5 ECONOMIC Mistakes NEW PLAYERS Make in Victoria 3
Summary
TLDRIn this Victoria 3 tutorial, the focus is on common economic misconceptions among new players. The video clarifies that a negative balance sheet is often desirable for major powers, as it stimulates the economy and construction, akin to GDP growth. It challenges the conventional wisdom of maximizing revenue and minimizing expenses, emphasizing the importance of targeted taxes and spending to influence economic growth. The tutorial also advises against overbuilding in agriculture due to its impact on investment pools and suggests prioritizing industries that contribute more to these pools. Additionally, it discusses the strategic use of trade routes, advocating for exporting goods that align with one's economic goals rather than simply chasing high productivity.
Takeaways
- 😀 New players often misunderstand the economic mechanics in Victoria 3, especially the balance sheet, where a negative balance might be desirable for major powers to stimulate the economy.
- 💼 Construction is crucial in Victoria 3 as it represents GDP growth rate, and players should focus on expanding their economy through building more structures.
- 💰 Players should not solely aim to maximize revenue and minimize expenses; instead, they should consider the broader economic impact, including the construction rate and GDP.
- 🏛️ The ownership of buildings significantly affects the investment pool, with capitalists contributing more than other pop types, so players should aim for more capitalist-owned buildings.
- 🌾 Overbuilding agriculture early in the game is a common mistake as it leads to less contribution to the investment pool, despite it being profitable.
- 🏭 Players should not always build the most expensive goods in the market; they should consider the impact on the investment pool and the type of ownership.
- 🔗 Tariffs can be counterproductive as they can disrupt the economy by making certain goods more expensive and less profitable, which can affect the investment pool negatively.
- 🌐 The goal is not to make all goods cheap but to strategically manage the economy to make some goods cheap and others expensive, aligning with the country's production capabilities.
- 🚢 Productivity of trade routes is not the only factor to consider; the type of ownership and the strategic economic impact are more important for long-term economic planning.
- 🌟 New players should focus on understanding the economic intricacies of Victoria 3, moving beyond intuitive assumptions from other strategy games, to effectively manage their nation's economy.
Q & A
What is the primary focus of the video?
-The video is a tutorial focusing on five common economic mistakes that newer players make in Victoria 3, a strategy game.
Why is construction emphasized as important in Victoria 3?
-Construction is highlighted as it represents GDP growth rate, and expanding the economy is primarily done through building more structures.
What is the counterintuitive aspect of the balance sheet in Victoria 3?
-In Victoria 3, especially for major or great powers, it's often beneficial to have a negative balance, running loans and a large line of credit, contrary to conventional wisdom which suggests a positive balance.
Why might a player not want to maximize National Revenue in Victoria 3?
-Maximizing National Revenue isn't always ideal because extracting more in taxes can decrease GDP by taking money out of the economy that could be used for consumption and investment.
How does the ownership of a building affect the investment pool in Victoria 3?
-Different pop types contribute varying percentages of their income to the investment pool. For instance, capitalists contribute 20%, which is why having more capitalist-owned buildings is beneficial.
What is a common mistake players make regarding building types in the early game?
-Newer players often build too much agriculture early on, which is a mistake because it creates aristocrats that contribute less to the investment pool, impacting the economy negatively.
Why might a player not want to build a profitable building in Victoria 3?
-A player might avoid building a profitable structure if it leads to the creation of less desirable pop types or if it doesn't align with their overall economic strategy, such as focusing on capitalist-owned buildings.
How does the price of goods in the market influence the economy in Victoria 3?
-The price of goods affects the profitability of buildings. High prices can make buildings more profitable, contributing more to the investment pool, while low prices can lead to unprofitable buildings.
What is the impact of tariffs on the economy in Victoria 3?
-Tariffs can be detrimental as they can increase the price of goods, making certain buildings less profitable and encouraging the auto queue to build less desirable pop type-owned buildings.
