Speculation about the economy

I was talking about this with a couple of folks, and thought I'd post it here. This is just speculation; I don't want to provoke an argument.

As we all know, many sims have very high prim usages right now. Why is this happening so often, when it didn't in the past?

Here's my speculation: suppose the increase in subscribers isn't actually responsible for the higher prim counts. This would explain why the Lindens aren't adding servers as rapidly as we'd like: the number of servers is tied to the number of subscribers, and maybe that's not increasing as fast as we think. Prim usage is thus growing faster than the population.

The problem might be that there's too much money in the economy right now. There are certain inputs and outputs that are fairly closely correlated with the population (stipend/bonuses and taxes, respectively), and who knows, maybe these are balancing out reasonably well. But there are additional inputs: events, for one thing. Each event injects another $1000 into the economy, half in prize money and half to the event holder. If there are lots of events being held, there's a significant input of money without a corresponding output.

Referral bonuses are another possibility. Money enters the economy, but doesn't leave.

This could mean that the population is getting wealthier, and able to afford more prims per capita. And that could lead to the sims hitting their prim limits more often.

As I said, this is pure speculation. I have no actual numbers. But if it were true, what options would there be for correcting the situation? Assume that the server-to-subscriber ratio has to remain constant in order to ensure profitability, meaning you can't just add more servers. What are the alternatives?

Raise taxes? I doubt that would be popular. Reduce event payments? Again, not popular, and events are essential to SL attracting a bigger audience. Reduce referral bonuses? Also counterproductive to SL's growth.

If the Olive system were in place worldwide, prim usage problems would be reduced, but instituting that system retroactively in other sims would probably be unpopular. Plus, it wouldn't eliminate the problem of too much money in the economy, although it might help SL through its growing pains.

Any thoughts?

I assumed that one reason the formulas for taxes and bonuses and dwell are so inscrutable and undocumented was so that the Lindens could throttle taxes up or down to control inflation and deflation, without raising a huge fuss in the user base every time they make a change. SL is so new, and growing and changing so quickly, that I expect they have to fiddle with things constantly in order to maintain something resembling balance. If this is the case, then inflation is already being kept in check.

And the number of newbies we're seeing in the welcome area tells me that SL really is growing, and pretty quickly at that.

The reason for the delay in adding more sims may be more mundane: It's the holiday season, a lot of staffers are on vacation (or will be soon), and they don't want to do major configuration changes unless they have a full support staff on hand in case things go wrong.

I have to disagree that there's too much money in the economy.... the answer to the sims filling up is more sims. The Lindens have tools in place to prevent the sort of inflation you're talking about, and from what I've seen they work overall.

I think there being too much money is a definate possibility.

I think it is possible that inflation in SL takes on a unique nature from other economies. Instead of a rise in prices/costs there is a rise in prim and land usage per capita. It is an interesting idea and completely feasable.

Heh, Jake, I dont know if you noticed but most people tend to complain that they're totally broke, taxes suck, etc, etc.
Heck, a friend of mine has gone so far as to scour an entire sim, looking for public objects to delete. He made a grand total of fifty bucks

On the question of money in pocket, it could be that both Jake and Eggy are right. We've got a class of people who have a *lot* of assets available, and then we've got a class of people who seem to be pretty close to broke. And then there's the bunch of people in the middle.

I'd classify myself as somewhere in the middle, for the record.

This isn't inflation tho, and I don't see it as a bad thing.

Inflation is a problem.... people are unable to do anything because the increased supply of money forces prices higher.

The available resources (prims/land) being used up in SL is NOT a bad thing, because unlike RL more can be added. It also looks like exactly this fix is in the works.

I refuse to see the issue of 'people doing cool stuff' as being a problem.

this is the first online environment i've ever experienced in which the devs really seem to care about maintaining their popularity. not a bad thing.

cutting event support would be a huge mistake. there's precious little documentation (i think on purpose) that encourages newbs to attend workshops and, in turn, host workshops later. it's an integral part of building the kind of community we have in world.

i live in olive now and i promise you people that the prim usage works. i've yet to met a resident that has complained about not having enough prims to work with. i wouldn't advocate retoactive conversion of existing sims. but i will suggest adding a lot more sims using the olive model so i will.

taxes, ah well, geez, whatever. what are we gonna do? vote them out? play or not play. they'll have to make that call and take their chances. i'm sure they're more concerned about making real money than we are about holding onto L$s. if we have too much money pouring into the economy, i think it's better to recollect it in taxes at the back end than to lessen it at the sources.

