I always get comments saying "the market is saturated on my server, it's impossible to make money".The more economically educated even write something like: "the profit comes from arbitrage between the market price and the price set by the uninformed seller. Since the number of uninformed sellers is fixed, and so is their ignorance, the money to be gained is fixed too. This amount is to be distributed between the businessmen. The more in the market, the less profit".
The conclusion is true. However the assumption of the statement is not. Most of my money does not come from arbitrage, exactly because a slice from the cake of stupidity is not enough for me.
Obviously I have no problem with arbitrage, on the contrary, I wrote that I believe it's a good service for the society. However it is overvalued. The reason for this is in the human psyche (another ape-subroutine): whenever I win money by arbitrage, I am victorious over a fellow human, I was smart and he was dumb. So I psychologically overvalue these moment, remember them, talk about them. However if one has a book, one notices how small amount these cheerful victories contribute to his money.
Most of my money comes from the glyph industry, and the bag business. While their success includes proper pricing, most of the work done is production. I buy materials, craft inks and cloths, craft items. Of course crafting 4 bags of glyphs is not so glorious as selling a single metal bar for 1200G, so I don't remember it. But here is where the money comes.
Other main money sources are investments and transportation between vendors and the common AH. They are also less shiny than arbitrage, but bring in more.
What matters most: there is practically unlimited possibilities in production, investments and transportation. There is always someone who wants to buy something. As long as you produce that item, have it in your bag from long ago or know the way to the vendor, you can make money. Until everyone produce, stock and gather all items for himself, there is place for you in the market. Not surely a shining throne made of gold. But a place of proper income, far from the annoyance of elemental grinding.
The conclusion is true. However the assumption of the statement is not. Most of my money does not come from arbitrage, exactly because a slice from the cake of stupidity is not enough for me.
Obviously I have no problem with arbitrage, on the contrary, I wrote that I believe it's a good service for the society. However it is overvalued. The reason for this is in the human psyche (another ape-subroutine): whenever I win money by arbitrage, I am victorious over a fellow human, I was smart and he was dumb. So I psychologically overvalue these moment, remember them, talk about them. However if one has a book, one notices how small amount these cheerful victories contribute to his money.
Most of my money comes from the glyph industry, and the bag business. While their success includes proper pricing, most of the work done is production. I buy materials, craft inks and cloths, craft items. Of course crafting 4 bags of glyphs is not so glorious as selling a single metal bar for 1200G, so I don't remember it. But here is where the money comes.
Other main money sources are investments and transportation between vendors and the common AH. They are also less shiny than arbitrage, but bring in more.
What matters most: there is practically unlimited possibilities in production, investments and transportation. There is always someone who wants to buy something. As long as you produce that item, have it in your bag from long ago or know the way to the vendor, you can make money. Until everyone produce, stock and gather all items for himself, there is place for you in the market. Not surely a shining throne made of gold. But a place of proper income, far from the annoyance of elemental grinding.
35 comments:
I think this is something a lot of people overlook. I've been following some tips I found on here and it has definitely shown profits. I've made ridiculous amounts of gold in the last few days compared to what I was making before.
One thing I noticed though, is that you can't wait for that 'silver bullet' to appear on the AH. That one item that will give you a huge amount of gold via a resale. Those things I've found happen, but you still need a steady, if 'non glamorous' income. Stuff like buying vendor items and listing them, or crafting stuff.
By the way, Gevlon, any thoughts on what the Dual Spec feature in the next patch is going to do to the economy? I'm thinking a big increase in glyphs... and possibly by a slightly smaller margin, gems.
Thoughts?
