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Re: (TFT) Economics

In a message dated 2/11/2008 3:12:55 PM Central Standard Time, 
mtapley@swri.edu writes:

> At 22:04 -0500 2/2/08, Erol wrote:
> >o Finally, making lamp oil less available makes the "industrial disease"
> >problem *worse* IMO, by making magical lights relatively more 
> >attractive. If lamp
> >oil costs $0.4 per liter when it is available, but the supply is uncertain,
> >then when a Light item comes along at $1400, it will be more attractive to 
> buy
> >it, or trade for it, than if one did have a reliable source of lamp oil.
>     One point I'd like to (belatedly) drop into this discussion. 
> Although Erol's analysis of long-term cost effectiveness is correct, 
> it relies on the purchaser being *able* to spend a large lump sum 
> ($1400 or even $500) of money at the outset, with the benefit coming 
> after a long period. That capability, and indeed that way of 
> thinking, may not have applied to the general populace in a medieval 
> setting. Neither a bank nor storage in a mattress was a really secure 
> way to pile up coins, and barter goods (particularly perishables) 
> were even more difficult to accumulate, so "spend as you earn" seems 
> like it would have been the rule of good financial management for a 
> serf.

1. $500 or even $1400 isn't all that much in the great scheme of things. 
Consider the price of a good horse, or a fine-quality sword or suit of armor. If 
something that expensive is worth buying, a way to finance it can and will be 

2. My point is that at $1400, a Light item *isn't* worth the cost, relative 
to a lamp and a pay-as-you-go supply of oil - not unless you have very special 
needs. But at "only" $500, a magical Light item would be attractive to people 
who go through a fair amount of candles and/or lamp oil: Not peasant farmers, 
but merchants, scribes, craftsmen, etc. 

3. If the costs and benefits remain stable for long periods of time (decades 
and centuries) then it will become common, conventional wisdom as to what is 
or isn't a good deal. 

4. I've already pushed up the expected rate of return (a measure of the 
scarcity of captial) to the high end of reasonable. IIRC the historical expected 
rate of return in medieval times was 7% per year (with actual interest rates 
being higher to account for defaults and other risks). I set the rate of return 
at 0.2% per week, which is a shade under 11% per year. So I figure I'm already 
accounting (no pun intended) for the difficulty of accumlating coins or barter 
goods to buy high-ticket items. 

>     I can, of course, envision a dichotomy between the nobility, 
> who might well think long-term in a financial sense, and the common 
> serfs who simply would never think of doing anything costing so much 
> at the outset. That would severely limit the market for industrial 
> magic.

It wouldn't just be the nobility who think in long terms, but also merchants, 
craftsmen, and other townsfolk. Still a minority of the population, but a 
larger one than just the high nobility - and large enough IMO to support 
"industrial magic."

And I wouldn't discount peasants thinking long-term. A peasant would spend 
$500 on something that would be worth $52+ per year to him. Like a draft horse. 
And if some magic item turns out to have the same sort of value to the 
peasant, I wouldn't want to bet against the peasant scraping together enough to 
acquire it, via one financing scheme or another. Not a $500 Light item, since I 
don't see peasants spending $52+ per year on lamp oil. But say a magic scarecrow, 
enchanted with an Avert variant, that saves the peasant $250 each year in 
grain not eaten by crows or other pests - if such a thing costs only $2000, I 
foresee one in practically every field (Industiral Magic Disease!). But if they 
cost $3000 each, or if they save the peasant only $150 or less in lost grain, 
then "Not worth the cost." 

>     I think this argument becomes even more powerful when the 
> possibility of theft or vandalism is taken into account. Stealing a 
> lamp, eh, maybe not worth the risk. Stealing a $500 pocketable item, 
> a bit more attractive.

Of course a Light item doesn't have to be pocketable, or even as portable as 
a lantern. For example, consider a floor-standing cast-iron candalabra 
enchanted as a Light item. Not so useful for an adventurer, but still good for a 
merchant or scribe. 

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