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Economics; Discuss: How does it work on a regional scale?
Topic Started: Sep 17 2014, 12:12 AM (921 Views)
Libraria and Ausitoria
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Prime Minister & Speaker of the Senate

At the instigation of The New Lowlands, following requests from multiple quarters, this is a place to weigh in on the discussion. By the end of it we should all have a better understanding of the regional economic situation - and to some extent, what sort of things we export and import from other regions.

One particular problem frequently cited is that (to quote Silverfield) 'we have so many first world and overwhelming populations that we are a bit of breaking ourselves trying to realize a regional economic situation'.

Various solutions immediately present themselves. I would suggest as a preliminary that we agree on the following cocktail: first, the labour/technology balance in Hemithea could be more skewed to technology and automation; second, a continued supplied supply of immigrants could be used to maintain the balance within national economies, with an emphasis on education and productivity; third, higher wages for what labour exists could be matched by higher productivity.

I assume all of this for Ausitoria on a personal level and I think it could go some way to explaining the imbalance.

But on the wider OOC level, there is undoubtedly a great deal that we could consider doing to try to correct for the imbalance. Besides greater internal variation, such as in Ausitoria; which has 1130.4 million people in two states (Bvordxa and the Amraja) that have a GDP per capita of approximately half the national average (a paltry $22000 akin to a developing country); the major solution that Nerod and I favour is to encourage everybody without an outsized population to have one third world puppet/colony. This would allow us to continue to enjoy our main first world countries as they are meant to be.

But what do you think?
Edited by Libraria and Ausitoria, Sep 17 2014, 12:21 AM.
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The Soodean Imperium


Welp. I start typing up a short reply, and look what happens. Bloody wall of text just flows off my keyboard.
Quote:
 
first, the labour/technology balance in Hemithea could be more skewed to technology and automation

This already holds true for developed countries IRL. It works fine for capital-intensive industries, such as airplane construction and cigarette milling, where capital and technology make up a relatively large part of inputs compared to labor, and where most hard labor can be easily replaced by machinery. But in labor-intensive industries, such as construction and mining, there are many manual tasks that are much harder for a machine to handle. With an abundance of capital but a shortage of labor, service industries in particular would see high wage costs, though "flexible employment" as seen in the US could be used to keep certain service wages low at the cost of increasing economic inequality and decreasing social mobility.
Quote:
 
second, a continued supplied supply of immigrants could be used to maintain the balance within national economies, with an emphasis on education and productivity

But where are these immigrants coming from? Outside the region? That's the same problem with the rest of the regional economy. People assume that there just happen to be an abundance of poor, dependent countries they can rely on, with the result that nearly all "player nations" are awash in money and people.

Additionally, if any unskilled immigrants who arrive are immediately trained and put into high-wage occupations, then this doesn't do much to depress labor costs.
Quote:
 
third, higher wages for what labour exists could be matched by higher productivity.

Again, see the top capital-intensive:labor-intensive section. Certain industries lend themselves very easily to high per-worker productivity, but others reach diminishing marginal returns right off the gate. A few farmers with heavy machinery can till and harvest a lot faster than hundreds of farmers who pick rice by hand - but you can give a hairdresser all the technology you want and they won't trim hair at even five times the pace.
Quote:
 
in Ausitoria; which has 1130.4 million people in two states (Bvordxa and the Amraja) that have a GDP per capita of approximately half the national average (a paltry $22000 akin to a developing country);

But look at those numbers in perspective for a moment. $22,000 per capita is higher than Russia, Poland, or Hungary, which are fairly developed economies. Indeed, it's not far short of Greece or Portugal.* Certainly no Switzerland, of course, but it's nowhere near Vietnam, China, Cambodia, or the other "workshops of the world."

Additionally, if this figure is factored into the national average, the remaining provinces would have to rank above $44000 per capita for the numbers to work out. And, correct me if I'm wrong, but the remaining provinces presumably make up the majority of Libraria and Ausitoria's population.

