Economic Health, what is it good for?

Just wanted to ask, a fairly simple couple of questions on the Economic side. I realise it could mean a few complicated answers are received, but that is always a danger on the forum.

Basically what kind of Impact will having a high or low EH score have on end of year incomes. (Apart from low EH being a trigger for natural disasters)

As I understand it it directly impacts on income per head of the general population which is used to calculate the Income from tax returns, is that correct?

Where I am not so certain is what kind of effect it has on trade investment incomes, will the impact only be on the home trade zone, or also in those where colonies are present, could it be there is an overall blanket benefit?

Whilst on money matters, can I also ask for a bit of clarity on currency exchange rates. Some of the positions have currencies I admit I have never heard of let alone found exchange rates in rulebook for them(p9 main rule book lists a few I know)

Even after all these years, I still don't fully understand EH and how it affects the game. My understanding is however that generally a higher EH means you get increased tax income from your own subjects (though this doesn't always seem to happen and may not apply to tax income on foreign merchants?), the one thing I am certain of is a higher EH means a stronger economy so fewer recruits.

I have never worked out what the link is between EH and trade investments income, I even wonder if there is a link. One can be incredibly strong and the other incredibly weak in my experience. I tend to assume that if your trade investments are going well then it must benefit your EH (though maybe not, if your trade is more about moving others goods?).

It is a good question.

Lowering taxes tends to boost £/head which in turn translates into higher taxes (when they are restored) and a higher EH.

Major structural changes such as abolishing serfdom tend to send EH much higher and for a long period.

Otherwise I think higher EH tends to have more of a benefit to increasing trade revenue.

But it doesn't always tend to work in the same way going up as going down which is what makes it difficult to calculate.

EH of 5 is supposed to give taxes at about the same level as the previous year all other things being equal, but they never are.

Famine will knock EH down by 1-2 points, but tends to hit incomes (£/head) from land (nobles) more than commoners. You would think measures to relieve famine or improve land would have the opposite impact and they do, but perhaps not by enough. This may be a mathematical quirk: if your EH drops from 6 to 3 (50%) then you need a 100% improvement to get back to 6. A couple of consecutive famines and EH will be on the floor no matter what other economic improvements you try.

Logically if roads/canals are at levelA then you have built all the infrastructure necessary to support an economy at a higher natural level so when you are hit by famine EH shouldn't drop so far and should recover faster. But I haven't noticed this to be the case.

Others have commented that some games tend to be much more dominated by trade and incomes are larger overall, so perhaps the way EH ties in varies vary from game to game as well?

On the positive side low EH means more recruits and in most games recruits are more valuable than money.

J Flower wrote:Whilst on money matters, can I also ask for a bit of clarity on currency exchange rates. Some of the positions have currencies I admit I have never heard of let alone found exchange rates in rulebook for them (p9 main rule book lists a few I know)

On currencies I am as confused as you are. Although it adds period detail I have always used £ in my orders to keep things simple for the GM. I guess it isn't too bad if the unit is 10Merks:£1, but 200Maravedis:£1 means 1L costs 700,000M which must be almost as confusing for players as for the GM?

Papa Clement wrote:

J Flower wrote:Whilst on money matters, can I also ask for  a bit of clarity on currency exchange rates. Some of the positions have currencies I admit I have never heard of let alone found exchange rates in rulebook for them (p9 main rule book lists a few I know)

On currencies I am as confused as you are.  Although it adds period detail I have always used £ in my orders to keep things simple for the GM.  I guess it isn't too bad if the unit is 10Merks:£1, but 200Maravedis:£1 means 1L costs 700,000M which must be almost as confusing for players as for the GM?

On subject of currencies I belong to the Papa Clement school in that I attach a treasury appendix sheet to orders with spending shown in pounds then the grand total converted into the local money.