Well MUDs have mudflation. MUDflation is when items don't leave the world and yet the rate they enter the world is fairly constant. There end up being lots of items which drives their price down until high level gear is attainable by low level players.

Real economies have inflation and deflation which is when the value of money increases or decreases due to its abundance (or lack thereof).

SL is not a MUD and has no 'items' to bring into the world in the conventional sense. SL is not a 'real world' economy because anyone can make anything, script anything, manufacturing costs don't exist only R&D, and a million other differences.

So I think there can be a new term, a new phenomenon called SLflation. This is the case where because of an excess amount of money in the world, the average prim usage per capita (APUPC) goes up. The real world economics of Linden Lab dictate how much resources they can afford to give a player who pays $15 a month. This is an average, some will get more and some less dictated by the various ratings, dwell, vote booths, event sponsorships and businesses. However, the APUPC is the embodiment of the amount of resources Linden Lab can afford to a player who pays $15 a month.

SLflation is a problem when so much money enters the world that it drives up the APUPC well above what Linden Lab has designated to be the amount $15 affords.

This causes a problem. When this happens Linden Lab can not increase the amount of resources. Doing so carries Real World financial risk, changes the business plan, and maybe just can't be afforded.

This means that SLflation also hurts the players, most likely in the ways already expressed and discussed in various threads. Sims become overly crowded and full at a time when the user base is not large enough to warrent server/resource expansion by Linden Lab.

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The above is a discussion of a theoretical phenomenon I called SLflation. It is not a statement of fact or an assessment of the current situation. I by no means am in posession of the necessary data to make that assumption or conclusion. Rather I am just proposing a possible phenomenon that could happen, and the effects that it could cause. Any relation this has to current, past or future events, places or people is purely coincidental and unintentional. Thank you.

exactly. more than one person can produce the same types of item here but with individual variations. prices are set by a traditional supply and demand model.

if i make a better one and people are willing to pay more for it, that's good. real good! but if money becomes more abundant, the price of everybody's widgets will increase. mine proportionally more than the others. when nobody wants a widget anymore, i'll have to start building something else or i'll start loosing money et cetera.

i've never played a game like this (not with set items and prices) other than real life. i think it'll work just fine. yes we'll have slflation. but we'll also have slcrashes is some markets and sltax increases to deal with. we already have welfare for newbs (i can say that, i am one).

I never precluded inflation from happening in SL. I merely proposed an alternate form that could happen. A different manifestation of an excess amount of money that is possible, and the harms that could come with it.

It is entirely possible that it could come with standard inflation, or with out.

It would take much more thought and reasoning to come to a reasonable conclusion in that regard. I tend to think that it is possible and likely to have SLflation without inflation, but no discussion thus far warrents that conclusion.

I think land is the major balancing factor, as well as big prims such as you might see in various bits of architecture, as both are taxed relatively large amounts. There's less and less land that's worth anything due to overcrowding, therefore less land is being bought and less land taxes are being paid, than is otherwise possible.

If I don't own much land, I can afford more prims, and I think that's more fuel for overcrowding. If I had to have a lot of land to have a lot of prims, it would naturally cut me down to size.

Can someone in Olive build a temple for the unwashed masses to pray for salvation?

Of course, another problem is that before the days of the Almighty Tuesday, people had their taxes and stipends spread out all over the week. They would give all their money to a friend, get their maximum stipend, then get their money back, and do the same for their friend before their stipend came around. And of course, they could sell their land for 0$ to a friend before their stipend day, to avoid land taxes.

Fortunately, that 'feature' is now disabled by the universal payday. It definitely has something to do with any inflation going on, but they'll be whittled down week by week now. No need to get up in arms at this point, it's a thing of the past, but it honestly has an effect on inflation.