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Wizarding economy revisited

Discussion in 'Fanfic Discussion' started by Skeletaure, Nov 11, 2017.

  1. Skeletaure

    Skeletaure Magical Core Enthusiast ~ Prestige ~ DLP Supporter

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    When you write a fanfic, what changes do you make to how the wizarding economy is portrayed?

    For me I try to fit what is observed in canon into something with a bit more economic rationale behind it. Now, a lot of the economic aspects of canon are somewhat awkward to combine and I don't attempt to do so. Rather I take what I consider the fundamental economic observations of the wizarding world and attempt to stay true to those.

    So, for example, I do not change the fact that in the wizarding world money is necessary, and wealth carries social status, but equally I do not change that even very poor people like the Weasleys can still live with a quality of life which in the Muggle world would be considered Middle Class. Nor do I change the "feel" of the wizarding economy i.e. I do not turn Gringotts into a modern bank, or create a stock market, or a huge marketing industry with brands like in the modern Muggle world (with a few notable exceptions)

    One thing that I feel needs to give way, given all this, is currency/prices/retail.

    Though it is possible to convert Muggle money to wizarding gold, I think it would be foolish to consider the two economies as comparable in any way. Wizarding prices are set with reference to the largely self-contained wizarding economy, and as such are determined by the economic conditions therein. Therefore I think authors should avoid setting wizarding prices by what equivalent goods would cost in the Muggle world.

    Let's talk about a few of those uniquely wizarding economic factors.

    Firstly, demand for "essential goods" is much lower because wizards' magic allows them to do for themselves many of the things which Muggles have to pay for. Wizarding culture also much more strongly favours the idea of an inter-generational family home, further reducing expenditures. Consider where you spend the vast majority of your money: rent/mortgage, electricity, gas, water, phone, internet, food. Of these, the typical wizard only has the expense of food. Almost all wizarding goods are in fact luxury goods, not necessities.

    Secondly, wizarding society does not use mass production. The vast majority of items on sale will be hand-made, often by the independent proprietor of the shop you are in. There's no outsourcing or globalisation, no long supply chains which cut costs. Just a shop owner who makes stuff and then sells it.

    Thirdly, and as a result of the above, wizarding demand for basic goods is much lower than in the Muggle world. Wizarding demand for luxury goods is about the same as the Muggle world but supply is much lower.

    With this in mind, I further imagine that A) wizarding wages are much lower than in the Muggle world, because wizards rely less on economic activity to meet their basic needs, so the vast majority of wages constitute disposable income, B) prices of most goods will be much higher than a similar type of good in the Muggle world C) sales volumes will be much lower, further increasing the need for higher prices.

    You also have to consider that the wizarding economy does not really have a financial sector like in the Muggle world - no double entry book keeping, no central bank. Gringotts is a holder of safety deposit boxes, not a real bank as understood in the Muggle world. These factors mean that the money supply in the wizarding world is much smaller than in the Muggle world, because M0/M1 (narrow money) = M4. As such the money supply does not increase over time through banking activities. This lack of expansion of money supply would mean that wizarding prices are very stable (low inflation), but it also means that wizarding currency is expensive relative to Muggle money. The supply of Muggle money would be orders of magnitude greater than the supply of wizarding money. There would be no wizarding billionaires, or likely even wizarding millionaires beyond a few million galleons. Even then, the very rich wizards likely have most of their wealth tied up in illiquid assets like land.

    All of this adds up to, I believe, a fairly consistent economic position which maintains the core elements of the wizarding economy as seen in canon: an unsophisticated economy built around independent craftspeople and landowners, not unlike the pre-industrial economy of, say, the early 1600s. Financial activity would be limited to small independent moneylenders, not institutional banks.

    What it would not preserve, however, are the 1 galleon = £5 exchange rate JKR has used. The exchange rate would be much, much higher.

    There is one aspect of the pre-industrial economy which I think has potential for exploration which is not shown much in fanfiction, which is mercantile activity. Now, wizarding society is much less based on raw materials, so this would be a less vital economic sector, but one presumes that there would still be commodities in demand for traders to make money with (potions ingredients, for one). And of course you can have trade not just in raw materials but also intermediate and finished goods.
     
