Economic Development Model - Opinions Please?

[alms66]

I must first admit to only reading the model and the last few posts, but regarding those last few posts, I feel I have something important to say.

Democracy, so far has proven to be very beneficial to all governments worldwide. At the same time the level of democracy, or freedom, is also very important. For example, Singapore, a highly democratic but more restrictive government regarding "freedom", as Americans know it, has a very low level of crime (as do all democratic nations, except America).

The way I view it (as an American), is that democracy always increases output of citizens but also democracy can be more harmful than dictatorship. The level of freedom is actually the "key" here. The U.K. is democratic but suffers from very few of the problems America suffers from.

The point is that too much freedom makes the populace too strong, and this weakens the government's ability to control and rule them, and without government there is anarchy, which in my opinion, is where America is headed. But this isn't only opinion. If you compare the level of riots, corruption, crime, etc. in America to other democratic nations, America is by far the worst, although (somehow) still the most economically prosperous nation in the world.

[Henrique Duarte]

Toubabo

I have to disagree with you. IMO Freedom and criminality in democracies aren´t exactly related. "Social unrest / disatisfaction/ economic need" breeds crime. The degree of freedom allowed by the state law enforcement institutions does control how the lid is put over the steam - you either restrict a lot the liberties and you won´t see the social unrest or you preserve those same liberties and people will express their unhapiness having criminality as a side effect.
If you want my opinion on freedoms/criminality in the USA my opinion is that the country has little freedom (I know its a big country with several states and that the constitution does attempt to preserve several basic rights) and very big social problems (racial tensions/ghetos/ homeless / etc etc). The fact is that the USA is not a "social" democracy, (does not even have a decent free public health care service!)
Betting on development without taking any measures to to prevent/solve marginalization/social unrest means that the country must pay a "crime bill".
Note that this comment is game related. The player should be able to decide what government route he wants to take and still have to face all the disavantages of his options (but I suppose there has been much discussion on the subject)

[LOGO]

First of all I don't understand why your talking about the effect of goverment types on crime in a economy forum, but I agree that too much freedom can breed crime. Take the U.K., they have cameras all around places like London, something we'd never do, and crime has lowerd dramaticaly in those areas. I'm not going into all the baltic stuff but look at Yugoslavia with Tieto and look at it now! I agree, in some respects, with that idea.

[Henrique Duarte]

LOGO

oops caught on a "answer the last post" urge and didn´t notice the subject was "out of thread"

[LOGO]

I don't think i'm satisfied with the PCI system, as I understand it people's wages just "magicly" increase over time. This make no sense, the reason wages are larger now is because of the larger middle class, and other things like minimum wages and other laws. First of all the wages should have a direct effect over goverment and the happines of the people, also the type of goverment should have an influence over the people as well. Along with that there should be a number of extremely wide reforms you can pass (bunching up a bunch of reforms into an easy to swallow button to push) to increase the middle class or to pass laws creating things like workmen's comp and wellfare. These are boarderline Government and Enonomy and I think most things in the model are. Any thoughts?

[Mark_Everson]

Logo:

I guess I don't understand what you mean by "people's wages just magically" increasing over time. There is nothing magical about it in the system. Essentially increased wages come just as they do in the real world, from productivity increases. Productivity increases come from primarily investments in capital, and utilization of new technologies. Minimum wage laws and such, at least as far as I understand it, have relatively little to do with average wages, which is what the model handles. All minimum wage laws do is set a floor below which you can't go. But I think in general minimum wages are set at the low end of the wage distribution anyway, because if they are not they will tend to give a huge shock to the economy. Anyway, most of the points you raise are already being addressed, and just aren't written up yet as axi says.

Axi:

For presenting the model, I definitely favor getting it out in the open as soon as possible. Otherwise, there is the danger of investing a lot of work in something with a large fundamental flaw in it... Refinements can always be achieved during the "comment window".

[axi]

LOGO: I am currently revising the new version of the government model, compiled by Rodrigo. It is a very large document that totaly reshapes Hfrankell's model, covering every aspect that concerns government in Clash. My review tries to cover some gaps, to fix some bugs and to correct some inconsistencies with reality, before it gets to see the sun. The most important contribution of mine, as it seems now, will be to establish a firm and reasonable interconnection between the economic and the political variables of the game. Due to the complexity of the system, this is really very tough and that's what's keeping me behind schedule in my reply to Rodrigo (this is for Rodrigo, in case he gets worried) and away from posting in these forums.

If you are interested in it, when it's done, I can send it to you too, along with Mark and Rodrigo. My personal opinion of course is that this document should come to surface in the website as soon as possible, but I don't know if the others agree.

Hey look! I'm a warlord now!

------------------
"In a time of universal deceit, telling the truth is a revolutionary act."
George Orwell

[This message has been edited by axi (edited March 20, 2000).]

