Comparing oil and rare earth metals

There is an expression in the world of capitalism “The solution to high prices is high prices” Basically, this means that if the price of something rises to a level that it is actually a problem then two things will happen: 1, users find ways to be more efficient with less supply, 2, the high price incentivizes higher production.

An example of this playing out would be the oil prices of 2014. When prices kept breaking through new thresholds every week, even peeking above $140 per barrel at one point, new oil production was brought online. Some of the production which was brought online required a high price to be viable at all such as the oil sands in western Canada. The reality of that oil is that it is far more expensive to access than most other oil sources and needs an abnormally high oil price to be a viable business. When all the new production in the world came online prices bottomed out at around $25 per barrel. This became impossible to ignore, as those who had heavily invested in the expensive oil sands started screaming bloody murder that their investments weren’t panning out, blaming taxes, environmental regulation, and of course “god damn lefties”, basically everyone and everything in the world except themselves for the fact that they over committed to a bad bet.

Change gears to the mechanics of Democracy 4 and the rare earth crisis. This doom bubble is basically impossible to prevent in a long enough game, is only countered by government intervention, is a nightmare to get rid of once it’s popped, and the private sector does not react at all. Certainly a price shock would have economic consequences, and part of that would be the private sector reaction. If the prices of these metals went sky high you would see Apple, Android etc. going back to the drawing board to produce their gadgets with less of these metals in order to compete with one another. You would also see producers looking to capitalize on the prices by cranking out production, you would see new prospecting etc. What you would not see is a red doom bubble which never goes away.

With this in mind, I recommend the following changes:
-Remove or reduce the “year” impact on the crisis.
-Add a self reduction to the crisis. It’s existence would down tick itself. This would also mean that as soon as the bubble disappears it would start ticking towards a return, which is realistic. Markets oscillate in real life, and humans with investment portfolios over and under react to these oscillations, often hysterically.
-Add inputs from international trade and currency strength. At 50% these should have a neutral input, reduce the crisis at high levels and exacerbate the crises at low levels.
-Add an input from pollution controls. The mining industry is not well represented in this game, so it’s just tucked into GDP somewhere, and mining regulation is tucked into pollution controls. Regulation would have a secondary effect of making mineral resources less available.

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Agreed! I’ve never been happy with these “unavoidable” crises.

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yes, i completely agree, @cliffski you need to do a better job of implementing the free market, do what OP said.

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I do wonder of the gameplay implications of having crises that end with no input from the player. Is it good if players feel like their actions didn’t matter because the crisis would’ve been resolved on its own?

Which is worse: the inevitability of a problem occurring, or the inevitability of it resolving? The first puts the player in a no-win situation; the second makes their choices less meaningful.

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the inevitability of the free market adapting to solve problems would be a great addition, keep in mind that govt intervention irl usually either has no effect or makes the problem worse.
from the gameplay perspective you have to incentiveize intervention, otherwise the player would have nothing to do.
but cliff does need to implement the free market in a better way

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lol you americans are a funny bunch

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Right?

I’ve spoken before about the puzzling free market logic of problems fixing themselves because ancient, disproven capitalist theory conventionally suggests that’s what’s supposed to happen, when it…doesn’t. And hasn’t ever. And won’t. Hell, let’s throw in trickle down economy while we’re at it, under which a monstrous wealth gap completely eliminates poverty via neoliberal witchcraft.

It’s also bad game logic? Like, why stop here? Why wouldn’t the free market disincentivise strikes, crime, being poor, being unwell, or death itself? there’s no game if the invisible hand does these things for you. I just don’t understand why this concept keeps returning to the forum.

The Rare Earth Crisis refers to all Earth metals being in short supply from being over-extracted, not the market forgetting to go get them. They’re rare, the clue’s in the name. Experts predict there will come a time when we have to dig deeper for lower yields in ways that aren’t economically profitable. In ways the free market is incapable of motivating because they wouldn’t profit well from the investment.

I don’t like the crisis being unsolvable either, but the fun solution is a Space Mining situation which you can only get if Private Space, Space Program, and Mars Program are all handsomely funded.

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This is all interestinmg stuff. To be fair, originally the impact of year stuff was an inexorable climb that could never be beaten, whereas if I recall (I am currently knee deep in other code), this now tails off so it does not follow the same constant rise…

And yes, absolutely the free market should both boost supply, and reduce demand and fix the problem, although there could still be a short term economic shock before these measures play out, with appropriate economic impacts.

In many ways this is like the current chip shortage, or EV-battery shortage. Its taking time for sufficient capacity to come online.

