Capitalism 2 and Capitalism Lab Forum

I was trying to decipher and pondering what kind of tax should be and could be added in the city simulation expansion pack, and David was kind enough to give us a screenshot (shown above). And it lead me wondering, what's the real GDP per capita in game? If the data shown above is calculated base on a 20% default individual income tax, than the GDP per capita in Portland is merely about 5k, which is unreasonable low if it represent a real world income level, which is about 20k in real life in 1990 currency level. But this is based on everyone is paying tax, and its a flat tax, which both are also false in real life. Regardless the authenticity of the income level, it's more important for the mechanics to be consistent within the game, conceivably to be calculated based on Real Wage Rate level factor. However, this bares an interesting question, what's the "GDP" or more precisely the "aggregate purchasing power" of all citizens in one city?

In real life, it's obvious people don't spend every penny they earned on normal spending, but also savings and investing. But exactly what is the citizen income and expenses? If base on a 10k per capita level to calculate a 2 million population city, then the aggregate potential gross income would be near 20 billion. So does this means if you open a company and sell every possible products in game with monopoly, you would hit a hard cap of 20 billion revenue no matter what? Or do citizens "borrow money" or use "credit card" to "generate" more money to spend on and lead to a higher money demand? Or do citizens save what's not spending and "recycle" the money in saving's account (which then would become the reserve of banks)?

I believe this should be a core issue to set up a realistic economic simulation, like the income/expenditure charts of citizens, and their interaction with the financial sector. It would be great to see the citizen expenditure pie chart of how many they spend on what kind of products, and how many are from AI/player corporations, and how many are local and unseen utility and service sector businesses. Also it would be great to see the saving/borrowing level of citizens become the corner stone of financial sector for money supply/demand. Money doesn't grow on trees, but could be from a semi-realistic money creation process like in real life banking.

I was trying to decipher and pondering what kind of tax should be and could be added in the city simulation expansion pack, and David was kind enough to give us a screenshot (shown above). And it lead me wondering, what's the real GDP per capita in game? If the data shown above is calculated base on a 20% default individual income tax, than the GDP per capita in Portland is merely about 5k, which is unreasonable low if it represent a real world income level, which is about 20k in real life in 1990 currency level.

I was able to obtain a screenshot from the dev team with the new GDP per capita graph - see attached screenshot. It is calculated by dividing the city's total GDP by its population.

It's almost exactly like I expected, just with a higher individual income tax rate of about 25%, hence it's based on a lower GDP per capita of around 3.5k. I do wonder what's the relation between wage rate and GDP per capita?

There are several ways in real life of calculating GDP, which one is used to calculate the GDP base? Income approach, production approach, or expenditure approach? I would assume it's some sort of income approach if wage rage is involved in consideration, but how do you calculate the corporate profit (and interests) within just one city? The sum of all firms in that city?

And does this GDP cap really a hard cap that can reflect corporation revenues within the city? This should be a core question if corporate based tax ever to be considered in game.

I do wonder what's the relation between wage rate and GDP per capita?

A higher wage rate means people are receiving higher salaries, which allows them to spend more on consumption. Since consumption is a component of GDP, thus it positively affect GDP per capita.

There are several ways in real life of calculating GDP, which one is used to calculate the GDP base? Income approach, production approach, or expenditure approach?

It is the expenditure approach that CapLab uses for calculating the GDP. I have got a screenshot from the dev team's work-in-progress version and posted it here for your interest.

how do you calculate the corporate profit (and interests) within just one city? The sum of all firms in that city?

As we are using the expenditure approach for calculating the GDP, this is not an issue that the game has to deal with.

And does this GDP cap really a hard cap that can reflect corporation revenues within the city? This should be a core question if corporate based tax ever to be considered in game.

It is actually the other way round. Consumption, which is a component of GDP, drives corporation revenues.

Very interesting, and it makes me wonder, since theoretically expenditure has to be equal to income, so the combined local corporate profit can be "estimated" quite easily by deducting the number backward from expenditure. This would be an interesting way to calculate local businesses inside a city compare to AI/players local firms.

I always wonder which corner stone the economy simulation in Capitalism is based on. It has to start somewhere with certain assumptions/numbers, thus able to calculate and extrapolate the rest. I'm glad there is no hard cap based on a prerequisite GDP assumption, and it's calculated from the ground up. All we need now is a proper financial mechanism for AI/players to participate with, not just statistical data to look at (Perhaps the citizen's savings/investment and expenditures breakdown charts/sheets can come along with the tax? And index like GNDI Gross National Disposable Income can be calculated?)

david Looking great!