Economy

[Guildmaster]

A thriving economy is vital for a civilization to exist. It is necessary for a good military campaign although many wars have been fought simply to bolster the economy. It is the most decisive force in determining civil strife, that much is obvious from watching the revolution in the USSR nine years ago, the French Revolution, the american Civil War, the Chinese Revolution, the Japanese invasion of Manchuria in WWII, Desert Storm, the American Revolution, the Franco-Prussian wars, the punic wars, not to mention the dominance of just about any nation from Egypt, Carthage(who's economy was threatened by Rome,) Babylon, etc, etc etc. There are three reasons why a nation goes to war...

Money
Power
Women

(In that order)
For that reason, the economy model must be intricately laced into everything done in an aspiring empire. This economy model intends to reflect this importance.

There are a number of things that need to be tracked in order to make an acurate economy model:
Resources are obvious. Without raw minerals and energy sources, you can't build anything. These can be mined, bought, traded for, or stolen. Instead of having an omniscent market available where a player can simply buy whatever he needs, which is a narrowminded idea, at the other end of a buyer is a seller. IF your civ pisses everyone off supply might be limited. If you have an embargo against you, supply might be even more limited if not quite expensive.
That is the first thing I would add. You can sell resources as well as buy them. Not only that, but you can only buy them if someone is selling them. If not, you will need to figure out ways to get them. Find a potential supplier and try to a)make an offer too good to resist (not just money), b)tell them if they don't give you what you need you will attack them and take it by force, or c)just take it without warning. Perhaps other underhanded means might also be available. This means also, if you end up supplying someone that has an embargo against them you might piss off the one that enforces the embargo. This allows for actual reasons for the other AIs to be mad at you instead of the stupid "Time to get mad at you" reasons used in earlier civ games.
Cost of resources is greatly modified by factors such as WHO the supplier is, in addition to the usual ammount of supply available.
Money... where does it come from? First of all you can sell stuff besides resources. You can sell military equipment to other countries though that might anger the country that equipment is used against. You can sell manufactured goods and foodstuffs, though in a more capitalist setting more of this is handled by private industry and not dealt with by the player. Also money comes from TAX.

You can tax anything. Remember that anything you tax will have consequences. You can tax imported goods, or exported goods. Note that the greater this tax, the less of these goods will be exchanged. Under the diplomacy screen if you're on good terms with a foreign power you can ask for a "Free Trade agreement" which means no taxes on trade between your two countries, and it also means the most trade. Again, this has its pluses and minuses. You get 100% diffusion with that country and +x% unhappy people because of the flood of foreign goods. If you own places that are good for everyone to use: ie. panama canals, railroads, etc, you can charge foreign countries for their use as well.
Extortion: Tripoli and Algiers and a few other cities on the north coast of Africa grew fat from annual fees paid from big countries like France and England in exchange for "not being pirated." You can offer your "protection" to other countries in exchange for money as well. Be careful that you don't do the same to foundling countries like the USA that they might blast you. Egypt, Rome, Babylon and many others have done the same, and grew quite rich from such annual tributes.
Special note here, money isn't the only currency. Rome, for example, would demand everything from cattle, grain, iron ore, slaves, fish, gold, spice, and etc for their not attacking them. Simply asking for money is too narrowminded.
Taxes on the people. For simplicity's sake, I will not think about differentiating between sales tax, property taxes, income taxes, etc. I think all we need is a "People tax" which is to say, based on the population you get x taxes. Stary this by saying:
"What is the cost of living?"
The cost of living is determined by a)technology indexes, b)agricultural surplus, c)Trade goods surplus, d)GNP, e)population density and f)available public services. At the beginning of each turn the game determines the total cost of living of everyone in your empire or country and combines this into one big fat number. The game then looks at the capitalist-communist index to determine what percentage of this cost of living is met by the people themselves and how much is met by the government. Under a total communist, you have to pay this FULL ammount, but then everyone is happy to have free living quarters, free food, free health care, etc. This happiness will be offset by the 100% people tax. Under a total capitalist, you don't have to pay any of this. But then a lot of people will not like it when they get their hospital bills, police bills, road bills, etc.
There are two numbers to represent this, you have a tax index which determines the % of your peoples' income you tax, and you have your communist index which determines the ammount of the cost of living is met by the government. IF the two numbers are the same there is no bonus or penalty. If you tax less than the government pays for you will have a budget shortfall but the people will be a lot happier and wealthier. If you tax more than the government pays for the people will be very angry but you will get rich in the process. This is all done in degrees of difference.
Now this brings me to companies. The level of the communist-capitalist index determines exactly what is paid for by the government and what is not. Each city or tile improvement has an upkeep cost in a combination of money, resources, and energy. If the improvement is covered by the government, you have to pay this upkeep. If it is owned by private industry it is paid for by the company that owns it, and the resources and energy are subtracted accordingly from the cheapest available source. Now assuming that the company is owned by the private sector, if the resources are available domestically they are simply subtracted from the cheapest available source automatically. If however they are available only from a foreign power then they are subtracted from that source and the lowest available price is subtracted from your nation's GNP. If the foreign source is cheaper than the domestic source, the company goes for the foreign source and subtracts the price from the GNP accordingly. If the ukeep cannot be paid due to lack of energy or resources, that company adds a popular point against your administration.
Now this company doesn't have to be an actual company, it could be represented by the improvement itself.
Example:
Monorail counts as public transit. Under a capitalist 5, public transit is free for the people while under capitalist 7, people have to pay for it. Capitalist 6 pays for half of it. Anyhoo, its upkeep is as follows: $20per turn,
1energy per 1pop per turn max 10energy per turn,
1 resource each time a city grows 1pop.

