Difference between revisions of "The Budget"
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Revision as of 11:58, 18 March 2017
The worth of the state, in the long run, is the worth of the individuals composing it.
-John Stewart Mill
Managing your budget is key to any successful game, and knowing what the various sliders mean helps tremendously.
There are three tax sliders, one each for the poor, middle, and rich classes. The first thing to remember is that POPs don’t like being taxed above a third of their income, but they’ll stomach it for a while. The worst thing you can do is consistently tax the middle and upper classes above 55%, as this will probably lead to devolvement among the POPs (see section “POPs”). If this happens, your Clerks, the driving force behind your research, can fall back into farmers or laborers because of tax-imposed poverty. High taxes will also lead to high levels of emigration. But of course, it also leads to lots and lots of money, so do your own balancing. A proper management of tax sliders is one of the most subtle aspects of the game. Another downside of high taxes is that pops will be less able to afford the goods they need each day, raising their militancy.
There is a second idea related here—tax efficiency. This is the rate at which your collectors are actually able to impose your tax legislation on the people. In other words it is the portion of the tax which you collect that goes into your treasury. There is an overall tax efficiency as well as a class-specific efficiency. To see how much of your POPs' money you’re actually getting, you have to multiply the tax rate by the tax efficiency by the class-specific efficiency. Both are displayed when you hover the pointer over the slider. Since 1.04 at the start of the Grand Campaign tax efficiency is low and slowly reaches 100% with the progress in Commerce techs.
Though not actually a slider, bonds represent your population’s investment in the government of your country. Remember the reasoning behind this: the more of a financial stake a population has in its government, the more likely they are to rally to its support in time of crisis (by the way, for all you history buffs and econ majors, this was part of Alexander Hamilton’s financial plan back in the Washington administration, and was the original reason the United States federal government developed a permanent system of national debt). Though the citizens rallying to the flag in a crisis to save their money is not actually represented in the game, your income from selling bonds is.
Citizens will buy bonds if they have extra capital left after purchasing all their needs. Even if your government is in debt, your citizens can still purchase state bonds.
This slider determines how much your government spends on raising the literacy rate and on funding research and technological development. Holding spendings at fifty percent keeps the current literacy rate steady. Put the slider above fifty percent and literacy will gradually increase; put it below and it will gradually decrease. The amount of spendings also determines how many research points you gain. Skimping on education yields few points, regardless of the number of Clerks or Clergymen you have. Spending much lets you get the most out of your research base.
This determines how much money your government spends fighting corruption and illegal activity in the country. Reducing crime helps reduce militancy, directly affects the revolt risk, and can help remove issues like immoral business practices which can lead to a collapse of your economy. There is always crime developing in your country, but the higher the slider the more quickly the government moves to stamp it out. Each month the computer runs a check on the amount of crime in you country, and depending on how much you have invested, a crime “building” (such as immoral business or machine politics) may appear or disappear. At zero percent funding, Revoltrisk is 40% higher; at fifty percent funding it is normal; at one hundred percent funding, it is 40% lower.
This is a related concept. Crime buildings represent the crime that is in your country. Every province can have only one type of crime building at a time. You cannot build crime buildings, they appear and disappear automatically depending on crime fighting slider setting. In fact crime buildings are usually (very) bad to have.
This determines how much your government spends supporting its various social reforms. In order to gain the benefits of your reforms, you must spend at least fifty percent of the slider. Funding below reduces the benefits, whereas funding above leads to Trust in Government (see section “Reforms”).
This is where you decide how much you put into national defense. The amount of money you allocate here determines your rate of increase in manpower and leadership points, as well as the maximum of each that you can have. When you convert a POP into a Soldier or Officer, the current level of defense spending determines how much manpower or leadership you get for that particular conversion (this number will not be constant, but dependent on the size of the converted POP. However, overall, the higher the defense spending of your country, the more effective conversion to Soldiers or Officers is in increasing you manpower and leadership). Having high defense spending also increases prestige slightly.
This determines how much money you give to the upkeep of your army and also, together with defence spending, how fast your manpower pool regenerates and what is the maximum you can reach. This can—and sometimes must—be low due to the expensive nature of industrialization early in the game. Funding Army Maintenance at one hundred percent means your divisions can be at full strength. Placing the slider below one hundred percent reduces the number of men per division, although the divisions themselves can never disappear, even at the lowest Army Maintenance possible. At zero percent maintenance number of men per division is reduced to 19% of the maximum; a fully maintained division may have 10,000 men (or 12,000 with a brigade attached). Cutting maintenance also reduces morale of your troops.