According to older versions of the rule book the rate of exchange can change but the only time I have known this to happen was when a idiot Ottoman sultan decided to debase the coinage and the value of the Anatolian, Rumelian & Egyptian treasury went down by 90%. But the GM did not allow debts to be paid of in the lower value coins...........which I thought was the whole point of debasing the currency.

Have never seen movement the other way.....As anyone else had the currency revalued upwards? Or is it just too much work for the GM? Otherwise in games when England has been hit by civil war, invasions, famines, and the Bank of England abolished you would think that lots of other currency would have got stronger against the pound.

Did manage to revalue the Prussian Thaler from 20:1 to Prussian Mark 10:1 in G2 , but it was expensive to do & took a year to implement. Alos boosted EH apparently or at least my loyal advisors said it did.

J Flower wrote:Just wanted to ask, a fairly simple couple of questions on the Economic side. I realise it could mean a few complicated answers are received, but that is always a danger on the forum.

Basically what kind of Impact will having a high or low EH score have on end of year incomes. (Apart from low EH being a trigger for natural disasters)

As I understand it it directly impacts on income per head of the general population which is used to calculate the Income from tax returns, is that correct?

Where I am not so certain is what kind of effect it has on trade investment incomes, will the impact only be on the home trade zone, or also in those where  colonies are present, could it be there is  an overall blanket benefit?

Whilst on money matters, can I also ask for  a bit of clarity on currency exchange rates. Some of the positions have currencies I admit I have never heard of let alone found exchange rates in rulebook for them(p9 main rule book lists a few I know)

To me EH affects tax and trade but not personal income - unless I suspect investments have been made using personal wealth, not something I have recent experience of income with.  High EH I suspect encourages more tax income - depends how efficient your tax collecting is and overall tax rates though.  Though 0% tax rate should help your population have more spending power, to create more transactions to create more profit (even if profit per transaction remains stable). As said above EH of 5 Richard says is roughly the same as it was in the previous year.  I'm not sure how Richard calculates it though e.g. is a yearly average used (most likely some type of this in my opinion) as opposed to just using the December EH which could have been drastically up or down from the previous few months e.g. in the event of famine, war and Treasury debt.

EH should help trade but I think it depends on what you have traded in compared to the market in that geographic sector so is harder to work out, and this does not account for trade subsidies.  From a GM (I GM RPG's and this is the way I would do it) and numbers game point of view I would think it easier to base off that nations EH for judging trade income - also perhaps having 0% trade encourages more trade with your country so there is more profit as there are more transactions.

Colonies are implied by Richard in one of the supplements I think to help improve trade income and are what is built into colonial powers income and why they do better than other foreign powers in those trade areas.  I suspect this is more of a modifier than a straight increment ratio.

Recruits, as said (by Papa?) above, are higher in number with lower EH, and vice versa.

Famine does not always drop your EH but you have to work hard or pay lots if you have the right investments to overcome/avoid the famine issues and preferably have enough food to tide you over one or two years of famine.

What I'm not sure about is the effects in an example like Japan who said elsewhere on this forum that (IIRC) their income was £103,000,000 last income turn and how the country deals with that as there appears not to be inflation in TGOK - would be a nightmare to manage if it was.  I'm not sure where all the metal comes from to create it and then there's the storage issues, unless like RPG players you ignore encumbrance.  With all that rice wouldn't the demand and/or price drop putting farmers out of business a bit like if we gave more than 10% grain in charity in any nation.  Maybe I'm misunderstanding how Japan's income is linked to their rice harvest.

With exchange rates I think it is what the coinage is made out of 1 Gold Coin = 10 Silver Coins = 100 Base Metal Coins.  Though they can be revalued, including forcibly downwards with low EH and treasury debt I suspect.  If I hear of a currency I tend to look at what it was historically made of.  If I ever get a bullion supply in a small enough country I would consider issuing gold coinage and revaluing upwards as debt management is easier with the higher value coinage/currency.  Will be interesting to see what the paper money of G10's Danish bank does as the supplements don't go into detail, on this other than you can literally print money.

Also am not sure how war will affect income, other than what Richard has told us about losing trade ships works.

