4 ms·

There may be some kind of relationship, but it's almost certainly not a linear one. I don't think I could summarize the research on the subject (there is a lot,

by mjn 14y ago

There may be some kind of relationship, but it's almost certainly not a linear one. I don't think I could summarize the research on the subject (there is a lot, and it's not my area), but it seems to strongly depend on the business, stickiness of various quantities, the specific tax rates, and other factors. Part of the problem is that economies are basically nonlinear dynamical systems, and nonlinear systems tend to have lots of strange feedback loops and attractors, where varying some inputs rarely has a simple (or often, even predictable) effect on system dynamics. An analogy might be fluid flow: high-level generalizations you might make about fluid flow are typically right only in specific flow regimes, and wrong in others (due to effects such as switching between laminar and turbulent flow). For example, if you can assume flow is always laminar, then increasing the pressure-drop across a length of pipe increases the flow rate. But increasing the pressure-drop can also induce turbulence, which may decrease the flow rate. I think most macroeconomic generalizations that assume things like "lower taxes are better for business" ignore system-dynamic effects like regime-switching. The main point, though, is that SimCity just posits a very simple relationship, rather than attempting to build a realistic model of the economy grounded in scientifically valid empirical data. This can have some propagandistic effects of basically defining a certain causal relationship as true, which may or may not be true in reality, but happens in the game's virtual world as defined. In practice, SimCity probably just did that for ease of coding and playing. An incredibly complex city simulation where your actions had unpredictable, very indirect effects, and random chance or exogenous factors or just hard-to-explain stuff overrode your policy decisions on a regular basis, might not be very fun to play, compared to an ultra-simplified world with predictable rules. But it's interesting to think of rhetorical effects as well.

AnthonyMouse 14y ago
That sounds like a complicated way of explaining the broken window fallacy. "Maybe the economy will be better off if the glazier has the money because he will spend it better than the butcher whose window was broken." In specific circumstances that can really be true, but in general there is no reason to expect it to be, and unless you somehow know that it is, breaking the window is more likely to cause a net loss than a net gain. I think the "economies are complicated" explanation is the wrong one for the point you're trying to make. If you can't predict what's going to happen, and taxes usually (but not always) result in lower growth, you're usually going to lose by raising taxes. And when taxes are broad-based, this is very likely to be the case indeed. Take "usually" and average it over enough repeated iterations and you get something that looks a whole lot like "always." The place you can win just by raising taxes is where you set out to tax something that it would be economically beneficial to destroy through economic disadvantage. For example, one of the problems with sustainable energy has always been that they could achieve cost parity with fossil fuels, but only by gaining economies of scale that they couldn't do without first achieving cost parity, so you have the chicken and egg problem. If you tax fossil fuels at a sufficient rate then that in and of itself solves the chicken and egg problem, which allows sustainable energy to increase economies of scale and become even less expensive, in the long term even less expensive than untaxed fossil fuels (especially when accounting for externalities). I assume this is what you're referring to as regime-switching. But you don't, as a general rule, get that sort of thing by imposing broad-based taxes or specifically taxing anything that you wouldn't like to discourage the consumption of, you get it by correctly predicting the outcome of a targeted tax and intentionally destroying something undesirable through taxation. (Which I don't think Sim City allowed you to do.)
- jacoblyles 14y ago
  IMO a lot of "European" economics consists of focusing all attention on the very unusual special circumstances in which it is wise to conduct the left-leaning politics that envious populists prefer and ignoring reality. I remember seeing lessons from an economics class in Germany where the first lessons include conflict between capitalists and labor and the negative effects of income inequality. In America, we start with basic supply and demand models.
- mjn 14y ago
  My point is more that SimCity doesn't attempt to model a complex dynamical system at all. It just defines certain aggregate relationships as true. That approach can be fun for a game, but also encodes ideological assumptions— not facts, but simplified models. If you try to build a dynamical system as the model, things get weird very fast. Even in simple ones you can build as toys, there is a lot of system-internal behavior: there are feedback loops, oscillations, attractors. Minor changes can have significant counterintuitive effects, if they dampen or excite various resonances in the system (which we're assuming here is a stand-in for "economics of a city"). That kind of Sim City I'd be very interested in. :) But would it be a fun game? Quite possibly not: players really tend not to find complex and chaotic simulations very fun, when the knobs affect the outcome in ways that are too indirect. Chris Crawford found that in a few of the games he made: a lot of players found Balance of the Planet, which tried to model all sorts of complex ecological effects, frustrating at best.
  - KVFinn 14y ago
    >If you try to build a dynamical system as the model, things get weird very fast. Even in simple ones you can build as toys, there is a lot of system-internal behavior: there are feedback loops, oscillations, attractors. They kinda sorta tried this in SimCity 5 and it's at least partially responsible for how broken the simulation is at this point. They ended up having to hack in a bunch of things to keep it stable and it is still producing some bizarre results a couple of months after release. >But would it be a fun game? Quite possibly not: players really tend not to find complex and chaotic simulations very fun, when the knobs affect the outcome in ways that are too indirect. It's pretty fun games like Dwarf Fortress. You can essentially trace the downfall of an entire Dwarf Civilization to pet cat dying and setting off a ridiculous chain of events. I think it helps that the expectation coming into that game is, "Losing is fun." so players roll with it.

