Deflation

[Penta]

OK...This is getting to annoy me.

Playing as Paris. I've noticed over 5-10 sittings a disturbing pattern...

Inflation falls as unemployment grows.

I tell my minister to encourage employment...

No effect.

Eventually, deflation hits, with unemployment growing. And once that happens, you're done for. There's no way to fight deflation.

Um...What do I do?

[red]

I don't know about deflation or the Minister, but as Paris, the problem I usually experience is full employment. Try building more industries and you should see it reversed.

[Penta]

I went back and tested. Did my level best to keep a surplus running, told ministers to work on encouraging employment and economic growth, did my usual bit of shutting down all but one mil base in each category and putting all my troops into reserve...

Then went about building clean power plants, agri, and composites. Slowly, keeping a close eye on inflation and employment.

All was good...But unemp REFUSED to go down.

Inflation did. Problem was, despite doing my damnedest to stimulate things, deflation hit. And once you see -0.00%, it's all over. You can't escape the deflation. At which point, unemp goes spiralling up.

[lordrune]

You're not spending enough.
Build more industries, even if they're not hugely profitable. Put money into social spending, research, anything to get your GDP back into growth. It's impossible to spend money without creating jobs and inflation.
Even if you have to run with a deficit for a while, you'll see the deficit shrink steadily while your GDP grows.

This works for me anyway so far, because I've created successful economies with Michigan (achieved over 42,000 GDP/c with surpluses and growth), South Island, and Queensland by following this principle. I'll try Paris in that scenario next, and see if I can get my economy moving upward.

[Penta]

That's perfect theory....but is it implemented in the game?

[Slash78]

Build more industries, even if they're not hugely profitable. Put money into social spending, research, anything to get your GDP back into growth. It's impossible to spend money without creating jobs and inflation.

You should see US defense contractors, they can spend all kind of money with out creating a single thing.

On a more serious note, they are right about spending, the only problem is sometimes you'll spend faster then you GDP will increase and you'll run into all sorts of problems.

As for deflation, my economy usually runs in the negative column. I just try not to let it get below -1.5%.

[RCBricker]

I ahve serious problems with the industrial model being able to run with large numbers of companies running at a loss. having that help your economy is just silly.

[BigStone]

I ahve serious problems with the industrial model being able to run with large numbers of companies running at a loss.

Sorry .. RCB .. but i don't follow ...

Cheers

[tkobo]

I ahve serious problems with the industrial model being able to run with large numbers of companies running at a loss. having that help your economy is just silly.

I dont see why ?
Many companies and even a few industries operate at a loss.This is one of the reasons why subsidies exist.

Farming in the US is a prime example.Definately helps and is in fact needed by the economy,but without the subsidies handed to small farms by the US gov many would go belly up.Heck many go belly up even with the subsidies.
Airlines are another example.

[RCBricker]

That is a result of lobbists and is not even close to considered good business. It actually hurts and economy by making it less than efficient and by keeping the economy for becoming what it can be. The money would be better spend in training workers to shift to industries that are actually making exportable goods.

Industries and companies that exist at a sustained loss should be abandoned. That is the way business works and business is the lube that makes economies run.

I am not a programmer and cannot at this time offer a fix (and there is not one for a game this far along). However, this is my opinion.

[Legend]

Usually we don't suggest running industry prices at a loss... but sometimes there are reasons for this...

When you sell agriculture to your people at a good price, perhaps less than your cost, people get happier, Domestic Approval goes up (a bit)... but you need to look at the big picture.... if you are an oil giant and can export at good prices, then you can subsidize food and other industries.

When it comes to Supreme Ruler there is a simple way to look at things of production... 11 resources, supply and demand, imports and exports, some resources need other resources to be produced and industry is one way to employ people. Another way to employ people is your military - when deployed are being paid, because they are being employed. Having an active armed force deployed helps lower unemployment because you have given these people jobs.

I personally haven't taken a close look at inflation but usually my unemployment levels need to be above 3% or I start to get emails telling me about inflation.

[RCBricker]

IF this is how you built the engine to run...then fine.