Why should productivity not be the primary focus when deciding on trade routes in Victoria 3?
-Productivity is important, but the type of pop ownership of the buildings is more crucial. Exporting goods owned by capitalists and importing goods owned by aristocrats is a better strategy than just chasing high productivity.
Outlines
📈 Understanding Economic Misconceptions in Victoria 3
This paragraph introduces the tutorial's focus on common economic misconceptions among new Victoria 3 players. It emphasizes that while construction is crucial for economic growth, represented by GDP, the tutorial will delve into less intuitive aspects. The speaker clarifies that a positive balance sheet isn't always ideal, especially for major powers, and that National Revenue isn't the sole focus. Instead, players should consider the construction rate and GDP alongside the balance sheet. The tutorial aims to correct the instinctive approach to economics in the game, suggesting that a negative balance might be desirable to stimulate the economy and increase GDP.
🏛️ Balancing Economy and Construction in Victoria 3
Paragraph 2 discusses the intricacies of managing the economy in Victoria 3, particularly the balance between extracting and injecting money. It explains that increasing taxes extracts money from the economy, which can suppress economic activity, while spending can stimulate it. The speaker advises players to think strategically about where to extract and inject money, targeting the upper strata of society for revenue extraction. The paragraph also touches on the importance of construction as a GDP growth indicator and how managing taxes and construction can influence the economy more effectively than just focusing on the balance sheet.
🌾 The Pitfalls of Building Agriculture and Ownership Dynamics
This paragraph highlights the importance of building ownership in Victoria 3. It points out that new players often mistakenly focus on constructing buildings that are profitable in the short term, such as agriculture, without considering the long-term impact on the investment pool. The speaker explains that different pop types contribute varying amounts to the investment pool, with capitalists being the most beneficial. Therefore, the tutorial advises against overbuilding in agriculture early in the game and suggests focusing on industries that increase the investment pool and contribute to GDP, such as construction-related industries.
🛍️ Market Prices and the Strategy of Building Ownership
Paragraph 4 addresses the common mistake of new players building based solely on market prices. It explains that while market prices can guide building decisions, they should be balanced with considerations of building ownership. The speaker argues that it's not always beneficial to build the most expensive goods, as ownership types and their contributions to the investment pool are crucial. The paragraph also discusses the importance of managing the price of goods to ensure profitability, especially for goods that are predominantly produced domestically. The tutorial suggests that players should aim for a balance where some goods are cheap to import, and others are kept expensive to maintain profitability and stimulate the economy.
Mindmap
Keywords
💡Economics
💡Balance Sheet
💡GDP (Gross Domestic Product)
💡Construction
💡Taxes
💡Investment Pool
💡Ownership
💡Market Tab
💡Tariffs
💡Trade Routes
💡Productivity
Highlights
Construction is crucial in Victoria 3 as it represents GDP growth rate.
New players often misunderstand the balance sheet's role in Victoria 3's economy.
Major or great powers may want to run a negative balance to stimulate the economy.
National Revenue isn't always about maximizing income; it's about economic stimulation.
Taxes extract money from the economy, which can impact GDP.
Construction rate is a key indicator of economic growth.
Taxation strategies should target revenue extraction from the upper strata of society.
Building too much agriculture in the early game can hinder economic growth due to lower investment pool contributions.
Ownership of buildings affects the investment pool and should be considered when deciding what to build.
Market prices are a decent heuristic for deciding what to build, but not the only factor.
Dual output buildings can provide misleading signals about profitability.
The goal is not to make all goods cheap, but to manage the economy for targeted profitability.
Tariffs can have negative effects on the economy by disrupting the balance of capitalist-owned buildings.
Productivity of trade routes is not the primary concern; building ownership types are more important.
Exporting goods owned by capitalists and importing goods owned by aristocrats is a strategic move.
The tutorial concludes with a summary of the five economic mistakes new players make in Victoria 3.
