Wednesday, August 31, 2011

Modern Economics appreciation by Gaming.

In a GURPS discussion about jobs, I just realized some interesting parallels about Modern and Ancient Economics.

  • One interesting parallel is how Government Hoarding of Gold is similar to the Central Bank raising interest rates. Choking the money supply can increase its buying power to an extent, farmers who have saved up coinage can substitute cash for owed labor.

  • How it is not the purity of the metal used for coinage but the over supply of the coinage that causes rapid inflation. How an army, like that of Frederic during the Crusades moved through Byzantium carrying so much gold and spending it in these byzantine cities increased the overall supply of gold and thus raising the prices of the goods they sought.

  • As an example the historic inflation of gold when spain brought it over from the new world. Prices soared yet the gold was pure.

  • How Kings, princes and lords and their monetary policy work much like a government. With lords passing on the complaints of farmers as inflations makes the cost of living much less tolerable. Where the prince, king or emepror has to make declarations for a certain good like grain (e.g. 1 solidus for 1 modii, 1 penny for 2lbs of bread) just to ease the injustice and abuse.

  • Also note how slow this processes is compared to modern times, unlike today where there is tracking of inflation and proactive measures in place. By the time corrective action comes by the emperor's decree much human suffering has occurred already. A hardworking freefamer would have become a serf, or his daughters sold off, his sons run-away to the cities. An entire village can be abandon, depending on how merciful or cruel its owners.

    One lesson to take to the game table is that, when there is an event, inflation goes up. Depending on the kind of event: Low Yield Harvest, Bumper Crop, War, Famine, etc. In a bumper crop where farmer s and villages benefit from their greater supply of goods vs the actual "monetary cost" going for them. Farmers can accumilate coin in such an event. In war, famine, building projects and low yielding harvest, inflation goes up because goods become scarcer thus their prices goes up.

When the largest and most powerful institution starts a lot of spending bringing about a larger supply of money, this raises the cost of goods but also raises the quality of life in the immediate vicinity. Suddenly there is money to spare. Soldiers paid begin having money to spend. In the heirarchy of needs, other needs start getting attention as well as other vices.

Inflation and Escalation is a standard in a world in flux because some where out there a good or commodity increases/decreases in supply. Going back to "golden age" levels of inflation doesn't happen without preventing necessary change. This change can be technology, climate, the titter of the scales of social justice, and ebb and flow of population.

Economics being taken forgranted.

In a previous discussion with my wife, one interesting thing about economics is how it is taken for-granted because it is so difficult to measure and predict. Even when studies prove that the economists are statistically wrong all the time (from her CFA book), these same critics still rely on the system they say is wrong. I think they have yet to isolate what is "wrong" and their definition of "wrong". Sometimes any actions/policy is good as it keeps us moving forward and not repeating what is bringing more harm.

The discussion was brought about by her CFA lectures that have many critical things to say about economics... but fails to provide any useful suggestions, recommendations or proposals. A rule of thumb with criticism, if the critic cannot imagine a solution or how to come to a solution then it ceases being constructive or a critical thinking exercise1

That rule of thumb is pretty useful in determining how well-meaning vs conscious or unconcscious malice in a criticism. That fact, that there is no useful forward moving suggestions makes me find such criticism useles. Its like complaining about something no-one else can prevent or stop, where there is no constructive-ness in the action like measring and assessing the situation, it's just a waste of time and not even worth note.

My opinion differs greatly because my historical appreciation is enhanced by gaming. The first example that point out how costs were arbitrary and economics helped fix a lot of things we take forgranted today was in a lecture about Levantine Empires2. On how slavery through debt was epidemic, successive civiliazations made many laws to prevent such from happening again and how those laws can be found in Islam. Same such problems happened in other cultures, where the costs of living these individuals thought they could pay was so flawed they ended up in perpetual servitude and slavery3.

Its easy to imagine a world without our conveniences when you role-play these worlds often or play them out in your head as a GM.

1The Art of Critical Decision Making by Micheal Roberto

2Empires before Alexander

3 Some forms of slavery is more sustainable for an individual when they can take advantage of the buffers and defenses of a larger and self sufficient household. Note that in modern concepts of social order, one can achieve the same buffers under a more liberated relationship among equals, in a community. But such social order requires a large amount of wisdom, philosophy, and awareness of individual rights.

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