So you would say this guy data mines you REEAAAL good. nice.

Well the balance between the economies of the PIIGS and the rest of Europe is what allowed their debt to accumulate.

You see it's not like the states, although we all share the euro we don't have the same interest on our bonds, but the market has been working under this "assumption" from the beginning, allowing Greece to overdraw basically.

Now a currency is supposed to be a means of transaction, making people reach their limits (poverty, suicide, unemployment of epic proportions) should not be a normal situation in peace time.

The solution of basically printing more money, thus devaluing the currency, has been used countless times (that's what the bailouts were in the states), it's prudent to let people commit suicide so your precious currency doesn't lose value. Not to mention that it will essentially be closer to it's real value, not a value that is based on the German economy, but the sum of the economies that make the EU.

You also have to understand that a lot of people had nothing to do with all this overspending, nor was the public informed.

So the decision you have is: make people eat out of trashcans, let people lose their homes, jobs etc or print more money. Remember it's not that people bought homes they couldn't pay for, it's that the goverment overspent and is now slashing wages and increasing taxation to the point that people can't sustain a business or find work since everything is closing down.

Even considering the large public sector, their wages don't even compare to the money that has been embezlled by Greek Politicians (for example a public servant making 14K a year, needs 74 years to reach 1 million euro, but only one politician has been found to have at least one account with 850 million in it).

There are many more issues, but the basic problem now is: will you allow people to get back on their feet or are you going to drive them into the ground?

Kostas, thanks for the thoughtful reply.

I don't think there's any real disagreement that the proper goal is an economic system that doesn't drive people to homelessness, starvation, and suicide. The question is what is the least destructive way to establish such a system given where you are now.

The unfortunate thing is that long-term stability often requires short-term dislocation. Schumpter's "creative destruction" referenced this -- the hard fact is that if you try to finesse the long-term needs by avoiding short-term pain, nothing ever gets done and you wind up with a disaster instead of a problem. More bailouts (with someone else's money) always look better over the short term; the question is whether they solve the problem or just kick it a little further down the road.

(And this is not some "ha-ha, U.S. wins, Eurozone sucks" chest-thumping, either -- the U.S. itself has already had its credit rating downgraded, depends on trade with a prosperous Europe, and faces its own looming disaster due to a political unwillingness to take any serious action to restrain the growth of taxing and spending on hundreds of entitlement programs.)

It's that practical question of "how" -- and the answers that an economist advocates -- that I'm curious to see applied to a company that manages multiple gameworlds with multiple internal currencies. How much short-term pain will players accept for the promise of long-term stable growth?

There's a reason why economics is known as "the dismal science"....

I think the fact that Mr. Varoufakis disagrees with the Eurozone's current "solutions" to their crisis is a very promising sign. Germany has repeatedly withheld loans to the peripheral countries on the condition that they undergo savage austerity programs. This might seem right from a moral standpoint of "righteously" punishing "spendthrift" governments, but it has failed miserably in practice. Instead of improving their fiscal and economic positions, it has has actually worsened their positions by causing further decline in their economies. The more they cut, the further they fall, and the worse their overall position gets. This is result of a EU with a united currency but not a united government.

I'm also quite puzzled as to why the current Eurozone crisis is so widely considered to be one caused by overburdened social welfare states. Greece definitely IS overburdened, but that had nothing to do with the current crisis in the EU. After the adoption of the Euro, there was an incredible influx of private capital into small economies like Greece, Ireland, Spain, Italy, and Iceland that led to huge losses when those financial institutions pulled out or when that capital disappeared during the financial crisis. Spain had a fiscal surplus before the crisis hit, so how did its welfare state cause the crisis? Sweden, with one of the largest welfare states in the world, has weathered this entire period beautifully and does not seem to be collapsing under its evil socialist nanny state. Ireland, the nation that has done everything that austerians and conservatives want, has cut its public sector savagely. Where is it's recovery? Greece is probably the only nation in the EU that is actually suffering the kind of problem that many attribute to the entire Eurozone. It DID have huge deficits and a bloated government, but that doesn't justify its example being held up as proof that welfare states are the source of all problems in the current world economy.

In conclusion, I think Mr. Farouvarkis will be a great addition to Valve. The Valve Union of free-to-play economies (the VU, if you will) should greatly benefit from his experience. I think a central bank is in order.

Maybe you have a shallow and distorted perception of what an economist does.

Assuming your theory is right, then why do we still have economists? why is it even called economy? Why not just call the field psychology?

yep not as impressive as 'video game developer'

:(

Well sure. Your theory is 100% correct if you ignore all the successful ones (France, Canada, Australia et al).

Tangent:

Ian, I think you are "ignoring" the word "eventually" and also the level into which a society embraces entitlement. France is 90% debt to GDP and going up, unemployment is huge and hasn't dropped below 7% for 30 years (That's horrible), and crime is going up.

Coincidentally, Canada and Australia which have embraced socialistic entitlement programs to a far smaller degree than France are doing better financially.

Also look at America, when entitlement programs were small the economy was robust. Under Jimmy Carter entitlements went up and the economy went down. Under Reagan and a little under Bush (1) and Clinton entitlements went down and the economy went up. Under Bush (2), and Obama entitlements went up and the economy went down. So in short I agree with James on this one.

Back on tangent:
I think Valve is going to produce some very interesting results with their economist and I think it is going to go a long way in shaping how people think about payment models for games. This, I believe, will be both a good thing and a bad thing in many cases. I fear some developers will try to fit their games into a free to play model to emulate Valve's success and just end up with a very broken product.

You say I'm ignoring the word eventually, and then using knee jerk statistical analysis to examine policy in America. The social structure of a society can not be judged in months but decades. Saying that the downturn in economy in America relates specifically to the fiscal policy of the time is at worst ignorant and at best a confusion of correlation versus causation.

In regards to eventually, how long do you suggest we wait? Let one country do it for 1000 years and then if it hasn't failed well ok everyone else start? That's just ridiculous. Also I don't think you know much about the social welfare policies of Australia or Canada if you don't think they are countries that have all but fully embraced social welfare.

"France is 90% debt to GDP and going up"

according to the IMF it will will shrink, in fact the European Union as a lower dept to GDP ratio than the United States!

http://www.google.com/publicdata/explore?ds=k3s92bru78li6_&ctype=l %20%20%20&met_
y=ggxwdg_ngdp#!ctype=l&strail=false&bcs=d&nselm=h&met_y=ggxwdg_ngdp&sca le_y=lin&
ind_y=true&rdim=world&idim=country_group:998&idim=country:AU:CA:FR:GR:J P:US&ifdi
m=world&hl=en_US&dl=en_US&ind=false

I am of the belief that both psychology and sociology are very relevant to virtual economics, just as Adam Smith approached economics from this perspective. Considering that he is considered the father of modern economics, to me this just shows how much the discipline has strayed. Behavioral economics is really the closest thing taught in schools, and in this case it does not appear that this economist is trained in this. To my knowledge I am the most published researcher in this field, if you want further understanding you can check my blog where I have almost 30 papers posted on the subject: http://gameful.org/groups/games-for-change/forum/