Monopolies

This article was originally written in the 1990s, and Thailand has come a long way in getting rid of many monopolies since that time, so some of this article is obsolete.

I'm an American who has analyzed foreign countries (mainly when I consulted to the U.S. Agency for International Development, aka USAID), so I'm particularly sensitive to monopolies. It's a main reason many less developed countries, including Thailand, stayed behind and often fell even further behind other countries in ability to compete in the new world, and standards of living for the vast majority of the population.

Monopolies in Thailand usually come from government corruption -- collusion between government officials and businesses offering the highest bribes under the table. Sometimes they come from mafia gangland warfare.

For example, up thru the 1990's and across the millenium, one of the biggest and worst monopolies was in the Internet field, and was the result of the authoritarian Communications Authority of Thailand (CAT), who regulated things all the way down to the rates and services that ISPs could offer. Internet and telecommunications are rapidly changing fields, and deregulation is the only way for a country to decently keep up and compete. In this field, Thailand was a joke for too long. Fortunately, Internet was eventually deregulated for the most part, though there are still issues for new technologies being rolled out, such as 3G.

The typical mechanism of a monopoly in a less developed country is this:

A new technology field from the west emerges. Say, Internet. The rich and powerful, with no limit to their greed, recognize this field as being lucrative and decide they want it all to themselves. The government ministers "regulate" this market and parcel out market shares according to under the table bribes.

The publicly stated rationale is that free competition cannot be allowed because the market isn't big enough to support too many service providers, and if the government were allowed a free market, then the players wouldn't make any money. (Most readers from America will either laugh so hard at this joke that they'll fall on the floor, or else cry out of compassion to would-be entrepreneurs here.)

The result is that lean and mean entrepreneurs are cut out while large, expensive, slow and inefficient fat cat companies make all the money (if they can even turn a profit at all, by the nature of their companies). (Oh, they would be happy to hire the lean and mean entrepreneurs ... at trivial monthly wages, trivial stock ownership, and a stifling environment amidst the greedy fat cats, who one must always "yom"... so where's the incentive compared to other alternatives for entrepreneurial people?)

Indeed, a lot of talent will leave Thailand and go work in the West. This is called "The brain drain."

For the general population, this means that new services are slow to arrive, service is poor compared to free market countries, and the price is exhorbitant. Meanwhile, the country and its people are slow to develop and fall further behind in their ability to compete in the world.

Some people consider government ministers' support of the policy of monopolies to be something remotely akin to treason.

The government aside, if you walk into one of the monopoly companies and analyze its operations, here's what you'll usually find:

The businessmen who control the business do not really understand the technical field very well. They hire people who they think have the paper credentials and should be able to run the business, mainly based on what university they went to and what degree they got (i.e., ivory tower sorts). They do not understand quality issues when it comes to hiring either the technical people or their managers. They are not able to discriminate well between hirees in terms of either technical skills or personality traits relevant to the field. Little good talent shows up (or stays long) at the low salaries they are offering.

At the other extreme, in low tech operations in some provinces, some sectors of the economy (e.g., major road construction projects) are controlled by "mafia" figures who have been known to force competitors out by various means of force (including some having histories of outright gangland warfare, e.g., killing their competitors using motorcycle hitmen). However, these provincial sectors are rarely of interest to international investors.

In any case, as long as monopolies continue, and without truly free markets and decentralized competition in cutting edge fields, Thailand will continue to fall further and further behind as a country in the competitive world. If we foreigners aren't be able to start and run enterprises in emerging fields without interference, then we won't be able to hire and train (technology transfer) Thais as well as we should be able to. Also, the income gap between the rich getting richer and the poor staying poor will remain, with a small middle class in between. In most countries, most entrepreneurs come from the middle class, but in Thailand they aren't given a chance in cutting edge fields.

The rich get richer and screw the country and the poor.

Again, how I've seen it rationalized and justified, government ministers' support of the policy of monopolies is damaging to the nation's best interests, as they sell themselves at the expense of their country's capability to compete in the world ... and all Thai consumers who pay exhorbitant prices with little choice.

They usually screw others politely, sometimes with a smile.




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