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Investment Subsidy task

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ciech
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Post: #1
Investment Subsidy task

Hello.

I run postcommunistic state in World Cologne named Sisao. And as in every postcommunistic state subsidies are a huge part of my budget expenses. Now I have an opprtunity to deal with it as I've just get the Investment Subsidy task. But I'm not sure how to act exactly so I would like to ask you all for advice.

Investment Subsidy task provides 3 options where first is not interesting to me at all:
1. More subsidizing in areas with high unemployment rates. (no way I'll be doing that!)
2. Subsidizing only enterprises that are "seminal or bring crucial advantages in international competition".
3. Basically: cut that s&$t!

Will the second option let me cut subsidies to some healthy level?
Isn't third option (the most tempting one) a suicide?

I've been today assassinated in World Accra by some left-wing extremist and don't want to repeat that. Smile


"Any society that would give up a little liberty to gain a little security will deserve neither and lose both."

This post was last modified: 18.04.2014 09:20 by ciech.

18.04.2014 09:16
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Helsworth
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Post: #2
RE: Investment Subsidy task

Choose the one with the "subsidies for the seminal firms". The GDR template state is very dependent on PE subsidies. You'll have to keep your fiscal deficit growth in check and at the same time ensure economic growth. So it's best to look for other public spending to slash.


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18.04.2014 12:20
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ciech
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Post: #3
RE: Investment Subsidy task

I've checked GDR guide which says about subsidizing what follows:
Reduce subsidies by e.g. 2% the first time, 5% the second time and as much as possible during the following winters.

There are two great tasks to reduce subsidies by 50% or more each, use them after some years of reign if possible.


I haven't lowered my subsidies regularly, but last winter I did 5% reduction and I can't see any negative consequences. I'm being extremely tempted by 3rd option. Smile What might happen?

Helsworth Wrote:
Choose the one with the "subsidies for the seminal firms". The GDR template state is very dependent on PE subsidies.


"Any society that would give up a little liberty to gain a little security will deserve neither and lose both."
18.04.2014 13:09
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Helsworth
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Post: #4
RE: Investment Subsidy task

If you do it too quickly, it will have a double negative impact. Lower popularity (thus you won't be able to change the budget as much) plus a rise of the budget deficit correlated with negative economic growth. Now that I've check out your state - you don't need to worry about your debt to GDP ratio nor about your budget deficit. You've got it under control. Make sure you keep your Money Supply above your GDP, continue to decrease the nominal interest rate; and hope that more economic related tasks will pop up. Such as Patents, Freedom of Movement, Product Testing, Illegal Employment, Cartels and Collutions etc.


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This post was last modified: 18.04.2014 19:10 by Helsworth.

18.04.2014 19:06
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ciech
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Post: #5
RE: Investment Subsidy task

So these were the original options:
1. "Of course, this case is scandalous, but subsidies are still necessary to keep the economy going and to create employment, especially in less developed areas!" says Siegmund Stocker, a local politician in a less developed province of Sisao. "Therefore, we should increase subsidies for investments in areas with high unemployment rates."
2. "To subsidize development in saturated markets using tax money is completely nonsense." says Dr. Yvonne Messner, a professor of economics at a large state university. "We must only subsidize enterprises that are seminal or bring crucial advantages in international competition."
3. "My taxes are going to support some wealthy business owner make more money? That is stealing from the poor and giving to the rich! We should reduce subsidies, not increase them." says Bob Churchill, a popular tax reformer. "To redistribute money via the state means only one thing: theft!


Following the advice I took the second option, but to me it was a close call as in the third option the guy talks about not increasing subsidies, which makes me think that only the third option reduce them.

I talked to a friend and he told me that second option reduces subsidies to about two thirds of previous level. I will check tomorrow and will give some feedback.

Here are some of my stats at the moment:
National debt: -428.75 Bil. €
New indebtedness: -31.42 Bil. €
PE subsidies: 65.12 Bil. €
Unemployed: 4.94 %
GDP: 541.83 Bil. €


"Any society that would give up a little liberty to gain a little security will deserve neither and lose both."

This post was last modified: 18.04.2014 22:23 by ciech.

18.04.2014 22:20
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ciech
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Post: #6
RE: Investment Subsidy task

ciech Wrote:
Here are some of my stats at the moment:
National debt: -428.75 Bil. €
New indebtedness: -31.42 Bil. €
PE subsidies: 65.12 Bil. €
Unemployed: 4.94 %
GDP: 541.83 Bil. €


After second option:
National debt: -432.54 Bil. €
New indebtedness: -16.05 Bil. €
PE subsidies: 48.78 Bil. €
Unemployed: 6.20 %
GDP: 551.96 Bil. €

And also some weird changes:
Economy growth - before: -0.22 % after: 6.27 %
Inflation - before: 0,37% after: -4.14 %

Did not expect deflation. Is that some kind of bug? Nonetheless will fight it by reducing nominal interest.


"Any society that would give up a little liberty to gain a little security will deserve neither and lose both."

This post was last modified: 19.04.2014 10:46 by ciech.

19.04.2014 10:46
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Helsworth
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Post: #7
RE: Investment Subsidy task

Don't pay attention to such things; AR is far from a real-life simulation. But it's still the best sim-game out there.


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19.04.2014 13:22
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