With costs on orders to Richard I tend to write them in the nation's currency with the £ value in brackets afterwards, partly so I don't go and overspend or not realise how much something really costs. I'm sure Richard double checks me.

Stuart Bailey wrote:According to older versions of the rule book the rate of exchange can change but the only time I have known this to happen was when an idiot Ottoman sultan decided to debase the coinage and the value of the Anatolian, Rumelian & Egyptian treasury went down by 90%. But the GM did not allow debts to be paid off in the lower value coins...........which I thought was the whole point of debasing the currency.

I do find that response bizarre - surely if you debase your currency then the old currency ceases to exist so you have to pay your debts in the new currency? Did you query this at the time, if so what was the feedback? Perhaps it was because it was a currency used by multiple positions?

My guess is that the impact on EH of revaluation depends on the proportion of economic activity abroad to domestic tax (which is ultimately based on domestic economic activity), but I wouldn't like to quantify it. Trouble with such drastic things as revaluing currencies is that if it is a minor movement it probably doesn't do much whereas if it is a major movement it will have unpredictable effects.

J Flower wrote:Did manage to revalue the Prussian Thaler from 20:1 to Prussian Mark 10:1 in G2 , but it was expensive to do & took a year to implement. Also boosted EH apparently or at least my loyal advisors said it did.

I find that even more difficult to understand! Revaluing currency upwards should make your exports more expensive and profits from trade abroad less. So surely EH should have gone down? Unless there is some strange impact on trade volumes, whereby your own people buy more foreign goods and that stimulates domestic economic activity by more than you lose from falling exports.

Stuart Bailey wrote:Otherwise in games when England has been hit by civil war, invasions, famines, and the Bank of England abolished you would think that lots of other currency would have got stronger against the pound.

Not necessarily. England is a trading nation so is probably more insulated because domestic tax is normally lower than income from trade. Also need to consider player response. Civil war/invasions certainly cause disruption, but if these are paid for by 3rd parties they represent a huge internal stimulus (i.e. demand for pounds vs Spanish maravedis). As the occupying force builds fortifications (using local materials), and pays local lawyers, where does this benefit go if not to the occupied country? Such actions will have supported tax receipts for England and stimulated trade generally. Bribes to locals will also have fed straight into an improved local economy.

Then there is the additional impact of the elimination of enemy merchant ships and blockades - in certain cases these can be hugely effective and greatly improve the financial position of the nation in question. The rules suggest that every Liner lost is £4,000 in profit though this will vary according to cargo. For fresh investments made in Jan-Feb of each year, the return is 40-60%, so to replace a lost Liner is going to cost £10K if the investment is made with recruits or £20K without. So if, over the course of a year the losses are 10L/month that will require £2.4M in new investment. To a nation which counts its trade in £100M chunks that may not be significant, but most nations are not so fortunate, and the loss of that kind of investment quickly causes severe economic problems. If a country is effectively bankrupt and its economy has been driven into the ground then although it is counter-intuitive, war offers a good way to restore finances through plunder simply because the boost from such activities has a greater proportional effect. In the longer term, of course, as units are lost and need to be raised, the costs start to pile up, but even this is manageable if the player is careful. A different mix of units can lower upkeep costs whilst maintaining or increasing fighting capacity.

As to the Bank of England, it really depends on why that Bank was being used. Historically it was set up by William to channel English money into UDP to pay for his wars, so far from being of benefit to the pound, it was a drain. Shutting down the bank may well have strengthened the pound. The bank was also bitterly opposed by some MPs who feared that it made the monarch independent of their financial control.

So taking all these points together, if you have a player for England who pays attention to the finances of war, it is theoretically possible that a war can pay for itself. Ultimately in any conflict someone has to fund it and however well it is disguised, those who own assets lose when those assets are destroyed or redistributed.

