Chinese "farmers" are ruining online games

According to a NY Times article, there are an estimated 100,000 people in China working as "gold farmers." They are farming for "gold" or other virtual currency used in online games such as World of Warcraft, and they are selling this virtual gold to Americans who are too lazy to play the boring parts of the game. The article says that the average wage earned by these gold farmers is only thirty cents per hour, and the working conditions sound pretty horrid.

A NEGATIVE SUM JOB

The job of the Chinese gold farmer is an excellent example of a negative sum job. Certain anarcho-capitalist types have the naive belief that if someone is making money doing something legal, then they must must be doing something that's positive sum. Well here we have an example of a job, "gold farming," that contributes no value to the world and, in fact, makes the online games worse.

HOW GOLD FARMING RUINS ONLINE GAMES

To understand the effect on the online games, take this hypothetical example. In the imaginary world of Vana'diel, there exists an item known as Leaping Boots. It's acknowledged that Leaping Boots are the best boots for any Thief of level seven or above because they are far more powerful than the next best pair of boots. But the guys who programmed the world set its parameters such that approximately one pair of Leaping Boots are introduced into the world per day, but at the same time approximately three new Thieves reach level seven per day. This means that there are only enough Leaping Boots for one third of Thieves to own a pair. The rest of the Thieves will have to wear junk boots and be laughed at by other players.

Imagine further that in the imaginary world there is an Auction House where an around the clock sealed bid reverse auction takes place. Most of the items in the game can be bought and sold at the Auction House, including the Leaping Boots. What happens to the price of Leaping Boots? In true free market fashion, the price rises until only the richest third of Thieves can afford them.

So how do Chinese farmers distort this picture? Suppose that in the absence of Chinese farmers, it would take ten hours of virtual farming work afford a pair of Leaping Boots. But now Chinese farmers enter the game and start earning virtual currency which they then sell to Americans too lazy to farm themselves. Because the supply of Leaping Boots remain the same, but the supply of farming labor has increased, this means that the amount of farming work required to buy a pair of Leaping Boots has increased. Instead of spending ten hours farming, one now must spend twenty hours farming in order to afford a pair of Leaping Boots.

Thus we see that the Chinese farmers have made the game worse for honest players. Instead of spending ten hours doing boring farming work they must spend twenty hours. Meanwhile, other players get to wear Leaping Boots without putting in their fair share of labor because they purchased the virtual currency using real money.

COMPARISON TO U.S. HOUSING MARKET

The effect of Chinese farmers on online games is similar to the effect of immigrant labor on the price of housing in the United States. In the U.S., zoning laws prevent housing from being built fast enough to satisfy the demand from a growing population. But at the same time, the increasing number of workers in the U.S. increase the ratio of workers to houses, and the result is that a person has to work more hours to afford a house than he would in the absence of immigrant labor. If we put a stop to immigration, then America's low birthrate would ensure that the price of housing would fall and become a lot more affordable for working Americans.

WHY ARE FARMERS FROM CHINA?

There are other places in the world where people are willing to work for thirty cents per hour. So why is China the gold farming capital of the world? The answer is that playing these games is actually a mentally demanding task and people with IQs below a certain threshold, perhaps 100, aren't smart enough to be virtual currency farmers. Chinese people have much higher IQs than poor people in other parts of the world.

* * *

To respond to certain comments below insisting that the work of gold farmers doesn't have negative value, WAKE UP! These gold farmers are doing FAKE WORK in a FAKE WORLD. They can't possibly make the FAKE WORLD more fun because the parameters of the FAKE WORLD are set by computer programmers, and they were set the way they were in order to generate the maximum amount of fun.

