NationStates Jolt Archive

From what I know about economics in rl, many of the things that happen in nationstates don't make much sense.

Like anti-trust bill=negative effect for economy.

There isn't a direct proportional correlation between income gap and economic growth. In fact, entitlement programs actually increase the wage gap when you do an economic analysis of it.

Some regulation can actually help the economy. For example, pollution controls would cost the government less than it would cost for the public to soak in the costs.

In some cases, increasing the minimum wage can actually help the economy (like when the economy is in a recession with very low inflation).

And the possible correlation btwn government size and the economy.

I just think it makes sense to make the results of issues a little more realistic. If need be, I can explain why according to current theory it should probably be this way. That, and I'm not including as many issues as I've angered over.

Well firstly I think they're unlikely to change the way issues are currently coded.

Secondly, clearly the game isn't 100% realistic. It's meant, in fact, to be a bit exaggerated. The point isn't necessarily that every issue mimics exactly what would happend in RL.

Thirdly, then, I'm not sure that all your economic assumptions are entirely accurate. In fact, it seems like some of them are largely individual opinions/interpretations. This game is no different: the issues are subject to the opinions of the submitters and editors. There will always be bias, or things that don't quite make sense: it's just the way things go.

Personally, I think the results of some issues - and clearly, it's impossible to fully evaluate every issue's effects - are a little odd, unrealistic, and so on. But overall, I think they represent a fairly reasonable compromise.

First of all, reasonability of my economic assumptions. Monopolies, by what I know of microeconomics and the law of diminishing returns, results in a lower output and higher price. Which means at a macro-level it induces low growth and higher inflation, thus a poorer economy. Yet the opposite occurs.

The economic assumption with entitlement programs goes as follows. If the poor are subsidized, it decreases their costs, thus increasing supply, thus resulting in a more poorer population. It's a simple supply-demand graph. The same with progressive tax rates, if the rich pay higher taxes, their costs go up, the supply shifts back, and thus there are fewer of them with higher incomes.

As for regulation that's just Game Theory. Take the prisoner's problem. Two people are convicted of a crime, they get a plea deal that if one of the prisoners narks on the other, he gets to go free and the other prisoner gets 7 years jail time. If they both nark they both get 7 years. If they both don't nark they both get 3 years. Since each go for there own maximum benefit, in an economic sense they would both nark on the other hoping that the other wouldn't nark so they could get off free. This creates the worst case scenario of 14 years combined term for both. For regulation and pollution it's the same thing. The cost of cleaning up pollution may be $20,000; but a group of individuals won't pay for it because of the free-riders who don't pay, say for example, their $10 fee in a group of 2,000. In a sense government can take care of the free-rider problem, or even put on a regulation on the industry producing pollution which would have a cost of $12,000. Which in this very rare case is more efficient.

As for minimum wage, should it be enacted, costs go up, but since people have more money, demand also goes up. This results in higher growth and inflation, which may be good sometimes and bad in others.

The assumptions are backed in economic theory.

The game has rights to over-exaggerate anything they want too, but if the ratings of an economy are used in roleplaying, they are actually skewed, and diminish the experience (for some insano nerds like yours truly). However, the part that I worry of is borrowing the game's common sense. Things engrained in my mind through theory and data are not that way in others because of a borrowed faulty reasoning. I'm trying to say that I think if something shows a point, there should at least be more of a logical backing behind it.

I'm also sure that it would change issue coding, I mean, just using as an example anti-trust bill. Switching an economy+ from pro-business to anti-business is a change in coding.

Now there are some issues that are comprimised for complexity. I don't think the game's server could handle making current running economic cycles for every nation. However, I don't think that gives it the right to completely compromise some of the fundamental factors going into an issue.

Economic theory is just that: a theory. Some people - even many people, including learned academics and people who have seen it in practice - may believe it, but it remains a theory. As far as I can see, the way issues affect the game can't be dependent on one economic theory. Being right, in this case, isn't enough.

To us, it would seem natural that censoring newspapers is a reduction of freedom of speech. However, there might be some who argue that by censoring newspapers, the general public is more encouraged to express their opinions, free from the possibility of being ridiculed for them by a minority of journalists. The issue becomes greater with political freedoms: one person's infringement is another's protection.

First of all, reasonability of my economic assumptions. Monopolies, by what I know of microeconomics and the law of diminishing returns, results in a lower output and higher price. Which means at a macro-level it induces low growth and higher inflation, thus a poorer economy. Yet the opposite occurs.

Not necessarily. You are looking at models based in our society. Even if your assumption is true for that, it doesn't mean that it will be true for every NS society, the socio-economic conditions of which may be vastly different. There is no way to 'prove' the effect of the existence of a monopoly. It could be that if this monopolised corporation is linked to the government, or to a state religion, people are so devoted to it that its output will increase.

