Some comments on the economics of the series

Hi Niethil,

I think the fact it was paid for by dairy subsidy-Proxmire speaks for itself in terms of its validity.

Others better informed, scifi writers with both scientific and economic credentials than Krugman's politics, dealt with the same concept far better.

L

niethil wrote:I have no ideas why so many people posting in this thread think that commercial transactions are cleared in real time. It's not true at all, it is in fact very unusual. Most transactions are cleared only once a day.

Also, I don't know if it's already been mentioned on the forum, but Paul Krugman once wrote a paper on interstellar trade (actually on the valuation of capital travelling at relativistic speed) : The Theory of Interstellar Trade
It has no resemblance whatsoever with Honorverse, but still ...

Hi SCC,

The main reason micro-jumps are generally 'inaccurate' is due to far larger distances and always unique circumstances, whereas my concept is a set routine over the same points, rather quite different situations.

Applying an accurate generality to a specific is a great way to get it wrong.

Anything that provides a financial edge will get support, remember Galileo's telescopes for the Republic of Venice?

L

SCC wrote:OK, about the micro-jump idea to move stuff from the WJ to Manticore, it won't work, micro-jumps have pretty much the highest accuracy problems of all jump types, sooner or later it's not going to end well, as in a ship gets it's translation wrong and never comes back.

As for the silly idea about using 3D Printers and making money, forget it. The old paper/fabric notes the US used to make/use (I'm guessing some are still in circulation), the hard part of making them is getting some of the paper their printed on, the mixture is basically a State Secrete and probably can't be reproduced on a 3D Printer, and the government LIKES it that way, it makes the notes virtually impossible to forge

Plastic notes, I don't know if there's anything special about the plastic, but the actual note is printed on top of it, old style.

As for coins, they likely aren't homogenous and the way the other coating is applied is important.

I think the person who first brought them up was thinking that's how the government in the future might make them, but I ask the question: Why? If a 3D Printer is going to be in every home in the future why make your currency printable on one?

And also note that 3D Printing was NOT designed with mass production in mind, it was developed to make creating one off test parts cheaper, not to get rid of mass production

lyonheart wrote:I think the fact it was paid for by dairy subsidy-Proxmire speaks for itself in terms of its validity.
Others better informed, scifi writers with both scientific and economic credentials than Krugman's politics, dealt with the same concept far better.

Actually I just like to reference things like that. I had a good laugh the first time I found it, that's all.

And I don't care about Krugman's politics : he doesn't get to vote in my country.

lyonheart wrote:Hi SCC,

The main reason micro-jumps are generally 'inaccurate' is due to far larger distances and always unique circumstances, whereas my concept is a set routine over the same points, rather quite different situations.

Applying an accurate generality to a specific is a great way to get it wrong.

Anything that provides a financial edge will get support, remember Galileo's telescopes for the Republic of Venice?

L

SCC wrote:OK, about the micro-jump idea to move stuff from the WJ to Manticore, it won't work, micro-jumps have pretty much the highest accuracy problems of all jump types, sooner or later it's not going to end well, as in a ship gets it's translation wrong and never comes back.

As for the silly idea about using 3D Printers and making money, forget it. The old paper/fabric notes the US used to make/use (I'm guessing some are still in circulation), the hard part of making them is getting some of the paper their printed on, the mixture is basically a State Secrete and probably can't be reproduced on a 3D Printer, and the government LIKES it that way, it makes the notes virtually impossible to forge

Plastic notes, I don't know if there's anything special about the plastic, but the actual note is printed on top of it, old style.

As for coins, they likely aren't homogenous and the way the other coating is applied is important.

I think the person who first brought them up was thinking that's how the government in the future might make them, but I ask the question: Why? If a 3D Printer is going to be in every home in the future why make your currency printable on one?

And also note that 3D Printing was NOT designed with mass production in mind, it was developed to make creating one off test parts cheaper, not to get rid of mass production

No, I think you are wrong about microjumps, Lyonheart. I think there is inherent uncertainty which prevents microjumps from being very accurate. Trying to set up "routine" jumps isn't going to help that.

