Publicly Traded versus Private Ownership in factories

[Secret Master]

So, let's start this discussion off the right way:

But, really, what's the difference between the two in terms of business performance?

Yes, with things like farms and plantations, you can replace some aristocrats with capitalists by swapping to publicly traded. This has some political effects in that aristocrats generally prefer landed gentry IG rather than the industrialists IG. I get that.

But with factories, I'm having a hard time understanding the benefit to swapping to either production method from the other. Consider this factory in my late game Russia.

With Public trading, it employs these POPs:

Okay, so if I swap to private ownership, these are the changes the tooltips tell me will happen:

Okay... so the only difference between both production methods is the number of capitalists. No changes to the types of POPs in this case. And yes, I can understand why lowering the number of capitalists might increase profitability.

But I've also seen situations where moving to publicly traded helps profitability. (Don't have a screenshot handy) I've noticed its rare in the later portion of my games that publicly traded is actually helpful according to the tooltips, though.

So, my question is why would the "better" production method (and you have to unlock this with a tech) ever be worthwhile if it just drags more capitalists into employment? Does this affect dividends and cash going to the investment pool? And how could a factory ever be more productive by hiring more capitalists and no one else?

 

[ShoGuL]

So, let's start this discussion off the right way:

View attachment 917626

But, really, what's the difference between the two in terms of business performance?

Yes, with things like farms and plantations, you can replace some aristocrats with capitalists by swapping to publicly traded. This has some political effects in that aristocrats generally prefer landed gentry IG rather than the industrialists IG. I get that.

But with factories, I'm having a hard time understanding the benefit to swapping to either production method from the other. Consider this factory in my late game Russia.

View attachment 917630

With Public trading, it employs these POPs:

View attachment 917635

Okay, so if I swap to private ownership, these are the changes the tooltips tell me will happen:

View attachment 917638

Okay... so the only difference between both production methods is the number of capitalists. No changes to the types of POPs in this case. And yes, I can understand why lowering the number of capitalists might increase profitability.

But I've also seen situations where moving to publicly traded helps profitability. (Don't have a screenshot handy) I've noticed its rare in the later portion of my games that publicly traded is actually helpful according to the tooltips, though.

So, my question is why would the "better" production method (and you have to unlock this with a tech) ever be worthwhile if it just drags more capitalists into employment? Does this affect dividends and cash going to the investment pool? And how could a factory ever be more productive by hiring more capitalists and no one else?

1) If you're trying to reform a backwards nation, making everything publicly traded empowers the Industrialists greatly. I managed to get them over 50% clout in my last Japan game, making it a breeze to industrialize.
2) No, the profits will always go x% to investment pool depending on your laws and IGs with the rest shared among the owners, the number of capitalists is irrelevant. I think you get more taxes with proportional taxation with more capitalists though.
3) I have no idea, I've seen this tooltip too. I suspect it may be a bug of some kind? I don't understand how giving the factory more owners that have to be paid will ever increase profits...

Edit: I suspect publicly traded also increases your average SoL significantly as long as you have excess population. Slightly worse off capitalists are a lot richer than peasants after all.

 

[Jamey]

I’d also like to understand this, as I’ve also seen instances where adding more capitalists increases profits.

I’ve gone with publicly traded to increase the number of capitalists for interest group strength.

I also think that more capitalists yields more investment pool, but I can’t prove it and the UI really doesn’t explain the investment pool anywhere that I’ve seen.

 

[ShoGuL]

I’d also like to understand this, as I’ve also seen instances where adding more capitalists increases profits.

I’ve gone with publicly traded to increase the number of capitalists for interest group strength.

I also think that more capitalists yields more investment pool, but I can’t prove it and the UI really doesn’t explain the investment pool anywhere that I’ve seen.

While this would totally make sense, and I also assumed that was how it worked.. it's easy to falsify.

