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What happens when governments control or dominate a national economy?

When a government controls the national economy, you call it totalitarianism. Think of North Korea, where people starve to death while the army is well fed. Think of China, where families are restricted to having only one child. Think of so many other regimes--Uganda, Somalia, Saddam's Iraq, Iran, Nazi Germany, Fascist Italy, the Soviet Union. Those in power have all the privileges, while the ordinary people go without.

 http://www.enotes.com/wh-encyclopedia/totalitarianism