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Star Wars Prequels The Almighty Buck Idle

Economists Discuss the Financial Repercussions of the Destruction of the Death Stars (hackaday.com) 171

Posted by samzenpus from the rebel-bucks dept.
szczys writes: What would the Galactic Economy look like following the destruction of two Death Stars? This is the informed Star Wars debate taking shape between to people who know their economics. Elliot Williams, a Ph.D. in Econometrics, has just debunked the work of Zachary Feinstein who claimed that the Rebel Alliance would have been off had they not destroyed the two Death Stars because what they're left with is a Galactic Economy in ruin. Feinstein, a professor at Washington University in St. Louis, published a scholarly paper early this month saying it was financial suicide to destroy both of the giant construction projects. Williams' take on things is that the project was a sunk cost; destroyed or whole the Death Star expenditures already made are gone and not likely to further cost or benefit the new government. Perhaps most interesting in the discussion is how you estimate the cost of the Death Star projects and the GGP — the Galactic Gross Product of the fictional universe.
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Economists Discuss the Financial Repercussions of the Destruction of the Death Stars More

Economists Discuss the Financial Repercussions of the Destruction of the Death Stars

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  • This is stupid. (Score:4, Funny)

    by Anonymous Coward on Thursday December 17, 2015 @07:39PM (#51140523)

    Work on real problems, and if you can't see any and you're an economist, you're also fired.

    • Re:This is stupid. (Score:5, Insightful)

      by Impy the Impiuos Imp ( 442658 ) on Thursday December 17, 2015 @07:47PM (#51140549) Journal

      "News for Nerds. Stuff that matters."

      This is the first topic in a long time that's firing on all 8 cylinders, baby!

    • Re:This is stupid. (Score:5, Insightful)

      by ShanghaiBill ( 739463 ) on Thursday December 17, 2015 @07:52PM (#51140579)

      Work on real problems, and if you can't see any and you're an economist, you're also fired.

      Well, it does illustrate a basic economic concept: If you buy guns instead of butter, you cannot later change your mind and transmogrify the guns into butter. It is surprising how many people don't understand the principle of sunk costs.

      • Re:This is stupid. (Score:5, Insightful)

        by Hognoxious ( 631665 ) on Thursday December 17, 2015 @07:56PM (#51140595) Homepage Journal

        If you buy guns instead of butter, you cannot later change your mind and transmogrify the guns into butter.

        You can if there's someone else with butter and no guns.

        • Presumably that's where the empire would get the money to pay back these hypothesized massive loans -- looting breakaway planets after forcing them to give up.

        • Re: (Score:3)

          by swb ( 14022 )

          You can if there's someone else with butter and no guns.

          Which is exactly the central growth engine of many Empires.

          Conquering new lands was a form of economic expansion. At a minimum they paid tribute (aka protection money) to you, more commonly your treasure was looted, your lands taken, your people taken back as slave labor, and so on.

          The Death Star is just an efficiency improvement in the Empire's ability to conquer and control systems.

        • If you buy guns instead of butter, you cannot later change your mind and transmogrify the guns into butter.

          You can if there's someone else with butter and no guns.

          Sure, if you don't understand the word "transmogrify" - just sayin'.

          • Fair point, but economists don't tend to fuss over the magical/mystical aspects much. Cr butter is all they see.

            They're a dour bunch. Some might even call them dismal.

        • Yes, but that way lies a slippery slope [youtube.com].

      • Re: (Score:2)

        by dcw3 ( 649211 )

        Maybe, but with guns, I can get all the butter I want.

      • Sunk cost implies the guns have no ongoing value, whereas they become an asset you can use or sell later on - so yes, you can turn them into butter at a later date.

        What you cannot do is use butter and then turn it into guns.

        • Sunk cost implies the guns have no ongoing value, whereas they become an asset you can use or sell later on - so yes, you can turn them into butter at a later date.

          The problem with this would be that the death star is like a F-22 loaded with nukes, not something you're willing to sell to anybody else.

          So you consider using it to intimidate others into paying 'not the empire' tax. Problem, the empire is most of the galaxy. What's the maintenance costs on it? How much does it cost to go from system to system.

