What are SOEs?

Over the past few weeks, as I’ve been watching the news I’ve noticed quite a bit of discussion regarding SOEs. So, I started wondering how many people knew what SOEs were. After a few discussion with some friends, I realized not a lot. So, I wanted to take the time to write this article on State owned enterprises and discuss it. SOEs are an interesting topic because most constitutionalist will say they are a bad thing, but even the United States has a few SOEs as well. Let’s discuss below.

What are SOEs?

A state-owned enterprise (SOEs) is a legal entity that undertakes commercial activities on behalf of an owner government. For instance, for the United States think Fannie Mae and Freddie Mac. These companies were independent private companies. In the after math of the 2008 Financial Crisis the United States government acquired both companies. Those acquisition by the US government made them into government owned entities or SOEs. All that means for us is that the US government is in control of how Fannie and Freddie are operated.

When you hear discussions on China and how the US does not trust most China based companies. State owned enterprises are the reason behind it. Companies like Huawei and others, those are state owned enterprises and are largely controlled by the government of China. There day to day operations are for the benefit of China as whole. The fear comes from individuals thinking that because China owns a technology company they can ask that company to collect data. Essentially spy on us. Whether they are doing this or not is up for debate.

Benefits of SOEs?

The true benefit of State Owned Enterprises really don’t affect civilians of that state too much. State Owned Enterprises are really for benefit of the government. Whether that be helping stimulate the economy or finding ways to regulate a certain industry in the market. A good example of this is the 2008 Financial Crisis. The US Government took ownership of Fannie and Freddie as to not completely crater the housing market. So, they funded both entities to keep them up and running so people wouldn’t lose their homes.

Who uses SOEs?

This one is easy. Literally every country has an SOE. There may be a few countries that don’t but that’s because they are too small and don’t have enough money or don’t care to.

Takeaways

Now that you know what an SOE is you can now look intelligent in front of your friends. Hopefully this post was informative for you. I always try to write articles that help provide more situational awareness, that I feel would be some interesting information. I have ADD and love learning new things like this.

If you enjoyed this article check out my other investment/wealth articles!