I noticed the comments and suggestions about running industries at a loss, as well as having unployment negatively associated with inflation, and figured I would state that this is not accepted economic theory. That is all. it is your game and as long as it works that is all I care about.

I really didn't expect to offend anyone. I have always been of the mind that forums were for helping and generally chatting. You know everyones opinion was acceptable. I was suprised that a couple of the readers were a little testy about my comments. But what the hell

[tkobo]

That is a result of lobbists and is not even close to considered good business. It actually hurts and economy by making it less than efficient and by keeping the economy for becoming what it can be. The money would be better spend in training workers to shift to industries that are actually making exportable goods.

Industries and companies that exist at a sustained loss should be abandoned. That is the way business works and business is the lube that makes economies run.

I am not a programmer and cannot at this time offer a fix (and there is not one for a game this far along). However, this is my opinion.

Hehehe we disagree alot, but thats okay,as you say below ,thats what forums are for.

If industries that existed at a sustained loss were abandoned the US would have little to no health care(heavily subsidized to simply keep it working),litlle to no food (farming agian heavily subsidized to keep it working) and little to no large scale travel (airlines the same).
But then again if this was allowed to happen,the US would have little to no industriual population also

Farms fail-food would becomes rare- food becomes rare people leave or starve- industries accross the board suffer due to labor shortages and increased expenses.

Health care fails- desease increases- population decreases-industries across the board suffer as sick time increases,lack of labor forces increase in required wages to be paid,etc..

Airlines fail- again industries across the board suffer.Resources become harder and more expensive to aguire and move

Some industries are simply too impoartant to "be abandoned".
To make matters worse-some of those industries are almost impossible to make profitable without making other industries less so.

[RCBricker]

wrong again

IF the farms fail we buy the food from elsewhere. We do not subsidize farms because they cannot sell their food. We subsidize farms for two reasons

1. The small farmers are not capable of runing their farms profitably because of the loans, the government (thanks to lobbiest) gives subsidies to help the small farmers.

2. the main reason for subsidies is to get the farmers to produce different types of crops that they may not normally grow. It increases supply fo a given product that can then be exported or consumed domestically.

Healthcare is actually privatized and is not subsidized at all. There are hospitals as well as other layers of healthcare facilities or industries that receive grants for various reasons. Some for research, some for services that are rendered to the uninsured.

If you are talking Pharmacies they are not subsidized, but they do sometimes receive significant grants. But mostly they receive nice patents that helps them to recoup their $billion dollars that went into research.

Airlines are being subsidized because of 9/11. Trust me they will fail at least some of them. You see in this instance the companies are gaining government funding because the terrorist attacks caused huge losses in demand that kept the companies from being able to make enough money to pay their loans. The country is still not flying like it used to. There have been a couple of the airlines that are getting dreadfully close to bankruptcy, which will limit competition and force the consumers of the bankrupt business to change who they fly with. A couple companies fail and the others prosper.

Just out of curiosity did you learn Economics at the same school you learned history?

[tkobo]

wrong again

IF the farms fail we buy the food from elsewhere.

Lets see, according to the FAO the number of chronically hungry people in the world is around 800 million (as of 2002) .Its predicted by 2030 this number will still be over 400 million,and thats with a continued growth in food production.
So your solution is too simply reduce food production more and increase the competition for that which exists ?

The US already has a roughly $440 million dollar deficit in food trades alone.
And again , your solution is too increase this ?

Currently the US exports about 8.5% of its food production-how much of this can we and the world do without.
Even worse ,if your right,why wouldnt countries around the world simply let their farms fail rather than subsidize them.
Of course ,if they do,good luck competing for the food they still make.
As less food produced equals less food exported.
Oh and by the way, the greater % of the top 20 nations exporting food ,subsidize thier farms.In fact the greater % of ALL nations subsidize thier farms.

We do not subsidize farms because they cannot sell their food. We subsidize farms for two reasons

1. The small farmers are not capable of runing their farms profitably because of the loans, the government (thanks to lobbiest) gives subsidies to help the small farmers.

2. the main reason for subsidies is to get the farmers to produce different types of crops that they may not normally grow. It increases supply fo a given product that can then be exported or consumed domestically.

