NationStates Jolt Archive

Alot of players on here, in order to justify huge military purchases use their storefront sales to make their budgets. This is very inaccurate for many reasons, which I'll try to illustrate.

Most nations on here allow private enterprise, this means that the government is not in control of sales, the companies are. If the companies are in control of the sales they get the profits, not the government. Although the government will receive some additional funds from increased taxes and possibly tariffs this will not equal the cost of the item sold. This is the first reason storefront funds cannot be used directly to make a budget.

Airplanes, tanks, guns, spears and even sharp sticks and rocks take raw materials and manpower to put together, these things are not free. If you sell an airplane for $40 000 000USD you have not just made $40 000 000USD in profit. You need to payoff the research and design teams, the builders, the cost of the raw materials, the people who program the software, the people who build the sub-assemblies ect... These costs add up. Your profit margin is most likely well under 50%, most likely closer to 5-10%. This means you have made approximately $3 000 000 on that aircraft; no wait, the company that made the aircraft made that much, the government will probably get closer to $500 000 on it, to be realistic.

Nations economies are more or less judged by their ratings from how they answer issues. While RPing a storefront is fun, it is more then slightly unfair to RP being able to keep all of the funds from sales. Part of this is because we don't, and should feel no need to, RP every little export. Your GDP is your GDP, if you wish to RP a large portion of your gross domestic product being made up of military goods, that's fine, but odds are your storefront will not have sales matching your GDP anyways. That means the rest of it is made up of other products.

If you steal all of your GDP from a single sector the others have to work harder overall and the economy falters. Look at North Korea, or the USSR after "war communism" and before the NEP. If too much much of the economy is based on the military, it falters due to a lack of consumer goods and if too much money is taken from any one sector the economy falters because those industries will become unprofitable.

Just a little perspective of mine on the topic, any comments are welcome.

Of course if a nation outlaws private enterprise and controls all industry, then they will get all the profit.

Good comments, and need to be said. While the idea of selling things to other nations is fun and good part of roleplay, its quite another to do that obsessively and try to use that as substitution for actual military spending.

I think its best to just RP the big important trade contracts and not bother with the details, personally.

I mean if your nation has a frightening economy, healthy trade and industry and you're an active roleplayer, you can pretty much ASSUME these types of trades are going on all the time-- and that your NS nation ALREADY reflects them.

Of course if a nation outlaws private enterprise and controls all industry, then they will get all the profit.

Yes all of the profits, of course you must factor out wages(or rations in lieu of), raw materials, R&D, factory maintainence costs... you get the point.

Good post, SH. Finally, someone else clears this up.

OOC:
Research and development costs are the largest, it's not only a lot of money but time and workforce as well. I should know, I've been developing technologies (http://www.nationstates.net/forum/viewtopic.php?t=79576) for a while now. Ultimately, it's not really going to give you much in return. ( Except maybe, people who will be impressed so much they'll give you constant research grants, if you're lucky. ;) )

Good post, SH. Finally, someone else clears this up.

Thanks, I figured I've been slacking around here and not contributing much recently, so I needed to give something to everyone. Maybe this will get stickied, or added to the list of required reading. :D

bump :)

Excellent post!

http://www.weirdozone.0catch.com/projects/nationstates/sirithil/sirithilnosfeanor.gifThis thread receives the Lady Siri Elfsnuggle of Approval!

Excellent post!

http://www.weirdozone.0catch.com/projects/nationstates/sirithil/sirithilnosfeanor.gifThis thread receives the Lady Siri Elfsnuggle of Approval!

w00t!

OOC: SH, I've suggested in the New to NS thread that this be added. Great work.

I have some comments to add as well, but that'll be for another time. Thanks for doing this!

OOC: SH, I've suggested in the New to NS thread that this be added. Great work.

I have some comments to add as well, but that'll be for another time. Thanks for doing this!

Thank you, I was a little surprized that this hadn't been said before.

WHAT!? N00bs cant buy 400,000 nukes if they sell a few hang gliders and some row boats?

That my friend... is outrageous.

In all seriousness... well done.

OOC: SH, I've suggested in the New to NS thread that this be added. Great work.

I have some comments to add as well, but that'll be for another time. Thanks for doing this!

Thank you, I was a little surprized that this hadn't been said before.

Well, in a way it was (http://www.nationstates.net/forum/viewtopic.php?t=57359&postdays=0&postorder=asc&start=0) (and you were there!), but this is simply a lot clearer than our entire muddled conversation there.

I was just explaining something of this to a newbie (who seems to really know his stuff, btw) today when I found this for the first time (linkage, part 4 (http://www.nationstates.net/forum/viewtopic.php?p=1798800#1798800)). Some of what I said there could be added here (like how the company will try to re-invest profits into new markets and projects...or use the funds to line the pockets of the CEOs). As I see it, the best part is that state ownership reduces the company's profit-margin when you buy from it!

All hat being said, this is the best version I've seen around. Bravo!

