Wednesday, July 11, 2012

Comparative Advantages

I've said elsewhere that Goonswarm Federation alliance's DNA has a healthy dallop of nullsec bear in it.  Nullsec bears, as you'll recall, are former highsec carebears who have migrated to nullsec at some point and adapted to that rough an tumble lifestyle with its sovereignty wars, calls to arms, bug-outs and quickly shifting turns of fortune.  Some set aside their carebear ways altogether once they get a taste for fleet combat, but many switch hit.  They play the industrial side of the nullsec game when the skies are clear, and fleet up to do their bit when war clouds loom. 

Though it sounds counter-intuitive, nullsec space can be a fairly safe place for an industrialist to ply his trade when the barbarians are not rushing the gate.  Depending on where in player controlled nullsec one is, one can travel many jumps without encountering another ship.  Quite a contrast from the crowded gates in highsec.  In fact, given the relative peace and quiet of nullsec, along with the plethora of raw materials needed for production so readily at hand, one would think the markets in nullsec would be fairly bursting at the seams with high value goods produced by part time bears.

Alas.  Not so much.

Nullsec markets tend to be much less functional than their highsec counterparts.  There are a number of factors driving this phenomenon; drags, and on occasions outright obstacles, to nullsec manufacturing productivity.  Some of them have to to with a healthy logistics infrastructure, including jump ships and jump bridges that allow goods to move with relative ease from highsec market hubs to the deepest corners of nullsec space.  Others include the relatively high cost and low efficiency of nullsec refining and production services which are often structured by nullsec alliances such that if makes better economic sense to compress rare minerals and jump them to highsec for refining and subsequent production than to attempt the same in nullsec. 

With the exception of items of particular interest to nullsec alliances or items that can only be produced in nullsec (such as capital and supercapital ships) there is little incentive for a nullsec bear to turn his hand to production.  Meanwhile, the obstacles and high overhead associated with nullsec production means that items produced there are not competitive with the same items shipped in from highsec.  The combination of barriers to production and ease of transport mean that nullsec producers' best prices can nearly always be undercut by traders with jumpships.  And, as I pointed out above, the population of nullsec is smaller on a system by system basis than it is in highsec which means less demand for most goods in nullsec than in the highsec market hubs.

Further, the small nullsec customer base means that highest end minerals and moon goo that are not used for nullsec specific products such as supercapitals, and are often controlled at the alliance level, are sold in highsec where the demand and the prices are highest.  As a result, those bears that do produce in nullsec are unlikely to get high value product inputs originating in nullsec at a significantly lower cost than their highsec counterparts. 

While nullsec tends to be safer on a day to day basis than lowsec, it is not a terribly secure place to locate inventory.   The ebb and flow of nullsec sov warfare means that inventory maintained in player owned outposts are subject to loss if the owner's alliance loses control of the outpost.  I've written elsewhere that careful advance planning is required in order to minimize the impact of sovereign space loss on player assets.  This is a non-trivial exercise when dealing with the usual player's collection of ships and fittings.  Moving and securing a high-volume market inventory that may span multiple nullsec outposts in a given regional market during time of war and invasion would require extensive planning and infrastructure.  While investing in such an exit strategy is costly from both a time and ISK standpoint, failure to do so exposes anyone heavily invested in nullsec markets to excessive loss.

Finally, even after the anomalies nerf, ratting is by far the easiest and preferred means of making ISK in nullsec.  Not only does it provide quick and easy ISK to the ratter, the automated taxing of this activity fills corporate and alliance coffers, pays nullsec rents and alliance membership fees, and drives system upgrades. Industrial activity, on the other hand, only fills alliance and corporation coffers through fees on industrial services such as mining and assembly.  As a result, most alliances maintain such fees at a high level, often discouraging or outright banning the use of POS as a means of obtaining those services, in an attempt to eliminate competition to outpost services and maximize outpost service revenues.  Of course the result in such cases is that nullsec productivity is further reduced and, more often than not, stations earn only a fraction of what they might if service charges were properly optimized. 

CCP has been grappling with this problem for some time.  It is, in large part, the reason behind the partial nerf of jump-bridge networks and CCP Greyscale's love affair with nerfing jump freighters.  It is also a bit of an obsession with Mittens and drives much of his "farms and fields" thinking and is, in some part, behind his attacks on high sec mining and trade hubs.  Indeed, Mittens (or a few of his more thoughtful underlings) may be the first nullsec alliance leader to put significant thought to the nullsec industrial production and the balance of trade with highsec.

