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NES Economics Thread

Discussion in 'Never Ending Stories' started by Masada, Sep 18, 2008.

  1. Masada

    Masada Koi-san!

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    I intend to write up a few summaries of some fairly important concepts that NESing tends to touch on,

    Including on the;
    Malthusian trap;
    The Industrial Revolution;
    Pre-Industrial economics;
    Financial instruments and the role of financial organizations;
    Trade before and after the industrial revolution;
    The various schools (some NESer's fall firmly into one or the other);
    And some general theory touching on basic economic concepts.

    I will not be giving my sources; unless there is some pressing need or you ask for them (I dislike referencing and find it takes far too long). I will endeavour to always flag and questionable content, and I will always try to give the middle view (which I’m sorry in economics is fairly “right wing” in so far as the dominant school is the Neo-classical school, I will try and give alternate view points where possible but that might not always be possible).
     
  2. Masada

    Masada Koi-san!

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  3. Masada

    Masada Koi-san!

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  4. Masada

    Masada Koi-san!

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  5. Neverwonagame3

    Neverwonagame3 Self-Styled Intellectual

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    O.K, I'll start- what would the the economic impact of Austria confiscating the lands of the Church in 1500? (Say, because the Emperor becomes Protestant)
     
  6. Masada

    Masada Koi-san!

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    He dies, or is replaced.

    Now onto a purely economics argument.

    The question is what does he replace Church ownership with. Does he replace it with cronies, does he sell it on the open market, does he open it up to smallholders etc. You cannot gauge the impact based solely on confiscating the land.

    Refine the question please :)

    EDIT: And by impact, do you also include extraneous shocks to the system, for instance wars, rebellions and excommunication.
     
  7. Neverwonagame3

    Neverwonagame3 Self-Styled Intellectual

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    Oops- I thought most of Germany was Protestant in 1500. Say, 1600 then.

    Anyway, I include the shocks to the system, and what I meant was the Emperor confiscating the lands to direct Royal control.
     
  8. flyingchicken

    flyingchicken 99 117 110 116 115

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    Farming and overfarming--when does the latter happen, why, what are its effects, and how can it be avoided? I'm curious.

    Also, are others free to answer questions (I'm assuming yes, for healthy discussion, but having it clear is nice)?
     
  9. das

    das Regeneration In Process

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    And relatedly, grazing and overgrazing. I accidentally found an interesting article mentioning the cycles of overgrazing in Syria a while ago in the Internet, but have been unable to locate it again or to find any concise description of the phenomenon; nonetheless, it seems that it could be very important.
     
  10. Masada

    Masada Koi-san!

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    @FC and Das

    I can send you on a quest to answer the question, but if you give me a while I’ll hammer it on the end by tomorrow. Tonight if I’m capable of making a coherent argument ;)

    Its commonly known as the “tragedy of the commons" the flipside of that is the "tragedy of the title" (the name varies for that one).

    @NWAG3

    I’ll take it to an abstract general level removing the religious issues and the political issues for the moment and deal with the peasant’s issues (holding all things equal):

    In real terms not much would happen provided we are dealing with a canny monarch. In real terms the transfer of feudal dues to another entity is not going to matter much, if the Monarch were to lower the dues then it for a short while a better standard of living would prevail, call it a generation, for the peasants because of the fall in taxation and the improvement in the material living standard deriving from an increased retention of cash or dues. The natural consequence of this would be to merely increase the population in the long run, and thence to bring down the living standard for the group in aggregate due to a decreasing return from agriculture. I don’t think your average peasant cared who ruled them, they got the short end of the stick regardless, I’m quite certain it was merely a matter of how much of the short end they got, use the stick to much and the peasants might hit back, use the stick to lightly and you can’t control them. That’s taken in aggregate, if one were to look at all the peasants as a group I doubt the average Royal seneschal (or the Austrian equivalent) is going to be any worse than the average Prior (or the Austrian equivalent).

    Now to do the same for the likely revenue for the Crown

    It’s a question of what direct crown control entails, if the crown were to tax the land, but did not tax commerce then a possible result is that the area’s under direct crown control could “poach” merchants and industry, it’s not an uncommon practice in the Medieval-Renaissance world, there were cases put before the Crown in England for instance arguing that lowering of taxes was in-fact anti-competitive, France had similar cases put before it around the period the Faire at Lyons(?) [The periods premier trade attractions for most of Europe, outside of Genoa, Antwerp, and Venice] was the subject of particularly violent attempts to suppress, or at least to put it on an even footing with other Faire from memory the issue was that Lyons(?) [It might on reflection be Limoges or some other faire] was a free city correspondingly it had the additional rights which most feudally controlled areas did not have. So it’s possible it could be used like that, this would be a mid length thing, 10-25 years.