Paying someone real money to get ahead in a GAME, where such activity is against the rules of the GAME, is most certainly CHEATING, and it obviously lessens the fun for people who play the game HONESTLY, and to the extent the overall fun of the game is reduced, the gold farmers are LEACHING money from the game company because by reducing the overall fun of the game they discourage people from playing and the game company loses subscriptions. Has anyone ever played any kind of game (board game, computer game, card game, competitive sport) where they didn't get mad when they discovered that some people were CHEATING at the game?

Furthermore, it's not even clear that the CHEATER's fun has increased because he doesn't experience the satisfaction of having conquered the game on his own.

Comments

[Alex]

The "online gold" has value. Its value is that it makes playing WOW a lot more enjoyable. If people are willing to pay money for getting a more enjoyable game, then that is not useless.

Remember, time is money. The value of searching for "online gold" has opportunity cost in an economic sense. Thus, people who pay for "online gold" are essentially paying for the time it takes to find the gold.

[Alex]

Also, if people are willing to pay for "online gold" so that they can by items that give them status in WOW, then it is a positive sum job.

Think about it, people pay more than $5,000 (sometimes more than $10,000) for a Rolex watch when a similar watch (that tells time just as well) can be bought for $100 to $300. So, why are people willing to pay so much for Rolex watches? Because they are status items. The same thing can be said for "Leaping Boots." They give status to the online player, so they have value.

[bluprint]

"...contributes no value to the world and, in fact, makes the online games worse."

The value provided is to the players that buy the gold, who are indeed citizens of "the world".

Instead of evaluating things according to your own personal values (e.g. the idea that the game is being ruined in some absolute terms or the concept you propose about "honest players") you should instead consider the larger picture and the fact that not everyone is like you. Not everyone values things the same as you.

I guess as long as you don't get the game cheats from Nigeria, you are probably OK.

[Brandon Berg]

This raises a question that I've been pondering for a while: Why do video games even have boring parts?

CRPGs would be much more enjoyable if they were designed such that they neither required nor rewarded mindless level grinding and gold farming, and instead awarded experience and equipment solely for things like the completion of quests, intelligent use of the combat system, light action-based elements, or anything else that requires some level of mental engagement.

I would argue that the fact that there are 100,000 people in China who are paid to play the boring parts of World of Warcraft is evidence of serious flaws in the game's design.

(But then, I haven't played an MMORPG for 12 years, so I may be wrong).

[Gil]

This reminds me of a boy catching Homer Simpson cheating in an exam. To which Homer replies, "welcome to The Jungle kid!".

[DML]

"Certain anarcho-capitalist types have the naive belief that if someone is making money doing something legal, then they must must be doing something that's positive sum. Well here we have an example of a job, "gold farming," that contributes no value to the world and, in fact, makes the online games worse."

I think the anarcho-capitalist would tell you that while you may not like the consequences of gold farming, you have to learn to deal with it and compete in some other fashion. If the game dies off because it's no fun, so be it. Lots of competitive video games have died because one-strategy-beats-all tactic takes away the fun.

A pure capitalist society isn't always the nicest thing in the world, but protectionist policies usually don't actually make things better.

"There are other places in the world where people are willing to work for thirty cents per hour. So why is China the gold farming capital of the world? The answer is that playing these games is actually a mentally demanding task and people with IQs below a certain threshold, perhaps 100, aren't smart enough to be virtual currency farmers. Chinese people have much higher IQs than poor people in other parts of the world."

What? So I guess the reason we get all of our Wal-mart clothes from Chinese manufacturers is because of their brilliant knitters? :)

How about this for a theoretical reason - China is a stable country and they have literally billions of people willing to do crap work for nearly free. Thus if you have offshore-able needs that don't require good English skills, your best bet is to use the Chinese.

[Adam]

I think it's the normal economic phenomena

[Mensarefugee]

Negative Sum? Or just an Anti-Chinese Article?

You forget to account for the income that the 'Chinese Farmer' makes, which presumably is under better conditions and/or higher pay than he would make otherwise. Give it 10-15 more years and China will be too rich to engage in this.

