Fwurg

[Brend]

Last week, Mercury and I got together and discussed how we could set up a bank in FWURG. The idea was that by allowing people to better lend money and manage debt the total economy of FWURG would improve.

After bouncing around a lot of ideas that were close but just not it, we came to the idea of facilitating part of the economic process: the saving of taxes over multiple turns.

I'll skip over the explanation of how we arrived at that conclusion, because that is a rather long-winded affair (three and a half hours of face-to-face discussion will do that). Long story short, I propose the following:

Also at Banking wiki page.

Complex Financial Products

By careful construction of debt and credit packages, it becomes possible to invest large volumes of taxes. Through a specialized tertiary sector of industry such complex financial products gain a level of stability that can not be attained with taxes.

This technology enables the establishment of a Banking Corporation. A Banking Corporation is a type of corporation that specializes Open Market Zones. The production of a specialised Open Market Zone is doubled. An Open Market Zone specialized by a Banking Corporation can no longer support fleets, and no longer generates . Instead, the production of a specialized Open Market Zone can be used to convert into Credits and Credits into in a one-for-one ratio. Both conversions consume the production of the zone.

For example, the Xyzzy Banking Corporation has a headquarters with a production of 120, so you can convert 70 into 70 Xyzzy Credits, leaving 50 production; or you could convert 70 Xyzzy Credits into 70 , with 50 production to spare. You could even convert 70 into 70 Xyzzy Credits, and use the other 50 for converting 50 Xyzzy Credits into 50 .

The Credits producted by the established corporation are specific to that corporation, and can only be converted by that corporation. Credits can be traded just like , and do not require trade capacity of any form. Unlike , Credits can be saved and will not be wasted if you do not spend them at the end of the .

Unlike normal corporations, Open Market Zones specialised by a Banking Corporation always generate +10(:tax) for the owner of the corporation, regardless of where they are.

Cost: 1000 / 4

Holocommute Workstation Deployment

By allowing employees to work from home, banking corporations can partly replace its normal infrastructure with modern holonet servers.

This technology removes the and Type I Atmosphere requirement from specialisations by the Banking Corporation. This allows Banking Corporation specialization of Open Market Zones on worlds with any orbit type, under any atmoshpere (including 'no atmoshpere').

Cost: 500 / 2

Prerequisites: Complex Financial Products

What these technologies offer is a way to save up your by converting it to Credits that aren't lost at the end of your turn.

There's two direct issues:

The base zone: Corporation needs a base zone and there is no 'Financial Zone'. I solved this by building on top of an Open Market Zone, effectively changing it to a 'Xyzzy Credit Zone' (just like corporations do now). The other solution would be the introduction of the 'Financial Zone', but that zone wouldn't do anything else.

Naming: We call it a banking corporation, but it might be more aptly named a Financial Corporation or even Credit Corporation... Personally, I think that Banking Corporation fits very well, but that might be due to the large discussion beforehand.

I would love comments and criticizm from others.

[Chriz]

I discussed this topic in length with Brend and know about the reasoning behind this proposal.

I support the proposal.

My reasoning: Since saving tax by itself is a powerful thing I think that a Corporation seems fair. Due to the fact that the zone only exchanges tax into credits and does not generate taxable goods with its capacity I think that the 10 generated by the zone is fair, just as it is with the Shipping Corporation.

The technologies don't really have to be expensive since the cost is allready in the corporation itself.

[Dragonmaster352]

I generally like the idea. The fact that credits can be traded without trade capacity will put it on equal terms as .

How will this be done in the turn report? Because I think these things need to be tracked.

[Brend]

How will this be done in the turn report? Because I think these things need to be tracked.

For the moment they would be listed in the Acquired Goods section, and you would have to update your total yourself (since the turn tool doesn't know about the previous turn).

Later on, this might be changed.

[Elmer]

I have some questions about why you want this. You and chriz said some things about it:

Last week, Mercury and I got together and discussed how we could set up a bank in FWURG. The idea was that by allowing people to better lend money and manage debt the total economy of FWURG would improve.

My reasoning: Since saving tax by itself is a powerful thing I think that a Corporation seems fair.

But I miss a bit how this would improve FWURG, because: When I got , it is better for me to spend it all. More spend is more progress. And I think this works for other people as well.

Larger economies might safe the taxes, but that would be postponing their personal progress.

When larger economies save taxes to loan to smaller economies, then smaller economies must have the corporation first. A waste of money IMO. Of course, the large economy can convert the taxes himself, but that way he can convert 200 in standard circumstances. 200 is nice, but little for real investments. And the larger economies don't need a banking corporation to lend 200 . (For example, the Veolian Commonwealth, Sundarian Federation, Praetorian Empire and Republic of Darya all have a big enough economy to lend 200 per to a player, so their combined economy can support a player with 800 with ease.)