I have to go towork I will finish later

[Guildmaster]

About businesses and improvements (both terrain and city) there is a special number called "jobs." Jobs are exactly that: Jobs. 1 jobs indicates that if there is one population unit in an area and there are 1 jobs in that same area, the unemployment rate for that area would be 0%. 0% unemployment means no new improvements are possible, because no one is there to work on them. Low enemployment rates mean in order to start a new business (a factory eg.) the cost would be increased due to the low available workforce. However, that could be offset by providing a little propaganda in areas of high unemployment thus causing a migration. Historically speaking this has always been true of people, always wanting to look for better and brighter opportunities. As a basic model, say you have two tiles both with about 10 population units. Both are producing enough food to feed 1o population units. However, tile A has a total of 9 jobs (10% unemployment) while tile B has only 5 (50% unemployment) jobs. The people in tile B would if politically possible migrate to tile A where all the jobs are until the unemployment rates equal... this is assuming all other things are equal as well. Unemployment severely affects taxes collected by lowering the per capita income and GNP.

So where do jobs come from?
a)City Jobs. Factories, banks, monorails, construction firms, etc. All these provide +1 jobs for that city. Major companies like corporate headquarters and heavy industry can provide +2, +3 or up to +5 jobs for the same city, depending on just how much supply is met by that firm and how prosperous that industry is. Also, for every ten population units in a city, 1 extra job is created to represent things like minor shops, restaurants, bars, etc. You also get +1 jobs in state/provincial capitals and +2 in your nation's capital.
b)Country Jobs: Trade routes automatically provide +1 jobs for each trade route passing through a tile. Depending on your agricultural index, farms provide x jobs, with a significantly high number in ancient times and only +1 jobs for the most advanced agricultural societies, as more advanced agriculture requires less people to work more acreage. This also turns out to be a convenient way to track the migration from country to city during the age of nationalism and industrialization, echoing the fact that people live in cities now for economic reasons moreso than anything else.
c)Tourism: As long as there have been people there have been reasons to take a vacation to get away from them. You can built tourist traps, have a city with a diverse and colorful history, or be near a natural fun-spot (beaches, ski resort). Your nations capital automatically gets +1 jobs for tourism. Coastal cities get another +1, while warm weather cities get +1. Coastal warm weather cities get +2. Tiles containing alpine slopes get +1 as well. Ruins of ancient civilizations (hmm, you were just there yesterday trying to develop steel...) also provide +1 jobs bonus due to tourism. Keep in mind, however, the game should randomly destroy ancient structures over time.

Once again I have to leave for work...

