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Start from GDR: economic stagnation! help!

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Henrik16
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Start from GDR: economic stagnation! help!

I think GDR makes a good start:
The GNI coefficient is 0.15, the GNP per capita is around 20,000$ and the unemployment is at around 1%; a socialist economy, like it!

However, the budget needs to be balanced, but how?
a) cut down the huge subsidies to free the market?
PE subsidies 68.53 Bil. € ,
in comparison with PE education 8.84 Bil. €
b) encourage business activity by lowering these:
Taxes on capital [?] 6.00 %
Acquisition taxes [?] 15.00 %
c) or finally cut down on;
Pensions 489.87 € pcm
and invest on environment to compensate for the unhappyness?

So, what is your take?
I think C must be cut down anyway, but what would encourage a freer market more; cutting down on the subsidies (unprofitable state companies, I guess) or simply lowering the taxes to irresistable levels?

08.10.2009 22:33
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Sheep
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Post: #2
RE: Start from GDR: economic stagnation! help!

Cutting subsidies is about a must, however there is a huge problem: The economy relies heavily on them during the first years, so you have to cut slowly first.

In my experience reducing both named taxes doesn't accomplish much, I'd leave them as they are. You need the money to fight the debt problem. Better reduce customs as fast as possible - it doesn't cost much and helps quite a bit.

I'd cut pensions a single time, poor old people will have a hard stand with it already. Investing in environment is a pretty good idea for GDR states.

Anyway, expect quite some challenge, GDR is the most difficult template state of Ars Regendi, mainly because of the debt problem...


08.10.2009 22:56
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Henrik16
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Post: #3
RE: Start from GDR: economic stagnation! help!

Thankyou. It seems like there´s no space for "shock therapy" in this one :l

08.10.2009 23:19
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Post: #4
RE: Start from GDR: economic stagnation! help!

Shock therapy is possible, just get Liberalism from an alliance. However, there is (very roughly) a 50% chance the GDR state won't survive it.

There are two tasks about cutting subsidies by 50% each - appearantly they work well for GDR states. So they would a moderate, but rather harmless shock therapy. Smile

After all, they are not really necessary. Be extremely careful with your economy and your expenses, and on the long run GDR will work out fine. Check http://de.ars-regendi.com/state/20023/show.html for example. Pfeif


08.10.2009 23:50
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Unkas
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Post: #5
RE: Start from GDR: economic stagnation! help!

Applaus

09.10.2009 19:43
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Arizona2008
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Post: #6
RE: Start from GDR: economic stagnation! help!

Henrik16 Wrote:
I think GDR makes a good start:
The GNI coefficient is 0.15, the GNP per capita is around 20,000$ and the unemployment is at around 1%; a socialist economy, like it!

However, the budget needs to be balanced, but how?
a) cut down the huge subsidies to free the market?
PE subsidies 68.53 Bil. € ,
in comparison with PE education 8.84 Bil. €
b) encourage business activity by lowering these:
Taxes on capital [?] 6.00 %
Acquisition taxes [?] 15.00 %
c) or finally cut down on;
Pensions 489.87 € pcm
and invest on environment to compensate for the unhappyness?

So, what is your take?
I think C must be cut down anyway, but what would encourage a freer market more; cutting down on the subsidies (unprofitable state companies, I guess) or simply lowering the taxes to irresistable levels?


I'd say index your pensions to 100% to 115% of your living cost (as I have done), and reduce capital taxes to 3-4%. Subsidies need to be cut down, and definitely raise education.

If in doubt, print money, I guess.

23.12.2009 19:22
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