Megathread : The Economy In Victoria 2

[Jolt]

One thing missing from Vic was 'negative expansion' except through the deeply unsatisfactory 'Depression, lose 10 factory levels sucka' blunt instrument.

Endless growth was the name of the game in Vic, and since the sequel will extend to 1936 from the start (and British industry was already beginning to falter in 1914) something creative must be done to represent recession and slump beyond market saturation.

Well, British industrial recession, IIRL, was not much of being bogged down in economic depression (Which should definetly be modeled), but rather because the lack of upgrading machinery of the British industries, making the British industry not being able to pick up the pace of the American and German industries.

 

[alvaro]

You're right. Model labour relations, make unemployment harder to avoid, but above all model the monetary economy beyond the glorified barter system that was Vic's economic model and recessions might even appear organically

+1
a good monetary model would even give sense to the discoveries of private banking or central bank policies.

about the recessions, maybe a simple mechanism of deflation spiral would do it based on increased productivities. it's simple and efective for the game. with a proper system of foreign investment that would provide a world wide lack of money and a proper industrial world recession. just a thought.

 

[Oerdin]

Huh... no.I much prefer "people need a of grain, b of beef, c of fish, d of fruit, e of clothes, f of furniture, g of wine, h of tobacco and i of coffee to be happy" than "people need x of generic product to be happy".

Agreed. That's the heart of Vicky.

If PI wants to make a profit on Vicky2 then they will need to simplify the game some what in order to get mass appeal but some of the basic Vicky1 stuff needs to be held over to keep the fanbois happy.

 

[Earl Uhtred]

Well, British industrial recession, IIRL, was not much of being bogged down in economic depression (Which should definetly be modeled), but rather because the lack of upgrading machinery of the British industries, making the British industry not being able to pick up the pace of the American and German industries.

Quite right. Forgot about technique. Something else that needs representing.

Instead of, or on top of, the education slider, we could do with industrial and educational doctrine paths similar to the military Jomini-vs-Clausewitz stuff.

The British uppah classes held technical education in as high contempt as they did dirigism (tariff wall excepted) and were decades behind the Germans in this field. Management shared in this. R & D and production were seen as entirely distinct. Technical education was seen as garnish to skills learnt on the shop floor.

I'm a Correlli Barnett disciple

 

[Brownbeard]

I'd like to see RGO work with diminishing returns as labour stacks in them, and subsequently this as engine for migration for pops to move to less populated RGOs to achieve better productivity and income.

Also, I'd like to see market change, in some ways similar to centers of trade.

IE. Each nation in the world should have its national market which would then link to a centre of trade, maybe a dozen on the globe, 5 continental ones(no. industrial power on continent) + 7 major industrial powers, and these would be re-evaluated every 10 years or so.

Each nation could diplomaticaly choose which market to belong do and would have the pros and cons involved (the obvious choice would be the closest market owned by friendly country, embargos and imperialism could alter this). The distance from the centre of trade would affect transport costs of goods and thus reduce profitability of foreign trade.

Also, major centres of trade would be interconnected, and their connections influenced by politics, or even cut off through embargos.

Thus, Paraguay could not trade directly with Switzerland, sometimes it would pay better to be have a more balanced and self-sufficient economy, than just make tanks, planes and steamships, plus there would be competing markets, economic imperialism and stuff.

My two cents.

 

[ashandresash]

A proposal for monetary economy and policies in Vicky (1 of 2)

Let's have a try with monetary economy representation. Sorry it's a very long statement (I use two posts) and my English is not so good... But you're helping me to improve (slowly) my written English skill, and make more funny the time waiting for the new patch to HoI3

MONETARY ECONOMY AND POLICIES IN VICKY

This is a proposal to make “monetary economy and policies” playable in Vicky, not a “simulation”. It’s abstracted (don’t expect interest rates and adaptative monetary demands, etc) but I think it could work because it’d give us the expected outcomes of different possible situations. And I have tried to adapt to Paradox mechanics.

The objectives of this proposal are:
1) Improve the capitalist investment model of Vicky.
2) Avoid a “permanent-growing-at-the-same-rate” economy.
3) Bring to the game an endogenous way to trigger bubbles, recessions and economic depressions.

The model

Four features are proposed here: demand of financial instruments (FINs), supply of FINs, monetary badboy… and crisis. Let’s see…

1) Demand of FINs. Why do we need them? Because we want to invest in new factories, in mines (1), in new and better infrastructures… and we want the existing ones not to disappear (explained later). So we need financial instruments for new investments and capital reposition.

