Are NPCs Economic Morons?

The economy of WoW is one which constantly loses gold. Mail, repairs, AH deposits, AH fees; we're constantly losing gold. Yet we have inflation. This means we are getting more gold than we lose. Even the least economically savvy player has more than zero gold. That means that he has more gold than when he started; he's made a profit.

This gold comes from NPCs. From this it's not that hard to say that moron players made their gold from even more moronic NPCs. It's rather unlikely that NPCs have much use for troll sweat, basilisk tails, and cracked carapaces. Yet they constantly hand out gold for these items.

Paying for worthless items, is that not vaguely similar to digging ditches and filling them in for government pay? NPCs act as a spend-easy government, handing out gold for whatever we do. This drives inflation and distracts players from what might be more productive tasks such as killing dangerous creatures or crafting. To counter this inflation we have AH fees and deposits, effectively taxes, in addition to all manner of repair costs and a NPC monopoly on reagents and all but a handful of mounts. Think about that, how easily we can list the few mounts that are not controlled exclusively by NPC vendors: a few drops from raids, three from engineers, and four class mounts. That means that about 80-90% of the mounts are controlled by NPCs. That's socialism! And we all know that socialists are morons.

Or are they? When we call NPCs morons for constantly taking our crap in exchange for gold, we make two major assumptions.

We assume gold has value to the NPCs. As far as we can tell the vendors have unlimited gold. They can keep buying and buying and buying and never seem to run out. If NPCs have unlimited gold then logically gold would have almost no value to them except for what it can buy.

We assume that the trash has no value to the NPCs. This may not be true. Perhaps they recycle much of it, so it is effectively a raw material for them; as useful to them as ore and cloth are to us. Maybe they disenchant or smelt down the armor and weapons, extracting valuable metals and magical substances. Think of the vendor value of crafted armor from Ulduar designs. If you could extract even 10% of the input materials, the vendor price still leaves massive profit, and NPCs are buying up thousands of pieces of old armor every day.

Once we challenge these assumptions we see that the NPCs may in fact not be morons. They may be the smart ones and WE are the morons. We hand over valuable items and materials to them in exchange for what is to them a worthless substance currency. Even if it is not unlimited, it is clear that the NPC economy has massive inflation and so their goal is to reduce the supply of gold and any input of material is a benefit. They subsidize our return of materials to them through artificially low vendor mat costs, such as rune thread which could easily sell for ten times as much, but the low price encourages mass crafting and therefore high amounts of materials turned over to vendors.

Furthermore, I claimed that vendor trash distracts us from pursuits such as crafting or killing. In fact it encourages these activities. If we could not vendor the surpluses of goods we make while leveling skills (enchanting cannot fully handle them), the net cost of crafting would be even higher, acting as a disincentive to leveling skill and resulting in a much smaller pool of crafters with useful skills, meaning higher unemployment. In addition, vendor trash comes from killing dangerous mobs. Few people farm by slaughtering neutral and harmless NPCs. Instead they kill minions of the Scourge or demons or all sorts of other dangers. Again, vendor trash is an incentive, and sometimes the only reward, for killing the many threats to Azeroth.

It may be an even more complex picture.

I suspect that the governments are short on gold. This is why the government-sponsored (take note of their affiliations) auctioneers and repairers are so eager to take bits of our gold. They have been paying out huge sums to fund their armies. The goblins also appear to still need more gold. It is likely that their operation of many flight paths, ships, and zeppelins are on their own losses but are maintained as stimulants for the trade which brings them gold. The trade wars between them and the large numbers of employees they maintain also require inputs of gold.

In contrast the vendors who accept materials in exchange for gold appear to have a surplus of gold relative to their material goods. They function as crafters and we are the gatherers. We bring them materials and they craft them into vials and thread and even powerful armor which they then sell back to us. In this process they appear to lose gold, but we do not know the full picture. They may also be furnishing the NPC armies and it is from the governments that they get the gold to balance their books.

Overall we are terribly ignorant of the full activity of the NPC economy. We should remember this when attempt to judge the economic intelligence of NPCs. It could be that we are the true morons, trading away valuable artifacts at a fraction of their potential value.