I believe there is always a way to make money if you are willing to really try. If you googled "blacksmithing recipes", "tailoring recipes", "leatherworking recipes", etc. and looked through all of them to see what would be made, I am sure on any server you would be able to find a few things that nobody was selling and people would want. Sometimes it is a lower level item that people would still want but nobody makes them any more. One general theme in finding what people would want to buy is an item that could help people level faster. Everybody wants to level. That is why bags always sell, it saves them time running to vendors. I found long after the BC expansion launched that there was a huge market for stormshroud armor since there are a lot of rogues willing to spend 100g or so for a set to make it faster to level up from 50 to 58. They probably make the 100g back by getting to Outland a little faster and getting those fat outland quest rewards sooner. So I learned to farm mats in bulk, no it's not really fun to spend the day in Eastern Plaguelands and Silithus, but found every day more stormshroud armor sold. It seems the world never ever runs out of rogues. I am positive there are plenty of other things on each server that have been overlooked that people would buy every single day if people would just make them. I cannot imagine any server where there is not a large demand for frostweave bags. Maybe you will have to get the cloth yourself but what level 80 cannot easily farm huge amounts of this if the AH price is too high for decent profit? Most people are just too lazy to take the time and look through tradeskill recipes and find out what that special item is, but if you find what it is, not only do you set yourself up for sustainable profits, but you do the people from your faction a service. I mean, how many times have we all wanted something on the AH but day after day find out nobody is making and selling it? Personally my long-term plan is to have 2 tailors, one shadowcloth and 1 mooncloth, and start up a glacial bag business. How can this go wrong when people pay almost 1k each for them? Demand for this item will exist until the next expansion comes and a new easier recipe for 22 slot bags comes along.
Erm, turning herbs or inks into glyphs counts as arbitrage, not production, in my mind. Which takes more time? Buying inks, buying parchment, finding which glyphs are worth making, listing the glyphs you made on the AH? That's the arbitrage part. Or, moving your finger to click "create 5" of a particular glyph. That's the production part. Same thing with eternals and crystallized fire, that's arbitrage.
The fact that everything you do is arbitrage is necessary, given that you search for opportunities to make 2k gold an hour. Production would never give you 2k gold an hour, the game isn't set up that way. Only when other people are too lazy or stupid to check all the different phases of the market, and an artificial opportunity for arbitrage is created, can you make 2k gold an hour. Of course this excepts the rare opportunity where you have a monopoly on producing an item, but I don't think anyone has a monopoly on anything in the current economy, especially if we are postulating a saturated server. Production skills with a cooldown, that's not arbitrage, but is anyone still making huge money off that?
Even the glyph business, which is a limited oligopoly situation at the moment, isn't a good example for you. The first reason, is that the more saturated the market, the worse the oligopoly will do at making profits as the prices go lower. I know you are making huge profits on the glyph business, I make a bunch too and I don't even bother to list every day-- that's why you are making money, your competitors don't bother to list every day also, leaving more business for you. The second reason, is that the majority of your readers without inscription could assemble 400 ink of the sea and 400 parchment, get a guildy to make them 400 glyphs for a nominal fee, then make thousands of gold by listing them on the AH. This is because the profit is in the arbitrage, not in the production.
@Plastic Rat
It's looking like dual spec will also give you dual glyph pages. So I think glyphs will start really picking up in volume when the patch date is announced and probably for a couple weeks after. Beyond that it might drop a bit since people won't have to re-glyph every time they re-spec. On the other hand, I've heard dual spec will cost a one-time fee of 1000g, so players who don't respec a lot might be reluctant to do it. Time will tell.
Two other things that'll affect inscribers:
1) Northrend herb nodes will loot for more herbs on average. Cheaper herbs. More margin on glyphs.
2) 50 new glyph recipes, learned from a world drop item. Gives you the chance to own a market for a while if you grab a few of these items early on, provided you get recipes that people want.
I would like you to imagine a WoW where production made more money than arbitrage. Where a blacksmith puts on trade channel that he needs 300 saronite ore and 50 eternals, a merchant comes and sells him the ore and eternals within 15 seconds, making a paltry few gold. The blacksmith hits create gold, making 10 of whatever item he's making. He then spams trade, selling 10 xxxxx, and another merchant comes up and quickly buys them off him. The blacksmith makes 900 gold for his "work", the second merchant will sell each item for a 10g premium, totaling 100g profit. Sound crazy? Yea, it's a crazy picture.
As long as arbitrage requires a modicum of effort and research, which it currently does... I mean it's beyond a kindergartner probably, but a bright 4th grader could probably do great at it-- and production requires spamming trade, hitting one button, spamming trade again(which a 4th grader could program a bot to do), the profits will lie in arbitrage, not in production.
Gevlon makes a good point here. At the end of the day, there is only so much money you can make from people's mistakes. Moreover, there are so many people camping the AH with their auctioneers running, arbitrage profit quickly approaches zero.
