World of Keynesianism

Economics and gaming: A model economy: Should links between real and virtual economies be encouraged or banned?,” The Economist,, 20 January 2005.

By special request, a story on Keynescraft and cross-reality currency trading

For players of online role-playing games such as “EverQuest” and “World of Warcraft”, battling monsters and amassing treasure is an enjoyable form of escapism. Yet the real and virtual worlds are increasingly intertwined. For many years, game items such as swords or gold have been traded online: virtual objects are sold for real money to the tune of at least $100m a year. But the links between real and virtual economies are now becoming far more elaborate.


Last month, a “Project Entropia” player paid the game’s creators $26,500 for an island in the game’s virtual world. (He hopes to recoup the money through mining and selling plots to other players.) This month, an “Ultima Online” player set up a scheme to let players donate items and currency to raise money for tsunami relief. Currency exchanges even allow gamers to move funds from one game to another.

Not everyone approves: some games ban the sale of game items, a few encourage it, but most turn a blind eye. But the sale of the “Project Entropia” island, and the popularity of “World of Warcraft”, a game launched in November which bans the sale of in-game items, highlight an emerging split, says Edward Castronova, an expert on virtual economies at Indiana University. “Project Entropia” and its sort are intended to be realistic alternative realities, often with a strong libertarian and free-trade bent. “World of Warcraft” and other similar games, in contrast, are fantasies with a strong sense of fair play in which status must be earned as part of a rags-to-riches storyline—so trade in game items is deemed to be against the rules.

Such bans are impossible to enforce. But “World of Warcraft” is designed to make trading less appealing, in two ways. The first is by improving the game design. If the early stages of a game are tedious, players are more inclined to skip them by buying rather than earning in-game items. “World of Warcraft” is fun right from the start, which seems to have reduced demand for in-game items on eBay. Trading can also be a symptom of mismanagement of the in-game economy. Inflation is rampant in most games, due to the convention that killing a monster yields a monetary reward [ so the money supply increases while overall production remains constant — tdaxp]: rising prices then fuel real-world trading. But newer games have more control over the money supply, which seems to reduce such trading.

Normally, this newspaper’s devotion to free trade is unwavering. Yet curbing the trade of in-game items is defensible, since game economies are run to maximise fun, not efficiency. While writing his forthcoming book, “Synthetic Worlds”, Mr Castronova has been pondering whether real economies could be run for fun too. “Wouldn’t that tip the economics texts on their heads?” he muses.

Tom Friedman’s Loss Leader Merchants of Death?!?

Arms Sales Begin at Home,” by Thomas L. Friedman, New York Times, 6 March 2005, (from Rich Lowry at The Corner).

Tom Friedman makes a startling suggestion and a startling claim in his latest column

First, the suggestion

For the life of me, I simply do not understand why President Bush is objecting to the European Union’s selling arms to China, ending a 16-year embargo. I mean, what’s the problem?

There is an obvious compromise that Mr. Bush could put on the table that would defuse this whole issue. Mr. Bush should simply say to France, Germany and their E.U. partners that America has absolutely no objection to Europeans’ selling arms to China – on one condition: that they sell arms to themselves first. That’s right, the U.S. should support the export to China of any defense system that the Europeans buy for their own armies first. Buy one, sell one.

Then, even more surprising

This is especially true since the real reason that the E.U. wants to end its arms embargo with China is to position itself better to sell more Airbus passenger jets to Beijing. Weapons systems are the loss leader that the E.U. is dangling in front of the Chinese to persuade them to buy more of Europe’s civilian airplanes. Indeed, what is really sad about the European arms sale proposal to China is that the E.U. doesn’t seem to be demanding any political price, even the slightest change in behavior, from Beijing in return, except some vague “code of conduct.” Sure. Ask the software industry about Chinese promises not to pirate technology.


Is this correct?!?

If it is literally true, this is the most insightful comment on the EU-China arms deal I have ever heard. If not, maybe Barnett’s right and Friedman has walked off the ledge of credibility. Or something in between?

Does anyone know the truth about this?

The Sinking Ship of the American Tory Party

Public Support for Iraq War Collapsing: Majority of Americans want to Bring Some Troops Home ,” by Juan Cole, Informed Consent, 6 March 2005,

Richardson Praises Bush’s Mideast Policy,” Associated Press, 7 March 2005, (from DU).

Flash: Chris Matthews…,” Drudge Report, 7 March 2005, (from DU).

First, the shocker (while it’s still news to anybody)

FLASH: CHRIS MATTHEWS, MSNBC: The 2008 presidential campaign will not include Al Gore. I’m reporting here tonight that the former vice president and 2000 presidential nominee will not run for president in 2008. I’ve been given this scoop from a perfect source, I must say, who informed me that the purpose of this disclosure at this time is to end speculation about a campaign that will never occur…. Developing..

