The Hamline: Atium Economics

[Shardcellist]

*Enter distinctive as-of-yet-to-be-composed Hamline opening theme music*

 

"Greetings, ladies and gentlemen, nobles and skaa, Brightlords and Brightnesses; and welcome to

 

The HAMLINE!

 

Your local Cosmere philosophy panel, where we theorize, cause general annoyance to nearby Soothers, and discuss about philosophical issues raised in Sanderson novels.

 

 

Today's topic was handed us by the Survivor himself, mentioned as one of our namesake's favorites. It is, therefore, our opening discussion.

________________________________________________________________________________________

 

General Information: The discussion as recommended by Kelsier to Vin was of atium economics in the Final Empire. The main points are as follows:

• During this period, the only generally known use of atium was Allomancy. Allomantic atium temporarily makes a Mistborn near-unbeatable, but burns extremely quickly.
• Supply and Demand: The atium supply was carefully controlled by the Lord Ruler. While later information tells us why (I will avoid HOA spoilers for the moment), it also provided the funding for the Final Empire. It was sold in limited amounts for exorbitant prices. 

 

The philosophy comes in when one takes into account that if a Mistborn burns his supply of atium, he rapidly burns through the most valuable resource around, spending a fortune in mere minutes. However, if he refrains from burning it, the atium's economic value is meaningless, since it only exists to power Mistborn (as far as all but the Lord Ruler and high-ranking individuals in his theocratic bureaucracy know).

 

 

 

I will now turn the topic over to the panel for discussion.

 

*General applause as the camera zooms in on the discussion table.*

[Shardcellist]

(Double posting to start the discussion)

 

As far as I understand, the main point is that atium only retains its economic value to power Mistborn (usually members of a Great House), but when used is quickly destroyed. This creates a dichotomy where one tries to obtain atium solely for the purpose of using it if necessary, but tries to avoid using it as much as possible. 

Thus, from my point of view, atium is generally a psychological weapon (I have more atium than you do, so you don't want to attack me or earn the ire of my Mistborn), but the existence of multiple Great Houses (potential opponents) means that one would only want to use it as such (while I have more atium than you do, if I use mine to attack you than House Elarial will be able to take me out and overpower us both).

 

 

Thoughts? Questions?

 

For example: What happens if all of the Great Houses mutually agree to boycott all atium whatsoever? This would have to be strictly enforced (any breach would result in an arms race where everyone tried to grab enough atium to defend themselves, and the entire agreement would go out the window), but could result in pressure on the government (the Lord Ruler seems to depend on his atium, to a certain extent,  to run his empire).

Edited October 8, 2014 by Shardcellist

[Green Hoodie Mistborn]

i think the word in your last sentence is the operative one. 

 

TLR "seemed" to depend on atium income. I seriously doubt that the money he made from Great House and to a lesser degree non-Great House purchases of Atium would have been anywhere near sufficient to fund the empire. Every time an Obligator observed a transaction or an agreement, they were paid. I'm sure most of this money ended up in the Empire's coffers. 

 

There were additionally taxes and other things. All nobles had to rent the skaa from TLR. I'm sure that generated the vast majority of his revenue right there. Also, it's an absolute empire where TLR holds all the cards. He has the Koloss, he has the Steel Inquisitors, by right of might alone he owns the entire labor force of Skaa. The economics of the Empire is really just a game that he lets the nobles play. He doesn't need it at all. The whole point is to give them something to fight over I think (in Atium as a resource). 

[Shardcellist]

That is a very good point, and one that I failed to address completely. Upvote for you!

 

I think, however, that you are missing a big part of the main point. That final question was meant as a thought-provoker, something to start the discussion. It was really more of a postscript (I will fix that and make it clearer).

 

If I misunderstood your point, that is my fault. It is a great commentary on the economics of atium and makes it more clear that its value is really only realized by the Great Houses, While the Lord Ruler helped fuel this,

HOA Spoiler

To control as much of the supply as possible to weaken Ruin, as well as using it for Compounding and Hemalurgy

he, being in charge of the supply, was for the most part unaffected.

Your final point (it being a point of conflict for the nobility) is probably the real source of leverage any attempt to mutually-agreed avoidance of atium would contain; weakening the Lord Ruler's hold on the nobility and the general populace.

[Oudeis]

Don't forget, it was also the only way to obtain the services of the kandra, yet another interesting and important economic consideration.