If you want a real example of a 'negative sum' situation. Look no further than our very own "Affirmative Action". Jobs are stolen to give to underqualified people. A zero-sum transfer at best. But because increased inefficiency and resentment abound, we lose income and peace of mind.

[SFG]

Methinks someone's Night Elf got killed by someone wearing leaping boots. ;)

RPGs would be much more enjoyable if they were designed such that they neither required nor rewarded mindless level grinding and gold farming,
I think it's a carryover from the old D&D days when high-level characters were supposed to be rare and obtained after years of play, which involved years of rolling dice and making dirty jokes about female NPCs while scarfing down potato chips and diet soda with your buddies.

You forget to account for the income that the 'Chinese Farmer' makes, which presumably is under better conditions and/or higher pay than he would make otherwise. Give it 10-15 more years and China will be too rich to engage in this.
Yes, it involves transfer of funds from lazy American nerds to hardworking Chinese people, which is good on leftist and bad on nationalist grounds.

If you want a real example of a 'negative sum' situation. Look no further than our very own "Affirmative Action". Jobs are stolen to give to underqualified people. A zero-sum transfer at best. But because increased inefficiency and resentment abound, we lose income and peace of mind.
Nonsense. It's more like a ransom payment. If we don't give people something to do, they're more likely to be on the streets causing street crime...or in the streets protesting raising hell about how behind economically they are.

You know, while it's much too late to do anything now, for all the whining conservatives do about importing immigrant labor, a lot of our social problems have to do with the South importing slave labor a few hundred years ago. African immigrants seem hardworking, etc., but then their kids get assimilated into an underclass culture.

If we don't give people something to do, they're more likely to be on the streets causing street crime...or in the streets protesting raising hell about how behind economically they are.

If that was the point, expanding the EITC would be much more efficient. Affirmative action is all about identity politics and special interests.

a lot of our social problems have to do with the South importing slave labor a few hundred years ago.

Mostly, it had to do with them being slaves as opposed to workers. The drawbacks of slave labor were clearly stated by Adam Smith.

[Peter]

Why does the expression "Get a life!" keep running through my mind?

"Why does the expression "Get a life!" keep running through my mind?"

Sounds like someone got owned on Warcraft! Warcraft Rulz! LOL! OMFG! See you at ComCon 2007.

[IC]

Actually I enjoy that I can even beat cheaters in the game by playing honestly. Well, if you can not dominate, certainly you are owned and hate cheaters.

[zai]

How is this any different from rich people employing maids and nannies? Should I complain about their newly free quality time they are putting into golf to get better and kick my a**?

Formula one racers tend to come from rich families that can afford Karting track prices. Should I complain about how I've been priced out of a sport I might otherwise have excelled at?

Here's a conjecture: Competitive advantages, no matter how fairly or unfairly procured, can not push the system towards sudden or gradual death because of damping feedback loops in complex systems.
That makes sense doesn't it! :)

zai,
All that shit about feedback loops and competitive advantages is great and all, but how the fuck do I get the Leaping Boots? I'm already on my 3rd breakfast burrito and Mountain Dew and I still can't figure it out.

[tommy]

How is this any different from rich people employing maids and nannies? Should I complain about their newly free quality time they are putting into golf to get better and kick my a**?

Poor comparison. This would be the equivalent of a nanny who cleaned one house by taking all the dirt and trash and throwing it in somebody else's house.

What Sigma is saying is that there is no clear objective gain to be had from gold farming. Of course, the individual who takes advantage of a gold farmer is provided subjective gain at everyone else's expense. The problem is that the anarcho-capitalists Sigma speaks of seem to view the economic relationship as being the only important human relationship when it comes to increasing quality of life. It simply isn't so.

Imagine if you played poker and some of your opponents decided to start selling cards from their hands to another player. Would you still want to hang in that game?

