Sober Thought economy

The economy of Sober Thought is extremely fragile and performs poorly by all conventional economic measurements. However, there is broad consensus in the society as a whole and political parties in particular to continue these economic policies which seem to be so terrible yet fulfill the needs of the country's residents.

Macroeconomic performance

Macroeconomics is that branch of the dismal science which tries to capture overall activity in an entire region, country, province or metropolitan area. One of the simplest measures used to compare economic performance in these areas is Gross Domestic Product (sometimes adjusted to account for the locale as Gross Regional Product, Gross Provincial Product, etc.) which accounts for all economic activity in the area, including that resulting from external demand. To make useful comparison, GDP is divided by the population of a country to give a per capita rate and expressed in a common convertible currency (normally the real world United States dollar).

According to conventional economics, the GDP per capita of Sober Thought is a disgrace. It is usually the lowest in the International Democratic Union, often below US$100 and drastically less than the IDU average of US$18,000. Such a result may be expected from a government willing to direct, participate or heavily regulate its economy. Furthermore, the economy is built to support a thick and wide social net which causes many services to be undervalued in comparison to their value on the freemarket. Thus, most people can live quite comfortably with little relative or absolute poverty.

The unemployment rate normally hovers around an eyepopping 15% or rougly one seventh of the labour force. However, in accordance with the data collection policies of RL Canada, these figures do not count fulltime or parttime soldiers. By no means is the country an armed camp, but its emphasis on civil and military defence in depth means that the effective employment is about half that, or closer to the natural rate of unemployment in RL Canada.

Economic policy

As might be expected for a somewhat left-wing interventionist state, the Economy rating in gameplay rarely excedes Imploded. The fact that there is a one hundred percent taxation rate might have something to do with this. The national currency is the Denkmark, which typically trades for at least two hundred of them to the United States dollar.

The Ministry of Community Prosperity is responsible for all aspects of measuring and predicting the domestic economy. Nearly all of economic policy is set at the federal level, but some is set at lower levels.

Monetary policy

Main article: Denkmark#Monetary policy.

NS Economy link for current statistics: http://nseconomy.thirdgeek.com/nseconomy.php?nation=Sober+Thought.

All countries need a store of value, a unit of exchange and a unit of account if they are to grow beyond a barter or fiat economy. Normally these three functions are all carried out by one currency, but occasionally the role is split. For instance, prior to the adoption by the real world European Union of the Euro, each member state used its own currency and for accounting purposes used the wikipedia:European Currency Union:European Currency Unit, ECU or écu.

In Sober Thought, all economic transactions and statistics are denominated in Denkmarks and the constitution gives the federal government exclusive responsibility for currency. The Denkmark, or dash-D, is the lowest valued currency in the International Democratic Union, frequently trading at two hundred or more Denkmarks per United States Dollar.

Interest rates can be used to encourage savings and investment, and typically high interest rates and an established strong currency encourage foreigners to buy local currencies and play the money market. This process of shorttem investments in currencies can cause wild fluctuations in exchange and interest rates which are detrimental to the people who actually use the currency for daily living and are not speculating.

Consequently, Sober Thought discourages foreign investors by keeping interest rates and hence the cost of money low. Such a policy also encourages domestic investment and homeownership because the real value of something is not represented solely in the nominal Denkmark value.

The low exchange rate means that exports can prosper because the cost of labour and domestic raw materials are somewhat undervalued. Imports are similarly hampered by the reverse side of the coin, but together both impulses encourage domestic manufacturing and national self-reliance.

Trade policy

Following closely on the heels of monetary policy is trade policy. The classical economics of Smith and Ricardo emphasised the benefit of international trade, with each country specialising in the products and services in which they have the greatest competitive advantage. Unfortunately, this analysis ignores some practical matters such as self-sufficiency, self-interest and self-defence. For instance, countries relying on international trade for most of their foodstuffs are highly vulnerable to economic boycott or military blockade.

The governments of Sober Thought have not been opposed to international trade or importing significant portions of their non-essential manufactures. However, it draws the line at national subservience or vulnerability. Therefore, as a matter of consensus among the political parties except the libertarian Free Enterprise Party, the country will not allow itself to become reliant on other countries for basic foodstuffs, defence technology or mass transit technology. Exotic fruits, specialist weapons or automobiles are all acceptable imports, and the legislature decided against subsidising the auto industry on a Daily Issue because private cars are not essential.

The country is a signatory to the IDU Free Trade Agreement, and it has suggested in public forums that a similar agreement in manufactured goods might be suitable as a UN proposal. The low Denkmark is helpful for exports, and in fact the country maintains a trade surplus with its neighbours. However, on a personal level, the currency is nearly worthless which keeps domestic investment, travel and purchasing inside the Ð-zone.

Labour policy

Main article: Sober Thought labour-management relations and Sober Thought unions.

Labour law in the country is gear towards maintaining labour peace with few strikes, lockouts or forcibly concluded contracts. When every party has its needs recognised and receives an incentive to cooperate, all will cooperate to create the most well-organised and well-run economy possible. Contract disputes between labour and management are arbitrated provincially as a branch of civil law or, if it is a business incorporated federally, the Vice Ministry of Employment.

