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Some comments on the economics of the series

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Re: Some comments on the economics of the series
Post by runsforcelery   » Fri Jun 06, 2014 11:43 pm

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Alizon wrote:
SWM wrote:Where do you get the idea that the Junction has been virtually closed? Only one terminus of the Junction leads into Solarian space; all the rest of the termini are open for business. And business is picking up on many of those routes. The Merchant Marine has only been recalled from Solarian space. Manticoran merchants are still plying the spaceways to the Talbott cluster, the Anderman Empire, the Phoenix Cluster, Matapan, Basilisk and the Silesian quadrant, and now into Trevor's Star and Haven space.

Also, by now Manticore has some of its manufacturing capacity rebuilt. If White Haven was correct about his predictions, some of the smaller shipyards have to be in service building the first new ships by the end of Cauldron of Ghosts. If shipyards have been built already, I think we can assume that some factories have also been rebuilt by now.

Manticore is doing fine. They've lost trade within the Solarian League, but they still have plenty of trade with other areas, and manufacturing is coming back online.


The only terminis that really matters in the big picture IS the terminis leading to Solarian space.

The Solarian League IS the market in known space. Take all of Manticore, all of Haven, all of Anderman Space, all of Silesia, all of the Talbot Quadrant, Allof it and put all together it is a miniscule fraction of the economy and markets of the 1,200+ worlds, many of them incredibly wealthy, that comprise the Solarian League.

Regardless of how you slice it, the VAST majority of cargos passing through the Junction are either carrying cargos from League worlds or too League worlds and that trade and everything that goes with it has just ended.

The Manticorian merchant fleet isn't primarily engaged is hauling cargos from Manticore or the rim to Solarian space, the Vast majority if it is hauling cargos from one Solarian world to another Solarian world. That's what happens when you have over 1,000 a large number of the MAJOR worlds that are trading with each other. That produces tax revenues for Manticorian shippers which produces taxes for the crown. Of course you've recalled your entire merchant fleet so that's virtually all dried up as well.

So who do you have left to trade with. Haven has around 100 worlds but only a few of those would actually be considered major worlds in comparison to League standards and they are all trying to pull themselves out of a century of the most hideous economic abuse possible. Then you have the Andermani who have a few decent worlds and then a few score of Verge and Rim worlds with what, by Solarian Standards, would hardly register on the trading scale.

Yes, Manticore can trade with them provided it can produce anything to trade but that will produce a tiny fraction of the revenue that has been lost, provided those shipping firms actually manage to turn a profit of some kind with the economic upheaval going on and their primary markets closed off.

Basically, it's your conjecture that since Manticore can still trade with maybe 5% - 10% of it's market and trading partners that losing the other 90% isn't such a big deal. Well do the math, it is a VERY big deal.

Simply put, if the Alignment has plannedto utterly destroy the entire Manticorian economy, between Oyster Bay and the actions already taken by the crown, they couldn't have come up with a much better plan to do it.

You're right, Manticore is going to be fine because if it isn't then unless you enjoy reading about economic devastation, it's not going to make a very interesting book. But I am eager to see what kind of handwavium or divine writers intervention it's going to take to do so.


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.


"Oh, bother!" said Pooh, as Piglet came back from the dead.
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Re: Some comments on the economics of the series
Post by Jonathan_S   » Sat Jun 07, 2014 1:01 am

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Brigade XO wrote:So many threads.

If two withdrawals are made from an account without enough to cover both, the one that gets there 1st is the one that gets paid. There are exceptions. One occurs when a bank takes the specifice step -when multiple checks/withdrawals hit the same day but there is not enough to pay all of them, they pay the greatest number if individual items and return (and charge for the overdraft that would have been caused) the rest. This presumes that they do the more or less standard batch clearing of physical items at end-of-day.

With the advent of real time electronic interchange, it is POSSIBLE for a bank on one side of the planet to get paid against a check it processes AT THE TELLER with the proper electronic equipment (reads the MICR encoding and the amount the teller puts in). The funds are at the same time "withdrawn" from the person's account with the bank the check is drawn on.

