Gangster capitalism

In the previous post I mentioned that Ben Thompson was highly critical of the TikTok deal. Here’s Jordan Schneider:

The current deal does not solve any of the concerns I initially had about TikTok’s US operations.

TikTok’s sort of sale to Oracle + Walmart doesn’t do anything to address algorithmic manipulation of political content, access to American’s data, or content moderation. . .

It used to be nice to think that in the 21st century, American crony capitalism was limited to small-time stuff like the occasional hundred grand in a Congressman’s freezer. . . .

Thanks to the Trump administration’s behavior, US diplomats trying to preach clean government won’t face “quizzical looks,” they’ll face belly laughs.

TechCrunch has a scathing essay by Danny Crichton describing the beginning of the end of American exceptionalism. It’s entitled:

Gangster capitalism and the American theft of Chinese innovation

Here are a few excerpts:

It used to be “easy” to tell the American and Chinese economies apart. One was innovative, one made clones. One was a free market while the other demanded payments to a political party and its leadership, a corrupt wealth generating scam that by some estimates has netted top leaders billions of dollars. One kept the talent borders porous acting as a magnet for the world’s top brains while the other interviewed you in a backroom at the airport before imprisoning you on sedition charges (okay, that might have been both). . . .

Hell, we’re apparently demanding a $5 billion tax payment from ByteDance, which the president says will fund patriotic education for youth. The president says a lot of things of course, but at least the $5 billion price point has been confirmed by Oracle in its press release over night (what the tax revenue will actually be used for is anyone’s guess). If you followed the recent Hong Kong protests for a long time, you will remember that patriotic youth education was some of the original tinder for those demonstrations back in 2012. . . . .

Dozens of smart, brilliant entrepreneurs aren’t even trying to migrate, instead rightfully seeing their home markets as more open to innovation and technological progress than the vaunted superpower. The frontier is closed here, and it has moved elsewhere.

So what are we left with here in the U.S. and increasingly Europe? A narrow-minded policy of blocking external tech innovation to ensure that our sclerotic and entrenched incumbents don’t have to compete with the best in the world. If that isn’t a recipe for economic disaster, I don’t know what is.

But hey: at least the youth will be patriotic.

And this, from Jeff Bezos’s newspaper:

Last summer, President Trump asked for an investigation into the contract over concerns that the contract requirements had been tailored for Amazon. Newly installed Defense Secretary Mark T. Esper then launched his own “review” of the department’s approach. The Pentagon then awarded JEDI to Microsoft, prompting a lawsuit from Amazon.

In its bid protest, Amazon alleged that Trump’s interest in the JEDI contract was motivated by his antipathy toward Amazon founder Jeff Bezos, who also owns The Washington Post. Bezos, who bought The Post in 2013, does not weigh in on The Post’s coverage decisions, the news organization’s leaders have said.

But there was an “investigation”, so clearly there is nothing to see here:

An in-depth investigation from the Defense Department’s inspector general found no evidence that key decision-makers in the Pentagon were acting on Trump’s orders when they gave the contract to Microsoft. But the investigation failed to answer important questions about the White House’s role and influence because the White House refused to make key officials available for questioning.

I’m sure the key officials were too busy to answer questions.

Cochrane on the US as a banana republic

Lots of people view my posts on the US becoming a banana republic as being slightly hysterical. Those readers might want to check out John Cochrane’s new post. While I don’t recall him using the term “banana republic”, his depiction of American political dysfunction is even more nightmarish than anything I’ve written.

PS. Bloomberg has a new piece out describing the unintentional side effects of trying to ban TikTok or WeChat:

TikTok’s collection of user data might be a legitimate U.S. national security concern given the relationship of Chinese companies to their government, but at least there is some degree of accountability. Just wait until there are millions of young people running malware-infested apps. Trying to side-load sanctioned apps is like trying to get a drink in the Prohibition era, when nobody could know whether that bottle of moonshine was diluted with paint thinner or some other poison.

