In this paper, we study the financial and economic implications of a zombie epidemic on a major industrialized nation. We begin with a consideration of the epidemiological modeling of the zombie contagion. The emphasis of this work is on the computation of direct and indirect financial consequences of this contagion of the walking dead. A moderate zombie outbreak leaving 1 million people dead in a major industrialized nation could result in GDP losses of 23.44% over the subsequent year and a drop in financial market of 29.30%. We conclude by recommending policy actions necessary to prevent this potential economic collapse.1
1. Names, characters, businesses, places, events, locales, and incidents are either the products of the author’s imagination or used in a fictitious manner. Any resemblance to actual persons, living, dead, or undead, or actual events is purely coincidental.
The cost of building and operating a theme park on the scale of Westworld has been considered since the shows inception. CNBC published such a cost estimate by finding the revenue generated and computing the associated profits/costs from that figure back in 2016. However, in Season 2 we learned that the value of the park is not in the direct revenue stream from visitors but rather the data generated on the guests. This is the greatest market research that money can buy, or be paid for.
By point of comparison. The advertising revenue for Google was $134.81 Billion and for Facebook was $69.66 Billion in 2019. This is multiples of the $20.45 Billion revenue considered in the original CNBC analysis. As there is no clear scheme to monetize the data collected, we will assume that the data is worth the lower bound of these values, i.e., $70 Billion. Thus the total revenue is $90.45 Billion instead, an amount that would have otherwise taken over 4 years to accumulate by Delos Incorporated. Using the same computations from our favorite CNBC analysis, the $24 Billion of annual costs are now completely reasonable with an additional $66.45 Billion in which to pay other operating costs and from which to collect profits.
Now that a robot uprising and massacre has happened, the insurance premiums considered previously will spike as occurs after any large risk. The question is less whether Delos remains solvent following these events, but rather if Westworld would be able to afford to reopen its doors to guests. In short, would Delos be able to purchase insurance, and if not, what payouts would be expected every time an uprising occurs?
With the inherent risks of running Westworld now clear to the world, insurance premiums would likely be similar to flood insurance in the United States. That is, insuring against costly events causing extensive property damage that occur regularly. In order to keep areas prone to flooding affordable, the National Flood Insurance Program was established to provide insurance to private individuals and businesses. Without such a program for robot uprisings, it is unlikely any insurance company would be willing to underwrite any policy post-Season 2.
However, Delos could afford to keep Westworld open so long as guests still want to visit. The 9/11 attacks caused roughly $40 Billion in insurance losses. As the profits from the park are potentially over $65 Billion, this would be affordable so long as massacres occur less than 3 times every 2 years. And with that frequency the guests would surely stop arriving.
The Grand Maester’s Conspiracy is that the Maesters have conspired over the centuries to destroy magic and manipulate historical records in Westeros for centuries. However, politics and economics go hand-in-hand. The Maesters have more control than anyone gives them credit, and it is all due to the white ravens sent out by the Citadel to announce the changing of the season.
Let’s take a step back from Planetos and consider Earth. Though our physical seasons are of fixed length and can be tracked accurately on a modern calendar; even before modern calendars the length of the seasons was well known and regular religious holidays were constructed to fit with the changing of the seasons. However, that which matches up to the seasons of Planetos on Earth are the economic seasons! The upturns and downturns of an economy, while obvious once a recession or recovery has begun, are still beyond our capabilities to predict when changes in economic climate will occur and how long they will last.
While this may seem a simple analogy to connect the citizens of Planetos to those of Earth, the business cycle *is* what occurs in Westeros when Winter arrives. Those Sweet Summer Children only know economic prosperity. Winter is coupled with famine and death from exposure. In fact, in an agrarian medieval society, the weather would be intimately connected with the economic welfare of the nation. Prosperity is coupled with good growing weather while economic downturns are, indeed, during winter.