Transcripts
hello and welcome back today we will be
continuing our Victoria 3 tutorial
series and this episode we'll be talking
about five things that newer players get
wrong about economics I just want to
emphasize that this is a sort of list of
things that are not intuitive not
necessarily the five most important
things to know an example of what I'm
talking about is construction is
probably the most important thing to
emphasize and be aware of but I think uh
someone who plays a lot of other
strategy games will be able to very
quickly identify that construction is
important to Victoria 3 because your
primary point of interaction is uh
building more buildings and so if you
can build more buildings and then you
can expand your economy more and you can
think of construction as your GDP growth
rate and GDP is an extremely important
number and so I think that this is
something that's easy and quick to
identify the five things we're going to
be talking about are going to be things
that are a lot harder to identify or
will be counter-intuitive specifically
in the realm of Economics so the first
thing we're going to talk about is
probably what newer players first look
at when they're trying to figure out
okay what's going on here economically
and that is the balance sheet you know
conventional wisdom would indicate you
want a positive balance and you also
want to maximize Revenue while
minimizing expenses uh and this is not
the case in Victoria three in fact
sometimes you or very often if you are a
major or great power you actually want
to have a negative balance and you want
to be taking loans running a huge line
of credit and also you do not
necessarily even always want to maximize
National Revenue now there are two
better things to look at or two things
you need to look at in uh together along
with the balance and that is your
construction rate which you can think of
as your GDP growth rate and your GDP
itself and so coming back to this um
balance figure it's that it's important
to think of it not hey we're just trying
to maximize how much money we're making
it minimize how much money we're losing
but look at it from the perspective of
you are taking money from the economy
every time you extract anything in terms
of Revenue with the exception of tariffs
you are extracting money from your own
economy so that money is not going into
the being paid for for goods it's just
sitting there into your gold Reserve so
for what I mean by this is uh if more
money was into the economy if we were
taxing people less they would buy more
clothes for example and this would
increase the profitability of our
textile mills and this increased
profitability because there's an
increase in price of clothes would drive
up GDP so when we take a bigger tax rate
or we tax anything we are driving down
GDP in a sense because we are taking
money out of the economy similarly when
you spend extra you stimulate the
economy and you raise GDP and also you
can think of you know construction as
your GDP growth rate so coming back to
kind of thinking about uh National
Revenue a healthier way to think about
it it's still a very important thing
your balance is still important to pay
attention to but it's not the be all
end-all and instead you should think of
it uh do I want to be extracting my
money for my economy right now or do I
want to be injecting money into the
economy and if you want to be injecting
money into the economy you actually want
to run a negative balance if you are
recognized the reason why you do not
want to run one run one if you are not
recognized is because uh the interest
rates are really prohibitive as
unrecognized powers or particularly
smaller Powers but you definitely don't
want to have an enormous gold Reserve
most of the time unless you are
preparing an action where you know you
are going to run a deep deep deficit and
you want to avoid default
um also you want to avoid going into
negative if you are unrecognized because
the interest rate is not going to be
sustainable and it will crush you but
other than that balance is not
necessarily something you even want
positive often you want it negative
which is not intuitive uh you know for
the beginner player to add on to this
balanced discussion it's important to
briefly cover taxes whenever you are
increasing taxes you are going to be you
know increasing the amount of money
you're extracting from the economy which
will depend press the economy but the
way you want to think about it is I want
to inject money into the economy in a
particular way and I want to extract
money from the economy in a particular
way and so this is how you want to think
about managing this it's not about
maximizing your revenue and minimizing
your expenses it's by having targeted
revenue and targeted expenses without
going into too much detail you generally
would prefer to extract money from the
upper strata and so one way you could do
that is if you are specifically taxing
stuff that they are consuming a lot of
like services and luxury items you can
Target uh the extraction on the upper
strata and you can do this for example
with consumption taxes and then bringing
up the uh the taxes from the consumption
