When you speculate on real estate, you are gambling that the value of that real estate will continue to rise, at a rate greater than the overhead on that property. Thus when the property taxes were lowered the result was a widespread degradation in public infrastructure, an effect not observed in EVE. In the real world, when a property tax is paid it cycles back into the economy through expenditures on public infrastructure such as education and road maintenance. By this I mean that when a tax or rent is paid in EVE, this does not cycle back into the economy, it just magically disappears. There was one additional difference in the real world, however. Its effects were exactly what you would have predicted from the scenario generated in EVE Online. This not only lowered property taxes, but also increased property values as described above. The most obvious such example was California's Proposition 13, which was passed in 1978 when I was only 12 years old. I wanted to see how this translated to the real world so I looked around for examples. In a low tax environment, speculation makes property values so high that people seeking homes have a hard time affording them. Families would be a good example of a group that “needs” property, some place to live. In a “high tax” environment, only those that really need the property will be motivated to hold it. Low property taxes raise the value of property and trigger speculation. If the tax on property exceeds the value generated by appreciation, then this becomes a losing investment.īecause of this interaction, high property taxes reduce the value of property, again due to the “hot potato” effect. The way this works is that if the tax or overhead on property is lower than the rate of increase of the value of that property, then this becomes an investment that generates profit. I wondered if excessively low property taxes would do the same thing in real life. When I began creating virtual economic systems and theories in 2005, I looked to the way our “real” economies were designed to see if I could find parallel systems. Thus the effect of this speculation was increased wealth stratification, reduced economic competition, increased consumer goods prices, and crazy real estate inflation. In the meantime a handful of players who did have factories (myself included) got exceedingly rich. While it took several months to implement the fix, once it was in it worked perfectly by causing the speculators to abandon their stranglehold on the economy. The idea was to create a “hot potato” effect where no rational person would want these factories unless they were doing a lot of output with them. My solution was to greatly raise the rents on these factories so that only those that were actually actively running them would want to hold them. #Eve online recruit a friend how to#One week after the launch of EVE I handed a report to Reynir Hardarson explaining, among other things, how this weakness in the economic design threatened their game and how to solve it. I would have loved to expand my production but within days of the retail launch all factories had been bought up and idled by speculators who were charging $300 to $400 per factory, without any way of knowing if they really owned the factory or not. I produced the first Mammoths (a massive transport ship critical to trade) in the game, and also the first Minmatar battleships. There I managed to buy the factories in a key star hub and set up shop. This forced me to race to Minmatar space, where the ships were generally held in lower esteem by beta testers. Since the game was released in the UK a day earlier than in the USA, by the time I was allowed to log into the retail version of the game all of the prime factories had been grabbed. Back in 2003 when I was helping CCP with their new economy in EVE Online, the biggest problem with their design was that the factories that were central to the player based economy were too cheap to buy and maintain.
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