Do people not understand how economies work?

I'm getting very tired of people who think that the Lindens can make everything cheaper to "fix" the economy. I am a new player. I'm not some land baron or designer selling expensive things. I do understand how a FREE economy works though. No organization decides the cost of things. Cost is decided based on what people want to pay for an object. If 10 people want to buy a piece of clothing for $L 250, and the seller is happy at making $L 2500, then he will sell at that cost. If he tries to sell at $L 2500 to start with, he will probably make no money and will eventually sell at the $L 250 to make his money. He will probably also find that if he sells at $L 25 that only say 50 people come to buy his product. Now he has made $L1250. He should learn to raise his price so he can make twice as much. The Lindens aren't cheating anyone. They aren't the ones who set the prices for land and goods. The SL residents are setting the prices. The SL residents are putting time and energy into creating products for anyone to buy, and they are encouraged to do so by the economic system the Linden's have set up to give them something in return for their work.

Land is a little bit expensive because there is a limited amount available. I have only been on for about 2 weeks and I have seen large chunks of land auctioned as well as first land sold. If land is becoming available at that rate, it seems that the Lindens are creating more land at a good rate to allow all players to have a chance at ownership if they earn it by earning $L. The history of $L/m2 prices that they have listed also shows no great increase in the value of land. They haven't updated lately, and it appears that land on the find search is even cheaper now compared to 5.41 $L/m2. It is not normal for "land" prices to stay the same price or fall in value. The fact that it has shows that SL is growing at the same rate their customer base is growing. That to me shows that SL isn't trying to make land an elitest only thing to own. This before I even mention the first land that they make available. In RW would you ever expect someone to come along and just give you land at half to a fifth of the market price. Stop griping about land being too expensive. There are public places where you can build your stuff if that is all you need the land for. If you can't find first land, realize that it would probably be innefficient for SL to just make land available to everyone cheap all the time. I'm sure part of what supports SL's existance is the sale of land in auctions. I would rather see SL stay around than see everyone with a 512 m2 piece of land.

There are also residents who have graciously given away free stuff all over SL. I have found hundreds in the last two weeks. Not only can anyone have a large selection of clothes on their first day, but they can have hundreds of examples on how to build objects from their first day. Many of these free items are modifiable allowing people to disect them and see how they are put together. These may not be the highest quality or most original things an SL resident can have, but part of what makes SL such a creative place seems to be the incentive creators get to make things by getting paid for the unique high quality items they have made.

I have already learned SL is a great place to be creative. I only hope more new residents will stop griping about how little they have, and be a little more creative in getting or making what they want.

*head hurts*

Land isn't expencive at the moment, L$10 a sq m for PG is expencive

Welcome to Second Life, Dark! You probably don't know me. I'm the resident cynic. Glad to make your acquaintance.

And, let me also welcome you to the Second Life forums, where everyone thinks they know economics. A few people here do, but it's better if you steer clear of General or some discussions if you'd like to keep your blood pressure down.

There will always be complaints and dissent, and this is precisely what the system is built to allow. Your best recourse is to "edumacate" these people in debate, or in the case of ignorance to the point of flame, just plain ignore them.

I would say you're right on point. I know it can be frustrating and how this sort of rant can be a great catharsis. Don't let this get you down so soon! If you do, you'll end up as jaded as I am.

Good luck steering the herd.

Well...yes they don't.

If people understood how the economy worked, we wouldn't have one.

They do not understand.

Maybe people just dont give a damn. Everyone feels the need to prove how smart they are, when there are plenty of smart people that just don't give a fuck. Get over yourselves.

SL could be place to expermient with new economic models however.

A few tens of millennia is not enough time for evolution to have done much to the design of our bodies or our deeper emotional responses. We are effectively stone-age people with an overlay of civilisation, rationality and intellect, resident only in our cortexes. A thin outer brain layer physically. A thin superficial layer emotionally.

Since most of us have ego-investment in our view of ourselves as rational, we hide the true nature of many of our real and baser motivations, even from our own view. Much of what you see in these forums, as elsewhere, is not well-founded in knowledge and understanding, but is working, maybe subconsciously, towards the old stone-age goals.

Demonstrating superiority over others. Showing off. Identifying and attacking enemies. Supporting and encouraging friends. Finding a pack to run with. Working out vengeance and envy felt towards others not here present and maybe long gone, or even towards other people in general. Trying to compensate feelings of impotence and failure in real life by dominating or insulting people who are restrained from responding except with words, or cannot find you in RL to give you a slap they (and perhaps you) might feel you deserve.

We all do some of these things, me included, though of course I can see my own less clearly.

