You Stay Classy America...

The Dow Jones Industrial Average crossed the 13,000 mark today (Wed. April 25, 2007). That's Dow history, a record high. All indications point to a healthy economy, though Prof. Balak may be skeptical.

I guess the impetus for this post comes from hearing Prof. Balak say that, "The American economy is crap." I personally disagree. Though I don't know Balak's position on why America's economy is in poor condition, I dissent. The majority of the markets in America are producing, growing, and earning. All of the new technological factors and developments that have only recently (about 2 decades) entered the equation of the America's economy have yet to exert their full impact. We are living in exponential times of development and growth; that is a good thing for future change. One of the areas that Balak criticized was the American housing market. It's not in good condition, not meeting its expected quota for several months; however, March showed growth over February, and with most other sectors flourishing, I assume the results will be reflected upon the housing markets. Trickle down style. But just because the housing industry is encountering some troublesome times, there is no need for alarm. God knows that every sector has seen its ups and downs, and it looks as though the housing market may have seen the bottom of the down.

One other topic Prof. Balak seemed to be rather concerned about is the distribution of wealth. Yes, there is a high concentration of money in a small percent of the population. Well, that's capitalism. Most of the money is maintained by a small group, but is that necessarily that bad? Marx got it wrong saying that they would "cannibalize" each other. Nope, they live on. But, with all the problems that Balak says the country is faced with, it leads one to think. How do Capitalists make thier money, or how is money earned(distributed) in general? Well, that's done by the process of innovation and development; innovation and development against "PROBLEMS." We NEED problems as Capitalists. If there was nothing to build a market for (against PROBLEMS..like scarcity, need of service, weapons...etc.) then there would be no need for an economy, let alone Capitalism. I see these problems not only as healthy, but necessary for the future of America. It's how a capitalist nation functions: by solving problems, and profiting from them.


Pretty lofty assertions...I know...Comment.

Learning from Video Games?

Can our class "Eco 202: Economics in a Historical Perspective" really learn about the history of economics from Civilizations IV? It's not a yes or no question as much as it's a grey area between.

Ways we can learn from CIV IV: The games that Balak has assigned to us (regular length, world map) start at 5000 b.c. and with a victory end somewhere in the 2000's usually. We see the progression of our civilization over a 7000 year timespan. We are directly involved in decision making that effects the technological, social, political, and essentially the economic route of our nation. This is an effective method of hands on learning and pushes the students more towards the conceptualization level of learning: rather than the memorization and regurgitation of info. However, because of this style's nature, there is less attention to the specifics like the different foundations for economic policy, different economic philosophies, or real life and actual historical economic occurrences...which brings me to my next point.

Things we can't learn from CIV IV: Economics and the study of economics are different concepts. Economics is a sideffect of human interaction, growth, and civilization that has been with mankind since his dawn. The formal study of economics itself, however, is very young. It is generally accepted that the study of economics was born from Adam Smith's Wealth of Nations, at least those existing ideas regarding what would be called "Economics" finally amalgamated in his book. In years to come, especially because of increasing size and trade between nations, the concepts would grow into formal theory. This type of economics is not reflected in CIV IV. Keynesian Macro Economics don't show up in the game, no unemployment (at least in our terms), no money control, no interest, or loans for that matter, and several other lacking elements. CIV IV doesn't show the "real history" of the world, or of world economics.

For better or worse? The benefits are about the same, sure playing the game cuts away at some of the formal theory and principles, but that's not necessarily necessary in our class. It is, after all, Economics in a historical perspective. We'll have plenty of time for memorization and regurgitation in the Economics classes ahead of us. Right now, the conceptualization method is working pretty well...it's better than reading. GO USA!

Saving and Investment

One concept that was presented in the Heilbroner book was the cooperative relationship between saving and investment. The book's words were confusing (to me), and left me uncertain about what the real relationship was. This post will be dedicated to explaining the book's concept in lamens terms (by parralelling it to Civ IV.)

First what the book quotes, "When we save money, we also abstain form using a certain quantity of goods and services we might have bought. To be sure, our money savings represent a claim on goods and services, a claim that we may later excercise. Until we do, however, we have freed resources that would otherwise have been used to satisfy our immediate wants." and one more passage, "Saving is the releasing of resources from consumption; investment is the employment of these resources in making capital."

