A Guide to the Gotzborg Economy

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Liam Sinclair
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A Guide to the Gotzborg Economy

Post by Liam Sinclair »

As per the related CS article, a comprehensive guide to Gotzborg's economy has been published in order to help explain its operation to individuals who want to become involved with it, whether citizen or foreigner. I invite interested individuals in the Bastion Union to have a read of the guide and if you want to provide any review comments or questions, whether regarding the guide or Gotzborg's economy itself, I would be more than happy to respond.

The Guide is published at the following link: http://www.gotzborg.com/site/?p=3185

Comments are enabled at that link for those who have (or sign up for) an account with the Gotzborg.com Wordpress site (incidentally, signing up for an account gives you access to the integrated learning management system for the Royal University of Gotzborg which we're in the process of populating with material). If you want to visit Gotzborg, there is also a review/comment thread, so when you include this thread, there are plenty of ways to make your opinion or questions heard!

Thadeus Laing
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Re: A Guide to the Gotzborg Economy

Post by Thadeus Laing »

While I think some of those who are not a part of Bastion would
love to see any attempt to form an economy in a Bastion nation
squelched, I recognize and applaud the efforts Gotzborg has made
in developing its economy. It is, hands down, the most developed
economy on Micras at the moment, even more so than Hamland.
Congratulations.

Gotzborg has cons though:

1) The inactivity tax: IRL bank accounts draw interest that
grows with time--why is that not so on Micras?

2) Exchange rate with SCUE:
Current Exchange Rate: 1 Thaler = 0.05 SCUE Unit // 1 SCUE Unit = 20 Thalers
That equates to 2000%. That is very high.

Liam Sinclair
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Re: A Guide to the Gotzborg Economy

Post by Liam Sinclair »

Thank you for the positive comments on our economy. Sir Ross is certainly the one who should take all the credit. Unfortunately he is presently away from the community and unable to respond himself to your compliment!
The inactivity tax: IRL bank accounts draw interest that
grows with time--why is that not so on Micras?
The purpose of the Inactivity Tax is to return Thalers to circulation from inactive individuals/companies, as keeping Thalers moving throughout the economy is, in the opinion of the Royal Government, more important to the health and growth of a micronational economy in the early stages of growth.

Also, the Inactivity Tax isn't actually levied on a bank account, it's on individual's "pocket" (cash). A bank account in Gotzborg is only attainable by applying for such a service from a private financial institution (presently there are none in operation). If an individual had such a bank account, for as long as the financial institution remains active or licenced, that individual's investments would be protected from the Inactivity Tax and be able to grow. In the event that the bank failed, creditors would be reimbursed a portion or all of their investments (depending on what sum can be recovered from the bank) by the Royal Government to their "pocket" accounts - at which point the sum becomes again liable to Inactivity Tax.

So there is a method to shelter your money from the Inactivity Tax if you anticipate that you will be away from the community for more than 6 months, assuming that the banking institution that you deposit it with doesn't violate its banking licence or otherwise fail to have it renewed from year-to-year.
2) Exchange rate with SCUE:
The Exchange Rate was set based on what information could be attained from the active SCUE economies to try to align the purchasing power of currency in Gotzborg and SCUE. There was very little information available at the time but there was a demand for this service that needed to be met. The Royal Government intends for this exchange rate to change as purchasing power in Gotzborg becomes more defined as our economy grows, and likewise for the economies of SCUE. And certainly as demand for the service increases and the holdings that the Royal Government has to facilitate such exchanges become more taxed, the exchange rate would naturally respond in kind.

In terms of purchasing power, let's use the example that a Gotzborg Vice-Minister of State receives a monthly salary of 5,740 Thalers at present. That salary is paid out so long as the Minister completes a minimum of one task in his or her portfolio each month. If we use Shireroth's economy as the benchmark for SCUE, an individual receives 300 Erb for authoring legislation that is passed by the Landsraad - under the current exchange rate, this equates to 6,000 Thalers, which is slightly more than the monthly salary that the Vice-Minister receives for performing their (one task minimum) role.

It's an imperfect comparison, I know, but there's a lack of good information out there to set a fairer rate, unless you are able to provide better information on the valuation of a SCUE unit given your deep involvement in that economic community?

