The economy is broken...

I have to admit I'm a new player, so I have not personally seen what things were like "before". I don't think making more money will make people any richer. The reason things are so expensive is because so many people are not willing to build their own things. This is not a bad thing. Economies don't work by people getting rich by everyone just getting more money. Economy works off of supply and demand. People will tend to pay a certain percentage of their wealth for any one good. If everyone has more wealth all of a sudden, the sellers will wise up and sell their goods for a higher price. If you really want things to be cheaper, then stop crying and make your own goods. The more supply in the world and the less demand, the farther your money will go. If Linden went overboard and just gave huge amounts of money to everyone, then the economy would truly be broken. A $L would be worth nothing, and no one could expect what they own to be worth much the next week. Every week the $L would continue to fall in value. There is no real benefit to the stipend being increased, because of supply and demand. There is alot to lose with too much of a stipend. Get creative or stay broke. This world has all the tools you need to create what you want in public areas, and there are hundreds of free examples given away all over SL.

Two simple maxims.

For content consumers: There is no such thing as a free lunch.

For content creators: If you're doing it for money, you're doing it wrong.

LF

I have nothing to add here. Thank you, Surina. This is precisely what I think.

The common use of the term subsidy means "paid by the government" In this case Linden Labs. The point is the more Linden Labs susidizes events or builds , the more people who never attend said events or builds pay on an opportunity cost analogy.

Increasing Inflation basically equals a tax on everyone who doesnt directly benifit from the Events being subsidized.

The only reason to have a stipend in the first place is to simulate people doing some sort of quotidian job that they don't have to do here, because YOU CAN'T STARVE HERE.
It's not like TSO or something where you have to "regenerate" yourself, even.

I think the last few posters, most notably Dark Korvin, Lordfly, Colette and Surina, summed up well what the deal is here.

1. More influx of "money" means prices go up. The people who most directly receive this money will benefit at the expense of those who don't. Ever see the Dave Chapelle skit about reparations? Monetary expansion destroys the social fabric anywhere it becomes an institution. The months and months of monetary "push" LL foolishly gave in to, back in the days, is exactly what led to the "las vegas" style economy that SL had and is only now starting to shake off a bit. For people who are "gamers" that might not seem so bad, but for everyone else, it kind of sucks. If there is such a thing as an FIC here, it is most probably the result of market distortions created by having one class of "consumers" and one of "producers" which happens when there is constant monetary inflation. (among other interventionist foolishness which LL has, thankfully, abandoned. I've studied enough of SL history to know that the economy used to be way more borked than it is now)

In fact, I think there need to be, if anything, more monetary "sinks". If there were more ways for $L to leave SL, we could afford to have higher stipends. I think LL is responding though, I see more $L-denominated auctions lately.

2. SL is not a game. It can be, if that's what you want to do with it, but it's an OPEN environment. To manipulate this environment to support a certain way of existence here, no matter what it might be, is ethically as well as economically flawed. Even if a vast majority of SLers wanted to experience it as a certain type of "game" or lifestyle or something, for LL to alter the way things work to favor that direction would be unfair.

The way things stand right now, it is what you make of it. And that's how it should be.

3. Think about it, the large "consumer/social/game-player" contingent provides a great economic opportunity for someone to provide cheap, serviceable, mediocre goods and services and make a lot of money off it. Personally, I bet someone has or will create $L 100 skins for this crowd. Just remember though, you get what you pay for.

To bitch because you can't afford Seburos or Pixel Dolls clothing or Second Skins when you don't produce anything, is just being a welfare queen. Hell, have some patience, and SAVE YOUR STIPEND...
(funny how no one thinks of that)

Maybe you should read up a bit more, my post was in response to

subsidy

1) Monetary assistance granted by a government to a person or group in support of an enterprise regarded as being in the public interest.
2) Financial assistance given by one person or government to another.
3) Money formerly granted to the British Crown by Parliament.

k in response to your definitions - here is the root. Your definition did not include the root word, thus your definition only pertained to usuage not what a subsidy is.