[roquijad]

LOGO:
Wages don't increase magically as Mark said it. If richness increase and the population stays the same, PCI=$/POP increases. Maybe you're aiming to wealth distribution. Mark is having a WD inside his model and Axi and I are trying to allow the govt to give directions to the econ model about how WD should tend to, like minimum wages and so on. That's for sure something you will be able to critizice in the near future when the govt model goes public.

Mark&Axi: About releasing the govt model, I'm waiting for the social to model be "ready" (in a general sense). That's because the govt model is extremely connected with the social model. The govt model I made assumed Manurein's social model with the "agents" approach, which is not going to exist any more in the new social model by TK. If we release the govt model now, a lot of it will need to be change according to the new social model and I guess that's only going to confuse people. If at least I have a general idea of how the new social model is going to be, I can make those changes before posting anything and therefore the govt model will be better understood. I'm currently working with TK via e-mail to create a crude first version of the social model. I think we'll be ready in couple of weeks.

Axi: Come on! send me your comments, man!

[Mark_Everson]

New proposed handling of production levels in the Clash economic model

I have been working for some time on a revision of the basic production model for the economic system. After some good advice from Adam Smith from the Apolyton forums I decided to go with a production function similar to what is commonly used in real economic analyses. It has a lot of flexibility coupled with reasonably realistic behavior, for a fairly cheap price in terms of computation. My main worry about it is that it may be a little difficult to explain to players. But I think after people get used to it they will really like it. For one thing, it makes setting the economy on autopilot much easier for those who don't much care about the economy.

This approach to production is what we will be doing with in demo 5. There are a fair amount of mathematical details in this writeup. That is because it is meant as a first pass to let Laurent, our Econ coder, can get an idea of the way the system is going. However, if you're not interested in the mathematical details here are the few things that you need to know about this change...

The people of your civ will automatically do reasonably smart things with this approach. They will, without your guidance, take advantage of all the natural resources available to them.
This approach smoothly uses any new technologies available when you make investments to improve production facilities. You don't have to build "advanced farms", your farming sector just becomes better gradually as you build more farms or replace existing farms. You can simply alter the rate of existing farm investment to change the rate of adoption of the new technology.
There aren't arbitrary breakpoints on how many people can use existing facilities. If you put more people to work in your factories, output will always increase. However, output increases with diminishing returns.

Now, on to some more of the guts of the model...

The basic idea of a production function is that one uses the input of different types of resources (labor, natural resources like land or timber, and capital investments) to determine the final output for an economic sector like agriculture. Typically adding more of any one of these things, for instance labor, without changing the other inputs, gives diminishing returns. So, for instance, if you double the amount of laborers on your farms, the amount of food produced will generally increase, but not as large as a doubling. However, if you were to double All the inputs, any output would be simply double the previous output.

There is one other feature about the production function approach that I'm using that's very important for Clash. Included in it is a factor that represents the effects of production technology changes on production (A in the equation below). As the tech factor A increases, the same amount of investment can get you more production. The way I have it in the current model A increases as new investments of capital are made. For example, it's assumed that the people, when they replace their farm equipment, replace it with the highest technology equipment available. This results in, on average, an increase in the productivity of farms beyond what the simple investment in more equipment would give. I'll give more details later.

The equation below is what a production function looks like. The total amount produced (Y stands for yield) is given by multiplying together several factors. Each of labor, natural resources, and capital has its own exponent (a, b, and c) that describes how production increases when you change the amount of that particular input. Just to make things concrete on the resource part, if we were talking about agriculture R would represent land. Some things, like services, don't have an explicit natural resource input so sometimes the production function won't have R or b. For a particular sector A, a, b, and c will have specific values designed to give reasonable outputs for the level of technology and application of other inputs.

Produced Amount (Y) = A*L^a*R^b*K^c
A = tech factor (includes available hardware, infrastructure, and other details)
L = Labor
R = Resource
K = Kapital (its traditional to use the German spelling)
a, b, c < 1 a+b+c = 1

Now I'll use as a specific example the production function for agriculture that we're going to use in demo 5 along with particular selected values for L, R, and K. We will use the same equation as above with the following values...

Produced Amount (Y) = A*L^a*R^b*K^c
A = 5 (production technology near subsistence level)
L = 1 head (1000 people)
R = 1 farm site
K = 1 (representing farm tools)
a = 0.5, b = 0.3, c = 0.2, which satisfies a+b+c = 1

Now, because I used a bunch of really simple values you can probably see that the crop yield is 5. That isn't really very much food production, since our farmers will need to eat 4 units of food just to avoid starvation. So a yield of 5 gives them a little bit of potential excess to trade for services or produced goods, or pay to the Player in taxes!

