Taxes, the Imperium, and You!

[MarcusIII]

yes, but not Free Market capitalism. Even Adam Smith allowed that oligopolistic behavior to the disadvantage of the consumer and the market were the norm, assuming no one could manage a monopoly.

In the USA the only monopolies actual have been because the gov't made them so. The earliest example is the rail roads. An monopoly created by the illegal actions of the US congress.

 

[Condottiere]

If you want to influence behaviour, you might need to artificially incentivize it, beyond the usual demand and supply.

As I recall, eminent domain on both sides of the planned route(s), that was given free of charge to the railroad operators.

 

[actionman]

yes, but not Free Market capitalism.

Free market capitalism is exactly what people do when they're left alone.

 

[actionman]

You are channeling Frédéric Bastiat. For those with less Econ chops here's his books you should study. They are free. epubs

Excellent contribution.

 

[actionman]

On most worlds, the local governments decided how they function economicly, but whatever form they use, they still have to pay taxes based on some formula of population, known resources and known output.

As far as IMTU, agreed. Consider all comments to be IMTU, since people do what they like in their own TU's.

This is collected by the subsector, which pays a similar formula based tax to the sector. The subsector probably runs on some form of demand economic model, I would guess some form of regulated capitalism usually.

A reasonable position. The Imperium is forthright about its prerogative to regulate interstellar trade and prevent inter-world conflicts from becoming too economically destructive. I consider this to be a regulation of capitalism, in the context of this discussion.

The sector level then pays its taxes to the region based on its income,

Agreed.

They need a large investment fund for development in the sector and a good emergency fund for reaction to unexpected costs and needs and response to large scale disasters.

Here we need to pin down which echelon of the Imperial government is responsible for these responsibilities.
Sector development? IMTU the sector duke, and subsector dukes for subsectors.
Emergency fund? Subsector dukes, because a large scale disaster is only going to affect a single system or possible several nearby systems.

After that though, its spending should be steady; infrastructure to support the bureaucracy, ship building, maintenance and equipment for military, salaries and the like.

IMTU this is funded at the Imperial level. Sector and subsector dukes would fund their huscarls and household fleets (if they maintain fleets), but the Iridium Throne funds the Imperial military and the Imperial ministries. If the sector and subsector dukes fund the sector and subsector fleets, then IMO the Imperial feudal model collapses because the fiefholders then hold both the fiefs and military power, and the Imperium would likely disintegrate into revolts and civil wars.

So could this not be at least partially command economy?

I disagree. It is a capitalist economy, because the Imperial government pays the owners of the means of production to produce what it wants, like any other customer (fair market value or a negotiated value that both parties agree to), and the owners decide what they're going to do with their factories. The Imperial government could reasonably do its procurement planning as you described, but then it would negotiate the purchase with the private owners of the means of production. The Imperial government wouldn't simply command the means of production to produce something then give it a certain amount of money the government had decided on in advance. Since the Imperium is an absolute monarchy, the Emperor could decree that Ling Standard Products has to produce something for a particular price, but that runs the risk of ruining the corporation if the price decreed leaves LSP unable to pay its workers, etc. That still wouldn't be a command economy, it would be the Emperor interfering in a capitalist economy.

In a partial command economy, the Imperial government would own the means of production of one aspect of the economy (let's say shipyards), and the means of production would produce whatever the Imperial government told it to for whatever compensation the Imperial government decided to give it. Efficiency problems would soon follow, because the shipyard project administrators aren't allowed to decide how to best use their facilities, how to keep their yards producing and earning credits as consistently as possible, how much to pay their workers, how much they pay for materials, which materials the shipyard gets, all that. The economic planners at the Imperial government decide all those things. Then we start getting problems like the shipyard can't procure materials because the amount of money the economic planners allocated to the project isn't enough, or the planners allocated too many resources and the warehouses are full to bursting, or the wages are out of sync with the prevailing wages in the system or the subsector (too low and the workers leave, too high and it's wasteful) and the shipyard administrators are powerless to make any adjustments because all that is done by the Imperial economic planners, and the shipyard is probably idle a lot of the time because it only produces what the planners tell it to produce, and the Imperium can't have it constantly producing subsector fleets except in wartime or other unusual circumstance. So the shipyard completes its orders then sits idle, it's capacity unused, consuming money and resources for it's upkeep. Irl example: In the USSR, a man was comrade manager of a factory that made dresses for the women of the area. His factory received a certain number of bolts of cloth, and the factory was required to produce a certain number of dresses per month. But, he was receiving much more cloth than making the dresses required. His warehouse was full and his workers were even stacking bolts of cloth all over floors. He couldn't reduce the amount of cloth he was getting, and he wasn't allowed to make more dresses, or even to lower prices to encourage people to buy more. To suggest any changes was to suggest that the economic planners had made a mistake, and the consequences of that would probably be dire. So, he made giant dresses. He made dresses that would fit 20ft tall women, because the planners didn't specify the amount of material to be used in each dress. Customers bought the dresses that still cost the same as a dress for a normal sized woman, then remade the dresses at home and used the excess cloth for other things.