Generally subsidy means coming from the government.

Usually you would use "Finance", or "pay for" to cover using your money from one source to cover losing money on another.

Since it confuses to issue to refer to someone "susidizing" one of their ventures with another becuase Actual LINDEN subsidies are a huge part of the economy. And a big topic of contention.

Im sorry if it had not apeared like I hadnt read your post about covering one loss with another proffitable business interest. Of course that may be necessary.

What? So expensive?
Don't you see any context ?

You are here. Hopefully at the very beginning of a huge new world. Still in the golden dawn when it is full of geeky enthusiasts who will work away real hours of their lives creating amazing things, and sell them at prices which mean they will never ever recover even one tenth of minimum wage for their efforts.
And not minding at all, because they enjoy it.

I predict that if things go well, in ten or fifteen years time we will look back wistfully to these precious days when nearly all was done for love, and to help things grow, and when everything cost a ridiculous pittance. Newbies will sit at your feet, saying "What? Really? How much? Wish I'd been there." Just as my jaw has dropped while oldies told me about prim hoarding, and about the giant sim-sized single-prim cube that is still in someone's possession, and gets an outing once a year at quiet times, secretly, for friends only. I've seen a snapshot.

Just think of it as entertainment, if you must. How much do you spend on one RL night out eating, drinking and having fun? Going to the movies? Baseball?
Probably at least US$32 or equivalent. L$8000.

Can you get as much fun by buying the L$ on GOM , and spending them in SL? I'm damn sure you can. And if you don't think so maybe you aren't enjoying this enough to bother being here.

As other people have said, if you genuinely can't afford RL nights out (to trade for L$), you can get 70% of the SL fun at cost of $10 once for ever. What sort of wonderful bargain is that for the financially challenged? Surely relatively few of us are that hard up anyway, or how do we have access to a broadband connection and a fairly fast computer ? Unless its Mommy's or Daddy's? Though of course there will be some fallen on genuine hard times, but desperately hanging on to their internet.

No, the economy isn't broken. Its amazing, and when you look back you'll see it - too late.

No the economy is not broken, is just impossible to compare it to real life, since there are no production costs, no meaningful labor costs and natural rescources are non-existant to the content creators (arguably prims are natural resources, but we consumuers pay for those with our tier). There is an infusion of money into the system based on the weekly stipend, so in effect we are all subsidized, though people on $10.00 accounts are more "welfarized."

The knee jerk reaction (largely among very succesful content creators) is that increasing the stipend will cause the economy to fail and then they won't produce anymore. However, noone has ever sugessted a point at which increasing the stiped causes inflation. most examples involve a 400-500% increase. It has never been articulated what say a 50% increase would do or a scaled 40%-100% would do. By the same token those who
want to increase the stipend have not yet put a coherent proposal as to how much it would take to make them comfortable without making collecting stipend a way to become rich. There seems to be a culture of entitlement on both sides, with no discussion as to excatly what the entitlements are.

Furthermore I am not sure anyone who does creat content would, in fact, stop creating content if the value of the linden dropped from US$4.00 to $1.00. In fact noone has ever established exactly how much an increase in the stipend would actually devalue the linden.
So for from my point of view, the debate on the economy seems to be a conflicet between people who want to play SL as a game, and people who want to continue to use SL to fund their real lives, or at least to milk as much $USD as they can out of the system.

Really its not so much that the economy is broken, its that the dynamics of the economy have not been sorted out, and the econic factors have not been evaluated and considered in a thorough manner. The debate in the forums is a start, but really some in-depth technical analysis is needed.

As far as SL and whether is a a game, or an expereince, or a toolset, that is largely beyond the scope of the thread, although it is essential in understanding the economic dynamic and projecting and determining economic policies in the future. For my own bias to be clear, I fall heavily on the side of LL being a game, as it competes for entertainment dollars and not professional dollars. Sl remains a toy, a sophisticated and engaging toy, but it is a hobby and not a profession.