Marshal Bombast wrote:As said above EH of 5 Richard says is roughly the same as it was in the previous year.  I'm not sure how Richard calculates it though e.g. is a yearly average used (most likely some type of this in my opinion) as opposed to just using the December EH which could have been drastically up or down from the previous few months e.g. in the event of famine, war and Treasury debt.

I have tried to model this going back a good few years, refining my assumptions and trying to get an accurate forecast for the coming year. It isn't 100%, but I have been able to get fairly close. Tax and trade work on different calculations. For tax it certainly isn't a single modifier using December EH, but neither is it a simple yearly average. The most accurate results I found were using a quarterly average, slightly weighted. No doubt having disclosed this, the method of calculation will change! Tax is certainly more predictable than trade so I might be overcompensating for insignificant movements. The other thing to consider is that populations increase every 5 years (normally).

Marshal Bombast wrote:EH should help trade but I think it depends on what you have traded in compared to the market in that geographic sector so is harder to work out, and this does not account for trade subsidies.  From a GM (I GM RPG's and this is the way I would do it) and numbers game point of view I would think it easier to base off that nations EH for judging trade income - also perhaps having 0% trade encourages more trade with your country so there is more profit as there are more transactions.

Colonies are implied by Richard in one of the supplements I think to help improve trade income and are what is built into colonial powers income and why they do better than other foreign powers in those trade areas.  I suspect this is more of a modifier than a straight increment ratio.

Famine does not always drop your EH but you have to work hard or pay lots if you have the right investments to overcome/avoid the famine issues and preferably have enough food to tide you over one or two years of famine.

Trade is much harder to model because there are so many different variables, not least products, changes in tariff rates by other players, general competition, losses to storms or simply demand exhaustion. I think there is a natural decay rate to existing trade which is being factored in so if you start with trade of £100K in a specific area but do not invest, returns may drop by 5% to £95K in the second year if you do not invest more in that area to maintain market share.

We are simply dealing with too many unknowns to make reliable estimates. Is it better to invest in named products which another player might be competing in or is it better to just invest in general trade, avoiding specific competition? No single player can have the answer to that one and whilst the old economic report used to provide a few clues it is years since that was scrapped.

I have noticed that the new top trade list in each region is dynamic, i.e. updated for changes made throughout the year, rather than simply a summary of the situation at the last income round. So this does provide some clues where investment has been made or lost.

You've certainly done well to avoid a fall in EH from famine. Even with mitigation there tends to be an initial drop simply because the farmers are poorer with no crop to sell and they have to buy new seed grain for the next planting.

Marshal Bombast wrote:What I'm not sure about is the effects in an example like Japan who said elsewhere on this forum that (IIRC) their income was £103,000,000 last income turn and how the country deals with that as there appears not to be inflation in TGOK - would be a nightmare to manage if it was.  I'm not sure where all the metal comes from to create it and then there's the storage issues, unless like RPG players you ignore encumbrance.  With all that rice wouldn't the demand and/or price drop putting farmers out of business a bit like if we gave more than 10% grain in charity in any nation.  Maybe I'm misunderstanding how Japan's income is linked to their rice harvest.

2 very good points! Inflation does not seem to be factored in otherwise those economies with ridiculously high growth rates (and EH) should find themselves in a tricky situation.

As to quantities of material required to support huge trade numbers, having captured a rather large quantity of wine I didn't have a clue what to do with it. So I calculated how many glasses of wine in a bottle, how many bottles in a barrel, how many barrels in a liner, to work out how long it would take the population to drink it (and how much more I would have to capture to satiate their thirst for the remaining few months of the year). I'm fairly sure the substitution effects were not considered in the economic model either. More pertinently, I also looked up how much water/rainfall was required to grow the grapes to produce so much wine and discovered that in the convoy I had captured there was more wine than could have been grown by the grapes even if it had been raining almost continually throughout the growing season (which would of course likely have led to lower yields anyway). My conclusion was that the economic model used in LGDR just isn't that sophisticated.