[Guildmaster]

This brings me to major corporations. Each tile (or city) that has the HQ for a major corporation gets +1 jobs regardless of what the product or service is. This corporation would have to be a separate AI though not too complicated. I would like to see more than one of these companies, maybe 2 or 3 at most per civ, this would allow competition within your own civilization... and at the more advanced levels, these companies would be so self-serving as to sell out your (and theirs) whole country in the name of wealth and competition.
For an example of this, a corporation that owns an airplane factory might end up selling your military's top aircraft for top dollar to the very enemy yo're fighting against assuming a)You don't buy all available aircraft and b)that company doesn't like you. This is especially volatile when these two companies can be so bitter against each other that you can only have one friend, the other will surely sell you out.
These corporations like to buy up city and tile improvements, they also like to build them too, according to how much money they have. These corporations get revenue generated from the buildings they own, and can also sell things like resources and trade goods just like you can. Most importantly, they can buy and own and build things overseas. This severely helps out your domestic economy by bringing in foreign money to your empire. Of course, anything they own they do have to pay the upkeep for it.
The cost to buy a building (a monorail for example) is figured by the construction cost multiplied by the apparent usefulness of the building, ie. the ammount of use it gets on a regular basis. Say there is a trade demand for widgets but a trade surplus for gizmos. A gizmo factory would cost significantly less than the widget factory.

Have to go to work again...

[amjayee]

Great thoughts!

Taxing trade goods&free trade agreement: Taxing everything is a good idea. We need to make a list of things that can be taxed - at least every trading good could be taxed separately. It should also be possible to make a deal about lowering the taxes to certain level. Economically strong countries could force the smaller ones to use lower taxe rates than the larger one.

Also it could be possible to collect tolls from the trade routes passing through your territory - possibly resulting the trade route moving elesewhere, unless it's more diadvantageous to use a longer route than paying you.

About using also other things than money for payment is a good idea, especially in the ancient times. When time passes, it should become less and less favorable to pay with goods - perhaps you need to pay some extra when paying that way, and the more advanced the country to whom the payment is being made, the greater the extra cost. Also, in pre-modern times, the money could be stored physically on the map in the form of gold, silver etc., while in the present time, the money would be "electronic" and not situated anywhere.

About taxing people, I think you are right about not taxing income tax, sales tax etc. separately, we wouldn't get much benefint from that. But, I'd like to add taxing companies, too. Because the people own the companies, that would add the sales etc. taxes quite nicely, and it has some benefit, too - without being too complex. So, one tax for people (income tax) and another for companies.

I think your cost of living system sounded good. We need to refine it, but it would work quite well. Also, we need to make a system to determine the income of your people.

The idea of the tile improvements acting as companies was interesting. We might get something out of that.

The jobs thing also sounded good, perhaps a little too simplified, like +2 in national capital and such - those things should depend heavily on the conditions. Also add some jobs per each city - they all need some officials. Also military has jobs for people, depending on the kind of army you have. Here I think the real population amount system would show its best parts, since we would not need to go in increments of 1000.

However, this far your system sounds good. Some refinement, and we have a good system to use...

[Guildmaster]

Of course you have a business tax as well as a people tax. The higher the people tax, the less happy the people are. The higher the business tax, the fewer business there are and the less happy the corporations are. As for taxes though, there needs to be a tax collection org. In ancient times, there were tax collectors hired, the emperor told them how much to collect and everything extra they would keep as their salary. Or something like that. In mideval times, the same responsibility was passed to families of nobility, the landholders. Much in the same way, they recieved a commission based on how much taxes the king allowed them to collect, though some collected extra against the king's wishes, and then the people blamed the king (this scenario would be too much fun to leave out of the game) Today we have the IRS, the responsibility being delegated to a company whose sole client is the US gov't. What you guys have in Europe I don't know. But there needs to be a way to delegate the tax collection responsibility so that it adds the potential to make both friends and enemies within the game.
Say, the Tattaglias are a powerful family who have been collecting taxes in Sicily for 100 years. They wouldn't be too happy if you gave Sicily to the Mazzinis, but then the one of the Mazzinis is in with the church so it might pay off there...
Also, you could use this to manipulate your people as has been done before too... say the people hate the Tattaglias because they tax too much, but you need them to be in power there. So you tell the Mazzinis to tax twice what the Tattaglias were taxing, give them prima notta, have them execute people and basically run the place with an iron fist. Then the people would be furious and beg for the return of the Tattaglias. The Mazzinis would get rich for a time and like you, the Church would favor you for having them there, the Tattaglias would later come back and solidify their claim to Sicily and like you for it, and the people would be quiet about how much money they were paying. Of course if word got out of your greater plan, you could end up fighting over Sicily in a civil war.
Cool huh?