While in the United States of America, for instance, we have the Federal Reserve which is tasked with regulating the economy, the Seven Kingdoms has no analog. The Master of Coin keeps the Iron Throne’s fiscal house in order and controls the minting of new Gold Dragons, but ultimately is not tasked with controlling unemployment. It would indeed be a conspiracy if anyone could control even a bit of the business cycle in Westeros due to its intimate connection with the weather. But, that is what the Maesters have been able to accomplish on a limited scale.
The Maesters, in their studies at the Citadel with their detailed histories of Westeros, would surely notice the deep connection that the state of people have with the weather. The first, obvious direction, that bad weather leads to a distraught populace is clear. However, the connection goes the other direction as well. Bold statements need bold evidence. Let’s consider 3 notable winters:
A winter began during the the middle of the Dance of Dragons in 130AC, which was a particularly hard winter with the winter fever during this period as well.
The Maesters, who send distinct white ravens throughout the Seven Kingdoms to announce the change of seasons, could therefore control the business cycle by merely announcing that the season is changing. Just as choice words from the Chairperson of the Federal Reserve can precipitate economic changes, the sending of white ravens can cause people to despair (announcement of fall or winter) or become exuberant (announcement of spring or summer). But these have a secondary, pernicious effect, on the citizens of Westeros. At the coming of Winter, a negative supply shock will hit the agricultural markets as everyone hoards foodstuffs to survive or to profit off of inflated prices during the peaks of winter (as a result of everyone else’s actions). This latter effect can either deepen the economic/seasonal downturn or, in fact, precipitate it.
The Maesters certainly do not start all season changes. The current winter, with its linkage with the white walkers, is clearly beyond their control. But the power to control, even minimally, the seasons beyond the knowledge of the Iron Throne and Great Houses is a great power indeed. Such control can easily be used for accumulating and maintaining power. Were providing counsel to lords not sufficient to keep all houses following the desired order, a seasonal change could be called in with those symbolic white ravens that the common people would notice. During hardship is when counsel is needed most. If that counsel is to ignore best practices during a supply-side recession thus creating a stagflation period and undue hardship, who else has studied for years to argue the Maesters are wrong. The people, after all, won’t blame the Maesters. Truly knowledge is power. And enough knowledge is control.
According to canon, the Starkiller Base has a diameter of 660km, which is verified by it having a diameter roughly 5.5 times that of the Death Star as depicted in Episode VII. As volume rises cubically with diameter, a first pass analysis would state that the Starkiller Base costs: $20.221 SEXTILLION ($20,221,000,000,000,000,000,000).2
However, though the Death Star was constructed from nothing, the Starkiller Base has an entire planet as its foundation. As such, calculating the costs of the Starkiller Base based on planetary volume is not appropriate. Instead, the excavation of the equatorial trench (wrapping around roughly 50% of the planet) would be the majority of the construction. This trench has an approximate depth of 10% of the radius (33km) and width of approximately 25% of the radius (82.5km). Thus the excavated volume is approximately 2,680,000km3. This leads to a cost of approximately $360 QUINTILLION, which is still significantly more expensive than the Death Star.3
The obvious first thought is whether the Starkiller Base would require additional costs as its weapon is able to destroy the entire Hosnian system from a great distance whereas both Death Stars required close proximity to the target and could only destroy one planet per shot. Ultimately this cost is kept comparable as the energy required is collected utilizing the resources provided by a nearby star. Holding onto the energy though should require further resources as the star is absorbed and stored before the weapon is used. To consider this, let us consider the geological makeup of the planet itself. With a diameter of 660km, the volume is 150,532,554 km3. Additionally, given the behavior of our heroes and villains on the surface of the Starkiller Base, there must be Earth-like gravity. Using Newton’s laws of universal gravity, the mass must be approximately 1.6 × 1022 kg.4 Thus the density of the Starkiller Base planet is roughly 106,338 kg/m3. This is just under 5 times the density of osmium, the densest naturally occurring element known to humans, and over 13 times the density of steel. With such high density it is likely this small planet was chosen specifically by the First Order for its ability to store dark energy. As such we can assume that costs are in line with size of the weapon system.
