Thursday, December 27, 2012

Farms and Fields: A Question of Labor

Nullsec does not have a Tritanium problem.  Nullsec has a labor problem.

Last week we discussed why the 'Farms and Fields' changes to nullsec being advanced by The Mittani® hive mind cannot reasonably achieve its stated goal:  Stocking nullsec with 'peasants' (i.e. industrialists and industrial infrastructure) for PvPers to to put to the sword.  This being obvious to anyone who understands nullsec and the players involved, it follows that the hive mind must have an unannounced secondary goal (or set of goals) motivating the aggressive propaganda campaign for the proposed changes. Clues to the actual goals of the policy can be found in game design changes being demanded by The Mittani®'s propaganda machine.

A key design change being pushed by The Mittani® to 'fix' nullsec is adding special 'super' ores to nullsec in order to solve what the Goonswarm sock puppet parade have dubbed "The Tritanium Problem".  In his November 27 article Addressing the Tritanium Problem, Goonswarm's Corestwo/Mynnna defines this 'problem' as "...the fundamental fact that sourcing large quantities of low end minerals and especially Tritanium is not feasible in nullsec". 

Now, whenever anyone calls a cornerstone justification for awarding themselves some privileged position, status, handout or free lunch a "fundamental fact", it is a near certainty that said justification is, in fact, not a fact at all; fundamental or otherwise.  Corestwo/Mynnna's so called 'Tritanium Problem is no exception to that rule.  It is, as international trade economists put it, a fat load of hooey.  Nullsec has plenty of low end ores for producing Tritanium.  When Corestwo/Mynnna says mining low end ores in nullsec isn't feasible, he means the ISK return per hour on mining low end ores in nullsec is so low by nullsec standards that no one in nullsec wants to mine them.  

In other words, nullsec alliances wishing to go into Tritanium-intensive manufacturing don't have sufficient labor willing to do the necessary low-end ore mining at a competitive wage.  Highsec,  on the other hand, is much more efficient at producing Tritanium owing to its larger and cheaper mining-sector labor force. 

"I don't know, Mord," some of you will be thinking about now. "While I'm inclined to accept that premise at face value, I'd be much more comfortable with the idea if you expanded on it in a vast wall of text".  Others of you, will be drumming your fingers impatiently about now and mumbling "TLDR already, Fiddle. Get to the effing point."  

I am happy to oblige you both.  For those of you with a passion for the wall of text, read on.  For those of you in something of a hurry, meet me below where its says "TLDR: Veldspar is not being mined in nullsec because markets work."

We'll begin at the beginning:  Mining is boring.

Most miners would agree. Oh, when the ore hold tops off there's a tiny stab of electricity, that most fundamental of video game rewards, but it's more akin to relief than accomplishment. The brain saying, oh thank god he's finished; maybe we can do something interesting now, like running a load of laundry or power washing the front walk. After an hour or so of solo belt mining one begins to wonder when the next Hulkageddon will inject a bit of excitement into the activity.

If there is pleasure to be found in mining, it is in mining with a crew. You watch each others' backs, joke and engage in the same sort of chatter that accompanies a long lull at a gate camp, an unproductive PvP roam, or the hurry-up-and-wait that accompanies most nullsec CTAs. But unlike those other activities, ISK pile up at an impressive rate when a good mining crew plies its trade. It doesn't provide the adrenaline jag of PvP, but the companionship and the ISK payout at the end make it worth while.

In my experience, fleet mining usually occurs in support of a corporation's manufacturing arm. The mining crew's pay-out for the ore they've harvested is usually made in Jita prices. A member of the corporation with perfect refining skills and good standing with the NPC corporation that owns the station refines the ores in order to maximize the mineral output. The minerals are then either sold or used as inputs to corporate manufacturing initiatives.

By highsec standards, a miner's payday is substantial for the level of skills required.  A solo miner in a Retriever with excellent Veldspar mining and refining skills can make five to ten million ISK an hour selling at current Tritanium prices (bearing in mind the time needed to transport the refined minerals to an optimal market for sale is not included). Working with a crew can bring efficiencies such as Orca and fleet boosts into play, increasing the per miner ore yield. However, depending on how the proceeds are paid out (for example, does the corporation keep a percentage of the minerals? Do haulers who don't mine get the same split as the miners? Is the local sale price of the minerals significantly higher than Jita prices?) the actual per hour payday for a fleet op may not exceed that of the solo miner by much. Always read the fine print.

