Looping the Hen

The New Economy: Prologue

More than 100,000 people worldwide make their living off of Ebay. Many are ‘game merchants’, peddlers of magic swords, virtual real estate and bags full of gold coin. More than 30,000 people (in the US) make a comfortable living playing online games full-time and selling their in-game loot, gold, or credits for the real-world variety. In Eastern Europe and Asia, ‘game farms’ employ thousands of people who instead of sweating it out stitching clothes or sweeping streets, work 12-hour days swinging cartoon axes, collecting treasure, and turning it over to their boss at the end of their shift. Most work on a quota; occasionally, the best (or the lucky) find a way to ‘embezzle’ some of it and convert it into valuable American currency.

It boggles the mind of many folks I talk to that can’t comprehend paying real money for virtual goods, or even that virtual items can have value. I hope this series of articles may give them a little more understanding of those of us who find real worth in things that are ‘unreal.’ This will be the first of a two or three-part series breaking down and explaining a cultural phenomenon that has the potential to allow many of us who have nothing more than an idea, a little faith, and a dollop of luck to live well above our means, either by fully embracing the New Economy, or using it to increase our standard of living.

The first installment will focus on the development of virtual economies: what they are, how they develop, why they work and are important, and both the opportunity and dangers they represent. The 2nd will discuss the rise of Ebay and the auction economy, and its potential to create a new middle class. We will touch on what Glenn Reynolds calls the ‘Army of Davids’, empowered individuals who ‘punch above their weight’ by leveraging technology. Everyday folks now have the ability to do many things that not so many years ago were limited to the commercial or governmental sphere.

I hope that I can get people as excited as I am by the prospect of having a huge portion of the economy run by us, by entrepreneurs, many of who are our friends and neighbors. Nowadays, no one has to accept living an ‘average life.’ This means you (and me!): Tammybaby, Lilly, Mom, Dad and Anne, Tom and Dagi, AKBar and WCB, Todd, Gribblet and DarkElf, Gibb and Saint, Tarpy and MamaB. And everyone else who may stop by! People are not limited now by high costs of owning and starting a business, by blindingly obtuse regulations, by taxes, or by ‘the Man.’ People are limited or not only by their own willingness to take a risk. And in some cases there is almost no risk involved, as we can now easily convert our entertainment to extra cash.

So let’s start with the area of the New Economy that has done so well by me: virtual worlds and their associated economies. Be warned, some of these articles will be long. However, I hope most of you will engage with me if you don’t understand something, or would like to add your insights, either in the comments, by email, or even by (gasp) phone. I hope to have the first installment up tomorrow!