Deep Story

EP.6- Roosevelt's Gamble: The Birth of Antitrust and the Monopoly Paradox

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Discover how the 1901 assassination of President McKinley set the stage for modern antitrust laws, as Theodore Roosevelt took on powerful monopolies to protect democracy. Explore the evolving definition of monopolies and the surprising ways industry giants like Microsoft and airlines challenge conventional wisdom.

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Speaker 1:

Thank you. That's what deep story is all about. Thanks for showing up and making us look popular. Oh, let me tell you a story that's got drama, intrigue and a splash of wow. I didn't know that we're diving into the world of antitrust today. Don't roll your eyes just yet. Trust me, it's spicy, it's controversial and, yeah, it's gonna make you go Wait, is that even legal to say out loud? But hold up, we're not starting with antitrust just yet. Let's put those three letters in a box, slap a Do not open until later Sticker on it and kick things off with a throwback to the year 1901. Picture this September 6, 1901. We're in Buffalo, new York.

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The 25th President of the United States, william McKinley, is in town for the Pan-American Exposition. Back then expos were the thing American Exposition. Back then expos were the thing. Everyone had an expo. And today you'll walk into some random mom and pop shop, see a jar of pickles and the labels bragging Gold Medal Winner, 1893 Expo. Like, really, was there even competition? Anyway, mckinley's giving this super upbeat rah-rah speech at the expo. Crowd's loving it. He finishes, sits down, probably thinking man, I crushed it today. And then boom, a guy walks up to him, calm as you like, pulls out a gun, two bullets go straight into McKinley's chest and abdomen. Yep, the President of the United States is shot. And if you're thinking, wow, that's awful, oh, just wait, it gets worse. Medical care back then let's just say it was not giving Gray's anatomy. They found the bullet in his chest, but the one in his stomach, no dice, couldn't find it. Infection sets in and poor McKinley's gone eight days later eight days now, according to the Constitution.

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You know the drill vice president steps up and McKinley's VP None other than Theodore Roosevelt. Yeah, that Teddy Roosevelt, the guy who's on Mount Rushmore alongside Washington and Jefferson and Lincoln. Can we just take a second to appreciate that Mount Rushmore lineup? It's like the Avengers of US presidents. Anyway, a Teddy Roosevelt takes over and let me tell you, this guy was a big deal. Later on, his distant cousin Franklin D Roosevelt becomes another legendary president. Guess, the Roosevelt family just had presidential DNA. But here's why this transition matters it's a total game changer for the US economy.

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Mckinley and Roosevelt had very different playbooks. Mckinley, oh, he was all about big business. This guy believed America should flex its muscles in the global market. His philosophy was basically American companies should dominate the world stage. Protectionist tariffs, check Government policies that gave businesses a leg up, double check.

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And here's a fun fact for my history buffs McKinley's time in office was actually known as the McKinley Boom. Yeah, from 1897 to 1901, the US economy was on fire. Did you know America hit number one in global GDP in 1894? That's right, number one. The very next year we kick off the Spanish-American War and bam, suddenly the US is a fool on imperial power with colonies to its name. All this McKinley's hand to work.

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Oh, and here's a little twist that'll blow your mind McKinley had a soft spot for China. No, seriously, in 1901, the same year he gets shot, the Qiong dynasty in China signs the Boxer Protocol. Massive reparations like 400 million silver tails. But McKinley, he's over here like guys, maybe don't squeeze them so hard, let's cut them some slack. Yeah, I mean, the other powers didn't listen, but at least he tried. Makes you think, huh, alright, so here's the deal.

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Mckinley's approach to big business was basically let him grow, let him merge, let him dominate the logic purge, let them dominate the logic. Only massive companies have the muscle to compete globally makes sense, right? It's kind of the same vibe you get today in emerging markets when governments talk about industry upgrades or consolidating resources, you know, turning a fleet of dinghies into one big old aircraft carrier. Back then, america was thinking the exact same way. But then along comes Theodore Roosevelt and he's like hold up, are we really going to let these corporate giants run the show? These guys could hijack the economy, topple democracy and next thing, you know, regular folks are out here eating dirt Not on my watch.