  2. Anarchy

    Anarchy Half-Blood Prince DLP Supporter

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    I agree with most of what you said. Lots of people seem to get hung up on the idea of a wand costing 7 galleons so they go through great lengths to dismantle and rationalize how the wizarding economy should work. Except, they use the muggle economy on the basis, which is incorrect. Muggle supply and demand and economic chains are not the same as the wizarding world, so you cannot just apply the same logic.

    I mostly just leave the canon economy alone, but if necessary, I'll try to rationalize smaller pieces of it, rather than trying to make everything work

    7 galleon wand? Easy. When a dragon is harvested for components, every single piece is used. So, if the heartstrings only cost Ollivander a few sickles at cost, that's because the rest of the dragon is worth thousands when parted out. But is selling wands alone at 7 galleons a pop enough to sustain a business? If you add in things like supplies (wand holsters and polishing kits, which could very well be where most of his profits come from) and add the notion that it's not uncommon to get a new wand every 5 or 10 years, then I think he'll be fine.

    Weasley's being poor despite having magic? This is also easy. All because someone has a wand doesn't mean they can do literally everything. Plus, their level of wealth is subjective. Arthur is a Department Head, albeit of a relatively minor department which is technically(I think) a sub department of the DMLE. So he has to get paid some amount of money. So, the difference I think, comes in with his actual situation. As an example, for a wife and husband living by themselves, no children, making 50k a year is enough to get by just fine (assuming you're not living in a huge city, but that's another issue). But, as soon as you start adding children, that 50k gets awfully tight. 7 children plus the husband and wife and suddenly that 50k is nothing, 100k might not even be enough to support a family like that.

    What about galleons being made of "gold". There's also an easy answer to that, even multiple ones. The coinage could be enchanted in such away as to be tamperproof, so there would be no actual way to melt it. Or, perhaps "goblin gold" is somehow different than normal gold. It could simply be an alloy, like most coinage. You could further justify it and say the actual gold content is roughly about about 5 pounds worth, leading to the roughly 1 galleon = 5 galleon exchange rate, but I don't think that part's actually necessary. It's just enough to say that they're not made of solid gold, so you can't just lolwalk down to a pawn shop and exchange a single galleon for a thousand pounds and break the economy with a simple thought because no one ever thought of that loophole (which I think is one of the worst cliches).

    So yeah, most of it just comes down to the fact that the wizarding world is not the muggle world, so their inflation and cost of living and supply chains and all that stuff is not the same.
     
  3. Moukaboy

    Moukaboy Banned

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    Something people seem to forget is that wands are essential for any wizard , my head cannon is that the ministry helps and buys some/most of the components , maybe even dragon farms are in effect with dragons being killed en masse .
    The 7 galleons are just for the time Ollivander spends creating the wands/ for profits .
     
  4. ASmallBundleOfToothpicks

    ASmallBundleOfToothpicks Professor

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    I'd say that it's a little aggressive to completely rule out magical mass production of simple objects. I'd think that animation spells could easily be used to create the magical equivalent of an automated factory. Failing that, House Elf labor could be another option. We also don't know how many objects can be enchanted at once, what the time investment is, or if there are any material components which could cost significant money.

    So to use Ollivanders as an example, if he can whip up hundreds of blank wands in an 8 hour workday with an enchanted lathe and some simple transfiguration, I can see how 7 galleons is reasonable a 5 British pounds per Galleon exchange rate. It also depends on how expensive Cores are- although admittedly, it is implied that Phoenix Feathers are rare. That said, just because Phoenix Feathers are rare, doesn't mean that they're expensive; they may not have many uses outside of crafting wands. Unicorn tail hairs seem fairly cheap, and we don't really know how many (or how often) Dragon Hearstrings are produced. I can't see most of the wood being a large cost either, due to the extremely low mass a wand has compared to a tree, even if such a high quality substance is relatively expensive.

    Remember, Ollivander could just be buttering up his clients when he talks about the difficulty acquiring the materials and the exacting craftsmanship that goes into his products. For all we know, dragon heartstrings could be shed every month or so, and the old coot has two warehouses full of them.

    Now, whether or not there's a demand for goods in that kind of quantity, that's another issue.

