Economy of Taihei Tengoku
Downtown skyline and port of Takao
|Currency||Taihei Tael (TTT)|
|1 April - 31 March|
$2.912 trillion (nominal, 2017) |
$2.612 trillion (PPP, 2017) (7th)
|4% (Q3 2015)|
GDP per capita
$55,241 (nominal, 2017) |
$49,557 (PPP, 2017) (1st)
GDP by sector
Agriculture: 1.2% |
|2% (Q3 2015)|
Population below poverty line
|$1,146 billion (40% of GDP)|
The economy of Taihei Tengoku is trade-oriented and market-based. It is the seventh largest economy in the world by gross domestic product and the wealthiest per capita in real terms. It is characterized by low tax rates and other liberal policies, including free-port trade in the two major coastal cities of Nara and Takao.
The Taihei economy is an advanced industrial and service economy, and serves as a major manufacturing and commercial hub. The port of Takao is the busiest port in Wilassia by both transshipment and TEU throughput, and the 4th busiest port in Maredoratica. The Nara Stock Exchange is the largest in Wilassia in terms of capitalization. Its currency, the tael, is managed by the quasi-private Bank of Nara.
Classical and early modern era
Early industrial period
Taihei National System
The end of the Great War placed Taihei Tengoku as a civilized, industrial power, but still at an inferior position relative to Alisnan countries. It had gained a portion of the Sirenes from the WHOEVER, but its interests in newly independent Ruccola went unrecognized despite Taihei Tengoku contributing the majority of troops in the campaign. In protest Taihei Tengoku only agreed to observer status in the Maredoratic League. The continuation of the Maredoratic Trade War worsened the country's economic outlook. The country's industry relied almost wholly on imported inputs from raw materials to complex machinery, and its anemic financial sector could not provide the capital needed as foreign sources fell behind capital controls.
The Domeito government, in an attempt to ameliorate its deteriorating terms of trade, implemented the National System in 1924. The economy was brought under increasing state purview through progressive cartelization. Only the large industrial conglomerates, the zaibatsu, could provide the spare revenue to fund loss-making state enterprises. Taihei investments in Ruccola and South Alqosia secured streams of raw materials while the state directed strategic industrial development by backing the zaibatsu with capital. Priority went to heavy industry, primarily in the north of the country, and to the military-industrial complex.
Economic growth slowed (as it did all across Maredoratica) during this period. The zaibatsu became organs of the state as they required more money to keep their industries operational, but simply printing money would destroy the country's scarce foreign exchange reserves and also lead to hyperinflation. The Taihei government implemented peacetime rationing of gasoline in 1941, with rationing gradually expanding until most consumer goods were effectively demonetized by the 1960s in order to save all available money supply for international trade.
Despite this, the National System still moved towards crisis. The Maredoratic League Investment Bank made mercantilist trade nearly impossible. A sustained international trade imbalance would lead to a revision of the currency pegs to eliminate it even if one party was outside the League and not a signatory to the Bois Breton Agreement. The only solution was to directly increase the real Taihei economy; as state planners judged the domestic economy to be as industrialized as it could be presently the only alternative was war. The country instigated the Confronto against the Ruccolans, intending to covertly separate (and later annex) a large border region rich in minerals. The invasion failed and Taihei Tengoku faced international censure and stiff reparations payments to the Ruccolans.
The collapse of the Domeito after the Confronto left the Rikken Aikokusha and its powerful leader, Ri Kou You, as the dominant faction within Taihei politics. The Rikken Aikokusha gained the majority in the Final Court in the 1966 tranche elections and Ri Kou You was crowned Wing King in December 1968. With the rest of the Regency rendered powerless by the collapse of the Domeito, Ri enjoyed a free hand in drafting and implementing comprehensive economic reforms. Between March 30 and April 1, Ri announced the replacement of the sen with the florin-pegged tael, abolished price controls and rationing, and merged the CBTT into the Nara Junker Bank to form the Bank of Nara, abolishing the National System in three days. In 1970 the adoption of the tael triggered another round of reforms, slashing most tax rates (including all tariffs) and reorganizing the Taihei welfare state around sovereign wealth funds and the negative income tax in place of the ration.