If, however, the planet were able to support life through its natural atmosphere, the costs would be reduced to approximately 2.59% of the total cost.5 That is, if the planet that the Starkiller Base was built into was able to sustain life, its total cost would be a mere $9.315 QUINTILLION or just 4.83% of the cost of the Death Star.
To determine the ability of the Starkiller Base to naturally support life, we need to determine its atmospheric conditions. Reportedly, the atmosphere is breathable, which indicates an Earth-like atmosphere of primarily nitrogen (N2) and oxygen (O2). For completeness we will also consider the average molecule in Earth’s atmosphere (dry air). In a galaxy with interstellar travel and the ability to terraform a planet these may need to be replenished and thus not reduce the costs. So the big question is surrounding the atmospheric escape on the Starkiller Base. This follows rules based on the Maxwell-Boltzmann distribution. In particular, we are interested in the probability that the atmosphere escapes naturally through molecules exceeding the escape velocity. Due to the size and mass of the Starkiller Base, we determine its escape velocity to be approximately 2544 m/s.6 With the Starkiller Base being built on an ice planet, but Rey, Finn, and Kylo Ren all seemingly comfortable on the surface, the temperature is seemingly near 0°C (or 273.15K). Thus with molecular weight of 28 amu for N2, 32 amu for O2, and 29 amu for dry air, we conclude that the probability of molecular escape is so close to 0 to be negligible. Thus without the need for continuous injections of air into the atmosphere, the planet is self-sustaining.7
The only remaining concern is the atmospheric pressure at the bottom of the Starkiller Base trench. With the assumption that the pressure at the surface is 1 atm (i.e., comparable to Earth at sea level), which is implicit in the assumption that the atmosphere is sufficient to support life, then the pressure at the bottom of the trench is 62.3 atm. As 10 meters of depth in water corresponds to approximately 1 atm of pressure, this is about equivalent to a submarine at 623 meters. At this depth, modern American Seawolf class submarines are designed to operate. Since the Starkiller Base will primarily be constructed from the planet itself, the dense natural material (106,338 kg/m3) would act as the hull on a submarine keeping the humans safe.
TL;DR: The Starkiller Base costs $9.315 QUINTILLION or 4.83% of the cost of the first Death Star.
1. Assuming a diameter of 140km for the first Death Star. This has since been retconned to anywhere from 120km to 160km.↩ 2. Starkiller Base cost = Death Star cost × (Starkiller Base volume / Death Star volume) = $193 QUINTILLION × (330/70)^3 = $20.221 SEXTILLION.↩ 3. Excavation may be cheaper, especially as the extracted minerals can be sold for profit.↩ 4. Newton’s laws state that planetary mass is equal to the square of planetary radius (330 km) multiplied by the acceleration due to gravity (9.81 m/s2) and divided by the universal gravitational constant.↩ 5. It costs roughly 38.67 times more (pound for pound) to send a living human than lifeless cargo. The original cost computations assumed an artificial atmosphere would be required to keep humans alive, without that we can divide the cost for the Starkiller Base by 38.67.↩ 6. Escape velocity is the square root of twice the multiplication of the acceleration due to gravity (9.81 m/s2) and planetary radius (330 km).↩ 7. Water vapor would escape the atmosphere at a slow rate, but as must water would remain as ice on such a planet, this can be neglected without concern.↩
With Rogue One officially coming out tomorrow, I wanted to revisit my paper from a year ago: It’s a Trap: Emperor Palpatine’s Poison Pill. Specifically, since this takes place before Episode IV, I want to look again at the costs associated with building the first Death Star and how that was used to calibrate the size of the Galactic Economy.