Andreas the Wise
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Re: A Guide to the Gotzborg Economy

Post by Andreas the Wise »

The exchange rate sounds good to me, considering the example you gave.
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Vilhelm Benkern
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Re: A Guide to the Gotzborg Economy

Post by Vilhelm Benkern »

The underlying value is what governments inside and outside the SCUE will pay, however. This isn't a criticism of the exchange rate, which I agree sounds reasonable. I read this document, and thought it was one of the best frameworks for a micronational economy. But it remains an empty vessel without a proper basis for a simulated economy. Reading through some of the economic threads in Gotzborg, it's unclear to me that this has been resolved. Paying for government work and renting forums are the easy bit - what about actual provision of goods? I find provision of services, for example legal representation, less problematic conceptually, though practically there is often little use for them if every RL citizen is drafting the laws (and therefore versed in their application). Considering the type of transaction currently going on, one asks: what is the point? Why spend money earned in government offices etc. on guns, butter, housing etc. which you could just as easily write it into existence? I understand the fun of simulation, but assuming you want the economics aspect to mean anything, there needs to be a substantive, as well as formal framework as has just been published. One attempt to broach this that I came across is the discussion on raw materials costs but the solution provided reveals the problems: you're basically buying RM from the government, at a cost not only artificial (which is fine) but hard to actually rationalise. As Bjorn points out, one of the few goods people always want to buy in micronations, images, require little RM.

The more I read this stuff, the more I'm convinced that we need to go hard and strict: land that contains raw materials owned (by govt, 'NPCs' or citizens); extraction, processing and manufacturing costs, again to government, third parties or by building your own factory; employees and associated costs; and possibly not allowing people to have 'stuff' (cars to move around in, troops to fight with, buildings to live in) without proof that it has been built or bought within the simulation. In other words, rather than going top-down and creating an economic, fiscal and monetary system and using it to encourage business, actually work on creating an economic ecosystem rooted in production of simulated goods.
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Liam Sinclair
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Re: A Guide to the Gotzborg Economy

Post by Liam Sinclair »

Those are all valid points, I agree. In requiring a person to "build" a building to justify having a forum for their business (assuming they don't want to just rent one), Gotzborg is tinkering on a very limited basis with the "need proof that it exists within the simulation" approach to the economy. That said, the bulk of the economy is still the traditional top-down micronational structure, which in my opinion is something that requires less human resources administratively, both in terms of designing the regulations, and managing the wider system. This eases the burden on the busy schedules of the limited population we have in Gotzborg and in any other micronation that undertakes an economic system.

The reason for the artifical approach to resource cost recovery is simply because applying a percentage of the total price is administratively easy for the Royal Government as opposed to having the companies do up a specific bill of materials used within the product so that a more detailed, per-resource-price (i.e. Thalers/tonne of steel for example), can be applied.

The hard and strict approach you propose would be an ideal case, and one that would arguably need to be supported by an extensive software package that would minimize the administrative side of things, while ensuring that individuals becoming involved can do so with relative ease (as opposed to being bombarded with a large number of "rules"). MITO was on the right track with the regulation of resources and their trade, but ultimately it failed because it was not directly integrated with the SCUE banking or market systems, making it less than user friendly in the grand scheme of the SCUE economy. I think we have the framework necessary to develop the software package needed to take the bottom-up approach, but once again, it's the time and expertise necessary to code it and administer it that we tend to lack.

The SMF Shop module that Gotzborg uses has a shop that we briefly experimented with that allowed the listing and sale of simulated goods. I liked this functionality of it until I discovered that when you bought a product, instead of the money going to the seller, it vanished into thin air. Tracking sales was cumbersome at best, so administratively it just wasn't worth it.

That said, I'd be interested in seeing further discussion on your approach (maybe a topic you can expand on for the Journal of Micronational Studies ;)). Even if it can be implemented on a limited basis that is administratively friendly in lieu of software support, I think it would have merits. Whether or not it spurs individuals to become involved in the micronation's economy is another problem ....

Andreas the Wise
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Re: A Guide to the Gotzborg Economy

Post by Andreas the Wise »

At one point Nick from Normark was working on a way of incorporating resource trading into the SCUE bank - I helped him code up some stuff, but it never quite got off the ground.
The character Andreas the Wise is on indefinite leave. But he does deserve a cool war ribbon.
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However, this account still manages:
Vincent Waldgrave - Lord General of Gralus
Manuel - CEO of VBNC. For all you'll ever need.
Q - Director of SAMIN
Duke Mel'Kat - Air Pirate, Melangian, and Duke of the Flying Duchy of Glanurchy
Cla'Udi - Count of Melangia
Vur'Alm Xei'Bôn - Speaker of Nelaga, Minister of Interior Affairs, and a Micron

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