2) Supply of FINs. Capitalists reserves (their accumulated yearly saves, just like in Vicky) and bank reserves (explained later) are the basis. They are transformed in FINs depending on policy (laissez faire is not communism), on economic research and discoveries… and the most important, a expansionist/contractive monetary policy slider. The more expansionist, the more capital reserves are converted into FINs. In this proposal, FINs are immediate, I mean: they can’t be stored… like money. They’re capital reserves transformed into investment (new or reposition).

3) Monetary badboy. When you make a lot of investments, with an expansionist monetary economics, private and uncontrolled banks… you’re increasing your monetary badboy. It’s a relative concept, depending on what proportion represents FINs over a “sustainable” monetary basis. Which is this basis? The addition (in nation-wide terms) of POPs incomes and public expenditure (discounting here payments of public debt and salaries of bureaucrats), minus taxes (2). Like reputation in EUIII, the proportion of “badboy” allowed over sustainable monetary basis would depend on other game features (policies, government, minister traits if they exist, techs…). The more badboy you have (and the more you’re over your “allowed” badboy), the more possibilities of triggering a financial crisis. As happened with badboy (in Vicky), it’d decrease with time and rate (like EUIII reputation) is modifiable by factors.

4) Crisis. When a crisis is triggered, depending of their relative level, the number of episodes in past recent and so on you could have, let’s say, three possible outcomes:

a. Financial panic! Reserves (both capitalist and bank) are severely reduced. It means that you could have problems reposing capital in your factories and infrastructure (losing some of them is possible if you don’t act, or economy doesn’t recover on time). And new investments would be less likely.
b. Recession: effect over reserves is bigger, and some factory/mine/infrastructure could be lost directly.
c. Depression: all above stronger, and some capitalists demoted (so your recovery would be more difficult, as there’d be less reserves creation).

Notes:
(1) In other posts I’ve suggested minery represented as factories.
(2) Bureaucrats cost is removed of public expenditure in the calculation of “sustainable basis” because of double accountability. Debt payments are removed too to prevent gamey tactics (and actually they shouldn’t become in an economic expansion, but paying former stimulus)

 

[ashandresash]

A proposal for monetary economy and policies in Vicky (2 of 2)

The second part of the proposal. It's more about effects in gameplay, outcomes... and contras of it implementation. Sorry again both post lenght and poor English.

The model working

1) Expansive/contractive monetary policy slider. Similar to HoI2 or EUIII system, but not the same. It's be possible multiple steps in a movement, and it'd be capped in maximum/minimum values (all the questions depending in your government, policies and techs). Even frequency (yearly like basis) could change in certain circumstances (policy, techs again… ie, Central Bank is discovered) making possible two or more decisions in a year. Effects:
a. FINs generation rate
b. POPs save going to bank reserves in a greater proportion
c. Rate of decrease of monetary badboy

2) Banks. It depends of government and tech. Like state bonds in Vicky, when POPs save grows, it should be invested either in bank reserves or state bonds (if policy is expansive, more to the bank). Banks representation is not like a factory but a “regional decision” (à la EUIII). The effects are:
a. More reserves (they’re added to capitalist ones, making possible the generation of more FINs)
b. An incentive to reserve/FINs conversion: it’s like decentralised expansive monetary policy
c. A boost in capitalist incomes
New research in the area would make effects of banks more powerful.

3) Monetary badboy. It should have an aleatory component, besides the “structural” one, in representation of bad practices, psychological issues… (and the gamey tactic of calculating basis, FINs, etc… to the “perfect proportion” is avoided). Of course, structural component must be more relevant. In the other hand, the information shown to the player should be a “estimation” (like intel works in HoI3), maybe with a red-yellow-green system. Of course, the more advanced in economics you are, the best intel you’ve had (but it won’t ever be perfect, and at the same time more advanced means more possibilities of banks and expansive policies, increasing risks…).

