Sunday, February 5, 2017

An Economic Thought Experiment (in a fantasy world)



Go to the grocery store - either in reality or in your imagination.  Go to the meat counter.  Steaks - $10, beef roast or ribs $5, ground beef $4.  Pork roast or ribs $2, chicken $1.  Why?  Because it is more expensive to raise beef cattle than it is to raise chickens or hogs, and typically beef is a more preferred (demanded) product.  So costs and taste.

Now go to the deli counter.  Roast beef $9, turkey, $7, chicken $7, ham $6.  Why?  If raw chicken is $1 and raw pork is $2, then why is ham $6 and roast turkey/chicken $7?  And if a beef roast is $5, while chicken is $1, then why is deli sliced chicken $7 to roast beef’s $9?  You could argue that there must be more labor involved in getting the chicken ready for lunch meat or perhaps more risk, but I don’t buy that (no pun intended).

My theory on economics is this:  perception equals reality.  What do I mean?  Everybody knows that beef is more expensive than chicken, and you see that at the meat counter.  But once it becomes “lunch meat” or cold cuts or whatever you want to call it, now it becomes far more homogeneous, more “alike” or basically the same.  When shopping for sandwich meats, people don’t think along the lines of beef vs. turkey, they perceive these products to be roughly equal in value.  I don’t, but I’m really cheap!

Why do you even care?  Because if you read Grain Into Gold, you will see that beef runs about 5cc (copper coins) a pound and so does wheat flour.  With pork at 2.5cc p/ pound, it is cheaper to feed your family on roast pork than on bread and water.  Really?  Yes.  Why?

I never intended to make beef and flour equal.  I studied the nonsense out of medieval farming techniques and tried to do some realistic assumptions.  Now, I had to take into account game worlds as I know them.  In most fantasy game worlds, the peasants may be poor, but they are not starving to death on a regular basis.  Despite many of our views of Earth’s commoners at that rough time, I cannot believe that they were starving to death either.  Otherwise there wouldn’t have been so many people to die from plagues.  What I did was assume that different products of an acre of land would be relatively equal in value.  So if your steer  ate two acres worth of hay, then the beef produced should be roughly equal to two acres of wheat.  And this is how it worked out.

Can I justify this?  Absolutely.  Fish is cheaper than beef.  Why?  Because it can be “hunted” in large quantities.  But if beef is too much more expensive than fish (it is already two and a half times as expensive), then people will stop eating beef and just eat fish.  OK, maybe not the nobles, but other folks will.  When food sources can be switched in order to lower an overall cost, guess what happens?  People switch food sources, until the two costs start to even out a bit.  This is my point about deli meats.  They tended to even out, because they can be exchanged for one another.  As long as a cheaper alternative is available, the more expense product will become cheaper.

So how do my peasants live if both meat and bread are expensive?  I have an easy answer to that:  starches!  Same book - Grain Into Gold - same idea - an acre’s production should be relatively equal in value all other things considered.  Potatoes, turnips, carrots, squash:  they are all at or below 1cc p/ pound.  What do I think my commoners eat for dinner?  Well, we’ll be getting enormously deep into that in an upcoming edition of Small Bites, but until then, I think they eat either pork sausage or chicken along with some squashes and tubers.  Not only do these starchy vegetables last reasonably long in a root cellar, but they fill you up and make you feel full.  They give you energy to work the next day.  Don’t believe me?  Look at the cafeteria at a college dorm (pretty easy for a lot of you, I think).  What do they serve?  Starches?  Why?  Because they are cheap!  Not everything has changed in the last 1,000 years.

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