Megathread : The Economy In Victoria 2
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...Or cheaper prices for finished goods. Inflated margins can never last unless there's a monopoly. Somebody will always try to use the leverage to undersell the competition. It could cause deflation though if unemployment gets too high.
Thank you for taking the time of reading it. Black Guardian and I haven't make things easy
I have a degree in Sociology and in Economics. And you could say I'm a PhD student... in Victoria :rofl:
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You're right. In my case, is a combination of my passion about Victoria, hopes about a better economic system... and of course, my lack of knowledge in computing
I agree. It represents that, when unemployment is in labour market workers "compete" for jobs, reducing their "prices". I think it's represented easier (with same effects) like a reduction of salaries (a modifier) when a province takes some level of unemployment. Of course, it makes that factories (or RGO) have more profit going to owners (capitalists, aristocrats, or even the state in a communist economy). That allows of course making the products more competitive in the market (because price could go down, if and that's a big if, it's a competitive market).
So I think wages could be similar to Vicky (income formula):
Wage = basis + subsistence wage + share in production (and modifiers)
- Basis should represent people just not waiting for a job knocking at the door: you do little works for neighbours, black martet (abstracted)...
- Subsistence wage is what you get for the fact or working. It should be different to classes (clerks and labourers i.e.)
- Share in production is obtained with full employment (because if one decides not to work, the company is losing production and they'd pay). But if there's unemployed workers, alternative is available.
- Modifiers should be for example taking social regulations in account (i.e. minimum wage, affecting subsistence wage; or even trade-unions allowed, making share of workers in production higher, because of strikes potentially succesful).
BUT (there's big "buts" here), complicating issues:
There's no only one labour market, but several of them. One for each POP class. And... how big are labour markets? A province? A state/region? The world? And information is not known by POPs (both workers or capitalists) 100% correctly (and inmediatly).
So, I think, if we want this issue modelled, we would need events in state/region (à la EUIII):
a) Unemployment in blue collars! When unemployment of low-class POPs is high (let's say 10%), wages in the region lose the "share in production" component.
b) Unemployment in proffesionals! The same, with clerks and middle-class active POPs (not clergy or officers).
This reducing also "quality of life" in the state (and chance of migration).
Conclusion: wage determination is not easy to model. Even in a income formula!
The problem I've found with awesome Black Guardian's proposal in this particular issue (wage determination, not in trade and lot of applications that I'd really love to be in action) is the fact that labour market is hard to simulate with Vicky features (the question about not one but several labour markets even in a unique province, as stated above). And about migration (to other provinces and regions, or colonies in the nation, or to other countries), I'm one of those who thinks that (in big numbers) people migrate fleeing from poor conditions rather than been rational-oriented where wage is a little bit higher. Because of other costs (transport, leaving families and friends, uncertainity about destination conditions...).
Quite right.
Thinking about your criticism brings up some rather easy ways to solve the problem without introducing labour-markets for every Pop-class.
The easiest way, probably even easier than an income-formula for every class, is to introduce modifiers for every class that do have an effect on basic market price of labor.
For example (modifiers arbitrarily chosen):
Craftsmen get 100% of the basic market price
Clerks get 170% of the basic price
Farmers & Labourers get 80% of the basic price
Problem: Unemployment of all POPs affect wages for even different employments. This is not accurate because Clerk-wages are not influences by farmer-unemployment...
Advantage: Easy to calculate, while accurate in most cases (Farmers could easily do work in a factory on machines, as well as labourers)
Same goes for emigration/immigration - the chance for immigration should of course not be very high only because wages are marginally lower in another state or colony. If the difference is huge, though, and high unemployment does take an effect on life-sustainability (which should be the case in my opinion), then people should emigrate to where unemployment is lower and life-sustainability higher.
1 question - are you sugesting farmers and labourers should be allowed to 'sub' for craftsmen/clerks in factories (I'm presuming with a hefty penalty to efficiency)? This could make playing the Russian game a lot more interesting early on, tho may make it too easy for super-manpower countries with state capitalist/ planned economy governments.
As for the unemployment suggestion, I'd model it on a capitalist export income share bonus rather than add detriment to the other classes, and to hell with getting into too much detail.