Al Gore imitating Howard Dean

And word from someone 2008 probably will include:

Support for President Bush (news – web sites)’s mission of spreading democracy throughout the world, especially the Mideast, is winning accolades from an unlikely source — New Mexico’s Gov. Bill Richardson, a prominent Democrat often mentioned as a possible presidential candidate.

Richardson, a former U.S. ambassador to the United Nations and energy secretary under President Clinton, on Monday cited Syria’s promise to lower the profile of its 14,000 troops in Lebanon as a “very significant” result of U.S. pressure.

The presidents of Syria and Lebanon announced Monday that the Syrian troops would be pulled back to eastern Lebanon’s Bekaa Valley by March 31.

“I believe the Bush administration deserves credit for putting pressure and saying that authoritarian regimes have to go,” Richardson said on NBC’s “Today” show. Bush’s stated mission of spreading democracy around the world “is working, whether it’s by design or by accident,” he said.

Bill Richardson with Sun-Disk
Seal of the State of New Mexico, or Papist Hagiography?

Saying “I told you so” on President Bush’s Second Inaugural would be a waste of time. Instead, the real analysis:

Gore bet big on the Torification of the Democratic Party. Like Nixon in 1964, he prepared himself for a second chance by endorsing a wingnut candidate. He bet that the fever would last until at least the primaries, giving him time to wrap up the nomination.

He chose poorly.

The successful Iraqi election and Lebanese intifada have collapsed the political center’s opposition to Bush’s Middle East policies. Baghdad Spring is a time for Baghdad Rules.

How can this be, if Juan Cole says the public is increasingly suspicious of the Iraq War?

Because politicans are not stupid. They are forward-looking. They play to the crowds of election day. Historically moderate Clintonistas are now shouting their sympathy for the war and preparing to save the ship. And Howard Dean’s ilk are drowning.

Domestically, we supporters of the Iraq War have strategic despair on our side. Good.

Johnson’s the next Dayton? (Tim Deep in Debt)

Sen. Tim Johnson is over $40,000 in debt,” by Raider, Argus v. Thune,, 6 March 2005 (from South Dakota Politics).

Maybe Tim Johnson’s pseudonym is Fiscal M. Prudence?

Gov. Rounds inner circle have been circulating some interesting FEC information. While Thune sits on a war chest of over $1.6 million (and is the process of raising more funds for like minded candidates) – the state’s senior Senator seems to have run into a little cash flow problem. View the FEC records here ( it is 75 pages long – but to save time just look at the summary page of $15,000 in cash on hand and $64,000 in debts.

Some simple math…

Johnson typically starts slow with fundraising as Daschle has always been there to turn on the spigot as Johnson would draft of his fundraising machine. Rounds inner circle points out that Johnson will need to raise $110,000 a day for the next 3.5 years to raise Daschle like numbers. No one from Rounds inner circle will go on the record – but they are not shy about pointing this out.

Given the super-popularity of Mike Rounds, and Tim’s history as Tom’s today, is there any doubt we will soon have Senator Rounds?

The history of financially wasteful midwestern Senators implies Tim might not even bother to run….

Clean Cut Kid: South Dakota’s MyDD

Signing Off,” by Chad M. Shuldt, Clean Cut Kid,, 6 March 2005.

Since I started blogging, I have used Clean Cut Kid as a resource. From speed limits to agriwelfare to abortion, he was a realiable source of Democrat partisan news from the Sunshine Mount Rushmore State.

His farewell post:

Dear Readers,

I am taking a (temporary or permanent — yet TBD) hiatus from daily writing on this site. I’ve taken a new job that involves politics and I will be working with different candidates and issues around the country. This would limit my ability to post on said candidates and issues, so I believe the best thing is for me to walk away and figure out how this fits together.

The new job, of course, will take up considerable time; leaving precious little of it to spend with my wife and three kids. I think I’d rather be spending that time with them than my computer screen.

I am considering farming out the site to someone who may be interested in writing here. It is a “somewhat” established blog — four months — with a strong traffic pattern established (averaging nearly 2000 unique visitors daily). If you or someone you know is interested, please send me an email with a writing sample. I will be upfront and say that I would prefer to turn the keys over to someone with a similar political bent.

This has been fun, and a great learning experience. I’ve also met a huge number of people through email conversations rooted from the site. I will continue to be in touch with you. And this is also not to say I will never be back here or anywhere else.

Best Regards,


Under Chad, CCK was The Coyote State’s own MyDD. They had the same strengths: timely updates on political news and everything affecting the strengths of the parties. They both had the same weaknesses. Both favored personal attacks. Likewise, both were harmed by their lack of ideology. While it is important not to be ideologically bigoted, CCK and MyDD both reflexively took the anti-Bush / anti-Republican side of an issue with very little thought.

But I checked CCK every day. I still do, hoping he will have “just one more” post. The Chinese Ringneck Pheasant State will miss Clean Cut Kid.