is inherently worth. Another side-effect is that people would less willing to pay huge amounts of gold for high end items. This will not suit the liberals I figure, but if they truly understand wealth, they know it's all about percentages and will adjust.
One final thing that Those who Serve have done, is try to lower the profit-margins on farming in a indirect way. We don't invest in Farming, but we do spend effort in it. They've purposely made farming more difficult to put more weight on the effort side of the effort-reward equation. I'll not subjugate you to another chart :-)
We'll probably see more Money-Sinks and other wealth regulating measures in the near to middle future. Definitely by the time of Chapter 2. Some rumoured/proposed Sinks are means to alter your appearance after character creation. (Yes think hairdressers). Accessories / customizations of armour, town clothes. Also an in-game auction-system might very well contain a commission paid to the virtual organization running it.
So what does this all boil down to?
The economy was not ruined by the Summer Update. In fact it's been but back on track. Sure, individual profits on selling Farmed gear have dropped, but so have your costs in buying stuff. You have to look at both ends of the market if you're both a seller and a buyer. The only group who really suffered were those who already had all the stuff they needed and hence had no benefit from the lowering of prices across the board. However, if you've already got everything you need, why would you need more wealth?
I hope this gives people some further insight into how the game works and what the Summer Update really means to us and others.
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