However, stuff that is produced isn't forcing your customers to make mistakes, so it isn't arbitrage, no matter how high your margins. If a customer can't cut a gem, he can't cut it, period. So, he pays a premium to have it cut for him, which is the profit margin of the JC. The customer will usually pay whatever he has to to get the gem, since it's cheaper than levelling up a JC.
But take a really simple example: Prairie Dog Whistles. I can put an alt in TB and run Prairie Dog Whistles back and forth between the seller and the AH easily.
However, for someone in Org, buying my whistle isn't stupid. They're paying for the convenience of not having to go to TB to buy it. Sure, they pay 10g or so, but it's not stupid. 10g is about right for the hassle of flying to another city.
Since there's no stupidity here, there is not arbitrage. The customer is being perfectly reasonable. A Prairie Dog Whistle is really worth 50s in TB and 10g in Org.
The "stupidity", if there is any, might be that there aren't more people selling prairie dogs. Everyone who isn't selling a prairie dog might be "stupid".
But this isn't true either, since, as Gevlon points out, there are far more business opportunities out there than there are entrepreneurs. Sure, anyone can do this with prairie dogs, but they're busy making bags or cutting gems or some other profitable business opportunity.
@one eyed jack
I haven't had a JC at 80 yet, but from my guildies' behavior, more of the profit is in prospecting saronite ore, than in actually cutting the gem. When I look at the AH prices, the cut gems are about the same price as the uncut gems. Runed Scarlet Ruby is 110g on my server, Scarlet Ruby is .. 110g. Why cut the gem? People buy the cut gems, because they buy them to use them. So if you don't know the cut, you end up with slightly lower profit margins, but mainly your time to sell is higher, and you're more likely to flood the market temporarily if you're in a hurry. But, the main profit is in arbitraging between Saronite Ore, and the raw gems gained from prospecting. Not a perfect analogy, but it's like cutting the gems is being a grocery store and advertising a loss leader, and prospecting is selling the shelf space based on customers per day. Perhaps there are aspects I don't know about due to lack of experience, but I'd need details to convince me. I mean obviously some cuts were monopolized for a few days/weeks right after WOTLK, but every cut must be swarmed with producers by this point, right?
@Kurt: the glyph creation is production because during the button pressing the ink and the parchment are irreversibly transformed into a glyph. By doing so I take the risk that the glyph will not sell and I cannot sell the ink back if I changed my mind. On the other hand in arbitrage I always have the chance to cut my losses by relisting the item for the same price I bought it (unless that price was already too high). The irreversible change of the item defines the action "not arbitrage".
The eternal-crystallized is arbitrage since the item can be regained, the eternal and the crystallized are forms of the same item.
@Gevlon
I anticipated your argument in advance, with my example of a noninscriptionist reader who paid a someone 600g/hour to spend 10 minutes making 400 glyphs, totaling 100g, than sold them for a profit of 4000g on the AH. So, I agree with you that production occurs, but I disagree with you that more than 2% of the profit is a result of the production, the rest is from arbitrage. You could call it distribution in a sense, but to me, standing in the AH buying (from one person) and than listing items is not distribution, it's just arbitrage.
To anticipate another objection, true arbitrage means you have no exposure to risk, since the value of inks and glyphs can drop, there is some measureable risk there.
However, I list maybe 200 glyphs at a time, ink on my server is currently 3.5g each, so my total exposure to risk is 800g at any one time. I'm making like 1k a day, in just a few minutes of my time. So, technically there's a risk, but since I'm making like .. 42000% annual return on my money, and the ink prices are remarkably stable, I'm going to say it's pretty darn close to arbitrage.
See, the financial definition of arbitrage is simultaneous transactions in different markets to realize a profit with no risk. But the historical definition is similar to this example I pulled from Wikipedia: "Arbitrage moves different currencies toward purchasing power parity. As an example, assume that a car purchased in the United States is cheaper than the same car in Canada. Canadians would buy their cars across the border to exploit the arbitrage condition. At the same time, Americans would buy US cars, transport them across the border, and sell them in Canada."
This kind of procedure, which is where the term historically originated, is what I'm referring to. Impatient people = canada, skillers/grinders = the US, and we = the transporters.
