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Monday Message Board

May 1st, 2017

Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.

Categories: Economics - General Tags:
  1. Ikonoclast
    May 1st, 2017 at 13:20 | #1

    MODEL MARKET

    I hope this post is not too vague or frivolous to elicit an answer or two. Does it belong here or in the sandpit?

    I am interested in re-modelling a market in a computer game. Any insights would be much appreciated. What I outline below gives a lead into how I would want the modded market to work overall.

    This market trades just six commodities. These commodities are collected by peasants. Well, they are more like slaves as they consume only some of the food they gather and otherwise work as ordered for nothing. Typical for a computer game of course.

    The six commodities are sold in a single market by each player who acts like a dictator of a little nation. There can be up to 8 players in the game (singly or in teams) and this is an economy/war game so battles are eventually fought. The players do not trade with each other (though that would an interesting and mod-able variant no doubt). The players essentially trade “off-map”; with “the rest of the continent” perhaps. A single market mediates this.

    There are six commodities: food, wood, stone, gold, iron, coal. Gold is clearly the most valuable and one might say it fills the role of commodity money but at the same time any commodity can be traded (bartered?) for any other commodity. No units of measure are nominated for any commodity. I could sell say 1,000 gold for 5,000 food or 1,000 coal for 2,000 wood. One has no way of knowing the units of measure in each case but we must assume the units are constant across all cases. It could be coins of gold for bushels (or pecks) of wheat. It could be mining wagons full of coal for cords of lumber, gold coins for cords of lumber and so on.

    We have to assume that the “rest of the continent” off-map has a significant demand for these six commodities, yet some of its own production as well, and will trade any for any (at a price) but that this demand (for any one commodity) could be temporarily sated at some point, such that the value of that commodity hits a very low floor of some kind. The rest of the continent at this point will still buy more but offer very poor floor prices as measured in the other commodities.

    We have to build in the assumption that the market charges a broker’s fee to broker these trades. We have to assume this commodity barter-trading is happening in an era, I guess, before true commodity money entirely “ruled” most or all the trades. The players on-map are trading surpluses in one commodity to get more of another commodity they are short of at that point in-game.

    What would be the best way to model this market? I assume one would set an “off-map” demand sufficient to soak up a sizeable proportion of all on-map produced resources but not to soak up absolutely all of on-map production even if permanent peace was declared on-map and growth ceased. The requirements for economic re-investment and production of war materials and expendable men (soldiers) on-map cause a good proportion of production to be consumed on-map.

    It probably needs to be added that the entire game model engenders a growth curve just slightly greater (slightly exponential) than linear growth.

    What parameters and equations would help set up this market “realistically” or quasi-realistically? How would supply, demand and prices behave? What would be likely brokerage percentages and so on? I hope this question is not too vague or frivolous to elicit a serious answer or two. After all, the answer could serve to teach a lay person a few basic market principles… maybe.

  2. Greg McKenzie
    May 2nd, 2017 at 08:28 | #2

    This sounds like an early mercantile system. One step up from a subsistence economic model but still dependent on the barter system. Having gold helps but it cannot be the medium of exchange if most of the population are slaves. This implies no subsistence wage and only food, shelter and clothing for work compensation. There will be rare double coincidence of wants and so a village based market will be mandatory. With no refrigeration and little safe storage, the perishables will be traded on a seasonal basis. Make sure you have river transport as infrastructure will be primitive. Then there is drought, famine and oestilence to factor into the skave output assumptions. Little or no medicial assistance will severely reduce labour productivity. Harsh penalties must be in place for any slave who runs away and any form of disobedience. But you may wish to implant a “carrot” in the form of some chance to buy oneself out of slavery. This may increase productivity but will also certainly also increase theft from one’s owner. Finally these economic models are famous for long periods of stagnation, not continual or even occasional growth Economic growth will be tied to things like abundant, but not too much rainfall, so make sure your farmers are on the right river bank. Also warfare will hamper, or may promote, growth spurts. Wars must be fought outside of harvest times and rarely in winter. Hope that helps. The traders will be the merchant class and double up as bankers. A goldsmith note may be a useful unit of measure and trading promissory note. Good luck with only six commodities. Luxury items may be needed to stimulate the circulation of gold reserves, though warfare works just as well here.

  3. BilB
    May 2nd, 2017 at 10:05 | #3

    My daughter, facing higher uni fees and a ridiculously lower repayment thresh hold, this morning put forward the very realistic notion that if the funds for universities are so desperately needed then in the spirit of the Australian fair go Uni fees should be back calculated and applied to all previous University participants and a HECS debt established for all of those people still working.

    Let’s have a truly level playing field.

    This is a perfectly fair proposition as past students who did no face the very high fee levels of today have had the advantage of an extended period of employment through very good economic times with high levels of employment. These advantages have been accrued in property ownership and superannuation accruals and it is not at all unrealistic that these people should pay in the way that future students are being told that they should pay.