    The other concern is how quickly do the items wear out. Realistically, if the items aren't terribly complex or sensitive, Reparo should keep it in working order, which would explain how many hand-me-downs we see in canon. Not to mention transfiguration makes resizing clothes a breeze. The Duplication charm also means that as long as you have the original item, you can create hundreds of temporary copies as needed, and just vanish them when you're done. It brings a whole new meaning to the idea of disposable utensils.

    I guess I'd say that there's probably a rather exponential curve in prices. Simple items, like Fred and George's prank items, Wands, Honeydukes chocolate, and books are probably quite cheap and plentiful. Stuff like Moody's Eye, a Wizarding Portrait, or the Weasley's family clock are probably orders of magnitude more expensive.
     
  5. Sesc

    Sesc Slytherin at Heart Moderator

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    Looking at the essay I once wrote, my conclusion was that the economic stuff actually is fairly self-consistent. And to attempt to fit it together, I mostly agree with your assessment, @Taure. I did it the same way.

    There's no mass-production, which creates a huge disparity in cost between simple stuff (simple as in, simple to e.g. transfigure, which would cover non-magical stuff, such as, say, simple furniture), and unique magical items (think a Pensieve) -- but nothing in Canon contradicts this. I think we can derive three conclusions from this:

    1) The amount of money you need to "get by" is low, compared to what the wealthiest people have (I pegged it at 350 Galleons per person and year, see below).

    2) Half or more of this sum will be spent on food (i.e. half a Galleon/day), because that can't be transfigured (Gamp's Exception), making it expensive, compared to other necessities.

    3) The spread of income or available money is quite big, as is the difference in living styles -- "all-magical items" will be mostly limited to rich people and talented people, which would typically coincide, since the latter can sell his talents accordingly.

    And again, nothing in Canon contradicts this.

    The single most helpful thing you can do, IMO, is to start thinking in Sickles. The exchange rate has to go, yes; but a reasonable one is 1 Sickle = 1 Dollar = 1 Pound = 1 Euro (to give a range), so like three times Rowling's semi-official one. To compare: 350 pounds = 6,000 Sickles, give or take. Within this frame, most prices in Canon fit astonishingly well. Take a hot chocolate aboard the Knight Bus (3 Sickles), a Canary Cream (7 Sickles), a Butterbeer (2 Sickles). And contrast with an off-hand bet by Draco of 5 Galleons, i.e. 85 Sickles, to drive home his wealth; Lucius should have an income above 100,000 Galleons, a hundred times what Arthur makes, easily able to afford a racing broom that should cost around 3,000 Galleons (or even seven of them); or the awful fine Arthur had to pay -- 50 Galleons (850 Sickles), when they likely had no more than 200 Galleons/year/person to begin with.

    The one thing that does not fit -- and can't be made to fit -- is the price of wands. Harry's wand costs 7 Galleon, while his potions book (fittingly) costs 9 Galleons. That doesn't make sense. A wand should be in the range of 100 to 1,000 Galleons, enough to allow for middle class families (income ~4000 Galleons or 68k Sickles/year for four people) to save up (for eleven years) for this once-in-a-lifetime item, and too much for the Weasleys to afford it.

    Still, by fixing that, I believe most things we see make a reasonable amount of sense. I felt like I had a grasp on the HP economy, after I considered all that, anyway. Thinking in Sickles (and imagining a somewhat pre-industrial economy) really helped.
     
  6. Methos

    Methos High Inquisitor DLP Supporter

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    I will get rid of the "17 Sickles in a Galleon, and 29 Knuts in a Sickle" and used more sensible numbers.
    I prefer Galleon to contain some gold alloy TM Gringotts.
     
  7. ASmallBundleOfToothpicks

    ASmallBundleOfToothpicks Professor

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    Or there is some form subsidization for orphans/muggleborns getting their first wand, which would explain why it becomes more important later on for Harry to repair his old wand, rather than just get a new one or use the Deathstick.
     
  8. Sorrows

    Sorrows Queen of the Flamingos Moderator

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    While the wizard economy is probably self contained in terms of magical items there is no reason for the merchants not to import non-magical items and materials from the muggle world. A chair is a chair and cushioning charms can be added later. The craft industry is undoubtedly far bigger than the muggle world. Still it would be far more economical for them to take advantage of the price decreasing effects of the automated economy on their doorstep. They could easily import or design items that would suit wizarding taste. They have no need to have industries that produce non-magical raw materials. Apart from a few explicitly magical items and crafting specialty goods, you would think enchanting imported objects would be a large industry.

