Corporations problem

[largedarryl]

Well banning toyota and just allowing GM would be like running mercantalism, and would be good and bad.

And without going into great detail, how does having Toyota sell vehicles in the US benefit the US?

 

[Raider]

And without going into great detail, how does having Toyota sell vehicles in the US benefit the US?

You have got to be kidding me....

 

[andrewlt]

Well banning toyota and just allowing GM would be like running mercantalism, and would be good and bad.

In the real world, mercantilism would be more bad than good. In BTS, it's just plain good.

And without going into great detail, how does having Toyota sell vehicles in the US benefit the US?

It's very complicated. Suffice to say that competition increases innovation, makes the quality of goods better and makes the economy larger. Also, I can drive to work every day without my car breaking down often. I drive a Camry and have 0 complaints so far.

 

[largedarryl]

I'm not trying to be difficult and I understand that competition will force US companies to innovate.

You have got to be kidding me....

There is benefit there, so where the cars are sold gets some extra production (individuals in the city are more productive), but the money spent is going to the Toyota shareholders.

There is an obvious benefit to the US, but I'm trying to keep away from absolute RL and trying to relate as closely to Civ as possible.

It's very complicated. Suffice to say that competition increases innovation, makes the quality of goods better and makes the economy larger. Also, I can drive to work every day without my car breaking down often. I drive a Camry and have 0 complaints so far.

There's nothing wrong with owning a Toyota, but the money you spent on that Toyota went to where (only if you it was new when you got it)?

 

[andrewlt]

There's nothing wrong with owning a Toyota, but the money you spent on that Toyota went to where (only if you it was new when you got it)?

Toyota dealer. Employees at the Toyota dealer. Toyota of Japan and thier shareholders/employees. Suppliers of Toyota and their employees. Lots of people. It's not a zero-sum game where the U.S. loses to Japan.

The money I spent on my Toyota grows the U.S. economy enough that it isn't a net loss to the U.S. economy for part of the money to go to Toyota of Japan. Besides, not every shareholder of Toyota of Japan is Japanese.

I'd rather that corporations are a no-brainer to spread in your lands. However, before you spread them in other civ's lands, you have to weigh the money your HQ is getting versus the benefits the foreign city is getting. You also have to weigh the benefits foreign corporations give to their HQ versus the benefits you gain from them in your cities. You might even want to pay a foreign civ to spread their corporation to your lands, which does happen in real life. I think that's more dynamic than having it a no-brainer to spread your corporations to foreign civ's lands and absolutely not wanting any foreign corps in your lands.

There has to be some benefit to want foreign corporations in your lands. In China, the piracy rate went from around 99% to around 70ish to 80ish lately. They wanted Microsoft's business enough that the Chinese government is now requiring all government computers to load a real, non-pirated version of Windows and pay Microsoft royalties. They're also requiring computer companies like Lenovo to do the same.

 

[-=Yin=-]

60% of the cars Toyota sells in North America are made here.

...from here... Sure, some of that profit goes to Toyota, but do you even begin to understand how many AMERICAN jobs this provides...everything from the factory worker to the guy who delivers pizzas to the board meetings? Not to mention the added tax base. Anyway...

My take on Civ corps:

When looking at ways to spice up the end game, certainly three starting points come to mind 1] What to do with multiple resources a player has but has no need for? 2] What about all those Great People who tend to lose their luster later in the game? 3] What to do with the large bank accounts, in part made possible by things like spreading your religion, etc.?

#1 is sort of like "Yeah, but no big deal." #2 Is along those line, too. #3, though, makes the end game a bit mindless as you can now afford huge armies, AI bribes, etc. Is there no way to tie these loose end together? This is the niche that corporations fill...you can now convert your resources to something you might want or lack, like more production or growth potential. Doing this, though, is going to make using up Great People a little more strategic, and you're going to have to eat up some of that huge bank account. Of course, you now have an incentive to get those extra resources as well...