This is the definition of good business, mutually beneficial operations are inherently more sustainable and long term profitable than predatory zero sum transactions. Good on you Gevlon for recognizing this and shedding light on it.
I started out as a firm believer of arbitrage. What is easier gold than simply running back and forth between the AH and the mailbox?
After reading your blog I have long realized that you made most of your gold through production. After all, the professions are there for a reason.
@Kurt: But they're not impatient, since they can't make the product themselves. That's why JC production isn't arbitrage; it's just production.
As for the jewels being swarmed, it depends on the server. For the red gems, it tends to be pretty close, because people use their guild JC's to cut those gems. For the other colours, people are generally willing to pay 10g for a cut rather than bother someone in their guild.
We should really stop using terms like "mistakes", "lazy" and "impatient", since we're becoming almost as moralistic as the socials. For one thing, this isn't even correct. There's nothing lazy about paying 10g for a Prairie Dog Whistle in Org. It's efficient, since you're saving yourself a trip.
Another thing is that people have the assumption that WoW is crawling with entrepreneurs exploiting every niche and squeezing every margin. This just isn't true. Even something like JC cutting makes money because there is simply more of a market than there are entrepreneurs ready to profit off of it.
Entrepreneurship is rare, both in WoW and in life. There are more profit opporunities available than there are entrepreneurs ready to take advantage of them.
Unless you're dealing with a bot, you can make money doing just about anything useful in the game.
The trick is to find something where you profit geometrically.
"@Kurt: But they're not impatient, since they can't make the product themselves. That's why JC production isn't arbitrage; it's just production."
What percentage of raiders don't have a good enough friend to prospect some saronite stacks for free? What percentage of raiders don't have someone in their guild that can make pretty much every cut? I bring up raiders because I believe most blue gems are bought by raiders, or I suppose serious pvpers. In my guild, there are at least 5 people who like to mine for fun, and to make a better profit have all of their saronite prospected for a nominal fee by a JC in the guild. However, people in my guild also constantly buy gems off of the AH. The reason is impatience, I do it myself on servers where I don't have a JC.
"That's why JC production isn't arbitrage; it's just production."
This sentence misrepresents my position. I break up these trade skills into a production component, and an arbitrage component, and you are grossly oversimplifying and misrepresenting my argument. I have a feeling that the production component of JC is more of the total profit relative to arbitrage profit than it is for glyphs, both for reasons of higher unit cost and because the entry cost into the market is higher for JC. (leveling cost is higher, research cost is much higher)
IMHO, The fact that arbitrage LOOKS like its giving more money its because all the consumables, rare gems, enchants and crafted items arent that important in the current raid enviroments, aka people are buying the cheapest gems and enchants for their cheap stuff.
About glyphs, any smart bussisnessman knows that once 3.1 arrives the glyph buy its going to go up and then go down because people are going to respec less,
because of dual specs, so they are liquidating stock and
selling for less.
Arbitrage looks cool and all, but its a source of profit unstable, very dependant of the stupidity of others for being viable, i prefer a steady souce of income thank you.
Getting to deciding conclusions based over the CURRENT state of the market its /fail. Because you cant depend of only a source of profit, you need to have several ready to serve.
I'm just pointing out the definition of "arbitrage". Arbitrage is when you immediately resell the exact same goods at a profit. If you alter the goods, it ceases to be arbitrage. That's just what the word means.
It's true that people often resell crafted goods at far higher than the material + labour costs, but to say this is arbitrage with respect to material rather than overcharging with respect to labour is arbitrary.
If that pun is intentional, then *groan*
Anyhoo, it's not arbitrary, I provided numerous anecdotal examples and arguments as to why I interpret it my way. Your counterargument of "your way is arbitrary" is insufficient, since you are merely arbitrarily stating that it is arbitrary. Be careful not to mistake the forest for the woods, as we say in Upper Siberia.
p.s. I do not agree that "overcharging with respect to labor" is a phrase that makes any sense at all, except in reference to some predetermined standard or rule, which is not the case here. That's like saying that I was overdpsing on Patchwerk last night, just because I was doing it up large.
The point is this:
When I buy an uncut gem for 10g and sell the cut gem for 50g, am I:
a) Charging 40g "arbitrage"?
or
b) Charging a 40g for my service?