    You could even posit that there is a merchant class populated by muggleborns that, without the the advantages of family and connections, instead take advantage of their ability to take advantage of their ability to understand and move within the muggle world.

    I always think that the idea that magic takes away the need for many goods and services does not make sense. We can all technically mend a dress or plaster a wall but that does not mean we would be good at it. Magic removes the need for effort and some materials but it does not remove the need for knowledge or skill. I would imagine that like ordinary school there are a lot of areas and spells that are only covered in general terms. From the lessons we see it is not just a matter of looking up the incantation, it requires practice etc. Specializing in an area of spell-work could involve learning specialist spells and having the experiences to know how best to apply them. You might hire a wizarding decorator to magically redecorate your house for instance.

    I'm not sure that there is much evidence of inter-generational homes either. Children do not seem to stay in the family home longer than what is normal the UK (most move out in their 20s.) Family houses seem to be kept on (from the very few we know about, all old wizarding families) but they can only be passed down to one child. There being a war that wiped out many of the previous generation producing many orphans and only children probably warped what we see here in any case.
     
  9. Sorrows

    Sorrows Queen of the Flamingos Moderator

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    I was thinking more of specialized runs of furniture/clothes/shoes etc ordered by the merchants.

    Honestly I think the idea of permanent transfiguration would lead to a completely alien economy in many ways. It seems to me that things that are transfigures/conjured in the books are normally needed for temporary purposes. Though that is pure head-canon.

    There are inconsistencies anyway, Dumbledore can create a fully upholstered chair with a wave of his wand but Madam Malkain fusses around with pins and measurements and real fabrics and such to make robes.

    Then again it could explain the fact that the wizarding shopping district for the whole of London appears to be two streets long.

    I would say in a world when you can create anything you want, having professionally conjured/ built/however created items would be one of the few ways to show status. You would basically have wizard fashion/furniture/whatever designers that get to cut out the middleman and create items from their lines themselves.

    I really don't think many wizards would be that good at a lot of aspects of magic after they've left school for a few years. How much chemistry or algebra can you recall a few years out? They would be practiced at the everyday stuff, as well as whatever was pertinent to their job/life and can do the simpler things with a bit of refresher reading. But complex transfigurations and enchantments probably take a lot of effort to remaster, if they covered them at all. Especially if they have to also reacquainted themselves with theory etc etc. Wizards limitations arn't in their wands but in their memories and knowledge base.

    I'm not sure why it would be super expensive to employ a specialist (barring the super exclusive/fashionable ones,) after all they are not spending money on materials or time. Show up, do a consultation, transfigure or whatever the stuff you want and leave. Sure it would be money spent, but people spent money on such trappings all the time.

    I also wonder if there would be a market for people who could do certain tricky enchantments.
    For example if you wanted your hallway to be lit by floating fire or your dining room ceiling to reflect the weather like the great hall or animate a statue to take your coat. Appearing to have mastered complex magic that is perhaps beyond the average Hogwarts educated wizard would probably be another status symbol.

    I feel like most people would hire builders or modify a muggle-built house like the Blacks did. The Burrow, while charming, probably is a dangerous disaster of a house. You need to know somethings about building even if you're going to do it by magic. Spells do not apparently last forever and there is no reason to keep renewing water repellent charms because you don't know the right angle for a roof or how to lay tiles. Your probably still going to want to know about load bearing walls and how deep a foundation should go. Sure you can patch any mistakes and hold a poorly constructed house together by magic, so long as the integrity of the spells hold. Most people probably want to go to bed knowing there isn't a chance their ceiling won't fall on them them because Uncle Alfreds sticking charm finally failed.

    It does make you wonder why the Gaunts lived in such a filthy shack though, considering they could have made vast improvements with a few wakes of a wand.
     