There doesn't seem to be a maximum size of trade in any game which would obliged players to limit investment in each area to a sensible size to avoid depressing prices or exhausting resources. I have known that sometimes mines stop producing, but the same does not seem to apply to agricultural produce.

Marshal Bombast wrote:With exchange rates I think it is what the coinage is made out of 1 Gold Coin = 10 Silver Coins = 100 Base Metal Coins.  Though they can be revalued, including forcibly downwards with low EH and treasury debt I suspect.  If I hear of a currency I tend to look at what it was historically made of.  If I ever get a bullion supply in a small enough country I would consider issuing gold coinage and revaluing upwards as debt management is easier with the higher value coinage/currency.  Will be interesting to see what the paper money of G10's Danish bank does as the supplements don't go into detail, on this other than you can literally print money.

Also am not sure how war will affect income, other than what Richard has told us about losing trade ships works.

Good luck with that - as I think I implied earlier, revaluing currencies seems to be a really risky thing to do with unknowable consequences.

Stuart Bailey wrote:Have never seen movement the other way.....As anyone else had the currency revalued upwards?  Or is it just too much work for the GM? Otherwise in games when England has been hit by civil war, invasions, famines, and the Bank of England abolished you would think that lots of other currency would have got stronger against the pound.

I think the currency for Spain/Iberia got revalued upwards in G8 a few years back, due to their strong economy? Deacon would be able to confirm or deny, obviously.

On the actions of England, I wonder (from Richard's point of view and game mechanics) if it might be easier to simply give all other nations an economic/tax income boost than revalue currencies.

Yes, in game 8, after years of an EH through the roof, the currency spontaneously revalued upward, going 20 Maravedis to the Pound to 10 Maravedis to the Pound. The Game 8 economy has been pretty strong for everyone.

I do believe that domestic income and trade income are independent, but related.

Your domestic income (and tax) is driven primarily by EH, and your investments in production and infrastructure in your own nation. Trade income is the superset of all the national incomes in the region and so more of an average regional EH. Your EH is part of that number, but what other nations are doing also has an impact.

I do think there is some sense of competition and market size in the system, so if you and someone else both invest heavily in something, you both will do poorly. Conversely, if you're the sole investor in a key market, you'll do very well even if that market isn't normally considered the most profitable.

So, EH and recruits being linked is just the way unemployment is shown in the game. A roaring economy employs a lot of people.

I agree with Clement that I think the underlying economic model probably isn't hugely sophisticated. But, I don't think it needs to be since it's a black box. If we all knew how Richard worked the economic equations, it would be necessary to add a lot of complexity to the game without that necessarily making for a better game.

As a general rule, my view is that understanding the overall model isn't that important. Understanding your own opportunity is. With good advisers and research, you can figure out what will play well for your position. Do that, and you'll do well.

But it is worth keeping in mind that a higher EH isn't always the best idea. High EH leads to low recruits, and if you need recruits for an army or navy, your booming EH won't give you as many. Of course, you can always just tank your economy by taking them anyway.

Deacon wrote:
Yes, in game 8, after years of an EH through the roof, the currency spontaneously revalued upward, going 20 Maravedis to the Pound to 10 Maravedis to the Pound. The Game 8 economy has been pretty strong for everyone.

So it was something that just "happened"? Richard didn't present it as an option from your treasury or whatever?

Yes, it just happened.

Currency revaluation is an option, and is supposed to help your economy (not sure why). You can ask Richard to cost it out for you, and you can do it yourself.

But, I didn't ask for it or pay for it. When I say that my EH is through the roof, it was I think 5+ years of EH 10.

I'm happy it happened, but it's actual in-game effects seem to be minimal as far as I can tell. Though, since the economy is a black box, it may be more useful than I think it is.

I have considered switching to milled coinage at some point, but that's another expensive investment. That also is supposed to help your economy and reduce inflation and coin shaving. I want to do that at some point in the next several years.

But, I wanted to do universal education first. I have seen no immediate or obvious benefit to universal education yet (only about 6 months in). But, my ruler is science/enlightenment focused so it seemed in keeping with the character to do it.

