Anyone wants real and working economy?

@ cwg9, I agree with you on this. If PI could solve this problem i t would be halfway through making a workable game economy. Other part of it I posted in other thread and now I'm posting here to collect your oppinions Here it goes:

I had an indea about how to solve Demand=desire problem(one of the main problems). This would have to be made by PI actually but we could suggest it, maybe. There is it: Stockpiles! We currently have National stockpiles mantained by the Gov. What if each state had it's private infinite stockpile where all the surplus goods went? When stocked, they would affect world supply(by adding with other stockpiles) numbers, making supply match or pass demand. That way the price would fall and Pops would be able to buy, turning fantasy demand into actual demand and feeding the economy with much needed money. The price should be a little more elastic, rising and falling more compared to the base price set by file.
Why state stockpiles? Because that way, when the goods are sold, the money goes to the factory or RGO that produced it, and tariffs could still be easilly aplied.
This is just an idea, but since the tools to PI make already exists(national stockpiles could be duplicated and altered. The price already changes with supply/demand, but could change more) , could be doable. If it would solve the problem is another matter... What you think?

DeKaas said:

The thing is factories that are subsidised either don't pay the workers or they pay very little to the workers (as they should). The problem I am seeing however in my games, is that subsidised factories keep hiring workers and even expand when capitalists manage to get some money together (they are at full capacity and making a "profit"). This creates a huge demand for input from farms and mines and floods the markets with goods from factories. Since your workers and capitalists don't make enough money out of these factories to even fulfill their live needs this creates a rather big gap in real demand and perceived demand especially for luxuryitems. This becomes a problem if everyone and their dog keeps subsidising (and the AI seems to do just that), rebellions for reforms are not effective and capitalists don't realize subsidised factories are money sinks. In other words: the system has no way to correct itself.

They keep pouring money in on a global scale, factories keep growing and it becomes a vicious cycle that can only be broken by reforms and smarter capitalists. I'm not sure if it's moddable, but if you make subsidies impossible for everyone ingame you might be able to see some improvement in supply/demand in the long run I think. That and industrialisation will happen very slowly.

Just my 2 cents, so correct me if I'm wrong.

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well yes and no. yes the subsidies lead to great overproduction but the problem is that the market wont recognize this and lower the prices enough. With prices low enough capis should recognize that they shouldnt build a new factory for that good with even the stupidest capitalist AI that only looks at prices. And no the "rather big gap in real demand and perceived demand" is not a result of this, it is there all game from the start. Unless EVERY pop gets 100% of ALL goods including LUXURIES there will be a gap, obviously most pops struggle just to get going so there is always a huge gap. Natural growth of pops alone should account for more growth than craftsmen since most pops cant afford to buy all goods all the time.

If you go for no subsidies you kill off most factories because how the game works. Without subsidies all factories disappear when there is even a little bit of input trouble. When for a week you cant buy an input due to any problems like fluctuation blockade, rebels in the supplier falling down in prestige or whatever, so even if you dont get your input for a short time, your factory goes into loss immediately due to cement etc and closes the next day. New factories wont have workers first so they will often close within a week as well, as is it completely decimates industry. So subsidies are needed. But they lead to overproduction. Well other things lead to overproduction as well, such as Coal production getting a +50% bonus from freedom of trade +250% from clean coal +100 from RGO enhancing techs +50% usually from population increase etc. See how after a point there will be a lot more coal than is ever needed? Subsidies are not a problem you need a system that can handle overproduction all around.

As Sajo points out, the problem is the fixed prices and lack of flexibility in them, combined with the desire=! demand thing. This leads to inflated prices for goods which then don't sell.

Entire pricing structure needs to be remodelled.

Craftsmen should NOT be the engine of the economy, particularly since they life needs are so high that they never activate everyday or lux needs.

Population growth, which mainly occurs in farmers from what I can tell, should play a much, much greater role.

removal of subsidies will result in a L_F-style industrial meltdown. Capis will never earn any money at all, and will just sit and sulk as they demote far too slowly. You will still end up with giant rebellion problems, it's just you won't have the industrial power to support an army to deal with it.

I'm just poking my head in to subscribe to the thread. I'll be perusing this later.