    Last edited: Nov 12, 2017
  10. Skeletaure

    Skeletaure Magical Core Enthusiast ~ Prestige ~ DLP Supporter

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    Regarding transfiguration and specialisation:

    From what we have seen, transfiguration provides the details of the object you are creating. Contrary to most fanon, you don't need to visualise the result yourself. When Cedric turned a rock into a dog, I highly doubt he knew everything there is to know about a dog's biology and chemistry. I'm not sure it's even possible for the human mind to know all that information and focus on all of it simultaneously. Certainly they don't teach that information at Hogwarts. The only realistic possibility seems to be that the magic fills in all the detail of the thing.

    Of course, magic is more than incantation + wand movement, and transfiguration is particularly difficult. But that's just it: the wizard needs to know the rules, processes and theory of transfiguration, not object-specific knowledge.

    Further, even though wizards typically use transfiguration for items they require temporarily, this does not stop the magic from being permanent in nature: Dudley had to have surgery to remove his tail, for example.

    Given this, it's hard to see much room for a market for of basic objects, whether wizard-made or Muggle-made.

    On a more speculative note, I would suggest that the way transfiguration works by default is that it creates a generic object. So, for example, when you want transfiguration to make a chair, it will make a generic, basic chair by default. The caster can customise the result to get something more fancy. This customisation normally occurs by manually modifying the result after it has been created (we generally see, in canon, transfiguration not being done all at once but rather by iteration, with characters modifying bits and pieces of an object in stages). However someone like Dumbledore can create custom objects directly, essentially condensing a whole series of transfigurations into a single transformation.

    Now, of course most wizards really suck at transfiguration. It seems to be the hardest class at Hogwarts by quite a stretch, and I imagine most wizards do not have the ability to make fancy objects. However, I imagine most wizards can still manage an uncomplicated, generic, inanimate item, even if it takes them a number of tries.
     
  11. Thaumologist

    Thaumologist Fifth Year ~ Prestige ~

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    In Bester's book "The Stars My Destination", everyone can teleport (or jaunt, colloquially). No matter their social status, wealth, or disabilities, this is something anyone can do. Instant transport, to anywhere, from anywhere (admittedly, there are rules - having to know where you're going and such).

    People with an above bicycles to get around. They don't need to teleport, because they have downtime. The rich use cars. The main character, when blowing great wads of cash, builds a trainline, uses a train, and dismantles the tracks behind himself.


    I can imagine something similar being in the HP economy. Anyone can learn to conjure up basic furniture, or transfigure their old and ratty mattress into a squashy purple sleeping bag, although it takes time. As such, the 'lower classes', and the poorer strata, tend to have homes that a finite or two would completely destroy. Expanding charms on the cabinets (so the potato masher doesn't stick), which themselves are transfigured from some wood, and stuffed underneath the sink (transfigured from a large beach shell) where the magically animated knife is top-and-tailing beans.

    Contrast that to the Malfoy's home, where every piece of furniture is a bespoke commission from an artist, all of it built by hand and moved into position by teams of workers. The rich don't have to use the same methods as the poor to keep their home running.

    It's been a while since I read Goblet, so I could be mis-remembering, but the tents that the Weasleys' borrowed look like two-sleepers, and where really nice inside. The posh tents Harry and Ron walked past where much larger, almost palace like in their construction.

    Admittedly, this could quite easily break down - wizards do seem to set great stock by actually doing magic. But there can be a difference between doing magic and needing magic.
     
  12. ASmallBundleOfToothpicks

    ASmallBundleOfToothpicks Professor

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    Furniture probably isn't the best example for what you're talking about. I'd say that food is a commodity the muggle world could provide at a cheaper price than the Wizarding world. If there is a muggleborn/halfblood merchant class, then it almost certainly involves importing food from the Muggles to Wizards. That said, I speculate that most Witches and Wizards are functionally subsistence farmers with a craft or trade on the side, like 1600's Italy or England. I don't think that there's really much demand for muggle goods except from the very rich or the very crazy.

    My guess is that more wizards are like Lockhart and Trelawney than like Dumbledore. Seriously though, most of the people we interact with in canon are quite accomplished magically in only one or two areas. Sure, they might be a badass auror like Moody or an herbology genius like Sprout, but that doesn't mean they're well practiced in Transfiguration they learned when they were twelve. We see very few generalists over all. Riddle, Dumbledore, Hermione, and Snape are the only ones that come to mind. The Gaunts may have been so specialized that they couldn't do many of the household charms Molly Weasley holds dear.

