AHD Economy Discussion

[FerdinandVeblen]

As for trickle down economics, they are "vindicated" in the sense that healthy capis spur industrial growth. However, healthy capis and aristocrats also buy lots of luxury goods. A little known facet of the original V2 was the mechanic whereby insanely wealthy POPs would double up or more on their luxury goods purchases sometimes. Thus, you can inflate luxury demand by keeping the rich fat and happy.

But the flip side is that there is a point where even the rich POPs can't buy enough goods to keep up with their income. You end up with a national bank that has 75 million in it because your rich POPs are insanely wealthy. If that happens, you need to rearrange your tax structure. If you can get the poor and middle class to a point where they can afford luxury goods, they can end up generating more demand than rich POPs; and if the rich are just socking away millions of pounds in the bank, you might as well get that money circulating again since they aren't going to buy even more stuff.

Yeah, V2 has both trickle-down economics (in early game industrialization especially) and classically Marxist "overproduction crises" (recessions/depressions in game, as this is the main way for them to happen without a full-scale banking system). Something for every political persuasion!

[Risa]

However, if I had to vote on an improvement, I would want shipping costs before regional markets. This might smooth out some of the wrinkles in the current system better. But I could be wrong.

Shipping costs are not a good idea in current one-price-for-all system. First of all, who recieve money from that extra cost? No one is appropriate, yet without money reciever the system is not closed any more.

Second, even if the first problem is solved somehow, establishing selling priority order based on price is not a trival effort, either. Every producer will need the ability of setting price for their own products, else foreign goods will never be able to compete with local ones, even if the former is produced by most efficient factory and the latter by most primitive artisan. To introduce such ability will require a complete rewrite of economic engine, a far more complex economic engine. And we haven't talked about other factors in real life that affect selling, such as general product quality, brand image, etc.

[zarinth]

Yeah, V2 has both trickle-down economics (in early game industrialization especially) and classically Marxist "overproduction crises" (recessions/depressions in game, as this is the main way for them to happen without a full-scale banking system). Something for every political persuasion!

Except for when there is a massive machine parts shortage bubble, which doesn't make any sense.

[Naselus]

As Risa says, adding transport costs (and also a more realistic tariff system, which protects local producers) is more or less impossible for V2 (here's hoping for V3). But the proposed local SOI system is possible and practical. It's not patch material, but it might be suited a a second expansion. Trickle-down economics works about as well in V2 as it does in real life; it causes the economy to boom but also greatly increases inequality. There's currently no scripting in the issue-ideologies to make POPs unhappy about increasing inequality, though it's actually fairly possible to script it.

[lollibast]

The world market is not a physical thing. It always comes down to one party trading with anoither. We're not talking about securities market and a clearing house handling anonymous traders. So why do relations between countries not come into play? It worked fine in "Imperialism", where you could make up for lack in rank (due to lower relations) with trade subsidies. That game is 15 years old and it worked very fine.

[Naselus]

Well, relations do come into play through the investment and influence systems. But there's a big difference between Imperialism (where the minor countries were simply given money every turn to purchase things with, and there were about 15 countries) and V2's system. Imperialism as freakin' awesome tho :P

It helps to think of prestige as sort-of containing that whole thing, tbh - think of it almost as a credit rating. Countries would rather sell to high-prestige nations, as they believe the currency is sound; where as trading with some backwater 0-prestige nation you've never heard of is undesireable as their money may simply be no good. This also works nicely with the prestige hit from bankruptcy - you've failed to pay your debts, so your currency is in doubt.

[Jazumir]

Bileteral trade deals, overriding the market mechanics, would be nice, though. But, OMG, when i start to think of how they should be implemented my feeble brain just keeps telling me ´eatthepuddingeatthepuddingeatthepuddingeatthepudd ing...´.

[freeaxle]

So thanks to this thread, and some points made by Naselus about the ripple-effects certain actions can have on the world market, I decided to try an industrial game. I played as Haiti, and did not expand in order to give myself a chance to focus on industry and also minimize my impact on the world market. In my game, I turned Haiti into a prosperous, industrial nation (god knows tobacco is useless for making money), which was profitable both inside and outside a sphere. To give you some idea, I had 4 million pounds in the national bank and was existing off rich taxes only (to try and prevent the capital drain [which I learned about from this thread ] which occurs as a result of capitalists not being able to spend all their money).

