One bit of your post makes me realise i wasn't clear when talking about alternative (or i just didn't understand what you said)

You said that taxation force individuals to move their investment to a more profitable industry.

I suggested that this could be controlled by ensuring all industries are the same (in terms of maximum profit taking) some other scheme to prevent alternatives would also be possible - in the original video it was not easy for British Capitalists to move to India and take advantage of cheap labour their... They were stuck in an industry or labour market with high wages.

Seperately you asked 8% of what; net profit is what i mean.

To increase your total profit and return on investment you would need to expand your market, spend more on goods (so your costs go up) and sell them to more people at a slimmer margin.

They are a variety of ways to keep your companies net profit artificially low; but this is one simple way of investing in assets.

orathaic: Wow, who is this guy? I took a look at his video on the Spanish Empire an it is possibly the worst history on the subject I have ever seen.

@JECE he is an america.

I don't know what your historical credentials are; but mine are particularily weak. I can only trust him as a source.

I might note that history is a story, and the narrative which you choose to take may differ from other's without being 'wrong'. History is necessarily subjective. Based as it is on a mixture of the subject's opinion of why things were happening and the historian's personal bias.

But Ora, there is a difference between Britain then, and the global market today.

There is not a world government. If you increased taxes in America, businesses would move elsewhere that has lower taxes.

Britain back then was the only country with the infrastructure capable of starting the industrial revolution, and that was why their wages were so high. I said earlier that the industrial revolution wasn't caused by England's high wages, but what caused England's wages to be high also caused the industrial revolution. And that is simply the technological and infrastructural progression in England for the 400 years prior to that.

Its the same reason that the poorest 10% of individuals earn between 1.5 and 3.5% of GDP for every country in the world. When the country becomes richer, almost everyone in the country does too.

The main point to all my arguments are:
1. High wages didn't cause the industrial revolution
2. High wages can't be compared to taxation.

I don't think I have explained #2 as well as I could. But I guess to easiest way to do that would be simple to look at private and social benefits and costs.

Wages are private cost, but the labour they give is a private benefit. Its why manufacturing is increasing in both Germany and America despite it being easy for businesses to have cheap labour in Africa or Asia. The reason companies sometimes prefer to have the higher wages, is because higher quality goods can't really be developed in low infrastructure countries. The point is wages are a cost to the company, but they also provide a benefit. (and if your taxing and subsidizing the same good then that is simply stupid and creates a ton of deadweight loss)

Meaning taxes are a private cost and a social benefit. Because rich companies benefit less from taxes then the benefits they produce companies would rather spend more on wages then more on taxes.

And lastly what I meant by 8% of what. Is net profit is actually a $ amount. If your revenue is $100000 and your expenses are $80,000 (including taxes) then your net profit is $20,000. (at least this is what I learnt in accounting) This is why I questioned 8%...

And once again I point out that net profit is after all expenses. So if I am being taxes at above a certain margin at a super high rate, I will increase the bonuses for my executives etc. to decrease my tax rate.

My main emphasis is that adding more costs to the business, costs that they don't want isn't a good thing.

And looking back at Britain you kept saying they were forced to be in Britain, and my response to you is no they were not.

They could have set up shop in India for $3 a day. However while the wage cost would have been lower every other cost associated with the business would have been higher; transportation, maintenance, security etc.

Nobody forced them to set up shop in Britain, they chose Britain based on it being over all the cheapest place to work, due to the infrastructure and being the center of the world at the time.

"There is not a world government. If you increased taxes in America, businesses would move elsewhere that has lower taxes."
I guess the easiest example to prove this is looking at Apple and Starbucks:
Apple's finance headquarters is in Nevada, which has a 0% corporate state taxes. If they were in California then they would pay an extra ~2 billion a year in taxes.
Starbucks on the other hand has its profitable stores pay a 'royalty fee' to both unprofitable store and stores in countries with lower taxes. The result is an artificial loss in countries with high taxes and an artificial profit in countries with low taxes.