    Another hypothesis is that the Gaunts were simply so inbred and stupid they didn't care about living in squalor.

    For some more extrapolation: When you transfigure a rock into a chair, I suspect that your magic "fills in the gaps" with what you think of as a normal chair, unless you specifically visualize something else. So Draco's default chair would probably be a lot less dinged up than Ron's default chair.

    But why would they want to or need to? If your craft-centric model is accurate, bartering your skills in something for someone else's skill in transfiguration seems to be the best option for most wizards, unless they're like Trelawney or Lockhart in that their specialization isn't in high demand. That's how most craftspeople deal with eachother in the real world, after all.
     
  13. Skeletaure

    Skeletaure Magical Core Enthusiast ~ Prestige ~ DLP Supporter

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    For the same reason that on most days I cook my own food rather than paying for a professional chef to do it at a restaurant. My own efforts are adequate and cost me nothing.
     
  14. Andrela

    Andrela Plot Bunny DLP Supporter

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    Are brooms such as Nimbus 2000 mass-produced?
     
  15. Skeletaure

    Skeletaure Magical Core Enthusiast ~ Prestige ~ DLP Supporter

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    No, I don't believe so, in that the spells on them still have to be applied by wizard craftspeople, not some automated process. As Mr Weasley says, there's no such thing as a self-spelling wand.

    At the most efficient, they might be an example of batch production. But they could equally well be good old fashioned job production.
     
  16. Lindsey

    Lindsey Chief Warlock DLP Supporter

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    In order to try and figure out the Wizarding World economy, we need to understand Transfiguration and Conjuring.

    Are Transfiguration and Conjuring permanent or not? That question alone would massively change the way any economy is run.

    I always had the belief that Conjuring was not permanent under most circumstances. When Conjuring happens, one is turning 'magic' into an object for a certain duration of time. Wizards who understand Transfiguration and Conjuring well might be able to have items last longer/make more complex Conjuring. This would be the case of Dumbledore conjuring sleeping bags for everyone.

    I do see Transfiguration as permanent if one knows what they are doing as you are not generating something from nothing but instead changing the structure of an object to something else. Transfiguration tends to be easier if the change is smaller (match to a needle would be easier than a match to a couch).

    If we went with this scenario, most people would have to buy some sort of already made object and transfigurate into something they desire. Perhaps old furniture into newer furniture. You wouldn't see people making their own furniture from thin air, as it would not last.

    Purebloods, or those who believe more traditional values, would probably enjoy hand/wand crafted items and supporting a local economy. They would see anyone getting muggle furniture and customizing it as barbaric and wrong as well as hurting the wizarding economy. Muggleborns and those more interested in the muggle world would see it has a cheaper, easier and more functional way of doing business. This would probably be a huge reason why many purebloods dislike muggle-born and their new ideas they are bringing in. They are 'destroying a way of life of the locals'.
     
  17. Sorrows

    Sorrows Queen of the Flamingos Moderator

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    If we take transfiguration as permeant though then comes the question of all those animals transfigured in class. Do they then create/destroy life when they turn pincushions into hedgehogs?

    Most transfiguration we see involves two states that have some sort of relation to eachother in size, shape etc. We also don't see many advanced transfigurations, to the point of large sophisticated objects like furniture being changed apart from by masters like McGonagall or Dumbledore. Though granted we don't see any of 7th year. We do see them often struggling and often failing to produce complete transformations of smaller objects. This suggests that large scale transfiguration is difficult and could be beyond the remit of the average wizard.
     
  18. arkkitehti

    arkkitehti High Inquisitor

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    Even worse, did Crouch jr. actually create a new Draco from scratch when he transfigured him into a ferret and back?
     
  19. Dresden11

    Dresden11 Fifth Year

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    I am pretty sure the soul stays the same with Draco ferret and Draco boy, and that component probably plays a decent role in transfiguration when you are looking at the more advanced transfigurations.
     
  20. FriedIce

    FriedIce Seventh Year

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    Why don't you just have the £5 to a Galleon a subsidised exchange rate to allow Muggle Borns to buy their stuff for Hogwarts. Stick a cap on it per year and the magical economy that Taure built works even with the exchange rate
     
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