Once the slider is lowered and changes take effect after one day has passed, those men have gone home. They will not automatically return when you increase the slider again. The only way to bring the divisions back to full strength is through reinforcement (see section "The Army").
This influences your individual ships the same way Army Maintenance influences individual divisions. Lower it below one hundred percent and the strength of your ships declines. Unlike with divisions, the strength of your ships will rebuild at no cost when the maintenence is brought back up. The only requirement is that the ships must be in a port, and, given enough time, they will come back to full strength. Note that ships take considerably longer to regain full strength than land units.
Loans and Interest Payments
Whenever your country spends more then it has in its treasury, it doesn’t shoot you into negative territory. Rather, you take out a loan, the amount of which is located in this box. This loan will remain until you repay it. Repayment is not automatic. You can hold the repay button to speed up the process for big loans.
It can be profitable to take out some loans in order to speed up your industrialization. Be careful with what you do with your loan money, wasting your loan money on laying a railroad track in a scarcely populated low value resource producing province may not be a good idea. Ideally, you want to use your loan money to either build or expand a profitable industry (consult your ledger to see what industries are profitable right now) or build railroad in your factory provinces to boost efficiency, thus improve your income.
Alongside this number is the interest rate. Not only you do have to repay the loan, but you also must pay daily interest. This number is usually only a few pounds a day at most, unless you are a very reckless spender.
The interest rate can be reduced through discovering several technologies in the Commerce area of research. These include things like Ad Hoc Money Bill Printing and any other techs that make capital flow more freely in the economy.
One thing to keep in mind: if your country goes too far into debt, you will be forced to declare bankruptcy. If this happens, not only do you lose a tremendous amount of prestige, but you lose all your stockpiles of goods and half of your factories as well. Having gone bankrupt once makes you more likely to go bankrupt again, and sooner as well, as the trust bankers put in your government goes down with each successive declaration (this can even lead to so called cascading bankruptcies). Suffice it to say, bankruptcy is a bad thing.
Tariffs were one of the most hotly debated issues in the Victorian time period, and, similarly, they are one of the more powerful—and potentially destructive—tools you can use to manage your economy. Tariffs are taxes on imported goods, which, for the purposes of the game’s mechanics (see section “Trade”) means that you’re putting a tax on every good your POPs buy from the world market, except the ones that are produced domestically.
Tariffs are, to some extent, an alternative to taxes, although usually you'd want to use them both. Often taxes are enough to cover merely the needed spendings from the sliders and the budget surplus is archieved thanks to tariffs. Taxes and tariffs differ slightly in the effects they exert on your population so you have to decide what suits you better.
The larger your population, the higher your tariff income should be. Tariff incomes are also higher for countries whose POPs are more advanced (i.e. Clerks, Capitalists, Officers, Clergymen, and Aristocrats over Craftsmen, Laborers, Farmers, and Slaves). This is because well developed POPs demand more goods and more expensive goods, thus raising your tariff revenue. But tariffs also make the goods your POPs seek to buy more expensive, and thus, potentially out of their reach. One of the modifiers of Militancy is how many of their desired goods POPs are able to purchase, so leaving high tariffs for indefinite periods of time can be quite harmful to your domestic tranquility.
Moving the tariff slider below the break-even point should, in theory, act as a subsidy to your POPs, but, thanks to testing done by dedicated members of the forums, it seems this is untrue. The sentiment of the moment is that trying to use the tariff slider for subsidies is akin to throwing your cash away.
There is a certain balance to keep in mind when imposing tariffs and constructing factories. If you produce an item domestically in any quantity, your POPs will try to buy it from your own sources first. Even though they will buy it through the world market system, there will not be a tariff imposed because the product was created domestically. For this reason, producing at least a little of all your POPs’ desired goods within your nation will benefit them by reducing the cost of those goods (as there will be no tariff on them) but it will kill your tariff income. If your POPs demand more than you are producing they will have to import the lacking amount from the world market and it will be taxed.
Keeep this in mind in the early game, particularly for players of countries with one one or more liquor factories. As Russia, closing your liquor distilleries on day one of the game can lead to a very large increase in tariff income for the early game with very few if any immediate repercussions.
Remember, though you may make changes to the sliders in this window, none will take effect until you have actually exited the window.