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Eh.. The more you take, obviously more the locals are going to resent their distant overlord. That's not some kind of mysterious effect, if your nation is a puppet and the overlord is taking you for everything you're worth, you're obviously going to want to work towards independence before there's nothing left.
And as to lowering their autonomy, it's (according to the wiki) one point of autonomy gone for every 100 production cost of lend-leased equipment. I've turned nations from puppets, to integrated puppets and even annexed them (First taking like 500, then 900+ autonomy reduction) just by gifting ♥♥♥♥♥♥ old rifles, artillery, tanks and more.
You can also build in their territory, which comes out to 0.7 autonomy lost per 100 production, so a military factory (that your puppet can then use to arm it's troops) means -25.2 autonomy.
There's the Suppress Subjects continuous focus for -0.5 autonomy daily.
And you importing their resources gives them a grand total of 0.04 autonomy for every 10 resources per day. As I recall, an integrated puppet gives you 80 resources for a single factory. That comes out to what, 0.32 autonomy per day? If you seriously can't counteract that with the kind of production you can push out with 80 more resources available to you..
wait are you defending the trade with overlord penalty? dude, to do what you are suggesting is not worth it....I would have to give EVERYTHING I build over...I would have to improve only puppet land to balance the paperwork....it is utter nonsense that OVERLORD is not allowed to resources of its PUPPET...they exist because master allowed it...they are MY PROVINCE....
It's a puppet government, not literally under your control. That would be what ANNEXING is. When you puppet a country, you install a government that is friendly to you, but they are not just mindless slaves. So if you just take and take and take and take, of course they'll sooner or later get tired of it and want independence. The British Raj is one example - why SHOULD they want to forever deal with the UK simply doing with them as they wish? And they're nowhere near as bad as it can get on the puppet scale!
Let's take a look at what the base level of puppet gives you, with NO increase in their autonomy. Already, you get 90% of their manpower added to your recruitment pool. An insane increase with a nation as populous as China. And I could be wrong but this is from China's recruitable pool, which is far higher for them than it would be for you if you annexed because China has those areas as core (obviously) while you would not.
And things that do increase their autonomy? You buy resources at a massive 90% discount, allowing you to get 80 resources per factory instead of 8, and you have a massive increase to trade influence so they're just about guaranteed to sell to you before anyone else.
Reduce them to an integrated puppet, and boom. You now have access to 100% of their manpower to recruit yourself, 25% of their civilian industry and 75% of their military industry.
You're vastly exaggerating the amount of trade or construction that it would take to outstrip the gain in autonomy from trading too. They gain .32 autonomy per 80 resources they give you - Now I could be failing math again (wouldn't be the first time) but that comes out to one military factory's reduction in autonomy (and again, you get 75% of their military industry yourself) lasting for just short of 79 days. Or 100 production's worth of equipment for one autonomy - got some old tier 1 towed artillery? 28 of those will counter autonomy gain from three days of shipping you resources.
Furthermore, lend-leasing the equipment to your puppet or building factories for them doesn't make it disintegrate into thin air - your puppet will then use that to equip it's own divisions and those divisions in turn can help you fight your wars.
I generally have mountains of old equipment in storage. I lend lease away as much as possible.
But the other side of this is that they want Puppets/Colonies/Dominions to be playable. So, the things a P/C/D can do to be useful to their overlord are things that get you bonus Autonomy points, unless your overlord is also doing you solids in return. So yeah, being a massive resource boost for your overlord gets you some plaudits. They can build you some stuff in return, or eventually in a couple years you get some upgrades. That's only fair.
Or running the Suppress Subjects continuous focus. But you wouldn't do that, would you?
Every time you enable Suppress Subjects, baby Gandhi cries.
Then you do it one time too many.. http://i2.kym-cdn.com/photos/images/original/000/913/887/841.jpg
You need 1000 points to advance one level, and there are what, four levels? (Int Pup, Pup, Col, Dom, Free)
So to have a Puppet go free over a six year period (IE: 1936->1942), they'd need to earn... ballpark 1.5 autonomy per day, without you doing a thing to stop it. If they're earning less than 1 per day net, they will be yours for the entire duration of the game. So that's... what, three or four blocks of 80 resources per puppet for the entire duration of the game, without you lifting a finger to slow their progress. If you're needing more than that, I think you can afford a few civ-factory cycles to keep them, no?
That border gore though..
Everything breaks if the Allied powers can declare war on the Axis early, before the Axis are ready. It breaks it as a plausible historical recreation, it most definitely breaks it as a World War 2 game, and it breaks it as a thing where the outcome is in question rather than Germany getting ♥♥♥♥♥♥♥♥♥♥♥ by UK+US before they've even done the Anschluss.
That's why Democracies get that rule. So that the Axis and the Comintern have the initiative early, and you don't have the US going on conquering sprees to get the 'at war' exemptions to their various debuffs by eating South and Central America.
Not everything is rules-as-physics.
not really...early in game the allies are suffering from great depression and such negative debuffs....war early on favors axis....they could have made it so war does not mean automatic cleansing of such debuffs...they COULD have done it right