Post by Icyferno on Sept 22, 2015 12:40:57 GMT
Status: Healthy / Rested
~
A single day had passed since the Swashbuckler sat down in the library to think about the impact Adventurers living in Londinium have on the People of the Land economically, treating Adventurers as people from a ‘developed country’ and Londinium alongside the surrounding cities like Sarum and Avon as ‘developing countries’. Of course, such a theory would seem strange, given that there were no resources to pull except for the concept of several things which the Adventurers used to have.
Skuggi’s pumpkin plant seems to have survived to see another day as well, but alas, he still does not think that forest soil was good for what seemed to be a garden plant. Guess he will have to wait and see.
Anyway, there were absolutely zero books to be found on the topic of globalization around the city, since there was no such concept in this world. As such, he tried to look at things in a smaller scale. The microeconomic scale.
In microeconomics, there were two important concepts at his elective level: Demand and supply, and government intervention, which occurs when the market fails. Market failure is described, according to his textbook, at least, as the distortions in the price mechanism which prevent it from allocating resources efficiently, leading to welfare loss.
Welfare loss, in this case, occurs when there is either negative externalities or positive externalities. Externalities are the cost of the good not borne by the producer or the consumer, but the third-party. For instance, if someone were to buy alcohol from a certain Dwarf of legendary proportions whom all biscuits fear, the negative externality would be that in a drunken rage, an idiot broke someone’s table or something. On the other hand, if someone were to purchase some medicine from a certain red-haired drug dealer roaming the streets being all shady and stuff, there would be positive externalities as the people around the guy who took the meds are less likely to be infected with the same disease. Unless said guy sneezed into a tissue paper before taking his pills and rubbing it in someone else’s face, then there was nothing to be done about it.
In a free enterprise economy, the market will produce and consume at the private efficiency level. It is where the marginal cost of consumption, the price paid by the consumer to get one more unit of drugs so he can get high, equals to the marginal cost of production, the revenue obtained by the red-haired drug dealer when she sells drugs. At private efficiency, the negative externality, which is what happens when the customer wrecks things while being high, is ignored, leading to welfare loss. Hence, the market fails to allocate resources efficiently and government intervention is necessary.
… Except there is no government, so guild intervention? Uhh, not sure if they would act unless one of their guild members is involved somehow.
This would be a good time to recap some of the policies he was thought that should be done to solve this problem. There was a possibility that they could be altered somewhat to fit the context of his current situation to make his life slightly easier. Also, he somehow felt that he was going to need this information really soon, in another life. Strange.
It also did not hurt to mention that for some reason, the more he thought, the more experience points he gained. Who would not like free experience points to drop into their lap? That person would have either be really high level that they would not bother with it, or mentally unstable.
One of the weirdest policies he remembered was a thing called campaigning. The purpose was to correct imperfect information, and to sum it up, the government goes around raising awareness amongst the general public either about the harmful effects taking drugs would cause, or the benefits recycled paper has on the environment, to raise a few examples. If he had not been told of such a thing in school, he would have never guessed there was such a thing. Campaigns, really? Apparently, one of the downsides to this policy was the sheer amount of money involved, creating a burden on taxpayer money. Another thing would be that some goods are habit-forming, and as such people may refuse to change themselves.
… Which kind of makes the whole policy pointless, in his opinion. However, it has apparently been met with success, for it was in his syllabus. Maybe Adventurers would be inclined to look at a few posters?
Moving on to more logical policies, he arrived at taxes and subsidies. The government taxes goods which burst with negative externalities, while subsidizing goods which ooze of positive externalities. The amount of tax or subsidy is supposed to be equal to the marginal external cost / benefit, which is the additional thing which happens when one more unit is consumed and produced, forcing Adventurers, People of the Land and Ancients alike to bear the cost of their actions, or the benefits in some cases. On the plus side, such a policy allows the market to operate with some degree of freedom. Taxes not only give governments more money to spend on not-as-effective policies like campaigning, but also encourage firms to invest in research so as to reduce the negative externalities so they get taxed less. However, there is the issue of not knowing how much to tax or subsidize. Even the government isn’t perfect, you know? Subsidizes would also place a strain on taxpayer money, also known as government budget, the fund they use to make sure your roads aren’t covered in potholes, meaning subsidizes could possibly make your roads have more potholes.