Because taxes don't directly benefit the corporation, it is the least favourite expense of every company. Every other expense is voluntary so companies can outway the costs and benefits of those expenses and chose whether they are worth it. Taxes are forced on the company, and the only way to reduce taxes is to exercise loopholes.

orathaic: I just took the historiography course required for my major this past semester and am not exactly in the mood to talk about history's 'subjectivity'.

But on a side note, 'bias', at least in the way you are using it, doesn't exist. (Unless someone is systematically suppressing huge swaths of the 'story', which incidentally this pompous idiot and/or unqualified opportunist did.)

glad I'm not the only one who doesn't like crash course world history :D

"And once again I point out that net profit is after all expenses. So if I am being taxes at above a certain margin at a super high rate, I will increase the bonuses for my executives etc. to decrease my tax rate. "

- that is kinda stupid, how about my executives have a higher rate for bonuses (or equal rate) or not just for bonuses, for any income over 250,000 $ (or similar figure).

Ok, so taxation on dividends, is one place to put it. That would allow re-investment into the company. Secondly a rate of tax based on profit - so again a figure of 250,000 $ could be used - or more fairly 250,000 $ per employee (based on fulltime hours worked, rather than counting part-time employees twice)

(and yes i know, companies, at least in europe, act as tax collectors for the government by applying a sales tax and sending it to the govt. - while also paying an employee salary contribution... but these are all measures to prevent a company from abused the tax code by declaring zero profit and spending all the money on things which aren't taxed...)

"My main emphasis is that adding more costs to the business, costs that they don't want isn't a good thing. "

Your point is well taken. And i'm not talking about 'what is a good thing' FOR specific business models. I'm talking about a larger scale picture which encourages business to find alternative profit-making models, because the taxation system prevents them from profiting in the current scheme. (or reduces the profit margins)

Your other emphasis has been on where you think govt. SHOULD be involved (ie education), and the point about advanced infrastructure pushing up wages cost, which you say is what drove the industrial revolution.

Well in any case, education cost can be seen as an infrastructure investment- it is an investment in the resources which the company will have available to it. (now you could argue for a pure free market where education is privatised and corporations bear the additional training costs required to make for literate employees... but you are not)

'But on a side note, 'bias', at least in the way you are using it, doesn't exist. (Unless someone is systematically suppressing huge swaths of the 'story', which incidentally this pompous idiot and/or unqualified opportunist did.)'

- yeah, sure... they say that in science too, except when a female researcher first entered the field and looked at female chimps, it turned out their behaviour was important.

As a historian, you have to first choose what to talk about. And this is inherently biased. Being unbiased is impossible - you are human, and thus you are biased to first talk about human history. That you may strive for bias free work, and that this is infact worthwhile; does not mean you will succeed.

'But on a side note, 'bias', at least in the way you are using it, doesn't exist. (Unless someone is systematically suppressing huge swaths of the 'story', which incidentally this pompous idiot and/or unqualified opportunist did.)'

I hope i have elaborated what I mean. I did not claim this source was unbiased. But you seem to say bias doesn't exist, so it must be.

Oh, sorry, i meant to continue my point about infrastructure... government can invest in unprofitable technology (R&D) and infrastructure which has synergistic benefits but requires huge initial investment to become profitable.

It can do things with taxation which then become profitable, and add more value to the economy overall, making it easier for corporations to make profits (building roads or communication infrastructure to facilitate trade, or protecting trade by defending property rights... and enforcing anti-fraud measures and contract laws.)

