Interesting Effects of Productivity & Maxed-out GDP

While it is rather easy to forget once you remove the Uncompetitive Economy situation, Productivity is the single most influential factor when it comes to boosting GDP. You can roughly expect 3%p increase in GDP per Productivity rise of 10%p. Then, what will be the Productivity-deciding factors? There are Education, Health, Automation, Technology, and etc. but what interest me are Wages & Unemployment. Here’s their relations with each other:

  • Higher Wages will lead to lower Productivity (up to -40%p)
  • Higher Unemployment will lead to higher Productivity (up to effectively +30%p)
  • Higher Unemployment will lead to lower Wages (up to effectively -40%p)
  • Higher Productivity will lead to higher Unemployment (up to effectively +16%p)

This may sound like ‘higher Productivity has negative impacts on both Wages & Unemployment’, you shouldn’t forget the GDP. Higher Productivity will boost the GDP and thus create employment & boost Wages in the end. GDP-related links are written below.

  • Higher Productivity will lead to higher GDP (up to +35%p)
  • Higher GDP will lead to higher Wages (up to +30%p, heavily skewed)
  • Higher GDP will lead to lower Unemployment (up to effectively -50%p)

Therefore, higher Productivity has both negative & positive impacts on Wages & Unemployment respectively, as written below.

  • Higher Productivity → Higher Unemployment → Lower Wages
  • Higher Productivity → Higher GDP → Lower Unemployment & Higher Wages

Simulation results suggest that higher Productivity will have minimal impact on Unemployment while actually boosting Wages. This sounds fair. But, there’s a thing - the GDP is capped at 100% and it’s quite easy to reach. It makes enormous differences to the simulation since the GDP will be constant however you boost the Productivity, nullifying some links as written below.

  • Higher Productivity → Higher Unemployment → Lower Wages
  • Higher Productivity → Higher GDP → Lower Unemployment & Higher Wages

Yeah, higher Productivity starts to actually take jobs away. It would make sense since the output (GDP) is the same while efficiency (Productivity) has risen. It’s natural to assume that less input has been invested. Therefore, Productivity growth when the GDP is capped at 100% leads to results shown below.

Okay, enough of numbers and stats. Now, let’s talk about what all these sound like.

Capitalists and corporations start to realize that it is no more possible to increase the GDP. Nominal GDP can’t grow faster than inflation rates whatever they do. But they can still increase Productivity with some measures such as boosting Industrial Automation or revising the Labour Law (or etc). It won’t let them sell more products but it should be possible to reduce labor costs.

Workers are producing goods & services more than ever but they can’t demand higher pay since the corporations keep firing employees as they need less people to keep their output. The situation used to be better when the economy was in actual growth. It was criticized as “growth without more employment” but still better than now. Soaring unemployment is driving a lot of people into poverty or even crime. Who took all the fruits of higher Productivity? Communists say that it’s the capitalists while the nationalists say it’s the immigrants.

For me, this starts to sound like another Marxist revelation. Something that says “as organic composition of capital rises, people will lose jobs and be exploited even further” or similar.

Gameplay Implications
It is best to employ productivity measures as few as possible provided you can boost your economy without such, when you want to keep Wages high & Unemployment low. Or at least you should stop boosting productivity once you hit 100% GDP. It will do nothing but making the people poorer. You should be able to compensate the wage loss if you can trigger the High Productivity situation but it won’t compensate the unemployment rise.

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Or increase the value of 1 (or 100% GDP) to something unachievable like 1x10^22. That should reflect a society which would need to harvest energy from the Sun, so it can feasibly be called unachievable.

I don’t think it needs a separate mechanic outside 0~100% stats. Since both Productivity & Unemployment are capped too, real (not nominal) GDP will reach its peak at 100% Productivity & 0% Unemployment (or somewhere near this point). Anyone who played the game should know that’s kinda unreachable. Therefore, capped GDP itself isn’t the core of the problem as long as other factors are capped too. If the GDP is adjusted so that achieving 100% GDP would mean max productivity and full employment, there will be no capped GDP problem.

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That’s a good point, so it’s essentially a question of balance. So how are we currently able to max gdp without making unemployment 0 or productivity 100? If that’s even possible in game, or desirable.

I personally think that impacts of Unemployment are undervalued in this game. It does have some scary effects such as higher Racial Tension (up to +70%p), higher Poverty (up to +24%p), higher Crime rates (up to +26%p), lower Wages (up to -40%p), and many more potentially bad situations, it doesn’t directly take people’s income away or hurts the economy. While just hiring people for useless jobs wouldn’t mean efficient use of resources, leaving massive workforce unemployed isn’t efficient either. If there were a notion of potential GDP (or full employment GDP) in this game, it would indicate that players are facing constant recession.

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Oh, I see.

I see 3.23% GDP per 10% productivity once the “High Productivity” limit is breached.

I achieved 100% wages and 0% unemployment, with 100% GDP during global recessions, only by not suppressing productivity. Unemployment itself raises wages, so with 0% unemployment, full wages can be achieved with maximum “Minimum Wage”, maximum “Subsidies for Labor Unions” and minimum “Labor Laws”.

0% Unemployment is achieved by investing in policies which directly reduce it in order of cost-effectiveness until it is reached. “Import Tariffs” and “One Child Policy” are infinitely cost-effective.

I don’t mind if players can achieve full employment or not. The point of my post is that GDP cap makes excessive productivity harmful for unemployment & wages, which can be seen as unintuitive / unrealistic.

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I found productivity policies to be more cost-effective at keeping GDP floating at 100% regardless of global recession, even after having to compensate for the unemployment, than any strategy that involves handling unemployment by attacking productivity and then trying to float GDP in any other way.

The GDP cap and all caps should definitely be adjusted, or the policies that feed into them adjusted, so that they can only hit 100% or 0% in perfect conditions, so that there is never a policy which is not achieving its full effect by pushing redundantly into something which is already at a maximum.