He supposed that it should somewhat be possible for Adventurer guilds to tax stuff, especially if they band together to bring Londinium to greater heights. Since everything is already in ruins and people don’t really expect them to fix most of the ruins outside of the city, that would mean a sizable fund in the long term after maybe a year or so. He doubted that they would subsidize anything, though. As much as they can act like the government, they are still guilds, which basically means that a bunch of firms will be running the city. Oh joy…
Last on the list was legislation and its lesser counterpart, cap and trade scheme. The lighter version, also known as the marketable permit scheme, only works when you know what the negative externality is. For illustration, radiation waste from a nuclear power plant. It is not something like the amount of tables broken by a drunk man in a bar, because limiting alcohol may not mean that the person is not intoxicated. Sometimes it takes little to take out a man who cannot hold his liquor. What the cap and trade scheme effectively does is to create a market for the negative externality by handing out permits, stating how much negative externality a firm is allowed to produce. Firms that really needed those permits would have to bid for them, while firms that were not producing much negative externalities could sell for additional profits, all while operating at what the government would like to believe was the socially optimal level of production.
It should, however, be noted that it would be difficult to measure the cost, and that it would be difficult to ensure people follow the scheme, especially if one were talking about a city like Londinium, which has a lot more privacy and held a lot more secrets than the previous world. It was also difficult to retrieve these permits once the firms had them, for who knows where people even keep these bloody things? Not that anyone would agree with what a council of guilds say if it directly conflicts with their interests, though.
The heavier counterpart, laws, basically restricted production of negative externalities by law. This means that there is no market solution: Either you follow instructions, or face day after day of court trials until you give up and hand over the money. Kind of sad, really, now that he thought about it. All this comes at the cost of budget. Money is needed to keep these companies in line, not because these firms are getting paid, but because the people who make sure that the poor sods are in line have to get paid. Extra manpower, extra costs. Guilds would probably resort to intimidation to get things done, though. Don’t want to follow my orders? Sure, let me just PK any member who steps out of the city. Such a forceful display of might will result in compliance if carried out properly, but it does not signify the true will of the guild in question.
At the end of the day, the four policies act as very simple ways for the government to intervene in the market and take away the freedom of the people to do business as they pleased. Could they make an appearance here? Have they made appearances before? He wasn’t sure of the answers to both of them, but what he was sure of was that things were going to be different from now on. Technology was not the only thing flowing in with the Adventurers. Information was, and that included economic concepts which he was certain some other guy had a much better understanding of and would be able to implement them in some form or another in this new world they inhabited. It would be unwise, then, for him to not recap on such concepts so that when they make a reappearance, they would not appear alien to him and he would be able to adapt to them in the shortest time possible, all while earning experience points for simply making these preparations.
~
Word count: 1631
Total word count (Pharmacist): 1631 x 1.1 = 1794.1
Notes: Celestial Arms 1.1x craft class bonus
~
A single day had passed since the Swashbuckler sat down in the library to think about the impact Adventurers living in Londinium have on the People of the Land economically, treating Adventurers as people from a ‘developed country’ and Londinium alongside the surrounding cities like Sarum and Avon as ‘developing countries’. Of course, such a theory would seem strange, given that there were no resources to pull except for the concept of several things which the Adventurers used to have.
Skuggi’s pumpkin plant seems to have survived to see another day as well, but alas, he still does not think that forest soil was good for what seemed to be a garden plant. Guess he will have to wait and see.
Anyway, there were absolutely zero books to be found on the topic of globalization around the city, since there was no such concept in this world. As such, he tried to look at things in a smaller scale. The microeconomic scale.
In microeconomics, there were two important concepts at his elective level: Demand and supply, and government intervention, which occurs when the market fails. Market failure is described, according to his textbook, at least, as the distortions in the price mechanism which prevent it from allocating resources efficiently, leading to welfare loss.
Welfare loss, in this case, occurs when there is either negative externalities or positive externalities. Externalities are the cost of the good not borne by the producer or the consumer, but the third-party. For instance, if someone were to buy alcohol from a certain Dwarf of legendary proportions whom all biscuits fear, the negative externality would be that in a drunken rage, an idiot broke someone’s table or something. On the other hand, if someone were to purchase some medicine from a certain red-haired drug dealer roaming the streets being all shady and stuff, there would be positive externalities as the people around the guy who took the meds are less likely to be infected with the same disease. Unless said guy sneezed into a tissue paper before taking his pills and rubbing it in someone else’s face, then there was nothing to be done about it.
In a free enterprise economy, the market will produce and consume at the private efficiency level. It is where the marginal cost of consumption, the price paid by the consumer to get one more unit of drugs so he can get high, equals to the marginal cost of production, the revenue obtained by the red-haired drug dealer when she sells drugs. At private efficiency, the negative externality, which is what happens when the customer wrecks things while being high, is ignored, leading to welfare loss. Hence, the market fails to allocate resources efficiently and government intervention is necessary.
… Except there is no government, so guild intervention? Uhh, not sure if they would act unless one of their guild members is involved somehow.
This would be a good time to recap some of the policies he was thought that should be done to solve this problem. There was a possibility that they could be altered somewhat to fit the context of his current situation to make his life slightly easier. Also, he somehow felt that he was going to need this information really soon, in another life. Strange.