There is no reason to think that this can't be used for startup industries. Except the claim that innovation is best driven by profits (i suspect that basic researchers not driven by profit, nor forced to spend time not researching, ticking boxes, teaching, etc. is actually more successful and innovative.. but that is an entirely separate digression.)

orathaic: If everyone is inherently 'biased', then nothing is 'biased' and you certainly can't use 'bias' to discredit someone's work. You can't just say, 'Oh, well he's only writing about it because he is interested in Spanish history, so he is biased and his work doesn't mean anything.' You can't just say, 'Oh, he's a Marxist historian; why would I listen to someone biased like that guy?' You need to listen to someone's arguments. Sure, an author's background may help you understand where he's coming from, but I always get annoyed when people confuse someone's background with a 'bias' (which is commonly used and understood as a discrediting taint). In fact, 'bias' is often used just to mean that someone has an opinion, as if that were a bad thing! You're right; 'bias' is a scientific term. It should, in my humble (biased) opinion, be stay that way.

opinion, be stay --> opinion, stay

Wait, is your humble opinion that history isn't a science?

Hmm, i know it is usually linked to geography, which is a science... The only thing history lacks is prediction; and even in some areas there is room for predictions of what will be found... I guess i have a pro-science bias. But me'h whatever, i don't know really care how we categorise subjects (actually i'm a bit annoyed by the lack of cross-curricular sharing)

As i said, i don't know whether John Green is a good historian. Feel free to share specific issues with his history of the Spanish empire (i've now watched the whole of crash course, but i'm not any closer to being an historian) also did i remember which is John Green and which is his brother Hank?

"Your point is well taken. And i'm not talking about 'what is a good thing' FOR specific business models."
Neither am I. Basic theory of perfect competition is that in the long run economic profit approaches 0.

If there are a few companies making millions of dollars in profit in a area, in a free market an additional company will open up and take away some competitors.

The point that you have missed is that profit is a single for produces as to where they need to allocate scarce resources based on consumer demands. Taxing profitable businesses deters not encourages competition and competition is the driving force on innovation.

"Your other emphasis has been on where you think govt. SHOULD be involved (ie education), and the point about advanced infrastructure pushing up wages cost, which you say is what drove the industrial revolution."
Well its true, the infrastructure and technology needs to be there for the innovation to happen.

If James Watt was placed in the 17th century, he wouldn't have developed the steam engine because all the innovation that happened in the 100 years preceding the industrial revolution wouldn't have happened yet.

This was my main emphasis of the first post. It wasn't a sudden Britain was backwards and then BAM! Industrial revolution! There was gradual innovation between the 15th and 18th century that lead to the industrial revolution. Proof of that is the wages that John Green talked about, they were the result of the technology and infrastructure present in England that were absent in Asia. While my knowledge of Spanish history is next to known, I don't agree with most of what John Green said in his Industrial Revolution and Globalization videos. I can't comment on the rest (that I have seen)

"Oh, sorry, i meant to continue my point about infrastructure... government can invest in unprofitable technology (R&D) and infrastructure which has synergistic benefits but requires huge initial investment to become profitable."
Social benefit vs Social cost. While I agree that the government does need a role in R&D and infrastructure, it should be a limited role and one that doesn't drown out the private sector (I support public-private partnerships for infrastructure).

Remember profit isn't a bad thing. The problem with the government isn't that all spending is bad, its that I don't trust them because they are unaccountable in terms of how they spend their money. Since they don't have a profit motif there is no solid economic indicator of whether government investment works, and so the government is more likely to do a bad job then a good job.

Meanwhile corporations are directly accountable to their investors and have an incentive to spend wisely. That is why private enterprise is more efficient then the government, if it wasn't then competitors would take over them. I don't want to give the government too much power because private enterprise will more often then not be better then public spending and I don't trust the government.

The US government already wastes too much money on healthcare, social security and defense as well as lots of wasteful spending on more minor projects.

Singapore is my favourite government in economic policy, though I disagree with it on civil liberties.

"There is no reason to think that this can't be used for startup industries. Except the claim that innovation is best driven by profits (i suspect that basic researchers not driven by profit, nor forced to spend time not researching, ticking boxes, teaching, etc. is actually more successful and innovative.. but that is an entirely separate digression.)"
Again I support public-private sponsorship to basic research, since government is not accountable to its spending.