    If for instance the crown were to tax trade and give the land substantially lower taxes than the surrounding areas, aside from the aforementioned increase in population in the long term and its consequent lowering of living standards. The lower taxes on the land would have an additional effect it would increase the total area under tillage, to put it in simple terms if the taxation rate was $6 a year or the same in kind payments then all land which does not grant $6 worth of crops or animals in addition to granting enough to live on would not be worked. So the net effect would be an increase in overall production of crops in the short term, which might boost taxation revenues. But the effect on trade might be quite large, trader’s often thought nothing of avoiding an area like the plague if it had high tolls, there are accounts of North German traders walking south rather than crossing the Rhine and turning due west only when the tolls began to fall… If the land were to cluster around an area which was a natural choke point then one could “force” the merchants through, they would try to avoid it by any means possible but if you target the tolls such that it is just slightly cheaper than the alternatives you can get away with it. Of course the net result is that anyone who can avoid your area will, you might wring some money out of them in the short run, but people will try and dodge it and you can bet they will succeed eventually at least until you respond. And the additional tolls will merely be added to the purchase price of the goods in your own territory or in other areas.

    A novel idea which I would highly recommend would be to take it under central government control, using it as collateral to borrow against, combine that with imported financial technical advice and you could probably secure your finances against default (a scourge of the period’s nation-states), the less default and the safer the states finances the cheaper it is to borrow, making financing wars much cheaper. One could then move on to the selling of debt in the form of bonds. An additional safeguard would be the slow auctioning off of the territory to the highest bidder, serving in the long term the duel purpose of providing collateral to borrow against and providing a long term steady source of finance independent of harvests and warfare (for the most part). The Dutch did this, and this contributed heavily to the ability of the Dutch to sustain their war effort against the Spanish and just about everyone else. It also made the Dutch unique in Europe for around 200 years with regards to borrowing, it allowed them to borrow below the normal commercial rate of lending so safe was their finances (as a note they were also safe in another regard, they didn’t rely on land taxes but instead on duties on trade) that they could borrow at 4%, the comparable rate for the English Monarchy at the time was around 10-15%, the Spanish Monarchy had a rate of around 10-15% as well… those two examples defaulted on a regular basis the “stop of the exchequer” is rather infamous.

    It’s not a question of who gets the land, one can give it to merchants and you can bet they would turn in the most rabidly conservative gentry in a generation. It’s slightly more complex than that, economics tends to move in shades, but one can apply general economics concepts to most situations historically and end up with an approximation of what happened, of course circumstances can conspire against it.

    General note: Specifics would require me to go looking, providing details might help! General questions I should be able to answer most of the time without reference to literture.

    EDIT:
    Yes people are allowed to answer questions. I do reserve the right to call bull**** but i'll try and avoid that.
     
  11. BananaLee

    BananaLee Fruity Penguin

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    Here's a little thought experiment.
    How would the economics work on an interstellar network? Assume Sol is so far away to not matter and thus a network of "developed" systems and "not-so-developed" systems are scattered about like markets and villages.

    Transportation is via the following method and limitations: -
    Let's see what sort of treatise could come out of this :D
     
  12. Masada

    Masada Koi-san!

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    Tragedy of the Commons:

    Imagine a situation whereby a group of herders hold communally a pasture upon which they all graze their cattle. The land supports a certain number of cattle, which as long as the Malthusian checks of disease, war and famine (henceforth called positive checks) kept the herd of cattle and the herders themselves below a certain level, there would be no problem. Eventually as the society grew more stable, and healthy, the increased number of grazing animals would exceed the carrying capacity of this common, which was soon dragged its carrying capacity down.

    The tragedy of the commons is inevitable if property is communally held.

    Each individual herder benefits greatly by placing an additional animal on the commons, but suffered only a small part of the incremental damage, if the herder was aware of the damage the benefit would far outweigh the detriment (at least in the short term), and he would graze as many animals on the commons as possible regardless of the harm caused to others (it’s not unlikely that the individual would never notice).

    This does not often happen in a single generation, it tends to be part of a cycle in the early pre-modern world, the increased food production will improve fertility, which will in turn create a larger next generation, which will ratchet the land usage up another notch, and eventually when the land exhausts itself and it becomes impossible to sustain the population you will end up with a rather large collapse… and a bloody nasty one as well (so it ties in rather nicely with Malthusian theories as well).

    It holds for crops as well.

    Imagine a common area, where everyone gets an area, not necessarily of the same but at minimum enough to live on, now imagine that everyone changes plots with each passing year. If one has not barriers to cultivation, everyone benefits from planting the most to the detriment of others; this does not need to be in area terms it could be in density of planting. So when the next person comes along the land is already heavily depleted and the yields get smaller and smaller with each passing period, since no-one is going to elect to leave the ground fallow.