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Teddy had a different vibe entirely and let's not forget, he was only 42 when he took office To this day still the youngest president in US history. Young, energetic and ready to swing a metaphorical axe at the giants of industry. So what's the first thing he does? He looks around, finds himself a target and lands on Drumroll, please, northern Securities Company. And here's the wild part. Northern Securities was founded on the exact same day McKinley was assassinated. Coincidence Maybe, but Teddy didn't care. Now Northern Securities was JP Morgan's baby. Yeah, that JP Morgan. This guy was basically the boss of bosses in the finance world. Four months after Northern Securities was born, morgan put together a mega deal that combined two of the biggest railroads in the US into one company. Think about it these two railroads used to compete. That meant lower prices for consumers, but now monopoly town baby. So Teddy sees this and goes nope, not happening.

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By 1902, just a year after taking office, roosevelt gets the Justice Department to sue Northern Securities for violating antitrust laws. And legend has it JP Morgan was pissed. The man was shaking so hard he could barely hold his drink. The second he hears about the lawsuit he storms into the White House, slams his fist on Teddy's desk and goes come on, man, we're pals. You don't file a lawsuit like this without giving me a heads Up. You got a problem, let's talk, we'll work it out. No problem, teddy, stone cold. He looks Morgan dead in the eye and says I'm not here to fix this problem, I'm here to end it. Boom, mic drop. There was no deal to be made, no negotiation. A few years later, northern securities was dissolved and those two big railroads split up like a bad divorce. And just like that America's first major antitrust case was in the books.

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Because here's the thing monopolies, scary stuff. You want an example? Rockefeller Standard. All At one point these guys were buying up competitors like they were collecting Pokemon cards. In a single month they snatched up 22 out of 26 rival companies Two by 1875,. They controlled 95% of the US kerosene market 95%. They were practically an international cartel. Now imagine living in a country where one company controls almost all the oil, steel, railroads or even food. Yeah, that's a hard pass.

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So Roosevelt gets to work and the man earns himself a nickname the Trust Buster. That didn't matter if you were the steel king, the railroad king, the oil king or the food king, if you were running a monopoly. If you were running a monopoly, teddy was coming for you. And this wasn't just a one-time thing. This became a defining feature of American capitalism. Grow as big as you want, but the second you threaten fair competition or consumer welfare, the government steps in and breaks you apart. It's a pattern that continues even now. Look at the Apple Act or the Google Act. The trust buster spirit lives on, baby, all right.

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So here's the deal with antitrust laws over in Europe. They've got this saying antitrust is the constitution of a market economy. Sounds fancy, right? The idea is to keep those wild, untamed beasts of capitalism locked up nice and tight in a cage. That's the whole point. Keep the beasts from running loose and trampling everything in their path. But even in the US things got… Complicated.

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Enter Alan Greenspan. You know the guy, former Fed chair, economic big shot. Well, he had thoughts. He once said Antitrust laws were born out of 19th century ignorance and fear. Back then, sure, it made sense. But today antitrust laws are just a big ol' mess of ignorance. Ouch, of course people don't take Greenspan too seriously these days, mostly because, well, 2008 happened. Yeah, thanks for that, buddy.

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But here's the thing by the late 20th century there was this growing belief among economists and legal scholars that maybe, just maybe, antitrust itself was kind of unnecessary. I mean, think about it. How do you even define monopoly? Where do you draw the line? Take Microsoft, for example. In 1997, the Justice Department went after them hard, accusing them of monopoly practices. Microsoft was like whoa, whoa, whoa, whoa, time out On the PC desktop. Sure, we're dominant Windows 95. Yeah, that's everywhere. But look at the entire software industry we're just 4% of that market. How is that a monopoly? And you know they kind of had a point. The whole case hinged on where you drew the boundary. This isn't just a Microsoft thing. Look at the airline industry. One airline might dominate air travel, but then they'll turn around and go hey, if you look at the entire transportation sector cars, buses, trains, boats we're tiny. Same with a courier company, yeah, we're big in package delivery, but in the logistics industry, nah, we're small fish. Coal companies, sure, we mine a lot of coal, but in the overall energy sector we're peanuts. See the problem? It all comes down to how you draw the map. And Europe, oh, they love redrawing the map.

