A Very Short and Dirty Guide to Economics

by Bryn Monnery

Introduction

This document is simply to try and familiarise people with the principles behind the numbers in the other articles.

Note: I used the GG2 spreadsheet (copyright Steven Alexander) as my source data for the columns: Population, Rudells in 2300AD, % Literate, % College, % Mineral, % Agriculture and % Power. Most of this is taken from the E/CS, but some are additional to E/CS data.

Economics

"Economics [is the] social science concerned with the production, distribution, exchange, and consumption of goods and services"

-MS Encarta Online

"I don't understand how an economy works when all we do is sell each other hotel rooms. :-)"

-Andy Goddard, ex-2300AD listmember

Essentially economics is concerned with the relationship between Production and Consumption, and the distribution of goods. To obtain goods, you can either make them, or provide a service in exchange for them, but the actual level of goods is dependent on the level of Production.

At the large Macroeconomic scale, we are concerned with GDP, the sum total of the value of all goods and services in a country. However, since wealth is defined as goods, only those services which are exchanged for goods from abroad increase the actual level of wealth.

The general equation for GDP by:

GDP = C + I + G

and

P + E = C + I + G

therefore:

GDP = P + E

Where:

P = Production (The Output of all Farms, Mines and Factories)
E = Net Exports (i.e. the sum of all exports - the sum of all imports)
C = Consumption (Personal Expenditure on items like food, clothing, appliances and cars)
I = Investment (Spending by buisnesses on items like new equipment)
G = Government Spending

It's obviously a cycle. In a balanced economy (i.e. one that does accrue national credit or debt), both sides are balanced.

Note, there is no S (for service) term, services do not effect GDP at the macro level (their effect is at the micro level which is unmodellable for 2300 purposes). However, Trade in Services does, and should be included in E. However, as we shall see below, this is not modelled in the 2300 stats, so introduces "fuzzyness".

In the real world, C, I and G are used to calculate GDP, however, in our 2300AD world, we have good manipuable production and trade figures. Therefore, we manipulate them as follows:

To get the trained workforce (Rudells):

Rudells = Population * % Literacy Rate * % College Education Rate/ 10,000,000

This is the maximum workforce. In some economies, Rudells may become unutilised, and not produce wealth (i.e. unemployment). America is an example of this.

Now, to split production between mining and manufacturing:

% Mining = 1- (% Mineral Output/ 1+ % Mineral Output)

and % Manufacturing = 1- % Mining

Now, Manufacturing is the main production term. We shall merge mine output into the manufacturing, and only pay for shortfalls, or profit from excesses. We shall take % college as our productivity indicator, and assume a general 4 fold increase in productivity, as indicated in the E/CS.

Base GDP = Manufacturing Rudells * % College Educated * 4 * Lv60,000

Which gives a result in Lv:

eg. America has 9.6 Industry, and 89% college. Her basic GDP is 2051.5 Billion Livre (9.2 trillion USD)

Now, we need to factor in trade. We only have 3 commodities, power, minerals, and food. For each, any excess generates income, and deficit causes loss through trade.

Our weight factors are derived as follows:

Food: 3 meals a day, 365 days a year at 1 livre per meal.
Agriculture Trade = Population * (% agriculture output -1) * 3 * 365

Power is just rated at 1 livre per person per day.
Power Trade = Population * (% power output -1)

Mineral Trade is based on the level of industry.
Mineral Trade = Industrial Rudells * (% Mineral Output -1) * 50 Billion Livre

eg. America has the following trade values: Agriculture = +16 BLv, Power = +9.27 BLv, and Minerals = -110.45 BLv. America is a net importer by wealth, and this costs her 85.18 BLv per year.

Add the trade factors and the industrial GDP together, and we have our GDP.

Only one thing is not modelled in the above, trade in services. In the real world, this amounts to the equivalent of 220 BLv flying around. About 2.5% of the worlds wealth moves via service trade, things like tourism.

Currently, a number of nations in the model are actually worse off doing industry, as they make less money by manufacturing goods than it costs to buy the materials.

In this case, they export services.

For each Rudell used in services, it's:

Service Exports = Rudells * % College Educated * 130BLv

This is divided per capita over the entire world in GDP imports (negative GDP)

Finally, we get the GDP of the terrestrial nations: