Curious to how the 1.9 Trade re-work will... work?

[TheFlemishDuck]

Interesting post from Michael Pettis in Bluesky. Because in Vic3 we are almost always increasing our POPs wages, it is also very difficult to increase trade.

In Vic3 only an increase of World population without internal consumption (no peasants, no buildings) could fuel international demand if at the same time the nations producing goods would not increase their internal consumption

Michael Pettis (@michaelpettis.bsky.social)

7/10 I am not sure why this is so hard to understand. The reward to any country for productivity growth is not trade surpluses. It is higher wages that allow domestic households to increase their living standards in line with the increase in productivity.

bsky.app

Isnt that incorrect for the reason that substitution exists? If country A produces enough intoxicants of one type to supply its market and country B produces enough of an other intoxicant to supply its own market, then they can still create a substituting interchange of intoxicants to the tune of the same levels of consumption?

 

[Vohen]

Interesting post from Michael Pettis in Bluesky. Because in Vic3 we are almost always increasing our POPs wages, it is also very difficult to increase trade.

In Vic3 only an increase of World population without internal consumption (no peasants, no buildings) could fuel international demand if at the same time the nations producing goods would not increase their internal consumption

Michael Pettis (@michaelpettis.bsky.social)

7/10 I am not sure why this is so hard to understand. The reward to any country for productivity growth is not trade surpluses. It is higher wages that allow domestic households to increase their living standards in line with the increase in productivity.

bsky.app

Interesting, and this touches on another problem with Vic3's simulation that is pop growth.
Historically, world population reached 2.11B in 1930 and 2.33B in 1940:

source

In Vic3, I never see it reach even close to 2B, in my experience it ranges from 1.5-1.7B in the 1930s.
That's a very stark difference, the world id missing some 20-30% of its population! That's between one third and one fifth!
And of course this has very profound effects in the game, when the main loop revolves around having available labor to keep expanding your industries, these pops leave a huge hole in your potential growth.

And this leads to another issue very prevalent in the late game, the near permanent full-employment state we face (there are outliers, but in most economies, if you've played your cards right, many of your building will have huge vacancies which cannot be filled).
The end result is higher wages, lower profitability, and less comparative advantage, which you pointed out, but there's also another factor here: higher wages increases domestic consumption, driving prices up and decreasing trade potential.
It should be very difficult or near impossible to keep this full-employment state, maybe it should stay between 5-10% with possibility to push above/below that in very negative/positive cases, and pop growth is definitely a big part of this equation.

Sort of off topic, but I've tried to fiddle with defines and ran test games, but even doubling overall growth rate I didn't see very significant results. I'm clearly missing something (maybe I should look more into literacy effects), but after a whole week running test games, I decided to give up for now.

 

[IsaacCAT]

The end result is higher wages, lower profitability, and less comparative advantage, which you pointed out, but there's also another factor here: higher wages increases domestic consumption, driving prices up and decreasing trade potential.

I have suggested that wages should always be evaluated to push them down if the labour market allows for it. With the latest changes with profitability target of buildings we should have seen less wage inflation.

You can try modifying these values in the 00_defines.txt. I would start by increasing the BUILDING_PROFIT_TARGET_TO_LOWER_WAGES from 0.15 to 0.25 and raising BUILDING_PROFIT_TARGET_TO_RAISE_WAGES to 0.3

BUILDING_DEFAULT_MIN_EARNINGS_TO_HIRE_EMPLOYEES = 3 # Non-subsidized buildings will not hire if it would result in their annual earnings/employee falling below this threshold (default value, can be overridden for building group)
BUILDING_PROFIT_TARGET_TO_RAISE_WAGES = 0.25 # Required profit margin to consider raising wages for SoL or employment reasons, with BUILDING_WEEKS_BETWEEN_PAY_CHANGES weeks cooldown
BUILDING_PROFIT_TARGET_TO_LOWER_WAGES = 0.15 # If profit margin is this or below, buildings should lower their wages, with BUILDING_WEEKS_BETWEEN_PAY_CHANGES weeks cooldown
BUILDING_PROFIT_TARGET_TO_WITHDRAW_CASH = 0.15 # If profit margin is this or below, buildings should withdraw money from the cash reserves to make up the difference
BUILDING_PROFIT_TARGET_TO_HIRE_EMPLOYEES = 0.25 # If profit margin is this or above, buildings should try to hire new workers

 

[Prob32]

It's because we don't have a fluid labor market... this means the wages basically only rachet upwards. And when you're developing a state the rachet up very quickly very early.