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Fast forward to 2007, when the EU came after Microsoft again, they couldn't prove a monopoly under the old rules. So what did they do? They changed the rules. They decided that any server software priced under $10,000 was part of the server market. Then they dropped the cutoff to $2,500. Boom, microsoft suddenly looked like a monopoly. But come on, who decides these numbers? $10,000. $2,500. Somebody just made that up.

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Where's the objective standard? Where's the fairness? And it's not just big companies. Think about your everyday life, like when you hit up one of those Kerak joints that also serves food. Is it part of the entertainment industry or is it a restaurant? Nobody knows.

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Modern markets are so mixed up and cross industry it's impossible to stick everything in a neat little box. Companies are out here blending, crossing and downright warping traditional categories. I mean even us. Look at Deep Story, tiny Podcast, janky Playback, software, no Budget. Are we a Monopoly Paft? Not Even Close. But if you zoom in real tight and say historical deep dives with creative critical perspectives, maybe someday we'll have a decent share. And if you narrow it down to solo hosted storytelling podcasts, well shoot, we might even dominate. But that's the point. We might even dominate, but that's the point. You can redefine the market however you want and suddenly anyone can look like a monopoly.

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So the other day a friend of mine said you're not fat, you're actually pretty slim. And I thought well, if you add a fat guy on top of me, my market share just hit 100% right. And if I gain a little more weight, bam, natural monopoly. I'd set up a weight barrier and nobody else could compete. That's how it works, folks. But seriously, who gets to decide these standards? What counts, what doesn't? There's no flawless system. It's all up for debate.

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Now let's talk about location. How do you define a monopoly by geography? Like, say, there's one bakery on your street, is that a monopoly? Or what about an ice cream shop? That's the only ice cream shop in a shopping mall? Monopoly, or nah. Or here's one. There's just one barber in a tiny village. Does that count? What if there's a second barber in the next village? Does the first barber lose monopoly status just because there's competition two miles down the road? Are we judging by local markets, national markets, global markets? And again, who gets to draw the map? There's no clear answer. And what happens when you've got no clear answer? You get lawsuits that drag on for years. Everyone's bickering. Lawyers are arguing back and forth what counts as a monopoly. Where's the line? Who's right? It's a mess.

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Here's a fun story from an Indian economist. He once heard about this antitrust case that went on for so long. One of the defense attorneys actually asked the judge for a break to go get married. And the judge was like Sure, this case isn't ending anytime soon, go ahead, take your time. Years later, the same lawyer comes back to the same judge and asks for another break. This time my son's getting married. The judge looks at him and says well, let's hope this case is wrapped up before your grandson ties the knot. It's funny, cause it's true, some of these cases go on forever.

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Take the old antitrust case against Alco, the aluminum giant. The evidence alone filled 40,000 pages 40,000?. Do you know how long it'd take to read all that? If a judge read 10 pages a day? They'd be stuck in court for years. They'd be stuck in court for years, why? Because defining the boundaries is like trying to nail Jell-O to a wall it's impossible to get it just right. So here we are, a hundred years into antitrust law, with lawsuits piling up, appeals dragging on, endless courtroom debates, and at some point someone's gotta ask wait, are we just making up rules as we go? Is this even a fair game? Let's break it down.

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The first big assumption in antitrust theory is these monopolies always raise prices. Sounds logical, right? One company controls everything. They jack up the prices and boom, consumers are screwed. That's the fear. And sure, as consumers, it feels obvious. You've got one choice no competition. They name their price. You have to pay it, simple as that. But is it really that simple? That's the question.

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And look, even we hear a deep story. We're built on this same idea. Monopolies are bad. Monopolistic capitalism turns into imperialism, thank you Lenin. And imperialism is the rotten end stage of capitalism, right? Sounds bad, doesn't it? But here's the thing Feeling bad about something doesn't make it true. So we're gonna break this down piece by piece and figure out if our gut instinct is right or if the facts tell a different story. So here's the thing. This idea that monopolies always jack up prices sounds logical, right, but when you actually look at the facts spoiler alert it doesn't hold up. History tells a different story. In fact, monopolies often go the opposite way and slash prices like they're trying to win Black Friday every day. Don't believe me?