BobfromSydney wrote:

Jonathan_S wrote:
Basically instead of digitally signing the transaction as "pay to bearer" they could just as easily sign it "transaction #xyz, for deposit only at branch A in account 123". Then they'd either put a hold on those funds until they got notification that the transfer had completed, or transfer them to the bank's general account. But it doesn't do any good to steal the transfer because it'll only be accepted one place and into one account.

That's the kind of system I've been talking about earlier in this thread. 'Pay to bearer' is equivalent to 'pay only to such and such' because it's not really transferable (except to gullible fools).

If Alice had a 'pay to bearer' note and offered it to Bob, Bob would not be able to trust that the 'pay to bearer' note was:
1. The 'original' copy
2. Not already 'cashed'
3. Not going to be 'cashed' by Alice or her associate Carol before Bob got a chance to cash it first

Now this is moot if all parties (including the bank) are on the same planet. But in this case why are they futzing around with bearer bonds instead of just using electronic funds transfers?

The hard part is the anti-duplication technology. Cryptography doesn't directly help with that in an offline environment.

But Bob knows that the copy he's looking at hasn't been cashed because the cashing bank would have updated the record, signed with their keys, noting the deduction in funds.

And (again baring duplicates) if Bob is physically holding the bearer credit chip he knows that Alice or Carol isn't going to deposit it (unless they first steal it back from him)


If you solve the duplication issue the rest follows and it works pretty much like cash does today. But like I said the anti-duplication technology is over and above the crypto (though if you can crack the crypto you can forge new credit chips against some well known bank). You can put cryptographically protected transaction IDs in even the pay to bearer chips, but that only provides very limited protection from "replay attacks". It'll protect the same branch from accepting a cloned chip more than once. And if they spread the record of that transaction across their bank network other branches will eventually know that its been previously accepted. But in intersteller banking that mechanism is too slow, by itself, to be the anti-duplication tech. That would (I assume) have to be more of a hardware level technology built into the actual chip hardware. (Like the anti-tamper tech Manticore builds into it's military hardware to hopefully prevent reverse engineering)

SWM wrote:No, I think you are wrong about microjumps, Lyonheart. I think there is inherent uncertainty which prevents microjumps from being very accurate. Trying to set up "routine" jumps isn't going to help that.

The question in my mind is how inaccurate are they? Because they could be pretty inaccurate and still let you shave move of the 7 hour light speed lag off a message from the Junction to Manticore (for example).

You'd have to aim wide enough that no nav error could throw you either past the hyper limit or into the RZ, but you're not trying to hold a formation, and the general accuracy still should be better than one part in seven; allowing you on average to target a 1 light hour sphere with the inner edge touching the hyper limit; even that grossly inaccurate jump would shave, on average, over 6 hours off the transmission.

I doubt there were enough time critical messages to make it economically viable to set up such a relay, but that's a different question than it's technical feasibility.

Jonathan_S wrote:

The hard part is the anti-duplication technology. Cryptography doesn't directly help with that in an offline environment.

But Bob knows that the copy he's looking at hasn't been cashed because the cashing bank would have updated the record, signed with their keys, noting the deduction in funds.

And (again baring duplicates) if Bob is physically holding the bearer credit chip he knows that Alice or Carol isn't going to deposit it (unless they first steal it back from him)


If you solve the duplication issue the rest follows and it works pretty much like cash does today. But like I said the anti-duplication technology is over and above the crypto (though if you can crack the crypto you can forge new credit chips against some well known bank). You can put cryptographically protected transaction IDs in even the pay to bearer chips, but that only provides very limited protection from "replay attacks". It'll protect the same branch from accepting a cloned chip more than once. And if they spread the record of that transaction across their bank network other branches will eventually know that its been previously accepted. But in intersteller banking that mechanism is too slow, by itself, to be the anti-duplication tech. That would (I assume) have to be more of a hardware level technology built into the actual chip hardware. (Like the anti-tamper tech Manticore builds into it's military hardware to hopefully prevent reverse engineering)

The only crypto I would consider safe in the Honorverse would be one time pads.

I think the use of word 'hopefully' is indicative of the problem with basing the security of the currency on the expectation that highly motivated people will not be able to duplicate physical objects they have effectively unlimited access to.