4) Some applications.

a. UK or Germany should have it too easy. A way to avoid this it’s by means of reposition of capital. The more you’ve invested, the more you need to keep it. But it doesn’t give us an annoying cap to development. Thanks to research, social promotion (explained later)... you could have more efficiency factories, more capitalists, more sustainable basis for FINs and secure expansive monetary policies. If you want to keep industrial hegemony, you should have to work hard in many areas.

b. How to fight unemployment (and obtain economic cycles). Let’s suppose unemployment is modelled (I made a suggestion above in the thread) and you want to eliminate it (is a waste of economic resources!). One possibility is expansive monetary policy. There will be more FINs available for new investments… and more people working (more taxes…). If you go too far, you could fall in a monetary crisis. And it can’t work forever: if you don’t have too much bank/capitalists reserves, you won’t generate FINs so much (expansive main effect is to accelerate the rate of conversation rather than generating more reserves, what it’s made but not as important as acceleration or conversion). Here we have a way to represent economic cycles! The bill for this “artificial” development is several years of lower growth, until reserves recovers. But contractive policies, accumulating huge reserves is not perfect… because you’d increase your monetary badboy. It’s a temporal solution (like IRL).

c. Healthy wealthy economies. You need structural measures for that. In monetary terms: increase your sustainable monetary basis! How? Increasing incomes of POPs. Social promotion works good for it, because middle-class earnings are higher than lower classes ones, and they don’t generate so much reserves as high-class, that “overheat” economy (with monetary risks, because of reserves).

d. Fighting a monetary crisis. If you go to expansive movement in slider, the recession effects should be combated, but you’re increasing your BB. If you go restrictive, you reduce BB faster, but increases your recession. You could increase public expenditure (not increasing taxes) and you have more sustainable basis for FINs conversion (but your debt could become unmanageable in a few years)… So there’s not automatic answers, but a combination depending countries circumstances.

e. Global depression? Some effects are cross-borders (if a big economy gets into recession or deppresion should produce and consume less, affecting other markets). A more direct representation is a new tech that allow the connection between foreign reserves (both capitalists and banks), giving a bonus to FINs conversion and reserves generation (boost for capitalist income and more other POPs saves to bank) in all the countries on the agreement… and making that a finacial crisis in a country increases monetary badboys in all countries in that system.

CONTRAS:
1) More computation, and calculation requirements

2) More exigence for the AI. Maybe biasing it to balanced monetary policies, except some historical events, giving just in those cases the chance of eccentric behaviour could work

3) Rework of consumption/save issues in comparison with Vicky

4) We need more middle-class POPs than clerks, officers and clergymen IIRC. Bureaucrats (problematic for this issue, because of double accountability with public expenditure), and artisans (¿low? ¿middle?) are declinant with industrialization… they both are not a solution. Maybe a class of urban merchants, wich appears like a “mercancy” for consumption of other classes (like “services” category…).

5) State industrialization should be more expensive than in Victoria. When I get in Vicky state capitalism and full citizenship… I’m unstoppable! It’s a little game-breaker (and unfairly, which makes it worse).

6) Exchange rates are not in the model (but they could).

 

[alvaro]

i like it.
so much better than vicky1 and not necessarily difficult to handle.

[ashant, you use "financieral" somewhere when it should be financial ]

 

[ashandresash]

i like it.
so much better than vicky1 and not necessarily difficult to handle.

[ashant, you use "financieral" somewhere when it should be financial ]

Sorry for "spanglish". Gracias, Álvaro.

 

[Naselus]

Unemployed POPs in an area should increase the Capitalist or Aristocrat's share of income. There are economic benefits to unemployment in a capitalist system, and they should be modeled.

Additionally, while i like the FINs idea from ashandresash, I think banks SHOULD be modelled as a factory, which generates a profit based on a seperately-set Interest Rate in the finance screen. Capitalists would be allowed to borrow from banks to buy new factories, with their own 'starting capital' requirement dependant on your government - 25% required for laisse-faire, 50% for interventionist and 75% for state capitalist. The capitalist then pays the bank back with interest.

Low interest rates in in a laisse-faire economy would then stimulate an industrial boom, but keeping the rates too low would overstimulate the economy, overstretch the capitalists ability to repay and would result in bankrupt capitalists and factories churning out so much cloth/whisky/pencils/shoes/whatever that they become worthless. This in turn would cause banks to stop generating money. Any bank going below a certain cash negative (set by economic techs, I'd suggest) needs either 'bailing out' or will downgrade in size until it eventually disappears.

You'd still need the ability to expand currency (the monetary policy slider is a must imo anyway), which would allow you to dig yourself out messes, and I'd include the concept of monetary badboy so that you can get an organicly-grown Mexican crisis.

You could even allow for cross-border lending, which would allow you to build a banking industry...