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Let's dig into a couple of examples. First up, alco. This was the aluminum company that the US government broke apart for being a monopoly. Back in 1887, aluminum cost $5 a pound. Fast forward 50 years to 1937, when Alco was in court fighting its antitrust case. Aluminum was selling for 22 cents a pound 50 years and the price dropped more than 20 times, 20 times cheaper monopoly. Huh, explain that one. Or how about the OG monopoly? Everyone loves to hate Rockefeller's Standard O.

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In 1880, rockefeller controlled 95% of the US kerosene market. That's your lamp fuel, people. There was no electricity yet, so every household needed kerosene to light up the night. Talk about critical infrastructure, but get this. Between 1818-1890, standard Oil cut the price of kerosene from $1 a gallon to $0.10. $0.10. No competition, no reason to lower prices. Yet there they were practically giving the stuff away. What's up with that?

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Let's jump to something more recent Intel. Back in the PC era, intel was the chip king. No serious competition. Sure, amd was hanging around, but they were like the kid playing basketball against LeBron no chance. And yet Intel kept innovating like crazy. Ever heard of Moore's Law? Every 18 months, chip performance doubles. That wasn't just some theoretical nerd speak, it was Intel's actual business model. They weren't just meeting Moore's Law, they were Moore's Law Faster chips, better chips, cheaper chips. And then, just to mess with everyone's heads, someone came up with Price-Moore's Law, which basically says that as chips get faster, their prices drop even quicker. So here's Intel sitting on top of the world and instead of milking it, they're giving us better products at lower prices.

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Why Did the capitalists suddenly grow a conscience? Did Intel wake up one day and say you know what? Let's be nice to consumers. Not a chance. Capitalism doesn't run on kindness.

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The truth is, monopolists don't drop prices because they're feeling generous. They do it because they're scared. Imagine you're the only barber in a village. You've been cutting hair there for years. Your dad did it, your grandpa did it. You own that market 100%. But you can't just jack up prices, right. If you do, people will just stop getting haircuts. They'll grow their hair out, braid it or whatever Heck, they might even start cutting it themselves. And worse, if you raise prices too high, some random drifter with a pair of scissors might roll into town and say, hey, I can do it for half the price. Boom Competition.

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The same thing happens in big business. The scariest competitor isn't the one you see, it's the one you don't see, it's that scrappy startup you didn't even know existed until they blindside you. Like, how many big tech companies in 2021 saw open AI coming? None, that's what keeps monopolies up at night. The ghosts of competition yet to come.

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So what do monopolists do? They build walls. They lower prices, raise quality, innovate like mad, all to make the market so hard to break into that potential competitors just give up. It's like you wanna compete with me? Good luck, the bar is here and you can't reach it. That's how they stay on top. The bigger the landlord, the higher the fence around their estate. It's not about being nice, it's about being untouchable. It's about being untouchable, alright.

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So here's the classic villain story. The big, bad monopoly pretends to be all nice to the consumer, comes in with rock bottom prices, wipes out all the competition and then BAM, jack up the prices, take over the village, the market and probably steal the prom queen while they're at. It Sounds terrifying, right, but does it actually happen? Spoiler, nope. Let me tell you why. Here's a wild one from the early 20th century.

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Dow Chemical, now a huge name, develop this cutting edge method to produce antimony, a chemical element. Go look it up on the periodic table if you're feeling nerdy. They got their cost down to 36 cents a pound, way below the competition. Enter their rival, a German cartel backed by the government, charging 44 cents a pound. The Germans come knocking. Listen, dao, how about we keep things chill? You don't sell in Germany, we don't sell in America. Deal, and Dao's like nah, we're good, thanks, they start selling in Germany anyway.

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The Germans start selling in Germany anyway. The Germans naturally lose it. Oh, you want to play dirty? Fine, let's see how you like this. They start selling antimony in the US for 12 cents a pound T-B-U-E-L-V-C-Ns. Less than their own production cost.

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Dao panics at first, but then they crunch the numbers and realize that, hey, the Germans are basically setting themselves on fire to spite us. So what does Dow do? They start buying up all the German antimony at 12 cents a pound. Yep bought it all. Then they repackaged it, slapped a Dow chemical label on it and shipped it right back to Germany at 24 cents a pound Still cheap enough to undercut the Germans, but high enough to bleed them dry.