I think when the capacity will be ten-fold, then we start talking about something. 200 is small, but when a larger economy can safe up 2000 , to spend all in one, that's the real deal. Then the large economies can safe up money. Small economies can borrow 2000 at once to rush their project, and then repay the large economy over time.

So my conclusion is: For smaller economies this is a waste of money and for larger economies it is rather useless with the current capacity.

[Brend]

Larger economies might safe the taxes, but that would be postponing their personal progress.

That depends on what you see as 'personal progress'. If you only look toward the development of your own system, you are right. But some factions might have goals that aren't 'get them highest taxable income possible'.

And even if you stop looking at 'taxable income' and only at 'income' there are a lot of options that aren't employed right now. Long term investments in others can be much more profitable than building another zone in your own system. (Especially if they can get 210 production for 1000 while you get 100 for 2000 .)

When larger economies save taxes to loan to smaller economies, then smaller economies must have the corporation first. A waste of money IMO.

Why should the small economy invest in a corporation? Each corporation creates its own type of Credit, so if you set up your own corporation that would actually be completely unable to convert the credits of another corporation.

It is a much better plan to let someone else invest in the corporation, and just enjoy the fact that you can save your by having them convert it to their credits and sending the credits back to you.

Of course, the large economy can convert the taxes himself, but that way he can convert 200 in standard circumstances. 200 is nice, but little for real investments. And the larger economies don't need a banking corporation to lend 200 . (For example, the Veolian Commonwealth, Sundarian Federation, Praetorian Empire and Republic of Darya all have a big enough economy to lend 200 per to a player, so their combined economy can support a player with 800 with ease.)

These technologies are not intended to effect only 'lending is easier'. They are meant to allow a more healthy financial system by allowing people to save up for later. All other effects are derived from the saving of money.

You are right that the large economies are perfectly capable of loaning tax to others without the necessity of saving taxes. But it becomes easier to create loans and other financial constructs if you do not lose the money after you have received it.

Look at it from the other side. The corporation isn't the only source of in the world. Let's say you have 2000 Xyzzy Credits (that's credits created by the Xyzzy Corporation owned by the Veolian Commonwealth). You can ask the corporation's owner to convert them, but they are limited to the corporations production, so thay wouldn't be that much per .

But there is another option! You can also sell them to someone else. Let's say that the Praetorian Empire is willing to buy 1800 Xyzzy Credits. Than you just converted 1800 of your Xyzzy Credits to 1800 in a single turn!

Later on, the Praetorian Empire can ask the Xyzzy Corporation to convert their 1800 Xyzzy Credits to ... Or they could just sell them on, as the next buyer knows that he can convert them later on if need be.

So my conclusion is: For smaller economies this is a waste of money and for larger economies it is rather useless with the current capacity.

Which is why small economies don't have to invest in the corporation themselves. The small capacity is how the value of credits can be decoupled from their original value. Over time, a lot of Credits can be created without flooding the economy with a sudden influx of 2000 .

The saving isn't done by converting massive into Credits. It is done by trading the existing Credits.

[Mercury]

Saving money is sensible when you estimate that money to be worth more at a later time then it is today.

For example, when you are adding Natural Life to a planet, you can choose to wait spending that money until you have Natural Life to buy cheaper zones.

It also allows more flexibility when doing large, long term projects. For example, the IO protocol is currently building a 5000 project to which they added 9 and 24 in the past two turns.

With savings, we could instead save that money up and when we get to 5000 buy a corporation in a few turns - but with the added option that we could instead choose to spend that money on terraformation, depending on the circumstances that are created at that particular time.

Finally, saving money creates buffers, which are crucial in times of war and uncertainty.

For example, when a fleet blockades your home system, you will suffer a significant drop in income - however you still may want to maintain your fleet instead of having it destroyed for lack of maintenance. If you have money saved, you can use that money as a buffer, allowing your fleet time to return home and kick out the invaders!

Thus, saving money is sensible for saving up for investments that are more profitable in the future, for adding flexibility when making large purchases and for buffering in case of uncertainty.

[Brend]

As no other questions or objections have been raised, I propose that I put these technologies on the wiki in the weekend of 25 and 26 May.

Any technical issues (such as an actual Icon for the Money, or the implementation of zone data) will be postponed until someone actually uses the technology.

[Brend]

I have put the technologies on the wiki (see the related pages above).

I've slightly changed the wording on the main tech to clarify that each corporation generates its own kind of credit.

OOC Note: if you start researching this technology, contact me to work out the OOC details of having a Credit icon for use on the Wiki, Forum and the tax tool!