If you end up with real-time banking across inter-planitary distances (even with FTL) then the transaction that gets there first and "hits the account" is the one that is paid. Sorting out who was doing what -when then becomes a subject for discussion between the two people trying to chash the checks (well, the one who doesn't get their check cashes/withdrawal made) with the other party.
Sure, but even FTL comms aren't real-time between the Junction and Manticore, and that's in the same system. (Admittedly they're only about 7 minutes comm lag; plus maybe a bit more for relaying overhead)

Even with FTL comm, if two people happen to cash checks 7 light hours away within 7 minutes of each other, the 2nd branch doesn't / can't yet that money has been withdrawn at the 1st branch.


It's not insurmountable, and RFC was nice enough to list out for us a number of those alternatives to addressing this; in those rare cases it comes up.

But I found it an interesting digression into some of the unusual (and uncommon) issues that a system wide banking network might need to think about (even if it works pretty seamlessly to their customers). It's often these weird corner cases, that almost never come up, that are fun to think about.
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Re: Some comments on the economics of the series
Post by Flakey   » Sat Jun 07, 2014 4:34 pm

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Had to sign up about this. People are taking about cheques, and clearing houses, but why would they have them?

I live in the UK, and I have not had a check book in 15 years, no one I know has a check book, unless they happen to be self employed, and even then not all of them do. It is over 10 years since I had to deposit a check. About the only stores that now like to handle cheques are mostly those that cater to trades.
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Re: Some comments on the economics of the series
Post by lyonheart   » Sat Jun 07, 2014 10:41 pm

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Hi Jonathan_S,

While personally think the Manticore financial industry would find the advantages of FTL transactions worth renting RMN FTL.comms, even light speed could be faster than you think.

While all traffic between the junction and Manticore is done by Manticore and in Manticore ships etc, before the double man security crisis of AAC caused by the nano-tech attempted assassination of HH [before she was HA-H] by Tim Meares, it seemed rather simple to have db's outside the RZ and H-L micro-jump from the junction to Manticore a then transmit the double encoded financial data to Manticore and receive new data including the confirmation of earlier transmitted downloads possibly from a buoy waiting just inside the RZ/H-L, which the db relays back at the WHJ when it returns to its spot near the junction.

Given the routine nature of the micro-jumps [at least hourly] the navigation is almost boring as shuttle flights [I remember shuttle flights leaving Washington International -before it was Reagan- every 15 minutes or as soon as they were full for NYC back in the '60's], so precision and response time is dramatically improved.

Bearing in mind there are at least 4 'sides' to the RZ/H-L, a db could leave the WHJ every 15 minutes with the latest financial and economic data microjump [or microhop?] to Manticore A, transmit then receive and return in an hour or less, in succession so data on Manticore would be only ~15 minutes behind the WHJ.

If using FTL.comms it could be 5 minutes or less. ;)

Then there's the possibility of sending financial data through the wormhole bridge to the financial center on the other side like Beowulf, so db's wouldn't be necessary but secured communications would so a hyper capable 'commo barge' [no need for speed away from a wormhole] would receive the latest data then pass through to the other side download then receive and return depending on the schedule, again with a number taking turns to reduce the interval to 15 minutes or whatever is considered optimum.

Financial and economic information would seem to be among the most obvious or precious of the data being sent through the wormholes.

Then db's could then deliver daily or weekly summaries to other systems and termini where the process is repeated again etc.

Such systems could have been in place for a century or three at all the wormhole bridges, enabling financial and economic data to reach more of the colonized galaxy faster than ever before.

OTOH, such a network would tend to emphasize the central importance of Manticore given all the dispatches with a Manticore header etc on them; which the rest of the other SL bureaucrats would ignore for all those centuries, until the financial meltdown RFC has prophesied finally happens rather soon.

Will that be in the next book? 8-)

L


Jonathan_S wrote:
Brigade XO wrote:So many threads.

If two withdrawals are made from an account without enough to cover both, the one that gets there 1st is the one that gets paid. There are exceptions. One occurs when a bank takes the specifice step -when multiple checks/withdrawals hit the same day but there is not enough to pay all of them, they pay the greatest number if individual items and return (and charge for the overdraft that would have been caused) the rest. This presumes that they do the more or less standard batch clearing of physical items at end-of-day.

With the advent of real time electronic interchange, it is POSSIBLE for a bank on one side of the planet to get paid against a check it processes AT THE TELLER with the proper electronic equipment (reads the MICR encoding and the amount the teller puts in). The funds are at the same time "withdrawn" from the person's account with the bank the check is drawn on.