But in real terms, I can't see how you can say with such certainty that the existence of a monopoly will create these effects. I know nothing of microeconomics, but it would seem to me that free from the obligation to constantly compete, companies could devote more resources to production and fewer to advertising. Furthermore, large monopolies may have more funds at their disposal for R&D. As such, they may be able to develop more efficient production methods. This would not be possible in an economic world populated solely by small businesses.

The economic assumption with entitlement programs goes as follows. If the poor are subsidized, it decreases their costs, thus increasing supply, thus resulting in a more poorer population. It's a simple supply-demand graph. The same with progressive tax rates, if the rich pay higher taxes, their costs go up, the supply shifts back, and thus there are fewer of them with higher incomes.

Without reference to specific issues, I'm not sure of the best way to answer these. I hadn't necessarily realized that the effect of a progressive tax was to boost the economy. However, not everyone believes that social welfare and such programmes will weaken the economy. They might, for example, provide impetus for smaller businesses to develop.

I'm not sure I agree that social welfare will boost the eocnomy - and I admit I hadn't realized there were issues that produced such an effect. However, many people feel that the economic growth of a country will be helped if more people are given the opportunity to create some starting capital. Also, tax systems seem unlikely to discourage industry.

As for regulation that's just Game Theory. Take the prisoner's problem. Two people are convicted of a crime, they get a plea deal that if one of the prisoners narks on the other, he gets to go free and the other prisoner gets 7 years jail time. If they both nark they both get 7 years. If they both don't nark they both get 3 years. Since each go for there own maximum benefit, in an economic sense they would both nark on the other hoping that the other wouldn't nark so they could get off free. This creates the worst case scenario of 14 years combined term for both. For regulation and pollution it's the same thing. The cost of cleaning up pollution may be $20,000; but a group of individuals won't pay for it because of the free-riders who don't pay, say for example, their $10 fee in a group of 2,000. In a sense government can take care of the free-rider problem, or even put on a regulation on the industry producing pollution which would have a cost of $12,000. Which in this very rare case is more efficient.

'Just Game Theory'? Possibly: even so it is JUST A THEORY. 'The same thing'? I don't believe so. Your example seems flawed, because not only is it unrealistic, but also it has no real relevance to the problem you've presented; or at least you haven't demonstrated such. Nonetheless, it is possible to argue both ways regarding regulation of, for example, pollution control. You yourself admit it is a 'rare case', implying there is no constant result, but rather the possibility of multiple outcomes.

As for minimum wage, should it be enacted, costs go up, but since people have more money, demand also goes up. This results in higher growth and inflation, which may be good sometimes and bad in others.

Exactly. Good in some, bad in others. As far as I know, the coding of the game is not sufficiently sophisticated that it can accommodate for all possibly economic scenarios. The minimum wage could be a burden, or could be a bonus. It is not feasible for issues to be so variable.

The assumptions are backed in economic theory.

By some economic theories. There are others that disagree. In any case, having a theoretical basis is not enough. There is a theory of economics called communism. The game code does not seem to run on an absolute communist basis. Yet communism is a theory, and one many support. How could one code a game that works according to every individual economic theory?

The game has rights to over-exaggerate anything they want too, but if the ratings of an economy are used in roleplaying, they are actually skewed, and diminish the experience (for some insano nerds like yours truly). However, the part that I worry of is borrowing the game's common sense. Things engrained in my mind through theory and data are not that way in others because of a borrowed faulty reasoning. I'm trying to say that I think if something shows a point, there should at least be more of a logical backing behind it.

Again, I'm not quite sure understand. However:
1. RP whatever you want. I certainly don't use the economic model the game presents for [URL=http://ns.goobergunch.net/wiki/index.php/Economy_of_Gruenberg]my economy[URL]. Many people use calculators, which themselves have their own inate biases. As such, you shouldn't feel the need to be constrained in your economic RP by the game code.
2. You seem to be suggesting that you are right and the code is wrong. Maybe so. But we all play NS; we don't all follow what you say. If it frustrates you that others hold 'flawed' economic opinions, try to convince them through argument: even a demonstration RP. (Which would be awesome.) Just assuming that everyone else has 'borrowed faulty reasoning' doesn't seem especially productive.

I'm also sure that it would change issue coding, I mean, just using as an example anti-trust bill. Switching an economy+ from pro-business to anti-business is a change in coding.

Yes, which it has been said is unlikely to happen. In fact, they're pretty snowed under at the moment in terms of getting new issues coded, let alone changing all the old ones to suit one personal theoretical outlook.

Now there are some issues that are comprimised for complexity. I don't think the game's server could handle making current running economic cycles for every nation. However, I don't think that gives it the right to completely compromise some of the fundamental factors going into an issue.