you can gain more Revenue now you don't
want to be running a huge positive
balance but one way you can inject money
back in is by advancing your
construction and by blowing out
construction really really large and so
what will often be the strategy early on
will be to maximize taxes specifically
focusing them as much on the higher
strata as possible and look to just send
construction into the stratosphere and
so this is kind of the the balance is
important but it's more important to
think of uh not this raw score of
balance but how you are you know
injecting money or extracting money from
the economy uh specifically increasing
the investment pool is particularly
strong in the early game which the early
game is much much longer if you are a
newer player and you can't get over like
1.2 billion GDP the next two mistakes
that newer players tend to make both
have to do with ownership of a building
now ownership is particularly important
because it affects the investment pool
transfer whenever a building has a
positive balance a certain percentage of
that will be contributed to the
investment pool about the investment
pool in reinvestment now different pop
types will contribute different amounts
to that investment pool in particular
shopkeepers and farmers will contribute
five percent of their income Aristocrats
will contribute to 10 percent of their
income and capitalists will contribute
20 of the income this is important
because it means that you generally want
to have a lot of capitalists and so one
of the major mistakes that a lot of
players make that are newer is they
actually build a lot of Agriculture and
in the early game
um you know once you get later
agriculture becomes okay but in
particular in the older early game you
do not want to build a lot of
Agriculture because it has a lot of
aristocrats which contribute less to the
investment pool which is a huge source
of your income in the early game
remembering that you know we would like
to extract money from the upper strata
this is a way of extracting money from
the upper strata that targets the upper
status specifically because these are
the owners of all the buildings and so
you would rather extract more from them
in particular and so not only is it a
good source of income you in particular
want to be extracting a lot from this
class and so you don't want to build any
agriculture as a result of this or you
want to avoid it as much as you can also
if you are playing on a relatively
backward country it is extremely
important to as a result of the
ownership to research the lathes
technology or any the other technology
that unlocks a production method like
leaded glass which allows you to switch
from being a shopkeeper owned to being
capitalist owned so for example if we
bump back to hand sewn clothes we will
see that the merchant guilds are now
shopkeepers and these only contribute
five percent of their uh dividends or of
the weekly balance to the investment
pool rather than capitalist which will
contribute to 20 to the investment pool
and so the second mistake is uh building
a lot of agriculture even if it's really
profitable because you will not get as
much into the investment pool even if
the buildings are making a lot of money
the third mistake players make is they
will in order to decide what they want
to build is they'll go into the market
tab they'll look in the market and they
will build stuff uh the sorts of things
that are the most expensive things in
their market and they will not build any
of the stuff that's really cheap and
it's important to emphasize this is
actually a decent heuristic for deciding
what to build but you have to on top of
this can consider ownership in
particular and you don't always want to
build the most expensive good
for example tobacco here while it's
really expensive is Aristocrat owned and
we would prefer not to build tobacco we
would want to build a lot of iron
specifically because iron is used in
construction and so it'll make
construction cheaper it's a lot to
unpack how everything's related but in
general you want to build a lot of stuff
related to making construction cheaper
in particular in the early game and you
do not want to build any agricultural
buildings even if it looks really
profitable another further example of
not always wanting to build stuff just
because it's profitable is if we look in
the market for example and see that
luxury clothes are really expensive but
regular clothes are really cheap if we
come and talk look at take a look at
textile mills you can reach a certain
situation where buildings that have dual
outputs like textile mills will have
have extremely cheap of one thing and
extremely expensive as the other such
that they actually aren't all that
profitable and so you can get an
improper signal in when it comes to
Goods that have dual tracks or dual
outputs so for example the groceries or
the croissants or the sausages in
particular will have there's multiple
things coming out of the Grocers like
liquor and these other sorts of stuff
that can help depress the profitability
but generally looking in here it gives
you a good idea of what's going to be
profitable and what would be good to
build but you have to Overlay it with
