Unemployment and Inflation

Discussion of the Economic Model in SR2010

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rhjyyz
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Unemployment and Inflation

#1 Post by rhjyyz » Jun 22 2006

I've been playing the demo for a few weeks now. Once thing I noticed it that unemployment and inflation ALWAYS move inversely with respect with one another. My question is, it is possible to lower inflation and unemployment, at the same time? Since this economic model is pretty realistic in many aspects I was just curious if there any methods in doing this. I have played almost all the regions in all the scenarios and its always the same....

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Inflation and Unemployment

#2 Post by Eric Larsen » Jun 23 2006

rhjyyz,
While most of the time unemployment and inflation will move in different directions it is possible to lower or raise both at the same time. Inflation is linked very closely to domestic demand. You can lower demand by raising domestic markup and this will actually help reduce unemployment by raising corporate profits which will help boost GDP/c and add more workers to the work force as the businesses have more profits to reinvest in more employees. You can overdo it and thus lower demand too much and you then try to recover by turning off production which then helps lower employment. The economic model is a lot of fun to figure out. The real fun comes on the world level with no world market.
Thanks,

Eric Larsen

The_Blind_One
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#3 Post by The_Blind_One » Jun 29 2006

I am wholly convinced that the game does NOT calculate the amount of workers but only looks strictly at monetary influxes. And since everything that would require real workers in the game, is counted towards the monetary influx of money in the game, workers are semi-simulated.

It perfectly explains why ur unemployment ALWAYS drops (from anything above 7%) even if ur gdp/c is constant or dropping.

Because if the game used a system where it counts the workers and their pay then the game would RECOGNISE the fact that it's possible for STRUCTURAL unemployment (wich is non-existant in this game and it's therefore purely based on a conjuctural monetary system wich always balances itself, with the integers being the tax system, efficiency, research, military spending, construction etc etc) (This can be derived from the scenario file aswell, there is an added value cost for goods besides usage of resources, increasing the added value doesn't change the demand (demand is fixed in the scenario file aswell and only changed by modifiers like the integers I mentioned previously))

Unrealistic but it'd be a bitch to count workers, specificly since the own dev team stated that the facilities u can build are not the complete representation of the country's production.

Weren't the devs going to EXPLAIN to us how the economic model worked? I think they promised to tell us months ago. I have yet to see someone post any REAL data on how the game calculates the economic performance. I recognise the fact that creating an economic model is a pain in the a$$ but being open and fair about it seems the best way to handle it and for future fixes.

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Balthagor
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#4 Post by Balthagor » Jun 29 2006

The_Blind_One wrote:...Weren't the devs going to EXPLAIN to us how the economic model worked? I think they promised to tell us months ago...
No, we did not. I mentioned I would ask George about it but he's been to busy to spend much time on the forum. He is the only one who could answer such questions.

While I know essentially nothing about economics, I still have to say that our economic model stands up very well. It is clearly a "deep" simulation (proven by the discussions he has spawned here on the forum) without being entierly out of reach of the average player (I've watched an 8 year old kid know to issue bonds and increase taxes when he needed more money).
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Our New Treasury Secretary

#5 Post by Eric Larsen » Jun 29 2006

Balthagor wrote:While I know essentially nothing about economics, I still have to say that our economic model stands up very well. It is clearly a "deep" simulation (proven by the discussions he has spawned here on the forum) without being entierly out of reach of the average player (I've watched an 8 year old kid know to issue bonds and increase taxes when he needed more money).
Chris,
Let's sign that kid up for treasury secretary or to head the fed bank. Sounds like he has more economic smarts than our economic leaders. :o
Thanks,

Eric Larsen

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#6 Post by The_Blind_One » Jun 29 2006

No, we did not. I mentioned I would ask George about it but he's been to busy to spend much time on the forum. He is the only one who could answer such questions.
So u mentioned to george...months ago to tell us how the economic model worked.

months...ago....

I guess George must be a pretty bussy guy to grab his little ''developer log'' wich every software producing company should have. In the developer log there should be a basic draft of the code for every aspect of the game. How it's really coded into the game is a different matter all together and is subject to change during the process. U guys DID keep logs right? How else would u know where to start? where to finish? what's been done? how it was implemented.... or did u guys just wrote the code as u went along? :roll:

Every company makes an initial draft of how the game should function and what inner-dependencies on code should exist. There should be extra logs because things tend to change during the writing. However that should have been set in STONE as soon as u go ''gold''. Every subsequent update should have it's own log. This way old mistakes can be backtracked and code can be cross-compared.