Unfortunately, the solutions Mittens' economic team have come up to date seem sharply focused on diminishing the highsec side of the equation rather than the development of a robust industrial infrastructure in nullsec.  Rather than lowering the barriers to and creating incentives for production in nullsec, they seem myopically focused on degrading the productivity in highsec in order to bring it into parity with nullsec's structurally and functionally less efficient productivity.

Like many nullsec alliances, Goonswarm is much better disposed toward tearing down than to building up.   This is the road of least resistance Mittens currently seeks to travel in order to get to his goal of a market dominant nullsec.  However, if Mittens' economic ministers are truly interested in developing the farms and fields paradigm, building up nullsec's industrial capacity must become the primary focus of their efforts.  That will take some clever thinking on their part and require an incentives program geared toward creation rather than merely destruction.


  1. "This is the road of least resistance Mittens currently seeks to travel in order to get to his goal of a market dominant nullsec"


    Hulkaggeddon and "farms and fields" are two completely separate areas, and the former is not an attempt to make the latter happen.

    1. "Hulkaggeddon and 'farms and fields' are two completely separate areas, and the former is not an attempt to make the latter happen."


      Are you writing as a proxy for Mittens? Are you a member of his inner circle?

      The connection between the two is fairly straight-forward. You may choose to say it just ain't so, but that isn't really an argument, is it?

      Sharpen up your logic tools and try again.

  2. "The connection between the two is fairly straight-forward. You may choose to say it just ain't so, but that isn't really an argument, is it?"

    Mord writes negative posts about goons, therefore he is being paid off by -A- to provide propaganda.

    Its really easy to draw lines between things, but the onus is still on you to provide the evidence Mord.

    1. Somebody get on the batphone to -A- and let them know they need to be paying for this. ;)

      But seriously let's walk this down.

      First of all, I do not write negative posts about Goons. I write negative posts about one Goon. He wears a chin-pussy. You may know him.

      I find Goons in general to decent, fun-loving folk and bear them no ill will. They are merely misguided souls who I shall liberate presently.

      My heavens, one would think you're not a faithful reader of this blog.

      Now, you start with a flawed premise (Mord writes negative posts about Goons, which is prima facie incorrect) and attempt a standing broad jump from that single broken support to your conclusion.

      I, on the other hand, base my larger argument on a number of facts about and public statements by Mittens: Mittens' holdings forth viz farms and fields and public CSM statements on the topic, Mittens comments about Jita, Mittens' attack on Jita, Mittens stated desire to make nullsec independent of highsec, Mittens' "forever" bounties on mining ships.

      Note, by the way, that I speak to the bounty system, not to Hulkageddon, which is a discrete event.

      Now, Mittens creating a financial incentive for suicide ganking mining ships in highsec is to any reasonable person a logical step toward Mitten's larger stated goals. Both are facts in evidence. One supports the other.

      We can go further if you wish . We could speak of Mittens' stated desire to eliminate rare minerals from wormholes. We could speak of Mittens' stated desire to bring the highsec economy to its knees if that makes the picture clearer to you.

      But then you're not here to make the picture clearer, are you?

  3. Fiddler's Note:

    If Mittens wishes to dispute something writ large 'pon The Edge, he should man up, sashay his chin pussy over here and write for and as himself. He should not hide behind his flunkies and sock puppets.

    Mord has limited patience when it comes to flunkies and sock puppets.

  4. You really do hate Mittens, huh? Are you CCP Sreegs?

    1. Sir, you mistake me. I have nothing but the utmost respect for His Mittensness.

      But, alas for him, he has chosen to lead his people down a darkling. And I, poor man, am obliged to strive against him and liberate the Goons from his fell influence.

  5. Small minds will never get it. Apparently, l'il mitenz' fanboys think no further or broader than the end of their nose. Like mittenz, CCP also has a policy, that when totaled, is also anti-high sec in an effort to get people to move to null. Making high sec shittier, which makes null look better in comparison, is a rather stupid way of dealing with the issue. It isn't going to accomplish much in the short term, and in the long term, it'll cost subscriptions. With people being who and what they are, especially in Eve, improving null sec is going to take a shit load of dedicated effort, by a small number of people, to an extended period of time, before the drooling sheep will slowly come on side.