[king of nowhere]

"Atium is only valuable to be burned by allomancers, but when burned is exhausted very quickly, so it's nearly worthless"

Real world gold wasn't good even for that and yet it made the fundation of the world economy. And let's not even start going into the value of the stock market, or of bitcoins. So, nothing strange here. or rather, it's strange, but no stranger than real life. the real world is much more strange than fiction because the real world doesn't need to make sense.

Paradoxically, nowadays gold has several important applications in electronics as a corrosion-resistant conductor, and gold nanoparticles are a promising field of research, so gold is becoming useful, but the economy do not depend on gold anymore.

 

"what happens if all the great houses were to boycott the atium"

well, again let's draw a real world parallel. what happens if all real world nations were to dismantle their atomic weapons? easy one: it would turn out someone didn't really destroy them all, and he would say 'now i can nuke you and you cannot, so you gotta do what i say; suck to be you'.

With atium is even worse. in the case of nukes, you only need a few dozens and even if the other guy has a thousand, the treath of your few dozens will be enough to prevent him from attacking. with atium, if the other guy has more than you, he can win by stalling the fight and wait for you to run out. that's not 100% foolproof, as you would then be forced to attack recklessly and hope to kill him before you run out, and you could succeed, but it definitely gives the guy with more atium a significant advantage.

 

Or, back to economics, it would be like asking what would have happened if everyone stopped accepting gold as payiment, seeing as it was good for absolutely nothing but look shiny on jewelry, and that was hardly important. As far as I know, gold was considered worthy at least 4000 years before present, and in all that time the occcurrence of people refusing its value never occurred. The reason it don't happen, I suppose, is purely statistical. if everyone think gold has value, then everyone would buy gold if offered at a good price. if someone think gold has no value...  then it still means he can sell gold to someone else; so gold still has value. it is a natural tendency of any newborn economic system, to find something to use as currency. back in the days I was playing Magic, virtually everyone would accept counterspells  for trade, even if they never played a blue deck, simply because there were enough people using those that they were sure they could sell them to someone if they wanted. so they started using them, and a few similar widely used cards, as currency.  in the real world, people started to use metals as currency because it would be easy to find someone who used them to trade with, and they were easier to carry around than, say, a flock of sheep. then people started taking metals even if they weren't using them, because they could trade to others. and gold, while used only by a few jewelers, was rare and sought after, so it became quite pricey, so rich people started to hoard it because it's easier to walk around with 100 grams of gold in your pocket than with one ton of iron. And so gold became the money standard for millennia.

So, I can totally see it happening to atium. someone is buying atium and willing to pay a lot for it. even if  you can't use atium, it's still worty to you because it would be easy to sell to those people. so atium becomes valuable for everyone. let enough time pass, and even if all mistborns died, everyone would still use atium for currency,  because everyone would still be sure they could sell the atium to someone else.

[Shardcellist]

"Atium is only valuable to be burned by allomancers, but when burned is exhausted very quickly, so it's nearly worthless"

 

"what happens if all the great houses were to boycott the atium"

well, again let's draw a real world parallel. what happens if all real world nations were to dismantle their atomic weapons? easy one: it would turn out someone didn't really destroy them all, and he would say 'now i can nuke you and you cannot, so you gotta do what i say; suck to be you'.

 

Or, back to economics, it would be like asking what would have happened if everyone stopped accepting gold as payiment, seeing as it was good for absolutely nothing but look shiny on jewelry, and that was hardly important.

First of all, the word I used was "meaningless," not "worthless." The difference between those two is both tiny and as vast as the world itself all at once. From what I gather, you agree that currency, for the most part, is meaningless beyond the fact that it is mutually agreed as valuable. Nothing is worthless unless people decide it is so.

And, of course, the right Feruchemical alloy should be able to store your flock of sheep in a manner that is easy to carry around.

 

As for the atium boycott, it doesn't have to be feasible, merely theoretically possible. We philosophers need not be practical, as long as we do so in a dignified manner, of course. Although, this is why I said it would have to be strictly enforced.

But no, hypothetical situations are a distraction. Deviation. Atium economics. We must discuss the nature of atium economics.

[A Joe in the Bush]

So, I can totally see it happening to atium. someone is buying atium and willing to pay a lot for it. even if  you can't use atium, it's still worty to you because it would be easy to sell to those people. so atium becomes valuable for everyone. let enough time pass, and even if all mistborns died, everyone would still use atium for currency,  because everyone would still be sure they could sell the atium to someone else.