like the understanding that ownership is
important and dual track
um you know buildings is important in
particular Fine Arts almost never worth
building even if it's really expensive
or never in the early game and so it's
not the case that you want to just
simply build all of these even though
usually that's a relatively good
heuristic just building what's most
expensive it is not always good and you
need to consider other things on top of
that now a secondary a part of this
mistake is the idea that in the end what
we are aiming for is to have every good
be as cheap as possible which uh is the
case in a lot of other games but is not
the case in Victoria three and so even
though we might be building the stuff
that's the most expensive and be pushing
the price down the reason we're building
the stuff that's most expensive like the
iron mines for example is because these
will be very very profitable they'll
have a really high balance because the
good is expensive we're not building it
because we're trying to reduce the price
we're building it because the weekly we
know that the weekly balance of the
building is going to be high it's going
to be positive this weekly balance will
transfer into investment pool transfer
it'll also be able to employ more Pops
it'll increase to the GDP which is the
total output of the goods no if all the
goods in your Market are cheap none of
your buildings will be profitable and so
it is bad to have everything be cheap
and generally speaking you can achieve
everything being cheap if you have
really really low government spending
which is indicates that you need to
inject act more money into the economy
so the goal is really not to get stuff
cheap instead it's to get some Goods
cheap and other Goods you want to keep
expensive which informs the overall
trading strategy now we're not going to
delve into that too too deep but just
imagine here we're taking a look at this
textile mill and imagine the price of
these are really really low right this
means that the balance is equal to the
revenue minus the expenses if we the
price of these is really low the revenue
will go to like basically zero right or
let's say it's only 12K suddenly this
building's not profitable and so it's
not going to increase investment pool
transfer
um you know or any of these other things
and so profitability is important and
profitability is driven by the price of
goods being high and so instead with the
way you want to think about it is you
want the price of the goods which you
have a higher proportion of your own
orders being built and by that I mean
you're not importing it so for example
if we're importing most of our tobacco
we want our tobacco to be as cheap as
possible right if we're building all of
our iron we actually want our iron to be
relatively expensive with some asterisks
all right if we're building all of our
groceries we want those to be expensive
because it means the buildings will be
more profitable and so you want to
depress the price of goods that are
disproportionately you are
disproportionately uh building less of
yourself and you want to increase the
price of stuff that you were
disproportionately building more of if
we were the only uh builder of groceries
for example we would want this price to
be Sky High because that would make
exports of the good extremely profitable
so this sort of brings us to mistake
number four which is trying to extract
money from the economy via tariffs if
you think about what we just discussed
in terms of pushing prices up and down
whenever we tariff for example if we
tariff on our import of fabric knowing
that we want to import fabric because it
is owned by aristocrats the buildings
that produce fabric if we tariff this
this means we're going to import less of
it and instead the equilibrium price
will be a little bit uh higher because
we are tariffing it we are making the
import less efficient and so less comes
in what this means is that first of all
all buildings that use the fabric as an
input will be less profitable because
their inputs are more expensive but
second of all this means that it will be
because the price is higher it will make
our Auto queue uh be more profitable and
more prone to building stuff that you
know will build out Fabric and build
fabric itself which will include the
aristocrats which is again not what we
want because we want to be capitalist
oriented so when we tear a fabric we
hurt ourselves in two ways right we are
making the capitalist owned buildings
that use fabric as an input less
profitable and we are encouraging the
auto queue to build more aristocratic
owned buildings second of all we might
be exported clothes right and uh
generally speaking we want the price of
clothes to be high if it is
disproportionately overrepresented in
our economy in terms of our buildings if
we tariff it that means fewer clothes
will go out we will skim the Tariff
right but then the price of these
clothes will not be as high AI so we
won't be able to support uh building you
know as many textile mills before they
become unprofitable and when you really
want to build a lot because you're
seeking to get throughput that much is
fairly obvious but this can help us do