I think there is also the problem of the 'cash' used by lower tech polities. Now it is clear not every Star Nation has the same level of technology in the Honorverse. What's to stop Sollie criminals from literally making a mint out in the verge?

Also even if the 'cash' is impossible to duplicate, what's to stop enterprising criminals from stealing the blueprints (or a physical unit) of the 'printing press' that makes the cash?

It only has to happen once and in between the time it takes for the entire currency to be recalled across the Solarian League and replaced with a new one, trade will be hamstrung and the criminals will all become richer than Detweiler, Hauptman and Honor put together.

How do they prevent mint workers from participating in an 'inside job'? Does everyone from the janitor to the commissioner wear radio transmitter bomb collars for the rest of their lives?

runsforcelery wrote:
Are you under the impression that the Beowulf Terminus is the only terminus of any warp bridge that enters Solarian space?

I have repeatedly stated that one of the reasons the MWHJ is so important is because it gives access to the entire network of termini around the League's periphery. And that network allows access to almost every portion of the Solarian League. Which is the very reason that shutting it down to non-Manticoran shipping adds so much time to any Solarian interstellar transit times.

During the decades of war between Spain and the rebellious Netherlands, the Dutch financed much of their war effort by continuing to provide the carrying trade for Habsburg commerce (including Spain's) even during periods of active operations. Much of the Armada's artillery had been cast in Protestant --- including Dutch and English --- foundries, and the money Spain paid for those guns helped finance the English galleons which defeated it.

The situation in the HV is not completely analogous to that episode, but there are definitely similarities. The SEM now has access to/control of better than 90% of the total wormhole network, and the RMN is in position to provide security against commerce raiders in virtually all of the systems to which they connect. Do you seriously think that Solarian transtellars (or anyone else whose livelihood absolutely depends on moving his products to other star systems) are going to balk at using Manty bottoms to do the moving? If you do, then you have an imperfect understanding of just how corrupt and "go along to get along" Solarian interstellar commerce has become. I do not mean to suggest for a moment that the SL's commerce is going to be booming along at pre-war levels, nor do I mean to suggest that there won't be a great many Solarian businesses which will refuse to use Manty merchies even if it leaves them facing significant financial loss or even bankruptcy. But I will positively guarantee you that there will also be a great many of those businesses who will use those merchies to avoid bankruptcy. And there are even going to be quite a lot of system governments who will wink at the use of Manty shipping, given their lack of institutional loyalty to the Mandarins. And, in the meantime, Manticore is going to be levying special transit fees on all non-Manticoran shipping through any of the termini it now controls as an emergency wartime measure. Again, let me stress that Manticore has no objection to Solarian commerce continuing so long as it does so under Manty supervision and conditions . . . and so long as none of the fees and duties previously going to the SL's bureaucracies continue to do so. Indeed, there are huge arguments in favor of allowing that commerce to continue, so long as it doesn't contribute to the war effort against the GA, if only as a means of generating good PR for the SEM.

"See how reasonable we're being? Or trying to be, anyway, when the League lets us! Unfortunately, we can't allow the Mandarins to use these termini to prosecute the war against us, and we have every reason to deny the League the revenues it's historically generated off of the Solarian merchant marine and the service fees we're no longer allowing anyone to collect. But we don't want to put anyone out of business unless we have to, so we're taking over the astro control functions you used to pay the SL to provide, and our emergency transit fees will come to only 50% of what you used to pay OFS and the League. And as soon as this unpleasantness is concluded, we'll happily go back to allowing free transit to anyone, including Solarian-register freighters."

Manticore is going to take a hit, and it's going to be a heavy one, but the only way it could turn into the sort of debacle you're positing, would be for the GA to lose the war. A war that ran long enough could still do serious damage, even if the GA won in the end, but nothing short of outright defeat --- the kind that leaves the SL in control of the MWHJ --- could produce the sort of free fall you've described.

No, I was aware that the Junction forms a network of wormholes connecting to a number of locations in and around the League.

What I was referring to in this relation is two fold.