I agree with both of you. Removing subsidies would only be an experiment to see what happens. But you are indeed right that it would kill all industry. The thing is however that subsidies do affect the game if there is no way to regulate it. The main problem lies with the fact that profitable non-subsidised factories find an equalibrium and level out on a certain productionlevel with the appropriate amount of workers. Subsidised factories don't and they keep growing until they are maxed out (in my experience), creating a massive surplus of goods and a great demand in raw materials. Basically the AI countries are en masse subsidising farms and mines while flooding the market with manufactured goods (and at the same time building a massive amount of angry craftsmen). If as you say prices are fixed (maybe that's the reason?) then it shouldn't matter.

I also agree that craftsmen should not be the engine. The current model even prevents it. Craftsmen are shareholders and don't have a fixed salary. As soon as a factory makes a profit, it simply hires more craftsmen and the share of profit levels out again. So craftsmen only make profit it your factory is maxed out at level 5 and profits keep growing.

I think I understand why Paradox modeled it like this. During the 19th centrury a lot of workers pushed for social reforms partly because their income wasn't enough to provide for their families, but perhaps even more because of working conditions, safety, lack of job security and other social injustices. Paradox, it seems, has tried to capture all that in an economic model by raising their demands and thus creating a permanent dissatisfied underclass. The other thing it would do is create demand later in the game. Except it doesn't because there is no way they are going to make any money as shareholders. They are however very good at being angry and pushing for reforms. You're just not going to be able to satisfy them, ever.

This is also why I don't think introducing proper supply/demand is going to work. Unless craftsmen are made into proper workers with a fixed salary, the subsidy system is tweaked to prevent ridiculous overproduction, capitalist become smart enough to recognise them as moneypits and/or uprisings are more effective at pushing for reforms.

One thing I noticed last night that may help in making changes to solve some of these issues is that the game already appears to be calculating real demand, it just doesn't get used at all for the price calculations.

On the trade screen we've all noticed the price graphs and how its a supply and (inelastic) desire calculation. However, if you go to the production screen instead and pull up a tooltip for any good, you'll see World Market values for goods supplied and goods bought worldwide. The latter seems to be the real demand number.

I'm not a modder, but since this value is already being produced for one of the interface screens, perhaps its not that complicated to substitute it for the desire numbers being used currently to calculate prices?

As a side note, the interface design is less than ideal in having to switch back and forth between two screens to get this info. It would be nice to have all the values for prices, world supply, world desire, world demand, domestic production, domestic consumption as well as imports and exports of each good all in the same place!

But there's still the problem of the evaporating goods. Unsold goods just disapear. They shouldn't. This could be the roots for a 1929 depression event. I mean not hardcoded, but if conditions were met.

cwg9 said:

On the trade screen we've all noticed the price graphs and how its a supply and (inelastic) desire calculation. However, if you go to the production screen instead and pull up a tooltip for any good, you'll see World Market values for goods supplied and goods bought worldwide. The latter seems to be the real demand number.

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It's not actually the real demand, as it's calculated after the event. It's the amount of consumption that was satisfied at the price that reflects desire...

It's all about the base prices, I'm telling you. If I could find a way to just increase the elasticity of pricing by about 100% then that'd almost fix it, too.

I suppose you're right that it would be more accurate to call this consumption, but it still seems like it would be a more useful number to use for price calculations. At least then we could expect prices to drop when over-supplied goods aren't selling.

cwg9 said:

I suppose you're right that it would be more accurate to call this consumption, but it still seems like it would be a more useful number to use for price calculations. At least then we could expect prices to drop when over-supplied goods aren't selling.

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I agree, and anyways I don't think a day's lag will make too much of a difference, as long as prices are actually responding to supply demand like they should, right?

But there's still the problem of the evaporating goods. Unsold goods just disapear. They shouldn't. This could be the roots for a 1929 depression event. I mean not hardcoded, but if conditions were met.

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Yep, giving every factory a inventory would help a lot here in smoothing things out, it would also allow us to model recession as inventories would quickly build, choking off new production.

I'm taking a degree in economics, I'm very interested in this.
I bought Victoria 2 exactly for the economics.