I complain about China — or, rather, the mainstream perception of China as this bright land of incipient markets and prosperity — quite a bit. There’s a story in today’s Washington Post that perfectly illustrates the problems that I see with the place.

In Dazhou, the authorities have arbitrarily expired all the $10,000 taxi licenses, and told the cabbies to buy new ones. The taxi drivers are not enthusiastic about this.

The first time Liu Yu tried going to Beijing, she didn’t make it very far. Police in this quaint river city in western China boarded her train just a few stops after it departed, found her in a window seat in a crowded car and demanded she disembark.

For the next four days, the officers detained her at a police station, interrogating her about her trip, she recalled. But Liu, the wife of a taxi driver and a soft-spoken mother under normal circumstances, was defiant.

She told them she was angry about a plan to revoke all taxi permits in Dazhou and force cabbies to buy new ones. Like many others, she and her husband had gone into debt and spent their life savings to buy a permit. She was going to Beijing to appeal the city’s decision at the highest levels of the government.

Eventually, they make it to Beijing, where they’re effectively told to get lost. They stage a strike. They are, some of them, arrested. Eventually, they either cave in and buy new licenses, or they pursue some other line of business.

This is what ‘market reform’ looks like in much of China, I’m afraid. By selling licenses to private operators instead of just handing them out to cronies, the city raked in a lot of money. They like that market reform. But they don’t seem to understand that those licenses were a kind of property and wealth that had been created by the city, and that invalidating them for capricious reasons — from the Post story, it seems pretty clear that they just wanted to raise money, not make any serious change to the way taxis were licensed — just Wouldn’t Do.

Eventually, enough Chinese people will realize that the government there is running a shell game — if enough foreign investors don’t realize it first.