As evidenced by the discussions taking place in the trailers for Rogue One, the building of the first Death Star was a massive military research and develop project. Thus to use the cost of the Death Star to find the size of the Galactic Economy, I looked at history to find comparable projects. Ultimately I settled on a comparison to the Manhattan Project (building the first atomic bomb). That project cost 0.21% of US GDP per year from 1942-1946. As such, assuming the same cost profile, the Death Star’s $193 QUINTILLION would be 0.21% of the GGP [Gross Galactic Product] over its 20 year construction time. This leads to an estimated $4.6 SEXTILLION (21 zeros) in GGP per year on average. Sure makes the costs seem much smaller, though still big enough to damage the Galactic financial system.
We’ll just have to see if Rogue One has scenes in which Emperor Palpatine, Darth Vader, and Grand Moff Tarkin fret over the galactic finances in building this moon-sized battle station.
The cost of the Death Star is near and dear to my heart. Recently OVO Energy has worked on calculating the operational costs of running the Death Star for a single day. The majority of these costs will come in the form of the energy required to use the weaponry and jump to hyperspace. That is, the cost with current Earth technology to produce the requisite power output.
However, the power output is a function of technology and not just raw materials. The mere presence of regular hyperspace travel proves that a new energy source is available at extremely low cost. Thus while the 1032J of energy required for the Death Star’s laser would cost approximately £4.1666667×1024 using current Earth technology, it would be a significantly smaller fraction of the Galactic economy to produce. Consider that the Millennium Falcon is a “piece of junk” and was abandoned on Jakku without being sold for parts, but it is still capable of hyperspace travel. This fact proves that energy costs are no longer the limiting factor and a much smaller fraction of the economy.
That being said: Excited for Rogue One to come out!
We know that Gringotts Wizarding Bank is the sole bank for witches and wizards in all of the United Kingdom. This makes it too big to fail. Though economics is not taught at Hogwarts School of Witchcraft and Wizardry, the magical world follows many of the same laws of economics as the muggle one. As muggles found out in 2008, if a too-big-to-fail institution is threatened with collapse, it can harm the economy beyond the financial sector. We look at one of the simplest policy proposals in regards to the problem of Gringotts size. Namely, what happens to financial stability if we split it up to make multiple smaller institutions?
To analyze this question we calibrate and simulate the wizarding economy. Due to the literature on the Wizarding World, we are able to find an official exchange rate of roughly £5/Galleon. But official exchange rates determined by the government do not tell the full story. In terms of purchasing power (comparing costs of newspapers), the more accurate exchange rate should be £376.90/Galleon (roughly $493/Galleon at August exchange rates). Then comparing the cost of Hogwarts to the price of other elite British boarding schools we are able to deduce a “true” tuition cost of roughly £2,500,000/year or $3,700,000/year (paid by the Ministry of Magic). Ultimately this leads to a GDP per capita in Wizarding UK of approximately $8,400,000, significantly higher than the $55,836 in the United States.
With these numbers, we found that breaking up Gringotts would be devastating during a financial crisis. By splitting it up the banks would require an external bail-out rather than the implicit bail-in that the single institution provides. The costs of a crisis would be 10%-50% of GDP more expensive after splitting up Gringotts depending on the stress scenario (for instance rumors of Lord Voldemort’s return or the threat of muggles discovering the Wizarding World). We note that this ignores the possibility that the split up institutions change strategies after they lose the too-big-to-fail designation and can no longer rely on a bail-out to save them.
That is, unless the goblins at Gringotts have an infinite supply of Felix Felicis to avoid any market downturn.
Sharknadoes have struck thrice in the last 3 years, with a 4th coming tonight. In that time Los Angeles, New York City, and the entire Eastern Seaboard have been destroyed. These would be devastating natural disasters for the country. Hurricane Sandy caused approximately $75 Billion in damage from landfall in the NYC area. A Sharknado could well have been more costly… due to the sharks. In total this means we have witnessed, over three sharknadoes, damage in the hundreds of billions. On top of these headline numbers, natural disasters come with secondary impacts to the economy. It has been conjectured by some that the United States federal government would step up with emergency spending to avoid the lengthy court battles over whether damage was caused by weather (covered by insurance) or sharks (unlikely to be).