Capitalists base export income share in Vicky 1 was 25*pop size/ total weighted population (TWP).
I'd just add +1 to the Rich pop size multiplier per unemployed eligible worker, This will automatically lower the share of ALL the poor and middle income pops in the country due to the increase in total weighted population; in my opinion, that's fine for simplicity's sake, and because the capitalist should build a new factory or the unemployed worker should migrate, it's self-correcting in the longer term anyway.
example:
Capitalist is in a region with 1 factory. There's 10 pops capable of working in the factory, so 1 unemployed.
Capitalist's export income share now becomes 30*pop size /total weighted population +5.This artificially boost capitalist income, which immediately encourages him to build more factories and so employ more of those unemplyed POPs.
Poor income now becomes pop size/TWP+5, making them 5/TWP worse off, and so encouraging migration as everyday and subsistence goods become unaffordable to the unemployed.
Yes, it's not devestatingly in-depth and it cuts a few cheeky corners, but it'd give us a low-CPU intensity unemployment model that's not devestatingly hard to explain to a casual player. Having unemployed POPs will cause both internal migration and emmigration, but it will also stimulate factory growth in capi economies. Simple but effective
No, I am not.
In fact, the relation of wages is still not that unrealistic if farmer unemployment effects wages of craftsmen, because they are easily converted. Taking the possible convertion of unemployed farmers into craftsmen into consideration, they are potential labour-substitutes for those already employed, regardless which task they are doing.
Even in real life, it does not take much effort to train an unemployed farmer to work on a machine in a factory, as long as it is a simple task or one that is easily learned.
Factory-work is in fact much easier regarding required skills - while the knowledge a farmer needs to prepare the ground and grow fertile crops takes years to be learned, craftsmen of early industrialization can easily be trained within months.
This would strongly suggest that applying a modifer via tax bracket would suffice, rather than having a modifier per POP type. Cheaper on the system resources, too.
Tariffs
Maybe it's been said, but I don't recall seeing it before. About tariffs, I think it could be a good idea having different groups for taxes rather than an universal one.
For example: food, industrial agriculture, minery, luxury raw products, light industry, heavy industry, militar stuff...
It would allow countries to give incentives to national production and, for example, give subsidies for buying raw materials for our industry (making it more profitable). Of course, it would be seen as an hostile action for "free trade" nations (and protectionist policy should have cost, reducing production efficiency and making trade research/implementation of new techs harder).
In the other hand, subsidies to exportation could be implemented too.
Of course, level of tariffs and subsidies should depend of trade policy.
And commercial conditions should be imposed in peace treaties.
Maybe it's been said, but I don't recall seeing it before. About tariffs, I think it could be a good idea having different groups for taxes rather than an universal one.
For example: food, industrial agriculture, minery, luxury raw products, light industry, heavy industry, militar stuff...
It would allow countries to give incentives to national production and, for example, give subsidies for buying raw materials for our industry (making it more profitable). Of course, it would be seen as an hostile action for "free trade" nations (and protectionist policy should have cost, reducing production efficiency and making trade research/implementation of new techs harder).
In the other hand, subsidies to exportation could be implemented too.
Of course, level of tariffs and subsidies should depend of trade policy.
And commercial conditions should be imposed in peace treaties.
I suggest some changes:
First different class of factories:
Mega Factories (like Vic1), Factories (sightly smaller), Workshops (small ones)
Second Market:
Global Market but with option of open/close to it (like japan, china or korea) and small Imperial, trade partners markets.
Third:
Rework of RGO´s, it is not the same if the miner or farmer works for a landowner or if they work their own land.
First different class of factories:
Mega Factories (like Vic1), Factories (sightly smaller), Workshops (small ones)
Second Market:
Global Market but with option of open/close to it (like japan, china or korea) and small Imperial, trade partners markets.
Third:
Rework of RGO´s, it is not the same if the miner or farmer works for a landowner or if they work their own land.
Think I raised this one about 5-6 pages back. In my eyes, the only way Tariffing would make any sense is if you can set it on seperate items; otherwise, the corn laws doesn't even make any sense....