TikTok has over a hundred million users, many of whom are young and ambivalent toward the current U.S. administration. The war on drugs should teach that any attempt to prohibit a popular and addictive activity sends the illicit thing underground while encouraging shady enterprises to spring up.

PPS. According to Matt Yglesias, Ben Thompson strongly dislikes like the TikTok deal. (Commenters told me I needed to listen to Thompson on tech issues.)

The good, the bad and the horrific

It’s become a cliche that people use misleading statistics. In this post, I’m going to explain how I believe the Covid-19 data should be organized, and why I don’t like many other ways of describing the pandemic.

In this pandemic, there seem to be three distinct regions of the world. Greater Latin America goes from the US-Canadian border all the way down to Cape Horn. The fatality rate is nearly 600/million, and rising fast. Greater Europe reaches across the Atlantic to include Canada. This region has a fatality rate below 300/million, rising modestly. And Asia/Africa/Australia has a vastly lower death rate, somewhere between 20 and 40 per million, rising modestly.

You see articles with very different takes. Headlines that India’s now hit harder than any other country. Or that the US is about equal to the UK and doing better than Spain. I don’t find these ways of framing the data to be useful.

The US is a vast, continental size country, with widely varying fatality rates. You can find areas where the fatality rate is lower than in Canada. At the same time, there’s pretty clearly something going on at the US/Canada border. The best America state (Alaska) has 62 death per million, while in Canada there are provinces with no deaths at all. Indeed they have 8 provinces with a combined death toll of 45, the same as Alaska, but with many times more people than Alaska. So whether you compare averages vs. averages, worst vs. worst, best vs. best, or just similar type states/provinces, the US is clearly doing worse than Canada—by almost all metrics. Indeed Canada as a whole is now doing better than even North Dakota. (BTW, Canada is roughly as urban as America.)

The worst hit parts of Europe are slightly worse off than the US average, but then the worst hit parts of the US are dramatically worse that the worst countries in Europe. People who want to sugar coat our awful outcome like to cherry pick the worst hit parts of Europe and compare that region to the entire US, including places like Alaska. That makes no sense. Compare worst areas with worst areas–say Spain with the northeastern US.

As for India, yes it now has lots of cases. But it also has 1.4 billion people, 4 1/2 times the US population.

When I look at the data I see three distinct areas. US/Latin America, Europe/Canada, and the other 80% of planet Earth. Maybe that will change, but right now that’s the pattern. You can slice or dice the data any way you wish, but if you reach radically different conclusions from me then I suspect that you are manipulating the data to reach a conclusion.

A $5 billion campaign donation to Trump

So the TikTok/Oracle deal has been approved. I see at least three forms of corruption. First, there is the Trump administration’s misleading claim that the company will now be American. Actually, the company will be 80% owned by ByteDance, which is a Chinese company (with a minority of American shareholders.) The Chinese will have voting control.

Second, this is quite similar to the proposed Microsoft deal that the Trump administration rejected. The difference of course is that both Oracle co-founder Larry Ellison and Oracle CEO Safra Catz are big Trump supporters. So we have banana republic-style favoritism. National security? Don’t make me laugh:

Trump’s willingness to accept a water-downed deal indicates how this saga was as much about scoring political points than truly caring about TikTok’s national security risks. Oracle’s proposal is similar to what ByteDance was willing to do months ago — from the creation of an autonomous TikTok management structure to the designation of a new headquarters outside of China. Plus, the company had already vowed it would add 10,000 jobs in the U.S.

But the worst part of the deal is the US government shakedown of TikTok. Trump was told that it was illegal to demand that the US government get a cut of any deal, so they instead insisted on a $5 billion dollar donation to an “educational foundation” pursuing one of Trump’s pet causes, the whitewashing of history:

Mr Trump also said the Chinese company would donate $5bn to an educational fund, which the US president said would address his earlier promise that ByteDance would pay the US government a fee for the transaction. “They are going to pay $5bn into a fund for education so we can educate people as to the real history of our country,” the president said at a campaign rally in North Carolina on Saturday night. 