If you end up with real-time banking across inter-planitary distances (even with FTL) then the transaction that gets there first and "hits the account" is the one that is paid. Sorting out who was doing what -when then becomes a subject for discussion between the two people trying to chash the checks (well, the one who doesn't get their check cashes/withdrawal made) with the other party.
Sure, but even FTL comms aren't real-time between the Junction and Manticore, and that's in the same system. (Admittedly they're only about 7 minutes comm lag; plus maybe a bit more for relaying overhead)

Even with FTL comm, if two people happen to cash checks 7 light hours away within 7 minutes of each other, the 2nd branch doesn't / can't yet that money has been withdrawn at the 1st branch.


It's not insurmountable, and RFC was nice enough to list out for us a number of those alternatives to addressing this; in those rare cases it comes up.

But I found it an interesting digression into some of the unusual (and uncommon) issues that a system wide banking network might need to think about (even if it works pretty seamlessly to their customers). It's often these weird corner cases, that almost never come up, that are fun to think about.
Last edited by lyonheart on Sun Jun 08, 2014 6:34 pm, edited 1 time in total.
Any snippet or post from RFC is good if not great!
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Re: Some comments on the economics of the series
Post by BobfromSydney   » Sun Jun 08, 2014 1:06 am

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Flakey wrote:Had to sign up about this. People are taking about cheques, and clearing houses, but why would they have them?

I live in the UK, and I have not had a check book in 15 years, no one I know has a check book, unless they happen to be self employed, and even then not all of them do. It is over 10 years since I had to deposit a check. About the only stores that now like to handle cheques are mostly those that cater to trades.


In the future modern day 'cash' would not be able to exist. Modern day notes and coins (or even futuristic notes and coins) would be very easy to copy using a house-hold or office 3d printer.

Therefore money would only be able to exist electronically, unless you are talking about specie (precious metals/elements). The only 'money' is money inside a bank account.

Now on current day planet earth electronic communications have lag times measured in microseconds. Financial entities can conduct transactions in the blink of an electronic eye. These transactions can be confirmed by both parties immediately after they are processed.

Now even in the future, businesses and individuals will have a stubborn insistence on being paid in 'real money'. :roll:

Since the 'real money' is stored electronically in a bank, in order for the money to be transferred from the payer to the payee, the payer has to communicate with the bank to let them know to transfer the money to the payee's account. At inter-planetary distances or interstellar distances this may take minutes, hours or even months.

The payee also has an interest in confirming that they have been paid (see above). Therefore before letting the customer walk out the door (and possibly out of the star system) with their new iPhone MCCXXXIV they will want to communicate with the bank as well to ensure the payment has actually been credited to their account.

Someone who flies into a star system waving a datachip around saying 'I've got a trillion hyperbucks in my pocket' is not going to get very far - no one would be willing to sell him or her as much as a cup of coffee unless those hyperbucks were transferrable/convertible to their bank account. Now we are back to square one with the payer needing to communicate with a bank and the payee needing to check that the transfer has been made.


>>>> A quick digression about the trillion hyperbucks on the datachip:
Now those with devious minds might be thinking: with a little help from my friends copy and paste, I could easily turn that trillion hyperbucks into TWO trillion hyperbucks! In fact, if I was willing to put a little wear on my Ctrl-C and V keys I could have as many hyperbucks as I could spend!
Obviously the Government, Banks, Business community and Consumers would not be in favour of this practice. The currency would quickly become devalued into uselessness and people would be reduced to bartering for goods using gold coins and sexual favours.
Therefore in order to maintain the value of the currency banks could only accept 'real' money and must only allow people to spend it once.
>>>>End digression.


So what is happening at the bank(s) during this transaction?

1. The payer's bank needs to confirm the authenticity of the trillion hyperbucks on the datachip.

2. The payer's bank needs to confirm that the trillion hyperbucks has not already been spent before.

3. The payer's bank needs to deduct the value of the cup of coffee from the payer's account (what!? 5 hyperbucks for a cup of coffee? What a rip-off!)

4. The payer's bank needs to transfer funds to the payee's bank (assuming they use different banks).


Step 1 is done using encryption. Encrypted messages can only be decrypted using the matching key. Who decides the what the key is? The central clearinghouse.