Additionally, adding in flexibility on tariffing/subsidies, rather than just using it as a stealth tax on your POPs, would open up a whole game of trade warfare which is frankly vital to the period.
I wouldn't bother setting up seperate 'categories' of goods, tho; I'd just put the tariff sliders on the trade screen for each individual item.
It's not a big if. It's inevitable. Especially the more imbalanced the equation gets. More unemployment also=less customers to buy goods, and that means you have more capis fighting over a smaller market for their goods. And that means price wars. So it all evens out again. So, yeah. You could model all of this but it would only add unnecessary complexity and processor usage to simulate something that all washes out in the end anyway.
Don't forget we have open economies in the game! It would be very profitable exporting your products to other markets, plenty of whealthy consumers willing to pay high prices for your cheap goods (made by empoverished workers). In fact, this strategy (adopted by just one or a few countries) would improve their competition chance (other capitalists must pay higher salaries) and their profits (prices won't go down so much if the market is big, in comparison of those countries production). Of course, if the strategy is generally adopted, things will go as you stated... and you would be living in KarlMarxWorld
All this questions depends on the big picture. If we have in Vicky2 just Vicky world market... you're right, all these ideas are just adding complexity without real gameplay gains.
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A New World Market
As I understand the current market, you place your goods on the WM and then off they go to the buyer with the most prestige.
This to me doesn't really make a lot of sense.
It seems to me that given how all buyers are willing to pay the same price (as nobody sets it), I would rather sell to a friend than an enemy. I assume that right now the way the WM is coded is that POPs buy your surplus first (if they have the funds) and then everything else gets lumped into a pool of global goods, that are then consumed in order of prestige.
While it would be more complicated (as it would require each nation to have its own pool within the WM), I'd like a system where my goods were sold to those nations that I shared the best relations with. This would simulate favored nation status and a true sense of economic partnership, as well as giving serious incentives for befriending certain nations. It would also prevent one from selling military resources to an enemy or regional rival - directly, at least.
I'd also like an embargo feature and the ability to tariff individual goods/nations, but I know when I'm stepping beyond the realms of practicality .
As I understand the current market, you place your goods on the WM and then off they go to the buyer with the most prestige.
This to me doesn't really make a lot of sense.
It seems to me that given how all buyers are willing to pay the same price (as nobody sets it), I would rather sell to a friend than an enemy. I assume that right now the way the WM is coded is that POPs buy your surplus first (if they have the funds) and then everything else gets lumped into a pool of global goods, that are then consumed in order of prestige.
While it would be more complicated (as it would require each nation to have its own pool within the WM), I'd like a system where my goods were sold to those nations that I shared the best relations with. This would simulate favored nation status and a true sense of economic partnership, as well as giving serious incentives for befriending certain nations. It would also prevent one from selling military resources to an enemy or regional rival - directly, at least.
I'd also like an embargo feature and the ability to tariff individual goods/nations, but I know when I'm stepping beyond the realms of practicality
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I disagree that relations should be what determines trade, but the overall concept I agree with. Half of the conflicts during this period were fought to gain markets for goods produced at home. (Possibly an exagertion, but still off the top of my head Spanish-American, Opium Wars, The Great Game, Imperialism in general.) Perhaps one solution would be a diplomatic option to open trade with a country. All uncivs (assuming the same system is in place) would begin without access to trade with the civs. When trade is established via diplomacy, event, force or otherwise they culd now trade with that civ, allowing them access to goods such as weapons, cannon etc, while allowing the civ to sell goods that wuold otherwise be either stockpileing or being sold at a lower price.
Don't forget we have open economies in the game! It would be very profitable exporting your products to other markets, plenty of whealthy consumers willing to pay high prices for your cheap goods (made by empoverished workers). In fact, this strategy (adopted by just one or a few countries) would improve their competition chance (other capitalists must pay higher salaries) and their profits (prices won't go down so much if the market is big, in comparison of those countries production). Of course, if the strategy is generally adopted, things will go as you stated... and you would be living in KarlMarxWorld
All this questions depends on the big picture. If we have in Vicky2 just Vicky world market... you're right, all these ideas are just adding complexity without real gameplay gains.
