Interstellar Economics

by Stephan Zielinski [szielins@pbi.net]

[This article was originally part of a long-lived Usenet thread with the above subject, but I found it interesting and universal enough to be saved for the gamers of all kinds and systems. For those who are not enough familiar with GURPS Aliens, Memer & Saret are an interesting symbiotic couple of races which require no life support whatsoever, and the original idea of the thread is that M&S cargo ships would be able to transport goods at much lower rates than conventional (read: human) ships. -- Incanus]

Merchant shipping is a dang complicated subject.

To get a ballpark of how much cheaper the Memer-Saret shipping is going to be requires some ugly arithmetic. Briefly, you need to calculate how much the owner of a conventional ship and the owner of a Memer ship has to charge to make a reasonable profit. I did a small amount of work on this, while trying to design a "reasonable" starship design process:

Design a merchant ship. Determine how much cargo it can carry and how long it takes to complete a "typical" trip. (Include layover time.)

Determine how much it costs to operate the ship for the duration of the trip. Don't forget fuel, crew salaries, routine maintenance, ship insurance (if not self insured), bribes, and so forth. This is harder than it looks -- you have to amortize the cost of the ship over its useful lifetime, taking into account the interest payments on the loan it took to purchase the accursed thing. You can cheat by arbitrarily picking a useful lifetime (Traveller used 40 years) and the duration of the loan (decades is not unreasonable for multimillion credit starships,) computing how much principal and interest gets paid out total. You can then pretend that this is spread out evenly over the lifetime of the ship. (I'd suggest you ignore inflation completely; it'll just make your head hurt, and besides, you can never count on the currency inflating to make it easier to pay off your debt.)

Add in a reasonable profit margin. (This should probably be close to the interest rate the ship was purchased with -- and it should definitely be equal to or higher then the yield of "safe" investments.)

Divide the final cost by the tonnage of cargo shipped. This yields a good ballpark price the wise merchant will charge for shipping cargo over that particular run.

Complications:

  1. This assumes the merchant can carry a full load both ways. If not, use the average tonnage carried instead of the ostensible full load.
  2. Valuable cargos have to be insured; bear in mind that shippers will have to pay this cost as well, either to an insurance company or through self-insurance.
  3. Very large corporations might ignore the interest rate on the loan when doing their calculations if they're merely trying to convert an excess of currency into working assets.
  4. This assumes piracy is either uncommon or covered by the ship's insurance. Calculation what the insurance policy for a starship would look like is way, way beyond me.
  5. Remember that while the default GURPS Space design system lets you purchase 1 TL obsolete equipment for 10% of the list price, the wise GM will considers its implications very carefully.

Got that? Good! Now all you have to do is calculate what it costs to ship nonperishables over a conventional ship versus a Memer ship!

At this point, odds are the Memer economic advantage is looking significant, but not crippling. For a 1/10th speed ship to maintain profitability, it has to be ten times cheaper to operate -- and in most design systems I've seen, the bulk of the ops expense goes to paying for those multimillion credit engines. A few hundred credits for soyameal and bottled air starts looking pretty cheap -- and in most systems I've seen, airtight hull integrity isn't all that expensive, either. If your system charges a fortune for life support and hull integrity, your mileage will vary.

If you don't want to go through all that, here are some possible shortcuts:

  1. You can get a rough idea what the difference between the two would be by designing two ships carrying equal amounts of cargo with similar performance, but omitting the life support and hull integrity on one. If the Memer ship is 5% cheaper, their shipping rates (for what they can carry) will be about 5% cheaper as well.
  2. If I recall GURPS Aliens correctly, the Memer were pretty unlikely critters to begin with -- they had a closed-cycle metabolism with the Saret, but no readily apparent source of energy. I'd be sorely tempted to drop them -- at least as written.
  3. As written, the Memer are very alien and very xenophobic. Hence, it's likely the more conventional states would collectively impose trade sanctions against them; states want their merchant traffic to be reliable, under their control, and more-or-less loyal to their respective governments. Governments could impose a surcharge on Memer shipping in their territory to keep them from dominating non-perishable shipping; the Memer could still eke out a profitability niche by engaging in the boring, economicly insignificant arena of "smuggling" "junk" from one system to another under the table -- scrap metals, plastic toys, obsolete equipment, and so forth.
  4. Remember that very few cargos can withstand exposure to vaccuum. Machines have to be specially designed to operate in vaccuum, lest metals vaccuum weld together and lubricants boil away or break down. Things like ores travel better -- but who in their right mind is going to ship bulk ores interstallar distances, rather than build a refinery next to the mine? Hence, you can probably get away with using the Memer as local color and ignoring their economic impact. (Curtailing their reproductive rate is probably a good idea -- as written, they can colonize 90% of the useless rocks of the galaxy, and if they breed anything like humans, interstellar space is going to be swamped with them.)

For extra credit, calculate what a Cidi merchant could do! For extra special bonus credit, calculate the growth rate of a population of Cidi on a virgin planet! For extra special mongo bonus credit, calculate whether it would be cheaper to blockade the Cidi homeworld and planets, or lose your entire government as Cidi replace your fifty-kilo bureaucrats, professionals, and information workers with two-kilo teddy bears that can exist on a fraction of the land and food! For a PhD thesis, pick a typical 20th-century democratic constitution, and figure out a way to adapt it to a Human-Cidi planet in such a way that the humans' concerns aren't squeezed out inside a hundred years! For a lollipop and a pat on the head, guess why I say it was a very bad idea to include tribbles with hands!

-- Stephan "for a high paying career in public relations, draft a press release explaining that the 1024 releases of the Rider virus on the Cidi homeworld was a regrettable accident" Zielinski