There's no way to distinguish between the two, which is why it is arbitrary.
The "overcharging" was an attempt to summarize your claim that 2kg/hour is so inflated, it must represent arbitrage rather than a service fee.
If it is a misrepresentation, please explain how to distinguish between arbitrage and a service fee. I think it will be impossible without either being arbitrary or referencing some sort of natural price, which is why I recommend abandoning the distinction.
Just to clarify: I don't think there is such a thing as a natural price or overcharging for labour.
I think a dividing up the 40g between arbitrage and service would require one of these concepts, which is why I deny that such a division is possible. I don't believe in natural price so I don't believe that arbitrage and service can be distinguished in a single price.
I need to pepper my writing with more subjunctives to make it clear when I'm not stating my own position.
"When I buy an uncut gem for 10g and sell the cut gem for 50g, am I:
a) Charging 40g "arbitrage"?
or
b) Charging a 40g for my service?
There's no way to distinguish between the two, which is why it is arbitrary."
You have provided insufficient information to answer the question. Where did you buy the gem? Who are you selling the gem to? What are the prevailing market prices for each gem? Without this information, the answer is indefinite. You will note that in my examples, I answered these questions. Also, there is a third possible category in your example, charging a monopoly based markup, for a cut that is possessed by a select few who recognize and enforce (not necessarily formally) a monopoly markup. In addition, your example is not a close analogy to any example I gave, so even if I granted that your situation was arbitrary, it wouldn't make mine arbitrary. In addition, your example is a false dichotomy, there are more than two ways of looking at that situation, even ignoring the third possible category I gave earlier.
"The "overcharging" was an attempt to summarize your claim that 2kg/hour is so inflated, it must represent arbitrage rather than a service fee."
That wasn't my claim at all, so your summary is a total failure.
"If it is a misrepresentation, please explain how to distinguish between arbitrage and a service fee. I think it will be impossible without either being arbitrary or referencing some sort of natural price, which is why I recommend abandoning the distinction."
Arbitrage is when you are buying and selling the same thing in different markets, like we've both said before. A service fee is when you charge someone a service fee to perform a service... so if someone asks you to do something, for a fee, that's a service fee, not arbitrage. If you are buying and selling in different markets, that's arbitrage. In your example, you didn't say which of these it was, so how can I answer your question? How about I construct a real world analogy for the use of the world arbitrage that I first had in reference to your first post, I think that will be more constructive.
As a side point, I'm pretty comfortable with the concept of production vs. arbitrage I gave for the glyph industry. The use of the word with the JC industry is more metaphorical, since in the glyph industry the profit is in the laziness of people in buying glyphs for 30g rather than finding someone to make it for them from the mats for cheaper, and tbh I don't know much about JC in the recent months. Interestingly, over time I'm seeing that as the profit per glyph goes down, the profit per mill is going up-although profit per mill spiked when eternal life's droprate was buffed.
So, let's examine the term arbitrage between saronite ore and uncut gems. This transaction is unidirectional, and the market has a (relatively) fixed cost to enter, getting a lvl 400 JC. So, this would be analogous in the real world to a situation where a country had import restrictions but not export restrictions on a good, and there was a licensing fee to carry out transport over the border. So far, this is a pretty common scenario. So, if there existed a price difference such that you could export out of this hypothetical but not unusual country to another country, basically guaranteeing yourself a profit with extremely low risk, wouldn't you call that trade in the real world arbitrage? I certainly wouldn't call it a freaking service fee. Buy the cargo in country A for 10 million dollars, at the same instant sell a contract to deliver the cargo in country B for 15 million dollars, buy insurance for the shipment for 1 million dollars... bam 4 million profit, with zero risk. To me, this is clearly arbitrage, and is exactly analogous to prospecting saronite ore, at least when I was doing that 3 months ago. Now this situation is uncommon in the real world, usually there is more risk, or less profit. The fact that this situation is common in WoW is why Gevlon is writing this blog eh? I could get into why it's common and wow and not IRL, but that's a big topic, so not today.
Your argument seems kind of silly to be honest.
Buying saronite ore from one market and selling the gems from prospecting the ore to another market is arbitrage?
Then would you say that the real world case of a car company buying up raw metal and creating cars out of them would be considered arbitrage? Because that's essentially what you're doing when you're prospecting ore.
