Imperial Economy

The Nesarian Empire is one of the world's strongest economies. With a total nominal GDP of approximately $21 trillion, it is the second-largest economy in the world behind the USA, and its economy is comparable in size to the European Union. The Empire is widely recognised as a highly developed country with an advanced economy, boasting a diverse range of prosperous industries across the primary, secondary and tertiary sectors.

Although the Empire's economy is stable and strong, it is often criticised by economists across the world for operating at far below its potential, for a variety of historical and political factors. The Empire's economic strength is mostly a result of the vast size of the Empire itself; covering the entirety of the continent of Inecuria and hosting a population of over 701 million, the question is not why the Empire's economy is large, but rather why it is not far larger. With a nominal GDP per capita of roughly $29,957, the Empire sits alongside middling developed countries such as Cyprus, Slovenia, Estonia and Spain.

In terms of historical technological and social development, the continent that Inecuria is most similar to is Europe - it could even be argued that Inecuria has been ahead of Europe for most of history, given that Inecuria experienced the world's first industrial revolution. It is therefore somewhat puzzling that Inecuria only has a similar GDP to the EU despite having nearly double the population. However, this is where many an Inecurian economist would step in to argue that the Nesarian Empire is a leading example of why GDP is a flawed and limited tool for judging prosperity.

Even economists who support the use of GDP as a measuring tool accept that trying to analyse the Imperial economy as a whole is a largely fruitless exercise. Just as the Empire spans an entire continent, so too does it have a continent's worth of economic diversity. The Empire as a whole is classed as a developed, advanced economy, but the level of development both between and within Imperial Countries is far from even. Some countries of the Empire punch above their weight economically, some are less developed than they arguably should be, and some are extremely difficult to develop at all.

## Legacy of War

Many historians have suggested that a core reason for Inecuria lagging behind its fellow developed countries is the sheer level of devastation it suffered throughout the 19th and 20th centuries. The Nesarian Empire suffered great economic and manpower losses during WW1, WW2 and the War of Independence - and given the extreme turmoil of the interwar period, this meant that the Empire had been wasting its economic potential all the way from 1914 to 1958.

However, on top of this was the apocalyptic destruction of the Civil War of 1839-60, the bloodiest war in world history. The Civil War razed many cities to the ground, halted and reversed industrial development, and left 1/5 of the continent dead. Young men were disproportionately affected by the slaughter, erasing large swathes of the economy's most productive population. After 21 years of constant war, it took quite some time for major industries to switch back to civilian production. The Empire had certainly not recovered from the Civil War by 1914, and one could argue that it has still not done so today. Inecuria's population did not rise back to pre-Civil War levels until 1972, and many of the towns and industrial plants ruined by the war still lie empty.

Economists are generally in agreement that the destruction left by extreme warfare is a contributor to the Empire's lack of growth, but they are also in agreement that it is far from the most significant factor. Some economists - mostly overseas ones - argue that the legacy of war is nothing more than an excuse to cover up failures of economic policy rather than an actually valid reason for Inecuria's slow development. Inecurian economists, on the other hand, argue that the frequency and destruction of Inecuria's wars meant that its economic development was effectively dead in the water all the way from 1839 to 1958, and some go as far as saying that it is miraculous that the Empire is as developed as it is.

## Financial Sector

A characteristic of the Imperial economy which many economists claim is the main reason for Inecuria's underdevelopment is a small and weak financial sector. Imperial banks, stockbrokers and other financial services are heavily regulated and generally small in scale, a lasting legacy of Emperor Adrion's fascist policies which sought to regulate financiers according to Elvetan principles. It is this regulation, combined with the fact that the financial sector has not been allowed to grow on its own terms since the Bloodless Revolution of 1980, that makes the Imperial financial sector so weak compared to its international peers.