Bear in mind too, that mineral yields from ore in highsec is often reduced due to refining using less than perfect skills and/or at stations where the NPC corporation retains part of the refinery yield due to the player's less that optimal standings. Performance, as they say, may vary.

Recall the Space Noob of Innocents Abroad; gleeful over having accumulated 700K ISK over several days. To new players, a million ISK is a small fortune. To them, five to ten million ISK per hour is an almost inconceivable income stream.  Mining is, by design, one of the best ways for a newish industrial player to build up a bankroll for purchasing more advanced ships, modules and skills.  As a result, there is a vast workforce of cheap labor plying the highsec asteroid belts; happily mining low-value rock, and supplying a steady stream of Tritanium and Pyrite to empire's manufacturing lines.

Mining in nullsec is an altogether different breed of cat.  In nullsec, the target of choice for miners are the ABC ores; Arkonor, Bistot and Crokite, which yield relatively large amounts of high-value minerals.  However, outpost refineries work at a 30% efficiency at best, as opposed to 50% in empire and at some NPC nullsec stations. Adding insult to injury, as refinery use-fees are an income stream for nullsec outpost owners, such fees tend to be quite steep and wildly uncompetitive with use-fees in empire and NPC nullsec.  To the enterprising nullsec bear, the answer is obvious:  The high value-ores are compressed using a Rorqual, jumped back to empire, and refined at a station near a market hub.  From there they either feed into the bear's empire production lines or are sold at market. The jump freighter then returns to nullsec loaded up with finished goods to sell.

In nullsec, ores of lower value than our ABC ores tend to be overlooked. The low-value ores are not cost effective to mine, compress and transport to empire for refining. Compressing and transporting mid-value ores may return a marginal profit, but not enough of one to make them of interest to the mining bear. The real ISK are in ABC ores. Even if outpost refineries operated at the same efficiency as those in empire stations, low end ores like Veldspar would rarely be mined in nullsec. Though Tritanium is selling at near record highs in empire, the same return per hour on mining Velspar and its humble brethren delivers too low an ISK return on hours of labor to to be attractive to nullsec miners.

Even refined Tritanium dropped by nullsec anomaly hauler rats is regarded as not worth the time and trouble of transporting back to station and is routinely left floating in space even after the wreck that held it is salvaged.

There are far fewer miners in nullsec than in empire. Those skilled miners that do abide in nullsec have income streams available to them that are more lucrative (and more entertaining) than mining Veldspar.  Thus, even though there is plenty of Veldspar lying around in nullsec, there is no financial incentive for the pilots with the appropriate skills to mine it.   Simply put, the cost of labor in nullsec is too high to generate and move around enough Tritanium to support a robust ship building industry.

TLDR: Veldspar is not being mined in nullsec because markets work. 

So, owing to its higher labor costs, nullsec is less efficient than empire at producing low-end ores. This is a commonplace scenario in international trade economics, and economics offers a number of remedies to it. However, economic solutions appear to be of little interest to Corestwo/Mynnna, Goonswarm's self-proclaimed 'guru of economics & all-around maven in Eve".  Faced with a problem rooted in market economics, he prefers to change New Eden's geology:  If low end ores are not valuable enough compete for the nullsec miner's attention, then new super-ores must be provided nullsec miners that will. As Corestwo/Mynnna describes the design goal of super ores:
"A miner in nullsec should want to mine any and all of the ores. While maintaining perfectly even isk/hour values is not possible (short of replacing all ores with a single mineral nougat that provides all minerals), even the 'worst' of ores should represent a considerable boost in income over those found in highsec."

In other words, Nullsec workers are so wealthy they can't be bothered to bend over to pick up a nickle, and Corestwo/Mynnna's answer is to populate nullsec with special nullsec nickles that spend like dollars. Encumbered with an inefficient labor force, The Mittani® hive mind wants special super-ores with yields of low-end minerals so vast that they off-set the inefficiencies of said labor force.  And apparently nullsec inefficiencies extend to the work involved in thinking.  It is far easier to cry 'unfair', weep Goon tears and demand New Eden's entire geology and economy be changed to nullsec's exclusive advantage than to HTFU (as Goons are quick to say) and think through a solution given the existing mechanics.  