Or in the simpler case of glyphs, a real world analogy would be Hallmark Cards.
They're taking pieces of paper, and making them shiny and filled with magical feelings and what not, and they charge who knows what for them.
Is this also arbitrage?
No, because it requires a skill to write good poems or whatever gibberish they have on there, and so does glyph making and prospecting.
"Then would you say that the real world case of a car company buying up raw metal and creating cars out of them would be considered arbitrage? Because that's essentially what you're doing when you're prospecting ore."
If you could make a car with a click of a button, 30 times per minute, with zero labor costs and only a very small nondepreciating capital investment required for market entry, then I probably would, given proper market conditions. Can you do that?
"No, because it requires a skill to write good poems or whatever gibberish they have on there, and so does glyph making and prospecting."
It requires skill to click a button? I feel sorry for you, if you find that to be the case. Are you conflating real world skill with an ingame skill? That's kind of a nasty category error, my friend.
Perhaps that was too glib. What Hallmark does is production, because it involves raw materials, labor, and necessary capital investment. What you guys keep wanting to use as a metaphor for production, clicking a button to turn one thing into another instantly... it's not a useful metaphor. According to that metaphor, when I buy a bus ticket, I've "produced" a bus ticket. When I water the lawn, I've "produced" a wet lawn out of water from the reservoir. That's sloppy thinking, and it's going to keep tripping you up until you abandon it.
"What Hallmark does is production, because it involves raw materials, labor, and necessary capital investment. "
So what is glyph making?
It involves raw materials (herbs) and necessary capital investment (training to 450, as well as constantly researching new glyphs). The fact that it only requires a button press has nothing to do with whether it's a production. The only requirement of production is that you make a product.
Do automated factories no longer "produce" items, just because it only requires a flick of a switch to start up?
"According to that metaphor, when I buy a bus ticket, I've "produced" a bus ticket. When I water the lawn, I've "produced" a wet lawn out of water from the reservoir. That's sloppy thinking, and it's going to keep tripping you up until you abandon it."
Producing means that you've created a good that can be sold. Buying a bus ticket fulfills neither of those requirements: you didn't create the bus ticket (the bus station did), and you can't sell it.
When you water the lawn, you've created a wet lawn, but you can't sell it. If you could sell your wet lawn, then you've created a good. Heck, an entire portion of the world is devoted to this type of work. It's called farming.
"It involves raw materials (herbs) and necessary capital investment (training to 450, as well as constantly researching new glyphs). The fact that it only requires a button press has nothing to do with whether it's a production. The only requirement of production is that you make a product."
You started by listing the materials, capital, and labor; when you got to labor you realized it didn't involve labor, so you completely started over and said that the only requirement of production is that you make a product, but left the first half of the paragraph intact. Isn't that basically insane? Glyph making kinda requires capital, it's definitely not capital intensive, definitely not any capital you could sell, but a sort of capital. But labor...no.
"Do automated factories no longer "produce" items, just because it only requires a flick of a switch to start up?"
If you could build an automated factory that required zero labor for oversight and maintanance, along with automated transport mechanisms to and from the factory, all for a very low capital cost which happened to be somehow nontransferable, than yes, that would be good analogy to glyph making. Of course, what are you doing there is not countering my argument that the analogy they are making to the real world, with it's economic history and tradition, is the wrong one, you are creating a hypothetical situation in which the real world is no longer a good analogy to the real world. In your situation, in the real world, no one would have to work for anything ever again, effectively invalidating all prior economic theory. We'd make all new terminology, and then we could have an all new argument about people misapplying it to WoW.
"Producing means that you've created a good that can be sold. Buying a bus ticket fulfills neither of those requirements: you didn't create the bus ticket (the bus station did), and you can't sell it."
Who says I can't sell it? Some bus tickets are transferable, some aren't. Who says the bus station created it? Maybe I printed it out on my printer, using a e-payment scheme. The point is, that you are missing the point, you are objecting to my definitions, but your definitions don't rescue the people you are trying to rescue, and they aren't specific enough for me to know what you are talking about.