          Remember, any planet you actually use it on is gone, including all infrastructure. I imagine the core materials are easier to reach afterwards, but as technology

          • Your F-22 with nukes is still very valuable as it stands, even if you don't want someone to have it as a usable single component - the flyaway cost of an F-22 was $150million in 2009, plus an average cost of $350,000 in 2014 for a nuclear weapon.

            The engines are worth about $20million each, giving you $40million or so of recoverable value, then you need to consider the cost of the high grade aluminium in the airframe itself, giving you another few million. Avionics, radar etc are also saleable, especially t

            • then you need to consider the cost of the high grade aluminium in the airframe itself, giving you another few million.

              Actually, modern fighter jets are built with a whole bunch of titanium, including big arsed plates of it. So that's worth the big bucks, while Aluminum isn't. What makes a particular grade of aluminum expensive isn't the alloying, but the heat treating. That's destroyed when it's recycled, and has to be done again anyway, so it's a genuine sunk cost. They're also starting to use more composites, which are not really recyclable...

              • The major structural frames for both the F-22 and the F-35 are aluminium - titanium is used in particular places for its strength, but its too expensive to be used for standard airframe structural frames, as its too difficult to machine and work with. The major structural frames for the F-22 and F-35 are made on 50 year old presses owned by Alcoa - something that couldn't be done if the material used was titanium.

                No aviation grade aluminium is recycled into more aircraft because its cheaper to start from s

                • The major structural frames for both the F-22 and the F-35 are aluminium - titanium is used in particular places for its strength, but its too expensive to be used for standard airframe structural frames, as its too difficult to machine and work with.

                  Yes, at the time you had to work with Titanium plates. Today, we can cast it. The amount of Ti in the military airframe is increasing.

                  No aviation grade aluminium is recycled into more aircraft because its cheaper to start from scratch for certification purposes, but that doesnt mean that aviation grade aluminium doesn't have properties which make it sought after on the second hand market.

                  It does, but it's not worth millions just because the completed airframe costs millions. It's only worth thousands.

        • What you cannot do is use butter and then turn it into guns.

          Of course you can. It's called trade.

      • Re: (Score:2)

        by CAIMLAS ( 41445 )

        Shortsighted.

        The production capacity used to make the guns can much more easily be turned around into a means of producing mechanical butter churns and automatic milking machines than it would be to produce the machinery to do so from scratch (ie from a "we must churn butter faster, now!" perspective. Short term delay, long term benefit.

    • Death Stars are an incredibly cost-effective project, so long as you build them for the IRS and not for the military.

  • The first poor logism here is that their economy runs on MONEY in the first place and that the EMPIRE is not just some communist enclave that forces ppl to just build whatever the hell it wants.

    • Re: (Score:2)

      by rtb61 ( 674572 )

      In dictatorships, money is nothing more than an exchange medium for resources, it has no power, access to resources is the power. In a dictatorship, the cost of expenditure of assets is meaningless, it is simply a selected measure, don't like the capital measure, disagree and in a dictatorship they kill you. Stuff is worth what they tell you it is worth, disagree and die, so wait in queue or smuggle, either way you are likely to die. So all about access to and expenditure of resources. So in space, a galac

  • Before you think this is some sort of joke (Score:1)

    by Anonymous Coward

    This could be used as an allegory for the abrupt closure of banks "too big to fail."

  • "It's not even paid for!!!"

    • Re: (Score:2)

      by Rei ( 128717 )

      Really, would it have been that much of the galactic budget anyway? I mean, I get that it was huge. But the Empire was said to be, what, 1 1/2 billion developed worlds and 60 billion colonies, with crazy-advanced manufacturing technology... I think that giant construction projects would be pretty run of the mill for them, even if that one was, individually, rather large. Like a nation building an aircraft carrier or something - a big expense, but not one that's going to bankrupt you.

  • Everyone else is discussing what utter fucking oxygen parasites economists are.