It would seem the bar for becoming 'guru of economics' in Goonswarm is not high one.

Now, last week I pointed out that changes associated with 'peasants to the sword' were all one sided; allowing nullsec in general (and Goonswarm in particular) new competitive benefits while giving up none of their existing advantages.  Likewise, Corestwo/Mynnna calls for super-ores to be handed to nullsec without surrendering any of nullsec's current geological advantages.
Nullsec (and wormholes) will continue to be the only source for high-end minerals, specifically Zydrine and Megacyte, As a result, they must continue to overproduce these minerals for export to highsec.

This is key.  The nullsec members of the CSM have already insisted that they want to be independent from empire. However, based on the changes desired, they want this to be a one-way street. They do not want empire independent from nullsec. They want empire to remain dependent upon nullsec coalitions for high-end minerals, moon-goo and the more lucrative inputs to production.  They want to maintain a monopoly on their large bore ISK faucets, while denying empire (and highsec in particular) access to meaningful incomes.  They want jump freighters and a long trade reach without the attendant market competition.  They don't want there to be competitive advantage trade-offs between empire and nullsec; they want nullsec's advantages to be absolute and all-encompassing.

They wish to burn Jita without being burned themselves.

'Why?' You might ask, 'Is Goonswarm's propaganda machine, which previously sneered at industrial Eve beyond Supercapitals and moon goo's easy money, suddenly gone all a-flutter over the industrial game? Has The Mittani® caught a case of carebear fever?'


In part three, we'll address that question. 

Monday, December 17, 2012

Farms and Fields: Misdirection


Dennis: What I object to is you automatically treat me like an inferior.
King Arthur: Well I am king.
Dennis: Oh, king eh? Very nice. And how'd you get that, eh? By exploiting the workers. By hanging on to outdated imperialist dogma which perpetuates the economic and social differences in our society.
- Monty Python And The Holy Grail

The lot of the medieval peasant was not a pleasant one.

Mind, if you had nothing with which to compare it, I suppose it was bearable.  After all, if filth, lice, malnutrition, disease, a relentless march of days filled with soul-crushing labor, suffering and an early death are what you expect, it's hard to feel disappointed when that's what you're handed.  Given this as your baseline for fun, the odd maypole dance, harvest festival or extra bowl of gruel would have come off as pretty good times. 

As bad as a peasant's day to day was, however, things were infinitely worse when life got interesting.  And when I say interesting I don't mean it in the "Hey Drogo, come look at this really interesting boil I've got on my nose," sense of the word.  Interesting for Drogo and his family usually involved lot of running, screaming, hiding and/or dying. Dull was good.  Dull was safe.  Dull meant the chances of dying a violent death at the hands of some armored stranger were somewhat remote.

The majority of medieval conflict was not the epic clashes of mighty armies a la Hastings or Tours.  They were usually smaller, more local events involving modestly sized forces. For any number of reasons, a feudal lord might call in his feudal obligations, assemble a force of fifty or so men and march on his neighbor's holdings. Unless caught by surprise, the neighboring lord would simply pull back into the castle with as much of his important people and goods as he could manage and bar the door. Lacking the advanced siege techniques and equipment of a later age, there the invaders would sit. Standing outside the castle. In the rain. Rusting.

However, the guy inside the castle wouldn't be smiling either.  For although the he was locked snug and safe in his castle, the same could not be said of his livelihood; his farms, his fields, any agricultural infrastructure and, more often than not, a lot of his peasants.  A feudal lords' income was normally dependent on agricultural output. Burn his farms and fields and you diminished his purse for the coming year.  Kill enough of his peasants, however, and you diminished his purse for years.  For, while peasants represented a renewable resource, infants make notoriously poor field hands.  Rebuilding a feudal estate's workforce took time.

And, since peasants were largely incapable of fighting back against armored men on horseback, killing them had more the tang of sport than of combat or hard work.  Thus, with the lord of the manor penned up in his castle, the raiders would begin the cheerful pass-time of raping, pillaging, burning and engaging in a jolly bit of peasant hunting.