So a pure warmonger who cares nothing for corps could, in theory, be bested by the player who makes a long-term corp strategy to have better production rates and city sizes in exchange for redundant resources, saved up GPs, and some of their cash flow off the top. Yes, this is a far more subtle approach to world domination, and you can certainly ignore it, but it's likely a bit of heaven for the micro-manager types who found the late game a bit shallow.

Is this an elegant solution? Is it one that necessarily makes good sense vis-a-vis real life? Well, maybe not. The more important question at this point is -- does corporations make the end game more interesting? Frankly, I think we'll need more time for the public to try it before we can be sure.

 

[Bird Brain]

This is an interesting discussion so far . . . I haven't received the game yet (grrr Amazon) but I'm really concerned about what I'm hearing about corporations so far. Since my father is an economist I brought up the issue with him, and although he hates computer games I managed to hold his attention long enough to discuss the way corporations currently work in civ. In short, we concluded that the original poster is dead right and that the current system for both domestic and foreign corporations is total bull. I'm no expert myself but I'll try to articulate some of the points he made about corporations and how they might apply to BtS.

<begin economics discussion>

Let's consider domestic corporations first: First, the corporation spends money (and a GP) to establish a headquarters inside the country. It then opens a domestic branch which costs an additional outlay of cash (and hammers). At this point everything invested so far represents a risk since the corporation has gained nothing in return for its investment. If this initial franchise fails (due to lack of demand or excess of supply (rival corporations)) then you have lost your investment. Otherwise the franchise must be profitable, and eventually it will return enough money to the corporation to recoup the required investment. Then, once the franchise has broken even all the money it makes thereafter is pure profit for the corporation (and the nation). Furthermore, if the franchise introduced a new good or service to its city it may increase the city's income by providing jobs and services that were previously unavailable (as well as new resource in civ). Therefore, assuming the franchise succeeds the corporation HQ is making money for sure and the town containing the franchise may be wealthier as well. If for some reason the franchise fails at a later time (again due to reduced demand or increased supply provided by new competition) then it's still not technically a loss as long as the franchise repaid its initial investment before going under. Whenever a franchise becomes unprofitable the corporation HQ simply closes it, and if all of the corporation's franchises fail then the corporation itself will fold. In this scenario an established corporation will *never* be causing the country to lose money (except in the cases of embezzlement, accounting fraud, and/or bankruptcy) as is apparently happening in BtS. At worst the only thing the country can lose is the wealth invested in the corporation startup.

Okay, I lied a little. Sometimes domestic corporations which are unprofitable do continue to operate. This happens because the government pays the corporations subsidies in order to keep them afloat. Governments subsidize certain industries because they provide resources (like aluminum and oil) essential for national defense. In this case the corporation is indeed costing the nation money, but this loss really represents military spending. Admittedly some industries receive subsidies purely for political reasons which also represents a loss for the nation as a whole, but this is the exception and not the rule.

Things change a little when we introduce foreign corporations, but it's still not necessarily a bad deal even for the country that gets bombarded with foreign franchises. Well, first the argument for the nation containing the corporate HQ remains the same except that from a national point of view things are even better because the HQ is taking wealth from other countries and bringing it home. Therefore let's consider the effect on the nation receiving the franchises. First, before the foreigners come the franchise doesn't exist. Then, some foreigners take a risk by investing their money and resources into your country. They cover the startup costs and the cost of materials and labor, and although they take all the profit home they still stimulate the local economy by providing jobs and resources that were not there before. Furthermore, the foreign country isn't really invasive; if the locals do not want the goods and services the foreigners provide then the franchise folds and the foreigners leave with their investment lost. So, while the foreign company probably benefits much more from the relationship both sides do win because they get money and goods that did not exist before, and all of the financial risk is endured by the foreign investors.

There are some jerk things a foreign country can do like trying to win a monopoly over your markets so that they can then charge you out the nose for their goods, but governments using a free market system actively prevent this (and select other abuses) from happening.

