Re: gold output
I've never found being next to Ermor to be a disadvantage, and several times have found it to be a boon. You should defend yourself against hostile dominion pushes -- they're very common. IMHO it's unusual to have Ermorian dominion hold sway over your lands.
Also, Ermor doesn't really want to push his dominion into your lands, as that's simply diplomatic suicide. Making his lands worthless to you and going no further is much more attractive -- and I don't see how this is significantly different than Dom 1.
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