Textures are pretty much the natural resource "cost of production". Fairly low too.
So marginal costs approach 0. That is to say, once the first object is made, the next object made will become "cheaper" (cost of 1:x cost of 2:2 * 1/2 x, etc...) until the cost approaches 0.

However, labor costs are always there. Even as an opportunity cost.

Prices stem from marginal scarcity - which relates to marginal cost - mixing with demand, which is pretty much subjective and somewhat fluid. One of the factors that is very hard to account for in the SL economy is that things don't wear out. Once you've bought one vehicle for example, you never need another one. You might want to upgrade or have a bunch of different ones, but you will always have it once you do.



This is where you make mistakes. There is no "point".
Any increase in the money supply will cause some amount of inflation.
More money chasing the same amount of goods.

In addition to inflation there will also be malinvestment. Prices are supposed to act as signals of demand. If there's extra money coming in, it alters this demand structure, based on who gets the money first. In the case of stipends, it's not too bad because everyone gets one. But when rates were $1, popular people became inordinately influential. When event hosts got free money, club owners were inordinately influential. Right now, probably noobs are inordinately influential, which isn't terrible but does have some socially distorting effects.

The funny thing is that increasing the stipend would probably benefit the most successful content creators in the short run. Historically, most inflationary schemes are proposed by the super wealthy to keep themselves in power. In the long run we would all suffer, except the large landowners (who would have solid goods to trade at any price) and the noobiest noobs (who would be in the same position they always were).




It's not really that people would stop creating content like that. If the value of the linden drops, the most wealthy people would still have proportionately more of them to trade.

But there would be people on the margins that would get squeezed out.

Even if you want to play SL as a "game", it still has to be stable and fair, or the game's no fun anymore. And again, SL isn't supposed to be anything in particular.

Just like a computer is not an email reader/IM terminal.

I appreciate a well reasond reply to my post, but again, you adress the general issues while dodging the specifics. Yes increasing money supply will cause some inflation. But how much? Anbd how much inflation is good, and when is it harmful?

How much devaluation cane then market bear and still fucnction. I have not argued against market stability, what I wonder is why the market should be stable at $4.00 us per 1000 $lindens and not $3.00?

Also what sort of model is out there that indicates what sort of increase in the money supply would precipitate a crash in the market.

For example I have in the past proposed a scaled increase in the stipend based on the amount of tier paid by the user. I feel that $500.00 dollars a week is too low to allow someone to save up the money needed for a major purchase in a reasonable time. I don't think stuff should be handed out for free either, so I propose a scheme whereby stipend increases as tier increases. Simply put the more RL money you spend on the game, the more Linden you get every month. Again, its not going to make someone rich, but it will reward people for investing more in th game.

I know that there are plenty of people who take the position of "get a job." But my position is that for SL to sustain expansion as a game, something needs to be done to accommodate the more casual player. For me an increase in stipend is only one aspect. I note that you make a point that entertainers were inordinantly powerful, and I think that is where we disagree. I think the cost of production in SL is very high for quality entertainment, and the ability to charge admission is very low. I think very few people would pay $2000 linden for a couple hours of high quality entertainment. Even if entertainers do charge for events, the returns will be very low.

This coupled with the fact that to put on quality entertainment requires a lot of work in building and scripting, which typically involves paying people to do these things, means that most entertainment will operate at a loss. Thus the number of profitable entertainment expereinces is going down.

Now a casual user might come to the game and not want to script, or not want to design clothes or build things. This causal user might take a low paying job as a host in club or at some event, and make a little bit of money. But mostly they come on to Sl to chat and socialize. Offereing incentive to people who are able to contribute to entertaining these people is offering incentive to "community builders." I think the number of creators and scriptors as a portion of the general SL population will go down and not up as SL expands.

So I feel for SL to survive the economy needs to be adjusted, so I have asked the questions of how much. And so far I have been met with only the most general assertions that increasing the supply of money is bad cause it cases some infaltion and will inevitably ruin the economy. To me this patently not the case because a small amount of inflation is an inevitable result fo an expanding economy.