    It happened fairly commonly throughout history, it was common for people renting land to overplant it, and treat it poorly, the reasoning being that they don’t own it, and can walk away from it when it becomes marginal. It’s very difficult to write a contact to take into account land quality even now, it was almost impossible to accurately measure the damage done in the pre-modern world.

    This is the original article (no I do not agree with the political beliefs of the author, but it's amusing in the extreme that his article's greatest impact is in Libertarian politics and Classical Economics).

    http://www.sciencemag.org/cgi/content/full/162/3859/1243

    @Bannana Lee,

    It will be speculative, but another couple of things I need to know, is there a limit to the amount of goods being transported, and is there the cost of building said drive prohibitive...?

    EDIT: For some fun please do read http://www.princeton.edu/~pkrugman/interstellar.pdf
     
  13. das

    das Regeneration In Process

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    I think I have found mention of the cycle in question in the Wikipedia article on Canaan.

    Is there any historically plausible way to restrain this?
     
  14. Masada

    Masada Koi-san!

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    I don't think so.

    The population will increase in the good times, and collapse in the bad times.

    Diversification of crops (assuming you can), increased storage (you can’t store past a certain point), and lower population (not terribly plausible) would help in the short term, but these cycles are probably much longer than substitution of food stuffs can last, definitely much longer than any storage, and well lower population would lessen the blow but any settled farming community is going to run more people than a nomadic culture on the same land (generally and suffer as a result). In NESing terms those would all be rather “gamey” any crop diversification that can happen has already probably happened, storing grain up for a mythical “Armageddon” is unlikely and besides it’s constrained by storage time and the bits that people need to eat each year and voluntarily lowering your population aside from murdering large portions of it are unlikely.

    Importing grain is unworkable for anywhere but the coast (assuming that the exporters are in a position to export which I doubt) and would be prohibitively expensive with even a small shock to the system. One could not keep it up for any significant period of time without running out of means to financing it.

    You could try and future proof your walled towns and cities, by maybe accessing the artesian basin but even then that would probably not save you, it might allow a portion of the population to continue but it would probably not be able to replace constant rains (since I’m guessing the issue here is drought).

    I sincerely doubt anything you could do as a player would save your people from the worst of it, you can lessen the blow but that’s about it.

    If you’re subject to a Malthusian trap, you are screwed by any decrease in your food production, even assuming you’re just an exporter… because whomever you’re exporting to is not going to be terribly happy with starving. Population increases exponentially in the good times, while food increase arithmetically, it’s the natural propensity of people to outstrip their food sources, any corresponding decrease in food production is going to manifest itself in dead bodies and in the most mild (I’ll stress mild) circumstances a degradation in living standards.

    I’ll have a look in detail at the situation again tomorrow (I don’t currently have any of my literature on the period handy).
     
  15. das

    das Regeneration In Process

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    Mhm.

    Anyway, I think that the most important thing both for my own purposes and for this thread in general would be a write-up on the nature of state income in different times (i.e. what it depends on and how it is gathered), and the ways it would probably increase/decrease due to objective factors and could be increased/decreased by decisions of rulers. All the other thing you have promised seem both very interesting and very useful, but still ultimately supplemental to those matters, given that NESing is almost always oriented towards the political leadership (and therefore the most important matter in NESing economics is how various economic phenomena and tendencies translate in the terms of the Income stat).
     
  16. Matt0088

    Matt0088 Chieftain

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    If you could post a something on the general economy and industry of the world in the Bronze Age to the Age of Antiquity. That would be very helpful for a NES of mine that is in its early development(really early).
     
  17. Azale

    Azale Chieftain

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    Keep up the awesome work Masada. I'm going to try to read over all of this during the weekend.
     
  18. Neverwonagame3

    Neverwonagame3 Self-Styled Intellectual

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    One trick I thought up at one point was (for the Middle Ages) to deliberately borrow enormus amounts of money for a coming war, then default and spend the money away. Would this have much of an economic downside?
     
  19. Dachs

    Dachs Hero of the Soviet Union

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    "Antiquity" isn't all that specific. :p
    A ginormous rise in interest rates next time around. And since everybody borrows money...if you're even lent to at all after that particular debacle, of course. Look at the disparity between the interest rates at which Great Britain and France could borrow money in the late 18th century. (That's also assuming that, in the Middle Ages, there exists sufficient banking apparatus to allow you to borrow on that scale. Fuggers ain't around yet, for example.)
     
  20. Neverwonagame3

    Neverwonagame3 Self-Styled Intellectual

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    What about the short term effects? Would it give a war advantage?
     

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