 

The Problem with that is that you're selling a Nuke. Gold was used for Currency, because not only was it easy to make Jewelry out of it, but it couldn't be made into Weaponry. Atium is the Opposite. It's used solely to Make Weaponry. (Kandras are Intelligence Weapons). No matter how Plentiful Nukes were, we wouldn't use them as cash.

[killersquirrel59]

I always thought that the main purpose of the atium economy was really one of distraction. If the noble houses are all fighting over who has more atium, then they aren't actually fighting in the streets. It's actually really clever to create a situation where each house can never be sure if another one has more atium and thus all houses are afraid to attack directly just in case. Sure they overcome this every few hundred years and have a house war, but with the established morality of the Final Empire, I'd bet that the atium economy has prevented far more house wars from happening.

[king of nowhere]

First of all, the word I used was "meaningless," not "worthless." The difference between those two is both tiny and as vast as the world itself all at once. From what I gather, you agree that currency, for the most part, is meaningless beyond the fact that it is mutually agreed as valuable. Nothing is worthless unless people decide it is so.

And, of course, the right Feruchemical alloy should be able to store your flock of sheep in a manner that is easy to carry around.

 

As for the atium boycott, it doesn't have to be feasible, merely theoretically possible. We philosophers need not be practical, as long as we do so in a dignified manner, of course. Although, this is why I said it would have to be strictly enforced.

But no, hypothetical situations are a distraction. Deviation. Atium economics. We must discuss the nature of atium economics.

yes, you are right on the distinction between worthless and meaningless.

still what i said about economics remain. if something is hoardable, easy to preserve and carry around, and there's enough people willing to barter for it, that something will be used for currency, regardless of its actual utility or meaning. it's quite a paradox, but it's a paradox stemming from understandable reasons.

 

The Problem with that is that you're selling a Nuke. Gold was used for Currency, because not only was it easy to make Jewelry out of it, but it couldn't be made into Weaponry. Atium is the Opposite. It's used solely to Make Weaponry. (Kandras are Intelligence Weapons). No matter how Plentiful Nukes were, we wouldn't use them as cash.

gold could be used to pay mercenary armies, to pay blacksmiths to make weapons, can be traded for weapons or for the steel to make them. everything you trade can be traded for weapons, so the distinction is not that easy. yes, you maybe should not pay that rival noble in atium, cauuse his mistborn would gain an advantage over yours. but then, if you pay him with money, he can simply use that money to buy more atium from tlr, does it change so much?

and after all, atium rarely get used in regular time, so it's a calculated risk.

 

as for using nukes as cash, well, not directly, but I see dismantling an old nuke because you can't afford the expence to keep it functional and paying taxes to the lord ruler with atium because you don't have enough gold as essentially the same thing: you are giving up a weapon of mass destruction because you cannot afford its cost.

[Oudeis]

yes, you maybe should not pay that rival noble in atium, cauuse his mistborn would gain an advantage over yours. but then, if you pay him with money, he can simply use that money to buy more atium from tlr, does it change so much?

 

It isn't quite that simple. Atium wasn't scarce simply because it was expensive to purchase, The Lord Ruler actually only sold a small amount of it at a time. No matter how much gold you brought to him, if you'd already purchased all he would allow you to purchase, he would not sell you any more of it. Therefore, you need to not only have enough funds to buy as much of it as you were allowed to purchase, but if you use it as payment to a rival, that rival will now have their allotment + n, while you will have your allotment - n.

[king of nowhere]

It isn't quite that simple. Atium wasn't scarce simply because it was expensive to purchase, The Lord Ruler actually only sold a small amount of it at a time. No matter how much gold you brought to him, if you'd already purchased all he would allow you to purchase, he would not sell you any more of it. Therefore, you need to not only have enough funds to buy as much of it as you were allowed to purchase, but if you use it as payment to a rival, that rival will now have their allotment + n, while you will have your allotment - n.

ok, true. still, it would be a calculated risk to give up a little bit of your atium if you got good stuff for it.

also, if you are going bankrupt, and you can either sell your atium or move away from luthadel and go back too your plantation, it may be worth selling all your atium to stay afloat and just pretend you have more atium to scare off assassins. it can work pretty well. after all, cett had no atium and he didn't even have a mistborn, but vin was still too afraid to go after him for most of the book, because she didn't knew for sure if it was a trap.