I used a gold mine for this, as the price doesn't change:

As you can see, this privately owned gold mine pays 50% to investment pool (under Laissez-Faire), with the rest going to the capitalists. A further $316 is taxed due to Proportional taxation.

What happens if I switch it to publicly traded?

Well, the profit goes down because all the extra capitalists have to be paid. They are each given a wage from 'working' on the building, before calculating the profit. The invetment pool is still 50% of the balance, it's just smaller due to less profits.

The net effect is that I've empowered some peasants to be rich capitalists, giving away a portion of the profits in exchange for wealthy and powerful Industrialists.

 

[Jamey]

While this would totally make sense, and I also assumed that was how it worked.. it's easy to falsify.

Thanks. I missed that info on that tooltip.

 

[Secret Master]

1) If you're trying to reform a backwards nation, making everything publicly traded empowers the Industrialists greatly. I managed to get them over 50% clout in my last Japan game, making it a breeze to industrialize.

I considered this, but playing Russia and China, I found it difficult to get POPs to become capitalists in the first place. I'd face the problem of factories (and rural industries for that matter) having a hard time hiring to full capacity because they couldn't meet their quotas of capitalists.

the number of capitalists is irrelevant.

That's what I thought, but I wanted to make sure.

But that means....

The invetment pool is still 50% of the balance, it's just smaller due to less profits.

... and I've been screwing myself by swapping over to more capitalists. I really make use of that investment pool, but publicly traded seems to be a net loss for such an approach.

Edit: I suspect publicly traded also increases your average SoL significantly as long as you have excess population. Slightly worse off capitalists are a lot richer than peasants after all.

Yeah. This might be how I've been able to scam such high average SoL in my games.

Related point:

When you get to the point where you are starving for resources and factories are unable to hire all their workers due to labor shortages, publicly traded is really bad. It skews labor weirdly and you have a lot more capitalists that are just barely making it.

 

[Aliquam]

I have also noticed unexpected raise in net balance of the industry after switching to publicly traded. IIRC it happened only with industries that were with no more than 25% of filled employment and/or reserves.

 

[ShoGuL]

I have also noticed unexpected raise in net balance of the industry after switching to publicly traded. IIRC it happened only with industries that were with no more than 25% of filled employment and/or reserves.

Hm.. industries need a certain % of capitalists employed to be able to employ more laborers. It's possible publicly traded has some wonky maths that allows more laborers in low employment buildings due to a larger capitalist pool? It seems counterintuitve but it's the only thing I can think of. Someone else will have to test it though.

(Also, not sure how you can disagree with my post, I literally just show what happens in the game with investment pool )

 

[brainiac1530]

There really isn't a huge difference in margins. Those 50 extra capitalists only get about 300 wage-shares, and most industries have at least 5100 to start (4500 laborers + 100 capitalists.) The real difference comes in the fact there are 50% more capitalists. Before considering laws, political power increases with wealth ... vaguely linearly (at the high wealth values you'd expect for upper strata pops). But the required income to maintain any given wealth is exponential (approximately 10% more per wealth.) Thus, you'll expect to see more political power for capitalists overall (which mostly goes to the industrialists) with publicly traded in effect in as many places as possible, and this is before considering per capita bonuses from laws. Wealth voting is obviously beneficial for them, but high-wealth capitalists also tend to have high literacy, which makes census suffrage effective for them too.

There are also some effects on the types of goods demanded. Very high wealth pops mostly increase their demand only in certain categories. But having more upper strata pops rather than a few richer ones creates more demand in some other categories. I have a rough spreadsheet that tabulates all this sort of thing.

 

[ShoGuL]

There really isn't a huge difference in margins. Those 50 extra capitalists only get about 300 wage-shares, and most industries have at least 5100 to start (4500 laborers + 100 capitalists.) The real difference comes in the fact there are 50% more capitalists. Before considering laws, political power increases with wealth ... vaguely linearly (at the high wealth values you'd expect for upper strata pops). But the required income to maintain any given wealth is exponential (approximately 10% more per wealth.) Thus, you'll expect to see more political power for capitalists overall (which mostly goes to the industrialists) with publicly traded in effect in as many places as possible, and this is before considering per capita bonuses from laws. Wealth voting is obviously beneficial for them, but high-wealth capitalists also tend to have high literacy, which makes census suffrage effective for them too.