No, but the code has to be fairly simple. As I understand it, it is a little more complex than it might appear. But, in and of itself, it can't, as you say, make accurate economic cycles for every game. It has, in fact, to compromise between a wide range of economic opinions. This is the compromise it has reached, and it seems, largely, reasonable enough.

Final thoughts:
1. You may be right. Congratulations. It's unlikely to lead to coding changes.
2. Almost all ingame economic interaction is RPed. To a large extent, your economy is what you say it is.
3. You can't absolutely know the effects of issues.
4. You could always submit an issue that reflects your own personal economic opinions.

Gravity too, is a theory, and many people may have seen it in practice, but gravity is just that, a theory.

The point is, is that there is a wide realm of data that support the theory, if you want to look at a more general aspect, CIA factbook probably has the most easily accesible data, for more specialized the bureau of economic analysis has hordes of data to support the thoeries.

As to the respect of theories, there are some that are proven to an extent that they become "law," but are still, in effect, resultant on inductive logic.

I do agree that many conditions may be socially based, but there still remains some basic underlying factors.

Not necessarily. You are looking at models based in our society. Even if your assumption is true for that, it doesn't mean that it will be true for every NS society, the socio-economic conditions of which may be vastly different. There is no way to 'prove' the effect of the existence of a monopoly. It could be that if this monopolised corporation is linked to the government, or to a state religion, people are so devoted to it that its output will increase.

Regardless even of theory or models, the law of diminishing returns still applies; and a monopoly will therefore, due to so-called X-factors ($400 toilet seats), the increasing rate of which a monopoly will need bureaucracy, etc. a monopoly will price items higher. Because of increased price people can afford less and thus output is lowered. So a monopoly COULD have a fanatical base (like a base of anime-fanboys 8D), but it would still remain that the system, according to theory, years of research, and inductive logic, is less efficient, more pricy, and therefore lower output than the non-monopoly go-around. That, and there are plenty of measures for monopolistic existence, however, the main item that I use is the Herschfingel Index (sp?).

Companies could devote more resources to production and fewer to advertising. Furthermore, large monopolies may have more funds at their disposal for R&D. As such, they may be able to develop more efficient production methods. This would not be possible in an economic world populated solely by small businesses.

As a good example of small businesses, take farming. In your example of R&D, the farms don't individually conduct R&D, instead they buy seeds with a tech fee that goes to the seed manufacturer who in turn spends the money amount competing specialized R&D firms. The competing R&D firms alternatively come up with the lowest bid, the seeds with the lowest bid, and finally the farms have to low a bid and are forced every year to sell their insane surplus XD. As for advertisement, as far as I'm concerned, this increases demand, and thus output.

Without reference to specific issues, I'm not sure of the best way to answer these. I hadn't necessarily realized that the effect of a progressive tax was to boost the economy. However, not everyone believes that social welfare and such programmes will weaken the economy. They might, for example, provide impetus for smaller businesses to develop.

I probably should've been clearer, I didn't want to say that there is a link btwn reducing the income gap and economic growth. It goes more along the lines of me choosing to decrease entitlement programs, and then coming back the next day to find increased income gap when according to the analysis it should be less of a gap.

I wasn't looking at the effect in the economy overall in regards to progressive tax methods, I was just looking at the effect with only those parties involved.

'Just Game Theory'? Possibly: even so it is JUST A THEORY. 'The same thing'? I don't believe so. Your example seems flawed, because not only is it unrealistic, but also it has no real relevance to the problem you've presented; or at least you haven't demonstrated such. Nonetheless, it is possible to argue both ways regarding regulation of, for example, pollution control. You yourself admit it is a 'rare case', implying there is no constant result, but rather the possibility of multiple outcomes.

I've already talked about theory.
I was actually hoping you could apply the prisoner problem to pollution control. Say there are two people who receive the effects of this pollution. As an example, if the two of them don't pay for anything, they both pay $10,000 in health costs, if one of them covers the pollution, s/he must pay $7,000, but if the two of them help cover the cost they pay only $3,500. Because one would pay the least money hoping the other covers the cost and themselves being a "free-rider," they both don't cover the cost. The reason I said it was rare, was actually a sarcastic remark against the government actually being efficient in an area, I meant it as a joke.
And indeed there are multiple outcomes, but there is a generalized probability of what pollution controls will help.

Exactly. Good in some, bad in others. As far as I know, the coding of the game is not sufficiently sophisticated that it can accommodate for all possibly economic scenarios. The minimum wage could be a burden, or could be a bonus. It is not feasible for issues to be so variable.

Agreed.

By some economic theories. There are others that disagree. In any case, having a theoretical basis is not enough. There is a theory of economics called communism. The game code does not seem to run on an absolute communist basis. Yet communism is a theory, and one many support. How could one code a game that works according to every individual economic theory?