<end economics discussion>

Though I have yet to play the game, from reading posts it seems to me that there are several huge things wrong the BtS corporate model. First, it doesn't sound like supply and demand have any effect at all. Correct me if I'm wrong, but it sounds like you can successfully set up the oil company in a tiny town which doesn't produce anything or a gem company in a town already flooded with other luxuries. In real life these franchises would fail horribly, and the only loser would be the person who made the executive. Franchises should only survive if they provide a *meaningful* benefit to the town they occupy. Also, it sounds like corporations cost an arm and a leg to maintain which is simply unrealistic. Barring military subsidies the corporations are *only* generating wealth, not causing a financial burden. It sounds like you establish an HQ knowing it will cost you but hoping to make it cost the opponent even more, and that is totally the opposite of how it really works. The mutual benefit of both countries is one of the huge advantages of a free market economy over mercantilism and state property . . .

I hope this post wasn't too difficult to read through. I tried to be concise (but failed), yet economics is a subject which gets very hard very quickly once you get into it. I saw a Firaxian post in the other thread so hopefully those guys are thinking about this issue. I'm still expecting to enjoy the game when it arrives, but it would be so much better if its model for corporations wasn't completely backwards . . .

 

[largedarryl]

Toyota dealer. Employees at the Toyota dealer. Toyota of Japan and thier shareholders/employees. Suppliers of Toyota and their employees. Lots of people. It's not a zero-sum game where the U.S. loses to Japan.

Now where is this money coming from? (I don't want to get into a discussion about inflation and currency) Since I am going to use CivIV's simple economic model, I am going to ignore currency differences. So a Toyota makes a factory and a dealership in LA (just an example). So the factory uses US resources and US employees. So when these vehicles are sold, the money sold is worth $1Billion/year. Now it costs Toyota $500Million/year to pay for the employees. The profit left over goes to the company HQ (now without complicating taxation and shareholders) this is basically a profit made in the city with the HQ. This profit is taxed by Japan and this money goes into the country from the US. Now this will result in a net loss to LA, because lets face it, you cant just make money from nothing. Since the HQ is making money from somewhere, it is coming from LA. The money being "made" in LA isn't a profit to the country, but just a recycling of the money that is already there.

So without creating overly complicated corporate models, this is very similar to what has been implemented in BtS.

The money I spent on my Toyota grows the U.S. economy enough that it isn't a net loss to the U.S. economy for part of the money to go to Toyota of Japan. Besides, not every shareholder of Toyota of Japan is Japanese.

Well relating this to Civ, would the the increase in hammers/food/culture created by the corp accurately represent a positive economic impact?

I'd rather that corporations are a no-brainer to spread in your lands. However, before you spread them in other civ's lands, you have to weigh the money your HQ is getting versus the benefits the foreign city is getting. You also have to weigh the benefits foreign corporations give to their HQ versus the benefits you gain from them in your cities. You might even want to pay a foreign civ to spread their corporation to your lands, which does happen in real life. I think that's more dynamic than having it a no-brainer to spread your corporations to foreign civ's lands and absolutely not wanting any foreign corps in your lands.

I agree, the spreading of a corp should be a no brainer in your own cities (net loss should be close to 0). And spreading the corp to other civs should result in an influx of money to the HQ. The current model just needs to be corrected to allow for the correct distribution of maintenance and profit.

EDIT: @Bird Brain - that is a very good and detailed description of how corporations work. I think the CivIV corporation model attempted to meet as many of these details as possible, but leaving out all the comlicated things (like supply and demand). They have implemented simple models for the other, the startup cost is there, I would like to think that the corporate output of hammers/food/culture represents a boost to jobs/production, and then the HQ buildings making money from expansion. In the game, I think the listed maintenance costs reflect the benefits nicely, 5-10 gold for the output, but the inflation is making this maintenance >20 gold. So I am just stating that the in-game model represents corporations pretty well, but at the moment, the execution isn't matching the idea.