So welcome, Dark, to the world of our forums, which is much like any other.

We speak of many things of which we are largely ignorant. But as I always say, if we only spoke of things we understood, there would be virtually no conversation, and what there was would be boring pontificating.

Half-understood things make for best fun, and best conversation. Though not, of course, for wisest action.

I could draw some spiritual parallels, but I always talk too much, and imagine I'm too damn clever. Stone-age characteristic I guess.

Excellent post Ellie! *****

Damn, I unwittingly provided an example too

Perhaps you are missing a point here? With respect to land, SL is NOT a free economy. Land is crerated by a single, monopoly supplier.

In a free economy, if making/selling a certain type of goods is highly profitable, more people will go into that business until it stabilises. Given no restrictions on supply of raw materials or suitable labour, prices continue down, then stabilise.

But the land here is subject to a control on the amount, thus creating an artificial shortage and increase in price.

You are right, Daemon, LL has declared that it manipulates the supply of auction land to keep the SL economy stable, and try to hold exchange rates and land prices steady as far as possible. You speak as though this is a ruse to make more profit. How can it be ? If they release too much the price will fall and reduce what they get, bringing things back to balance at lower prices. In fact land prices are falling. They need to release less to bring the prices back up so that those holding land don't lose confidence in it.

It's my opinion that the whole system has been disturbed by the land barons finding an unintended consequence of a software change, which allows them to bring private sim land into the market, bypassing the control mechanism. Something still technically forbidden in the terms and conditions when buying a private sim. It all hinges on whether this is "selling" land (as some barons claim and advertise) or "renting" it as LL has ruled.

This began a couple of months ago, and I hope this economic spike will soon be evened out, and prices will return to normal. Depends how popular this new form of land holding will become. The Lindens may need to ration and auction private sims, as the largest current holder of the unrationed low-fixed-price version has publically suggested.

This breaks and locks out all the people doing RL research in SL, or using SL for other RL projects. I would argue that SL is the leading game engine for people developing their own MMOG's... rationing and auctioning private sims will keep people who are looking for an MMOG game engine far far away.

On a day that has Second Life being discussed as a viable option for creating MMOG's on the Serious Games mailing list, hearing this suggestion makes me sad.

I think what bothers me is alot of people coming in to explain economics to me, without accounting for the various factors that make SL behave differently than a corresponding real-world economy. Also people propounding free-market economics and economic darwinism who cannot provide a single examble of a successful major world econony that operates on a completely free market (aside from Tijuana and some other Zona Frontera cities).

It occurs to me that in a broader sense perhaps,

The ecoonomy of SL is a subset of the Economies of the users.

It also could be likened to the economy of a Casino. Since much more people operate at a loss (consumers) then "win" (the sucessful creators who make RL money)

So it is your belief that because political forces keep countries from being true, free-market economies, that it doesn't actually work? Oh Adam Smith you fool!!!

Don't worry, Satchmo, it won't happen. Im here, fighting tooth and nail,

I have a proposal for a third intermediate type of sim, to keep everyone satisfied except the poor land barons not smart enough to grab before the ladder gets pulled up.

My guess is LL are waiting to see how big this sector becomes, before they decide if the leak round their control mechanism is significant enough to need plugging.

I'm beginning to see that a lot of what I thought of as "ignoring" and "procrastination" by LL is actually a wise and careful policy of never pronouncing, and never acting, unless it proves really, really necessary.

Many problems genuinely will reduce or even evaporate, given a little time.

Interesting idea. If a third class of sim was created, one in which you could sell portions of it I am assuming (?), where does that leave the few that have 'sold' portions of the current type of private sim?

Are you suggesting that the current private sims should be promoted to the new class?

hehe i remember there was a Dilbert cartoon once - maybe someone can find it -

(manager) Hurry we have a crisis!
(to the manager) You let every issue sit on your desk until they are either a Crisis or Moot.
(manager back in his office) THATS IT , from now on im giving him the 'moots'.

Also, if a third class was created, what would distinguish them from the mainland sims?

My suggestion, Hiro, is to split the private sims into two types.

1) True Private Sim. Fixed price, freely available, but only pure renting allowed, no deposits or upfront charges, or pretending to be selling land when selling leases. No "deeding" of sub-plots to groups.The buyer accepts the partial crippling of commercial exploitation in return for the reduced price and free availability. Exactly as it was before the "deeding" which made the expoitation possible.
2) Commercial/Private Sim. Sub-plots deedable, Leases fully tradeable like land. Must be advertised as leases, with full disclosure of extra risks, but otherwise enter the free market normally. Because of this, they affect open market land prices, so they must be rationed - which means they must be auctioned.