On it's face, it's true that production can be used to refer to any instance in which a good is created. In fact, "Some economists define production broadly as all economic activity other than consumption. They see every commercial activity other than the final purchase as some form of production." (wikipedia) Of course this definition for production would make the dichotomy between arbitrage and production a false dichotomy. Hmm...isn't playing with new definitions and applying them to old arguments fun!?!? The reason I bring up labor and capital is that economics is fundamentally the theory of scarcity, and when you create a virtual world that doesn't require labor and capital, those two things definitely can't be scarce... and so to point out that at some extreme level of generality you can find a word that encompasses two activities, is really effing pointless in a discussion of more detailed analogies.
So what's happening here is that a few people used production as a metaphor for certain activities in a certain way, I pointed out flaws in that metaphor, and now you are producing a more general definition for the word production than the one seemingly used by Gevlon and OEJ, and using that to criticize my criticism of their metaphor. According to this process, I should now create a new pseudonym, and proceed to critique your critique of my critique of OEJ's critique of my critique of Gevlon's critique using different definitions for the words "arbitrage", "metaphor", "skill", and "necessary". How's that sound? That would be 'productive', right?
"you are creating a hypothetical situation in which the real world is no longer a good analogy to the real world. In your situation, in the real world, no one would have to work for anything ever again,"
Or perhaps you're the one creating the false analogy:
"If you could build an automated factory that required zero labor for oversight and maintanance"
Glyph selling requires quite a bit of oversight and maintenance. I don't recall there being any mods that'll cycle through all 200+ glyph recipes and automatically choose which glyphs I do and do not want.
"along with automated transport mechanisms to and from the factory"
I'm pretty sure I need to transport those glyphs myself.
"all for a very low capital cost which happened to be somehow nontransferable, than yes, that would be good analogy to glyph making."
Time and Gold are not negligible capital costs. If they were, then it wouldn't be hard to fathom that everyone would have 450 JC now, one of the best returns on money as well as best returns in PVE.
Yes, glyph making hardly requires as much labor/capital/materials, but neither are we producing on the order of magnitude of a major car company.
"and now you are producing a more general definition for the word production than the one seemingly used by Gevlon and OEJ, and using that to criticize my criticism of their metaphor."
And isn't that what you did first with the definition of "arbitrage"? For Gevlon and OEJ, arbitrage only meant flipping: the act of buyinglowsellinghigh with the same item. You expanded it with your own definition to include production within its own parameters. At that point EVERYTHING would be arbitrage, except for the action of servers spawning things to be mined/farmed.
How is this any more valid?
""and now you are producing a more general definition for the word production than the one seemingly used by Gevlon and OEJ, and using that to criticize my criticism of their metaphor."
And isn't that what you did first with the definition of "arbitrage"? For Gevlon and OEJ, arbitrage only meant flipping: the act of buyinglowsellinghigh with the same item. You expanded it with your own definition to include production within its own parameters. At that point EVERYTHING would be arbitrage, except for the action of servers spawning things to be mined/farmed.
How is this any more valid?"
The answer is simple. I used a slightly expanded definition of arbitrage in an attempt to be more descriptive in one part of a point I was making. If I'd used a different word, the point I was making would be unchanged. I could have made my point in words of one syllable. "Cash made from glyphs, is made more from the ease of search trade house, not as much from the glyph skill." Not as clear that way, which is why I went all polysyllabic on its ass.
You, on the other hand, are changing definitions for the sole purpose of engaging in semantical debate. So, the question of validity is irrelevant, you can't compare an actual economic argument to one that isn't.
I mean, look at your arguments: "I'm pretty sure I need to transport those glyphs myself."
From the mailbox to the AH? You're seriously going to compare transoceanic transport of heavy objects, to a 4 second walk carrying virtual slips of paper? Word!
You're stretching that far, because you have NO ACTUAL POINT TO MAKE.
"You, on the other hand, are changing definitions for the sole purpose of engaging in semantical debate. So, the question of validity is irrelevant, you can't compare an actual economic argument to one that isn't."
I haven't changed the definition from what Gevlon and OEJ has defined them to be.
Their definitions:
Arbitrage: "Flipping", simply buying low selling high.
Production: Buying materials, using any number of tradeskills, and then selling the product.
If you have issue with those definitions, you probably should have taken issue with them directly, several days ago, instead of using such a roundabout argument.