Sigh.  Good times.  Good times.

This is precisely this sort of good time the The Mittani® hive-mind are offering up to PvPers with the 'Farms and Fields' initiative it is championing.

'Farms and Fields' was initially put forth by Mittensduring CSM 6, and after his re-election to the CSM chair he stated that he would continue pushing the concept during CSM7.  Unfortunate events conspired to remove him from CSM7, and he subsequently allowed his individuality to be incorporated into the The Mittani® hive mind.  However, the hive mind continues the good fight, promoting 'Fields and Farms' via its primary propaganda organ.

The idea goes something like this:

Nullsec is boring to small/subcapital fleets because it is a target-poor environment.  In terms of Sov warfare, there's no meaningful role for small fleets as there's little they can do to harm a large sov-holding alliance. Like our medieval raiders, a subcapital fleet roaming sovereign nullsec often finds potential targets locked up behind the castle walls of outposts and POS shields.  If the Sov holders were invested in a robust industrial infrastructure located in nullsec, the component POS-based structures would act as targets for the raiding fleet, like unto the fields and farms of a medieval fief.  Throngs of carebears, attracted to nullsec from highsec by the robust industrial infrastructure and abundant high-value raw materials would play the role of helpless medieval peasants.  Hapless and incautious, the bears and their armadas of mining and ratting ships would be lambs for PvP raiders to slaughter at will.  Under 'Fields and Farms', every day would be Hulkageddon day in nullsec.

Further, as a result of all this nullsec carebearing, the shelves in nullsec markets will be fair bursting with goods manufactured in nullsec, making the lords of nullsec very wealthy indeed and Jita freighter runs superfluous.  By attacking the yummy industrial targets, conventional fleets will be able to deprive the Sov holders of the industrial infrastructure and carebears upon which they depend for a portion of their income and for the materials of war.  Thus, in addition to having more fun, subcap and small fleet specialists will be provided a meaningful role in sovereignty wars.

Of course, anyone with an ounce of sense and a bit of experience in nullsec can see obvious holes in this plan.  It simply will not work as described.  Nullsec isn't highsec, and the idea that bears will behave the same way in both places is belied by nullsec's own history.  Ironically, bears are much harder to kill in nullsec for a number of reasons I've described elsewhere, and as the very success of Goonswarm and Test Alliance attest.  As I wrote in Creatures of Light and Darkness, 'nullsec' means that the only security you have is the security you can enforce.  And the enforcers in nullsec don't play by Concord's rules.

Both bears and nullsec alliances are motivated by self-interest.  Medieval peasants were tied to the land.  Drogo didn't have much in the way of career options and he couldn't move to another fief if he wearied of being hunted and having his life's work (such as it was) burned to the ground.  Nullsec bears have no such limitations. When things get "interesting" in nullsec, industrialists move their expensive toys out of harms way.  If things remain "interesting" on an ongoing basis, and the sov holder cannot or will not enforce an adequate level of security against raiders, the bears will move elsewhere.  Likewise, the hosting sov-holder is not going to go through the exercise of incenting the development of an industrial base for the sole purpose of allowing enemies and sundry raiders out for a laugh to burn it to the ground. 

The promoters of 'Farms and Fields' are on the record as opposing changes to combat, structure defense and sov mechanics that would diminish their ability to protect this new industrial infrastructure once it is in place. They also are on record as opposing changes to jump freighters that might diminish their access to high sec markets and industry should their internal markets and industrial infrastructure be compromised.  Thus, the originators of the policy want the increased industrial capacity and markets, but without creating any attendant vulnerabilities; the very vulnerabilities they are using to sell the carebearification of nullsec to a PvP community resistant to such changes. 

If the 'Farms and Fields' initiative is unlikely to support its publicized primary goal, we are left, once again, with one of two possibilities:  Either The Mittani® is stupid, or The Mittani is lying®.  Now, I don't know about you, but I don't think The Mittani® is stupid.  That being the case, the announced goals are likely a deliberate misdirection intended to distract nullsec and lowsec PvPers from the actual goals of the policy.  Which begs the question: If  'supplying the peasants to put to the sword' isn't the primary goal for 'Farms and Fields', what is?

The answer has to do with ship yards, super-veldspar and resource cartels.  We'll go into that next time.