    • The witch doctor has a theory that a disease like malaria is caused by a spirit which comes into the air; it is not cured by shaking a snake over it, but quinine does help malaria. So, if you are sick, I would advise that you go to the witch doctor because he is the man in the tribe who knows the most about the disease; on the other hand, his knowledge is not science.

      -- Richard Feynman, The Feynman Lectures on Physics

      For better or for worse, economists are our "witch doctors" when it comes to the economy.

  • But then again, I suppose this is fun to an economist...

    Whatever floats your boat man.

    I guess I don't recall anyone ever talk about money in any of the movies. Do we even know that the whole galaxy was on a capitalist system? I just can't imagine that you could build a Death Star in a capitalist society where you are paying all of your workers a living wage... not to mention your huge standing army....

    • I guess I don't recall anyone ever talk about money in any of the movies.

      "Republic credits are no good here". "I always knew there was more to you than money".

      That's without even looking it up, scholar.

      • I guess I wasn't thinking hard enough.

        After I posted, I thought, oh yeah, Han was negotiating with Obi Wan in the cantina about the cost of passage.

        Oh well, thanks for pointing those out.

    • Re: (Score:2)

      by vux984 ( 928602 )

      I guess I don't recall anyone ever talk about money in any of the movies.

      Did you watch the movies?

      What 10 minutes in Owen buys the droids from the Jawas.

      Luke's request to join the academy was denied because they couldn't afford it. "Maybe after the harvest I'll have enough money to hire some help, and you can go to the academy next year."

      Further on...

      Han solo demanded 10,000 to fly Luke to Alderaan.

      Han: 10000, all in advance
      Luke: 10000, we could almost buy our own ship for that!
      Han: Yeah, but whose going to fly it kid, you? ...

      Ben: We can pay you 2,000 now, and 15,000 when we we

    • I guess I don't recall anyone ever talk about money in any of the movies. Do we even know that the whole galaxy was on a capitalist system?

      I don't know about "the whole galaxy," but you did have bounty hunters.

    • But then again, I suppose this is fun to an economist...

      Whatever floats your boat man.

      Sure. It's not like engineers and physists don't figure out the details of Sci-Fi spaceships all the time. I'm sure some computer scientists have worked out the computational power of the Matrix. I suspect that economists do gedankenexperiments on fictional economies all the time also.

  • claimed that the Rebel Alliance would have been off better had they not destroyed the two Death Stars because what they're left with is a Galactic Economy in ruin

    So the Death Star may be too-big-to-fail? Well, then break up the monopoly into many smaller Death Asteroids and let them compete with each other. If you want to fry big planets, then you use multiple Death Asteroids on the same target.

    It's also easier to sell off Death Asteroids because only big clusters could afford a full Death Star. Death Aste

    • Re: (Score:2)

      by Cederic ( 9623 )

      They already had fuck-off big capital ships called Star Destroyers. It was false advertising by the manufacturers though, they weren't at the star destroying level.

      Then again the Death Star wasn't a star. Imperial bragging, etc.

      But your theory is flawed. Take the Challenger II tank; it's capable of taking out another Challenger II tank, but if the opposition only has RPGs they can use 90 of the fuckers and the tank is still operational.

      I'd assume a planet can take an awfully large amount of damage from a st

  • It's helping to keep at least two economists focused on something other than real-world situations, where their advice would inevitably cause more harm than good.

  • That doesn't make sense.

    I don't count myself an expert in Star Wars trivia, but if the Empire is anything like the Roman empire, then economic expansion via military force is a key part of its economic growth. You conquer new lands for tribute, booty, resources, labor/slaves, and so on.

    A death star is a valuable military weapon that could conceivably improve the economy by allowing the Empire to more easily (and more cheaply) conquer new systems. In terms of conventional industrial economics, it's like ha

    • Re: (Score:2)

      by sconeu ( 64226 )

      Where are they going to expand to? They already rule the fucking galaxy.

      • Re: (Score:2)

        by ceoyoyo ( 59147 )

        It seems highly unlikely that the empire could have conquered any reasonable part of the galaxy in the 25 years they were in power. A bunch of the core worlds (some of which were still resisting like Mon Calamari, Corellia, and Alderaan), sure, but not everything. Even the Old Republic didn't rule the whole galaxy: there were lots of unknown regions.

