The journey from there to here

Everything I need to know about economics, I learned from the board game "monopoly".

My strategy at the beginning of the game was simple: buy every property you land on, even if you have to mortgage existing properties to do it. When you have monopolies, build as soon as possible as much as possible. I, of course, would usually attempt to control the high rent/low rent combos of boardwalk, park place, baltic and mediterranean, because that gave me "the corner". Even an "advance to go" card would subject the other player to the possibility of paying money to me for landing on my property.

As we played, faithfully, we realized our biggest barrier to being the barons we expected to be: the lack of money. So we used the common "house rule" of placing a $500 and all taxes, "chance" and "community chest" payments in the middle of the board, in hopes that a "free parking" roll would net us this lottery. As the game wore on, stops on "free parking" became more and more common (often following a potty/soda break on the part of one of the players, oddly enough...never did figure out how that worked). Eventually, however, the bank ran out of money, and we either made our own or cannibalized the older monopoly sets that had previously been victimized by our wanton destruction. This, not coincidentally, is also how we ended up having four cars on the board in the same game and the mass confusion that followed. Occasionally, we would even cannibalize the "life" games for the higher denomination bills that it offered.

The result was predictable: mass inflation. Landing on "boardwalk" or "park place" even when fully equipped with hotels no longer affected us as we were paper money millionaires. When someone went out of the game, we would auction off the property, and the auction amounts would reach absurd levels, with the creditor being the eventual loser, as the person going "out of the game" would often wind up obtaining enough money at auction to stay in the game for several more turns, occasionally winning back others' properties through the auction process and avoiding properties through a strategy that involved getting sent to jail repeatedly.

The game would drag on forever, and would often end at about 2 or 3 in the morning, when we finally decided to count assets and declare a winner. While it was fun for us, the money became meaningless, as it had no value.

The same economics I learned in those monopoly games applies to real life. It explains why a minimum wage increase won't work. It explains why wealth redistribution won't work. Because as you increase the supply of money, it becomes basically worthless. If everyone's got $50,000 in assets, guess what? It's going to cost you $20 or $30 or more per pound  for that ribeye steak instead of current market rates, because the money demanded will always be proportionate to the supply of money.

What I know about economics could fill a thimble. But I do know enough to remember the lessons taught me by that simple little board game: you can't simply increase the money supply to satisfy your needs. You need to increase your earning ability to obtain more of the money already available.


Comments
on Mar 09, 2006

Pffft.

I don't see any props in this article to the "cheater."  I was always the cheater...sneaking money out of the bank when no one was looking or went for a potty break.  I still never won a SINGLE game though, I guess because I HATE THAT GAME.

So I've never heard of a group of people playing and not having at least one cheater...hows that play in reality?

Cheaters never prosper?

 

on Mar 09, 2006

Actually, I made vague reference to the cheater when I mentioned how someone always managed to land on free parking when the others were out of the room. That was much better than the "free bank loans", because in our group, the banker always took his own money, property, and the bank to the bathroom WITH him...none of us trusted each other at all.

on Mar 09, 2006
Your thimble can hold an ocean.  While I danced the dance and got a degree in economics, your simple blogs on the subject have always been very insightful and right on the money.  You explain in plain english what I usually resort to techno speak to do.  I am impressed with your grasp and understanding of economics.  Some of my most educated peers in my chosen field (computers-networks), cannot understand what you make sound so simple to convey.
on Mar 09, 2006

and avoiding properties through a strategy that involved getting sent to jail repeatedly.


That seems to be a common strategy for former business tycoons in real life too.
on Mar 09, 2006
the banker always took his own money, property, and the bank to the bathroom WITH him...none of us trusted each other at all.


OH ho ho! Now that's thinkin! What is it about that game that just makes one want to cheat?
on Mar 10, 2006
That's nothing. I do remember a game that basically encourages cheating. It's a card game, can't remember how its played...

Oh yeah... and that's a great article on why printing money on other reasons than replacing old money is just a bad idea.