this and so tariffs just hurts you on
all fronts in regard to how you want to
massage the economy it's not that you
just don't want money it's that you want
to get money in a particular way and
this particular way it does not evolve
using tariffs as a primary means and so
you should not as a new player Chase
tariffs in fact on almost everything uh
you know if you are importing it you
actually want to you know let's say we
want to import sugar we're going to put
an import route to the Egyptian Market
we would actually want to eliminate the
import tariff on the sugar that way we
can bring more in and so if you're
extracting tariffs this is actually
generally a Bad Thing The Only Exception
is is if there are certain Goods in your
Market you are trying to protect in
particular in the late game this can
become a strategy but uh other than that
it's not even then it's not about
extracting money through 10 it's about
preventing other countries from being
able to import your goods although
generally protectionism is not a good
strategy I want to emphasize that it's
kind of just a late game sort of thing
we've switched to England to talk about
the last mistake which is having
productivity of your trade routes be the
primary thing that is important to you
when deciding this is a mistake uh when
deciding what trade routes to make just
looking at productivity and trying to
get the most productive trade routes now
productivity is important but the
overall strategy of wanting buildings
owned by a particular pop type is more
important than the productivity itself
and so if we were to take a look at the
idea of exporting rain we could export
it at a relatively High productivity or
exporting tools let's say which would
actually have a negative productivity to
the Spanish Market it would actually be
preferable for us to export the tools
and the reason why is because this will
affect the types of buildings that can
be built in Great Britain and it will
affect the types of buildings that will
be built by the automatic q and still be
able to be profitable if we export tools
to Great Britain this product or sorry
into the Spanish Market this will be a
negative trade route and this wouldn't
be the first choice right we would
definitely want to go to Westphalia
first but if we export it to Spain uh
this would make it so that our uh
tooling workshops would be more
profitable right and so let's find a
tooling Workshop here our tooling
workshops would be more profitable the
weekly balance would be higher if we
were to export grain we would experience
the same thing in particular with all of
our Rye Farms except we don't really
want our rifle arms to be profitable we
would rather our tooling workshops be
profitable because the ownership type
matters it's not that we want to ride
workshops to be trash but we would
rather let our pops uh let's say it's a
it's a matter of how you are extracting
money we would rather let our Pops our
specifically our poor pops just consume
the grain rather than export it for some
productivity right we don't want to
extract money in that way that is not
the more efficient way of extracting
money instead we would rather inject
money by not running a productive trade
route and getting money from the
productivity of the building and the
owners of the building paying to us and
like this sort of stuff this is not our
preferred way of extracting money we
would rather let our Pops eat the Grain
and we would rather try and extract
specifically on the wealthier pops and
so for example exporting luxury uh you
know furniture and this sort of stuff is
super super okay because we are not
concerned as much about keeping the Sol
of these pops high but returning to like
the overall strategy you want to export
all of your or the only things that you
are exporting you want to be owned by
capitalists as far as importing goes you
want to import all the stuff that's
owned by Aristocrats and also
specifically resources can be good to
import for a variety of reasons that are
beyond the scope of this video but other
than that that's your general strategy
and this strategy is more important than
chasing some productivity you know
chasing some tail in the Spanish Market
sorry that's our import trade route our
export trade route here it would not be
worth it to seek this productivity even
though it is productive
um you know just on terms of this
it will make the Trade Center make more
money it will do these sorts of things
uh but this is not a good way to
evaluate it it's about thinking of your
total holistic strategy of pursuing
buildings and ownings of a particular
kind and also getting greater
specialization because when you export
if you're producing a lot of clothes and
you export clothes we can build these
tool clothing things up higher which we
can get more economies of scale bonus
from specifically we need to research
another tech here in Great Britain so
that's not the best example but it is
the idea so that was the tutorial on
five mistakes that newer players make in
regards to economics in Victoria 3
mainly kind of focusing on stuff when
they're coming from a different game if
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