"From the mailbox to the AH? You're seriously going to compare transoceanic transport of heavy objects, to a 4 second walk carrying virtual slips of paper? Word!"
And neither am I on the massive scale of a global car company, selling to a multitude of continents/realms.
I mean, do I really need to point out that we're only making virtual money here, and we're only talking about WoW economy in a virtual sense?
"You're stretching that far, because you have NO ACTUAL POINT TO MAKE."
Maybe you just can't apply real world analogies to a virtual world? At some point you have to have some sort of leeway or conversion between real world and the virtual world. Otherwise, you might as well point out that there ISN'T any arbitrage/production going on in the WoW economy, because all the money is fake and no one's getting any profit whatsoever (except Blizzard).
"Arbitrage: "Flipping", simply buying low selling high.
Production: Buying materials, using any number of tradeskills, and then selling the product.
If you have issue with those definitions, you probably should have taken issue with them directly, several days ago, instead of using such a roundabout argument."
I don't believe that anyone but you is using that definition for arbitrage. That definition of production is not the one you gave a few posts ago. Sigh, this is hopeless.
"And neither am I on the massive scale of a global car company, selling to a multitude of continents/realms."
I can't parse this, it is neither a sentence nor meaningful. I can say that I didn't mention global car companies, I mentioned arbitrage of cars between countries by nonglobal noncompanies. I get the feeling you aren't comprehending my points from this disparity, perhaps we'd better agree to disagree.
"Maybe you just can't apply real world analogies to a virtual world? At some point you have to have some sort of leeway or conversion between real world and the virtual world."
I would agree that you can't apply real world analogies to a virtual world, although I continue to believe that I can. I would also stipulate that you can't understand my analogies, based on the evidence of your posts.
I'm going to quote a section of my earlier post: "The second reason, is that the majority of your readers without inscription could assemble 400 ink of the sea and 400 parchment, get a guildy to make them 400 glyphs for a nominal fee, then make thousands of gold by listing them on the AH. This is because the profit is in the arbitrage, not in the production."
Replace the word arbitrage with 'distribution on the AH', replace the word production with 'clicking the create button in your inscription skillbox'. If you wish to reply to that amended example, go right ahead. If all you want to do is argue semantics, we're not going to get anywhere, because you are not understanding the fine distinctions, nor are you writing clearly and correctly enough for me to understand your objections.
"I don't believe that anyone but you is using that definition for arbitrage."
From Gev's original post:
"Obviously I have no problem with arbitrage, on the contrary, I wrote that I believe it's a good service for the society."
He links to this page within the words "good service":
http://greedygoblin.blogspot.com/2009/01/value-of-flipping.html
It's obvious that he's referring to "flipping" when he says "arbitrage".
"That definition of production is not the one you gave a few posts ago."
I don't see how it isn't. It's still "making a product that can be sold". Are you really bitching that I didn't use the exact wording?
"I can say that I didn't mention global car companies, I mentioned arbitrage of cars between countries by nonglobal noncompanies. I get the feeling you aren't comprehending my points from this disparity, perhaps we'd better agree to disagree."
Just note that your remark stemmed about transoceanic transportation stemmed from comparing a automated car factory to glyph making, which I was replying to.
"If all you want to do is argue semantics, we're not going to get anywhere,"
This entire DISCUSSION has stemmed from a misunderstanding of the words in the first post.
"because you are not understanding the fine distinctions, nor are you writing clearly and correctly enough for me to understand your objections."
If you can't follow a discussion with a clear path, that's not my fault.
You: Automated car factory relates to Glyph making production in Dreamland.
Me: Glyph making isn't as simple as you make it out to be.
You: It's much much simpler/easier than car production.
Me: Yes, but I'm not producing as much either. Therefore it doesn't need to be as complicated and costly.
You: I was talking about arbitrage not production.
What?
"The second reason, is that the majority of your readers without inscription could assemble 400 ink of the sea and 400 parchment, get a guildy to make them 400 glyphs for a nominal fee, then make thousands of gold by listing them on the AH. This is because the profit is in the arbitrage, not in the production."
And yet when people buy my glyphs directly (i.e. come up to me and have me make a glyph or buy one of my premade glyphs), they still pay the overpriced amount (or tip generously). Would that profit still be considered arbitrage?
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