Join the new world

My last article "Mayhem and the CAF Debate" (see the bottom of this article for link) was intended, and I hope taken, very much as a discussion starter, not approving either system but pointing out the pros and cons of different systems. I was very happy to see so many comments and points of view given which proved that the article achieved somewhat of its intended purpose (53 votes and 34 comments is a good proportion imo when trying to start discussion). In general a Government funded food programme for any who are fighting seemed the most favoured approach and indeed such as system would certainly increase eCanadas military damage.

It strikes me though that because the military is the single biggest factor in any enations economy (apart from buy food to live) that military system of any enation depends and perhaps dictates the economic system of the enation and vice versa...

The Military-Industrial-Government Relationship.

There is a symbiotic relationship in real life and in erep between those who make weapons and those who use them. Because one of the duties of ANY government is national defence a government will naturaly have an interest in this relationship too (so for example in the real life current UK Aircraft Carrier programme the MoD is a partner as well as being the client). This used to be the case in some erep production programmes too, for example for Q5 Hospitals and Defence Systems... These companies used to be either eGovernment owned or highly subsidised by eGovernments as the buyer was normaly the eGovernment.

On another level the effectiveness of an enations military depends alot on the weapons they can afford - if the Government subsidises high quality weapons player rank up quicker etc and therefore the military potential of the enation rises. Most eGovernments usualy run at least one weapons company (probably 4 now) and economicaly some argue this has a cyclicaly good effect. Let me explain what I mean...

Government owns a high quality weapons company 'Guns Inc'. They pay the market rate to employees who can thus buy food etc - they pay tax on food so Government gets some back. They might even buy some weapons from Guns Inc - tax and income for company. The Government Military or a Private Militia buys weapons from Guns Inc - more tax and more wages for workers to spend on food - more tax etc etc... Some may consider this a 'Keynesian model' which traditionaly favours Government investment for economic growth (familiar to most 'western nations' in real life recently).

The other alternative of course is a completely free market system and this depends on private investment and a healthy market to be able to invest - this is true in erep and in real life. Suppose the eGovernment relies on private citizens to provide high quality weapons companies like the hypothetical Guns Inc? Well they have to be making money to invest before any private business can become high quality... Obviously this lacks Government control but also needs no Government investment. The tax from sales etc amounts to the same and in fact in erep work out cheaper (we don't have company tax on profits here) but basicaly erep-wise it just saves the 'capital expenditure' on the Governments part. The end of this though is that the private company has more money to invest and this often results in new companies abroad for supply and a resultant import tax increase and this move - investment abroad, is not in any egovernment investment interest as such - they get no tax from workers there.

The Military Model and the Economy.

The militia model of military requires people to work for low wages, this decreases income tax and since weapons are essentialy not sold but given another loss of tax revenue ensues. However Militias MAY have an interest in buying and investing abroad if goods are cheaper and some of this tax revenue loss may be made up from import tax (though most likely they avoid this). The problem here is that ANY Militia system must perforce employ its workers within it's own companies and thus the 'free enterprise' inniative of the private Militia becomes essentialy a 'commune' or a 'Corps-operative'. This ironicaly is the antithesis of any 'free market system'.

For eGovernment run weapons companies again they normaly rely on home grown supply comapies in the private domain for raw materials and pay the market rate - which of course is higher than that of the Militia model and thus produces more tax income and thus produces more tax income. In turn home grown supply companies pay ones own ecitizens and they buy food etc and we end in the cyclical Keynesian arguement again. Naturaly any eGovernment, presumably a 'socialist' inclined one could chose to force a Militia style Cooperative on its military...but to do so would depress tax revenue. In the case where an eGovernments military is forced to work for an eGovernments weapons then essentialy you have a Government Militia.

Import Tax and the eCanadian Military.

Well for a long time the subject of eCanadas 'closed market' has rumbled on and no eCanadian Congress or eGovernment has had the will to tackle the matter - though I am sure none have lacked the courage. Occasionaly a 'free marketeer' pops up and gets shouted down, most famously when Jacobi wanted to close the grain industry. Currently our import taxes for all raw materials stand at 99% and for weapons from 40% (tanks) to 80% (artillery). Suppose I wanted to import tanks for CAF or TCO (I can't sell to anyone else!) could I make a profit? Almost certainly not because they both rely on their own supply systems... In effect they have no choice since importing is not viable. Nor is importing their raw their materials to feed their weapons manufactures... However a good case could be made that eCanada can produce cheaper weapons if we lowered raw materials import taxes - certainly we could buy cheaper food to sustain soldiers during battle.

It is ironic that eCanadas Government in some ways supports the free market in the military sphere and yet in some ways works on a Keynesian system while the supposedly 'free enterprise' TCO in fact employs a closed market system for its members and depresses the market. It could be argued that both systems are a result of the crippling import taxes that make foreign markets essentialy a no go zone for investment and cheaper weapon production for militia (TCO) and CAF... Point is the 'closed market' of high import taxes essentialy subsidises every eCanadian worker in the raw materials market and dictates to some extent the military models we can use.

The arguement for this has always been that this would lower wages in Canada and possibly so. This in turn would lower tax revenue etc etc. The reverse arguement is that if people could make a profit from importing goods from abroad at a lower import tax (by paying the lower import duty) may make up for this while also producing cheaper weapons. The question would then be how would our military system be affected? For example TCO and CAF supply companies could import raw materials from abroad etc... Now certainly we could provide cheaper food and perhaps weapons - and more of them even since some people would move from unprofitable raw materials companies to other industries. For profitable companies an export market would also be created.

The Value of CAD.

Now the old arguement about the wages runs that lower wages lowers the value of the of CAD (on the gold market). Some great eEconomists whom I respect say this must be so... wages go down, prices go down and thus CAD devalues. Well first CAD is kept atificialy high by eGovernment intervention at times. But the main arguement here is that with a high CAD value we can print money for less gold and thus fund our military system. Again - the high value of CAD DICTATES our military choices, the high import tax of raw materials doubly enforces this 'closed economy' model. The 'free marketeers' might argue that with a lower CAD value and import tax we could produce weapons alot cheaper and thus save the Government money that way. It would also open the market to new private enterprises thus increasing tax revenue again - particularly from realistic import taxes.

Summary.

How we most effectively deploy the strength of eCanadas military is dependant on both the Military and Economic system we employ but this itself is dependant on the value of CAD and import tax. The question before us all is: "Can we feed ourselves cheaper and make cheaper weapons with a lowering of import tax and the value of CAD?" This would undoubtedly mean changes for our military systems with the 'closed market' of TCO perhaps threatened and the Government run CAF able to compete with TCO company production prices.

I offer no opinion on any of this (though personaly I am inclined to the free market model) but offer this as a subsiduary article to my last one for discussion.