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The Germans were like, wait, why are they not dead yet? Long story short, the Germans ended up flat on their backs. Game over the moral. You can't just use insanely low prices to wipe out the competition. It's a losing strategy. The Germans tried it and they got smoked.

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Markets don't work like that and honestly, they never have. But what if they could? And honestly, they never have. But what if they could? Let's say, hypothetically, a company tried Like, remember Kaspersky, the Russian antivirus giant? There was always this fear. What if Kaspersky crushed all the other antivirus companies with low prices, then jacked up their rates once they owned the market? Would they, could they? Nah, that'd be business suicide. Why? Because the second Kaspersky tried raising prices. All those dead competitors would pop right back up like zombies in a bad horror movie. Competition would shift to a new battlefield and the cycle starts all over again. That's the thing.

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Markets evolve, and here's the kicker. Monopolies know this. They don't stay ahead by jacking up prices. They stay ahead by raising the bar so high that nobody else can climb over it. They innovate, cut costs, improve quality and lower prices to make it almost impossible for newcomers to compete. They don't build moats, they build skyscrapers. That's the real strategy. So this whole idea of monopolies always screw over consumers is kind of well. It's fiction and that's something economists in the US figured out after decades of lawsuits, court battles and endless antitrust cases. Lawyers might love the drama, but economists, they're like guys. This doesn't even make sense. But economists, they're like guys. This doesn't even make sense. In fact, economists took matters into their own hands Back in the day, they started giving free lecture judges to judges to explain how markets really work.

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We're talking big names here. Friedrich Hayek, ronald Coase, james Buchanan, gordon Tullock, milton Friedman these weren't some random dudes, these were Nobel-level legends. Over the years, more than 600 federal judges have attended these lectures. And here's a fun little story Milton Friedman, the man the legend, skips his own Nobel Prize banquet yeah, skips it why he had a lecture scheduled for American judges and didn't want to miss it. Can you imagine Sorry, Sweden, I can't stay for the after party. Gotta teach some judges about economics. That's commitment, folks. So here's the thing after decades of economists giving free lectures to judges, literally dragging them out of their chambers and saying sit down, let us explain how markets actually work. Some of these judges finally started getting it. One circuit court judge even said what? Or didn't anyone teach me this sooner? I could have figured this out ages ago.

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But not everyone got the memo. Take the Microsoft antitrust case in 1997. This was a huge deal, a real turning point. By then, a lot of judges had wised up to the idea that antitrust cases aren't always what they seem, but not all of them. Enter Judge Thomas Penfield Jackson in 2000, who was convinced he'd found the smoking gun that proved Microsoft was a monopoly. He even held a press conference yes, a press conference to brag about it. And then he ruled against Microsoft. Well, the appeals court oh, they torched him basically told him what are you even doing? Did you skip all the free econ classes? We've been listening to economists for years and here you are pulling this nonsense. Get it together. A few months later, judge Jackson was out of a job. Coincidence Maybe, but let's just say his legal career didn't exactly end on a high note.

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Fast forward to 2007. A Europe decides to take their own swing at Microsoft. They found them guilty of monopolistic practices and fined them. Wait for it. One dollar, that's right, one single dollar. And just to rub salt in the wound, the US Department of Justice issued a statement basically saying hey, europe, we get it. You don't like Microsoft, but here's the thing.

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Antitrust law shouldn't be about whether a company is a monopoly. It should be about whether they're actually harming consumers. And guess what? We've seen no evidence that Microsoft or any of these so-called monopolies is doing that. Ouch, now, sure, you could argue the DOJ was just protecting American tech. But there's a real split in how the US and Europe approach antitrust.

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In the US there's been this massive shift over the last century, driven by economists who've studied markets and figured out a few things Like remember Ronald Coase? The guy lived to one and three long enough to see every boom, bust and bubble the 20th century had to offer. Coase had this great line about antitrust. It's ridiculous. Antitrust makes it impossible for businesses in a free market to actually do business. Think about it Pricing If you set prices too high, you're accused of monopoly. Pricing Too low, that's predatory pricing. Keep them steady. Oh no, now it's collusion. What are businesses supposed to do? High, low or in between, it's all wrong. And if you can't even set prices without getting dragged into court, well, congratulations, you've just killed the free market. And here's the kicker natural monopolies. They're not the villains they're made out to be, sometimes. They're just the inevitable result of a competitive market.