[Nancy Lebovitz]

In the U.S., zoning laws prevent housing from being built fast enough to satisfy the demand from a growing population. But at the same time, the increasing number of workers in the U.S. increase the ratio of workers to houses, and the result is that a person has to work more hours to afford a house than he would in the absence of immigrant labor. If we put a stop to immigration, then America's low birthrate would ensure that the price of housing would fall and become a lot more affordable for working Americans.

Well, maybe it would be better to change the zoning regulations.

Meanwhile, illegals do a lot of construction work on private houses, so I assume they're doing something to contribute to the housing stock.

[David Alexander]

If that was the point, expanding the EITC would be much more efficient. Affirmative action is all about identity politics and special interests.

The whole theory behind Affirmative Action was that black people due to years of isolation from whites had no networking opportunities within the white corporate world, and that the only way to break that was via Affirmative Action. In contrast, EITC is just a bypass around welfare and serves as an amelioration of working as low-paid labour.

Mostly, it had to do with them being slaves as opposed to workers. The drawbacks of slave labor were clearly stated by Adam Smith.

I wonder what would have happened if the majority of slaves were returned to Africa after emancipation. Most of Canada's black population is composed of foreigners with the small proportion of that population being native-born blacks who were escaped slaves from the US and a few slaves owned by loyalists in Ontario and Nova Scotia. Most of Canada's slave population was sent back to Africa during the 1840s and 50s. Canada's black population seems to be better than its counterpart in the US on the surface, but that may be due to the "immigrant factor" that disappears by the second or third generation.

[tommy]

MensaRefugee,

You forget to account for the income that the 'Chinese Farmer' makes, which presumably is under better conditions and/or higher pay than he would make otherwise. Give it 10-15 more years and China will be too rich to engage in this.

You forget to account for the fact that the money provided the gold farmer would have been spent elsewhere by Americans, presumably in ways that would be more likely to benefit other Americans.

Nancy,
Changing zoning regulations isn't necessary, the existing ones just need to be enforced, like not having 5 families live in a one-family home or people living in garages like in LA. But like many issues involving illegals, the existing laws are either ignored or openly flaunted by both illegals and Americans, including our elected officials.

[tommy]

You forget to account for the income that the 'Chinese Farmer' makes, which presumably is under better conditions and/or higher pay than he would make otherwise. Give it 10-15 more years and China will be too rich to engage in this.

Of course, this sort of argument also fails to take into account that money spent elsewhere might be more likely to find its way into the hands of Chinese who actually work for a living producing goods for export to the United States.

Gold farming likely benefits one group of objectively non-productive Chinese at the expense of productive ones.

[tommy]

If we don't give people something to do, they're more likely to be on the streets causing street crime...or in the streets protesting raising hell about how behind economically they are.

Or maybe just getting real jobs.

[I]

Free trade capitalism is about free to trade any thing which is need by any body. Do not define what it worth by your own idea which is what communism and socialism try to do.

As someone who is unfamiliar with this whole gaming thing, and the attendant issue with Chinese computer slaves finding game codes for US based dorks who are into Warcraft, how come some nerds right here in the US do the same thing and charge more, but bill themsleves as experts on the whole gaming thing? They could be like highly paid consultants that actually produce something of value (at least for some people) instead of the garbage that "consultants" in business seem to traffic in.

And tommy didn't you hear, Barack Obama is going to make sure that none of his constituents have to get "real jobs" because if they do, there will be riots. Don't worry, I'm sure you won't mind having your tazes raised and the money given to indigents and low life/low IQ criminals. Ransom indeed.

[Heh]

Well the problem isn't wholly with gold farmers. Since you can pass gold "down" from your level 70 (or 60 in the past) you still have the higher priced items. The difference is there would be no recourse for a lowbie to get an item since they could never keep up with the higher level farming.

That gold farming ruins the game, is like the douchebags that make a level 19 with level 70 enchants and say that does not ruin the game.