 

[ColinD]

I've spent quite a while modelling enough of this in various ways to run PoD, first using the Pocket Empires rules, then the WBH rules, then adding the TCS element for comparison, with a brief attempt to find a way to use T5 (lawl, lesson learned).

I've come to a bit of a balance using resource units for civilian with a carved-out 1% of GWP (half of the alleged NATO figure, although most of us outside the USA cheat) for total defence capex and opex. I combine the RU approach with a bastardised version of the faction system from SWN to limit how many initiatives a polity can advance at once. I don't want to end up running Civilisation VII in Excel...

My real goal here is to add more rounded domain play in the sector I want to use after my current two PoD campaigns end. I am well aware from past experience that that will be a long time, so I have time to finish polishing the maths

Edit: the TCS element on the right is just something I'm working on for comparison, and doesn't include the TL scaling that the campaign version adds. The majority of the data on there is taken straight from the World Builder's Handbook and traveller map. There are red note icons where I've adjusted values for current campaign progress.

View attachment 6968

I see Noricum twice. Are these the Noricum in the Spinward Marches and Noricum in the Trojan Reach?

 

[Vormaerin]

Free market capitalism is exactly what people do when they're left alone.

If your definition of "Free market" is cronyism, oligopoly, and monopoly. Because unregulated markets absolutely do not lead to fair and open trade. They just lead to private individuals or groups rather than governments being the central authority.

 

[Condottiere]

As currently is being discovered, leaving strategic industries subject to prevailing market forces, can leave the State vulnerable to the whims of potentially hostile actors.

Also, National Aeronautics and Space Administration.

 

[MonsterX]

In a partial command economy, the Imperial government would own the means of production of one aspect of the economy (let's say shipyards), and the means of production would produce whatever the Imperial government told it to for whatever compensation the Imperial government decided to give it. Efficiency problems would soon follow, because the shipyard project administrators aren't allowed to decide how to best use their facilities, how to keep their yards producing and earning credits as consistently as possible, how much to pay their workers, how much they pay for materials, which materials the shipyard gets, all that. The economic planners at the Imperial government decide all those things. Then we start getting problems like the shipyard can't procure materials because the amount of money the economic planners allocated to the project isn't enough, or the planners allocated too many resources and the warehouses are full to bursting, or the wages are out of sync with the prevailing wages in the system or the subsector (too low and the workers leave, too high and it's wasteful) and the shipyard administrators are powerless to make any adjustments because all that is done by the Imperial economic planners, and the shipyard is probably idle a lot of the time because it only produces what the planners tell it to produce, and the Imperium can't have it constantly producing subsector fleets except in wartime or other unusual circumstance. So the shipyard completes its orders then sits idle, it's capacity unused, consuming money and resources for it's upkeep. Irl example: In the USSR, a man was comrade manager of a factory that made dresses for the women of the area. His factory received a certain number of bolts of cloth, and the factory was required to produce a certain number of dresses per month. But, he was receiving much more cloth than making the dresses required. His warehouse was full and his workers were even stacking bolts of cloth all over floors. He couldn't reduce the amount of cloth he was getting, and he wasn't allowed to make more dresses, or even to lower prices to encourage people to buy more. To suggest any changes was to suggest that the economic planners had made a mistake, and the consequences of that would probably be dire. So, he made giant dresses. He made dresses that would fit 20ft tall women, because the planners didn't specify the amount of material to be used in each dress. Customers bought the dresses that still cost the same as a dress for a normal sized woman, then remade the dresses at home and used the excess cloth for other things.

State ownership of a shipyard (or any other types of production) does not necessarily mean that all these types of efficiency problems will occur. That is simply false.

I will take the example of Fincantieri yards, which is 70% owned by the Italian state, and produces aircraft carriers, patrol ships, cruise ships, ferries, yachts as well as all kinds of maritime engines and related things. The yard relies on Italian defense procurement for many of its orders, but also competes internationally for both defense and commercial contracts.

Why have state ownership? State ownership is a way of ensuring the majority stake of this crucial defense company does not get bought by potential enemies, and also making sure key technologies aren't exported. Shipyards experience boom and bust periods because of large orders, which mean there will be many more jobs when those come in, than when there are only small orders, so the workforce has to grow and shrink, and capital might end up unused, so it also projects a political commitment to keep the company afloat during bust periods with defense or other government types orders so that investors continue to put capital in, and skilled workers don't move away.

Does this hurt efficiency, or affect operations? There is the danger that the "too big to fail" problem can make the company less efficient - i.e. there is a moral hazard. However, Fincantieri engages lots of subcontractors, manages its workforce just like any other ruthless capitalist firm, procures parts and raw materials just like any other large firm. The state ownership is in the background in terms of day to day operations.

The owners don't normally specify what will be made or how to make it, except that of course the yard is very much in the defense business. Obviously, defense production involves tight cooperation with the military, just as making cruise ships involves tight cooperation with the cruise lines in the design and production process.

State ownership is common in defense industries, for good reason, and there are dangers to that, but also dangers to not having it.

It is possible to do anything in a stupid way, and there are lots of examples of state owned companies doing stupid things. But also privately owned ones do stupid things sometimes too.