There are also some effects on the types of goods demanded. Very high wealth pops mostly increase their demand only in certain categories. But having more upper strata pops rather than a few richer ones creates more demand in some other categories. I have a rough spreadsheet that tabulates all this sort of thing.

Are mines special? The gold mine example above saw a 30% decrease in net dividends which seems very significant.

 

[brainiac1530]

Gold mines seem to have basically the same labor composition as any mine. The only difference I can see is that gold mines are especially profitable, so their spending on wages is probably much higher. There's already a whole thread on that. That mine was already operating under the profit cap, so hiring those extra capitalists definitely came straight out of the profit margin. Unfortunately, it seems industries don't lower wages until they operate at a loss long enough to empty half their gold reserve, so needlessly high wages often get locked in.

 

[Sovieticozasz]

In my last game as mexico i did some numbers, and reached the following conclusion (it may be the completely wrong conclusion but hey, that is what i got!)

i had a food industry with privately owned production method that had a 1.11k in weekly balance. 836 of those went to the ether that is shared dividends 278 went to the investment pool and 167 were paid to the state in the form of divident taxes. So i got (assuming i can use the full investment pool, and that is easy to do) 278+167 = 445 pounds a week benefit from this factory.

after i changed to publicly traded, it added 50 capitalists, and the numbers changed to 1.06k in weekly balance. 800 went to shared dividends, 266 went to the investment pool and 160 were to taxes, so i got 266+160 = 426 pounds of benefit for the factory

so the factory was earning me 426-445 = -19 pounds compared to before

but that was not a problem, since those new 50 capitalists had a wage of 96.7 yearly pounds, a total of 4835 pounds per year, or 92.73 pounds a week wage.
since i have proportional taxation at medium i get 25% of that or 23.18 pounds of income from taxes.

so my real income difference after enacting publicly traded for this factory was 426-445+23.18 = 4.18 pounds benefit, and there are 50 more capitalist empoyed,
bolstering some of the best IG groups and 50 more people that will hardly become radicals since their SoL is incredibly high.

 

[TerraSlayer]

So after reading this thread, as I understand it, the investment fund comes from the factory profits and not the actual capitalists? If that's the case, the description of the laissez-faire law needs to be changed to specify this. I was also one of those who thought publicly traded was better than privately owned for investment capital. As the thinking was, the more capitalists you have, the higher investment income you'd get.

But obviously this thread shows that's not the case. I'm actually blown away by these findings. I never actually bothered to check on my own, I just assumed that's how it was (you know what they say about assuming. lol).

 

[Republic of Mercury]

So after reading this thread, as I understand it, the investment fund comes from the factory profits and not the actual capitalists? If that's the case, the description of the laissez-faire law needs to be changed to specify this. I was also one of those who thought publicly traded was better than privately owned for investment capital. As the thinking was, the more capitalists you have, the higher investment income you'd get.

But obviously this thread shows that's not the case. I'm actually blown away by these findings. I never actually bothered to check on my own, I just assumed that's how it was (you know what they say about assuming. lol).

Well, the investment pool comes from the share of the factory profits paid to capitalists (e: Ouside of Agrarianism*). Buildings where the pops receiving dividends are all capitalists, changing the number of capitalists doesn't do much. But for buildings that have non-capitalists earning dividends (e.g. farms and plantations) adding more capitalists redirects more dividend money to the investment pool (Under Laissez Faire).

 

[CrabHelmet]

Well, the investment pool comes from the share of the factory profits paid to capitalists. Buildings where the pops receiving dividends are all capitalists, chaning the number of capitalists doesn't do much. But for buildings that have non-capitalists earning dividends (e.g. farms and plantations) adding more capitalists redirects more dividend money to the investment pool.