[Oudeis]

Yeah, but now you're only positing the most extreme of situations (bankruptcy, destitution). What about common, everyday economics between powerful, solvent houses with other wealth to draw upon?

[Green Hoodie Mistborn]

That is a very good point, and one that I failed to address completely. Upvote for you!

 

I think, however, that you are missing a big part of the main point. That final question was meant as a thought-provoker, something to start the discussion. It was really more of a postscript (I will fix that and make it clearer).

 

If I misunderstood your point, that is my fault. It is a great commentary on the economics of atium and makes it more clear that its value is really only realized by the Great Houses, While the Lord Ruler helped fuel this,

HOA Spoiler

To control as much of the supply as possible to weaken Ruin, as well as using it for Compounding and Hemalurgy

he, being in charge of the supply, was for the most part unaffected.

Your final point (it being a point of conflict for the nobility) is probably the real source of leverage any attempt to mutually-agreed avoidance of atium would contain; weakening the Lord Ruler's hold on the nobility and the general populace.

 Sorry I think I did miss a part of the main point, but thanks for the upvote

 

i would say that we have an interesting real world semi-parallel right now between Great House Atium Boycott 2014 and how effective it would actually be, with the mass protests in Hong Kong right now. The "people" are trying to passively resist and finding that they really have no leverage at all. I suspect that the Great Houses would quickly discover that their Atium boycott would lead to naught for them vis-à-vis the Final Empire in a similar vein. 

 

@outis - if you are a powerful solvent House with other resources, why in the world would you even consider trading Atium to a Rival Great House? That's like sacrificing your Queen near your opening gambit in Chess almost (ok not exactly, but you get the idea). 

[Oudeis]

 @outis - if you are a powerful solvent House with other resources, why in the world would you even consider trading Atium to a Rival Great House? That's like sacrificing your Queen near your opening gambit in Chess almost (ok not exactly, but you get the idea). 

 

Several reasons.

 

First, because... um, to put it bluntly, I don't think your analogy makes much sense. First of all, house wars only happen once every one or two hundred years. Hostilities simply aren't that high, and not everyone exists in as high and perfect a state of paranoia as the average Sharder.

 

Economics is not like playing chess against one opponent. It's like playing chess, but also go, but also mario kart, but also hopscotch, but also a wrestling match, against a dozen opponents, where each game can affect each other game, losing any one game means you lose them all, and teaming up is absolutely allowed. Trading away atium, then, is like sacrificing your queen in Chess, but gaining a sumo wrestler for wrestling and a jetpack for hop scotch, if the deal is lucrative enough.

 

It's similar to the conundrum expressed in the second and third books. Atium is only valuable because of allomancy. Yet, allomancy uses it up. You can't have your atium and burn it, too. Well, you also can't hoard your atium, and yet get value out of it, too.

 

So. In conclusion, the only reason to hoard atium would be because you feared someone would kill you with Mistborn, which is a rare enough circumstance that the average Lord wouldn't be so worried about that that he'll allow wealth to go stagnant out of fear. And, as any economist knows, you have to speculate to accumulate. Not using your atium has what's called an "opportunity cost," meaning the money you never made that you could have. Most very rich people have a comparably small percent of their worth as liquid assets; most of that money is busy making more money. A Great House can be solvent, it can have excellent contracts and revenues pouring in, but those revenues, if the House is smart, will be going towards yet more endeavors, making bigger contracts, purchasing more things like land or mills or raw materials that will produce value.

 

It will be a not uncommon occurrence for a solvent House with a strong revenue stream to discover a business opportunity which requires investment. Passing up that chance, or even just investing less than you could, just so you can sit on some atium, will provoke the opportunity cost. That's more money which could go towards more land, more guard, buying more atium next time it's available for sale, paying the Cantons to prevent them from authorizing assassinations against you (I want to find that WoB that talks about sanctioned assassinations; there's more than one way to prevent your own assassination at the hands of Mistborn.). This House will be able to tell itself that it never spent any of its atium. It will not, however, be as rich a House as it could otherwise be. The odds of someone caring enough to kill you are comparatively slim in the era of the Final Empire, outside of a House War. The odds of wanting to have more money are more or less constant.

