Join the new world

Economic Program

I consider myself to be a pragmatist in economic policy. I like to look at the mathematical reality of what we have and where we can go with it and try to make the best choices for growth based on that. My in-game economic policy does not necessarily reflect my real-life economic beliefs, because they function according to different (though comparable) behaviors.

Current state of the Austrian Economy:

I haven’t yet completed a thorough analysis, but roughly speaking this is my take on the current Austrian economy.

After a period of hyper-inflation the ATS has come back down to earth, with a more normal exchange rate and a vibrant exchange on the money market. This is compared to the history of the ATS since about last November.

This has required a period of relative deflation to reach this point, which bodes well for the future of the economy. However, in periods of deflation the main pressure is put onto the job market and wages in particular, which have severely suffered and represents the biggest area of concern in the Austrian economy.

There are a wealth of companies offering jobs, and the government doesn’t need to be concerned about current job offers. Simply wages.

The food and grain companies seem to be active and competitive with an ability to earn at least meagre profits. Though I’m not sure specifically, weapons comps appear able to earn profits, particularly if they are exporting. Though the domestic weapons industry is flagging due to lack of war. Moving tickets has picked up due to the new module.

The government has a treasury that allows for relative stability, but not flexibility.

Recent History of the Austrian Economy

Before what I refer to as the Period of Turbulence, the ATS was in a relatively stable state, with movements that allowed speculation and bringing of gold onto the market. There were plenty of job offers, but the government frequently had to act to offer level-1 offers. Wages weren’t great, but relative to the value of the ATS, they provided a stable existence, with the ability to save and maintain basic needs. There was a thriving manufacturing market that provided a healthy income to the MM from exports. The grain industry was alive, but not thriving.

Then Austria entered a period of invasions and constant PTOs. This put a significant strain on many parts of the economy. Workers fled the country, depriving the nation of labor income, and companies started to close. PTOs fought financial warfare against the nation, initially buying as many ATS as possible, and the robbery of the ACB by Hedera gave the enemies of Austria a further opportunity to grab more ATS.

The ATS took a nose dive when the enemies of the country dumped all their saved ATSs into the money market. This made profits from exports nearly impossible, and drove investors in the currency away. More labor left the country.

Towards the end of this period, I had resigned as MoF, to pursue other ways for the government to handle finances as the Budget Director (since a failed initiative). But after discussion with the others in the financial end of the government we decided that the then-broke government should grab as much gold as possible from the Austrian economy, even if it meant the ATS would then be broke. It was a hard choice, but it allowed the Austrian government to continue to function like an ordinary government even if the economy was broken.

Following this came an expansion of government spending which turned out to be somewhat troublesome. I and others had figured it would be a good idea to turn Austria into something of a welfare state to help support a return to a healthy economy. However the spending of further ATS only created further hyper-inflation. Government spending did not help anywhere near as much as it hurt the overall picture. The idea was to create a space in which the economy could grow, but government run comps only perpetuated hyper-inflation.

This is when I consider Austria to have entered the Period of Malaise. It was after the external and internal threats, but the nation suffered from a very poor economy and little activity. There as an assumption that Austria had died.

The hyper-inflation was brought about by a number of factors, and can not be blamed on any one thing. It was a tsunami of different threats. The steps of the government at the time were done with the best interests of the economy in mind, but little could be done to stop the rolling damage. I still believe the government did the right thing in getting as much gold as possible at the expense of the ATS. Though it did significant damage to the economy, it allowed the government to function securely. The growth of government comps and runaway spending at the time was probably a very bad idea, and my attempts to reign in spending as Budget Director failed.

Moving Forward

In spite of current worries, the economy has come a long way. Due to recent activity and the inevitable tendency toward deflation if there is no action that leads toward inflation (government action typically leading to inflation), the ATS has returned to a more normal position. The job market has returned.

I don’t believe significant change in the ATS is necessary. It is in a relative place that only minor adjustments may be needed.

The biggest concern facing the Austrian economy right now is wages. This is a significant problem, as buying food is even hard at current rates. How can we expect domestic activity in the weapons and other markets if there are no wage increases?

The best way to increase wages is to get gold into the hands of the comps. This is a tricky position to be in, because the government can’t easily act to do that. The only solution I’ve ever had for this in the past is to offer a loan program to purchase export licenses in particular. While I wish it had been more successful, nobody really took it up. Except for OmuNegu who never repaid and then quit. Though he’s done enough good for the overall Austrian economy I’m not really holding it against him.

By increasing exports, however, it enables comps to offer more competitive wages. So, let’s consider how we can encourage further exports from Austria.

The main thing the government can do: NOTHING. Seriously. If the government sets up comps and thinks it can set wages and spend ATS to make it easier on citizens it will just slow real growth. I’m not a Friedmanite by nature, but I know this is the case in Austria. We can not spend our way out of this problem - government spending will only hurt long-term growth. The government should refrain from as much spending as possible. The only spending it does should be money earned directly through taxes because that’s at least not circulating any additional ATS into the system.

The government should ready to act if jobs are absolutely necessary. But I hope we can rely more on indepedant and responsible businesspeople to offer those jobs.

Perhaps the best thing the government can do is simply create an atmosphere where we can support independent business and comp owners. Offer advice and guidance and support where we can.