Development blog video #2

Check it out here:

I like what you seem to be doing with income. Just remember that each dollar (or pound) needs to come from somewhere, so while farm subsidies help to move farmers from poor to middle income, the taxes or debt reduce something else (such as capital formation), and that something else can have an effect on many incomes (including farmers).

Let us know when there’s a beta to test.

Well subsidies have a cost, and that comes out of government funds, so you are either borrowing it, running down reserves, or making cuts elsewhere.

Right… But that’s just cash, and conservation of cash is not the same as conservation of finite resources and labor. Borrowing (or even printing money) still has an economic cost. Even when money is wished into existence in a central bank computer, some real goods and services will be displaced by that money, inducing indirect economic effects. Prices change and, depending on trade barriers, production / importation etc change. Farmers may gain the amount of a subsidy (and vote for you), but somebody somewhere (or maybe everybody everywhere) pays the price (and if idle labor is utilized, the jobs created might not be in your own country!). No wealth is created directly by a gov’t transfer program; wealth is just moving from one place to another (a zero or even negative-sum game, depending on the amount of bureaucratic overhead).

It would be impossible for any of us mere mortals to know all impacts directly. That’s why we build finite-resource models. When government moves or manufactures “money”, our model reallocates real resources. Somebody loses or pays more. The effects percolate through the economy. If we do it right, the winners and losers emerge indirectly without our ever understanding exactly why. Unfortunately, a model (computerized or otherwise) is not forced by the real world to obey finite-resource constraints, so it’s possible (by accident if not deliberately) to wish wealth into existence without the effort of actual manufacture / cultivation etc.

This is what keeps getting free-lunch pseudo-Keyensians into trouble (and taking the countries they govern with them). Their models provide arbitrary wishful-thinking “multipliers” of wealth that do not exist in the real world, and then their policies create rack and ruin in the real world instead of the bounty predicted in their models.

Your challenge for Democracy 3 is to avoid bad assumptions, then model real-world finite-resource scarcity honestly (but still allow wealth to be manufactured… with effort), and eventually have real-world outcomes emerge more accurately than from the models made by over-paid, all-too-influential real fools in real governments.

Note: This is devilishly difficult to do. While finite, the factors of production are variable. People can work or not (or work harder… or work smarter). Natural resources can be discovered. New tech can change productivity and extract previously inaccessible resources. Imports can seem to come out of thin air. A good model needs to be very clever about what it deems to be fixed, and what it deems to be finite but not fixed. It then needs to ruthlessly obey its accounting rules in all transactions so it doesn’t violate laws of conservation of mass and energy. The modding instructions will need to explain the finite resource rules so that players can’t simply “write themselves cheques”.

Good luck, and congratulations in advance on winning your Nobel prize in economics.

i am kind of modelling this with a number of the government programs which are stuff like state health provision, which ‘crowds out’ private provision. There is no magical net gain (although some might suggest very reasonably that the reduction in bureaucratic waste from moving to a centralized system exists), all the player can do with state health care is ensure universal provision for the poor, by raising taxes(or borrowing) and spending it on public healthcare, thus reducing the amount of private health care people take out.
Theoretically, the effect on GDP is neutral, although the complexities of my model mean that if universal health provision raises health care enough, productivity will rise and thus international trade 9through better competitiveness) could boost GDP.
It’s horribly complex :smiley:

That reflects the competition in the market for health services (much like education where K-12 private ed holds less than 10% of the market against “free” public schools in the US). However, I was referring to a more general economic principle: When gov’t spends money on something, then it draws scarce resources into it, and then those resource no longer exist for private enterprise to use, in that industry or any other. The pols will shine a light at the focus of their program and crow about how they stimulated the economy, but the rest of the economy has been diminished in some way.

If your model lacks “conservation of mass” rules, then there may be places where something is created out of nothing (e.g. manufactured without using any labor, materials and/or capital). You seemed to start something like conservation of mass in D2 when you modeled oil shortages and prices. If something like that operated in the background for land, labor and capital in D3, then some interesting behaviors would emerge organically without having to be predicted a priori for each policy.

I don’t mean to insist that you ruthlessly enforce these physical conservation rules, but I hoped to explain what I mean because proper accounting for scarcity is one of the key factors where many pie-in-the-sky economic models diverge from the real world (another is human motivation/incentives). That’s why models that look so good in a PhD thesis fail so dismally when free-lunch politicos try them. Being an ideologue myself, I deeply desire to see your game treat them as harshly as the real world does.

Indeed I understand what you mean in that respect, although not modeling that explicitly, I’m hoping to ensure that no part of the D3 model allows for any creation of economic growth from nowhere, other than through greater productivity and efficiency (technological progress etc).

how long have you been working on that ?