Am I the only one that knows basic software programming principles? :P

Seriously, u can't trick me with ur corporate mumbo jumbo about ''working so hard'' and stuff like that. I bet u guys do work hard and all but u can't tell me u can't find 4 hours in 5 months to tell us how it works (and it probaly only takes 15 minutes). But I did kinda expect that u guys were for a hardcore fanbase, so being transparent would have been the natural way to go.

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#7 Post by Balthagor » Jun 29 2006

I will mentioned it to George again. He said something about working on an update...
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#8 Post by The_Blind_One » Jun 29 2006

Hey u guys are right in a sense, I did kinda rant and I do apologize for that, I'm sorry for that, but it's just frustrating the hell out of me that such a simple thing can take so long. It's like you guys are trying ur hardest NOT to answer any of the toughest questions. We've all been wondering how the economic model works, for months on end. Heck a year now already. Yet never has there been any real clear explanation about the economy 8_

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George Geczy
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#9 Post by George Geczy » Jun 29 2006

While we do have a "Rule" guide for a lot of game elements (ie, an airport is 6 "missile build" slots; the limit for a stack of units is 7 without overstacking penalties; etc), the economic model is a bit more tricky to explain in a sound bite.

There is no single economic forumula - it's more like, well, a sausage machine - all your crap goes in, and out comes an economy.

And it's not as if the real world is any better - economists regularly disagree, and in fact the Nobel Prize in Economics has been won by economists that often have opposite theories and interpretations from one another.

As I mentioned in some other thread a number of months ago, some of the core Economic concepts in SR2010 are based on the theories of an Economist named Karl Polanyi (a Hungarian academic that was born in Austria, lived in Canada, and worked in the US). Without checking my notes I forget some of the nitty gritty details of his theories, except that they parallel how SR2010 works with its combined sociological/economic models. Though I did find some notes that said that Nobel Economics Prize winners Robert Fogel and Douglass North (1993) argued a position that is pretty much opposite.

In SR2010, most of the formulas are done in the "micro" level - for example, spending on subsidies has this effect, spending on social programs has those effects, taxation has this effect, etc - and all these effects inter-relate and mix themselves up, giving the end macro result.

There was a blog by GalCiv creator Brad Wardell on this type of "sausage" calculations in his own game, debating whether a "fuzzy" result that can't be easily predicted is a good thing or (gameplay wise) a bad thing. I come on the side of supporting it, and in fact I think it is more realistic as well. But some people don't like the fact they can't easily tell why this or that happened in their economies. Just like leaders in the real world :-)

-- George.

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#10 Post by bergsjaeger » Jun 30 2006

:lol: Well if I was the devs I be going on a long over due vacation after patch 5. Course I'm not a dev but I'm still going on a long over due vacation Sunday. Everyone needs a break. Seems I get alot of them. But anyways. It really don't matter to me if the devs don't answer any of my questions as long as they make the game they created better. That's more important to me.
In war destroy everything even the livestock.

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Crap In, Crap Out???

#11 Post by Eric Larsen » Jun 30 2006

George Geczy wrote:While we do have a "Rule" guide for a lot of game elements (ie, an airport is 6 "missile build" slots; the limit for a stack of units is 7 without overstacking penalties; etc), the economic model is a bit more tricky to explain in a sound bite.

There is no single economic forumula - it's more like, well, a sausage machine - all your crap goes in, and out comes an economy.
-- George.
George,
Thanks for taking some time away from your busy schedule of trying to complete update 5 to explain some of the economic stuff. Personally while I would like to have better data on how the economic model works so as to understand how to work the game better I tend to agree with you that there should be a little mystery involved in these games. That's what keeps us going back is that we play a game and then say to ourselves what we did wrong and we have another go at the game to try to improve on our last game's results. If everything is spelled out 100% then there's little mystery left in the game, just as in real life, and players won't be playing as many replays as they would have since they'd know everything about everything in SR2010 to start. Keep the mystery going so we have to play to figure out what's what. In this Info Age people want everything spelled out for them rather than doing some good old fashioned thinking. :wink:

I really like that sausage machine analogy and "crap goes in and out comes an economy". Seems just like our realworld economy.
Thanks,

Eric Larsen

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#12 Post by The_Blind_One » Jun 30 2006

George Geczy wrote:While we do have a "Rule" guide for a lot of game elements (ie, an airport is 6 "missile build" slots; the limit for a stack of units is 7 without overstacking penalties; etc), the economic model is a bit more tricky to explain in a sound bite.

