But that's how the game is played now.
Colonies cost money. You have to run them, police them, defend them, and all for what? Ungrateful peasants that only want to revolt. It's far more profitable to let them run their own country (under your supervision and tutelage, of course), have them pay for all those expenses and pay for those expenses with their raw materials, sold at a price that you dictate.
Why do you think colonies have fallen out of use? Because we're above that now and we're so much better and more civilized now? Please.