Step 2 can be managed two ways:
One way is to communicate with every other branch of the payer's bank to ensure the money has not been spent before. This may mean the payer needs to wait for minutes, hours or months for their cup of coffee.
The other way is for the funds to be 'locked' into a 'cheque' that can only be cashed at one particular branch. This means the branch only needs to check its own records to see if the money has been 'spent' before.

Step 3 has some interesting ramifications. Whilst the bank could re-write the datachip with 999billion, 999million, 999thousand and 9hundred and ninety five hyperbucks after making the transaction, this is inefficient. Then the next time the payer wishes to make a transaction, the bank has to go through step 1 and 2 AGAIN. It makes more sense that when the payer arrives in system, they deposit the entire cheque into the bank and then withdraws the balance (into another 'cheque') when they leave. Remember that whatever remains on the datachip cannot be spent in another star system (or 'branch') anyway.

Step 4 is relatively simple, but relies on trust and reliability of both banks, which needs to be closely regulated by a trusted authority.


Why involve a central clearinghouse rather than use a 'peer-to-peer' (branch-to-branch) system? I have a feeling that when dealing with an entity like a trading cartel which may be borrowing money from many branches simultaneously there needs to be some sort of control to ensure that the account does not go 'bad'. Also inter-bank settlements etc. would be an issue.

Finally the clearinghouse is where the regulatory supervision regarding the management of the money supply would take place. Since the value of a Fiat Currency depends on the circulation and money supply, for other parties to accept the currency as payment, they would need to have some degree of assurance that the currency would still retain equivalent value in the future.
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Re: Some comments on the economics of the series
Post by BobfromSydney   » Sun Jun 08, 2014 1:21 am

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What hasn't been mentioned is that for the vast majority of people who would only ever go off-planet for a holiday, their banking experience would be very similar to our present day banking experience. Spending, depositing and withdrawing funds would occur 'instantaneously' and quite smoothly.
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Re: Some comments on the economics of the series
Post by Alistair   » Sun Jun 08, 2014 2:12 am

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Wow RFC Thats a great info dump on trade patterns during the war with the SL

I can see this Trade to SL planets not just undermining the SL but bringing many planets into the fold of the SEM
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Re: Some comments on the economics of the series
Post by Flakey   » Sun Jun 08, 2014 6:56 am

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BobfromSydney wrote:>>>> A quick digression about the trillion hyperbucks on the datachip:
Now those with devious minds might be thinking: with a little help from my friends copy and paste, I could easily turn that trillion hyperbucks into TWO trillion hyperbucks! In fact, if I was willing to put a little wear on my Ctrl-C and V keys I could have as many hyperbucks as I could spend!



Though you already seen in the books both letters of credit ((Bearer bonds)) and credit chips, issued by various interstellar banks. Even slavers use the credit chips, using a verifier to check they are real. If they consider them a secure method of payment I do not think it as easy as using cntl c to copy them.

As some one else mentioned above. 99.99 % of all transactions are going to be either instantaneous, are a hour or 2 delay at most. With the case of going far enough off planet the above two mentioned uses are already in place to be used, I see no need for cheques in the Harrington universe.
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Re: Some comments on the economics of the series
Post by SWM   » Sun Jun 08, 2014 1:12 pm

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Flakey wrote:
BobfromSydney wrote:>>>> A quick digression about the trillion hyperbucks on the datachip:
Now those with devious minds might be thinking: with a little help from my friends copy and paste, I could easily turn that trillion hyperbucks into TWO trillion hyperbucks! In fact, if I was willing to put a little wear on my Ctrl-C and V keys I could have as many hyperbucks as I could spend!



Though you already seen in the books both letters of credit ((Bearer bonds)) and credit chips, issued by various interstellar banks. Even slavers use the credit chips, using a verifier to check they are real. If they consider them a secure method of payment I do not think it as easy as using cntl c to copy them.

As some one else mentioned above. 99.99 % of all transactions are going to be either instantaneous, are a hour or 2 delay at most. With the case of going far enough off planet the above two mentioned uses are already in place to be used, I see no need for cheques in the Harrington universe.

When people were talking about cheques and clearinghouses, they meant credit chips (or other secure verifiable credit documentation) and the specialized bank services that provide them and verify them.
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Re: Some comments on the economics of the series
Post by niethil   » Sun Jun 08, 2014 2:52 pm

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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 ...
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