AHD Economy Discussion
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It can be a good thing. It's not exactly a depression set up (we'll never see a depression in the game so long as banks don't loan to capis). I'm still trying to decide how to combat it economically. I tried dreadnoughting my way out of it (arms race with the USA anyway), but that didn't help. Maybe disarmament is the right answer.
small margins? -> LF, +25% output bonus
wildly fluctuating demands - > LF, capis adjust automatically
tired of micromanaging? -> LF, does it all by itself
to sum it up: laissez faire>all
what i dont get are the comments about letting pops buy from stockpile, whenever i do that it costs me ridiculous amounts of money as pops seem to buy cheaper from me than I buy from world market
wildly fluctuating demands - > LF, capis adjust automatically
tired of micromanaging? -> LF, does it all by itself
to sum it up: laissez faire>all
what i dont get are the comments about letting pops buy from stockpile, whenever i do that it costs me ridiculous amounts of money as pops seem to buy cheaper from me than I buy from world market
Which begs the question: Will Victoria ultimately solve the shortcomings of capitalism? Where exactly, in the game, does money originate anyways? Start stocks + precious metal mines + loans from national banks? And what are the limits of the national bank, in the game? How much can it lend? What does it depend on?
National banks are filled by POP savings.
Starting stocks are determined by the POP_savings setting in defines.lua, which I believe is expressed in % of a year's worth of income.
Precious metal mines are more or less the only means of injecting liquidity into the economy while the game is in progress atm.
National banks will lend upto their total money stockpile.
Countries may lend upto 3 times their tax base from every bank that has the money to lend.
Oh, and depressions are theoretically possible without a credit system. Liquidity crunches along the lines of 2007 and 1929 (as there was a liquidity component to the great depression) aren't; at least not in a real-life manner; however, since money supply is only very vaguely linked to production (through RGO bonuses only), liquidity doesn't rise at the same rate as production presently.
What would a depression without a liquidity crunch look like? Just lower GDP?
This is a serious question, by the way. I don't know enough about economics to know the answer.
I will say that only having countries being able to get loans from banks has always given governments in both Vickys a real economic advantage. At least now, in AHD, the government cost of building factories is so much higher than capis that the advantage in having loans is partially negated.
Still, I would prefer a game set up where capis were 200% easier to promote, but who would also get loans from the bank and potentially get financially ruined. Even with the capi bonus, in the current setup, it's generally fine to have few capis, since they concentrate the wealth of a state making it easier for them to build and upgrade factories.
I was really bad at the economy in vanilla, and I'm no better in AHD. Do you have some short tips? Low tariffs I get, should I go for high taxes or low taxes? I remember seeing in vanilla that people recommended taxes for poor at 70%, but I never saw any better results in my games with high taxes. I suck so bad.
Capital concentrations can still occur under the V2 model, since Capitalists will still take money out of the consumption economy to plough into the production economy. This is a Marxist contradiction of capitalist, in that the more money that is used to produce goods, the less money is available to buy goods - in short, the more goods that are made, the less goods can be bought. So liquidity problems can and do happen, but the cause of them is rather different from the real-life versions - in fact, the lack of credit makes liquidity problems more likely.
Essentially, in real life, the Credit Crunch was caused because no-one trusted anyone enough to lend to each other anymore, and the vast majority of real-world economics is based on credit. Something similar occured in the Great Depression, after the initial stock market crashes etc. Liquidity ceased to exist, because just about all the liquidity in the real life system was credit.
In V2, the liquidity is hard currency. But it gets soaked up by Capis and ploughed into Factories, with the majority of the profits landing in Capitalist's pockets. As the amount of money the Capis own gets stored in national banks or factory budgets, consumer cash shrinks, causing demand to fall. This causes factories to fire people, which causes demand to fall further, in a vicious circle, until no-one can afford to buy anything and there's no demand for anything at all. THAT is a V2 depression
It can happen without a liquidity issue, as well; say all the dye RGOs in the world are occupied at once. All fabric factories stall, and start firing workers; with no fabric, all the clothes and luxury clothes factories also stall. Demand for cotton, dye, and silk all crash disasterously, so now all RGO workers in those three types (plus all those textile factory workers) are now unemployed, taking a big chunk out of demand for other goods - resulting in a lot of other RGO workers being fired. This kind of slump is not as bad as a liquidty slump, since there's plenty of cash in the system so some POPs are still buying goods and making money. Demand for textiles will skyrocket, so when the dye market comes back online it will rapidly re-hire staff and the system will be able to re-adjust.
Government spending curbs the problems of the V2 economy, of course, so good old-fashioned Keynesian ideals work perfectly well in V2 (there's no inflation, so Stagflation, the bane of Keynes, can't happen). It can also rescue a depression. But since 'trust' is basically unquantifiable in a sane manner in the game, a credit system wouldn't ever be able to cause a RL-style credit crunch - it would really just improve the flow of cash round the system, so money couldn't get hoarded in national banks, and so depressions and recessions would become less likely, rather than mroe so.
I was really bad at the economy in vanilla, and I'm no better in AHD. Do you have some short tips? Low tariffs I get, should I go for high taxes or low taxes? I remember seeing in vanilla that people recommended taxes for poor at 70%, but I never saw any better results in my games with high taxes. I suck so bad.
In AHD, things have gotten much tougher in the economy.
Assuming you are trying to industrialize, I would set tariffs to zero. I would tax the poor to satisfy your government's needs, but that's only because in 1836, the middle and upper class are not big enough to generate significant revenue.