The assumption in the game however, is that although yes, there may well be potential further supplies of rare earth metals, environmental restrictions prevent their exploitation unless that policy is passed. The alternative route is to implement green energy requirements that reduce demand.

BUT!

I do take the point that obviously in the absence of either policy, companies would effectively implement the green electronics initiative themselves, out of self-interest.
I will add this to trello as something I need to spend time on.

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Thanks for the reply Cliff, it is appreciated.

Plexus, while many overstate the effect of the private market, to deny it’s existence or effect is not accurate either. People are motivated by money, that’s just a basic fact. If it were not true then subsidies wouldn’t achieve anything either. As for mistrust of government by Americans, I have to admit that for whatever reason Europeans seem to have government figured out better than North Americans. North American distrist of government is a result of the typical results of government work in North America. If you were an employer who was saddled with a bad employee who consistently produced poor quality work on the rare occasion they worked at all, you wouldn’t trust that employee with anything important. The same has happened with governments in North America. In North America, if your hope is to see the worst quality possible for the highest cost possible with the longest delay possible, put the government in charge. Why this is the case could be it’s own thread, but governments in North America are constantly incompetent, and cultural distrist of governments is a result of their track record.

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I think that’s all quite fair. We have a similar situation in the UK with our healthcare, where its infrastructure is deliberately designed to be as inefficient and poorly funded as possible. Very few can claim to’ve had a good experience with it inside or outside it’s workforce. This allows private groups to outperform and constructs the illusion they’re superior, when high-level state organisation can be seen everywhere else.

I’ve advocated in the past for creating green situations illustrating certain market cultures before. Talk to a nordic businessman and a middle-American one, and they’ll sound like they’re from different timelines of capitalism. When an economy works and succeeds a certain way, it nurtures a certain ideology which invariably shapes the market. I think that definitely has a place in the game.

I’m just sceptical that hard economic crises like the exhaustion of a highly limited resource can be an opportunity for savvy thinking to generate reliable profit out of. I mean, if it were, it wouldn’t be a problem, right? It’d be like creating a crisis like “car demand”. People want cars, how will the government respond? Never fear, the market’s here to make and sell them like it already does and has never been unable to.

The invisible hand is made up of economically solvent business cases delivering to answerable demand in reliable and mutual ways. It doesn’t reverse global warming, avert meteors or conjure unicorns.

I understand that demand is always an opportunity for supply, by whatever means necessary, but the reason such an expansively capitalised planet like ours still has such extravagant economic problems is because not all of them can be addressed in profitable ways, and the infinite growth a capitalist model relies upon is a recursively disproven fallacy, humbled by decadal global market crashes and shocking unsustainability.

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All fair points, I think we were interpreting the meaning of the red bubble differently. You took it as the supply of these metals actually running out, I took it as more comparable to my oil example. While I have not personally researched this industry, I would be surprised if it didn’t have similar conditions where some sources are more expensive to access than others. This is why subsidizing the industry helps. Alternatively, a high sale price can be more valuable than a subsidy.

In the oil industry, some pockets of oil are so easy to access that once you’ve drilled the hole, the real challenge is restricting the rate at which the oil pushes itself up the hole. A major cost in the oil industry can be transportation costs. Realistically, oil needs to reach ocean tankers to reach the global market. Hence the comparison between an off shore oil rig drilling into a liquid pocket, and Canada trying to purify oil sand, then pipe it across 1000km of land which includes one of the world’s more substantial mountain ranges. Point is that Canada’s oil sands can only really find a market when there is a global oil price crisis. I am assuming that there are versions of this in the rare earth metals industry, potential sources which are disproportionately expensive to access, which are only viable to extract when they can sell for a crisis price.

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i wish, but i’m not so lucky to be american

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maybe make rare earth mining licences, instead of subsides, if there’s a rare earth crisis the govt doesn’t need to subsidize mining rare earth (witch would already be very profitable considering there’s a shortage) companies would do it on their own if it was a real shortage, govt just needs to allow it and give them mining licences, implement a uncancellable policy on mining licences, kinda like we have for labour laws

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Hmmm interesting. Perhaps the policy could be altered to support both, with nothing but licensing at the low end, going to small and then big subsidies at the high end. That used to be impossible but I added functions to allow non linear costs for policies a while back, so this would be a possible change :D.

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i would love to see it implemented

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Thanks again for the reply. I do put thought into my suggestions on how to iron out the creases here, and it would help to know whether or not something is possible on the coding level. Is it possible to program a crisis decrease itself when active?

Doing this would create the oscillations we see in reality.

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I’m not sure there is a current method for doing this, although theoretically one could be added. I shall give it some thought as I’d like to have a more general solution rather than quickly hacking a fix for this case.

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