If instead our labor were allowed to work 2 farm sites the output would be 6.16. This production level of above 6 gives these farmers significantly larger surplus production than before. It could be used in different ways to grow the civilization. The increase in output that results from being able to work more land can be thought of in several different ways... with more land to pick from the people can take better farming sites on average, and leave the poorest land in the sites unused, or they can leave land fallow longer making it more productive, and there are several other possible explanations. It isn't really important which explanation makes more sense in which particular circumstance. The nice part about it for the player is that the people do sensible things without you needing to tell them "by hand" what to do.

How the tech factor A changes

So how exactly did the tech factor A get to be 5 in the example above? And how can be made to get better so are production becomes more efficient? I have come up with what I think is a reasonable way to have A reflect the fundamental technological realities of the civ in question. The amount that A increases depends on the amount of new investment, and how far A is from the current best available technology level, represented by the "ideal" tech factor T. The ideal tech factor represents what the tech factor A would be if all the investments had been made using the current best technology, infrastructure level, etc..

Change in A is governed by the following formula:
Anew = Aold + (Kbought/Kold)*(T-Aold)*I
Anew = new value of A after capacity improvements have been made
Aold = value at beginning of turn
Kbought = new capital investment made this turn
Kold = total amount of previous investment in the sector at beginning of the turn
T = ideal tech factor
I = innovativeness present in the economy ranges from 0 to 1

Anew = Aold + (Kbought/Kold)*(T-Aold)*I

I'm not going to go over this in detail, but hopefully you can see that the new value of A approaches T more rapidly as: a higher percentage of new capital investment is made, or the innovativeness becomes larger, or as the ideal tech factor increases. The latter factor comes in strongest when the people are replacing very old equipment (A much less than T) causing the rate of improvement in A to be relatively rapid.

The ideal tech factor T gets the most part of its value directly from the effectiveness as determined in the technology model. In addition T has buried in it "human capital" aspects such as education, infrastructure aspects such as roads, railroads, and power grids, and some "tweaking" factors to get the numbers to come out right when the desired amount of capital is invested. This is going to be a somewhat complicated subject all by itself, and I am just going to gloss over it here.

The level of innovativeness of the people (I) will be something like 0.2 for a completely traditional economy, 0.7 for a command economy, and 1 for a pure market economy. The character of an economy will be indicated by a certain percent of each of traditional, command, and market forces. The innovativeness will be figured by simply using a weighted average with the factors above.

That is the general idea of the new model. I am currently working up a spreadsheet with specifics that runs through a complete turn (from an economic perspective) for provinces at different stages of development. When the spreadsheet is reasonably complete I will release it for anyone who is interested in the details of how these things work.

Let me know what you think!

[Richard Bruns]

I like this new system; it should work well and it is intuitive to me. I never really understood the old econ model. Of course, it might help that I just finished a semester of economics and the new model is based on real economics.

I do have a couple minor concerns, however. They deal with minor details and should be easy to deal with; I am not critisizing the model as a whole. If I didn't mention something, I think it is good.

The main thing I want to stress is that we should not code the ideal tech factor T into the econ model. If we say that tech number 47 helps farm productivity a lot while tech number 82 helps mining output a little bit, then we will be creating a nightmare for mod makers. The impact that tech has on the T values for agriculture, mining, production, etc. should be coded into the technology model so any alteration of the tech tree can be easily turned into the proper alteration of the econ model.

Does this mean that the tech model just got a lot more complicated? No. If we do it right, a technology's impact on T values can be directly based on its interface tags. These tags, which are already a part of the tech model, can be one of the major links between tech system and other models.

To help the AI and serve as a way to navigate the tech tree, we had planned for each tech to be assigned one or more interface tags. Each tag would be the name of the civ activity that the tech helps, and a number representing how much that tech helps. For example, a tech might be tagged with Agriculture:7 and Mining:2, meaning that it helps agricultural production a lot and mining production a little. The AI and the players can sort technologies by their tags, investing research in what is needed most. For example, a player would click on the Agriculture button in the tech interface, and all techs with an agriculture tag would be listed in descending order of the tag number.

Rather than simply being a description, the interface tags can also have a direct impact on production using this new econ model. The ideal tech value T for some economic field can simply be a weighted average of the knowledge levels of all techs with that tag.

A lot of technologies will have interface tags with 1 or 2, meaning that they are not the things to research in an emergency, but thay do halp a little. Roads, for example, would have an Agriculture:2 tag, maning that better roads do help effective farm yields a little by making it easier to move the food to where it needs to go. As a general rule, every infrastructure or educational technology would have tags of 1 or 2 for almost every civ activity. This means that they should fit into the T calculation nicely.

Mark: Is the I value you mentioned the same one that will be used in the technology model to determine the rate of growth of technology? If so, I don't think it should be used here as well. If it has an impact in two different places, it will have a disproportionate effect on tech growth. It already changed the rate of knowledge acquisition, so why should it change the rate of application as well? I thought the tech model was supposed to include both aquisition and application.