First you have a short term problem and that is that Manticore has recalled all of her merchant fleet to Manticore. This means that for however long this is occurring or in effect, it doesn't matter whether the Junction is closed or not. If you're merchant ships are sitting in orbit around Manticore they aren't creating transit fees, they're losing money for their shipping lines and since shipping lines don't often operate with great profit margins this means these lines will likely loose money which means no income for the crown to tax. This also does nothing to account for the fact that there are going to be a lot of unemployed merchant sailors, at least temporarily and those sailors aren't going to be earning paychecks or buying a lot of goods which will reduce or eliminate the profits of a number of other business which further reduces the tax base etc ... . The fact that this is likely to go on for several months is going to be a huge problem for the SKM all by itself.

The longer term problem doesn't have to do with the closure of the termini per se but more with what you can do with them under the current conditions.

Prior to the current unpleasantness, I believe Manticorian ships carried approximately 80% of League interstellar shipping. Given the wealth and value of that trade this is where the majority of the economic engine that drives Manticore probably lies. Most other economic engines probably are as a result of this happy circumstance, support it and are largely dependent on it.

Let's say that the Queen sent all of her merchant ships back into the trading business tomorrow. What portion of that trade do you think they could realistically access now. True, you are going to have a lot of worlds who are going to do backflips to get anyone to carry and deliver goods but even so, you're sending your merchant marine not into the League you know but into a somewhat different and much more dangerous animal.

How many warships did it used to take to convoy Manticorian Merchant vessels to the 3,000 or so League worlds whose trade they carried. As far as I know, I believe that figure was none. How many of those merchant vessels can safely reach and transport goods throughout the League now without some form of armed escort? I mean corrupt it may be but how are various units of the SLN and Frontier Fleet going to react to what have to be thousands of unarmed unprotected Manticorian freighters plying their trade deep inside the League. Why send your forces out to the edge of nowhere to raid Manticorian commerce when it's obliging transporting goods between Earth and Alpha Centauri.

If the GA has to provide armed escorts, how many can they provide to counter possible SLN intervention of unarmed merchant vessels which even a SLN SD could easily run down. What type of force protection do you have to offer them.

I'm betting that there is no practical way for the GA to actually provide adequate security to Manticorian merchants operating throughout the League. Yes, there will be a portion of the League where that will be possible but not in all of it, probably not in more than say 30% - 40% of it's normal carrying trade.

Yes, that's still a lot of trade but then my next observation is how easy it is to push a modern economy into a recession or depression.

The answer is not all that much. Have you ever calculated how much economic activity is actual lost if you reduce an economies marginal propensity to spend from around 90% to 80%? The answer his you reduce your economy by half. That's just a change of 10 cents out of every dollar and you lose not 5% or 10% of your economy, you lose half.

Its from a smaller shift that this that gave birth to the Great Depression.

Let's be generous, let's say that Manticore effectively loses half of it's League trade, half the ships carrying gainful cargo that there once were, half the transit fees, half the taxable revenue and now a need for only about half the businesses and their employees who once were employed in supporting that trade and then half of those who supported them. Pretty soon you follow the ripples out to your local supermarket which has to let people go because people don't have enough money to purchase what they used to.

Now, that's just the disruption caused by what's going on with the League. Now let's throw in the destruction of pretty much all of the Manticore system's orbital infrastructure which I understand contained almost all of its heavy industry not to mention many of the businesses which supplied those industries including your local orbital supermarket.

How many of those are out of work or just plain not economically producing because they are dead. How many ripples go out from that?

Either of these events by itself, Oyster Bay or the disruption of League trade should be enough under most circumstances to bring any economy to it's knees. That they are both happening simultaneously should not simply be an economic "hit" but something which creates and causes significant economic damage which can not be easily remedied.

I understand you reference to the Dutch, I actually find the analogy to Napoleon's Continental system worthwhile as well, in other words the large landbound group with poor modes of transport trying to keep it's members from trading with the power (England) which has the fast efficient methods of transport and control of the seas. On the other hand, the economic models for these cultures at that period of time really don't correspond well with modern more specialized economies that exist today or presumably will exist in the Honorverse.