The point of what that poster was saying is that the investment pool doesn't come from the share of factory profits paid to capitalists, it just comes from factory profits (the whole pool regardless of who it goes to).

I don't know if this is right, as it doesn't match the game tooltip, so I will test it.

 

[Republic of Mercury]

The point of what that poster was saying is that the investment pool doesn't come from the share of factory profits paid to capitalists, it just comes from factory profits (the whole pool regardless of who it goes to).

I don't know if this is right, as it doesn't match the game tooltip, so I will test it.

TerraSlayer was saying that the number of capitalists isn't important. I was patly-disagreeing, by clarifying that it's the proportion of capitalists that matters. Now I have sources.

(n.b., I may have used the wrong screenshot for publicaly traded in Laissez Faire) Nope it was interventionism that was wrong.

(if anyone's suprised by Laissez-Faire's publicly-traded contribution not being higher than Agrarianism's privately-owned, remember that publically traded plantations only have half as many capitalists as aristocrats.)

 

[CrabHelmet]

View attachment 917918View attachment 917928View attachment 917920

TerraSlayer was saying that the number of capitalists isn't important. I was patly-disagreeing, by clarifying that it's the proportion of capitalists that matters. Now I have sources.

(n.b., I may have used the wrong screenshot for publicaly traded in Laissez Faire) Nope it was interventionism that was wrong.

Yeah rereading I misunderstood what TerraSlayer said. It's definitely the case that only capitalists contribute to the Investment Pool under Laissez Faire, and so by increasing the proportion of Ownership Shares held by capitalists, you increase contributions to the Investment Pool. For a lot of industries, publicly trading makes no difference, because going from having 5 Capitalist ownership shares out of 5 to 10 out of 10 doesn't do anything, but for agriculture where you go from 0 shares out of 7 to 5 shares out of 12 being held by Capitalist, it means a significant increase to the Investment Pool under Laissez Faire.

So the answer seems to be: "you use publicly traded for things that wouldn't otherwise have capitalist shares, and when you want to boost the clout of Industrialists and other capitalist-affiliated IGs, and when you have a reasonably profitable factory and want to increase SoL instead. You don't use it if you're trying to avoid Industrialists or a factory you want to be profitable is not profitable yet."

 

[Hemothep]

View attachment 917918View attachment 917928View attachment 917920

TerraSlayer was saying that the number of capitalists isn't important. I was patly-disagreeing, by clarifying that it's the proportion of capitalists that matters. Now I have sources.

(n.b., I may have used the wrong screenshot for publicaly traded in Laissez Faire) Nope it was interventionism that was wrong.

(if anyone's suprised by Laissez-Faire's publicly-traded contribution not being higher than Agrarianism's privately-owned, remember that publically traded plantations only have half as many capitalists as aristocrats.)

So basically under Interventionism/LF use publicly traded for rural tab & privatly owned for urban buildings to maximize investment pool.

 

[Sbrubbles]

View attachment 917918View attachment 917928View attachment 917920

TerraSlayer was saying that the number of capitalists isn't important. I was patly-disagreeing, by clarifying that it's the proportion of capitalists that matters. Now I have sources.

(n.b., I may have used the wrong screenshot for publicaly traded in Laissez Faire) Nope it was interventionism that was wrong.

(if anyone's suprised by Laissez-Faire's publicly-traded contribution not being higher than Agrarianism's privately-owned, remember that publically traded plantations only have half as many capitalists as aristocrats.)

Yeah, aristocrats take like 1/3 of agriculture profits under privately owned, compared to capitalists taking 100% of factory profit. Agrarianism just isn't that good.

 

[ShoGuL]

So basically under Interventionism/LF use publicly traded for rural tab & privatly owned for urban buildings to maximize investment pool

Just farms and plantations. Mines and lodges are already owned by capitalists.