Actually the main reason we subsidize farms is becuase they cant sell enough of thier food at prices high enough to pay the costs and living expenses of those farmers who own and work said farms.
This in fact has the odd counter effect also of farmers recieving subsidies to produce no crops at all because the effect of an over abundance of a given crop in some circumstances would actaully be to make matters worse in some cases.As a price drop would occur for all farmers of that particular crop.

1)your 1 is kinda funny.So your saying that farmers were doing just great, than one day decided to take out loans they didnt need becuase lobbyists convinced the government to make unneeded loans available to them ?

2)Hardly the main reason, while it is a reason.However one of the reasons this is done is too get farmers to produce crops that are NOT as profittable as the ones they would choose to otherwise.

Despite your over simplified claim of only "two reasons " for farm subsidies there are in fact many reasons for farm subsidies which vary according to the individual subsudies purpose.
Such as these examples:
*provide a stable and set amount of a certain crop in order to help maintain a more stable sell price.In other words,the gov aproaches a farmer and says "Your already making wheat""We want the price of wheat to remain about such and such price""As we understand this will decrease your potential income ,we will pay you a subsidy so that you can maintain your price at such and such as we would like you too, without suffering this reduction in your potential income.
*increase the production of a certain crop type by getting farmers who would make another more profitable (to them) crop,make the one thought more needed atm.
*allow farmers to compete on a global scale price wise with countries whos standard of living and food prices are much lower.A way to hedge against loose of business due to lower cost imports.
*allow farmers to survive bad business circumstances rather than lose them and thier crops long term.Such as drought,flooding,desease,etc..

Theres 4 right there.Twice as much as 2:) .

Healthcare is actually privatized and is not subsidized at all. There are hospitals as well as other layers of healthcare facilities or industries that receive grants for various reasons. Some for research, some for services that are rendered to the uninsured.

Actually as of 2002 the US Government Funds roughly 60% of U.S. Healthcare Costs in the US.
"Government expenditures accounted for 59.8% of total U.S. health care costs in 1999, according to a Harvard Medical School study published in the journal Health Affairs."

Medicaid subsidies:i assume this needs no explantion/example.

Hosipital subsidies: example- Penn State University's medical school hospital recieves federal subsidies.It also recieves Medicaid subsidies and state subsidies.

Another example for above(hospital subsidies) :example -New York State hospitals also are getting $1.25 billion in subsidy federal assistance over five years to help them adapt to the state's plan to place 2.4 million Medicaid recipients into managed-care programs. Major beneficiaries of the $1.25 billion subsidy are teaching hospitals that are also receiving $400 million from the special federal Medicare subsidy program to train fewer doctors, in addition to the $4.155 billion, three-year HCRA subsidy for graduate medical education.

point proven.

Airlines are being subsidized because of 9/11. Trust me they will fail at least some of them. You see in this instance the companies are gaining government funding because the terrorist attacks caused huge losses in demand that kept the companies from being able to make enough money to pay their loans. The country is still not flying like it used to. There have been a couple of the airlines that are getting dreadfully close to bankruptcy, which will limit competition and force the consumers of the bankrupt business to change who they fly with. A couple companies fail and the others prosper.

That doesnt explain why airlines were subsidized BEFORE 9/11.

Heres an example:
"Essential Air Service

Another function assigned to DOT with the demise of the CAB was the responsibility for maintaining air service to small communities. With carriers free to go wherever they want, Congress anticipated that some of the lightly traveled routes would lose service. To assure appropriate service, it established the Essential Air Service program, which provides subsidies to carriers willing to serve domestic locations that otherwise would be economically infeasible to serve .DOT administers the program, determining subsidy levels and soliciting bids from carriers. ."
Sorry about the huge size of text- apparently this is the next size available

http://www.airlines.org/about/d.aspx?nid=7947

Point proven.

Just out of curiosity did you learn Economics at the same school you learned history

Is there some reason your getting upset here ?There really is NO reason to get snarky or TRY to be insulting.If you cant support your claims ,simply admit it and walk away.If you simply dont want to debate the views you put forth,again simply walk away.
Behaving badly will not make your claims correct.