Within the Soodean Imperium, there are 20 provinces and 1 special municipality with 2,420 million people and an average GDP per capita of $14,500. That's the entire country. Yet that "paltry" GDP per capita figure is still considerably higher than China or Romania, and comparable to Bulgaria. A second-world economy, if such a term is considered valid.

*these figures, and others, do vary a little depending on what measure of GDP per capita you're using.

Quote:
 
the major solution that Nerod and I favour is to encourage everybody without an outsized population to have one third world puppet/colony.

But how is this any different from, say, declaring that everyone trades with nonexistent, non-canon third-world countries somewhere outside the region? It's better than nothing, but at the core, it's still a handwave - "we're rich, but we have a colony that is poor, so it's okay."

Furthermore, in order to make sense, this would mean that the sum total of in-colony populations would have to be considerably higher than the sum total of colony-owner populations. Let's look, after all, at how GDP per capita is distributed among populations in the real world:
http://farm1.staticflickr.com/52/148281788_11e0537269_z.jpg?zz=1
Using this as the basis for our colonial planning, assuming an average Per Capita GDP of 30,000 for current Hemithea populations, there would have to be an additional ~5 times our current total population in third-world countries for the balance to work out.

Even that won't be very sustainable into the long run, and a modest doubling would be far less so. This is because the demand for cheap outsourceable labor - which must be huge in this region - will create a higher demand for labor in the colonies' export industries, which will, in the long run, cause wages there to rise. Economic theory oversimplifies this, but the general trend can be seen in China today. For the initial two decades after the country opened to the west in the late 1980s, wages remained fairly stable, as Mao's rural policies had prevented the country's massive rural population from migrating to the cities so there was always a large supply of migrant labor that could flow into the Guangzhous and Shanghais to fill factory posts at a lower cost. Yet as time went on, that supposedly endless reserve of peasant migrants proved to be finite; Chinese private-sector wages rose 14% in 2012, and within the main export-oriented cities wages have been doubling every few years. Some developed-world countries have taken this opportunity to shift their production to Southeast Asia, where wage hikes are continuing to remain modest but will undoubtedly start to press upward once the lag is taken into account. So, given how strong Hemithea's "core" economies are, and how many people are employed in those "core" economies, one would need a much larger and more densely populated "periphery" to supply the highly demanded labor. Note, too, that this same logic can be applied to immigration.

And this brings us to the central problem at the heart of all of this: population. Thomas Robert Malthus may have greatly underestimated the degree to which technology could push up the "cap" on populations imposed by natural resources, but this region is pushing things to mind-numbing levels. And that's without the sextupling of the regional population through a proliferation of third-world colonies. Let's not forget, after all, that North and South America combined host "merely" 950 million people. I'm splitting hairs over the feasibility of hosting 2.4 billion people on 4.6 billion million* square kilometers, of which about 2/3 is made up of fertile plains and river valleys; when I hear so many claims of twice that population on half the space of inhospitable terrain, I shudder to think about where all that food is coming from.

I suspect that a multilateral population and GDP retcon-reduction deal is considered "off the table" by many people in the region. I would even venture to guess that it's been tried in the past, before my transfer in here, and met with opposition. But I daresay it may be the only way to have any semblance of a functioning economy and food supply without resorting to invisible off-map supercolonies or cities of hydroponic vertical farms manned by hyperintelligent robots.

*Edited for misspelling.
Edited by The Soodean Imperium, Sep 17 2014, 09:59 AM.
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Libraria and Ausitoria
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The Soodean Imperium
Sep 17 2014, 09:50 AM
Excellent graphic, I've been looking for one of those. One matter that should be considered is that Africa is (unfortunately) still fairly insignificant to world trade and many other countries (e.g. India) aren't really open to trade anyway, so I think we should be looking at ensuring a balance not totally dissimilar to the right half of that graph distribution only. This means we could just about scrape by with one or two times as many people in poor countries, which becomes much more feasible.

Another point is that as long as the really rich are really rich; that means there might be sufficient people to prop up a high average (although the societal inequality would be terrible).