 

[homan1983]

I know there is another thread here that is discussing corporations and inflation, but I chose to make a different thread since my point is somewhat different.

The other thread only discusses the cost of the corporations being too high. I think the feature as a whole is broken and not well thought-through.

First and foremost, of course, IS the cost issue. Right now everything else corporation does, such as its benefits, is overshadowed by insane costs, to the point where your focus becomes worrying about how to NOT have corporations in your cities rather than how to put them to a good use. The fact that corporation upkeep can make up 70%+ of a country's expenses is just absurd.

But the cost issue is just a side-effect of the broken way in which the feature functions. The main problem is that corporations cost the government (you) money and has the potential to bankrupt your (or any other) nation. This does not make any sense what so ever--that is just not how corporations work in real life. Microsoft is not bankrupting Europe by selling Windows there, and no matter how many restaurants McDonald's opens in Russia, Russia isn't going bankrupt. Foreign company franchises and offices provide jobs, services, and tax revenue to the host nation. They do not suck on their treasury, costing many times more than all social projects and military upkeep that country is incurring.

Moreover, most countries WANT foreign corporations to come in and provide services and jobs. You can bet Russia wants McDonald's there, and Europe would go nuts if Microsoft stopped selling Windows there. Having a corporation in your nation should be highly desirable due to the benefit its presence generates and having a corporate location in your city should be a very good thing. It should not be something feared to the point switching government types to avoid foreign corporations doing business in your cities.

I just don't see how Firaxis' take on corporations makes any sense.

Anyone else agree with me, or am I way off here?

It does provide benefit when inflation is at 0% or even 40%. So your idea of what a corporation should be like is in fact how it is.

It just has a flaw currently that I am sure Firaxis will sort out. After all the game just came out on the 20th - I am slightly disappointed by the scale of this "flaw" however.

 

[largedarryl]

Hi Homan, I think from your other threads, people are getting this idea that corporations problem is the implementation in game. I think the implementation is good, but the Civ maintenance model wasn't designed with corps in mind.

This flaw does need to be tweaked a little bit, possibly just decreasing the upkeep (kind of cheating and hopefully Firaxis comes up with a better way of doing it)

 

[Duuk]

Personally, I think adjusting the upkeep from -25 to -5 (the +5 that goes to the Corp HQ is then effectively modelled, and "domestic" corportations are a zero-sum cash effect) would solve the issue nicely.

 

[zenmaster]

I just don't see how Firaxis' take on corporations makes any sense.

Anyone else agree with me, or am I way off here?

I agree with this sentiment completely!
Firaxis needs to do something serious about this.

Corporations as currently implemented are neither realistic nor fun in any way.

I've tried to make costs bearable for now by lowering the inflation rates to Warlord Levels (BTS inflation rates are 50% higher, and inflation lasts longer!), but I don't like corps as implemented in any way. The system needs more than a "tweak"

 

[mrt144]

i think inflation should just be lower and the cost per resource consumption should be lower. that benefits people that run state property first off, and doesn't penalize making succesful corporations with many resources nearly as severely.

 

[homan1983]

That would be too powerful.

Remember you're getting like +10 from corporations.

I don't mind -25, i dont mind -30 or even -35, I can't seem to say this enough but the problem is not the -30 but rather the inflation making it -100 from -30.

 

[eoghammer]

I have proposed in another of the corp post a simple solution :
let the inflation impact the maintenance but increase the output of the corporation by the inflation as the corp improve as soon as the cost rises...

 

[dozenlong]

The problem is that in the real world, corporations are a win-win situation. If that isn't true, there would be no country that would allow any foreign corporations to operate inside their border. Both the U.S. and Japan benefit from Toyota operating in the U.S. In BTS, countries don't even benefit from their own corporations spreading inside their border. If the BTS model is true for the real world, the U.S. government would tell Wal-Mart to close all their stores inside the U.S. but give them money to expand inside Iran.