 

Joshua, the WarGames computer, was wrong. Not playing at all is the opposite of a winning move. Being known as a hoarder of atium will more frequently count against you than work for you. And, you'll be sitting on money that could be better used getting you more money. The other Houses, the ones willing to allow the atium to flow as the economy sees fit and profiting thereby, keeping around enough of it for a reasonable level of protection, will be outstripping you rapidly in all the games that aren't chess, and you'll be left in the dust. They'll defeat your entire House, all without burning a gram of atium.

 

Just one man's opinion.

[king of nowhere]

 

@outis - if you are a powerful solvent House with other resources, why in the world would you even consider trading Atium to a Rival Great House?

I was going to answer to that, but then outis one popped up, and it's basically the concept I was trying to pass, but explained better than I could.

[Moogle]

Another huge issue with hoarding atium is that it marks you as a target for theft.

 

If you're known to be hoarding atium, suddenly every single thief and Kelsier in the area is going to be after you, trying to steal it. You're basically asking to be robbed.

 

I agree that keeping a huge stockpile of it doesn't make sense. If nothing else, you can sell it, invest the money, and buy more atium later as Outis said.

Edited October 9, 2014 by Moogle

[Green Hoodie Mistborn]

I'm not suggesting that a House would horde Atium at all. I just don't think they would sell it to other Great Houses or even lesser houses in most circumstances. 

 

I'd think that they would get letters of credit from the Empire itself vs. their verified by an Obligator store of Atium which they would then use to transact business and give up the Atium to the Steel Ministry rather than a rival house. Or even simpler would just be to sell it directly to the Steel Ministry to get the gold. It serves their purpose of having large amounts of money on hand to invest, it also serves TLR's purpose of reducing the available supply and therefore drives supply down even further. He'd have been foolish to have have this practice in place. 

 

I understand economics and opportunity costs and money making money. But giving your enemies or even opponents a potential weapon like that is foolhardy to me. TLR not buying Atium for gold back from Houses or doing some credit scheme would have been also to me. 

[Shardcellist]

Just a question, for clarification: Why pay the massive costs for atium from the Lord Ruler in the first place if you're just going to sell it back to the Steel Ministry? I doubt they would pay more to buy back atium that they just sold you then they received in the first place, so you might as well just keep the boxings.

 

As for atium in these economic circumstances, I think the only value to holding onto it (other than Mistborn fighting) is a type of speculation. What will it be worth in the future? It does seem like it might be a more stable form of currency, with the Lord Ruler limiting the supply. As for theft, remember that Kelsier was just barely able to rob House Venture; most lesser Mistborn would be unable to do so; he was only able to find it in the first place because he knew what he was looking for, then he had two tough fights: one with hazekillers and one with the house Allomancers. Still, proper economic investment seems the way to go.

 

As for Mistborn fighting, I doubt most houses send their entire supply with one Allomancer; it is really a question of who bothered to take more from the house safe before leaving on the nighttime errands. Therefore, the only time a massive stockpile would ever be of use is in a full-fledged house war; which, as mentioned, is a rare occurrence.

 

Thus, the question is this: How much better is atium than gold as regular currency? How much does its limited supply and Allomantic potential (along with kandra opportunity, as mentioned above) improve its worth above its strict monetary value?

[Oudeis]

What will it be worth in the future?

 

This line made me chortle.

 

It's possible that atium might be required for some transactions. It's a bit of a stretch, but still plausible. Let's say someone is selling some raw material that you want. Someone else is paying their asking price, in gold. Perhaps if you offer the same value, but in the more-stable currency of atium, you might convince them to sell to you, instead.

[killersquirrel59]

Atium is actually a pretty close equivalent economically speaking to diamonds in the real world. All supplies tightly controlled by a single party to hyper inflate the value of something that is useful but not particularly rare until the entire world is convinced that it is far rarer than it truly is. 

[Green Hoodie Mistborn]

@killersquirrel - I like the direction of your thought, but that is a "yes and no" to me. Ever try to sell a diamond? you're lucky to recoup 10% of the purchase price, because the perception of diamond's scarcity is not equivalent to the reality. Even with the tightly controlled supplies, there is never a shortage of diamonds. Atium OTOH doesn't suffer from that issue... it really is as scarce (on the market) as it seems to be so you should be able to demand full or inflated prices for your little nugget of Atium if you are going to sell it, though finding buyers may be tough.