That's interesting, thanks

I have thought about universal education and milled coinage but never really been in a position that could afford it. I have wondered if universal education would boost honour? and possibly milled coins might reduce it, if nobles were include in any of the dodgy practices it helped stop

My thought was that universal education would be a good, but slow, boost to EH. As your citizens get more educated, they can do more. But, I have no evidence to date of it.

If you want to try exploring that, might be worth joining game 8. Pretty much everyone's economy is great....

The Persian one was on the verge of becoming a 10 when I had to drop G8. It's interesting how each game seems to have its own quirk in how it develops. Afraid at the moment though rejoining isn't an option (financially).

I think Universal education increases honour , you are seen as a benevolant ruler with the interests of your people at heart.

Historically the Higher levels of literacy in UDP was a part of the reason for its economic success, so I would imagine there would be some in game advantage as well.

Small countries in game with populations below 2 million probably have a better chance of being able to afford it a bit earlier in game than som eof the larger positions, or maybe you can divide your larger position into districts & roll out the reforms over a few game years, certainly tha ti smy plan in G7 with Russia (pop 19mill)

I'm in Game 8 and control a midsized Baltic State with a Population of 1,000,000 and my economy is in no way booming. I abolished Serfdom, which effected the southern part of my state 2 years ago and EC has been 4 ever since, despite the construction of a major engineering project (A ship Canal). I have invested heavily in trade and trading vessels and this has raised my income from these sources, but doesn't seem to impact Economic Health. What is the impact of a long-term recession and why does trade seem unaffected by a downturn in the domestic economy?

Don't know much about the facts surrounding G8, but if yourin the Baltic have there been or are there wars going on that could be effecting your EH; also getting rid of serfdom probably rasied your income per head so in a way EH was improved indirectly. Maybe if you invest in trade in the region your position lies in Baltic/ Eastern Europe? Then that can if your lucky help improve Home Nation EH as well as technically your investment in the region is based on your home province.

Not promising that any of the above will help or even if it is true, but it helped me in other games. Good luck & I hope you reach the dizzy height sof EH5 in the not too distant future.

To raise EH, investing in base infrastructure of Roads and Canals does help a lot.

If you want to write to me in game 8, in character, I will try to offer more specific advice. Hispania does a fair bit of trade in the Baltic these days.

Trade Income, as I mentioned above, I believe is connected to the income/EH of the entire region you trade in, so if other people's economies are doing well, your trade will do well even if your EH isn't great.

Goldstar wrote:I'm in Game 8 and control a midsized Baltic State with a Population of 1,000,000 and my economy is in no way booming.  I abolished Serfdom, which effected the southern part of my state 2 years ago and EC has been 4 ever since, despite the construction of a major engineering project (A ship Canal).  I have invested heavily in trade and trading vessels and this has raised my income from these sources, but doesn't seem to impact Economic Health.  What is the impact of a long-term recession and why does trade seem unaffected by a downturn in the domestic economy?

Did you invest in domestic trade or foreign? I suspect EH does better with domestic trade investments.

Yes, Domestic trade investment, or rather investing in trade in the area occupied by your country, in your case the Baltic could help Domestic EH, maybe build some covered markets as well. If nothing seems to work, maybe ask your advisors for an opinion, danger is the answer may prove more confusion, but if your lucky it may just be what your looking for. They maybe able to tell you if another nation is heavily into subsidies in the region, or has swamped the region with traders so your own don't get a look in.

Do you have a lot of low taxes/ trade agreements with other positions? If their merchants are importing tax free into your ports & you rown Commoners tax( which also covers your merchants) is higher then you are putting your own traders( domestically) at a disadvantage

My coinage, as Kwantung China Game 8 was also revalued from 100 Qing to the pound to 50 Qing to the pound last year, just out of the blue. Trade income have been strong for years (more than 100,000,000 pound currently), tax income not much to brag about.