Observations:
1.) The economy is less static than in Vanilla. If you're just going to build factories without thinking about it and then ignore them, then you're going to have troubles. If you don't get the commerce techs you're going to have troubles. I found that the key was to be prepared to destroy and rebuild industries. Machine parts were insanely profitable when I first built them and then became the opposite when everybody else did, which was when I switched to other factories. I find this much more enjoyable than Vanilla because it means you're thinking about your industry right through, rather than just building certain factories every time.

2.) Spheres actually have reciprocal benefits now. They give you a market (as IIRC pops always try to buy from the internal market first) and access to resources you wouldn't have as a second tier power. Also, the more you industrialise, the less of a negative impact (first choice over your resources by the sphere master) has.

3.) A lot of goods are overproduced for various reasons. You can compete in these areas if you have good levels of commerce tech, as you don't need to sell all your goods to keep your factory profitable. Otherwise, leave cement to the guys with the big spheres.

If you put a bit of thought into it, you will find the economy and world market dynamic, challenging, far from broken and most of all fun. There are some things that need improvement, but it is more than possible to get a fun economic game with the current system.

[The Arch Mede]

As Risa says, adding transport costs (and also a more realistic tariff system, which protects local producers) is more or less impossible for V2 (here's hoping for V3). But the proposed local SOI system is possible and practical. It's not patch material, but it might be suited a a second expansion. Trickle-down economics works about as well in V2 as it does in real life; it causes the economy to boom but also greatly increases inequality. There's currently no scripting in the issue-ideologies to make POPs unhappy about increasing inequality, though it's actually fairly possible to script it.

Adding shipping costs would be easy. You just have to do it in goods. The simplest way would be that the purchaser pays the seller for 100 goods, but only 80 arrive and the other 20 are consumed to power the shipping. The complex way to do it would be to add a shipping good to the game, and the purchaser would have to buy 20 shipping for each 100 goods they bought off the world market. The complex way means taking the service sector seriously, which Vic2 doesn't but I don't think it would be any more difficult to code in than the sorts of things added in AHD. Next expansion Victoria 2: A Nation of Shopkeepers?

Its money you have to be careful with creating and consuming in the Vic2 model. Goods are created and consumed all over the place. You can add costs in wherever you like, so long as they are goods.

[Naselus]

You still need to add in something to figure out the distances etc. Or are you just suggesting we charge 20% shipping fee regardless of where the buyer and seller are? In which case, yes, it's easy, but it's also utterly pointless :P

[tului]

You still need to add in something to figure out the distances etc. Or are you just suggesting we charge 20% shipping fee regardless of where the buyer and seller are? In which case, yes, it's easy, but it's also utterly pointless :P

Indeed, why would the UK, with ports in Rangoon and Singapore pay the same for opium as the USA?

[FerdinandVeblen]

Well, if I were trying to kludge together a simple shipping-cost model, I'd do it like this:

- start with a flat 5% cost for everyone, 20% will distort the system too much even if it's realistic.
- Nations trading with those that border them get a 50% cost decrease. (so 2.5% shipping costs)
- Nations trading with those on another continent get a 50% cost increase. (so 7.5% shipping costs)
- Landlocked nations get a 50% cost increase on all trades. (so 7.5% shipping costs, 5% for neighbors and 10% for other continents)
- possibly, different costs for different goods. Fruit is low value-density and spoils, so a 10% base cost; machine parts are high value-density and don't spoil, so 2.5% base cost.
- Techs in transport and navy would reduce shipping costs, maybe some commerece techs would too.

The problem is making it so the AI/your POPs "know" to buy the cheaper goods. The continental SOIs would help somewhat, though who would be each continent's sphere-master?

[Rhyus]

The continent's sphere-master would probably be the highest overall ranked regional power

[Rhyus]

Edit: Dame internet froze and made a double post, so just ignore

[Beagá]

Merchant navies, merchant navies... This will solve lots of issues. And make submarines have some meaning.

To be honest I think the next expansion will focus on the Great War, so there´s hope ^^

[Yosiu]

Well, if I were trying to kludge together a simple shipping-cost model, I'd do it like this:

- start with a flat 5% cost for everyone, 20% will distort the system too much even if it's realistic.
- Nations trading with those that border them get a 50% cost decrease. (so 2.5% shipping costs)
- Nations trading with those on another continent get a 50% cost increase. (so 7.5% shipping costs)
- Landlocked nations get a 50% cost increase on all trades. (so 7.5% shipping costs, 5% for neighbors and 10% for other continents)
- possibly, different costs for different goods. Fruit is low value-density and spoils, so a 10% base cost; machine parts are high value-density and don't spoil, so 2.5% base cost.
- Techs in transport and navy would reduce shipping costs, maybe some commerece techs would too.

