The real problem with Victoria 3's economy is taxes

[Don_Quigleone]

The problem with population growth is that there simply isn't an easy way to model population growth during this period. Some countries saw massive population growth (Russia in 1836 is ~60 million, by 1913 it was 170 million, and that doesn't include massive waves of emigration, Britain likewise saw massive population growth, though most went to the colonies). While others less but still significant (Germany went from 30 million to 60 million in 1913, Japan from 30 million to 55 million in 1920, Austria Hungary 30 million to 50 million in 1914) while other countries saw hardly any population growth (France went from 34 million in 1836 to just 41 million in 1911). And then you have the United States going from 13 million in 1830 to 92 million in 1910 (though using the USA is cheating as most of the population growth was immigration).

It's hard to pin down factors that tie these together in a way that's easy for the game to model. If you base on wealth, then Russia won't have enough growth, and France too much. If you base it on pops working rural jobs, then UK will get too little.

 

[Panagean]

The problem with population growth is that there simply isn't an easy way to model population growth during this period. Some countries saw massive population growth (Russia in 1836 is ~60 million, by 1913 it was 170 million, and that doesn't include massive waves of emigration, Britain likewise saw massive population growth, though most went to the colonies). While others less but still significant (Germany went from 30 million to 60 million in 1913, Japan from 30 million to 55 million in 1920, Austria Hungary 30 million to 50 million in 1914) while other countries saw hardly any population growth (France went from 34 million in 1836 to just 41 million in 1911). And then you have the United States going from 13 million in 1830 to 92 million in 1910 (though using the USA is cheating as most of the population growth was immigration).

It's hard to pin down factors that tie these together in a way that's easy for the game to model. If you base on wealth, then Russia won't have enough growth, and France too much. If you base it on pops working rural jobs, then UK will get too little.

That's really interesting. It sounds like countries had some control over population-migration effects, but much less over domestic growth. I wonder whether, in additional to a weak correlation along the lines of what the game currently has, there might also be a large "natality factor" assigned to each pop. The "natality factor" would originally be set to whatever figure produces approximately the IRL outcome (so French pops would be set to be inherently less fertile than Russians), but each pop would have a chance to "re-roll" their natality factor with a MTTH of, say, 25 years. Could be a nice way of having some historical grounding in the early part of the game, but descending into plausible "alternative universes" in the second half.

 

[AmpsterMan]

I find the urban centers as negative feedback loop compelling. What would be the economic effect on doubling pop services substitution effect? This mixed with some production modes changing the consumption of raw goods would be nice.

 

[Voidian]

I really don't think taxes are even a problem.

I mean, any system having increased depth is a welcome change for me, but I don't think it will change anything.

Since release, the most powerful government type, by far, was a laissez faire system with as many capitalists as possible and minimun taxation+ max spending in every area, you can just keep building everything with over 4k construction points and a billion+ storage of investments while everyone gets the highest living standards in the planet, the entire country is composed of loyalists, and you'll struggle to find ways to spend your money to keep it from hitting the cap all the time, later on I just gave up on actually constructing stuff because I couldn't handle pausing the game every few minutes to queue up 1k new random buildings, if anything decreasing taxation would make it easier to not struggle to hit the money cap all the time.

 

[SgtPepper1]

The impression I get from OP is that the solution of reducing taxes is fixing a problem that is excessive exponential growth. I simultaneously think lowering tax income for the player doesn't matter and that excessive exponential growth is not a problem.

I do not think excessive exponential growth is a problem because if you made the AI actually efficiently build, the player and the AI could reasonably compete. Just as well, the excessive growth lets insignificant powers actually become great powers by the game's end if played well. I think it's up to debate as to how much exponential growth you want, but I don't think exponential growth is a problem in and of itself and I don't think that it tackles the root of the problem.

I don't think lowering tax income is the solution. You can lower taxes, that doesn't change the gameplay loop. It's no different than how Paradox added in autonomous construction with 1.3. It's just a sap on your effective construction capacity. Lowering tax rates does the same thing. They could just arbitrarily introduce a scaling modifier on additional construction points per construction sector added, so that the player has diminishing returns per construction sector made. Not that I think this would be a good solution either.

I think that the core of the problem is the construction sector. The building is fundamentally the most powerful building in the game (maybe govt admin if you can't collect taxes due to some nations starting Bureaucracy) because optimal play is constructing more construction sectors (as many as your income/deficit can handle). There's no world where reducing taxes would meaningfully change this. You simply go find more gold mines to take (as it's one of the few (if only) ways to boost minting considering minting from GDP is capped at 200,000 now) and proceed to do this. You also still will see people jack their taxes to the max at the start of the game to still do just this. Lowering taxes will make it harder to grow exponentially, but it will not kill the strategy and I doubt it would kill "excessive" (I'm not sure what it is, because we probably all have slightly different ideas of what excessive is) growth.

 

[Don_Quigleone]

The impression I get from OP is that the solution of reducing taxes is fixing a problem that is excessive exponential growth. I simultaneously think lowering tax income for the player doesn't matter and that excessive exponential growth is not a problem.