Well, in a way it was (http://www.nationstates.net/forum/viewtopic.php?t=57359&postdays=0&postorder=asc&start=0) (and you were there!), but this is simply a lot clearer than our entire muddled conversation there.

I had completely forgotten that, that was back in the day.

The BDIA collection of design beuraues is government owned.

The BDIA collection of design beuraues is government owned.
Still, my aerospace company is also government owned. But the actual profit the government earn is still a small amount.

The BDIA collection of design beuraues is government owned.
Still, my aerospace company is also government owned. But the actual profit the government earn is still a small amount.
I have a hugeass budget anyway, but most profit goes to the govt.

Thread ADDED to page 12 of the New to NationStates thread.

This has been an OOC post.

The BDIA collection of design beuraues is government owned.

Bureau ;)

I have several private design firms and one government owned firm.

bump

Just another random statistic: on average, only 6% of a company's revenue is profit.

Just another random statistic: on average, only 6% of a company's revenue is profit.

Point well recieved.

bump, so it doesn't get deleted

I was wondering where this thread went, I have it saved on my comp anyway becuase it is one of the best threads I've read to make a more realistic RP, along with Clan Smoke Jaguars thread on Tanks, and several others, like why High % armies aren't realistic

Nice post... you would think this would be common sense to anyone over three years old... but its not...

*sigh*

Thanks, I'm thinking about redoing the 'threads every newbie should read' post. Or well, making a new version of it.

***gives standing ovation***

You have no idea how long I've been wating for someone to say this...... Couldn't do it myself, cuz I know I'd just start ranting :? Good job and carry on.

Wow, I'm getting accolades from some very old and well respected nations here. I must say I'm rather proud of myself right now. :P

I think this is a very good thread, but keep in mind that more a advanced (i.e. space tech or later) nation will have more advanced production methods that lower production costs, and if that same nation has govt. controlled commerce, the profit for the govt. can be quite a bit higher (I would say up to 30-40% if BOTH of these conditions are true and the nation can justify it by describing production methods.)

I think this is a very good thread, but keep in mind that more a advanced (i.e. space tech or later) nation will have more advanced production methods that lower production costs, and if that same nation has govt. controlled commerce, the profit for the govt. can be quite a bit higher (I would say up to 30-40% if BOTH of these conditions are true and the nation can justify it by describing production methods.)

But wouldn't the products made by the space tech nation be more complicated, requiring more advanced methods. I mean nowdays we can assembly-line swords that can cut through the strongest blades made in Japan or Europe or China or the Middle East in the 1300s. But what does it matter, we use machine guns that are more complicated. The fact we can make outdated technologies more effectively is irrelavent.

I'm not talking about materials costs, I'm talking about production itself. For instance labor costs can be brought way down by having a team of robots or a fully automated machine make parts and build ships, etc. It would cost money to maintain the machines, but still less than labor costs most likely.

I have not read the majority of this thread (sorry) but i would like to say that your statements are well founded and well supported. However, I do use my ship store to supplement my budget (only supplement, I don't use it to finance everything).

My ships are produced and sold by the government, so I receive all the profits, not merely a percentage from taxes. Also, I charge almost double what the production and transport costs are, so I still make massive profits, even though the complex ships and advanced technology cost more to make.

Labor costs are nothing compared to the price of having skilled engineers or technicians who maintain your fleet of automated robots. Lowering production costs just means you can produce more, but then since you have to keep track of, and ship, and sell all that more, it turns out the same anyway.

I think I read somewhere about certain modern high-tech companies making profits on the order of a few cents per dollar of sales, and that that was a good figure. High tech, means higher price, is a good policy for RP in this game, generally.

Imitora Military Industries is government owned (to insure quality of goods), but even then only 17% of total income goes to the governmnet for spending.

I'd like to buy this thread. Here's a hundred bajillion dollars I made selling n00x0rz to n00bz0rz.

*money wired*

(This is going right the hell into the thread up top... bwah, ha ha ha...)

I'd like to buy this thread. Here's a hundred bajillion dollars I made selling n00x0rz to n00bz0rz.

*money wired*

(This is going right the hell into the thread up top... bwah, ha ha ha...)

Thanks SLAG, and a bump for good measure.

The production costs generally will come down as time passes in high-tech products. Technology will evolve, which allows further integration and/or smaller footprint, and as price comes down, the products become more accessible, and at some point the economies of scale kick in. Remember also that there's some point where the R&D have been paid for, allowing for lower prices. Caveat, though: not every production process can be automated, and even robots need servicing. Remember also to design the automated production process.:P

Oh yes: spike! (Gets boring if you "bump" all the time.:))

The production costs generally will come down as time passes in high-tech products.

Well, not exactly, read above. If you read this (http://www.nationstates.net/forum/viewtopic.php?t=86861), you'll also find out that it also matters with labor, manufacturing techniques, and cheaper/more advanced components.

*hump*

+1