Firstly, the actual public sector in Sober Thought is rather small considering its interventionists tendencies. It is much more likely to regulate a private sector industry or establish an arms-length Community corporation like CommunitAir or InfoST than it is to create actual government employment. Those in the narrow public service of the federal government are prohibited from striking or unionising, and many provinces and cities have followed suit. So despite the rhetoric of the Free Enterprisers, nationaised industries are not the norm here.

Secondly, labour unions are recognized as legitimate actors in large scale workplaces so little effort is spent combatting what is regarded as a normal aspect collective bargaining. When a majority of non-management employees sign union cards, the entire workplace and all its non-executive employees are covered like the RL Rand formula.

But labour is not king, just a commoner like capital. The labour leadership is held responsible for the acts of its membership, and is liable for prosecution for encouraging or tolerating illegal strikes. Legal strikes are possible, but again because of the low value of the Denkmark few unions can sustain a long walkout. Unions are effectively absent from workplaces of fewer than one hundred employees and are barred by law for white collar or management workers per a Daily Issue ruling.

Lastly, concerning the third leg of the tripartite system, management's legitimate aspirations are also clearly recognised in Community labour law. It bands together in industry associations to better deal with sector-wide unions, and the result is often a model contract concluded by a management and union chosen as lead negotiators for each round of collective bargaining. What is more, labour peace and a reliable workforce give management a competitive advantage when dealing with other domestic and foreign businesses. And like their union counterparts, few businesses can afford a long lockout.

Corporate responsibility policy

While free enterprise is permitted, valued and encouraged, it is not at the expense of social obligations and not by avoiding the true cost of business decisions. There are also strict accounting and reporting standards for all parapublic and public businesses. Incorporated businesses may have the legal status of persons, but this extends to the right of suspension or dissolution of the corporation for violations of the law.

To encourage fair trade and fair dealings, goods are the responsibility of the individual or collective industry from the extraction of raw materials to the manufacture and packaging of the product through to recycling or destruction. To enforce this responsibility, many business have formed self-governing industry associations which arrange their own membership and governance procedures for their constituent businesses. A business not belonging an association must bear all the responsibility for its own products, so few choose to do so.

For example, a steel company relying on iron ore that is strip mined, smelted with brown coal and whose slag is discarded into ecologically sensitive marshland is responsible (through its industry association) for the cost of landscaping, air pollution controls and marsh restoration. If a steel company sells structural beams to a construction company, the steel industry assocation must recycle or safely dispose of them at the end of the building's life.

Industry sectors

Public and parapublic sector

Government is directly involved in the economy only where national sovereignty demands it or a natural monopoly exists that a regulated private sector organization cannot or will not operate. In macroeconomics, government is called quaternary industry after the primary extractive, secondary manufacturing and tertiary services sectors.

The major quaternary, or government service, industry is spent on public security or social defence — a notion peculiar to the country. Essentially, it combines a very generous social welfare net with a very strict social behaviour code. Provincial police are augmented by the Civil Guard or Community Defence Forces as required, but police powers may only be exercised by government-funded provincial police, and may not be delegated to private security firms or private police forces.

A less direct form of economic participation is provided by the parapublic sector, chiefly self-financing and separately incorporated institutions whose controlling or sole shareholders are governments. In the transportation and communications field, InfoST, STaqua, STferro and CommunitAir are all Community corporations. Sober Thought Post is also an autonomous agency of the federal government.

Finally, at the last tier of government control, is regulated industry. This term applies to private enterprises whose prices (not things like product safety, financial accounting or governance) are regulated by one or more levels of government. For practical purposes, it behaves like the parapublic sectors.

Private sectors

The major primary, or extractive, industry is beef-based agriculture, and periodically this is enhanced by hunting owls, the national animal. Forestry, fishing and mining are subsidiary industries, with declining employment and economic activity.

Citizens and the government value the natural environment, so great care is taken to limit the destructive effects of extractive industry such as soil erosion, water contamination, habitat destruction and loss of photosynthesis. Virtually all of the employers in primary industry are private sector.

The major secondary, or manufacturing, industry is in the automotive, aerospace and shipbuilding industries. However, most of these manufactures are geared towards military or government use, like the family of jet transports which are used by the state-owned airline CommunitAir as well as the CDF Air Service.

This is the only subsidy that the federal government offers to its business people, although a few provinces and cities sponsor more modest industrial support programmes. There is rough parity between the private sector on one hand and the parapublic and regulated sectors on the other.

The major tertiary, or services, industry is education. The governments and residents of Sober Thought value education very highly. Furthermore, they broadly construe the meaning of education to include trades, commercial, professional and academic instruction. There are no ivory towers or Ivy League snobbery here, and most colleges and universities are regulated by definition (since no institution not regulated by the government may call itself a college or university and grant degrees or diplomas), and in fact most are parapublic because they are arms-length institutions supported by various levels of government.

Less important tertiary services include air, railway and water common carrier transportation. Smaller amounts are spent on health care, with a heavy emphasis on preventive and low-tech care which brings the greatest results for the least cost. These too are mostly in the parapublic sector.