I do not think excessive exponential growth is a problem because if you made the AI actually efficiently build, the player and the AI could reasonably compete. Just as well, the excessive growth lets insignificant powers actually become great powers by the game's end if played well. I think it's up to debate as to how much exponential growth you want, but I don't think exponential growth is a problem in and of itself and I don't think that it tackles the root of the problem.

I don't think lowering tax income is the solution. You can lower taxes, that doesn't change the gameplay loop. It's no different than how Paradox added in autonomous construction with 1.3. It's just a sap on your effective construction capacity. Lowering tax rates does the same thing. They could just arbitrarily introduce a scaling modifier on additional construction points per construction sector added, so that the player has diminishing returns per construction sector made. Not that I think this would be a good solution either.

I think that the core of the problem is the construction sector. The building is fundamentally the most powerful building in the game (maybe govt admin if you can't collect taxes due to some nations starting Bureaucracy) because optimal play is constructing more construction sectors (as many as your income/deficit can handle). There's no world where reducing taxes would meaningfully change this. You simply go find more gold mines to take (as it's one of the few (if only) ways to boost minting considering minting from GDP is capped at 200,000 now) and proceed to do this. You also still will see people jack their taxes to the max at the start of the game to still do just this. Lowering taxes will make it harder to grow exponentially, but it will not kill the strategy and I doubt it would kill "excessive" (I'm not sure what it is, because we probably all have slightly different ideas of what excessive is) growth.

The issue is that ingame economic growth rates dwarf real life economic growth rates, and much of this is the ease of raising revenue. Real life rulers would have done as players do (jack up taxes and go full hog on mass building projects) but in real life there were many things preventing them from raising such massive revenue.

The only real life example where economic growth matches the game is the industrialization of the Soviet Union before ww2, and of course that's exactly a situation where a government was able to tax their population to the hilt without much opposition.

 

[durbal]

The issue is that ingame economic growth rates dwarf real life economic growth rates, and much of this is the ease of raising revenue.

No, it's not. Economic growth in game is too big because more is always better and pops are just goblins that go from subsistence farmer to engineer just because a building was built.

 

[Don_Quigleone]

No, it's not. Economic growth in game is too big because more is always better and pops are just goblins that go from subsistence farmer to engineer just because a building was built.

More is always better isn't a problem. The ease of getting educated pop jobs is a problem, I agree, but historically the reason people didn't have "more" was a shortage of capital. There was never an infinite money tree to build factories and infrastructure, and there was usually more people then machines for those people to work.

 

[durbal]

More is always better isn't a problem. The ease of getting educated pop jobs is a problem, I agree, but historically the reason people didn't have "more" was a shortage of capital. There was never an infinite money tree to build factories and infrastructure, and there was usually more people then machines for those people to work.

Your solution is lowering taxes doesn't solve the issue of lack of access to capital, though. The money will still be there and will be invested in industries by pops. Taxes do not create capital.

 

[Sbrubbles]

Your solution is lowering taxes doesn't solve the issue of lack of access to capital, though. The money will still be there and will be invested in industries by pops. Taxes do not create capital.

What are you on about? You absolutely create capital through taxation, and lots of it. Every single farm/mine/factory you're paying for with government taxation is new capital created. There is no crowding out of private investment to speak of in Vic3. You can easily invest upwards of 15% of GDP just with taxes.

 

[durbal]

What are you on about? You absolutely create capital through taxation, and lots of it. Every single farm/mine/factory you're paying for with government taxation is new capital created.

That's not what capital is, but anyway...

My point is that taxes do not create capital simply by virtue of being taxes. If what you are saying is true, higher taxes would always create more capital and that's simply not the case in reality or in the game. Realistically, you're better off going LF and letting private investment build stuff in most cases because money for investment (aka capital) is manufactured out of thin air.

 

[Sbrubbles]

That's not what capital is, but anyway...

My point is that taxes do not create capital simply by virtue of being taxes. If what you are saying is true, higher taxes would always create more capital and that's simply not the case in reality or in the game. Realistically, you're better off going LF and letting private investment build stuff in most cases because money for investment (aka capital) is manufactured out of thin air.

Capital (economics) - Wikipedia

en.wikipedia.org

Spoiler: Capital

In economics, capital goods or capital are "those durable produced goods that are in turn used as productive inputs for further production" of goods and services.[1] At the macroeconomic level, "the nation's capital stock includes buildings, equipment, software, and inventories during a given year."[2]

https://en.wikipedia.org/wiki/Capital_(economics)#cite_note-2

Factories buildings are capital goods, the machinery inside factories are capital goods, agricultural and mining implements are capital goods, etc. A "building" in Vic3 is representing all of these, and you can build these with government funds. Therefore, government can create capital in Vic 3.

In Vic 3 higher taxes always create more capital and that's simply in the case in the game. I invite you to, in addition to whatever you're doing in terms of LF, set taxes to 4, wages to 2 and see how much you can actually build.

 

[Don_Quigleone]

That's not what capital is, but anyway...

