Evolving the Second Life Economy

OK jumping way back to the beginning of the thread. And giving an opinion on how the tax system should work. I like the system we have. But it has one thing that I think would make everyone happy. To see what the cost is of objects and land purchases as we make them. Not instantly of course. But within minutes. Not the Next Day. I think that this would help people know where the limit is on their taxes. Example:

I own land. My taxes on the land are 700. I have no rating bonus. I put 25 objects in the world. They are not all at the same height, nor are they the same size. I would like to see if my taxes can cover these objects.

Normally you would have to wait until the next day. But, it would be so much nicer to see it in just a few minutes

Well, just an Idea...


-Skippy

Well here's my L25 on the subject.

Lets start with Taxes since that's always a major gripe here and in RL.

I think Land taxes need to be adjusted. Here's my rational of why and how. From what I perceive to be the LL perspective, the Land taxes are high so that they can balance how much land a person can own with the amount of servers they need, while still satisfying everyone in game that they can, in fact own land to build their dream house/ them land/ store. The problem with this is often people wind up buying land in dribs and drabs as they try and expand/ fulfill their vision. Or, conversely, have to release land to pay for their taxes.

Certainly this can be argued that that's part of a good economic system, as it encourages people to plan ahead and decide what they really need vs. what they really want.

The problem is that often what happens is you get a situation where someone may own 2-3 parcels of land, sometimes in different sims, where they are building little bits of there dreams because of a lack of space.

Then LL opens a new Sim and a land rush ensues as everyone fights to sell off their land and objects so they can consolidate everything into a larger space. But, to do so, they may pay a premium on the land as there are fewer neighbors orignally and therefore less of a discount.

So my proposal is as follows:

1. If you pay a premium for land in a new sim, offer a lower weekly tax rate. By encouraging people to consolidate, you give other opportunites to maybe get the land they wanted right next door.

2a. Implement a parcel tax as well. So, if someone owns more than say 5 parcels, then a small surcharge on their taxes can be implemented.

2b. To encourage consolidation, implement a "land Link" editing tool. This would allow people to buy several parcels of land next to each other (say they wanted an H shaped land mass. With the current tools they have to buy a minimum of 3 parcels. The land link would allow them to buy seperatley, then link them as one parcel. The converse, "Land unlink" would allow someone to detach a part of their land. This would make things easier to sell if you either had overextended youself in land purchases or want to give/sell a specific piece of your land to someone and didnt want to releasr the entire thing and then reclaim just the portion you wanted back (this may already be in game but I never found it, but didnt ask.)

3. Once the kinks have been worked out, find ways to encourage group builds with very specific guildelines on how to get group status, especially in terms of self government etc. One thing I've learned from working with the Americana group is, if you encourage a talented group of people to work together, the results will amaze.

Raven

As I have posted elsewhere, I believe that the SL economy is lacking in a big way: Investment. The normal model for a capitalistic economy is this:

GDP = C + I + G + (X-Im)

1. GDP is the gross domestic product. It is a rough measurement of how much we get for an hour's work (when divided by people and labor hours), and how much we are producing as a whole.
2. C is consumer expenditures, or what our avatars spend in-world. That includes taxes and transfers, such as land/object/light tax and purchases.
3. I is investment activity, and there is basically no such thing in SL. I will get to that shortly.
4. G is government spending - that means the Wild West town (Lindenbuck spending) and other projects plus buying new servers and paying the staff (US Dollar spending). That leads to a discussion of how L$ relates to US$, but maybe that's best discussed another time.
5. (X-Im) is exports minus imports. Also an interesting topic of discussion, but for another time.

Here's the problem. For every dollar a person has, they can either spend it (buy cheeseburgers) or invest it (put it in a savings account or buy stocks/bonds/certificates of deposit/etc). Each week we get a stipend+bonus, and as I understand it (please correct me if I'm wrong) that amount actually goes DOWN as our unspent cash increases.

The effect of spending a dollar is that the economy inflates. The effect of saving a dollar is that the economy deflates. Since the federal reserve bank (the "Fed", led by Alan Greenspan) wants to keep things in equillibrium, it sets interest rates as follows:

1. During times of inflation (rising prices), the Fed increases the interest rate. This encourages investment, which brings inflation under control by deflating the economy by a certain amount.
2. During times of deflation (recession), the Fed decreases the interest rate, which encourages inflation.

Trouble is, if you do the wrong thing during the wrong period (increase interest rates during a recession or decrease them during inflationary periods), you simply exacerbate the problem by adding momentum to it. By applying a negative interest rate, you are guaranteeing that the majority of consumers (avatars, in SL parlance) will feel encouraged to spend as close to their means as possible, rather than saving. So they live "from paycheck to paycheck," if you will, and that costs The Government more resources, because avatars are buying objects and rezzing them and buying land to put them on at a higher frequency. Economists have a saying - "During a recession, cash is king." Nobody saves because saving is foolish. With awful interest rates, you actually LOSE buying power by saving, especially if the economy recovers.

If you apply a POSITIVE interest rate, even if it's just 1%, you will encourage people to save their money rather than spending it, because they won't get a ding in their "paychecks" for holding their cash. It would also mean that the richer people would get a higher rate of return on the money they save. Anyone who has a problem with that concept should probably consider applying for residence in China or Cuba, where "from each according to his means, to each according to his needs" is (ostensibly) practised. Yes folks, this is capitalism, not socialism. There are about 30,000 millionaires in the USA and most of them got there by passing up on indulgence so that they could invest for the future.

Another part of the Investment factor would involve setting up a stock exchange. Companies could be traded publically in order to rase funds, rather than having to beg for venture capital, or bringing in wealthy "board members" who might distort the company's vision because they have money to throw around. I would like to see Linden Lab offer municipal bonds on this market as well, even if the interest rate is small. It would be an easy way to shrink the money supply, should inflation ever become a problem. The amount of bonds offered would have to be relative to the position of the economy, with more being available during inflation and fewer being available during recession.