But yes, I definately agree a tax can be put on everything.
More about jobs... The number of jobs in an area pretty much fluctuates. Once a city has +x jobs for something, there is no reason that city can't lose those jobs entirely. Once corporations are in power, they can move industry overseas for cheaper labor rates or just to piss you off. This would lead to a drop in jobs where the factory used to be. And this can go on many many times, perhaps lasting quite a long time leading to things like recessions, depressions, etc.

[amjayee]

The tax thing sounds good. Perhaps we cannot go to so much detail (naming the families who are allowed to collect taxes), but basically there could be several ways of collecting them, each having its advantages and disadvantages depending on the era. And about how the taxes are collected here in Europe, at least in Finland it is done by a government-operated bureau, "Tax Office".

Yes, if you tax companies to hard, they might move their operations to a country with smaller taxes.

[The Joker]

I like these ideas. But as we are designing a game and not just posting ideas for professional designers to use we need to be very, VERY specific in our ideas.

But for a rough start your ideas are great.

I posted a rough idea that could easily be combined with yours in the trade thread.

For convenience I will post it here:

quote: I am for completely removing trade, luxuries, taxes, science and shields as these are in their current form. Having trade and production as two seperate entities is completely unrealistic. In stead I think that all people should work in certain professions. The basic one of these would of cause be farmers. They would produce an amount of food. If they produce more than they eat themselves they would sell it to other people, freeing workhours to other jobs. But to be able for things to change hands traders would be needed. Each trader would be able to trade a certain amount of things. This number would increase with advances, city improvements and more. The production system should propably work pretty autonomously from the player. People working in industry would produce things, and these things would be divided into categories, like consumer goods, heavy industrial things and more. Consumer goods would make people happier. To be able to produce the things the player would want - units and more - he would have to buy workhours from his people. This would of cause cost him money, which would make money and therefor tax rates far more important than in any previous civ games. Also people working in administration would have to get payed. It is obvious that I have not completed this system in any way, but I think it is necessary for the economic model in our game to be totally different from that in Civ2. Not only because our model should be more realistic, but also because it, if done properly, could reduce micromanagent.

What do you think?

I really like the system with income/expences of the state - you should be able to choose your tax income (0-100%) and your expences (0-100%). If you earned more than you used the people would become unhappy, but you would free money to administration, units and more. A tax system could also be combined with an individualism sytem (where the people have an individualism rating from 0 to 10). If the individualism rating is high the people would like a small public sector, if it is low they would like a large one.


Also: We need to agree on the ressources and commodities used in the game. To make such a system realistic we might very well need over 50 goods. This will of cause require a lot of management time, but if we want trade to have an important role in our game (which I think we do) this is not a bad thing.

[amjayee]

I have had similar ideas. Those sound good. Also I agree we will soon need to start being more specific, but before that we need to decide on the system we intend to use. I hope the meeting on Sunday clears some things.

I agree that we need more raw materials and goods. A good economic system is so essential in this kind of game, that I think the advances are greater than the disadvantages in this case.

First of all, we need to agree on the basic system framework and design principles. Then we can start discussing the final trade good names etc. I have made a rough agenda from the ideas presented, to serve as a proposition for the game system framework. We can decide those things on Sunday. Check it out.

[Cylon]

A few thoughts:

There are several main economic actors in the economy, of which two are households and business firms. All earnings that business firms recieve from production flows to households as income in form of wages, dividends etc, all income households recieve flows back to firms in the form of consumption.
When households decide not to spend all of their income, they save (S). These savings flow to firms in the form of investment through the capital market (a saving account at a bank, bonds etc), which is the third economic actor.
Then there's the government, they recieve taxes from households and firms, and finance a possible deficit from savings (through loans) and they transfer money to households and firms (welfare, subsidies) or purchases from firms.

There are 3 factors required for production; land, which could also be interpreted as resources; capital, ranging from cash to machinery; and labor.
Sometimes enterpeneurship, ie the incentive to combine those factors and produce, is also included but it's not always as popular because it cannot be measured.