You're talking about the 1800s. At some point the cost of transport outweighs the profit in export. You can't expect to sell goods made in NY for the same price in London as you can in the home market. You have to pay to ship the stuff there. The home producers in the UK still have an advantage, and depressed wages in NY are unlikely to outweigh the cost of moving the goods, all other factors being equal.
That's why I like the HOI3 supply system with built in cost-to-transport. The Vicky magic transporter world market really needs to incorporate not only regional markets but transport overhead too.
I like the way you're assuming London's buying the stuff from New York before they buy their own; generally, I'd figure that the British will only import American goods if their own production capicity for that good isn't high enough anyway. And since the UK is therefore over a barrel and must be assumed to be buying the goods regardless, relative price competition is irrelevant - the main focus of the effect here would be who in NY gets to keep the lion's share. The profit alteration from labour competition will only break down once demand <= supply. When dealing with the whole world's population in Vicky's 'totally open to everyone' markets, you really don't need to worry about export costs or anything of the sort from the supply side - demand for some things is always massively higher than production is, which in turn means that it's a seller's market and the supplier can be assumed to get away with whatever the hell he likes. I do think we should model transport costs, but I'd lumber them on the buyer, as he's the one who wants the damn gun/spoon/cement anyway.
Let's not forget that it wasn't until Henry Ford that a capitalist really understood the idea that his workers needed to be well paid to afford to buy the products they make. The 1800s were full of examples of cartels and monopolies, with no anti-trust laws or monopoly commisions to try and prevent it. And the average worker could rarely afford the goods he was making in his factory, was grotesquely underpaid due to the fact he was totally replacible; yes, we know that it makes little overall long-term economic sense to run things this way, but it makes a hell of a lot of money for the fat bastard at the top, which is precisely what we're looking at modelling here, and precisely what happened, over and over, in the 19th century.
Your arguments against labour competition have several holes in them so far, tbh; you even pointed out in one post that you'd need a monopoly to see benefits from labour competition, without apparently recognizing that in Victoria it's actually more or less inevitable that monopolies DO emerge - there's always someone producing fuel before anyone else, for example, or aeroplanes, cars, tanks, machine parts.... And while yes, these monopolies do get swept away within about a decade (usually), a decade is actually 10% of the whole game. And this is before we even broach the subject that the buyers of the goods produced by your factories are pretty rarely the low-tax POPs who work in them anyway; yes, underpaying my craftsmen will harm my regular clothing sales, but will do nothing at all to demand for cars, steel, tanks, machine parts, guns, canned food, aeroplanes, luxury cloths, luxury furniture, cement, lumber....
I suspect the chances of us actually seeing proper price competition are extremely low indeed; but having a relatively small, low-overhead self-correcting labour competition feature would make sense, be both historically and economnically accurate, and could be achieved in a processor-friendly fashion if we avoid getting carried away with the details. Since production costs seem to bear no apparent relation to eventual price on the market in Vicky, I'd suggest adding in shipping costs (as much as I agree with you that those SHOULD be there) would fit much less smoothly into the Vicky model compared to labour competition. Which is not to say it shouldn't be in; see below
Now, back to export prices, addressing it from the side of the buyer. I'd like to see a cost modifier applied dependent on distance from the supplier of the goods; the Chinese buying rifles from Britain should indeed have to pay more for them than if, say, Hamburg was buying them, precisely to model the transport cost effect you mention; and as a direct consequence of this we'd see demand drop offs as countries further away literally couldn't afford to buy export goods. Order of purchase would have to be totally remodelled from the original Vicky, to run in order of lowest-cost-to-buy first, which would finally give us a model where countries (amazingly) trade with other countries rather than the infinitely wealthy teleporting flying saucer of the WM. It would hopefully even make the idea of split markets redundant - no need for seperate region markets if the transport surcharges on the purchaser make distant goods unaffordable anyway. Unfortunately, I suspect that tracking the starting points of ALL goods on the Vicky map to end-points would have crushingly high-end PC requirements.
Soz for the wall of text
Who you looking forward to playing the most?
For me it's Japan I think... such huge upheaval and transformation there during that period, cant wait to see how PI implement it
For me it's Japan I think... such huge upheaval and transformation there during that period, cant wait to see how PI implement it
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