Economic Theories are Nice, BUT ....

Economists are the biggest idiots on the planet. They spend lots of time developing lots of pretty charts and nice theories to create an ideal world on how the world works under a free economy. They make wild and crazy accusations that people would rather sell what they have than end up with overpriced products sitting on the shelf. All these theories are nice, of course, and paint a pretty rosey picture of how a free market economy works, but to anyone who really understands how any of this actually works knows it's a pretty veneer that covers up a whole lot of rot.

Take land in SL, for example.

Everyone knows that First Land is L$1 per meter. * * * Everyone! * * * And, there's lots of land for sale, much of it at L$20 per meter or higher.

In truth, there's very few reasons for any parcel of land in SL to be worth "more" than another. All land in SL is pretty much created equal. At low levels {newbie levels}, the may be great differences in desireability, but from what I've seen, once you go past 4096 meters, a parcel is a parcel is a parcel is a parcel. There is, essentially, nothing gained by the actual position of any of the giant parcels.

Clearly, way too much land in SL *is* overpriced. Now, this raises the question on how this came to be, as clearly it flies in the face of all economic theories.

Here, my dear, economic theory runs headlong in to real life.

The Land Barons of SL are all here to make money. As a result, we end up having a vertical stack of them. At the bottom, and one of the most well to do as well as most famous, we all know. They sell the land generally around L$6 per meter.

Assume other land barons buy this land. They have * * * NO * * * intention of keeping this land. So what do they do? They * * * MARK UP * * * the price of the land and then resell it. L$6 per meter? No. L$7 per meter.

Who buys it? * * * ANOTHER * * * land baron, who again marks up the land, and puts it back on the market.

This is not a good business model. This is a Pyramid Scheme, and ultimately, it hurts everyone. Granted, the people who end up unable to sell most of their land are the ones feeding it to it with delusions of grandeur, but obviously they must be selling at least * * * SOME * * * of this land in order to continue trying. And you know who I think ends up buying it?

The people who can least afford it.

Most private individuals set their land for sell with one of two things in mind. {a} Get their money back or {b} deter people from actually buying their land {I think they get a kick off it}.

Most Land Barons and Land Speculators, on the other hand, sell land only to make a profit.

Consider the following ....

I know a community. They have a very large home, like three stories and sprawled all over. It's on like ten acres. It's in town. It's gorgeous, with well kept and tended gardens.

The house is a local landmark, and could probably get historic status if people tried.

How much do you think this house is worth irl? US$500K? US$750K? More?

The house is currently on the market at US$60K. Would you buy and and mark it up to resell it for a quick profit because it's such a steal? Of course!

But you want to know a little secret about this irl house? It's in the poorest county in a large state that has no work and very high taxes. They can't sell this big, beautiful home that in New York City or even here in Jacksonville, Florida, would easy fetch a cool million or more at US$60K because NOBODY WANTS TO LIVE THERE.

Why do I mention this and why do I compare SL to FL in this case? Because the Land Barons are proving to be fools and idiots.

The vertical stack only serves the Land Barons and the Land Barons alone. They're creating a virtual real estate bubble that shouldn't even exist, and we're all the losers.

The smart, sustainable land barons don't set their prices too high and appear unwilling to pay outrageous amounts of money for land. Those will always be with us.

The snake oil peddlers, however, will not be. Especially in a place with high unemployment and high taxes.

We need to create a more sustainable SL Economy.

For me it all comes down to location, location, location. If you're in the market for a 4096 plot, flat, green, on a waterway, low lag, etc, you're not going to find it for $6/sq m. You're buying more than square meterage, remember, you're also buying into the surroundings and sim performance.

.... which goes completely belly up when you get a club, casino or mall move in just up the road, rendering your land and everything else entirely worthless.

Lewis

Exactly... You can even try to bank on having Linden maintenance land surrounding your new place, be on the edge of the continent, and *still* have a casino open up in the corner with 20 campers, effectively lagging the sim down.

I think it pays to either have the patience to wait stuff out, or just be prepared to move a lot and make things easily portable

I know that most obnoxious/laggy club builds are gone in a few months, at least in my experience, but those two or three months until the owner finds out turning a profit isn't as easy as it seems can be taxing for sure...

Why does land cost more in some areas? people will pay that price...... WOW! Economics ;0

First land is an incentive for users to upgrade to premium. That does not represent the value others put on the same land or land in other areas.

Ouch.



Aaah...Ouchh.

Economists are idiots, and land barons are fools. That's why your average Joe does so well on the stock market compared to financial institutions and professional traders, and "land barons" are losing so much money right now! It all makes sense...

"Clearly, way too much land in SL *is* overpriced. Now, this raises the question on how this came to be, as clearly it flies in the face of all economic theories."

Ahh, you yourself are knowledgeable in all economic theories! Does this make you an idiot? Inquiring minds need to know.

So...

Take, purely hypothetically, a person that offers land for *nothing* up front, at rates lower than Company tier?

I'm just curious - would such a person generally be considered an evil land baron?

Economists are not idiots.

I forget the name of that game where everyone walks around in a circle while another chair is removed, then the music stops
and everyone tries to sit down.

But in this case they keep adding new chairs.

I think the things making a place desirable are neighbors, neighbors and neighbors.
Then there is water and view.

Dwindling Seats Revolution

In my experience, there is one simple rule to economics and business:

Nothing has inherent value. Nothing. Value is 100% determined by how much someone else values the item and is willing to trade you for it.

Gold? Its a rock. Diamonds? Rocks. A painting? Worthless in itself...its pigment on fiber. Food? It grows in the dirt on its own, with or without humans. Worthless in value in and of itself. Everything that exists is truly worthless.

And yet, it all has value if someone wants it bad enough. There is no way to set a value on anything. No way to say what is fair price. Fair prices don't exist. Nothing has inherent value. Things only have value if we decide they do, and the value is limited only by what the most desirous of it will pay for it. L:ikewise, a thing loses all value once no one desires it any longer.

Thus economic theory is really the theory of what people desire and guessing how much someone might desire it more than someone else.