    The first people to accept this reality must be the politicians and ideologues who are driving the argument that the young should face higher costs than their forebears faced so that the privileged can pay lower taxes.

    After listening to Simon Birminham laying out his cleptimonious arguments to Fran Kelly this morning, I completely agree with my daughter on this.

    We have a government long on self congratulation for achieving nothing, and completely bereft of ideas on how to make our economy “great again”, so they decide to steal from the students while having the gall to argue that deficits are immorally disadvantaging future generations.

    Hows about putting the top tax bracket back a notch and making the present rich pay their way now, and dropping the capital gains tax concession on investment properties.

  4. Smith
    May 2nd, 2017 at 11:04 | #4

    The Federal Government has announced it will build, own and operate Badgerys Creek airport. It will go (further) into debt to fund the $5 billion cost of building it.

    It’s like Bob Menzies has been resurrected.

    “Debt and deficit” must no longer be “disastrous”. I know there’s no prizes in politics for consistency of rhetoric, but LOL. It will be fascinating to watch to debt and deficit hawks in the media who are also rusted on Liberal tribals explain their way out of this one.

  5. Ikonoclast
    May 2nd, 2017 at 16:54 | #5

    @Greg McKenzie

    The game model is not nearly as sophisticated as your set of parameters. 🙂

    But interesting observations nonetheless, thanks. Even reading that list makes one realise that any model (a simple fun game model or a more complicated and “serious” economic model) is so abstracted and simplified from reality that what is accounted for is still far, far less than what is not accounted for. The real systems involved (comprising physical factors, economic systems, and human actors) are immensely complicated.

  6. Ikonoclast
    May 2nd, 2017 at 16:59 | #6

    @Smith

    Government debt is perfectly okay to neoliberals when it funds;

    (a) unnecessary and unjust wars;
    (b) tax breaks for the rich;
    (c) subsidies for the rich and corporations to make even more money.

  7. hc
    May 2nd, 2017 at 18:16 | #7

    I am surprised that economists (and others) who reside in our far north have not taken up the issue of the destruction of Queensland’s coastline. This is potentially one of the most attractive areas in Australia from an aesthetic/visual aspect and the far tropical north is an important biodiversity conservation zone. I have just visited Townsville and the lack of appropriate development is obvious – the site is well-equipped with natural beauty but is being massacred by redneck land developers in search of a quick buck. The Queenslanders have often been ridiculed as the “backward north” of Australia. Perhaps a consortium of more enlightened southern states could take over Queensland and run it in a way (as a colonial territory?) ?that suggests the future matters. Queensland has it all in terms of environmental resources – where are the decent politicians there? Is it that the Queensland population are so well endowed with natural beauty that they value it low at the margin. It is not just Surfers and the Sunshine Coast – the stupid destruction extends 1500 km north of that monstrosity.

  8. Collin Street
    May 2nd, 2017 at 21:13 | #8

    Just to point out: if HECS is by nature of a debt loan or payment-for-services, then unilaterally demanding accellerated payback by increasing the interest rate or cutting the repayment threashold is plainly a “taking”, and — by virtue of its unilaterality — a taking on other-than-fair-terms.

    So, yeah. I would be surprised to see retrospective changes of this nature actually make the final legislation. Admittedly, the treasurer is a narcissistic idiot and the AG got his law degree out of a wheatbix box, so who can tell. But the law is reasonably clear, I think.

  9. Ikonoclast
    May 3rd, 2017 at 06:24 | #9

    @hc

    As opposed to the rest of Australia where the people, the politicians and the development decisions are all perfect?

    It’s the Australia as a whole who is failing in these matters. Regional differences pale in comparison to the scale of national failure.

  10. Ikonoclast
    May 3rd, 2017 at 06:25 | #10

    Oops typos. Well you get the drift.

  11. David
    May 3rd, 2017 at 08:20 | #11

    Thanks again John.
    Agree totally hc I am a resident of the Sunshine Coast and have watched as the ugly development encroaches on the natural environment mainly attached to the beach and hinterland environments. I have been reading the transcript of the current CCC enquiry “Belcarra” into the 3 Councils of the Gold Coast, Moreton and Ipswich and suspect the evidence therein discloses the problem and causes of uncontrolled development. These seem all to be pro-development councils like the Sunshine Coast.

    One councillor testified she ran 2 “fund raisers’ for donors charging from $2500 for “deluxe” tables to $195 for a single attendee and raised circa $170,000 yet she stood unopposed and won her position without having to spend the usual expected electioneering costs. She makes Council decisions on the basis of what the community wants !
    Could you imagine the outrage of the Murdoch minions if this were a progressive candidate and if so their lack of reporting perpetuates and compounds the original abuse and any reasonable person’s suspicion.

    .

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