Anyway, remarking on your other excellent points in your delightful wall of text (more walls please! Let's build a house!), I know that my first set of suggestions are in themselves quite insufficient to cover the discrepancies. You are also quite correct that wages are rising in the developing world due to labour shortages - and that is the real reason why even the poor states in Ausitoria reach $22,000: wages have been growing at c. 4% per quarter in real terms and they are pricing themselves out of the market. I would disagree that many immigrants could be immediately trained to deal with high-end jobs - but as you say that depends on the 'off-region' sources.

But even if we also assume our cocktail of more immigrants, more technology and automation, higher productivity, economies of scale, hydroponics, uncommonly fertile soils and innumerable natural commodities, a societal preference for long-lasting quality goods over bulk goods, never-ending labour shortages, and immense imports all at the same time; I definitely think we also need to acknowledge the existence of poorer countries, whether we have them as colonies or not (we could always add a few NPCs around, possibly one OOCly assigned between three of us).

Finally, the question of what sort of reductions people should make to their primary nations has been raised but only in the form of requests. When we were in close contact with Elysium I did my best to constrain nations, attempting to suggest caps of c. 2.5 billion within Hemithea. I will admit I have reversed that policy in the expectation of more RPing with Sondria; which has absurdities of nations with 10 billion people earning sums of $60,000 per capita.

I think it is a question of trying to strike a balance between the two camps of realistic populations and the silly NS populations; so that we can hope to straddle the two?
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Fallenrun
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Minister of Defense

I think that we need to sort out map scale down to a actual figure. Atm it's kinda hard to find our how many people you can fit. One example is TNL with 4 or so billion and ausi (who is larger) with 1 to 3 billion (I can't remember the number atm) And as we know population and population density greatly effects economics. So I think we need to set a scale and I agree with the pop caps.
Edited by Fallenrun, Sep 17 2014, 12:46 PM.
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The New Lowlands
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Councillor for Cartography & Deputy Speaker

In regards to the issue as a whole, it might be simpler to assume for the sake of not having to account for every nation in the NS world that the extent of our planet, for our calculations, will be limited to Hemithea. The question then arises of what to do when someone interacts with someone outside of the region, to which the simplest answer would seem to be the suspension of the internal limits imposed on Hemithea by Hemithea.

A good example of this might be Ausitoria using the United Realms exclusively for activities which are Hemithea-Centric, and using "Libraria-Ausitoria" (e.g. including the Home Realms) for activities outside of Hemithea; within Hemithea, L-A would have a population of just over a billion, and outside of it the 5.5 billion listed on L-A's factbook. The link between activities within Hemithea and outside Hemithea might be a bit messy if Hemithean nations interact outside of regional RPs, so that may need some hand-waving, but I reckon it could work easily enough if everybody's reasonable OOCly.

As always, primarily the concern of what we take to be realism should be a fairly high secondary to what everyone considers enjoyable, which may cause some problems; the "developed countries" of Hemithea presumably don't want to suffer from endemic labor shortages and lack of resources, while the "industrializing countries" of Hemithea (such as TNL, which inexplicably retains a GDP/c of around 30,000) don't want to be pushed into international irrelevancy.

Regarding TNL, it'd probably be best if I dropped my GDP/c to around the 10,000-15,000 mark; such a figure would probably account for increased labor costs as a result of demand to some extent, which when coupled with population increases should leave TNL remaining fairly significant internationally (although I'll have to remove a lot of my military assets and such, which seems to have remained an artifact from when I ran TNL as a first-world country. Oh well.)

I'd rather not suggest that colonies thrown into the mix, because it implies terrible, murderous things about Hemithean states who would probably rather remain sparkly democracies and would require significant addition to the workload of a few players, which they might find problematic. "NPC" states also introduce the problem of who would be running them and what their interests would be and such, so I'd rather call on the "less-developed" nations of Hemithea (i.e. TNL, some other people maybe?) to reduce their GDP/c and increase their population, and some of the "more-developed" to reduce their populations.