It also did not hurt to mention that for some reason, the more he thought, the more experience points he gained. Who would not like free experience points to drop into their lap? That person would have either be really high level that they would not bother with it, or mentally unstable.
One of the weirdest policies he remembered was a thing called campaigning. The purpose was to correct imperfect information, and to sum it up, the government goes around raising awareness amongst the general public either about the harmful effects taking drugs would cause, or the benefits recycled paper has on the environment, to raise a few examples. If he had not been told of such a thing in school, he would have never guessed there was such a thing. Campaigns, really? Apparently, one of the downsides to this policy was the sheer amount of money involved, creating a burden on taxpayer money. Another thing would be that some goods are habit-forming, and as such people may refuse to change themselves.
… Which kind of makes the whole policy pointless, in his opinion. However, it has apparently been met with success, for it was in his syllabus. Maybe Adventurers would be inclined to look at a few posters?
Moving on to more logical policies, he arrived at taxes and subsidies. The government taxes goods which burst with negative externalities, while subsidizing goods which ooze of positive externalities. The amount of tax or subsidy is supposed to be equal to the marginal external cost / benefit, which is the additional thing which happens when one more unit is consumed and produced, forcing Adventurers, People of the Land and Ancients alike to bear the cost of their actions, or the benefits in some cases. On the plus side, such a policy allows the market to operate with some degree of freedom. Taxes not only give governments more money to spend on not-as-effective policies like campaigning, but also encourage firms to invest in research so as to reduce the negative externalities so they get taxed less. However, there is the issue of not knowing how much to tax or subsidize. Even the government isn’t perfect, you know? Subsidizes would also place a strain on taxpayer money, also known as government budget, the fund they use to make sure your roads aren’t covered in potholes, meaning subsidizes could possibly make your roads have more potholes.
He supposed that it should somewhat be possible for Adventurer guilds to tax stuff, especially if they band together to bring Londinium to greater heights. Since everything is already in ruins and people don’t really expect them to fix most of the ruins outside of the city, that would mean a sizable fund in the long term after maybe a year or so. He doubted that they would subsidize anything, though. As much as they can act like the government, they are still guilds, which basically means that a bunch of firms will be running the city. Oh joy…
Last on the list was legislation and its lesser counterpart, cap and trade scheme. The lighter version, also known as the marketable permit scheme, only works when you know what the negative externality is. For illustration, radiation waste from a nuclear power plant. It is not something like the amount of tables broken by a drunk man in a bar, because limiting alcohol may not mean that the person is not intoxicated. Sometimes it takes little to take out a man who cannot hold his liquor. What the cap and trade scheme effectively does is to create a market for the negative externality by handing out permits, stating how much negative externality a firm is allowed to produce. Firms that really needed those permits would have to bid for them, while firms that were not producing much negative externalities could sell for additional profits, all while operating at what the government would like to believe was the socially optimal level of production.
It should, however, be noted that it would be difficult to measure the cost, and that it would be difficult to ensure people follow the scheme, especially if one were talking about a city like Londinium, which has a lot more privacy and held a lot more secrets than the previous world. It was also difficult to retrieve these permits once the firms had them, for who knows where people even keep these bloody things? Not that anyone would agree with what a council of guilds say if it directly conflicts with their interests, though.
The heavier counterpart, laws, basically restricted production of negative externalities by law. This means that there is no market solution: Either you follow instructions, or face day after day of court trials until you give up and hand over the money. Kind of sad, really, now that he thought about it. All this comes at the cost of budget. Money is needed to keep these companies in line, not because these firms are getting paid, but because the people who make sure that the poor sods are in line have to get paid. Extra manpower, extra costs. Guilds would probably resort to intimidation to get things done, though. Don’t want to follow my orders? Sure, let me just PK any member who steps out of the city. Such a forceful display of might will result in compliance if carried out properly, but it does not signify the true will of the guild in question.
At the end of the day, the four policies act as very simple ways for the government to intervene in the market and take away the freedom of the people to do business as they pleased. Could they make an appearance here? Have they made appearances before? He wasn’t sure of the answers to both of them, but what he was sure of was that things were going to be different from now on. Technology was not the only thing flowing in with the Adventurers. Information was, and that included economic concepts which he was certain some other guy had a much better understanding of and would be able to implement them in some form or another in this new world they inhabited. It would be unwise, then, for him to not recap on such concepts so that when they make a reappearance, they would not appear alien to him and he would be able to adapt to them in the shortest time possible, all while earning experience points for simply making these preparations.
~
Word count: 1631
Total word count (Pharmacist): 1631 x 1.1 = 1794.1
Notes: Celestial Arms 1.1x craft class bonus