Prices do not significantly grow on servers as gold farmers mature in fact the opposite happens, most things come down in price as there are more "rares" entering the market because the farmers are more apt to get world drops vs. quest rewards.

Gold farmers, make it possible for more people to get the items as there are more for sale, trickle down money hurts the economy more.

Lastly, without substantially changing game mechanics you will never get rid of gold farmers. So why continue to complain about something you can't change?

Crazy is defined as doing something over and over and expecting a different out come. You, and others can continue to complain, but it won't change.

[tommy]

And tommy didn't you hear, Barack Obama is going to make sure that none of his constituents have to get "real jobs" because if they do, there will be riots.

Yes, but fortunately, they will be "Quiet Riots." Come on, feel the noise...

not having 5 families live in a one-family home or people living in garages like in LA.

That would make the problem worse. Having people live in garages or extremely crowded homes ameliorates the scarcity of housing, but allowing higher-density development would be far better.

Of course we could solve the housing problems by deporting illegals and not letting any more into the US. But I guess that simply can't be done.

Love this - NY Times gallery of players of online roleplaying games & the (generally far better-looking) avatars they choose to represent them:
http://www.nytimes.com/slideshow/2007/06/15/
magazine/20070617_AVATAR_SLIDESHOW_5.html

[trumwill]

Most of those gamers are pretty decent looking guys and gals. There are the expected exceptions (and an unexpected one!), but they're a better looking bunch than I envision when I think of gamers.

[rightwingnut]

Not a good argument on this entry HS.

No one is cheating anyone, the task gold farming in a virtual world is still being performed anywhere its done in the real world, if its cheaper to perform the same key strokes in China than it is in the U.S, well that's simply a matter of efficiency.

Against the rules of the GAME ? LEACHING money from the game company ? They can't possibly make the FAKE WORLD more fun ? What ?. The amount of dexterity needed to farm gold in a virtual world is set by the game company(computer programmers), that someone is willing to do such a task for cents and someone else is willing to pay for it, its simply business.

The problem you have with your argument is that you can't see the value of paying someone to get you ahead in a virtual game.

Though I am not a gamer, I would assume it takes a considerable amount of time to gold farm in a virtual world, someone else simply sees value in this, get over it!.

"A cynic is a man who knows the price of everything but the value of nothing--Oscar Wilde"

[ria]

Chinese people have much higher IQs than poor people in other parts of the world.

pretty bold statement you got there. i hope you have evidence to prove this. Otherwise, you're just a racist in so many levels!

[SFG]

ria: you haven't been reading this blog too long, have you? ;)

Competitive advantages, no matter how fairly or unfairly procured, can not push the system towards sudden or gradual death because of damping feedback loops in complex systems.
That makes sense doesn't it! :)
Not really. Free-market capitalism is in many ways an undamped system; look at all the times someone can grab an advantage, attained fairly or unfairly, and become a monopolist. Money and power, unlike concentrations of salts and pressures, appear to obey a negative concentration gradient (the rich get richer). And there really would be nothing to stop society from collapsing if we ran out of oil.

[Ayn Hayek Rothbard]

"Free-market capitalism is in many ways an undamped system; look at all the times someone can grab an advantage, attained fairly or unfairly, and become a monopolist. "

I hope you are not insinuating that America has anything close to a free market. I believe mercantilism is much closer to our current model.

The only monopoly that can be maintained by force (as opposed to giving people what they want more efficiently than their would-be comepetitors) is government.

As for the topic at hand, I also found it unfair when some kids were able to hang out at the arcade for hours each day and get really good at Zaxxon. I could never get on the high score list - talk about a negative sum experience!

[Fred]

We're not running out of oil.

But here's another example.

In Economy A, everyone does their own housework and nobody is employed elsewhere.

In Economy B, nobody does their own housework but everybody is employed doing the housework of other people. To do so, people have to travel to work.

ria,
Racist or not, this:

Chinese people have much higher IQs than poor people in other parts of the world.

happens to be correct on many "levels."