Of course, we could also just start from scratch in a sense and make everybody change their stats according to an agreed model.
Edited by The New Lowlands, Sep 17 2014, 09:10 PM.
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Libraria and Ausitoria
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Before we get too bogged down in opposing each other's ideas, one particular point that we should note is that we do not need to be exactly accurate: only sufficiently accurate for most (preferably all) of us to be able to agree that region economics is not unrealistic to the point of nonsense.

I'd definitely oppose starting from scratch, as the last thing we want is drastic change, and that sentiment is the basis of all my reasoning:

Regarding colonies and democracy, they are most certainly not exclusive and I am sure that to some extent that would be useful in maintaining sensible standards; and many nations in Hemithea aren't democracies anyway and would have been quite capable of defending colonies. Trying to use only a few solutions to a problem when there are several dozen that could be handy strikes me as a little silly.

I'm afraid I would strongly oppose trying to make Hemithea even capable of being completely self-contained, let alone actually be so; as we should treat ourselves as part of the NS-verse. Merely from a personal point of view, I can assure you that Ausitoria's economy does make sense with the innumerable extra-regional relationships I have developed; so that Ausitoria would have very little direct net impact on Hemithean economics besides generally raising standards by more competition.

But anyway, I do not see any difficulty in attempting to work with other regions: with a continuous supply of new nations rising and falling, there would be plenty of poor ones about and without accounting for them I think it would be unrealistic for us to be able to enforce the necessary standards to be self-contained. The question of measuring so as to work out a balance of the region's trade then becomes more a question of distance; given that we either occupy a super-earth or have to worry about flexible oceans; and if we assume it is never going to be particularly profitable to move goods more than twenty thousand kilometers, the possible number of workers in pseudo-Chinas within that radius and their effect on Hemithea can certainly be calculated to within a rough estimate if we make a few assumptions.

Turning to the question of map scales; I believe they are fairly clear: since we are not on a flat earth, a pixel varies in size depending on latitude.

On a side note, since NS-earth assumes greater numbers of people and economies of scale; it is probable that new technologies would be discovered, tested, and adopted relatively faster; hence to some extent TNL might well have a number of first-world assets; and would certainly expect to have them as prototypes.
Edited by Libraria and Ausitoria, Sep 18 2014, 11:19 AM.
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The New Lowlands
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Councillor for Cartography & Deputy Speaker

"Before we get too bogged down in opposing each other's ideas, one particular point that we should note is that we do not need to be exactly accurate: only sufficiently accurate for most (preferably all) of us to be able to agree that region economics is not unrealistic to the point of nonsense."

This is clear enough.

"Regarding colonies and democracy, they are most certainly not exclusive and I am sure that to some extent that would be useful in maintaining sensible standards; and many nations in Hemithea aren't democracies anyway and would have been quite capable of defending colonies. Trying to use only a few solutions to a problem when there are several dozen that could be handy strikes me as a little silly."

Well, for the colony in question, they are depending on the type of colony in question. Overseas territories which share in the wealth and development of the mother country might still exist, but consider what happened to colonies economically disadvantaged compared to their colonial masters; the rise of nationalism and demands for increased autonomy would result, in a democratic state, to secession, and in a non-democratic state would lead to rebellion.

"I'm afraid I would strongly oppose trying to make Hemithea even capable of being completely self-contained, let alone actually be so; as we should treat ourselves as part of the NS-verse. Merely from a personal point of view, I can assure you that Ausitoria's economy does make sense with the innumerable extra-regional relationships I have developed; so that Ausitoria would have very little direct net impact on Hemithean economics besides generally raising standards by more competition."

The problem is that it's wildly impractical to account for the NSverse in its entirety, in which case the MEDC/LEDC ratio would probably be even more heavily skewed towards the former. Constraining any restrictions we apply on regional economics to the region itself doesn't preclude that you can interact with nations outside of Hemithea, but simply serves as a barrier to us bashing our own heads in over people outside the region.