    • That doesn't make sense.

      I don't count myself an expert in Star Wars trivia, but if the Empire is anything like the Roman empire, then economic expansion via military force is a key part of its economic growth. You conquer new lands for tribute, booty, resources, labor/slaves, and so on.

      A death star is a valuable military weapon that could conceivably improve the economy by allowing the Empire to more easily (and more cheaply) conquer new systems. In terms of conventional industrial economics, it's like having a vastly superior factory.

      A loss of the Death Star would both be an economic loss of the investment and much slower revenue growth because you'd have to fight harder to conquer new systems with more conventional weapons (to the extent that a Super Star Destroyer is a conventional weapon).

      That is sort of like arguing that the allies in WW2 were destroying an economic investment and slowing revenue by dismantling the Nazi work camp system. Why get rid of the camps when slave labor can make so many goods for so cheap? Besides that both the Death Star and the camps aren't necessarily sustainable or that economics wasn't the main goal of either, the allies and rebels found their enemies tactics deplorable and one of the reasons they were being fought.

      • Re: (Score:2)

        by swb ( 14022 )

        It depends on your perspective. To the Nazis, the work camps were economically valuable.

        To the allies, destroying them was an economic value because it made the Nazis easier to fight.

        There's no argument that economic expansion through conquest is self-limiting and economically inefficient, and I'm pretty sure it features in many explanations as to the fall of the Roman empire.

  • Economist....ESPECIALLY PROFESSORS. People, who have never (usually) worked OUTSIDE of schools, colleges their entire lives, teaching at business colleges and universities. Instructing those wanting a business degree on how business works, have NEVER started, run, maintained a business. On paper, their theories are sound. In practice, most would fall flat on their face!

  • Reminds me of the Endor Holocaust which would have pretty much ended life on Endor due to the billions of tons of material raining down on the planet.

    http://www.theforce.net/swtc/holocaust.html [theforce.net]

  • Well, it's really not that hard. Basically they cost only time and fuel, since you can loot the raw materials from rebel and/or independent planets and use rebel scum for free/slave labor. You don't even have to pay the supervising soldiers since complainers end up doing slave labor and there'll be always enough dumb morons who'd prefer to be loyal soldiers than slaves. Easy peasy.

  • If the GGP can survive the total destruction of Alderon, I think the galactic economy can survive the loss of two Death Stars. Then there is also the clone wars. Frankly, it requires a bit of suspension of disbelief to think that the Galactic economy can function at all since the Galaxy seems to be perpetually at war.

  • Just like the last financial crisis, whoever owns the derivatives on the AAA Mortgage Backed Securities on all that Alderon Property, that will never be paid back, is going to make quadrillions of credits.

  • Wouldn't they die if they did not destroy them? (Score:4, Insightful)

    by Zorpheus ( 857617 ) on Thursday December 17, 2015 @08:35PM (#51140803)
    I thought this was the whole point of the first destruction at least, to not be annihilated by it. But I guess economics can't comprehend the value of survival?
    • ... is that calculations are most of the time done on a linear scale, while a logarithmic scale would be much better. On a linear scale annihilation is a 100% loss, compensated by a doubling of the value, which is a 100% profit. But this is not how it works, after a 100% loss nothing is left and a doubling still leaves nothing. This makes large risks look much smaller than they actually.
      On a logarithmic scale annihilation is an infinite loss. 50% loss is equivalent to 100% profit, which makes much more sen

  • Perhaps most interesting in the discussion is how you estimate the cost of the Death Star projects and the GGP — the Galactic Gross Product of the fictional universe.

    Traveller's High Guard rules would probably be the best. You'd just have to have the Referee figure out what the cost of a "Turbo Laser" is, either by assuming it's just a meson gun or something else that would be determined by percentage of ship.

