Taxation versus Borrowing

[Darman]

I know right now the rules talk about taxing your economy and higher taxes means smaller growth of your economy.  My question is: what if you have reached the limit for taxing your country and are in the middle of a war that is costing too much money.  It doesn't have to be a large to-the-death war, but it could very easily be several smaller wars.  Do the numbers in the rules for taxation include borrowing done by the government?  I ask because in theory the British government towards the end of the Napoleonic Wars tried to pay for its military through taxation (for normal upkeep) but half of the extra cost of the war would be covered by new taxes and the other half would be covered through borrowing.  I was wondering if there might be any vehicle allowed through the rules that would allow a government to borrow money, either from its people or (in my opinion the better idea) from other nations?  I appreciate that this may have been discussed and discarded however it had just hit me today that if the maximum you can increase your taxes by is to double them during wartime, the government might still be incurring costs above and beyond its tax revenue.  If you're government has a policy of keeping taxes in the 3-5% range this might not be a problem but for governments more interested in economic development who find themselves the victims of overly aggressive nations trying to double a 1% tax is not going to do all that much for you. 

[Tanthalas]

KISS mate, we are not likley to see that as an option.

[Desertfox]

I like the idea of being able to borrow from somewhere or alternative being able to store sulprus. That said I don't think a 1% tax rate will be doable for anyone, you just can't maintain a suitable defensive force with that money, much less build stuff. 2% is probably the minimum one can go.

[Darman]

KISS mate, we are not likley to see that as an option.

I agree keeping it simple is the goal, and I don't view borrowing/lending as being all that complicated.  Maybe it is, I'm definitely not an economist or a banker.  But from my perspective country A says to country B, "yo, lend me $10" and country B says "sure, pay me $15 in 3 years".  Or something like that. 

[Carthaginian]

KISS mate, we are not likley to see that as an option.

I agree keeping it simple is the goal, and I don't view borrowing/lending as being all that complicated.  Maybe it is, I'm definitely not an economist or a banker.  But from my perspective country A says to country B, "yo, lend me $10" and country B says "sure, pay me $15 in 3 years".  Or something like that. 

Well... if Country A borrows $X from Country B, then we need to treat that as a simple private business deal.
1.) NO RULES NEEDED- Country A borrows the money as a 'handshake' kind of deal, and the two nations treat it as a simple transaction.
2.) LOAN WHAT YOU HAVE- As long as Country B has sufficient money to loan Country A, it's all good... loan as much as you can afford.
3.) CAVEAT EMPTOR- If the debt is not repayed on time, then it's your own fault for either engaging in a risky practice or not working out proper terms.

There should be no expectation of international committees, no demands of coalition wars, and no 'but he owes me money' whining.

[miketr]

The Mods had talked about allowing banking of funds and to allow borrowing but no firm agreement or approved mechanism.

Michael

[Darman]

There should be no expectation of international committees, no demands of coalition wars, and no 'but he owes me money' whining.

I had never even thought of any sort of international agreement on financing.  Coalition wars may end up occurring, or at least the bankrolling of one nation's armies by another nation (England did that fairly often).  And whenever you loan someone money you are taking a risk.  And I for one wouldn't rule out the possibility of the losing side in a war defaulting on any loans made to them, either through a pure default or a revolution or coup.  However if a certain nation routinely defaults on their loans then I think most other nations would be a little more hesitant to lend them money. 

The Mods had talked about allowing banking of funds and to allow borrowing but no firm agreement or approved mechanism.

Michael

Banking of funds might make sense, however that would probably involve rules and the way I view it borrowing/lending requires few, if any, rules.  Other than the guidelines Carthaginian already posted, I think borrowing and lending would be a fairly self-regulatory business, if you have a tendency to default then nobody will lend you money. 

[Carthaginian]

Banking of funds might make sense, however that would probably involve rules and the way I view it borrowing/lending requires few, if any, rules.  Other than the guidelines Carthaginian already posted, I think borrowing and lending would be a fairly self-regulatory business, if you have a tendency to default then nobody will lend you money.

I'm really with you, Darman... that's why I like the 'handshake' model. Players who present a poor probability of returns will not be loaned money, simply because they aren't good investments. Beyond that, anything else is just more endless rules-lawyering, that will stretching the development time on the rules and push the start of the game farther and farther from the beginning of September.

I also basically expect that any loosing nation would default on loans... this is simply a result on gambling on a bad hand, you loose your stake. And while I don't particularly like the idea that a dozen nations might finance a single proxy to go to war for them, it is an inevitable fact of war that things work like that.

[miketr]

We were talking about borrowing from national banks, etc IE players would be borrowing from their economy in effect.  Again we didn't have any firm agreement.

Michael

[Carthaginian]

We were talking about borrowing from national banks, etc IE players would be borrowing from their economy in effect.  Again we didn't have any firm agreement.

Michael

Mike...

Why?
What is the point in allowing deficit spending?
Do we really want the N-verse to get into the kind of idiocy that the current economic situation reflects? I look at the stupidity going on around us in the world and wonder why the heck we'd want to invite that into our sim.

Is this VITAL to the sim's function?
Or can we just stay within a budget and forget about extraneous rules?

[Desertfox]

Its easy to keep it simple, you just borrow from yourself, if you don't pay it off in a set amount of time, mods cause your population to revolt or the economy collapses.

And just because its a stupid idea to do so doesn't mean it should be allowed. OTL is what it is because of said stupid decisions, so I say allow them. If someone wants to spend more than he makes let him, its his problem...

[Carthaginian]

Its easy to keep it simple, you just borrow from yourself, if you don't pay it off in a set amount of time, mods cause your population to revolt or the economy collapses.

And just because its a stupid idea to do so doesn't mean it should be allowed. OTL is what it is because of said stupid decisions, so I say allow them. If someone wants to spend more than he makes let him, its his problem...

Really... what does this rule add?
Well, aside from the fact that some small population of players will abuse this, constantly allowing their nation to revolt, change regimes, etc- simply as an excuse to abuse the fact that they can squeeze a few more dollars?

Desertfox, if someone makes a rule that invites jackassery, it is inevitable that jackassery shall ensue. I point out Real Life as my example. Prior to National Banks and the rise of deficit spending a nation's entire economy collapsing was unheard of... but today, we are looking at a world collapse as a possibility.

[Carthaginian]

ADDENDUM:

Perhaps I might be able to face this as a rule if the Mods place an appropriate penalty:
When your nation revolts because you are spending like drunken sailors on leave- or worse, like the U.S. Government- YOU LOOSE YOUR NATION FOREVER. The 'regime change' kicks out the leader responsible for destroying the nation's economy (the player) and becomes an open nation for a new player. The original player may play as any other nation available, but may not have his old nation back.

[Desertfox]

It gives you the ability to gain emergency cash for short periods of time in case no outside lenders can be found.

Your penalty is a little extreme, I would say a say 30% permanent drop in that country's economy would be more appropriate.

[Carthaginian]

It gives you the ability to gain emergency cash for short periods of time in case no outside lenders can be found.

OR, if abused, it allows you to do what the idiots in charge of a large chunk of the free world have done over the last 100 years or so.

Your penalty is a little extreme, I would say a say 30% permanent drop in that country's economy would be more appropriate.

Looking at the world at large, I'd say that it is actually rather lenient... very few egomaniac dictators with poor accounting skills get a second chance to run a nation into the ground- most of them die horribly.
I counter that your penalty is too lenient, as it allows a player to keep playing, even though he has been kicked out during a revolution. ;)