Take the money 'wasted' by NASA over the years, i agree with you. The money originally spent on R&D to 'beat' the russians helped develop a massive industry. But the US kept spending and outsourced, diverting the money (which as you pointed out is unaccontable in it's use) to private interests.

I would have specified creating state companies which (once successful) are sold off to private investors. Govt making a capital investment and then divesting itself of the industry; that would allow creation of jobs among other things...

I kinda agree with you on the principle, i like the free market, but as you pointed out 'profit is a signal for investors' - that means that sectors with no profit get no/minimal investment - which is where i'd like to see govt. Stepping in. BUT on a temporary basis.

but what if sectors with no profit are unprofitable because they are a waste of time?

In the private sector once you spend boatloads of cash developing a product that is unsuccessful because nobody wants it, you drop it and move on.

In the public sector you then spend boatloads of money figuring out what you did wrong.

It is quite possible that an industry is unprofitable because either nobody is interested in it or because we lack the current technology to develop it properly.

supply and demand are signals to developers as to what to develop.

If there is high demand for a product with no suppliers due to technology being unaffordable, companies will likely invest in making the technology more affordable.

You can't measure this 'high demand' in the absence of any supply. Nobody is actually setting a price, thus there is no signal.

sure this is, marketing research...

Saying that taxation reduces expenditure on R & D assumes that every spare dollar would otherwise go to R & D if the tax did not exist. That's the equivalent of assuming that workplace safety violation fines take up money that would otherwise be invested in improving workplace safety. Or...they would induce the company to incur short-term costs in order to avoid long-term losses to profitability.

Yes, market research can help. But some things may make no profit for several years.

Ok, if you can convince your government to buy - then they are a customer not an investor.

I guess ky arguement is that the govt should invest and then sell off (to make money for further investments) the infastructure - or better still hold ownership but contract use out, so a private entity manages the infrastructure (ie rents to the public) while paying the govt. for the priviledge.

But for new R&D selling off to release funds for future R&D.

Sorry, i'm getting away from taxation and talking about what i think Govt should do.

Obviously i think govt need taxation to spend on something.. and i think this whole education/infrastructure is vital for over coming the weaknesses of a completely free market - the cost of education necessarily affects business, a pure free market would release the burden of taxation from companies but leave them woth an uneducated workforce... (or the wealthy would pay for their kids to go to private schools and we'd have a deeply engrained class system...)

Regardless, your position is that increased taxation will only result in decreased production - so socially responcible taxation policy would be to (say) decrease gun ownership, or smoking rates by taxing said products.

(or the reverse, positive incentives to encourage socially beneficial behaviours, so maybe paying incentives (or tax breaks) to parents whose kids have an above average reading age)

The anarchy of production is overall very poor at directing investment. Relying on the voluntary decision-making of private capital results in much waiting and little action.

education is a positive externality.

I like sin taxes, sales taxes and property taxes, hate all other forms of taxes.

Putin doesn't know what he is talking about.

That's why we have an abundance of consumer confidence and little investment. There is demand and suppliers who refuse to meet that demand.

I think there are advantages to having centrally planned developments in tandem with private enterprise... I'm not even trying to find a compromise, i'm looking for an ideal system which takes the strenghts of several other models and merges them in a sensible way - and i fully admit i don't know what the most sensible way is, in fact it likely changes over time.

@fasces, why property tax and not income tax. You seem likely to have a decent reason.

I like the idea the cigarettes (for example) are taxed to provide revenue for smoking related illnesses and research to cure lung cancer; that is a state of affairs where people more likely to be a burden on the medical system pay more (but in the US the likely pay more in terms of medical insurance too, and i inherently dislike this double payment)

orathaic: Your reply has been noted. I haven't had any time to respond.