Monday, May 3, 2010

A Game for the Bowles-Simpson Deficit Reduction Commission

The U.S. federal budget deficit is out of control. Congress is totally polarized and the Congress critters can't work together. Even if they could, the options available are politically toxic and members of today's Congress are not what you would call politically courageous. So President Barrack Obama creates a non-partisan commission headed by the President of the University of North Carolina (and former Clinton White House chief of staff) Erskin Bowles and former Republican Senator Alan Simpson of Wyoming to come up with solutions. And what is one of those solutions? Pass the buck to the citizens.

As I found out by listening to Channel Massive #129, Mr. Bowles asked Microsoft CEO Steve Ballmer about the possibly of creating a game that would allow anyone to come up with a solution for the budget deficit. I don't think Mark & Noah really believed what they heard. But I've given the subject some thought and I'll give my analysis of the whole idea. Take it for what it's worth.

First, with the economic complexity of some of today's games, looking at virtual worlds as a model to use in the real world isn't as ridiculous a concept as it would have been 10 years ago. Eve Online is an obvious example, with game publisher Crowd Control Productions (CCP) employing Dr. Eyjólfur Guðmundsson as its lead economist. If the BBC can interview the man known as CCP Dr.EyjoG to Eve players for economic insight in real life matters, why can't the U.S. government look to games for insight?

I admit that the BBC has a love affair with Eve Online, but Eve is not the only game getting attention as a virtual world economic laboratory. One game receiving serious academic study is Sony Online Entertainment's EverQuest 2. SOE made over 60 terrabytes of logs available to researchers and one paper has already been published. While some people, including myself, have quibbled with the paper, researchers are looking at virtual worlds seeking insight into the real world.

So, video games are a valid way to look at the budget deficit? My answer is ... maybe. Remember, both Eve Online and EverQuest 2 are massively multi-player role playing games (MMORPG) and Mr. Bowles asked Microsoft to look into developing a single player game. In an MMORPG, thousands of players (and in Eve over 150,000 players) interact and form a complex economy. Even then, as University of Southern California's Dr. Dmitri Williams points out in his piece on Terra Nova, the game's coding can determine the behavior of the player base. In a single player game, the code that simulates the actions of those players in an MMORPG matters even more.

Let me give one example of how code decisions and assumptions can influence game play. Back in 1990 one of the first games I played on my Mac SE was Sim City. I spent a lot of time trying to figure out what tax rate to set that would not only maximize the incoming tax revenue I received but also the rate that would spur the most economic growth in my city. Does this sound familiar? Like what Mr. Bowles and former Senator Simpson need to try to figure out? A graphical representation of how much revenue is collected by the government at particular tax rates is known as the Laffer curve and would need to be built into the design of a single player game.

The burning question is: who determines that point of greatest returns? Dr. Arthur Laffer? Back in 1992, with Dr. Laffer as a campaign advisor, former (and possibly future) California Governor Jerry Brown proposed a flat federal income tax of 13%.

Do we look to the gaming world and ask Dr. Guðmundsson of CCP? After all, if the commission is going to look to the gaming world for answers, Dr. Guðmundsson is probably the most qualified game developer in the industry today to provide the answer based on virtual world economies. Based on the raising of taxes in non-player corporations in the Dominion expansion, I would guess Dr. Guðmundsson has determined that for Eve players that point of maximum return might be 9-10%. By setting the tax rate to 11%, the CCP developers were trying to encourage players to join player run corporations. In effect, they were trying to set a tax rate that would discourage a certain activity. Players might have accepted a rate of 9% or 10% and the tax hike would not have had the intended effect.

Of course, basing economic decisions for the United States based on a game from an Icelandic company would be silly. But is letting someone on the commission or the Obama administration make the decision just as silly? They are, after all, supposedly looking for answers, not handing them out. But if the commission defines the game's assumptions, how many choices will players have? Will players only be presented with variations of the current progressive tax system or will other alternatives, like Steve Forbes' flat tax or the fair tax championed by former Arkansas Governor Mike Huckabee?

The tax portion of the problem is just one (or many depending how you look at it) of the design decisions that needs to be made in the production of the game. Yes, a good economic simulation would benefit the debate greatly. But who determines if the game is a good simulation or just a propaganda recruiting tool for one side or the other? So maybe Mark's and Noah's reaction was right after all.

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