Economics: how it´s current state

[DavidBacon]

I´ve been away from Vic for a long time and now that there is a new exp coming I would like to know: is there any plans for fixing some of the roots issues that existed in Vic2 economics? I´ll explain myself. In the launch of the game there deep problems with the economy that were latter mitigated but not solved. There was much discussion about what was the real cause, but people didn´t reach a consensus, at least none that I can remember. There were two big mods that tried to solve this problems, but my conclusion was that they tried to attack the consequences, symptoms, but never got to the cause.
In my opinion , the main cause for some of the Vic2 problems are: fixed prices. The prices are allowed to roam, but only inside a given range. The same thing goes to demand: it´s pre-established, wich means that even if prices were able to roam free, supply could eventually reach a wall were people wouldn´t buy the goods offered anymore. You see? Vic is rigged to reach a over production state that eventually leads to a deep economic crisis. To change that, they would have to change the price mechanics and the demand mechanics too. The prices should be allowed to roam free and demand should be based on price levels along with basic needs.
I may be wrong but I think this basic changes would allow a similar scenario to real history, were the rise in productivity helped reducing prices for most goods back then, and would also allow fro vic to have a working economy.

 

[Richard Dolder]

I'm not sure what you're actually trying to suggest here, you should probably clarify yourself.

 

[Fryslan0109]

I realize this is the response to a lot of gripes about Vicky 2 economics, but you should try the Pop Demand Mod - things usually turn out rather more plausibly. Granted, it would be nice to see a lot of the mod's fixes in the vanilla game.

 

[Richard Dolder]

I realize this is the response to a lot of gripes about Vicky 2 economics, but you should try the Pop Demand Mod - things usually turn out rather more plausibly. Granted, it would be nice to see a lot of the mod's fixes in the vanilla game.

As good as PDM's economy fixes are, everything else they do tends towards the hilariously awful.

 

[unmerged(312767)]

The economy is mostly crippled. main reason - overproduction. With interventionalism and some other economic policies capitalists are locked in a vicious cycle.
Subsidies make capitalists build useless and always unprofitable factories like explosives or canned food. You can't stop them from expanding factiries either. The more they expand the more you overproduce. the more you overproduce the more you subside. Always hiring more craftsmen in the process.
In the end, you produce so much goods that entire market crashes.
The only solution is laisless faire, but this way you will lose valuable 20+ level factories left and right.

 

[Richard Dolder]

The economy is mostly crippled. main reason - overproduction. With interventionalism and some other economic policies capitalists are locked in a vicious cycle.

Overproduction is a problem because it burns the factories on two levels, one in that less is sold, two in that the price goes down at the same time. So if overproduction is x2 what is demanded, half as much is sold and it costs half as much.

Also it should be noted the game should be overproducing in the end game, if overproducing causes industrial crashes the market is flawed.

 

[unmerged(312767)]

Demand for most goods is very limited n Vic2.
POPs can't allow their goods, even when price goes down.
With techs two or even one great powr can produce more certain goods than entire planet's demand.

 

[Phalanxia]

It's because there are caps on the demands of individual POPs. IRL, there are no caps on demand beyond income.

 

[FabiusBile]

Overproduction is a problem because it burns the factories on two levels, one in that less is sold, two in that the price goes down at the same time. So if overproduction is x2 what is demanded, half as much is sold and it costs half as much.

Also it should be noted the game should be overproducing in the end game, if overproducing causes industrial crashes the market is flawed.

In the end game every single good is overproduced and over 50% of all the factory output is dumped into the sea! All the RGO demand is simply there because the capitalists want to dump even more liquor into the ocean!

Yes, the economic end game is still horribly broken in Vic2; but at least you can still wage war .

 

[Constans337]

Hopefully this will get some love in HoD. Factories producing at maximum output with no concern for demand is currently a major issue for the game's economy.

 

[Naselus]

IRL, there are no caps on demand beyond income.

If this was true, planned obsolesce wouldn't exist and Bill Gates wouldn't have a big pile of money because he'd have spent it all on spare washing machines. There are limits to demand above ad beyond income.

As for fixed prices; V2 doesn't have them. The price range is determined entirely by the ratio of supply and demand and can move infinitely depending on that price; try setting all the life needs of all the POPs to a million rubber and see what the price does. Price ranges freely, and demand is based on income more than anything else (almost nothing in-game ever achieves 'full' demand).

Anyway, overproduction in AHD is mostly due to liquidity; late game, monetary policy is too 'tight' - there's not enough cash to keep demand going. Little else needs to be changed to have a good enough economic game.

 

[Richard Dolder]

In the end game every single good is overproduced and over 50% of all the factory output is dumped into the sea! All the RGO demand is simply there because the capitalists want to dump even more liquor into the ocean!

Right now, today every single good is wildly overproduced, and less than 10% of the population works in manufacturing.
The endgame should have massive overproduction, the problem is if overproduction causes factories to go bankrupt.

Yes, the economic end game is still horribly broken in Vic2; but at least you can still wage war .

I'm assuming that's a joke.
Microing that many stacks is painful.

 

[FabiusBile]

Right now, today every single good is wildly overproduced, and less than 10% of the population works in manufacturing.
The endgame should have massive overproduction, the problem is if overproduction causes factories to go bankrupt.

Not in this Manner. I admit I have never checked, but Liquor Factories in my area do not destroy 60% of the bottles they produce without actually selling them. Because that's the equivalent of what happens in Vic2. Also all the RGO (minus Rubber, Oil etc) demand is only there because there are so many factories over producing goods and those goods are immediately destroyed because there is no demand for it. So no, the end game should not have overproduction on that scale (>50% of all goods) because no sane capitalist would spend money on goods just to destroy the end product . Yet Capitalists in V2 tend to hire until they make no money anymore every single time.