Early in the game, keep your government's expenditures lower than in Vic2. This may mean having a smaller military. Focus on education and, if possible, administration. Literacy is a long term goal that you should pursue straight out of the gate. As for crats, people often forget that low administrative efficiency increases the stockpile costs of the military, so getting yourself up to speed in admin is important to staying efficient.
I would industrialize along the lines of whatever RGOs you start with. Iron, coal, and dye can be in short supply in the early game, so you can't even count on being able to import them to fuel industry. If you have grain and fruit, wine and liquor are good starting industries. If you have iron and coal, make steel and cement. If you are sitting on dye, make fabric (that's the UK and Netherlands). You can diversify later when the WM starts catching up to demand.
I would avoid LF early in the game like the plague. State capitalism or interventionism is best, because you will need to direct the industries along appropriate lines. Some factories to make military goods are necessary if you intend on engaging in an arms race with other GPs. Regardless, when industries appear to be dying, unless it is because of a war being fought, I would just let them die. Don't impoverish yourself with subsidies to industries that just aren't going to make it.
Also, once you have some basic industry in place, I would start researching commerce techs. The tax efficiency techs and the admin techs are great to get income flowing. But the efficiency techs can help you out-compete other nations, even if they throw up tariffs.
In V2, the liquidity is hard currency. But it gets soaked up by Capis and ploughed into Factories, with the majority of the profits landing in Capitalist's pockets. As the amount of money the Capis own gets stored in national banks or factory budgets, consumer cash shrinks, causing demand to fall. This causes factories to fire people, which causes demand to fall further, in a vicious circle, until no-one can afford to buy anything and there's no demand for anything at all. THAT is a V2 depression
Basically, fat national banks that aren't loaning money are bad. Time to tax the savings out of people, then, when things start turning south.
Keynesian economics *shudder*
At least the bonuses Laisez faire gets are epic enough to make its so Keynes doesn't look too awesome.
At least the bonuses Laisez faire gets are epic enough to make its so Keynes doesn't look too awesome.
The problem with the economic system going down at ca 1870 is
that the supply get's higher and higher but not the demand.
With other words : the economical system is still a total nightmare
And i don't understand why they cannot fix it -I compare it with Victoria I
At the beginning of the game (for example) the grain supply is far behind the demand. It's ca 1:4
In Victoria II supply and demand are ca 1:1 at the beginning
Comparing AHD with the Base game - AHD absolutely changed nothing in the behavior of
the whole economy going down in 1870
that the supply get's higher and higher but not the demand.
With other words : the economical system is still a total nightmare
And i don't understand why they cannot fix it -I compare it with Victoria I
At the beginning of the game (for example) the grain supply is far behind the demand. It's ca 1:4
In Victoria II supply and demand are ca 1:1 at the beginning
Comparing AHD with the Base game - AHD absolutely changed nothing in the behavior of
the whole economy going down in 1870
But that's not true. Pop growth, Lit and Con all increase the demand from pops, plus lux goods are bought multiple times when the pops can afford it, plus industry gets higher throughput so demands more inputs, this all increases demand for goods.
Also, Grain is a life need, you really don't want demand to be 4 times supply...
Also, Grain is a life need, you really don't want demand to be 4 times supply...
Plus, comparing it with V1's magic flying buy-all market isn't really valid. V2's got a self-contained economic system. V1 had infinite money waiting on the WM, so it could always sell stuff.
I must say that i never past the year 1875 so far.
I will give it a try past that -
Cause your arguments make sense
All what i can say is that there is defintely a "crash" in the economy around 1870.
I mostly play Sardinia Piedmont.
So i mostly watch fruit and grain...and both sell terrible bad once the supply get's higher and higher but not the demand. (around 1870)
Now i could argue...when the pop's sell less fruit...they have less money...when they have less money the demand also lessens.
What i noticed (until 1875) that the Pop growth effect is not very strong in general (near stagnating)
I will give it a try past that -
Cause your arguments make sense
All what i can say is that there is defintely a "crash" in the economy around 1870.
I mostly play Sardinia Piedmont.
So i mostly watch fruit and grain...and both sell terrible bad once the supply get's higher and higher but not the demand. (around 1870)
Now i could argue...when the pop's sell less fruit...they have less money...when they have less money the demand also lessens.
What i noticed (until 1875) that the Pop growth effect is not very strong in general (near stagnating)
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What i liked in V1 was - that it reflected the benefits of the new technologies much stronger. (especially grain etc)
Better technologies = more sell = better life standard = more demand in everyday needs,luxury needs
This argument is a joke
My answer :
Hopefully "simiarly not unrealistic" - the economy will recover around 1879
It wasn't an argument
But anyway, what should happen in your fruit case is:
Fruit is oversupplied.
Fruit farmers become unemployed, and either demote to craftsmen (increasing industry demand, and also their own demand) or migrate to other RGOs which do have high demand for their output.
Fruit is no longer oversupplied, and industry has increased.
There may be a slight issue with money supply not expanding quite as fast as output atm, which would cause mini-recessions and microdepressions as the market runs into the limit of cash supply, but that's quite hard to diagnose accurately - it means tracking down where all the money in the game is at a given moment.
But anyway, what should happen in your fruit case is:
Fruit is oversupplied.
Fruit farmers become unemployed, and either demote to craftsmen (increasing industry demand, and also their own demand) or migrate to other RGOs which do have high demand for their output.
Fruit is no longer oversupplied, and industry has increased.
There may be a slight issue with money supply not expanding quite as fast as output atm, which would cause mini-recessions and microdepressions as the market runs into the limit of cash supply, but that's quite hard to diagnose accurately - it means tracking down where all the money in the game is at a given moment.