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Look at China's internet giants You've got Baidu, alibaba, tencent. Are they monopolies? Sure, but are they bad for consumers? Not so much. They innovate, they compete and they make life more convenient for millions of people. Maybe, just maybe. That's not such a bad thing. Here's the thing you think life is easy for these big monopolies? Think again. Remember when Tencent's CEO said If we hadn't invented WeChat, we'd be in serious trouble right now? That's not confidence, that's terror. Or how about Jack Ma In 2014,? He told his entire staff if we don't push ourselves harder, 2013 might just go down as Alibaba's best year ever.

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The good days are almost over, but these so-called monopolists are more terrified than we are. They're not sitting back sipping tea and casually goaging consumers, no way. These folks live with the constant fear that someone somewhere, is out to eat their lunch. Entrepreneurs at the top of the market feel competition like a storm bearing down. It's way more pressure than we could ever imagine.

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Now you might be thinking okay, but what about state-owned monopolies in emerging economies, like South African Airways or Mexico's PMX? Surely those need to be broken up. Right, let's unpack this. First, there's no need to break them up and second, market competition will eventually make their life miserable anyway. Why no need? Well, let me give you a metaphor.

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A government can't write two contradictory laws. You can say, hey, citizens, you're not allowed to get married without your parents' approval. And then in the next breath, parents, you're forbidden from arranging marriages. Those two things cancel each other out. Right? It's the same with state-owned enterprises. A government creates a giant monopoly, builds a big wall around it and says nobody else is allowed to play in this sandbox. Then the same government introduces antitrust laws to fight the monopoly it just created. Come on, that's like locking the door and then complaining you can't get in. If you really want competition, just lower the barriers to entry and let private companies join the game. Problem solved. You don't need to create a monster and then waste time trying to kill it.

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Now let's talk about why these state-owned monopolies can't handle real market challenges. Imagine trying to turn one of these big, lumbering organizations around. It's almost impossible. Sure, in the private sector, you've got companies like IBM. They wrote the book on corporate reinvention. Who says elephants can't dance? But state-owned enterprises? They're not elephants, they're dinosaurs. Their DNA is built for survival in one specific ecosystem and when that ecosystem changes, they're toast.

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Let's break this down. State-owned monopolies exist because governments draw two big walls around them. First wall this is a strategic industry, so only my baby can operate here. Second wall Everyone else Stay out. Take telecom, for example.

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In China, china Mobile gets the license. You want to set up a private phone company? Good luck, the government will shut you down faster than you can say dial tone. That's what we call an administrative monopoly. But here's the catch those walls only protect you within a certain framework. China Mobile might dominate phone calls, but did the government ever say oh, by the way, nobody can make internet calls either? Nope, enter. Tencent, a scrappy little software company, starts out with Q, a PC Base chat app for flirting, file sharing and late night cramming sessions. Meanwhile, china Mobile and China Unicom are too busy duking it out to notice what's happening. Fast forward a few years and FQ Q spawns WeChat. Now that's a game changer. Is WeChat a telecom company? Nope, it's software, it's tech, it's everything but what China Mobile was built to fight. Tencent didn't climb over the wall. They built an entirely new battlefield. By the time China Mobile realized what was happening, tencent was already a giant. And here's the kicker Almost every major innovation today follows this pattern.

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It's all about hybrids, mashups and crossing boundaries. The walls you build to protect your monopoly. They're useless against the competitor who doesn't even play by your rules. Let's be real. How is a state-owned monopoly supposed to know where the future's gonna take it? The government builds this big old wall around the company, but the problem is the wall is only as good as the map they drew when they built it. They can't predict the future. No one can. That's the flaw baked right into these administrative monopolies. They can't adapt to changes in technology or consumer preferences because their boundaries were locked in the moment they were created.