I'm assuming that's a joke.
Microing that many stacks is painful.

Yeah well, it's the only thing left in the game at that point - unless you manage all your factories manually (I'd rather have L-F and not have to deal with it ). But yeah, managing Mobilisation isn't that fun either.

 

[FabiusBile]

Anyway, overproduction in AHD is mostly due to liquidity; late game, monetary policy is too 'tight' - there's not enough cash to keep demand going. Little else needs to be changed to have a good enough economic game.

Could you expand on that? I'm not sure I understand.

 

[Naselus]

Could you expand on that? I'm not sure I understand.

In real life, cash has a variable velocity; if I buy something from you for five pounds right now, you can spend that money in two minutes time, ad the person you give it to can spend it immediately too. This means that, in real life, if the total money supply is low it simply moves through the system faster.

In V2, cash has a fixed velocity of 1. Every bit of money can be involved in only one transaction per day. As such, if the total market value of all goods produced exceeds the total mount of cash in the system, no-one can buy the excess goods. Liquidity therefore acts as a cap to the maximum amount of economic activity that can take place.

Now, this problem becomes increasingly visible as the game goes on, as industrial production exceeds the rate of expansion of the money supply. This is compounded by factors like concentrations of capital (money which is not 'active', sitting in bank accounts or the national purse), which lower liquidity and so reduce the number of potential transactions.

This is the major structural issue with the economy leading to oversupply, not a lack of demand in the pop files (there's tons to spare) or over-productive factories.

 

[Richard Dolder]

Not in this Manner. I admit I have never checked, but Liquor Factories in my area do not destroy 60% of the bottles they produce without actually selling them. Because that's the equivalent of what happens in Vic2. Also all the RGO (minus Rubber, Oil etc) demand is only there because there are so many factories over producing goods and those goods are immediately destroyed because there is no demand for it. So no, the end game should not have overproduction on that scale (>50% of all goods)

What liquor factories in your area do is sell that to distributors who sit on the liquor until it gets sold(if it ages well) or dump it when it goes bad(if it doesn't.), far more liquor is still produced than consumed however.
Also from a game design perspective either you have underproduction in the early game, or over production in the late game.

because no sane capitalist would spend money on goods just to destroy the end product . Yet Capitalists in V2 tend to hire until they make no money anymore every single time.

The U.S. produces enough food to feed the world, and yet people go hungry.

Yeah well, it's the only thing left in the game at that point - unless you manage all your factories manually (I'd rather have L-F and not have to deal with it ). But yeah, managing Mobilisation isn't that fun either.

If i wanted to play a wargame i'd play a wargame.
I'm here for a victorian era game which means factories and diplomacy.

 

[Peppiniello]

If the problem of late game its tight monetary situation, would it work to add a decision that comes with late techs to print money, that gives money to pops and raise prices? (I know prices are the same worldwide but that can be simulated with something like increased demand?)

 

[Sarmatian]

In real life, cash has a variable velocity; if I buy something from you for five pounds right now, you can spend that money in two minutes time, ad the person you give it to can spend it immediately too. This means that, in real life, if the total money supply is low it simply moves through the system faster.

In V2, cash has a fixed velocity of 1. Every bit of money can be involved in only one transaction per day. As such, if the total market value of all goods produced exceeds the total mount of cash in the system, no-one can buy the excess goods. Liquidity therefore acts as a cap to the maximum amount of economic activity that can take place.

Now, this problem becomes increasingly visible as the game goes on, as industrial production exceeds the rate of expansion of the money supply. This is compounded by factors like concentrations of capital (money which is not 'active', sitting in bank accounts or the national purse), which lower liquidity and so reduce the number of potential transactions.

This is the major structural issue with the economy leading to oversupply, not a lack of demand in the pop files (there's tons to spare) or over-productive factories.

Just wondering, do you actually know how much money there's in the game near the end? Like, 1900-1936. I tend to hoard money up to a point (if I get involved in a great war or something) and it is not uncommon that I have tens of millions in treasury. Would I feel the difference if simply allowed the pops to get it?

 

[Naselus]

Just wondering, do you actually know how much money there's in the game near the end? Like, 1900-1936. I tend to hoard money up to a point (if I get involved in a great war or something) and it is not uncommon that I have tens of millions in treasury. Would I feel the difference if simply allowed the pops to get it?

Yes, government spending can have a very visible impact in the economy if done right for a big nation. For example, if you have >10mil pops and have a huge stockpile of cash, try setting a -50% tariff and eliminating all taxes. The market will be rapidly buoyed up by this, causing a chain reaction of growth as you pump liquidity into it - kinda like quantitative easing is supposed to work IRL (except IRL, it all gets hoarded by desperately deleveraging banks).

What you're actually seeing in-game is a sort of deflationary crisis. Goods become more plentiful relative to money, which is essentially the same thing as money increasing in value (deflation). The more money you remove from circulation, the worse the deflation is. People get paid less, which reduces demand, which means they get paid even less, which further reduces demand.

The total amount of money can only really be found by adding up all the amounts in savegames. It varies from game to game.

 

[Chief of Staff]

How is each new unit of money created in Vicky 2? Does money get created with each new POP or is it from precious metal you get? I was wondering how money supply is expanded over time in this game. The only way I can see creating new money supply is through precious metals that are mined each day, which is then spread throughout economy via government spending. I don't see how cutting tariffs and taxes would create new money supply except by increasing amount of cash left over for POPs that can freely spend them.