There is no single economic forumula - it's more like, well, a sausage machine - all your crap goes in, and out comes an economy.

And it's not as if the real world is any better - economists regularly disagree, and in fact the Nobel Prize in Economics has been won by economists that often have opposite theories and interpretations from one another.

As I mentioned in some other thread a number of months ago, some of the core Economic concepts in SR2010 are based on the theories of an Economist named Karl Polanyi (a Hungarian academic that was born in Austria, lived in Canada, and worked in the US). Without checking my notes I forget some of the nitty gritty details of his theories, except that they parallel how SR2010 works with its combined sociological/economic models. Though I did find some notes that said that Nobel Economics Prize winners Robert Fogel and Douglass North (1993) argued a position that is pretty much opposite.

In SR2010, most of the formulas are done in the "micro" level - for example, spending on subsidies has this effect, spending on social programs has those effects, taxation has this effect, etc - and all these effects inter-relate and mix themselves up, giving the end macro result.

There was a blog by GalCiv creator Brad Wardell on this type of "sausage" calculations in his own game, debating whether a "fuzzy" result that can't be easily predicted is a good thing or (gameplay wise) a bad thing. I come on the side of supporting it, and in fact I think it is more realistic as well. But some people don't like the fact they can't easily tell why this or that happened in their economies. Just like leaders in the real world :-)

-- George.
I agree that economics is a fuzzy subject and in fact I do think ur economic model is (after some research I did myself) quite accurate. More taxes can decrease overal taxes (wich can happen in ur game) for example. However the economic model feels somewhat...focused around monetary growth and not structural growth. I think a mix would have been better. I do hope u guys will be able to somewhat simulate a stagnating economy or structural unemployment if u guys are willing to do this. If structural unemployment was added in the game I'd not have beef with the system. It's just weird seeying really really poor countries with lots of unemployment, drop to low unemployment because it balances itself automaticly. If u guys fixed the auto-balancing issue in the economy...i'd say u'd have a solid economic model where nobody could bitch about :P it would be able to simulate almost any type of situation in the world.

My thoughts on how to do this? (hope u guys are able to use it for a future project, hopefully another SR2010 or an update)

I would link ''tech level'' with economic growth. Every tech level u gain allows a (possible) extra 4% monetary growth without increasing inflation. If u use an economic policy wich doesn't make ur economy grow it will cause more unemployment because ur inflation cools down (-4%) wich increases ur unemployment.

With about 35.000 gdp/c average for 2005 tech level, and every cosequent year increases with 4%. Ofcourse it shouldn't be entirely dependent on tech level, but it sets for a basic system.

Well just my 0.02 eurocents :D

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Samuel the Great
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#13 Post by Samuel the Great » Jun 30 2006

I really like the way the economy works in SR2010. Best yet in a Strategy Game.

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#14 Post by The_Blind_One » Jun 30 2006

Samuel the Great wrote:I really like the way the economy works in SR2010. Best yet in a Strategy Game.
Well it's not really easy to compare since there hasn't been a game that has an economic model as integrated into the game as SR2010. Usually games make up their own economic model wich only simulates a certain time period.

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#15 Post by AtomicBoboli » Jul 09 2006

The only serious issue I have with the economic model is that the effects of inflation do not appear to be properly represented. In some areas of the economy, drastic inflation does not affect the prices of certian items. The only area of the economy that appears to be seriously adversely affected by inflation is exports, as far as I know.

Military construction is one of the more notorious areas, as high-inflation countries find themselves able to buy the same equipment for the roughly the same dollar price as it has always been. There are plenty of forum topics about that. That is a giant advantage, and not the only one. High inflation countries also have advantages in diplomacy and imports.

This problem is rooted in the fact that each nation's currency appears to be the same dollar, the value of which does not vary internationally. A nation with horrid inflation can send "trivial" gifts of billions of dollars, which, arealistically, has magnitudes more value to a more stable country. This makes high-inflation countries a powerhouse on the diplomatic stage.

In addition, nations with high inflations can pay what would appear to be exhorbitant amounts of money for resources on the market, when it is actually paying much, much less. This reduces the importance of a trade deficit, although most players will want to have an independent economy, or lots of exporting allies, before they begin their conquest.

Of course, I may need to make further in-game studies of the matter. I actually try to avoid making my economy super-hot, and so I've not had much a chance to observe it. Maybe one of the Moderators will dash in to disprove everything I just said, so maybe I should not have spent so much time typing it.

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