Pops by profession type should be a private good in a separate market window showing the relative demand for each profession. This would allow pops to then live in housing building tiers which also would be good proxies to a banking system and savings system for the individual pops. It would be somewhat similar to Anno but instead of actually building the houses they would all auto-populate similar to subsistence farms.

You could have each level of housing tier require certain amounts of construction when it's upgrading extc extc. This would also more concretely model pop location for consumption and war occupation as well as allow wages to become dynamic based on demand.

https://forum.paradoxplaza.com/forum/threads/labor-market-re-work.1724312/

 

[Timewalker102]

Interesting post from Michael Pettis in Bluesky. Because in Vic3 we are almost always increasing our POPs wages, it is also very difficult to increase trade.

In Vic3 only an increase of World population without internal consumption (no peasants, no buildings) could fuel international demand if at the same time the nations producing goods would not increase their internal consumption

I read this entire Twitter thread and I'm not really sure Pettis' point is accurate or salient for Vic3. Erdal has written a follow up thread which probably explains things better but it seems to me that Pettis is describing mechanisms and then making implicit assumptions. Saying "the U.S. manufacturing industry has been forced to indirectly subsidize American consumption" is a dumb way to view it; it doesn't preclude the ability for the manufacturing sector to succeed in the US, it's just that there's a global market.

In general I think demand probably needs to be flattened more (by changing the pop needs calculation maybe) but I don't really agree with the idea that trade conflicts only stem from wage suppression, as the actual data from Germany shows.

 

[IsaacCAT]

In general I think demand probably needs to be flattened more (by changing the pop needs calculation maybe

If you take out demand growth you kill the game.

But I agree with you that too much internal demand is detrimental for trade to be of importance at the start of the game and I have made a thread about the main culprit of magic demand creation: peasants.

Are Peasants killing Trade?

We have many of them, but they consume only 5% of their nominal consumption at any wealth level. Not only that, they live in subsistance buildings that produce goods that add to supply with no demand at all. Peasants consumption should be 100%...

forum.paradoxplaza.com

 

[Sieeratrc]

In the last DD Wiz said:
View attachment 1241261

I'm curious as to how this is going to be done without making things artificial- what I mean by that is arbitrarily increasing volumes or discounting items which effectively creates free money.

The reason the current trade system struggles is that international trade fundamentally is suffering from both MAPI penalties and transport. It should not really be suffering from MAPI when you think about how a trade agreement works from the perspective a import/exporter. As well as the fact that international trade has to pay for convoys which internal trade does not despite convoys being cheaper than overland travel in many cases.

My fear is that without properly implementing mechanics here you're going to end up with a system where it's cheaper to trade almost always because you're creating money through artificially trade boosts despite it being technically unprofitable or it will still be better to be an autukary because you get "free internal transit".

Also there's the unspoken item that the current trade is horribly optimized and lots of trade routes slow the game down.

You bring up some really valid concerns. Artificially inflating trade volumes or applying arbitrary discounts can easily lead to ‘free money’ scenarios, which would break the balance and make trade the default winning strategy.


The MAPI penalties and convoy costs are definitely areas that need better balancing. In theory, international trade should have some friction, but if it’s consistently less viable than autarky, then something is off. Ideally, trade should be a strategic choice rather than a forced one due to mechanics.


A few potential ways to address this:
Dynamic Trade Costs – Instead of flat MAPI penalties, perhaps costs should scale based on factors like infrastructure, diplomatic relations, or even market demand elasticity.
Convoy Efficiency vs. Land Transport – If convoys are cheaper in real life, then internal trade shouldn't always have a huge cost advantage. Maybe internal transport should have some kind of inefficiency factor (e.g., supply chain bottlenecks)?
Trade Route Optimization – As you mentioned, excessive trade routes slow things down. Smarter route prioritization or consolidation mechanics could help performance.


I’d love to hear if the devs have a roadmap for addressing these concerns because trade should be an engaging, dynamic system—not just a min-maxing exploit or a penalty-laden afterthought.