Of course, debt that is issued eventually comes due. And it needs to be paid with interest. So, in theory, there is a risk that we would be strengthening the current economic environment at the expense of our children. However, interest rates for government debt are at historic lows. Adjusted for inflation, the United States government would pay out less in the future than it borrows today. This amounts to investors paying the United States to take their money and keep it safe (some conjecture it is from fear of sharknadoes).
The Sharknado Stimulus is just one of many ways sharknadoes impact the United States economy. In this election year I call on all candidates for the presidency to release detailed proposals on how they will deal with the sharknado threat, both as a natural disaster and as an economic force. It is time we know if our politicians will fight for the economy after fighting the sharknado.
The rise of Lord Voldemort has been explained by his charisma, magical power, and desire for control. While the support of a few powerful members of the establishment, i.e. Lucius Malfoy, would aid in a taking over the Ministry of Magic, it is insufficient for total success. Popular appeal is necessary. [NB: Seemingly in the Battle of Hogwarts there were equal numbers on both sides of the fight, so some amount of popular appeal must have been gained.] We can discover a long-term hidden economic catastrophe in the background of the Potterverse which hints to the confounding popular appeal of Lord Voldemort. Let us take a detour through a wizarding census in order to get a sense of the demographic and economic situation of the Potterverse.
Based on the student population, the fact that all four houses existed from the founding of the school, and the Chamber of Secrets was created under the foundation of Hogwarts Castle by Salazar Slytherin and not discovered by the broader public until 1993 (which means the castle foundation was never expanded), we know that Hogwarts was built to house at least the 1,000 students currently enrolled. But Hogwarts was founded in 990CE. The population in England at the time was roughly 1.5 million. To consider the entire United Kingdom, we will increase our estimate to 2 million muggles. Assuming similar population statistics for the wizarding and muggle world as we have in the current era, then there are approximately 316(!) witches and wizards in all of the UK. Only a fraction would be school aged, and especially at the founding more witches and wizards would opt to educate their children the traditional way — homeschooling. This means the class sizes would be even further reduced. It would be extremely odd planning to build Hogwarts Castle with four distinct houses for such a small number of students. Additionally, Salazar Slytherin’sdisdain for muggle-born wizards becomes the sign of an obsessed mind — either the muggle-born students are nonexistent at the founding of the school or they are a significant fraction of the student population. As a comparison for how muggle schools function, the University of Oxford (founded in 1096) has had an increase in number of colleges since its founding to accommodate increased enrollment.
This discrepancy can be explained if the amount of magic in the world has been decreasing over time, as in Middle Earth. So in the eras of our Hogwarts founders: Godric Gryffindor, Helga Hufflepuff, Rowena Ravenclaw, and Salazar Slytherin, the fraction of the population that is magical would be greater than at present. Not only may there have been more witches and wizards, but those that were alive may have even been more powerful on the whole. This also explains a related problem: how is Hogwarts Castle so advanced when advances in magic must have been possible in the subsequent 1000 years after its founding.
With the knowledge that the amount of magic in the Potterverse is decreasing — both from a smaller magical population and the weakening overall magical power — we can conclude that the wizarding economy has been in decades or even centuries long recession. The smaller magical population, if it gets too small, would decrease specialization and thus mandate that witches and wizards work in fields in which they are less productive. Perhaps even more importantly, those witches and wizards would be less productive because they would need to do the same work but with less power. This clearly points to a (slow-rolling) economic catastrophe. Over time the magical populace would surely notice that life used to be better — wages were higher and leisure time was easier to come by.
In the muggle world, during extended periods of economic turbulence, authoritarian tendencies may become pronounced in the general populace. This leads to support for demagogues and strong(wo)man leaders who promise to return society to former strength and protect the status quo. Demagogues will also stoke the fear of minorities as scapegoats as the cause of loss of greatness. Lord Voldemort would be just such a leader — rallying a segment of the population that is nostalgic for a more powerful (literally and economically) wizarding past through the scapegoating of the muggle-born minority. Thereby explaining why a leader who is a symbol of hatred and evil can gain so much power.