Discussion regarding ways to improve the micronational economy system.
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Posted this in the University of New Kirriemuir Economics Department today. I'm a political scientist, so forgive me for this being more political economy focused than economics focused. Thought I would post things here since part of the problem we have is that we do things mostly in our own states.
We are at a stage where the groundwork has been laid for economic expansion. There is still little economic activity actually occurring. I want to have a brief discussion on the domestic economy before moving towards trade and international economics.
The domestic market
Domestically we have seen the government offer grants to citizens which allows for greater economic activity. Critics will argue this has not done anything to actually start the economy. We see little actual trading happening domestically, however, this does not mean that nothing has occurred. The potential for growth has come into existence. We now see that people can now trade if they want to. The 'citizen dividend' has helped spur the economy's potential. The question now remains why the economy remains fairly stagnant.
There are two main reasons I will put forward. Firstly, the 'social problem' prevents actors from actually charging for their services. Secondly, the 'goods problem' means that there is little desire for economic activity.
The 'social problem' - For some this is not actually a problem but a great feature of micronationalism. The social problem is more a conundrum than an actual threat to the economy. It basically points to a tension in people's commitments. In a micronation we have two 'rationalities' - to ourselves and to our states. Since our communities are small and we have a personal role in furthering them, we do not charge for our services to that state. We do this because we have a social obligation to the state. This means that bountying can be wasteful for the state and that people will not want to charge for their services.
The social problem is one of the main factors holding back some economies. People will develop regions, produce artwork and so on for the gain of their community and not themselves. This presents a problem for the market whereby a culture of property and entrepreneurialism will develop. However, I do not believe that this means we should be totally guided by personal interest. Our attachment to states and communities is what makes this hobby what it is, it makes it fun. The fun is making our state compete against others, to see it grow and flourish. Therefore, any solution must account for this.
The main solution is the promotion of goods and projects which appeal to individuals. Property which can cause jealousy and only be owned at personal level can be a useful part of this. There are such things as forum based shops which allow for individuals to buy meaningless things like "cars" and so on. Trading currency for currency on a forum may allow for some sort of market to develop, but this must be facilitated by the state. The alternative is that people begin to offer goods and services that not only benefit the state but benefit each other. Things which benefit the individual can be bought and sold can help grow the economy and partly solve the 'social problem'. This problem is, however, linked to a secondary problem called the 'goods problem'.
The Goods Problem - Unlike the social problem, there is really no up-side to the current state of affairs. The goods problem basically refers tot he fact that there is little to actually trade and desire. Basically, despite all citizens having money they do not have anything they want. In turn, because there is nothing they want they have no desire to get more money. Therefore, it can only take a few people to actually offer desireable goods for this to be solved and a sort of supply 'multiplier' to occur.
There are examples of useful services in Gotzborg with Bjorn Olsen offering very high quality images for money. This is the sort of 'good' which people should want. We are limited, of course, by being on the internet. In real life we have all sorts of wants and desires from games to food to envelopes. So there is a real question here regarding 'what can we produce?' and 'what can we want?'. If I had an answer to this I would probably be a lot richer than I am.
The problem of international trade has been brought up a few times. With increased economic credibility states are suddenly seeking trade agreements with Hamland. With few goods and services to actually trade, however, this is a slight problem. I want to outline a few impediments to trade which will need to be considered moving forwards.
Legal challenges - The first one regards the law. States can sometimes have complicated legal systems and barriers to entrepreneurialism. This means that in order to trade states will have to have cross border agreements over the management of trade between states. The number of states makes this particularly hard and monotonous.
A simple solution is to try and create a single set of rules regarding trade. However, this carries the problem of diluting the state's sovereignty over its legal system. Therefore, setting standards agreed to by major trading powers may be a useful starting point. This already occurs with the WTO and the old GATT system of trading in the real world. Major trading powers can, therefore, meet this challenge by trying to agree on common principles and standards for trade. A Micrasian GATT may be a good step towards this.
Political challenges - The second challenge is the political aspect. This simply refers to the use of sanctions on other states. Until now economic sanctions carried little actual weight as it was simply a symbol of disapproval. Sanctions can, however, pose a new threat to the development of states and diversity of Micras. Sanctions having weight suddenly makes Micras a lot more exciting, but their abuse could harm the community.
The challenge is, therefore, to establish a political regime which allows for the use of sanctions but in a way which is not likely to harm the community as a whole. This question is in its early stages and so I will not delve much farther into it.
Goods challenges - The question of actual goods and services being traded remains. Free trade provides a possible solution to the 'goods problem' by allowing people to sell their goods on larger markets. The problem of the market lacking desirable goods, however, remains.
Social challenges - Lastly, there are social challenges regarding the way we see trade. Without repeating myself too much, people will be likely to provide more for their state than for themselves. As well as this, our community is spread across many forums and so different norms and approaches to trade are visible. In order to solve this the community needs to come together more on economic issues and include more of the community as a whole. Of course people will continue to sit in their own states discussing matters and this will have the effect of allowing a diverse number of approaches to the global economy. The challenge, therefore, has its up-sides as well as down-sides.