Did you ever wonder why there are no computer geeks in Sierra Leone or Zimbabwe doing this service for American gamers? Oh yeah, they are to busy lopping off each others limbs and starving to death. Do an internet search on the intelligence of various races, you will find much that is "racist" there as well (but true). Welcome to reality.

[trumwill]

The notion that the gold-farming is okay because it's capitalistic avoids other things that can be considered capitalistic but aren't. Blackmail, for instance, is someone exchanging money in return for a service (in that case, silence). That doesn't make it okay. Bribery is another example.

Let's say that George Steinbrenner is tired of spending all of his money on good baseball players. For a fraction of the price, he can pay off the referees and umpires and secure the same amount of victories or more. Steinbrenner wins, the umpires win. Capitalism at work! Except that paying off the umps defeats the purpose of the game. The same is true for buying items and levels of experience by means outside of the game.

Did you ever wonder why there are no computer geeks in Sierra Leone or Zimbabwe doing this service for American gamers?

Lack of infrastructure, mostly. More generally, African countries have very bad institutions as an aftermath of decolonization.

[bbartlog]

If you look at the game design of World of Warcraft specifically, you can see that the people who created the game *did* regard this as a problem. They knew that overall enjoyment (and revenue) would be damaged if acquisition of these items (basically positional goods) could be farmed out.
The result is that almost all of the really top-tier items in World of Warcraft are 'bind-on-pickup' aka BoP, which means that you can't buy them in the auctionhouse, but have to acquire them yourself (unless you buy an entire readymade character from a leveling service, of course....).
Anyway, there's still gold farming and it is deleterious to the game, but the designers managed to mitigate the impact pretty well. I quit WoW some time back, but for reasons unrelated to the (IMO small) impact of gold farmers on the game.

Must be the infrastructure:

http://www.vdare.com/sailer/060319_cameroon.htm

You might not want to read the whole article, it is probably racist and you might taint yourself.

[mondo]

Lack of infrastructure, mostly. More generally, African countries have very bad institutions as an aftermath of decolonization.

We'll be hearing the same excuses 100 years from now.

[David Alexander]

Lack of infrastructure, mostly. More generally, African countries have very bad institutions as an aftermath of decolonization.

That and Africans in "stable" countries can make more money from e-mail scams about "Nigerian princes" and defrauding gullible Westerners than from rigging an online game.

And speaking of intelligence, "lack of infrastructure" and other BS lies about why low IQ types can't get their act together, remember this little story? Its back!

http://apnews.myway.com/article/20070619/D8PRLSMG0.html

[anonymous]

there are worse things to complain about, and other "unproductive activities" where participants are paid much more than chinese gold farmers. how about the job of a highly compensated all street trader that moves securities back and forth? does he "redistribute" risk and help capital "find its target" and add to market "liquidity", or is he really just engaged in a zero sum game with other traders.

im personally sympathetic to the chinese gold farmer...they're just trying to make a (very small) living, by providing a small entertainment service. it may be unproductive, but labor markets are notorious inefficient.

[anonymous]

eh, apologies for the grammar above. wrote too fast.

[tommy]

I believe that many libertarians would also agree that insider trading is a positive sum job also. After all, it provides a benefit to the inside trader and it is a difficult crime to police. Those seem to be the only two criteria applied by many libertarians in determining whether something is beneficial to society: the existence of personal gain and the difficulty in policing. The fact that it effectively turns capitalism on its head by rewarding those who don't take risks at the expense of those who do doesn't perturb them.

[libertarian]

tommy,

perhaps the stock market would be exposed as the glorified OTB that it is, if there weren't silly laws trying in vain to prevent people from acting on the knowledge in their brains.

[secret asian man]

This situation is identical to women wanting men to buy them diamonds, thus inflating the price of diamonds.