This actually paralells pretty well with Civ. In Civ IV all of your production abilities come from the cities. Each city can construct one thing (building or unit) at a time. Also, you can devote the labors of the city to producing research, money, or culture. So which is saving and which is investing? I'd say the only one considered to be saving is the production of money. This is because the end result of producing money is simply more money, each of the others (culture, research, buildings, or units) goes back into the proudction system somehow. (Unless you consider military units because often they will be amassed before they help conquer/defend and yield results.) Culture makes your people happier and expands your borders, research makes your "next technology" come about faster (which then goes back into the production system as well) and the same goes for buildings. So all of these activities could be considered Investing because they make some capital good that becomes/augments the factors of production. Money production, on the other hand, would be considered Saving because it is not immediatley recycled. However, money is still considered a capital good and can be invested just as any of the other options (like when you upgrade units, that takes money--an investment.)

Hope that can help...if you need it.

Expectation of Industrialization

Industrial Revolutions…there’s been more than one. They’ve occurred at different times in different places in the world. However, the initial concept of Industrial Revolution is especially European, and even more specifically English. It’s a good enough example though, especially when comparing real world events to Civ IV.

Nearly every Civ IV game has its own form of an industrial revolution. How quickly this level of industrialization is achieved is one of the games most crucial requirements. When a nation becomes industrialized production skyrockets. Effectively, industrialization is the specialization of labor with the aid of performance enhancing machines. The production of windmills, machine shops, and railroads are all signs of reaching an industrialized society in Civ.

Along with, usually, a much higher standard of living for a populace, industrialization weaves an exceedingly high level of interdependence within a society. Adam Smith gives us our most famous example of this in The Wealth of Nations; he demonstrates how industrial specialization (the “division of labour” as he called it) increases the efficiency of producing pins. I quote, “Those ten persons, therefore, could make among them upwards of forty-eight thousand pins in a day. Each person, therefore, making a tenth part of forty-eight thousand pins, might be considered as making four thousand eight hundred pins in a day. But if they had all wrought separately and independently, and without any of them having been educated to this peculiar business, they certainly could not each of them have made twenty, perhaps not one pin in a day…” (The Wealth of Nations.)

Many will argue that with this interdependence there comes the possibility of a catastrophic breakdown of the entire society because one small, specialized industry fails. Personally, I think that's pretty pessimistic; there aren't any other alternatives that will raise the standard of living so high for so many as does industrialization (except possibly killing off a large portion of the population and living off of their leftovers.) So I say we should stick with and support industrialization as it comes to us in both the real and virtual world.

Civics, Baby!

I have played and won about 5 Civ IV games now. I have also increased the AI skill level and still managed to win. I wouldn't consider myself a master, but I am much better than when I first began.

From some of the readings and in-class discussions the topic of society arises. Some of the primary points of separation between the different schools of economic thought spawn from how one proscription of economics will effect a society. Some of the most notable points would involve social stratification, slavery, welfare, graduated vs. flat taxation, public vs. private ownership, and an array of others. All of these terms pertain not solely to economics and society, but also to government.

There is an intangible triangle between Economics, Society, and Government. Each leg of the triangle effects, and is effected by, the other two legs of the triangle. In Civ IV the most obvious sign of these concepts comes from the Civics developments. Considering Civ IV is a game played for victory, which civic style you select should be aimed toward your ultimate victory goal. Chances are that you if you were developing a world that you were going to have to live in as an average citizen your selection would be weighed much more precisely. But, you're probably not playing that way. So, select the method that fits your game.

Each of the civics available for development in the game fall into a specific category. The categories are: Government Civics, Legal Civics, Labor Civics, Economic Civics, and Religious Civics. Each Civic developed beyond the original set of civics that you begin the game with requires the development of a certain technology. Every civilization will have at least one civic from each of these categories; each country today has their own selection of one of the above listed as well.

I have selected one from each of the 5 categories and made what my personal ideal world would look like (not that I play my game this way.) The following is my list:
Government Civics - Universal Suffrage (requires Democracy)
Legal Civics - Bureaucracy (requires Civil Service)
Labor Civics - Emancipation (requires Democracy)
Economic Civics - Free Market (requires Economics)
Religious Civics - Paganism (no requirement)

Do you have an opinion? Leave it in a comment.

Shift Happens...

A few days ago my uncle sent me an e-mail that I would consider to be one of the most amazing, interesting, and scary bits of information I have ever come across. To understand what this blog is about you will have to follow this link http://www.scottmcleod.org/didyouknow.wmv . It will open as a Windows Media Player file (or whatever video player you use.) Open it, watch it then continue reading my blog.

