This is why the modern day patent system is so destructive and anti-liberty.

But, we must invariably come to the question of the “inventor’s copyright” as defined by Rothbard. Secondly, we have to define the nature of implicit contracts. Then we can understand the nature of idea protection under a free society.

Surely someone so litigious would seek approval through legal means? If not, they’re so far past stupid that they’ve become dangerous.

What about the Kindle is patentable (by Amazon)? There are several other similar devices already on the market, predating the Kindle.

Funny that you should mention MMORPGs. Any Austrian Economist would find the monetary system of World of Warcraft quite interesting. It is a textbook study of inflation due to an increase in the money supply.
When new expansions come out, Blizzard (WoW’s parent company) always makes new zones yield more Gold (WoW currency) for players. This entices players to purchase the new expansion sets. However, this also leads to an overall expansion in the money supply. Eventually, as the gold circulates, prices on all goods across the server increase (even goods that are not related to new areas).
Also interesting is that people in the game blame it on speculators and greed, just like in real life.
This is just my take on it from an Austrian perspective. Anyone play and have any thoughts about it?

@Jeremy:

I play WoW and consider myself knowledgeable in economics too. I respectfully disagree with your claims about inflation.

So far, Blizzard released two expansion packs, Burning Crusade in January 2007 and Wrath of the Lich King in November 2008. While it is possible that short term disturbances in the prices occurred at these times (I was not active at those times so I don’t know for sure), I have not seen long term inflation.

The pricing system in WoW (and other MMORPGs, such as Eve Online, which is an even better example of a virtual economy) is, according to my estimates, roughly geometric, and depends both on your level and if it is necessary or just an extra.

Take the mounts for example. Level 30 mount plus riding skill has a base price of 45g. Level 60 mount+riding has a base price of 700g. Technically you don’t need it to progress, but it’s faster. Burning Crusade mounts (Level 70) are 900g and 5200g, respectively (again the difference is that the more expensive is faster, but both give the ability to fly).

Another example is the bags. The relationship between the slots and price is roughly (roughly because you can’t buy all of them from vendors with gold, switching from vendor prices to Auction House prices explains the fluctuation):
6 – 0.05g
8 – 0.25g
10 – 2g
12 – 12g
14 – 8g
16 – 10g
18 – 50g
20 – 125g
22 – 1200g

What this means that you only need lots of gold if you want to have an edge over characters that are about the same level as you. If you don’t do much PvP, or are a casual player, having enough gold is typically not a problem.

Level cap is also a measure to prevent inflation (in my opinion), as it stops the geometric progress. Both of the expansions, in addition to bringing new areas, also increased the level cap (BC from 60 to 70, WoTLK from 70 to 80). Which of course means that most of the new areas are tuned for those high level characters, and thus must have a higher profitability (with regards to ingame currency).

The main thing that causes inflation in MMORPGs is farmers selling the ingame currency for real currency. Blizzard goes hard on them. There have been examples of other MMOPRGs which didn’t protect against this, and they suffered from textbook examples of inflation, which drives casual players away because they can’t buy anything useful.

At first glance, this looks like an example of mercantilism, banning cheap imports and stiffling competition. But this misses the point. Unlike in a real economy, here Blizzard (the provider of the game) is the only actual supplier. They spend a lot of effort on making sure that the game progression is balanced, otherwise they’d lose customers and (real) money. Gold farming disrupts the balance and they lose customers. In real world, you don’t have anything like this. The analogy would be if a government “owned” the whole country and was the only supplier of goods and services, and the only employer. Therefore, while virtual economies are useful for analysing real economies, the results shouldn’t be generalised.

Cheers,
Peter

The god analogy is also imprecise, but in some areas more fitting than the government. In MMORPGs, the company running the server indeed supplies everything and determines rules, like one imagines a god. So it can be interpreted as godlike omnipotence. However, they still lack omniscience (therefore being more like a government). There are a lot of cases where something fishy was going on and it is either never found out or only after a long time, even years. There is still no way to “fix” the problem of non-linear causality, inability to gather and process all relevant data, and interpret the results.

I laughed when inflation hit places like WoW, because as far back as 1994 my business pitch included an economy with a sound e-currency based on real-world gold.

That’s probably one of the reasons banks refused to listen to me.