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It is a funny thing. Yesterday communists were all about state monopoly of… well… everything. Today, the Chinese communists are in a hurry to dismantle all state monopolies, particularly the big one: Oil.  Oh, those bad, bad Chinese artificial state monopolies!

In its article “A new round of anti-corruption reforms have been started targeting oil” the Chinese newspaper The Economic Observer points out that there is a new anti-corruption storm of unusual size and depth going on. It has to do with the power that “Oil” state companies yield in the North.

According to the story, these super corporate fortresses are a power on their own.  They are dangerous because:

  • they are a blend of state monopoly and agile enterprise
  • they can establish, consolidate and expand their monopoly
  • they can obstruct any system changes
  • they can pursue their own economic goals
  • they can pursue their own political goals
  • they have captured the government
  • they cannot be regulated
  • they are extremely difficult to break monopolies because of their tight government integration

Again, it is funny how the article mentions “corruption” and then they equate it to state monopoly.

Let’s begin by stating what’s obvious but no politician wants to acknowledge. Natural monopolies exist simply because people prefer their product over the competition. Natural monopolies are not good or bad, they just are. They don’t hamper the market, they exist in it.

Artificial state monopolies, on the other hand, are quite a different story. These are not monopolies that grew out of market approval, but out of brute force yielded by governments.  The government decided to create a monopoly and it enforced it with guns. Every other company was excluded. Everything else could was forbidden from competing. Everything else was simply squashed by the government.

Artificial monopolies are bad because on one hand they can simply eliminate competition by ordering the state to do so, and at the same time they enjoy unique rights to their businesses. The situation they exist in is not a free market, not even a market.

The Chinese government created a monster and now they are severely upset (read pissed-off) because the monster has chopped its leash and cannot be controlled any more.

They are upset because a company is acting as a company. It is taking every and all possible advantages to maximize profit. If those advantages include using the power of the state for free, the better.

They are upset because they can’t control the monster any longer. The creature has now plenty of money to buy their way into the government or “capture” key government positions by installing their puppet former employees in those positions.

This is obviously bad, say the Chinese. Corruption, corruption, corruption and state monopoly.

However, if you analyze a little deeper, you will notice that their main issue with this state of affairs, is not that there actually is a state monopoly but that it is getting out of hand.

The very same problem occurred in Russia when the oil barons tried to rebel and impose their political views. Vladimir Putin stamped them out.

In this case, the Chinese will stamp them out because there is only one thing that they cannot tolerate. And this is political interference. Why? Because politicians' jobs are at stake.

Yes, in the end it’s that simple.

In the end, all this story about Artificial State Monopolies being Bad, is not about state monopolies but about control.

And so, in order to reassert control, politicians will eventually break down the monopolies. And then people may, perhaps, if all goes well, and if the winds are blowing in the right direction and the gods are with us, finally benefit from the break-up.

What a pile of nonsense! What a collection dung beetle!

The issue is very simple indeed. Artificial monopolies are bad. Natural ones are not. For as long as governments exist, there will be artificial monopolies “for the good of the people”. Artificial monopolies are always about a group asserting power and control over another group. Artificial monopolies are always to the detriment of consumers.

However politicians may want to spin this power struggle is irrelevant. The only solution here is to get rid of all governments. It’s the only way to ensure there will be no power struggles at all. As long as a group has the monopoly of brute force, this group will be able to enforce artificial monopolies. It does not matter how many rules and regulations you throw at them. They will all be bypassed.

There really are no other solutions. Get rid of all governments, and nature will retake its course.

See the truth. Recognize the truth. Be the truth. Or not. Your choice.

Note: please see the Glossary if you are unfamiliar with certain words.

 

 

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