In the real world entities such as the "US" and "Japan" are near meaningless economically. Decisions are made by individuals, not for the greater good of nations but for individual profit. An assumption of a free market is often that it will lead to a good (or greatest possible) outcome, but let's look at reality.

1. QWERTY keyboards still exist because individuals found it more profitable not to market ways to double typing speeds (such as Dvorak) but rather keep in sunk costs. Remember, these keyboards were designed to slow typing down as much as possible.

2. Japan built an IC industry because US companies did not want to compete with their own vacuum tube industries.

There are others, but suffice it to say that many decisions are made without much long term or national level thought. Macroeconomics on a national scale is useful for general trending and modelling but should almost never be used to explain specific cases, as proximate causes in those cases are far more likely to be short term/tactical/and of lower scope and lower affect.

I don't think we want quite that complexity in Civ

 

[facistal]

It seems that people are kind of coming down on whichever side of the real like 'Free Market' debate they come down on. Just like in real life everybody seems to be incredulous about the other sides points.

Being someone who is believes that the neo-liberalist idea that THE MARKET WILL DICTATE and is a little afraid of 'invisible hands' I do think that there is certainly a cost to having foreign corps at home. The calculations may be wrong but it looks like the concept is right. They provide goods and take money and if that corp is foreign the money is lost. The idea that they are providing jobs and infrastructure is funny because if you really believed in free market forces wouldn't there have to be a domestic entity that would fill the gap.

The one point I agree with on the other side is that governments to not send their corporations abroad to as someone put it 'bankrupt them by selling them sushi'

Maybe the foreign nation should get to refuse the executive.

(and yes the inflation is broken)

 

[Nikis-Knight]

Personally, yes, I think corporations in the real world do more good than harm, although entirely incidentally, which is the beauty of the system.
But, I am willing to ignore economic inaccuracies if they make for better gameplay. I'm even willing to ignore them if they make for different but not bad gameplay. I don't need civ to be realistic, in fact, I'd prefer it not to be if being unrealistic is more fun. (Just so long as people don't make real world arguements with refernce to Civ mechanics, either! )

But given the investment required by corporations, and the perks SP gets as well, I think it only makes sense that they would give nice profit.

 

[MisterBarca]

But the cost issue is just a side-effect of the broken way in which the feature functions. The main problem is that corporations cost the government (you) money and has the potential to bankrupt your (or any other) nation. This does not make any sense what so ever--that is just not how corporations work in real life. Microsoft is not bankrupting Europe by selling Windows there, and no matter how many restaurants McDonald's opens in Russia, Russia isn't going bankrupt. Foreign company franchises and offices provide jobs, services, and tax revenue to the host nation. They do not suck on their treasury, costing many times more than all social projects and military upkeep that country is incurring.

Moreover, most countries WANT foreign corporations to come in and provide services and jobs. You can bet Russia wants McDonald's there, and Europe would go nuts if Microsoft stopped selling Windows there. Having a corporation in your nation should be highly desirable due to the benefit its presence generates and having a corporate location in your city should be a very good thing. It should not be something feared to the point switching government types to avoid foreign corporations doing business in your cities.

I just don't see how Firaxis' take on corporations makes any sense.

Anyone else agree with me, or am I way off here?

I wouldn't be surprised if the devs are for most part phony Leftists.

 

[Joosty]

I don't think it's necessary for corps to have costs at all, apart from the initial founding and the cost of spreading (that is the resources you spend building executives, not the gold cost for expending those execs).

Religions don't have costs other than potential diplomatic drawbacks. Corps are win-win things as far as I'm concerned. No matter where the HQ is located or where it settles down, it gives benefit. The civ which has the HQ gets some money for every (foreign) city the corp is located in, and all those cities get the corp's benefit.

You should not consider whether it's profitable to put a corp in a city or not, or indeed whether bankrupting your opponent is the strategy of choice, but rather whether your financial benefit outweighs the benefit the corp gives to your opponent's cities.

Edit: To take the shell example, as owner of Shell HQ, do I value the potential profit more than the providing of oil to my opponent?