Economics Questions

[Darman]

Some issues I'd like cleared up and/or have a suggestion for clarification.

Do all foreign payments have to be paid out of the military budget?

Interest/profits on foreign payments (so Nation A pays Nation B $10 for a ship, $8 to build and $2 in profits) should be allowed to be paid out of the civilian budget. 

Loans should be added to a country's income in their overall budget, thus a $10 loan would increase max military spending by $5.  In my humble opinion all loans should be allowed to be repaid from the civilian budget. 

Payments for goods and services (i.e. ship construction) are military costs and should be paid out of the military budget. 

Loans are civilian in nature and the money being loaned should come out of the lender's civilian budget and enters the borrower's overall budget as income.  Payments and interest for loans should come out of the civilian budget. 


Thoughts?

[Darman]

and yes I am just trying to be a pain in the ass

[KWorld]

Not sure about foreign profits on military goods coming out of the buyer's civilian budget: from the buyer's perspective, it's a military purchase, it's costs (whatever they are) would normally come out of the military budget.

Loans to foreign nations I can easily see coming out of the non-military budget, and repayments of loans from foreign countries could also come out of the non-military budget.

Loans/payments/etc, yes, I can see those arriving as income and being split appropriately.

[Walter]

I can see nations do very questionable things and use civilian loans for military purposes so I don't think that that incoming money should be appropriately split. That just goes against the nature of humans. :)

[Nobody]

It all depends on you negotiation skills.
The important thing is that the exporting country needs enough of the right founds (most likely military) at the right time. Everything else is a matter of the respective countries.

[Darman]

I can see nations do very questionable things and use civilian loans for military purposes so I don't think that that incoming money should be appropriately split. That just goes against the nature of humans. :)

Absolutely!  And during wartime there is no difference between the two budgets.  The idea is that if you add a loan to a country's income because they need $10 for their military budget, then they need to take a loan out for $20.

Not sure about foreign profits on military goods coming out of the buyer's civilian budget: from the buyer's perspective, it's a military purchase, it's costs (whatever they are) would normally come out of the military budget.

If it costs $10 to build a ship, those $10 should come out of the buyer's military budget.  But if the seller wants another $2 in profits then those should be allowed to come out of civilian spending. 

[KWorld]

Not sure about foreign profits on military goods coming out of the buyer's civilian budget: from the buyer's perspective, it's a military purchase, it's costs (whatever they are) would normally come out of the military budget.

If it costs $10 to build a ship, those $10 should come out of the buyer's military budget.  But if the seller wants another $2 in profits then those should be allowed to come out of civilian spending.

My point is that from whoever's doing the accounting on the buyer's side, they a) probably don't know exactly what is profit and what is not, and b), it's all a cost for a military item.  I wouldn't be in favor of this sort of hair-splitting.

[Darman]

It doesn't have to be taken out of the buyer's military budget.  As of right now several purchases have been negotiated where payment for unit construction was taken from the military budget and since money was tight (it isn't tight for everyone), interest (the payments were made in installments), could be taken out of the civilian budget, as the payment plan was negotiated.  Its an optional thing.  Not mandatory. 

[KWorld]

A separate question:

For work like the Trans-Siberian Railroad, the Suez, Kiel, and Nicaragua Canals (maybe a larger White Sea Canal in the future), large-scale engineering that has both civil and military benefit but that are, in their construction phase, a civil engineering project, how should they be paid for?  From the civilian budget?  The military budget?  50/50 split between the budgets?  Something else?

[Tanthalas]

Traditionaly atleast in the US most of the Major projects like that were payed for by and for the military (interstate highway system anyone)

A separate question:

For work like the Trans-Siberian Railroad, the Suez, Kiel, and Nicaragua Canals (maybe a larger White Sea Canal in the future), large-scale engineering that has both civil and military benefit but that are, in their construction phase, a civil engineering project, how should they be paid for?  From the civilian budget?  The military budget?  50/50 split between the budgets?  Something else?

[Darman]

I think that large-scale projects like the Panama Canal, Suez Canal, Trans-Siberian Railroad, etc have economic benefits but the economic benefits are heavily outweighed by the initial capital costs, as such, unless a government steps in and builds it for other purposes (i.e. military purposes) there is no private investment that will build it.  It should be paid for out of the military budget, but there should also be a bit of an economic incentive at the end.  Maybe come up with a way where one pays for an IC in addition to BP costs for the project? 

[KWorld]

It depends.  Suez was done with private money (but Egyptian government backing allowing the use of forced labor), and the French part of the Panama canal was done the same way (minus the forced labor).  The US trans-continental railroads were private as well.  The US Interstate Highway System was paid for via the federal gas tax and other taxes on tires, etc.  The US portion of the Panama Canal was paid for by the US government, though it didn't affect the US military's budget in a negative fashion.  The Trans-Siberian, I haven't found anything definitive, but it LOOKS like so far that it was a government project, rather than privately funded.

[Darman]

The US trans-continental railroads were private as well.

The first railroads out west were built using funds generated by the sale of federal lands turned over to the railroads.  Most often the owners of the company that the feds gave land to to build the railroad would subcontract the actual construction of the company off to a "construction" company owned by them, generating excessive profits.  Many times the railroads would be completed, but shoddily.  Then the original owners will sell the company off at a profit leaving the new owner with a rapidly degrading railroad. 

[KWorld]

The US trans-continental railroads were private as well.

The first railroads out west were built using funds generated by the sale of federal lands turned over to the railroads.  Most often the owners of the company that the feds gave land to to build the railroad would subcontract the actual construction of the company off to a "construction" company owned by them, generating excessive profits.  Many times the railroads would be completed, but shoddily.  Then the original owners will sell the company off at a profit leaving the new owner with a rapidly degrading railroad.

Sure, but from the government's perspective, the land was long-ago paid for (for a song, basically).  It was a resource, but one that the government was going to give away anyway (via homesteading, or other processes that allowed people to claim untenanted lands).

[Darman]

The US trans-continental railroads were private as well.

The first railroads out west were built using funds generated by the sale of federal lands turned over to the railroads.  Most often the owners of the company that the feds gave land to to build the railroad would subcontract the actual construction of the company off to a "construction" company owned by them, generating excessive profits.  Many times the railroads would be completed, but shoddily.  Then the original owners will sell the company off at a profit leaving the new owner with a rapidly degrading railroad.

Sure, but from the government's perspective, the land was long-ago paid for (for a song, basically).  It was a resource, but one that the government was going to give away anyway (via homesteading, or other processes that allowed people to claim untenanted lands).

The government gave away potential assets.  Without the land grants the railroads would not have been built.  Oh sure some would have.  But not as many as were eventually built.  Hell, companies were created solely to receive a land grant, the company built the minimum miles of track required then cashed in. 
The railroads required government subsidies.  So the government needs to pay for extra railroads and other major infrastructure costs.  Economic benefits only come after the initial capital investment made at govt expense.  Whether or not the govt paid money for the land they eventually used to finance the RRs is irrelevant.  The govt gave away some of its assets to finance the RR.