"But anyway, 1) I do not see any difficulty in attempting to work with other regions: with a continuous supply of new nations rising and falling, 2) there would be plenty of poor ones about and without accounting for them I think it would be unrealistic for us to be able to enforce the necessary standards to be self-contained. The question of measuring so as to work out a balance of the region's trade then becomes more a question of distance; given that we either occupy a super-earth or have to worry about flexible oceans; and if we assume it is never going to be particularly profitable to move goods more than twenty thousand kilometers, the possible number of workers in pseudo-Chinas within that radius and their effect on Hemithea can certainly be calculated to within a rough estimate if we make a few assumptions. "

1) Seeing as this discussion pertains to regional economics, it simply make sense to limit it to such. If regions outside of Hemithea want to be involved in the discussion or implementation of any agreement, I don't see how or why we would or could preclude that.
2) While I don't have any data available (I'll try to collect some) I'm fairly strongly of the opinion that the MEDC/LEDC ratio would not be improved by including the wider NSverse, which I assume you're referring to. Even if we restrict our considerations to regions we hold large-scale interactions with, the problems we hold in Hemithea will not be fixed by that.

"Turning to the question of map scales; I believe they are fairly clear: since we are not on a flat earth, a pixel varies in size depending on latitude."

It might be simpler to pretend for the map's sake that Hemithea is a flat earth, with a pixel-based scale.

"On a side note, since NS-earth assumes greater numbers of people and economies of scale; it is probable that new technologies would be discovered, tested, and adopted relatively faster; hence to some extent TNL might well have a number of first-world assets; and would certainly expect to have them as prototypes. "

The problem with constant mention of economies of scale is that they do nothing to raise the level of technology, they simply make existing goods cheaper to produce, and in keeping with MT (i.e. if it's not in use IRL and hasn't been historically it's not MT) it'd be best not to fluff away economic problems with "scientific advancement" over the real world. That's not to mention the fact that at the scales implied by the NSverse any economies of scale might be swallowed up by increased inefficiency.

TNL itself might have access to a few more first-world assets than it's IRL economic counterparts, but that depends on what we determine here.

P.S. I really need to figure out how to use the quote function.
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Libraria and Ausitoria
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Prime Minister & Speaker of the Senate

In reverse order; I suffer the same problem with quotes, alas; and my point regarding larger economies and technology is simply that with more scientists there would be more avenues explored at a time and faster advances. As for the MEDC/LEDC balance, I include countries that have ceased to formally exist and have yet to formally exist; and most of them would be growing from or falling into the LEDC state. I fear we are talking at crossed purposes over the question of how to figure other regions - I also don't think it necessary to talk to them. As for colonies and democracy; you can do a lot with home rule and subsidies, although that would be expected to slowly raise living standards in the colony anyway. But anyway I wouldn't (OOCly) want to force colonies on any nation.

Otherwise, I completely agree with you.
Edited by Libraria and Ausitoria, Sep 18 2014, 02:23 PM.
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Fallenrun
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Minister of Defense

It might be simpler to pretend for the map's sake that Hemithea is a flat earth, with a pixel-based scale.

I completely agree with this.
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Loufe
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Panelysian Senate Opposition Foreman

I agree with the fact that we should create third-world countries to balance it out, and I also agree with Fallenrun's idea of sizing countries on par to their population.
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Libraria and Ausitoria
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Prime Minister & Speaker of the Senate

So, have we reached any general conclusions/agreement?
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Fallenrun
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Minister of Defense

I think we have agreed that we need a pixel based map scale, rescaling nations so their population fits in their borders, more (or larger) Chinas/third world countries and I think that is it.
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Nerod
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Emperor of the GNNE.

I agree with Fallenrun.
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Loufe
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Panelysian Senate Opposition Foreman

I agree with GNNE and Fallenrun.
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Libraria and Ausitoria
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Prime Minister & Speaker of the Senate

Fallenrun
Sep 22 2014, 12:26 PM
I think we have agreed that we need [...] more (or larger) Chinas/third world countries.
But we haven't agreed how, unless we agree that all methods proposed should be used simultaneously?
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