The problem is making it so the AI/your POPs "know" to buy the cheaper goods. The continental SOIs would help somewhat, though who would be each continent's sphere-master?

I like this idea very much
I think something which will make global economy deeper would be introducing second tariff slider instead of one : one slider to import and one slider to export of goods.
Some country (heavily industrialised like USA or UK) would be able to make all of their profits just by taxing export from their manufactures (as long as they are profitable enough).

These ideas could impove game economics but won't heal them completely. To do this, in my opinion, it would require a dynamic demand system: Pop make a demand for good not when they "would like to buy" but when they can afford to buy a good. That's how the real economy works. I would like to have my own Jumbo-Jet but i would rather not count it as demand for it

[Naselus]

The continental SOIs would help somewhat, though who would be each continent's sphere-master?

They wouldn't have one. Each continental SOI would basically act as a mini-market of it's own, so the highest prestige power with it's capital in Asia would buy from the Asian SOI first. The continental SOIs wouldn't compete for influence, either; they'd basically just passively let GPs take from them. Whenever a country wasn't in a GP's SOI, it would revert to being in the continental one.

Merchant navies, merchant navies... This will solve lots of issues. And make submarines have some meaning.

To be honest I think the next expansion will focus on the Great War, so there´s hope ^^

Easy to say, but how would they work? HOI3 convoy-style? No chance, the overhead would be unimagineable.

Best bet that I can see for merchant navies would be for them to act as a maximum import level. Every blockaded port would then lower the Merchant Navy total by x%, where X is Y/num_of_ports, and Y is 1*blockade efficiency (assuming blockade efficiency would be added to any expansion which wanted to make submarines work). That might do it.

[Naselus]

These ideas could impove game economics but won't heal them completely. To do this, in my opinion, it would require a dynamic demand system: Pop make a demand for good not when they "would like to buy" but when they can afford to buy a good. That's how the real economy works. I would like to have my own Jumbo-Jet but i would rather not count it as demand for it

POPs do only add demand when they can afford to buy. That old bug was fixed a loooooooooong time ago. If you look in any savegame, you'll find 'demand', which is total world-wide desire for a good, and 'real demand', which is demand from POPs who can afford to purchase. That's what is reported as 'demand' in game, and is what's used to calculate prices.

[Secret Master]

Alright, I've played some games with different countries now, and I've been able to win. Here are my economic observations. Naselus, tell me if my thoughts match your data.

1) Industrializing early is pointless until you hit certain milestones. It's not just that artisans start out more efficient, it's that there simply isn't enough "stuff" on the WM to reliably fuel mass production. Trying to industrialize early as Prussia-Germany saw my factories starving for critical resources half the time, even when it was something like coal, which I made myself. Between POPs and RGO inefficiency, there wasn't enough coal to keep cement factories running at full speed every day. So, the lesson there is to only start building up industries when you achieve two things: excess resources relevant to the industry, and excess labor to run it. If your RGOs are selling all of their products, there's not enough excess labor to fuel industrial growth. If there aren't any excess resources, the factories starve half the time.

2) NFing craftsmen is for suckers the first 50-60 years of the game. Because resources are much more scarce, it's a really bad idea to pull POPs from RGOs while those RGOs are selling 100% of their units. If the RGO isn't selling 100% of its units, it starts firing POPs, who will naturally demote to craftsmen, anyway. Instead of NFing craftsmen, you should be letting industrial and commercial techs increase RGO efficiencies to allow for naturally firing POPs from the RGOs. As Japan, Russia, and Germany all could tell you in my games, pulling POPs, via NFs, out of coal mines to work in steel mills only means that those steel mills starve for coal. Starving for resources = bad.

3) The early game is not the time to spam factories. The early game is the time to raise literacy and fund imperialism. All that money you spend building factories that spend half the month starving for inputs could be better spent on building bigger armies that can be used to carve a colonial empire for yourself. Preferably, you should be carving out an empire that provides current or future resources you will need. (I can consume 100% of the world's rubber in 1910, so thinking ahead is important.)