The economy is roughly divided in three sectors; the primary sector, subdivided in agriculture (eg fishing) and extractive (iron mine); the secundary, subdivided in basic industry (steel) and processing industry (car); and tertiary, subdivided in services (insurance) and commerces (supermarket).

I'd suggest to keep this mind when designing an economic engine, because those are standard used and clear economic principles.

Also, there's a distinction between a "job" and a employment position, one employee can do several jobs; a farmer that produces tomatoes and drives them to the local marketplace and sells them, is producing, transporting and trading, while still being one employee.

Remember that there's a distinction between population and working age population (usually everyone between 18 and 65, although definitions vary). Most of the time figures of employment are substracted by extracting the employed from the working age population. (at the moment there's an employment rate of 71% in US)

[amjayee]

Thanks for your good message, Cylon.

Everything you said makes sense. Those shouldn't be very difficult to model in the game, either. I wish that what you said would form the basis for the economy in the game.

About jobs/employment: the jobs should be shown as the number of men needed; so, one job would mean the "bunch" of jobs that one man is supposed to do, for simplicity's sake. The unemployment should work as you stated, as the percentage of people in the working age/group that have a "job".

Also, in some cases underemployment could occur - today, in Finland there's a short supply of IT professionals, for example, and that fact is slowing down the economic growth. Underemployment might occur

a) when there's simply too few people to "fill" the available jobs; in this case, some immigration might occur, depending on the government of that country

b) when the nation isn't technologically advanced enough - this occurs with jobs reguiring special skills

c) when the nation is too small to produce enough professionals for that purpose; which is the case with Finland and IT people.

I think these could be modeled quite easily.

Does anyone have idea how to model inflation and many other economic phenomena? Or are those too much detail in a game with this kind of scope?

[The Joker]

I agree that we should use a recognized economic model as a model of the one we should have in the game.

That was what I had in mind when posting my idea on not dividing trade from production as done in Civ2.

Of cause I had not gone as far as Cyclon did. But I agree that we should.

I don't think we would need inflation in our game. It depends on various factors and for a grand scale game as ours we should not need it. Also we do stuff like choosing the interest rates. Some things are just too far out.

But we should have unemployment and a public sector and such things.

I think I will try to check some books on the subject and try to work out some basics for an economy model.

Maybe we would want a system of needs/wants of the people. At first people would want food. When they get this they want goods up to a certain point and when they got this they want some kind of cultural things? Of cause these three will overlap (people today both want culture, goods and food), but if we are to have an economy that works independantly from the player we need things like this.

But how do we make unemployment realistic? Of cause if the player has loads of cash he will always be able to buy lots of goods (units and other stuff) from the people or hire loads of administrators which would lower the unemployment rate.

We would also need economic growth as a factor.

But while doing this we have to make sure that you wont need a phd in economics to understand and work with the system.

[The Joker]

I am working on an economy model that goes down the basics of things in a way that we have not yet done.

I promised that it would be ready soon, but unfortunately it showed to be a much more difficult and time consuming task than I had ever imagined. The economic algorithms are so complex that it is almost impossible to sit down with a calculator, a pen and some paper and actually figure out how the economy will be the following turns. Even with just 1 city, 2 goods (except food) and an economic concentration level dividing employed workers and individual company owners the calculations needed are simply too heavy for you to do! Of cause a computer would be able to calculate this in an instant, but I fear that with 1000 cities, 60 goods, trade, production and investment in both consumer goods and raw materials would simply be too much for a normal computer to deal with. But I am not sure about it. The good thing about the system is, that there is absolutely no AI needed. All acts by the agents in the economy is determined by normal calculations, and still it offers great variety and logic. Therefor I will need some more work done on it before posting it.

[amjayee]

It is quite certain that a good economic model will require lots of calculations. But the PC's of today are very efficient, I think the economy will not be the largest burden for the processor. And as you said, it requires no ai. Also we have to remember, that with clever code design we can do miracles; for example, we could make the economy system so, that the same calculations are not needed to do every turn. For example, the cities and civs could make long term plans for several turns, and only check every turn, do they need to change them. Also, the program could check, has the situation changed significantly. If not, the results of the last calculations could be used, perhaps altered a little. All in all, do not use too much time to look for optimum algorithms, it is impossible to know how it works until we playtest it. Just write down how certain things are calculated, and what things need to be calculated.