In the farming effectiveness equation, I didn't see anything that changed farming effectiveness based on climate or terrain. In the ecology model, I have detailed a set of steps that would create a farming effectiveness factor for an ecological province. That factor should be included in any calculation of farming effectiveness. I would suggest that this factor be multiplied to the R^b term of the farm productivity equation. I could fix the ecology model so normal farming terrain has a factor of one.

[Mark_Everson]

Thanks for checking it out. I generally agree with the things you have to say about modifications, so unless I gripe about or modify something you said, consider that doing it your way is fine by me.

BTW you should probably cross-post your comments to the current tech thread, since many of them are pretty important with respect to the evolution and refinement of the tech model.

On using the tags to get the ideal tech factor technology component, I agree completely. However, one thing I think you left out is that technologies should sometimes have a lineage where technology A is succeeded by technology B. Even though they both might have an agriculture tag, they could not be both used for the effectiveness. Just whichever one gives a better effectiveness should be used.

Another point is that you say that infrastructure or education technology should boost almost anything. I would prefer to use the economic infrastructure components in the econ model for this in most cases. That's because the greatest educational technology in the world does your civilization no good if there are no schools and no resources invested in education. Similarly, knowing how to build superhighways does your no good if all you have are dirt tracks. Doing it this way would also make the tags system much simpler since educational techniques would only need a tag pointing to educational infrastructure then. At any rate, we should probably continue this part of the discussion in the tech thread...

On the farming effectiveness question, in my mind your ecology model factor should just go into changing R directly. I think it's a bad idea to be hanging excess terms off the utility function since we could easily compromise its proportional returns to scale and other good properties. Also, the production function applies on a provincial basis. Provinces will generally have lots of different types of land of different quality. So your farming effectiveness modifier would have to be some sort of weighted average anyway. If you would like to change the ecology model to provide an appropriate agricultural sites number, that would help a lot. I really think that's the best way to go, but we can discuss it further if you'd like.

[Mark_Everson]

Technology going obsolete:
The Telegraph is a very important communication tech for a bit. (I expect we'll have it as an application, but can't remember for sure.) It will boost effectiveness in building communication infra. But when telephony comes along and gets going it completely Replaces telegraphy after some time has passed. You should not get Both the effectiveness bonus for telegraph and telephone, just whichever is better... Another example would be my proposed flow from Farm Tools to Farm Machinery. Once machinery comes in, nobody uses the hand tools that were once so important anymore. So when the effectiveness from Machinery is greater than that for Tools you would use the Machinery one rather than adding them IMO. I *think* this issue will come up in several places, but won't be all that common...

Of course it may be that in most of these cases the effectiveness you get from the older technology is so small compared to the new one, that the Total effectiveness is basically still that for the new one. In that case its not a big deal if we just add them together. Although our players might be amused to see their telegraphy number still increasing with year-2000 technology!

Agricultural sites:
There are a variable number of agricultural sites per square in the model. The minimum number of sites in a square is 1. (We could keep track of fractional sites if it turns out to be important) I don't know what the max is, maybe it'll be of order 30 or so. Think of each site as equivalent to N acres of pretty good farmland. So if the square has 10N acres there would be 10 sites. If the land amt is the same but the quality is less we'd reduce the # of sites, to maybe 8. If you reduce the land quality thru overfarming we'd reduce the number of sites also. If we drain a swamp it increases the number of sites in the square. The number of sites is added for all squares in the province and that's the number of sites that's in the production function as R.

[Richard Bruns]

Technology: I hadn't planned on seperate applications for telegraph, telephone, etc. At first I thought that all things like that would be part of the same technology, in this example Electric Communication. But then I realised that, even though I could combine those two and a lot of others, there are a few techs that will go obsolete.

Obsolescence should be defined in the tech definition, and when something is gone it will be deleted from the tech tree calculations entirely. This would mean that there is no need to filter them out in the oither models.

Agricultural Sites: I understand now. I'll revise the ecology model so it generates the number of farming sites per tile.

[Lord God Jinnai]

One thing on obsoletion and replacement: That's pretty much a good idea you have for the most part. However, exceptions should be made for a powerful governmental/reglious/cultural (esp. the last) movements for traditionalism to not accept the better quality stuff. This can be limited to certain areas and the only differance is that it would take longer to be achieved (ie the better technology would be delayed for use for X turns).

[Richard Bruns]

I can't think of any example of a technology going obsolete or being replaced by something else. Rather than A->B, I'm fairly sure that all techs go from low level A to high level A.

I agree that an Infrastructure tag would probably be a better way to go.

Mark: I don't understand all of your comments about the ecology. What did you mean by an agricultural site? I thought a site was one tile.

I'll put more tech-specific stuff in the tech thread.