4) Certain resources are so critical that they determine the fate of nations now. Dye is controlled by the UK and Netherlands until Synthetic Dye is invented, so you are at their mercy if you want to produce cloth. Coal is used in so many industries, not to mention POPs using it up, that if you don't have your own coal, you are at a serious disadvantage to everyone else. Iron is really important in the early and middle game. Timber is useful early on, but once Russia gets some techs, it gets much more common. Sulfur is vital to anyone who wants to produce weapons. If you cannot sphere or annex these critical resources, you are doomed to be an agrarian power until you gain enough prestige to buy them or other nations finally produce enough.

5) You should guide industrial development during the first half of the game using available resources. Let the artisans satisfy demand in other products, but let your factories only work along supply chains you have full access to. During the second half of the game, you can start looking at demand more often, but even then you still need to monitor supply. The specter of supply chain problems never disappears completely.

6) Subsidizing industries must be carefully considered. Industries that just keep failing every day of their life should be deleted or closed. The only time subsidizing is important is when you have a sine-wave supply bottleneck or when you need to immobilize labor in a state while you build new factories. That sine-wave bottleneck is a real problem, since the factory gets its inputs half the time, but half the time it's missing something. Rather than just close it down or let it fire workers, I can run that factory at 100% the moment it gets inputs again. Still, letting workers move to industries that are doing better is usually the best strategy.

7) Commercial techs are absolutely critical, now. It's not just input/output efficiency, either. Because there is so little excess money available, using administrative techs to increase admin efficiency can save you thousands of pounds a day if you are a major military power. The tax techs help you raise needed money in the first place (so long as you don't kill your POPs). And the first two market structure techs increase RGO efficiency, which helps for all of the reasons I mention above.

8) Bankruptcies seem to be coming from two sources. The first source are minor powers that enter debt spirals due to unforeseen costs (wars, sudden price increases, tariffs dying). The second source involves major powers that go bankrupt due to lack of available credit. Not only me sometimes, but almost every single GP in various games have gone bankrupt. The problem isn't the interest payments. I went bankrupt on $200,000 in debt (the interest payments did not even exceed my gold income). The problem is that the national banks just don't have enough capital to lend. An analysis of banks in various games has indicated that the general tighter economy in AHD means that aristocrats are no longer cash cows for taxes or lending. As Russia, even putting rich taxes at zero and putting tariffs at zero, I saw 80% or so of my aristocrats not able to afford half their luxury goods. The good news is that their money is circulating in the economy and buying up the products I produce. The bad news is that the Russian national bank has about $400,000 in total assets in 1915, half of which is loaned to other GPs who are also facing similar credit crunches. (Watching France default on 100,000 in Russian debt was hilarious until I realized that I couldn't borrow that money to help finance a war against the UK.)

9) Dreadnought spam is still possible, but only if you are willing to really impoverish your people to do it. If you close the loop and produce all the goods for dreadnoughts yourself, you can sustain their production fairly well. But you have to raise taxes really high, which kills the standard of living of your POPs, which carries with it other consequences. It also means you must research all tax techs to get enough efficiency to draw the required revenue out of your POPs in the first place. And since oil and fuel are finite, there is a point where you can't build or support any more dreadnoughts because there is not enough crude oil on the planet to satisfy your demand.

10) Wars are expensive, but losing access to needed resources is even worse. Also, losing prestige is bad.

11) Prestige is absolutely critical now. The difference between being #2, #7, and #29 is vast. If you can get and keep #1, you are well on your way to building an awesome economy.

[Naselus]

I agree with most of that, yeah. I wouldn't say you need to hold of industrializing completely early on, but you MUST have control of the supply chain - only a fool builds a Steamer Shipyard in 1841 when they only produce fruit. High-end factories are for high-end nations.

Prestige is extremely important now, but so is an active imperial project. With the highest prestige in the world, you're still unlikely to be able to buy coal on the WM before 1850, since the producing nations swallow up as much as they produce most of the time.

Artisans, so long the forgotten children of V2, are now a fully-functional and useful POP. Until you go through the industrial revolution, you should love and cherish these guys, and look after them; they will buy RGO items and produce the goods your population is failing to get from the WM. And they provide good tax income, too. Don't be afraid to offer them a subsidy, if you can afford to, it helps them no end.

I refuse to subsidize most industries, tbh; unless it's critical to my supply chain (like a fabric factory when my major industries are clothes and shipbuilding), or else military goods, I let them fail. Going deep commerce as fast as possible means that an unprofitable factory is losing money despite having a 40% profit margin, and the £1000 budget on a factory means it has to be losing money for a fair while before it shuts down. Some goods get so flooded later (like fabric) that they just aren't worth saving, and the craftsmen in them would be better off working in a clothes factory using those goods rather than making them.