I think my previous post oultined many factors that I think have not been addressed, or are not understoond at the moment. You have brought in another one: texture uploads. Frankly I have discounted these as especially meaningful, since if one uploads a texture for $10.00 and then sells the object for $50.00 in and quantity over 2 the upload cost is marginal.

Increasing the Stipend Based on Teir I think would be better then keeping Dwell and talking about redoing Event funding.

Simple reason is LL would get more real $USD based on land owned. And I think Land is the biggest Money Sink in the in Second Life, also?

I assume LL has a pretty good idea how much tier is being paid thus they could realistically attempt to predict resulting inflation.

Of course the money returned in Stipend would have to be worth LESS than the USD amount of the difference in Tier by quite a bit.

Since its basically the rent or buy Quality of Life financialy arguement.

More land would mean a better quality of Virtual Life, and would provide some added stipend. But should still be much be cheaper to have No land and buy Lindens then to Tier up to get Lindens.

The problem here is that you are arguing from wrong (or at least irrelevant to SL), series of base assumptions. You clearly haven't read any background information on exactly what SL is supposed to be, you are merely imposing your "feeling" of what it should be on the rest of us, without actually looking into it first.

Since your whole post is laced with free-market rhetoric, it indicates (to me) that you probably see SL as just another computer game that you paid for and that it is a part of the "gaming market." It is this rather narrow focus of yours that is affecting the conclusions you reach.

As Surina aptly points out, there is much more to SL (and RL!) than just having fun, playing games, and ruminating on the workings of capitalist economies.

I have met several extremely interesting players who have been here since Beta and never had a "job" or a "house" and mostly never gone to a club either. Some of these people are core players that have strongly affected the growth and style of the "game."

Personally I dont play computer games, but I do play SecondLife.


.

I think you are both being silly and mean to jump all over Surina for one (perhaps mis-stated), comment in an otherwise long post about all sorts of things.

Neither of you have actually responded to her original points.

The point is not what *you* think SL is, but what Linden Labs thinks it is and what they are trying to make it be. Surina was even so magnanimous as to include your (narrow) definition of SL as a computer game in her descriptions and her response to your post. The *least* you could do is admit that you have no answer for her objections to the original (troll) post.

You see SL as a game, or some kind of simulated capitalist economy, fine.

You are only one of many groups in SL.

Please have the courtesy to at least *try* to see others points of view.

Ah, I *knew* this would happen.

Just because that Mr. Unameable is gone, doesn't mean that the forum is immune from prosletizing patriots and free-marketer economists.

These folks could easily bring down the level of discourse on the forum as handily as Mr. P. did, and they post almost as prolifically (sp?).

When I can make $31,000 linden an hour for my time (very reasonable in my field) then SL might be a tool. Until that point its a hobby and yes, a game, competing in a market with other games for my entertainment dollars.

There have been at least ten other active threads over the last several weeks where the vast majority of users have claimed: "after all, Second Life is only a game."

It amazes me how slippery the definition of Second Life is. Very often the same commentator calls it a game in one thread, and claims it's not in another. No one will nail it down, I suspect, because it's not very convenient. When it comes to the "economy", it's not usually a game. When it comes to other areas - such as social relations or politics, for example - it's almost always a game. Not hard to figure out what's going on there.

If it's a game, the economy isn't broken. Because there is no economy, and LL's only agenda is to make the gaming consumer as happy and as likely to return and spend real money as possible. The only constraint is to find a happy balance between the desires and pleasures of core users/creators, and those of casual consumers.

If it's not a game, then this particular thread actually has some meaning.

Perhaps the economy is not a game, but everything else is. But that flies in the face of... well, everything.

(sigh time to feed the troll )

1) You dont HAVE to have money

2) The economy isnt broken, i have made beyond a substantial ammount of $L without fully dedicating my time to the system

...

3) Who the hell spends 500 $L on 2 shirts?