The economy quickly entered recovery and began a long period of sustained expansion. The suddenness of the reforms drained the excess cash reserves the zaibatsu held and monetized the now-legalized informal economy, ending the chronic shortages of consumer goods. Most zaibatsu collapsed into their constituent firms in order to resolve their outstanding liabilities. The transfer of capital and employees out of the cartels diversified the economy and created a multitude of new businesses on sounder financial footing. Taihei economic growth attracted foreign direct investment, driving further growth; the Taihei economy posted 11% growth in 1978. By Ri Kou You's death in 1999 Taihei Tengoku ranked sixth in the world for per capita income.
The Taihei economy continued to grow into the 21st century, eventually becoming the wealthiest in 2009. The Taihei economy last entered recession in 1990, after a Communist revolution in Questers destroyed significant Taihei investments in the country. Since then the economy has posted continual growth, the longest such period in modern history. The 2014 global financial crisis threatened another recession in the Taihei economy, to which the government responded to by formally adopting a gross national income target. The Bank of Nara dropped its reserve rates below zero, dramatically increasing the money supply to counteract the decline in economic activity. This unconventional monetary policy averted recession but prices rose dramatically, with the economy experiencing 10% inflation in 2014 and 4.7% inflation in 2015.
Agriculture produces about 1% of Taihei GDP and employs about 1.5% of the working population. The staple crop is rice, produced mainly in Kozuke and Mutsu commanderies. Agriculture is shrinking in both value of production and in employment: the average farmer is 56 years old and aging, many farming small plots only to supplement pension incomes. Immigrant workers rarely move out to the rural areas where most farmers live. Taihei fisheries collapsed in the 1990s due to overfishing, but are undergoing a recovery after fishing permits were decreased and there issue nationalized under the Fisheries Bureau.
Taihei Tengoku possesses marginal mineral and hydrocarbon resources. Domestic sources of iron and coal were almost entirely exhausted in the early 20th century, though one mine in Yamase commandery still produces low-grade anthracite coal for domestic use. Small mining operations in the north and east of the country extract minor amounts of antimony, lead, mercury, silver, titanium, and vanadium.
Taihei Tengoku has a highly developed service sector. Nara, in addition to being Wilassia's most visited city, is home to the continent's largest stock exchange.
Law and government
Since the late 1970s Taihei Tengoku has led the world in ease of doing business rankings. The permit requirements to start a new business takes about one business day and involves one three-page form. Most disputes are settled in well-funded public arbitration courts with few explicit statutory regulations. There is no minimum wage, and labor market regulations are almost entirely determined by bargaining.
The Taihei government levies three principal taxes: the income tax (including the payroll tax), the land value tax, and the value-added tax. The government ended corporate taxation in 1999, although copious deductions had made it long irrelevant, and abolished taxes on capital gains in 2004. The National Revenue Bureau collects about 19% of GDP as taxes annually.
- Income tax: Unlike most countries, Taihei income tax is assessed not as a rate but as direct payments. The size of these payments are continuously determined as the distance between gross income and a logarithm. The logarithmic formula is expressed as n times the base-n logarithm of the ratio of gross income to the average income. For incomes below a ratio of 2 the post-tax income is higher than gross income. Theoretically, the effective tax rate approaches 100% as personal incomes reach into trillions of ecus. In practice, personal incomes never reach this level of punitive taxation; the highest effective rate paid in 2017 was 21.9%. Spending on education and deposits into pensions and health savings accounts allow deduction of up to half the income tax. Citizens exempted from the draft pay an extra 3% of pre-tax income for twenty wage-earning years.
- Payroll tax: Unlike income taxes, payroll taxes are assessed at 10% gross salary, used to evenly fund the Pension and Hospital Fund accounts of employees.
- Value added tax: 3.33% (one-thirtieth) of most consumer goods. Food, clothing, and medicines are generally exempt.
- Land value tax: 1% of ground rent.
Spending and investment
The state spends approximately 19% of GDP annually. Its largest commitments are income supplements, healthcare, and the National Protection Army. About 6% of the national budget, amounting to 1.5% of GDP, is invested in a sovereign wealth fund each year.
The Taihei government maintains three sovereign wealth funds under the management of the Bank of Nara: the Pension, Hospital, and Revenue Funds. The first two are funded by payroll tax revenues and provide retirement and medical savings accounts to citizens from bond revenues. The Revenue Fund is a revenue equalization fund consisting of more liquid assets and is a "war chest" in case of emergency.