You know, one of the reasons I never decided to take up writing is that the worlds we create are so complex that it's virtually impossible to know all the things you really need to know in order to write to the level of detail and intelligence you do. It's something that I deeply admire about your work and in seeing that you have the courage to take things on in detail that I know that are beyond me.

But I have to admit that I look at these events and I feel that the economic impact of them may be underappreciated by many.

BobfromSydney wrote:The only crypto I would consider safe in the Honorverse would be one time pads.

I think the use of word 'hopefully' is indicative of the problem with basing the security of the currency on the expectation that highly motivated people will not be able to duplicate physical objects they have effectively unlimited access to.

Fortunatly (for Banco De Madrid), Honorverse denizens aren't as paranoid as you are.

Torch of Freedom
Chapter Ten
wrote:Fortunately, it wasn't always possible to rely on normal electronic transfers, even when both parties to the transfers in question were as pure as the new fallen snow. Which was why physical fund transfers were still possible. As the female crewmember stepped forward, Hutchins punched in the combination to unlock the battle steel box, and its lid slid smoothly upward. Inside were several dozen credit chips, issued by the Banco de Madrid of Old Earth. Each of those chips was a wafer of molecular circuitry embedded inside a matrix of virtually indestructible plastic. That wafer contained a bank validation code, a numerical value, and a security key (whose security was probably better protected than the Solarian League Navy's central computer command codes), and any attempt to change the value programmed into it when it was originally issued would trigger the security code and turn it into a useless, fused lump. Those chips were recognized as legal tender anywhere in the explored galaxy, but there was no way for anyone to track where they'd gone, or—best of all from the slavers' perspective—whose hands they'd passed through, since the day they'd been issued by the Banco de Madrid.

Mind you, events have shown that SLN computer security isn't as tight as it could be, but Banco De Madrid credit chips are "good as gold" -- and that probably is true even if they're counterfeit, because I'd guess very few are actually redeemed in Madrid.

BobfromSydney wrote:I think there is also the problem of the 'cash' used by lower tech polities. Now it is clear not every Star Nation has the same level of technology in the Honorverse. What's to stop Sollie criminals from literally making a mint out in the verge?

Nothing except for the effect a flood of counterfeit neo-barb currency would have on an already poor exchange rate for Solarian Credits or Manticoran Dollars. I rather imagine the Trans-stellar(s) most affected by a currency crash would be willing to offer a substantial bounty for the head of the perpetrator -- that would tend to put a damper on Criminal Aspirations.

There probably is a fairly significant counterfeiting problem on verge and/or protectorate worlds, but it's bound to be small time and policed by those who have lots of money and don't want it devalued.

SWM wrote:No, I think you are wrong about microjumps, Lyonheart. I think there is inherent uncertainty which prevents microjumps from being very accurate. Trying to set up "routine" jumps isn't going to help that.

What he said. It's specifically called out in At All Costs about how tricky it is to micro jump between the MWJ and the Manticore system proper.

This ignores the fact that for something like 1/3 to 1/2 of the year it won't work because Manticore itself is inside the resonese zone

The loss of the orbital facilities and the personnel who worked there is a 10-20+ year hit. You need millions of people right now trained to do stuff. The training time is years (and the time to full proficiency is more years) and the feeder is limited, because this sort of thing is normally a lot of OTJ plus some from school, and the normal turnover is limited.

You also apparently lost much of the commercial design staff for the high tech equipment, so you have nobody qualified to design the replacement equipment even if you have production equipment and production staff to run it. Which you don't.

You can't expand schools because there are no additional qualified instructors, they are all dead. You can't do OTJ because you don't have any facilities, so there is no J. Not to mention that since there isn't anyone left who knows how to do this so it's the blind leading the blind.

You have no ability to find leads who have the 10 years of hands on experience until you have people who have worked for 10 years, which you can't do until you have built new facilities, etc.

You can't even build new production equipment on which to start training people until you build the equipment to build the equipment, each step of which takes years and requires someone to sell you the huge amount of fairly primitive industrial equipment you need to start the process. Then you need for them to train you in how to use it, since it won't be made the same companies that built the original equipment (being that they blowed up real good). This also means that none of your documentation is of much use.

It's a enormous disaster that will take at least a generation to recover from.