About one to two decades ago, it was popular to bash Japan by calling it one big cartel or megalopolis of cartels. American economists, businessmen, and cheap political hacks named the country: JAPAN INC. There were many "Rising Sun" fear mongering movies and other forms of Western backlash against Japan. Washington, D.C. sent numerous negotiators to get Japan to let American businesses into the somewhat isolated markets and business world of Japan.
In the wake of the recession and deflation in Japan, which lasted approximately from 1989 through 2003, one seldom hears of a good article on the cartelism in that country. Meanwhile, last May I read a special report in the FRIDAY TIMES (May 11, 2007) a brilliant summary about cartels in the Arab states. The piece was by Jamie Etheridge and was entitled: "Gentlemen's Agreements and Developing Kuwait". The political economic analysis of the author reminded me both a bit about my experiences in Japan and of my homeland, America.
FROM MONOPOLIES TO CARTELS
Etheridge notes: "In the Arab Gulf, oil-rich governments have long celebrated their natural monopoly over the energy sector, state utilities, infrastructure projects, real estate development and myriad other aspects of the local economy." However, in recent decades both
(1) globalized economic and political pressures combined with
(2) a growing wariness in placing a nation's trust too much in the volatile energy sector
have led governments in the Gulf Arab world to call for an end to monopolies and for economic liberalization.
Sadly, in the Gulf this does not necessarily translate into a real free market of forces coming to be developed. This is because competitiveness is often still missing. Rather, these calls for the end of monopolies and liberalization have led to growth in cartels.
One finds that this problem in Kuwait is evidenced quite clearly in the communications, insurance, and hotel sectors. A fairly tiny elite, who support the current regimes at all costs, are the beneficiaries of ownership in these lucrative sectors.
Besides international or globalized pressures, Stratfor researchers have indicated, "Governments, especially the ones in the Gulf Cooperation Countries, will move from a monopoly to a cartel when the private sector tends to expand and [when] there are an increasing number of actors that do not represent the interests of elite. This is where moving to [a] cartel system will help" sustain the current government-and, of course, the particular form of current regime governance, i.e. described as "emir-ship" in many Gulf states.
Etheridge explains that "the Arab Gulf states adopt the lingo and mechanisms of the West-they 'liberalize', they 'privatize'. But they avoid the potential dangerous consequences of greater economic-and by extension political-participation by a greater diversity of society."
FLASHBACK TO AMERICA INC.
Now, before, I return to Etheridge's writing, I think it needs to be added that the USA, too, also has large oil cartels who participate with the world's largest cartel OPEC. Moreover, these cartels of oil have great influence on the U.S. government and the stability of whomever is in power, i.e. whether the White House or congress is Democrat of Republican. This is why many of the most critical analysts of the elite oriented Washington, D.C. leadership have called the USA virtually a one-party state.
For example, even the currently expanding bio-fuels sector in the United States seems to be dominated by a single owner or group of owner. Meanwhile, only one source of this type of alternative fuel has been properly subsidized in the USA over the past 30 years-this is corn. Meanwhile, quite obviously as Brazil is showing the world that sugar cane is a much more efficient bio fuel to be using and investing one's time in developing.
Only an elite cartel could force a shift away from efficiency like we have been seeing in the biofuels in North America in the supposedly most free business market in the world-my homeland, the USA.
Moreover, lobbyists from the traditional energy sector elite as well as their political cohorts in the USA have until now refused to invest to any great in the alternatives to the petroleum and natural gas or coal sectors. If the finance market in the USA were freer and less-dependent on the political and economic elites who currently run the country, thousands of new local cooperatives across the nation would have been formed already and would have been issuing bonds to create and use energy from alternative fuel sources at local levels-including wind-, geothermal-, solar- and other energy sources that have till-now had to rely on the supposedly free market for investment.