 

[MadImmortalMan]

Unemployed POPs in an area should increase the Capitalist or Aristocrat's share of income. There are economic benefits to unemployment in a capitalist system, and they should be modeled.

Huh? Capis make money by hiring people to produce stuff and giving them the tools to do it, not by collecting taxes from the unemployed people in their area. Don't do this.

 

[Arilou]

I'd like some way of interventionist or similar areas to "induce" capitalists to go in specific directions, but not go full-out state-planning.

I'd say something like the government being able to place "orders" for example "Build a railroad from Moscow to Kiev" (with say, a 10,000 £ bounty) and this would make capis more likely to do that, rather than building one from Smolemsk to Riga, for instance, they still wouldn't do it if they could make more profits elsewhere, but it would be a way to game the system a bit, especially in order to get "national interest" kinds of factories up and running (small arms, artillery, etc.)

 

[unmerged(56465)]

Huh? Capis make money by hiring people to produce stuff and giving them the tools to do it, not by collecting taxes from the unemployed people in their area. Don't do this.

I think he's referring to the fact that more surplus labor means lower wages, and therefore larger profit margins.

 

[MadVlad]

Except then you also have to model in that the unemployed people aren't buying anything, and thus profits decrease as revenue decreases as well...

Best to just leave unemployed POPS out of that particular equation, I think.

 

[unmerged(56465)]

Except then you also have to model in that the unemployed people aren't buying anything, and thus profits decrease as revenue decreases as well...

Best to just leave unemployed POPS out of that particular equation, I think.

They may decrease in absolute terms, but he said their share of the money should increase, meaning the poor are getting screwed even worse than the rich. Of course, I don't know if that's really accurate either.

 

[Naselus]

Unemployed people not buying anything is already modelled into Vicky. They have no cash reserves or cash income to buy their goods. So they don't buy them...

And having capi's income share increase in areas where there's higher unemployment would make sense and wouldn't exactly be hard to model. Just stick an 'unemployed' integer into the capi income calculation.

 

[Black Guardian]

Unemployed people not buying anything is already modelled into Vicky. They have no cash reserves or cash income to buy their goods. So they don't buy them...

And having capi's income share increase in areas where there's higher unemployment would make sense and wouldn't exactly be hard to model. Just stick an 'unemployed' integer into the capi income calculation.

Shorter post today, don´t worry guys


As I proposed in my looong post on page 1, calculating wages with a market-mechanism deals with this. If (labor-)supply > demand, wages will decrease and thus profits will increase as the production of goods becomes cheaper.

Furthermore, this is a much more powerful tool than any income-formula that includes this, because it can also model the other effect:
High wages increase demand of the pops AND can be linked to immigration-calculation. High wages should encourage people to immigrate into the high-wage-area! This will of course decrease wages on the long term but further increase demand...

I haven´t yet made up my mind about the monetary problem that was brought up - but as far as I remember, monetary policy in the 19th century was mainly aimed at keeping the own currency tied to the Gold-Standart, not related to support economic growth or development...

 

[OHgamer]

keep in mind folks the amount of number crunching for each and every POP each and every game day some of these suggestions would require. While there is great merit in alot of the ideas, there needs to be in the back of everyone's mind what kind of processor power would be needed to pull off the kind of sophisticated economic calculations being proposed here. More realism is always nice, but not if it comes at the price of needing a mainframe to run the game because even the latest quad core systems will choke on all the data needing to be crunched.

 

[unmerged(131989)]

I hope the resource types can be moddable, so we can add more types of resource. At the very least it'd be nice to have a few spare tags for resources.

 

[henryV]

Let's have a try with monetary economy representation. Sorry it's a very long statement (I use two posts) and my English is not so good... But you're helping me to improve (slowly) my written English skill, and make more funny the time waiting for the new patch to HoI3

MONETARY ECONOMY AND POLICIES IN VICKY

This is a proposal to make “monetary economy and policies” playable in Vicky, not a “simulation”. It’s abstracted (don’t expect interest rates and adaptative monetary demands, etc) but I think it could work because it’d give us the expected outcomes of different possible situations. And I have tried to adapt to Paradox mechanics.

The objectives of this proposal are:
1) Improve the capitalist investment model of Vicky.
2) Avoid a “permanent-growing-at-the-same-rate” economy.
3) Bring to the game an endogenous way to trigger bubbles, recessions and economic depressions.

Amazing! Great job.

Are you an Economics professor or PhD student?