Why communism doesn't work

Day 4,755, 02:53 Published in India India by Visor Of Blades

Some smart people have recently claimed that a tax the rich, feed the poor policy is a suitable mechanism to improve everyone's income. Let me explain why it doesn't work.

First point: it was suggested by the said group of smart people to make a system "similar to real life". That presumably refers to the fact that there are different tax slabs for different income groups - very low income (0 tax), low income (10% tax), middle income (20% tax) and the high income (30😵 tax brackets.

That is already a fundamental flaw - the major portion of this "income" is salary. Fair enough. No way to get out of that - more salary = higher tax bracket. "But you need to add tp income" I hear you say. Sure. TP "income" and BH "income", mind you, are different from absolute gain from those medals.

What if the said player is investing in houses and packs for the hunt? In real life, it is the NET income that is taxable, not the absolute income. Everywhere. Even when you sell shares on BSE/NSE, you pay tax on the profit. You have to subtract the cost of buying the said share. If you sell potatoes, you subtract the cost of procurement gor them.

And there is no way to say how much you paid for packs. You can trace donations, but one can easily circumvent that - I will donate, let's say, 1 million cc to buy BP, and some amount of food and weapons which will be given to me on a pre-determined date, which is in the year 3020. How much did I pay for each good? Since neither buyer nor seller differentiate between it, you also can not. Also, the seller can claim selling part of the material at loss, adding new problems - he can claim that the weapons were being given at lossy price as part of the transaction. The said weapons or food will never be transferred as eRepublik won't be around for 1000 more years.

Second, you can tax someone for the profit they make from selling food, weapons, etc. Again, you have to tax the net profit, not absolute sale value. If I as a company reinvested every profit I make to grow the company, that means I owe the government no tax. If I incurred net loss, I not only don't pay tax this time, I can carry forward that loss for upto 8 years, and count profit against that loss, and as long as the total profit is lower than the said loss, I pay no tax. I will pay tax after I have made profit, which I can juat reinvest and show as no operational profit - that's why Trump pays so little tax.

Even if all that doesn't work, I as a taxpayer have one more option. I have few companies that I need to work in. For that I need energy and for that I need recovery. So for that I need to hit in battles, and that technically counts as operation cost. So any weapons, food etc that I uae for that, I can count as operation cost and reduce my shown profit.

Second point: the part where you donate the "collection" to poor account. Multiple studies have shown that if people are given freebies without putting much effort, they are less likely to put more effort to get more stuff, and this holds true even if the freebies are insufficient to cover their expenses. Obviously, more the freebies, lower the effort. And once it crosses the income they need for now, they put no effort for the sake of income, thereby removing all chances of income growth. That is essentially why even though you have many examples where highly capitalist-oriented economic models that have worked, not a single model based purely or close to communist or socialist structures have succeeded. Every single one of them has failed, and each failure was more miserable than the last, The USSR taking top spot in this regard. Before you say China, go read about their economic model. They are a socialist GOVERNMENT with a capitalist economic model.

Sure, you cam loan them. For that I'll give you a seemingly unrelated example but be patient. So recently (maybe 1-2 months ago) the Security and Exchange Board of India (SEBI) introduced a new requirement for mutual fund schemes (specific to those in equity) to call themselves as "multi-cap" funds. Let me clarify the words - all companies listed on the stock exchanges are categorised into 3 categories - small cap, mid cap and large cap. This relates to the size of thw company - smaal companies in small cap, and so on. What multi - cap funds used to was to buy and sell stocks across these categories, but very often would have a large amount of money invested in large cap companies - many times in excess of 90% of the funds they managed.

So what SEBI did? They made a rule that at least 25% of the money has to be in each of the caps (accounts for 75😵, and the rest 25% can go wherever, and is allowed to change with time, as long as the remaining percentage is handled. What is the problem? The problem is that small cap companies can not soak in that much money.

The amount of money these guys manage, mind you, is not like the pocket money that dad gives during college to pay fees and such. These numbers run into thousands of crores (each, for bigger ones), which can buy out many small cap companies many times over. To give a comparison, selling one share in Shree Cement will give enough money to buy around 60 shares in Wipro, and Wipro is not a small company. Think of companies you have never heard of, like Esther Industries (plastics and packaging). One share in reliance will give you 150-ish in Yes Bank.

Similarly, if you give me suddenly 1 million cc and say go make companies, my company system (of 170+ companies) will break down. Such a system is doomed to fail from the start.

Third point: Plato can give freebies. Sure. He can also reduce legend damage, and even reduce the number of weapons that a company makes. He can even triple the raw material costs. He can evem add extra zeros to the TP medal requirements, and make it 100 trillion instead, for lowered reward of 10cc. No problem here.

But then, if the prospect of being a strong account is that your income will be targeted, apart from losing your free income, what will you do with the freebies? Go put it in fixed deposit scheme at post office (they have good intrest rates BTW). Nobody will use the freebies, and those top account will stop buying packs, because why will you pay a guy to extort you? And soon Plato will not be able to maintain the servers, and the gsme, along with all the time and effort you did not put, will die.

But the people who suggested this scheme are smart people, and surely they have a way to explain it. So let me go a step further and explain why this model works:

You get rewarded for paying with money/time. That's it. Just like you do at the store - if you have money, you can buy stuff, and if you work there you get an employee discount. Reward for effort. It's that simple.

At the smae time, effort at being bad gets bad effects too - if you steal from a supermarket you get beaten up, if you steal from Apple you go to jail (except Bill Gates ofc), if you steal from Modi you get lynched, if you steal from Walmart you get into the wall of shame, and if you make a shit script you lose 140k cc overnight.

This is the end of the article. Thank you for reading.

And if you got offended and are hurrying to write an angry comment, I thank you even more because I'm probably not going to respond to it and it will keep my article up in your stupid face even longer.