No, several reasons why, No.

1. As I said in another topic, I can make and Lose L at no risk, I'm not playing with real money, I can't t lose anythign If I don't Buy L, which I don't. Heck RIGHT NOW, I stand to make about $5 above my registration if I sell all my linden. This is a GREAT appeal to BROKE players to make in gmae items, convincing richer players to buy L. Taking that away would hurt SL.

2. Taxes, enough siad there.

3. Governemnt reuglation. If LL uses USD as an in game currency EVERYONEseling much of anyhting has to file real life bunsiess papers according to each regions laws, and LL has to keep trackof who did so becuase they are liable for kowingly providing a place for the conduction of black market activites if they don't. Hence it would almost kill business, and put a TOTAL unreasoble load on Linden labs, you wil be seeing 100.00 reg fees if they switch just on THIS principle alone.

Also I don't care what Linden labs says, SL is a GAME. it may not be a MMPORG, that's true, but when ever you give people the ability to be what ever they want, andto fly, ect, you can't not call it a game. A PROFITABLE game for many yes, but a game none the less........

If they wanted it to be like another real life, they should assign avatars, give you a random amount of L, and throw you into SL at a random early stage of life, andthen be done with you. also they'd need to have a FULLY operational government set up. But then that wouldn't be escapism, and no one would buy would they?

Its called coomom sense, I think some peopel should use some..........

Have to agree .. they should not use any real world currency , especially not USD to replace the Linden$

Can you imagine the complexity , paying Sales tax, or income tax, on every Dollar you make in Second Life?

Becuse with USD its income, even if you turn right around and Spend it. With the L$ its only income AFTER you sell it on GOM.

I can understand peopel pushing for this - Becuase it will remove any currency fluctuations.

But for most Users this would be a bad idea.

Last time I checked there was only one country that uses USD. For everyone else there would still be currency fluctuations. Please don't assume everyone is American...

Other than this minor point I have to agree with you. My question is, how long before L$ is recognised as a real world currency?

when Virtaul countries become recognized legal entities.....aka when pigs fly.

essentailly unless you have a way for a virtual country to win a REAL war, you will never get offical recognization as a country, and hence the RIGHT to produce legitmate currency that other countries will accept offically..

i so agree with you tommy, I have enough stress with RL work, I dont give a Rat's ass
to make money in SL. I am here to have FUN, with or without money. There are so many free things to do here in SL. I have more fun exploring, going to sandbox etc. I dont need money to have fun....lol ....i dont need it in RL either.

Do you have a way in which we could loose? (we being citizens of SL) The argument works both ways. So far, the land of SL (whatever it's currently called) has NEVER lost a war with an RL country.

The first step though would be to get L$ recognised as a RL tradable commodity. We have already given them value and decided what that value is. It is already possible to buy RL goods with L$, though admittedly only from other SL citizens. What would it take, baring in mind that the premis here is that SL is not a game, for L$ to be traded along with US$, Sterling and Euros? (No country was invented for the creation of Euros...)

I actually wasnt meaning to sound Ameri-centric. My point was primarily that since if a RW currency were used, the Linden economy wouldnt not effect the currencies value.

As I understand the logic behind it, Since LL is in California - in the USA , they would use US Dollars.

Even if they used Euros (or Yen, or etc) though it would pretty much tie the SL economy to the Real World Economy thus force the game economy to no longer be seperate of FL economy, since the currency would have an intrisic value.

I just dont see how it would be of any real use. Since I surely dont want to keep track of and pay income tax for money I earn in a game that never even leaves the game.

Probably to sucessful Content Creators who make a couple Hundred US dollars a month, They have to report Income any way so they dont see how this would be a significant inconvience to -us- the people who pay for their stuff so they can earn a coupel hundred USD a month.

As for the interesting Question about when the L$ would be recognized -

I dont think the L$ could never become a recognized Currency as long as LL is located in the United States. The US Federal government is the only entitity in the USA with the power to print money.