by mjn 14y ago

AnthonyMouse 14y ago

That sounds like a complicated way of explaining the broken window fallacy. "Maybe the economy will be better off if the glazier has the money because he will spend it better than the butcher whose window was broken." In specific circumstances that can really be true, but in general there is no reason to expect it to be, and unless you somehow know that it is, breaking the window is more likely to cause a net loss than a net gain. I think the "economies are complicated" explanation is the wrong one for the point you're trying to make. If you can't predict what's going to happen, and taxes usually (but not always) result in lower growth, you're usually going to lose by raising taxes. And when taxes are broad-based, this is very likely to be the case indeed. Take "usually" and average it over enough repeated iterations and you get something that looks a whole lot like "always." The place you can win just by raising taxes is where you set out to tax something that it would be economically beneficial to destroy through economic disadvantage. For example, one of the problems with sustainable energy has always been that they could achieve cost parity with fossil fuels, but only by gaining economies of scale that they couldn't do without first achieving cost parity, so you have the chicken and egg problem. If you tax fossil fuels at a sufficient rate then that in and of itself solves the chicken and egg problem, which allows sustainable energy to increase economies of scale and become even less expensive, in the long term even less expensive than untaxed fossil fuels (especially when accounting for externalities). I assume this is what you're referring to as regime-switching. But you don't, as a general rule, get that sort of thing by imposing broad-based taxes or specifically taxing anything that you wouldn't like to discourage the consumption of, you get it by correctly predicting the outcome of a targeted tax and intentionally destroying something undesirable through taxation. (Which I don't think Sim City allowed you to do.)

jacoblyles 14y ago
IMO a lot of "European" economics consists of focusing all attention on the very unusual special circumstances in which it is wise to conduct the left-leaning politics that envious populists prefer and ignoring reality. I remember seeing lessons from an economics class in Germany where the first lessons include conflict between capitalists and labor and the negative effects of income inequality. In America, we start with basic supply and demand models.
mjn 14y ago
My point is more that SimCity doesn't attempt to model a complex dynamical system at all. It just defines certain aggregate relationships as true. That approach can be fun for a game, but also encodes ideological assumptions— not facts, but simplified models. If you try to build a dynamical system as the model, things get weird very fast. Even in simple ones you can build as toys, there is a lot of system-internal behavior: there are feedback loops, oscillations, attractors. Minor changes can have significant counterintuitive effects, if they dampen or excite various resonances in the system (which we're assuming here is a stand-in for "economics of a city"). That kind of Sim City I'd be very interested in. :) But would it be a fun game? Quite possibly not: players really tend not to find complex and chaotic simulations very fun, when the knobs affect the outcome in ways that are too indirect. Chris Crawford found that in a few of the games he made: a lot of players found Balance of the Planet, which tried to model all sorts of complex ecological effects, frustrating at best.
- KVFinn 14y ago
  >If you try to build a dynamical system as the model, things get weird very fast. Even in simple ones you can build as toys, there is a lot of system-internal behavior: there are feedback loops, oscillations, attractors. They kinda sorta tried this in SimCity 5 and it's at least partially responsible for how broken the simulation is at this point. They ended up having to hack in a bunch of things to keep it stable and it is still producing some bizarre results a couple of months after release. >But would it be a fun game? Quite possibly not: players really tend not to find complex and chaotic simulations very fun, when the knobs affect the outcome in ways that are too indirect. It's pretty fun games like Dwarf Fortress. You can essentially trace the downfall of an entire Dwarf Civilization to pet cat dying and setting off a ridiculous chain of events. I think it helps that the expectation coming into that game is, "Losing is fun." so players roll with it.