Actually, the majority of communistic theory has been proven wrong. As an example Marx supplied the Labor Theory of Value (LTV), of which there is actually a proof that disproves it. That and, as from what I know of Communist theory, it is more political than economical; and as for variants in theories, I'm basing this on fundamental areas that these theories coexist, supply-demand, AD-AS, law of diminishing returns, etc.. In other words, it is probable to have a more coexisting system.

2. You seem to be suggesting that you are right and the code is wrong. Maybe so. But we all play NS; we don't all follow what you say. If it frustrates you that others hold 'flawed' economic opinions, try to convince them through argument: even a demonstration RP. (Which would be awesome.) Just assuming that everyone else has 'borrowed faulty reasoning' doesn't seem especially productive.

I'm hoping I'm doing this as of now. As for the game, I'm trying to learn C++, wish me the best XD.

Yes, which it has been said is unlikely to happen. In fact, they're pretty snowed under at the moment in terms of getting new issues coded, let alone changing all the old ones to suit one personal theoretical outlook.

Hrm, agreed.

No, but the code has to be fairly simple. As I understand it, it is a little more complex than it might appear. But, in and of itself, it can't, as you say, make accurate economic cycles for every game. It has, in fact, to compromise between a wide range of economic opinions. This is the compromise it has reached, and it seems, largely, reasonable enough.

Agreed.

The only other thing I have to say is that for Final Though #3, there can be rather good generalizations. As for the other three, they are all valid points.

Certain tenets of labor-theory value and even mercantilism have found their way into modern economics. They are not absolute nor is your view. They are theories in an ever-changing field. Gravity, meanwhile is not cxhallenged except in the microphysics of it.

As for the issue you are talking about, computer industries are not the same as farming. Also, agribusiness does fund research. Plus, you are breaking down the company into completely localized forms and can expect a negative effect from that, especially if it is enforced with size and growth limits. All that a monopoly does is reduce consumer confidence and allow artificial prices, which if set too high, will fail. They simply keep prices at the top of what the market can handle and do reduce output. If that money is put towards higher wages though, they can actually increase consumption.

Certain tenets, but they still remain a base foundation of economics, and no, gravity is neither as base as one might think. Many things about gravity are base, Newton's Gravitational Constant, etc.; but as to how it works is a changing constant. The same with economics, it has base fundamental ideas.

http://en.wikipedia.org/wiki/Labor_theory_of_value
Under Transformation Problems is the proof against, I don't think you were asking about that, but I'm putting this here to be sure.

I do not understand as to what you mean by "localized forms," I am taking the businesses into specialization subsections, which if there is enough demand for them, the reduction in average variable costs allows for lower pricing/higher overall production. Therefore on a macro-level the companies that support this system win out, but it is not to say that the other companies don't exist.
As for a monopoly, it does more than that, other than those two things a monopoly has higher base costs, and due to a higher output level it supports further higher costs due to diminishing returns. By this respect if three companies produce at optimum, say they would produce 50 units each, by having one company produce at 150 units, they are not in the optimum level of the curve and thus price higher.
Yes, indeed if they increased wages they would cause higher consumption, but at the cost of higher inflation.

This is a simple game designed to sell a work of fiction. The author is also the game's designer, and to the best of my knowledge he is not an economist in his spare time (as if he had any, being a new dad and all). It's designed to be a work of political satire, not economic realism.

In addition, the game has been modified by additional coders and issue writers, none of whom are economists in their spare time. The issues are designed to demonstrate the unintended consequences of decisions, something they do quite well. The fact that they don't conform to current economic theory is irrelevant.

We're not going to go back though 180+ issues and edit them into 'realistic effects'. Either accept that the choices you make don't necessarily follow the options you chose, or turn issues off. If the game makes you angry, stop playing it. Max doesn't want you angry, he wants you to buy his book. THAT is the purpose of this site.

And look below that at An Alternative View.

As for the issue, by local forms, I meant something like this. Company A owns factories in City B and a chain of stores throughout Country C to sell many of their goods. However, the government steps in and separates ownership of all stores and unites the factories under a new leadership. All business is soon owned at the local level. The store in city B is now owned and managed by people different than those in City C. Draconian legislature prevents any business from owning outside of their territorial area.

As far as I've read the alternative is more sociopolitical rather than economical.

But before I respond to your example, did you mean Country C? Or actually City C? Or City B? Because it looks as if you might as if actually mean City C, but it would be less confusing if you use City D, so it might not be what you meant. Also because if you meant Country C then it would appear as if your complaint is with multinational corporations, which appears to contradict your final statement, or if you meant City B then it appears as if the complaint lies with driving the firms to so many that there are forced to produce at a point below the optimum.

As for Frisbeeteria, I've already agreed with Gruenberg on my futility, it appears as if this thread has turned into something else, nevertheless, I don't want to leave any loose ends.