We start with an economic historical discussion of the causes and outcomes of the Panic of 1873 and its connection to The Long Depression of 1873-1896. I like to emphasize political economics, as the two areas of study properly belong together, so we look at their interplay in the circumstances that dominated the last quarter of the 19th Century. Then, for the gamers, I close with suggestions on how to model this in Victoria 3 and provide a richer, more immersive economic experience.
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Very interesting discussion
I like this video (hi from Belgium!)
My guess is that the stronger the industrialists the more speculation happens
love it
Would be good to see more reasons to actually choose interventionism/protectionism, at the moment investment pool transfer (mainly from capitalist) is so strong, it could feed into this over speculation mechanism also 🤔
These are some great ideas! Personally though I think to help differentiate a little bit between interventionism and laissez faire I think interventionism should give you some tools to respond. Like maybe when you hit the threshold for the crash to get a chance to spawn you get an event saying “Rampant speculation in your economy!” And you have the option to reign in speculators to reduce the chance by half. I guess you can sort of indirectly stimulate interventionist measures when a crash actually happens by subsidizing buildings so they can keep workers even as the building is unprofitable. I also think a crash should delete buildings down so you not only have unemployed workers but the industries themselves are also permanently affected and you have to spend construction to rebuild them. Thanks for the great videos and economic and historical analysis!
"I liked this video"
I think Paradox ought to reach out to you for a partnership! Top-notch discussion and it’s impressive how you link it to the game. It makes you wanna go and play it.
Another interesting video. The economic trajectory of the player nation is too linear now, so economic crises are a good way to shake things up. You already mentioned having a potential recession if there’s an economic boom, but I also think the economic consequences of the end of a major war are negligible and need to be increased.
The further you progress in the Victoria III timeframe, the more the economy is mobilized for war. So it’s a bit weird that the economic effects of transitioning from a wartime to a peacetime economy are almost the same during the entire game.
As an example, all major (surviving) powers of World War I experienced an economic slowdown in the early 1920s, winners and losers alike. Government expenditure declined drastically, currencies like the Franc, Lira, and Mark lost most of their value, the demobilization of millions of soldiers caused a flooded labor market (made worse by the fact that women had entered the labor force en masse during the war), and there was production overcapacity due to wartime economic expansion. The effects of this should be more severe the longer a major late-game war goes on.
I'm facinated by this era, could you recommend some books for learning more?
For all who like this video I would have to recommend the "Dr. Ingo Sauer on Hyperinflation, Central Bank Insolvency, and the ECB" by Forward Guidance. It is a German professor being interviewed on the hyperinflation of the reichsmark and how the reichsbank re-capitalizes.
By the way, are you using autonomous investmentin Vic3?
One way you might be able to simulate this is to have something which tracks the profitability of various industries in a country, and gives the most profitable ones a small but growing throughput bonus the longer they remain profitable and continue to grow, to represent increased investment and speculation, but the higher that bonus gets, the higher the odds of a crash in that industry are, which could instead apply a throughput penalty or radically alter the price of a good.
You could also chain the events together, so the more industries that are currently crashing, the more likely it is for other industries to experience a crash too if they share a resource, so a boom in the motor industries could lead to a crash which pulls down steel along with it.
Just some off-the-cuff speculation on my part. Pun intented.
I'd definitely welcome these changes in game. I know some people might be averse to it because it interferes with bar go up, but right now it's far too easy to make a completely stable country with high SoL for all pops and bar constantly go up. Along with not looking like a real economy, it frankly makes the gameplay loop stale. Get LF and Free Trade is always the goal currently, when in reality there were trade-offs, and the in-game trade-off of "When you get to 1bil GDP, your investment pool falls off" is simply not a meaningful downside.
>.> <.< v.v ….. I like this video
Great discussion, loved it. And I have a thought: wouldn't a artificial crisis, like offensive war, be great offset to slow down overheating economy? With demand on human life you'd reduce demand on commodities (since they are fighting and dying) and at the same time sell people promise of even better future after war, which would reduce speculation for now and in the future after war social turmoil would 'reset' economy to a healthy grow. In a way you speculate on crises making it derivative of economy.