Where to start? A $1,000 computer that will be able to outperform the capabilities of the human mind by 2023? 3,000 books published daily? 2.7 billion Google searches monthly? The population/reproduction rates of China and India? Or most daunting, by the year 2049 a single $1,000 dollar computer will be able to outperform the capacity of the human RACE?

If it's not apparent enough from just looking at the differences between you and your parents, or noticing the new technology that has developed in the last few years, Civ IV should be able to apprise you of how technology gains momentum in its development. That's not to say that it can't regress as it did during the Dark Ages, but that it builds upon itself both higher and wider. A good diagram for technological development would be an inverted pyramid, with each new layer moving both horizontally and vertically on the frontier.

I feel that one of the most relevant questions to ask after knowing this is: What will happen to humanity?

Since humanity's beginning the most powerful computer available was simply the human mind. Even modern day computers that my be faster and more precise, can not be programed with all the factors that come into the decision equation. But what if this inverts, what if humans become secondary to machines? I quote Balak from class today, "Any teacher that can be replaced by a machine, should be." How are these changes going to effect our lives, and if not ours then the continuation of humanity? Historically, most technology has had positive effects on humanity, given that it may present some negative externalities. This advance will be like none other before, not like copper to bronze, nor like steam to combustion. Those advances are elements that humans are in control of and use, secondary to human relevance. This, however, could possibly bring humanity within sight of a realizable utopia or terminating dystopia. Will we reach a world with perfect machine slaves that remove the struggle from existence Will economies crumble because all human labor has become inefficient? Will things be better, worse, or the same? Time will tell.


Sorry this blog doesn't relate to Civ IV much, I think it relates to economics well enough to stand alone. Thanks for taking the time to read.

Guns and Butter

Civ IV, for the most part, functions to entertain its player. The entertainment value comes from the process of learning and applying the skills necessary to achieve success. One of the reasons Civ IV has attained such success (Game of the Year 2005) is because there are six different ways to win each game (Time, Conquest, Domination, Cultural, Diplomatic and Space Race.) My personal favorite method of winning is military conquest. But, for any manner of victory to be met, respects must be paid to the principles of production.

The Economic Questions must be answered relatively early on in the game in order to formulate a good strategy for victory.
Q1. What to produce?
A1. Depending on what type of victory you are striving for this is crucial. Conquistadors produce military, Dominators produce population (and take land), Culturists produce culture, Diplomats produce bullshit, or the UN and Astronauts produce the Space Ship.
Q2. For whom to produce it?
A2. I think the answer to this is for yourself.
Q3. How to produce it?
A3. This is where the technologies come in and the production power of your cities and workers. Each victory will require the production of certain units, buildings, and technologies.

If you weren't in class Tuesday, we had a discussion about some pretty basic and important economic concepts. Specifically The Principle of Increasing Marginal Opportunity Cost and Comparative Advantage. Believe it or not the rest of this blog post is going to be focused on explaining how the game reflects these principles during game-play. I'll make it short and concise...

The Principle of Increasing Marginal Opportunity Cost - This is mainly applied to the researching of technologies in the game. Each technology more or less improves the majority of one sector; while other sectors may benefit, it will not be as substantial as the primary sector (ex. production of Radio is mainly cultural, but also allows for development of submarines and other military units.) The standardized graph for the PP frontier uses Guns and Butter, a simple enough divergence between society's staple (food) and the excess military capacity (guns.) Depending where the current point of production is on the frontier, a reflection of a society's food surplus is shown. Once the always necessary Food Surplus has been met the possibility of specialization is revealed (the ability to produce military units and Guns.) However, the principle demands that for increased military production, food production must be foregone and vice versa; the amount of variance depends upon the slope or curve of the PPF.

Comparative Advantage - If you've played enough, you will know that each unit or building that a city may produce requires a certain number of turns to complete. If you have a relatively new city the number of turns to complete a specific construction can range from 4 to 200 turns. Possibly 4 turns to create a granary, or up to 200 turns to create a modern armor. The comparative advantage is a reflection of what a city's factors of production are more suited to produce. As more base constructions are completed the comparative advantage may shift from basic food surplus creation to other things such as cultural, or military production, etc.

If you want any kind of victory, you must answer the Three Economic Questions early on in the game and pursue the required fields of specialization consistently through the games duration...


Leave a comment if you feel what I have said is stupid or irrelevant...or if you think this post is the most enlightening thing you've ever seen.