My point is that taxes do not create capital simply by virtue of being taxes. If what you are saying is true, higher taxes would always create more capital and that's simply not the case in reality or in the game. Realistically, you're better off going LF and letting private investment build stuff in most cases because money for investment (aka capital) is manufactured out of thin air.

Sbrubbles is correct.

What determines the rate of growth in Victoria 3 is the proportion of a nation's income that's spent on building new capital IE buildings. Raising taxes may reduce the income of capitalists thus reducing the investment pool, but the increase in your state budget that can be spent on construction goods is far higher. Taxes shift the proportion of your GDP that's spent fulfilling pop needs vs being spent on government goods or construction. It's absolutely an optimal tactic to crank up taxes, keep standards of living low and divert as much income as possible into paying for as much construction goods as possible.

 

[AmpsterMan]

Raising taxes to max is going to be optimal even if we reduce the amount of money; perhaps if the consequences for higher taxes were higher, there would be an offset to running high taxes, to only be used in extenuating circumstances.

Building more construction and it's associated inputs is always going to be a dominant strategy because the time horizon for the game is very long and so compounded interest rears it's head. It will always be optimal to build to your resource limit as fast as possible.

 

[durbal]

Sbrubbles is correct.

What determines the rate of growth in Victoria 3 is the proportion of a nation's income that's spent on building new capital IE buildings.

You keep saying that and it's just not true. I know this is your thread and you think you had a revelation here, but please just realize this simple fact: the game snowballs out of control even with the lowest taxes possible. It's even one of the best strategies.

 

[Haresus]

You keep saying that and it's just not true. I know this is your thread and you think you had a revelation here, but please just realize this simple fact: the game snowballs out of control even with the lowest taxes possible. It's even one of the best strategies.

Even if we all accept that lowest possible taxes and laissez-faire are better for constructing more buildings than higher taxes and laissez-faire (this would be relatively easy to test), there are still parts of the game where you don't have laissez-faire yet. In those situations, when pop investment is fairly low, higher taxes are definitely better for growing your economy faster.

In the early game you are unlikely to have laissez-faire. The earlier the snowball starts, the bigger it eventually gets, and the faster you get capitalists and unlock laissez-faire.

 

[durbal]

Even if we all accept that lowest possible taxes and laissez-faire are better for constructing more buildings than higher taxes and laissez-faire (this would be relatively easy to test), there are still parts of the game where you don't have laissez-faire yet. In those situations, when pop investment is fairly low, higher taxes are definitely better for growing your economy faster.

In the early game you are unlikely to have laissez-faire. The earlier the snowball starts, the bigger it eventually gets, and the faster you get capitalists and unlock laissez-faire.

Honestly, Agricultarism is fine for getting investments going.

 

[Sbrubbles]

You keep saying that and it's just not true. I know this is your thread and you think you had a revelation here, but please just realize this simple fact: the game snowballs out of control even with the lowest taxes possible. It's even one of the best strategies.

The game snowsballs out of control even with the lowest taxes possible, yes. This doesn't make it "one of the best strategies". It makes it "a strategy". A strategy that is objectively inferior to high tax and spend. The game snowsballs out of control much harder with the highest taxes possible.

If you're willing actually put in the work to prove your point, how about a test? Here are the rules:

1) Pick France
2) No offensive wars, no customs unions. Defend yourself if you have to, of course.
3) No deleting initial army and navy buildings. Expanding and deleting ports and government buildings is fine

And most important of all:

4) You can use console commands to cheat LF in 1836 but aren't allowed to use government funds to build, only autonomous investment. No changing any other laws (I have to stay on interventionism which France starts with).

Winner is who gets to 100 million GDP first.

Spoiler: I'll go first

 

[durbal]

The game snowsballs out of control even with the lowest taxes possible, yes. This doesn't make it "one of the best strategies". It makes it "a strategy". A strategy that is objectively inferior to high tax and spend. The game snowsballs out of control much harder with the highest taxes possible.

You keep saying that but mathematically you are wrong. LF manufactures money out of thin air. If what you're saying is true, why do you not go full communist every game? It should be spectacular.

And if you say the game snowballs out of control even with the lowest taxes possible, then how is 'the real problem with Victory 3 is taxes' an actual argument?

 

[Sbrubbles]

You keep saying that but mathematically you are wrong. LF manufactures money out of thin air. If what you're saying is true, why do you not go full communist every game? It should be spectacular.

You keep saying that but mathmatically you are wrong. I've yet to see you put up any evidence of any of your claims tbh. I've put up France with 100 million gdp in 1848 on the back of ultra high tax and spend. Can you do better? No, you can't.

Plus I can and have gone full communist on some playthoughs. Why do you think this is some gotcha? Going communist isn't even relevant tbh, since you can't go communist early on for it to matter. With tax and spend by 1860 you're already at peak economy and you can reduce taxes because there is little point to continue building en masse.

And if you say the game snowballs out of control even with the lowest taxes possible, then how is 'the real problem with Victory 3 is taxes' an actual argument?

The snowball with just autonomous investment and no government tax-and-spend is much smaller. It's still there, but you're only gonna run out of peasants around 1870s and not 1850s. More restrictions are indeed necessary, but taxes are the more glaring problem.