SimCity: "It's a bit like Azerbaijan"

Like many people of my generation, my first experience of economics wasn’t in a textbook or a classroom, or even in the news: it was in a computer game.

SimCity was one of the first games I ever became addicted to – SimCity 2000 in my case. If you’re not familiar with the game, look here. In short, you are a mayor charged with designing and building a city. You’ll have to lay down the roads, the power lines and sewage pipes, the power stations and schools that every city needs. So far, so urban planning.

The economic element concerns trying to create the incentives to draw people into your city. If there isn’t the necessary infrastructure you’ll be left with a swathe of empty residential, commercial and industrial zones no one wants to inhabit. Design the city right, give everyone the colleges, parks and stadiums they want and you will attract a wealthier, cleaner, nicer brand of people.

Do it wrong, neglect your education system or allow unemployment to rise, and you could find yourself in a dirty, crime-ridden place which will eventually become unmanageable.

And, most relevant of all to economics, there is a tax system. Levy a high tax and your citizens will get irritated and want to move out. Levy a lower tax and you’ll get lots of people moving in but you might not generate enough revenue to pay for that new library, cathedral or power station.

This, when I think of it, was the first time I experienced the Laffer curve – though of course I didn’t realise that at the time: it was just a constraint that meant, annoyingly, I couldn’t have my cake and eat it. And although SimCity was just a computer game, and was designed with addictiveness in mind more than economic verisimilitude, it nonetheless proved an important educational tool: you want to see economics – incentives, constraints, deadweight loss and taxable elasticity and all – in action? This is your game.

So I was delighted to see recently that a new version of the game is out. But, and I appreciate this is unlikely to be the question every gamer asks him or herself, what about the economics? Is that going to be dumbed down this time around? I haven’t yet had a go at the game but I did have the chance to chat with Ocean Quigley, the game’s creative director. He revealed there are a few subtle differences with the previous game.

One is that they have done away with the chronological progression  of previous versions, where you’d start off in the post-industrial revolution era where the best power source available was coal and progress through time until eventually you unlocked the Nucear Fusion power station.

This time around there is no such march of time. There is evolution, but it’s more organic, and more reversible. You can unlock new, shiny innovations such as nuclear power stations (although not fusion this time around upsettingly) depending on the education level of your city. But you can also lose access to these innovations if you allow education and skills levels to fall.

That raises the prospect of seeing your city rise to greatness and then, whether through neglect or intentional decline, watch it diminish into an Ozymandian ruin. Which seems to me to reflect economic reality quite well.

According to Quigley, the designers have tried their hardest to ensure that there is no inherent bias towards running your city in a particular way. You can become an extremely successful mayor, earn lots of money and get a high population, with a smoke-filled industrial city. You don’t have to have the cleanest city in the world – though your wages (and taxes) will need to be attractive enough to offset the disgust caused by the dirtiness.

He says: “My agenda isn’t to say ‘green is good’. The agenda is to say ‘the world is made out of systems and you can make your own moral decisions about what to put in yours.

“Any simulation is going to come with its own biases. For example, we had to make decisions about criminality: what makes people into one, recidivism and so on. We looked at a bunch of research, cultural ideas, broken window theory, liberal notions about opportunity and so on. And in the end we wound up deciding that the causes [of crime] had to be both explicable and ones players could do something about.

“So in our case criminality is a probability modulated by education and economic opportunity. If you persist in being a criminal you’re likely to become a worse criminal over time. You can decide for yourself whether you want to deal with crime or its root causes.”

Filling your city with lots of high-tech automated factories (which you can do if your skills level is high enough) will drive up profits and increase your tax base, but will leave lots of people out of work, just as is the case in the real world.

As in the previous SimCity there will be a tax system (best of think of it as a kind of land tax, as it’s levied on occupants of space in the city). The more you develop your town hall, the more you can tailor this tax system. Initially it’s a flat rate. Then you can tax different land uses differently – whether they be commercial, industrial or residential. Ultimately you get to set different rates of tax for different wealth levels. So you can introduce something of a progressive tax system if that’s your bag.

In the real world, different income groups respond to tax in different ways: high income taxpayers, who tend often to be more mobile, and can move more easily from one country to another, are often more sensitive to higher taxes. And that’s the case in the game as well, according to Quigley: “In our simulation poor people are much more tolerant of taxation than rich people are. They will stick around. They don’t have mobility. When you get to middle class people they get more vocal and annoyed. The wealthiest citizens are hypersensitive.”

In this particular version of the game, because the architecture has become rather more ambitious, with every citizen’s occupation and desires mapped out, the scale of the cities are far smaller than in previous versions. That in turn means that as a mayor you have to choose to specialise in a particular industry: you could be a supercasino city, for instance, or an oil refiner, or focus entirely on waste management and sewage. The borders are porous so you can interact you’re your friends’ cities and trade with them.

“So if my city is an education hub, others over the river could be making an industrial centre,” says Quigley. “And the educated students might be developing the high tech, and so on.”

To back this up, Maxis, the wing of Electronic Arts which designed the game, will operate online markets in certain key commodities and goods. Your city mines gold? Well you can sell it on the market. Which adds an interesting dimension: there’s an incentive to manufacture a product or exploit a commodity which happens to have a high price on the online market at any one time.

In fact, Quigley says the team almost went one step further. They were considering setting up an international capital market for government finance. In previous games you could, as a mayor, issue bonds to raise money for projects (the interest rate would increase depending on how indebted you were). This time around, the team considered creating an online market buying and selling these bonds, raising the prospect that a city could face a debt crisis, could go bankrupt and could, in turn, cause a financial collapse across the entire global economy (of SimCity cities)

“We were kicking it around,” said Quigley. “We even thought about having credit ratings. But then we figured: let’s worry about roads and bridges first off, and worry about secondary stuff later.”

Nonetheless, I’m satisfied that there is still plenty of economics in the new game (although playing it in person will of course be the best test). But what kind of an economic system are we talking about here? If you were to try to categorise the SimCity world, would it be a capitalist system? A communist one? A social democracy? Other analogous games like Tropico give you the option of deciding whether to run your state as an open market-based economy or a communist, closed-borders system. What about SimCity?

“Well, if you wanted to get really literal, it’s state capitalism. You’re a bit like the president of Azerbaijan, running some post-Soviet state. You decide you’ll zone an area. You tax them. You as the mayor own the large state-level businesses: oil refineries, electronics plants, mines etc. And you can demolish them at will.

“One can defend democracy and the rule of law in life. But in computer games? That’s not how it works.”