I just watched this video:
And it made me think that, fundamentally, our current economic problems are because we allowed the real economy to become like a poorly designed MMO economy. A lot of my work lately has been on MMO metagame design, concentrating on making games sustainably fun, integrating the mechanics into the business model, and keeping the game manageable from an operator’s perspective. A common problem, maybe the most common problem, in MMO mechanics design is that they are too complicated. Not just too complicated for players to understand and have fun with, but too complicated to model and test properly, such that unforeseen and unforeseeable pathological conditions are bound to manifest once thousands of people start using them and such that exploits are going to present themselves so rapidly from so many angles that developers will be unable to keep up patching for them. Much of what my consulting consists of is helping game developers and designers simplify their mechanics such that they have analytically tractable systems. The main ways to do that are to limit the number of moving parts, keep those parts closely related to the basic atomic game mechanics, ensure that the designs are modular / cellular, and keep the interactions among modules / cells limited to very clear and explicit ones at the top or bottom of any complex processes (i.e. process inputs/outputs, but no intermediate goods).
The financial markets in the real world used to be architected mainly by these principles: currencies firewalled off national/regional economies, financial services firms were tied to specific jurisdictions and operated under more or less local oversight, financial products were relatively simple and their proliferation and innovation in their design was controlled by stick-in-the-mud regulators, derivatives were tightly tied to their underlying commodities, etc., etc. Then finance globalized, regulators became decreasingly effective when faced with transnational firms and increasingly sophisticated products, product innovation accelerated at a breathtaking pace, structural firewalls fell away with the effective repeal of the Glass-Steagal Act and product deregulation like the Graham-Lugar act. The upshot of all of this is that financial markets “mechanics” that had been relatively simple became ever more complex and less transparent and harder to analyze, firewalls that kept processes cellular and would have prevented systemic failures (like state chartered banks, investment banking separated from commercial banking from insurance, reasonable capital/margin requirements that apply to all instruments, all instruments going on the balance sheet, capital/margin requirements applying to all market participants, etc., etc., etc.), and an increasing disconnection of the “real goods economy” to financial markets. They system become np-complete in its combinatorial complexity, or it became “Chaotic” (in the Complexity Theory sense of the word) on a global scale. Of course, financial markets have always been Chaotic, but in the past they have been firewalled off from each other, and in the instances that they bled across borders (e.g. LTCM), they at couldn’t back up into the real economy too badly because derivatives were still fundamentally tied to their underlyings and there were still capital requirements against them.
This is terrible metagame design.
When you make a game like this there will inevitably be exploits discovered by the players. Witness: credit default swaps. When the GMs are asleep at the switch, or the system is so complex that the effects of the exploit are not apparent until it gets to huge scale, or the GMs are in league with goldfarmers working the exploit, the exploit is absolutely bound to ruin the game, and nobody has fun anymore.
Comments