I think this would meet everyone's needs, except any landlord entering the private sim leasing market after the change, who could well be at such a disadvantage that he might never catch the others.

I have, obviously, suggested this to LL on the hotline. Whether they think it worth anything, who knows? Or whether this new sector is now languishing, and it won't be necessary - I don't know either. Anyone care to comment?

I think the biggest question that would need answering is what would happen to the current private estate sims?

If they set them all to be the deedable version where selling of sub plots is permitted, that benefits those who have ignored LL's ruling. Those who have toed the line, and are renting, will have sims full up of tenants, unable to sell the plots. I mean you can hardly then ask them to pay up a purchase fee right? lol

If they decide to make all the current sims undeedable, where does that leave those who are renting out deedable plots?

Specific answer is - in the Private/Commercial (island) sim, all land would still be actually owned by the sim owner (as now) who would have total dictatorial power, and thus could run a themed community and pursue his/her own policy of enforcing law and order and building and behaviour standards in any way that seems right or advantageous. All exactly as in the current single-type private sim now.

In total contrast to genuinely selling land on the Mainland.

Note also that as far as renting is concerned, the mainland landlord is (and always has been) at a disadvantage because he pays so much more for his land. I can't decide whether I think we should remove this unfairness by preventing the private sim landlord from even renting land out. It is such a big change from a long-standing situation, and when no-one seems to be complaining, that I hesitate to suggest it. Seems best to just take the true private sim back to what it was (if ever the aternative is to let it be auctioned and so lose its low cost for ever).

Well let me first state I do have a vested interest in this, I rent out deeded plots in private sims, but I charge no 'purchase price'. It is going well with 100% occupation and a reservation list as long as my arm.

I see no reason to have this third class sim what so ever. The only reason I can see is so that those who broke the rules can then carry on doing what they are doing. I mean shouldn't we be stopping the breaking of the rules rather than changing the way SL works to accommodate these rule breakers?

As far as mainland vs sim renting goes - well I do both. A private estate of course costs less than an equivalent amount of land on the maingrid, true. But they are 2 very different things. Also, on the mainland, using deeded groups, you are able to hold 10% more land than in private estates. Most importantly, every one has the choice of which to choose between (both as tenant and landlord).

I think it works well as it is as long as people follow the rules. If you want to buy, you can buy on the mainland, buy a private estate sim, or share a sim by buying with people you trust.

If you want to rent, you have this option to rent parcels in private estate sims, or on the mainland. Both offering very different things.

In effect all "private estates" are currently the second, commercial type, aren't they ? So all the existing ones would have to retain that capability, able to lease, rent, whatever they want except actually sell.

The only "crippled" ones (same as they all were four months ago) would be the ones sold for low price after the date of the change (ie after the rise to auction price).

I have a more radical suggestion for the auction process. Instead of LL deciding what mix of the two "commercial" types to offer, let the buyer decide. Anyone buying a sim at auction can make the choice. A dictator who has total power, who can "deed parcels but not sell them. Or a normal owner who can sell parcels on as he wishes. Whichever you want. LL just sets the type as required before handing them over.

A bit further along, even this could be rendered unnecessary, by giving any plot owner the option of either "deeding" or "selling" individual plots. This might entail significant software changes, but would more closely mirror RL, where the owner can do either on any bit of land he owns. It might get very, very messy and confusing though, mixing it all up geographically. I haven't thought this possibility through. All sims would become the same except the true, commercially crippled, private estate.

I don't think we have to worry, I thought until recently that Leasing would be so popular all this would be necessary, but now I'm not so sure.

And I agree that at least one outcome would be damned unfair, rewarding those who bent the rules. As "Lindar Lehane" I took a lot of flak for saying this. One reason I changed my posting identity.

Well no they are not. You are suggesting that leases can be sold and transferred, that's not currently the case. If LL was to move in this direction those who have 'sold' deeded plots against LL's wishes are fine and dandy. Those who have rented them out, have filled their sims with tenants, and will be unable to sell them. It also sends a message.....follow the rules, and we will shit on you from a great height.
Yeh I would be fine, having purchased quite a few with more ordered. But this kinda sux for those who wish to do it in the future. No one would be really able to compete with those already established.

OK I have an idea for you. How about these 2 types....

Type A: As the current sims. Deedable plots, but no transfer or sale of these plots. These can be purchased as is now, US$980.

Type B: As above, but the deedable plots can be transferred and sold. These could go to auction.

This would avoid problems with current sims (as they remain the same), but still offers a new class that enables sale of plots. No one loses out.


As an aside, I think it would be cool to be able to offer more land access to tenants on the maingrid. Extra tool would be cool.