Rationale behind Income from Production?

[AKronblad]

Having played (or at least modded) EU4 for over four years, I suddenly just came to think about what the income from Production actually represents. To me, the main (or only) source of income for a state is more or less tax revenues, at least historically.

Does Tax simply represent one form of tax, and Production another form? Or what does Production income really reflect?

 

[GRWalker]

I have always imagined it as an excise duty - - a tax paid to the state by the manufacturers in order to allow the goods to be made available to the consumers (or traders, in the case of EU4).

 

[AKronblad]

I have always imagined it as an excise duty - - a tax paid to the state by the manufacturers in order to allow the goods to be made available to the consumers (or traders, in the case of EU4).

Interesting: makes sense. However, time period wise, excise duties are not that old, though, to occur already at start in the EU4 time period, right?

 

[GRWalker]

Interesting: makes sense. However, time period wise, excise duties are not that old, though, to occur already at start in the EU4 time period, right?

I'm not sure; by name this kind of taxation goes back to the period of the English Civil War, so mid-17th century. I couldn't find older examples after a cursory search on Wikipedia.

Another train of thought: if some nation has +% income from production in their National Ideas, you could check the flavor text for clues on what that means.

 

[Robert de Bruce]

I thought of the production income generated by royal manufactories and such. In the time period EUIV covers it wasn't like private enterprises produced and paid taxes and the kings were confident with taxes only. There are many examples in France and a good one is the Saxonian porcelain manufacture. Furthermore, colonial and trade companies had their own plantations, contributing directly to state income. So for me it's also explainable that one province produces only one good, representing only the state production there. Ofcourse it does not fit for all, for example hordes, tribes and also some goods like grain. Grain you may explain with old feudal rules giving certain percentages of the harvest to the lordship. But usually at EUIV time frame this is a nominal rule, replaced by monetary taxation saying this amount of grain is worth this in ducats.

 

[TheMeInTeam]

Interesting: makes sense. However, time period wise, excise duties are not that old, though, to occur already at start in the EU4 time period, right?

Efficiency does increase very significantly from tech as time goes on. Early game production efficiency is pretty low (and thus production income) but you eventually get lots of modifiers to make it strong, only trade can outcompete it and you need a good amount of control for trade to significantly outperform production (they also have good synergy).

 

[Orkonkel]

A mine would contribute significantly to the state's income, and not due to taxation.

 

[AKronblad]

Thanks everyone!

So basically it could make sense to view Production as state owned or state controlled production facilities, and not necessarily all production taking place in the province.

 

[Alblaka]

I thought of the production income generated by royal manufactories and such. In the time period EUIV covers it wasn't like private enterprises produced and paid taxes and the kings were confident with taxes only. There are many examples in France and a good one is the Saxonian porcelain manufacture. Furthermore, colonial and trade companies had their own plantations, contributing directly to state income. So for me it's also explainable that one province produces only one good, representing only the state production there. Ofcourse it does not fit for all, for example hordes, tribes and also some goods like grain. Grain you may explain with old feudal rules giving certain percentages of the harvest to the lordship. But usually at EUIV time frame this is a nominal rule, replaced by monetary taxation saying this amount of grain is worth this in ducats.

Given that you literally build workshops and manufactories with royal/government coin, this seems like the most reasonable explanation.
Everything past that can be blamed on 'abstraction to suit the gameplay design'.

 

[Wektor]

In addition to what others said, it also may represent the income from royal domain - in many countries monarchs owned considerable amount of land and in many cases national treasury and monarch's own money was basically the same thing. In Poland, for example, in that period main sources of money for the state were not really taxes (as nobility and clergy had many privileges and exemptions from taxation and collecting taxes was problematic) but mostly state monopoly for salt mines (hence in vanilla Eu4 Kraków province is very rich and has salt as a trade good), income from vast arable lands and cities owned by the king and custom taxes imposed on trade. Also, for example, in Russia, Peter the Great established state monopoly on alcohol production, so all the money from alcohol consumption in Russia went straight to the treasury (and btw, he also implemented laws encouraging alcohol consumption among peasants, which some claim led to alcoholism problems in Russia). so, basically, the state had quite big impact on economical life back then.

 

[Floatserve]

I was wondering about the same thing a while ago and also received useful answers from the community.
https://forum.paradoxplaza.com/forum/index.php?threads/production-what-is-it.934260/

 

[Badesumofu]

The thought I've often had as well is that you play as the country as a whole, not just its government. You don't get a game over when the government falls to something like a Revolution, after all. More production of more goods makes the country as a whole more wealthy and so you end up with more ducats to spend on whatever.

So you can then view it in one of a few ways: you can view all the spending of ducats that you do in the game as the government spending that money. In that case you'd also expect that the government gets some of the profits of things like workshops and manufactories. Or you can take the view that when you spend ducats it represents some body within the country spending money. In that case it doesn't matter whether something like a workshop directly enriches the government. Either way it makes sense.

Someone is building things and someone is making money of those things and using that money to build more things.

 

[SignedName]

Interesting: makes sense. However, time period wise, excise duties are not that old, though, to occur already at start in the EU4 time period, right?

Taxes in kind are an ancient concept, and widespread throughout history. For people who couldn't pay taxes with coin, the government usually took a portion of their crops or other goods produced as payment instead, which the government would either use itself or sell to earn income.

 

[ringhloth]

IMO it doesn't often represent taxes and direct income from goods - that's more represented by trade. It represents, instead, the fact that these goods are easily available, and their easy availability increases the wealth of your nation, which you can tax in other ways. For instance, a province producing grain means that you don't have to pay to import grain abroad as much, and thus aren't losing money to importing grain.