  • Wartime Economics Fail (Score:3)

    by cmholm ( 69081 ) <cmholmNO@SPAMmauiholm.org> on Thursday December 17, 2015 @08:37PM (#51140811) Homepage Journal
    I don't have to read Dr. Williams' rebuttal to see that Mr. Feinstein was either trolling or lacking knowledge on some fundamentals of wartime economics: if the enemy is using a resource as a weapon in combat, it needs to be in some way destroyed or neutralized... especially if said weapon has and can be used to vape your civilian means of production, along with 100% of the co-located civilians.
  • The thing was already built. It's being used to threaten planets into slavery. Why not destroy it?

    • It would have been far better to capture it, if they could pull that off. Even if they have no use for a Death Star per se, it represents a huge quantity of high-value dual-use technology and raw materials which could be put to better use. Destroying it is still preferable, of course, to leaving it in the hands of the Empire.

  • Seems pretty obvious that blowing up planets (Score:4, Insightful)

    by nedlohs ( 1335013 ) on Thursday December 17, 2015 @08:52PM (#51140893)

    for things as trivial as trying to get a prisoner to talk is going to have a larger impact on the galactic economy than the destruction of the death star.

  • Death Star my ass. (Score:5, Funny)

    by fahrbot-bot ( 874524 ) on Thursday December 17, 2015 @09:55PM (#51141123)

    Seriously. It's a Death Moon. Ya, I know I/we heard someone say it wasn't a moon, but it is. Though I'm sure that if the International Astronomical Union (IAU) had there way, it would be called the Death Dwarf Planet or Death Asteroid. I'm going with Death Moon. Not nearly as sexy as "Death Star" or "AT&T" though.

  • Both are incorrect (Score:3)

    by nickol ( 208154 ) on Friday December 18, 2015 @03:19AM (#51141975)

    The true story is somewhat different, and it is about corruption. It's Empire, you know. Darth Wader got a government contract to build a Death Star. It was built not from iron and steel, but from cheapest available materials, using non-qualified workers and third-world subcontractors. In fact, the quality of the construction was so low, that it could fire only once. The Emperor somehow was aware of this affair and arranged an investigating committee (everything goes slow in Galactic Empires). At the time of Episode 4, this committee was already on board of the Death Star. Darth Wader had to do something to get away from this trouble. And he asked his children for help. He gave drawing of the Death Star to Leia and she delivered them to rebels. Rebels successfully destroyed the Death Star and the investigating committee. The only person who could run away was Darth Wader. And later he got another contract from the government - to build another Death Star. Which was never finished.

    From the economical point of view, corruption is not good, but the waste of valuable construction materials was not so substantial. Most of the money went to Darth Wader's pockets.

  • Of having an entire planet obliterated from your economy by a Death Star?

    • Of having an entire planet obliterated from your economy by a Death Star?

      Probably less than one two hundred billionth of your GGP. That would be equivalent to losing $17k dollars from the US GDP.

  • On the contrary, it'd have resulted in an economic boon for the Republic. The deathstar is a sunk cost; the production and supply facilities which were not in orbit for the purposes of construction are now sitting idle. This is likely many star systems worth of mining operations, refinery,

    Think about what happened in WWII in the US: typewriter manufacturers, automotive manufacturers, etc. all quickly shifted gears to produce planes, tanks, and guns - enough weapons that we were supplying the Russians, Briti

  • As I said when the first story was posted... go look at the Senate of the Old Republic. Even assuming two Senators, instead of just one... how many *thousands* of boxes, one for each planet, in the OR did you count?

    So, this estimate's wrong, also, because they scale is off of the *sources* of the Empire's revenue. I'd guess their revenue is orders of magnitude larger than either economist is estimating. I'd put the cost of a Death Star at about the cost of maybe two of the next generation of nuclear aircraf

  • Compare to the NSA Echelon and Cybersecurity data centers. (Heck, consider on-the-books programs like various planes and ships over recent history.) Our current economic system has repeatedly demonstrated the ability to spend oodles of money on military projects with little long-term-investment economic benefit (beyond the salaries of the people involved), so why should the Empire be less capable, especially if it has a lot more member states (and combinatorically-more interstate commerce!) to tax? Skimm

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