Trump is campaigning against the 1619 Project, which is fine. (I also don’t like leftist propaganda.) But he doesn’t stop there. Like other white nationalists, he’s promoting a history where Civil War-era generals who committed treason against the United States of America are treated as heroes. They weren’t heroes, they were traitors who fought to keep millions of black men, women and children enslaved.

Given that Trump is running for President on this issue, the $5 billion dollar payment is little more than a disguised campaign donation. In 2020 America, it’s all pay to play.

PS. A glimmer of good news:

The Trump administration’s curbs on WeChat were put on hold by a California judge, upending an effort to halt use of the Chinese-owned app in the U.S.

Magistrate Judge Laurel Beeler in San Francisco issued a preliminary injunction at the request of a group of U.S. WeChat users, who argued that prohibitions would violate the free-speech rights of millions of Chinese-speaking Americans who rely on it for communication. The app, which was supposed to disappear from U.S. app stores on Sunday, has 19 million regular users in the U.S. and 1 billion worldwide.

I use WeChat to communicate with my wife, who’s currently being quarantined in China.

Also good news for Apple.

Hispanic votes matter

You won’t find anyone on the internet who’s a bigger critic of Donald Trump than me. More specifically, I’m disgusted by Trump’s racism and the increasing racism within the GOP.

And yet I have trouble understanding what the Democrats are trying to do. Going at least as far back as the Jesse Jackson campaigns, there’s been this “rainbow coalition” idea, a theory that people of color are oppressed by our society and thus are the natural allies of the Democratic Party, which claims to be the anti-racism party.

I’m not Hispanic, but I have to wonder how Hispanics are viewing the events of 2020. The “black lives matter” rallying cry is something close to the new religion within the Democratic Party. By itself, that may not be a big problem, but unless I’m missing something this new anti-racism ideology is increasingly focused on African-Americans, to the exclusion of other people of color. How much discussion have we seen this year about young Hispanic men who are murdered by cops? Or imprisoned for selling pot?

When some uneducated schmuck responds to “black lives matter” with “all lives matter”, he’s told that he’s a racist. How would that make the average Hispanic voter feel? I can’t say, but it’s a question worth considering as polls show increasing Hispanic support for Donald Trump.

The Democratic strategy for future decades seems to hinge on the assumption that working class Hispanics making $43,000/year will continue to have radically different voting patterns from working class whites making $43,000/year. (Even though the two groups often intermarry, and work side by side.) Maybe so, but how likely does that seem in a world where the Democrats increasingly portray blacks as the victims and non-blacks as the oppressor class? What’s the Democratic Party pitch to Hispanics (and Asians?) Recall that the old South Africa had whites, blacks, and “colored”, each treated differently. Is that the plan? No more rainbow coalition?

I’m not saying the Dems are wrong in a moral sense; perhaps this is an incredibly noble and selfless crusade on their part. I have become persuaded that the complaints of the black community are genuine. Rather this post is about strategy—I just don’t see how Dems will win in the long run unless they find some other way to frame the anti-racism issue. A more inclusive framing. A framing describing how we’d all benefit from a color-blind society.

A cynic might say this is all a sort of kabuki theatre by the Democratic establishment. After all, even heavily Democratic California refused to enact some fairly basic policy reforms to get rid of bad cops. What does that tell you about their sincerity?

“To ignore the thousands of voices calling for meaningful police reform is insulting,” Sen. Steven Bradford, D-Gardena, said in a statement early Tuesday morning after his bill to “decertify” officers who commit crimes or serious misconduct failed to get a vote in the final hours Monday. “Today, Californians were once again let down by those who were meant to represent them.”

That’s right; even in 2020, when everyone is falling all over themselves to prove how anti-racist they are, heavily Democratic California legislators refuse to enact a bill that would take away the badges of bad cops. Blue lives matter?