The regulation of the financial sector is a controversial topic. Liberal economists argue that it stifles investment, whereas traditionalists argue that safeguarding the economy and the nation from the power of wealthy financiers is worth the costs. Without going into specific details, Imperial law heavily restricts the rate of interest on loans to prevent usury, obliges banks to be careful in giving out loans to ensure that all loans can be repaid, and strongly restrains public stock trading to limit the influence of speculation. Most of these restrictions are targeted at high-end loans and trades involving businesses and large sums of money; those who take out loans or trade shares as private individuals generally have an easier time.

### Elite Money and Fascist Economic Theory

The general Inecurian argument - which originally stems from their vein of fascist theory - is that the restrictions on finance are aimed at eliminating so-called "elite money", which lowers national GDP because there is simply less money going around, but it does not actually affect the health of the economy as a whole - or the "common man's economy".

The concept of "elite money" is money within an economy that is generated by the elites and used by the elites, and remains within the economic sphere of the elites without ever positively contributing to the "common man's economy" - that is, the economy of the average citizen, where most money is spent on necessities and luxury products are a rare treat rather than the norm. The economic theory of Inecurian Fascism asserts that elite money is so dangerous because it does not improve the conditions of the common man, but it can still ruin the common man if the elite sphere of the economy fails. In general, the theory is a complete rejection of trickle-down economics.

Inecurian economists argue that elite money exposes the main flaw in the use of GDP as a tool for measuring prosperity. Elite money is included in GDP figures despite not actually providing any benefit to the common people, and generally leads to a measurement of GDP per capita making a country appear much more prosperous than it might actually be. As many countries throughout the world show, a very high GDP per capita can exist alongside high poverty, homelessness and exploitation.

Liberal economists often counter-argue that while this criticism of GDP is indeed true, the financial sector does more than just contribute to GDP directly - it also facilitates investment. While Imperial regulation certainly does not prevent investment, it limits the scope of investment - generally speaking, all matters related to loans and stock trading become more difficult the more money is involved, making large-scale investments a slow process compared to many other countries, especially in risky ventures. While restricting risk may be good for stability, there have been many occasions where risks have paid themselves off multiple times over. Liberal economists argue that in order for an economy to experience great success, economic agents have to be allowed to take risks, and have to be allowed to fail if those risks do not pay off.

Inecurian and liberal economists are at an impasse on this issue. Liberals usually concede that the Inecurian criticisms of GDP have merit, but they do not accept the theory of elite money as a whole, and argue that large-scale investment is beneficial for an economy. Inecurians wholly agree that investment is necessary for an economy to grow, but they see certain types of investment as merely an extension of elite money, and see no problem with restricting them as they are ultimately useless for the common man.

## Equality

The Nesarian Empire ranks highly in terms of income equality. Its Gini coefficient, though varying with time and with available data, generally hovers between 29 and 30; this is slightly more equal than the European Union average and is comparable to countries such as Sweden and the Netherlands. Inecuria has a strong tradition of generally detesting *Bevalore*, a term which is usually translated as "overpaid executives" but literally means "gold-eaters".

This has not only led to robust regulation and taxation that limits extremely high incomes, but it has also married a sense of embarrassment to positions with very high incomes that generally leads to the highest earners in society earning relatively less than their counterparts in a country such as the USA. Combined with the strict regulations and controls in the financial sector, it becomes evident why the gap between the wealthiest and the poorest is not as wide as in many western nations.

However, while the Nesarian Empire has low *income* inequality, it has very high *wealth* inequality. Unlike most advanced developed economies, the stark wealth inequality is down to the reality of the Empire as being a country still dominated by aristocrats. The Empire's wealth is not concentrated in individuals but rather in noble dynasties. The reality of much of the Empire still being partially feudal in nature and the unprecedented continuity of most Inecurian noble houses - especially the ruling Capilus dynasty, which is the second-longest reigning royal family in world history behind the House of Yamato, ruling the Empire continuously since its founding in 58BC - has led to the extraordinary accumulation of wealth over many centuries, and in some cases well over two millennia. The wealth of the Empire is often described as being "not merely old money, but *ancient* money".