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Now let's look at it from the perspective of the people running these companies, the S&C EO of state-owned giants. Can they innovate? Honestly, no, and it's not because they're all incompetent. A lot of them are brilliant strategic thinkers. But can they take a risk and dive into cross-industry innovation? Absolutely not. Why? Because their hands are tied.

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Picture this Imagine it's 10 years ago and the ETCEO of China Mobile Spots FFQQ and thinks man, this chat app is fire. We need to make something like that before Tencent gets too big. Even if he knew FQQ was the next big thing, could he actually act on it? Nope, why? Because spotting market trends is one thing, but convincing your entire bureaucratic structure to bet on a risky innovation, that's a whole other story. Think about venture capitalists. These are some of the smartest, sharpest people on the planet. They're playing with their own money and they still get it wrong 90% of the time.

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Now imagine a state owned ECE all saying to their bosses hey, I want to take a chunk of taxpayer money and throw it into this high-risk project. That's career suicide. If it fails and let's face it, with a 9% failure rate, it probably will Everyone's going to accuse them of corruption, favoritism or worse. And let's not forget, these CEOs are half politicians. Their job isn't just to run a company, it's to safeguard state assets. They can't gamble with public money. So what do they do? They play it safe, they stick to their lane, they fulfill the glorious mission handed down by the government and that's it. Cross industry innovation. Forget it. It's not worth the risk to their careers. This is why administrative monopolies struggle to adapt. It's not about the people, it's in their DNA. They're designed to operate within fixed boundaries, not break out of them.

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And while we're on the subject, here's a question that came up during a deep story Brainstorming session If state-owned monopolies are doomed to fail in the long run, should today's college grads still aim to work for them? My answer nope. Here's why in economic terms. First, let's talk costs. If you're an old-timer who joined the state owned enterprise decades ago, congrats, you hit the jackpot. You've been raking in the benefits for years. But if you're a new grad trying to get in now, it's a whole different game. You've gotta pull strings, take crazy hard exams, maybe even grease a few palms, though things are cleaner these days. All of that costs you money, time, effort. And here's the kicker Once you get in, it'll take years of cushy benefits to pay back those affront costs. By the time you break even, you could have made the same or more working for a private company.

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Second, think about what happens if the industry opens up to competition. Say, the government decides to let private companies into the market. Who's going to fight that the hardest? The newbies in these state-owned firms. Why? Because they haven't recouped their costs. Yet they're thinking wait a second. I worked my butt off to get in here and now you're telling me anyone can join the party. My golden ticket is worthless.

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They'll resist reform with everything they've got, not because they're against competition, but because they've got too much skin in the game. So there you have it State-owned monopolies. Don't just struggle to innovate, have it. State-owned monopolies. Don't just struggle to innovate, they also create this weird feedback loop where even their own employees fight against progress. It's a system stuck in its own trap. Here's the kicker the young people squeezing into state-owned enterprises. Today. They're gonna end up being the loudest voices against reform. Why? Because every step forward for society becomes their personal nightmare. Think about it. The system finally opens up, competition rolls in and boom. All that effort they put into getting in wasted, everything they fought for gone. How's that for a happy career trajectory? So, yeah, if you really sit down and do the math on this, do you still want to pull strings, schmooze and fight tooth and nail to get into some state-owned monopoly? I mean, come on, let's talk about a return on investment, people.

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Now, we've gone through a lot of economics today, but let me boil it down to one simple conclusion humanity is making a massive shift from a static worldview to a dynamic one. Back in the 19th century, antitrust laws made perfect sense. Why? Because society was still shaking off its agricultural roots. Resources were scarce land, food, water. If someone monopolized those, the rest of us were screwed. So, yeah, it was all about protecting those finite resources. That was the moral logic of a static society. But fast forward 100 years. The free market comes in and suddenly the world is in motion. It's all flow industries crossing over, hybrids popping up and innovation smashing through old boundaries. The whole game is dynamic.

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Now, if you're still stuck longing for the stability of those walled-off safe havens Guess what? You're stuck in the past. It doesn't matter if you're defending them or railing against them. If you're defending them or railing against them, you're playing by the rules of a static world, while the rest of humanity is sprinting into a dynamic one. And here's the code, hard truth. If you're clinging to that static mindset in a dynamic era, your life, well, let's just say it's not exactly shaping up to be a success story.