Another day, another example
It’s getting to the point where every single day you can find examples of the US becoming a banana republic, usually on Trump’s twitter account:
The appeal came a day after US president Donald Trump vowed to ban TikTok in the US, and said a sale to any party — including Microsoft — would not be an acceptable solution.
“As far as TikTok is concerned we’re banning them from the United States,” Mr Trump told reporters on Air Force One late on Friday, who said he could use executive powers to formalise the decision as early as Saturday. “We are not an M&A [mergers and acquisitions] country.”
The comments left some involved in the talks between Microsoft and ByteDance fearing that any hope of a deal had collapsed on Saturday.
However, others — including ByteDance executives — believe that Mr Trump’s intervention was a negotiating ploy intended to compel the Chinese group to sell the US business in full and at a lower price than it had been holding out for from Microsoft.
Yes, we can’t have a Chinese firm involved in US social media. And everyone knows that Microsoft is secretly owned by the CCP.
Recall all those crocodile tears in DC about the big tech “monopolies”?
Microsoft has a limited presence in social media and believes a deal would allow it to enter a category dominated by rivals such as Facebook, one person added.
In private, TikTok executives and investors have speculated that Facebook, which is preparing to unveil a rival product in America as soon as this week, has been lobbying the US government behind closed doors to ban the app.
Wouldn’t that be a surprise.
BTW, I did a post on December 10, 2019 over at Econlog. Here’s the title and first two sentences:
Is the “War on Tech” just around the corner?
The media says yes. I say no.
And here’s Tyler Cowen today:
Furthermore, the tech companies have been rising in popularity. I am going to “call” that the “war against Big Tech” essentially is over, and that the critics have failed.
In last year’s post I explained why the war on tech would fizzle:
Actually, I do understand, which is why I’m so skeptical of the idea that a war on big tech is just around the corner. Big tech firms are the crown jewels of the US economy. Their big profit margins are a boom to both US stock investors and the US Treasury. Yes, we could break them up into tiny pieces, each highly competitive. I’m sure the French government would love to see tech profit margins plunge so that French consumers would transfer much less money to the US. But I’m not sure why the US would want to do that.
How do left wing politicians in Sacramento feel about breaking up big tech, which provides much of the funding for California’s lavish social programs? How do left wing politicians in Massachusetts feel about drug price controls, which would impact the Bay State’s lucrative biotech industry? How do left wing New York politicians feel about Wall Street profits?
President Trump is known to have a somewhat negative view of many firms in Hollywood and Silicon Valley. So how does he represent their interests in trade negotiations? Who said, “all politics is local”?
All we are left with is a war on Chinese tech.
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1. August 2020 at 10:35
Ignoring the presidential statements on this one for a second, I actually think the TikTok situation is more interesting and complicated than meets the eye. My first instinct was similar to your view of it but this excellent article by Ben Thompson (who is one of my favorite writers on tech) changed my mind: https://stratechery.com/2020/the-tiktok-war/
1. August 2020 at 10:49
*You* are getting to the point where there are examples every day. Recognize selection effects in your life, for no one will recognize them for you.
1. August 2020 at 12:06
Regarding Can Sar’s link:
“To that end, this long history looms large in how China thinks about its relationship to the U.S. specifically, and the West generally. China is driven to reverse its “century of humiliation”, and to retake what it sees as its rightful place as a dominant force in the world.”
Knowing how wrong broad statements like this are about the United States, I’m extremely skeptical of the truth/usefulness of this statement.
1. August 2020 at 12:43
Can Sar, every social media platform uses algorithms to influence what users see. If the possibility that Tik Tok will use algorithms to favor pro-Chinese content is enough to censor it, then that same justification could be used to shut down Twitter, YouTube, Facebook, etc. over allegations that their algorithms favor liberal or extreme content. Or shut down news websites over allegations that their articles are biased. Overall, the justification for shutting down Tik Tok in that article seems a lot scarier than the usual justification of doing so for data privacy reasons. The government shouldn’t be allowed to shut down platforms for expression because it disagrees with the views expressed—and the fact that it seems this is the government’s real reason for wanting to shut down Tik Tok (otherwise why oppose the sale to Microsoft?).
1. August 2020 at 12:50
I disagree somewhat here. Emphasizing that I have no expertise in either the economics of anticompetition or the legal aspects, it seems there are good cases to be made for breaking up Facebook and Google. to argue against Facebook and Google having monopolies in general social networking and general search, respectively, is absurd. Google’s YouTube also has a monopoly on video sharing.
The question is whether they abuse those monopolies at the expense of economic efficiency, and I think they probably do. Someone correct me with counter-evidence, but advertising costs on those platforms has skyrocketed in recent years, beyond the level at which ad effectiveness has improved, squeezing out smaller competitors and ultimately leading to higher costs for consumers as higher ad costs and less competition is reflected in prices.
1. August 2020 at 12:51
On Trump’s actions, I think we need a whole new set of laws to contrain Presidential power, and we need to make the President personally interfering in specific private business decisions criminal.
1. August 2020 at 13:05
Garrett,
I disagree about China. I think the surge of nationalism there does reflect a desire to be a more dominant country, to a degree, and I think China is dangerous under its current regime. That said, there’s no reason to believe China will still have such an attitude by the time they have the power to do most of what people fear they might.
I think China is very containable in the next 10-20 years, without restricting trade or having any sort of cold war.
1. August 2020 at 14:08
Can Sar, So you disagree with me and cite as support a Ben Thompson article that completely agrees with this post:
“My strong preference would be for ByteDance to sell TikTok to non-Chinese investors or a non-Chinese company”
Me too. And without Trump trying to shake them down for a better deal.
BTW, I like Thompson, and agree with many of his comments, including this:
“I can’t emphasize this point enough: one of the gravest errors made by far too many people in the U.S. is taking an exceptionally self-centered view of U.S.-China relations, where everything is about what the U.S. says and does, while China is treated like an NPC. Indeed, it is quite insulting to China, a great nation with a history far longer than that of the United States.”
Stanon, Yeah, it’s all fake news. These Trump tweets are being faked.
Michael, Are you commenting on Tyler’s post or mine? I never said anything about Google having a monopoly in search.
You said:
“I think the surge of nationalism there does reflect a desire to be a more dominant country, to a degree, and I think China is dangerous under its current regime. That said, there’s no reason to believe China will still have such an attitude by the time they have the power to do most of what people fear they might.
I think China is very containable in the next 10-20 years, without restricting trade or having any sort of cold war.”
I mostly agree. I don’t think China is anywhere near as dangerous as Russia, but they are more dangerous than most nations. The biggest risk I see is an attack on Taiwan.
1. August 2020 at 15:45
BEIJING — “A U.S. citizen is among six pro-democracy activists to have arrest warrants issued for them by Hong Kong police for suspected violations under a new national security law, Chinese state media reported late Friday.
Samuel Chu, the managing director of the D.C.-based Hong Kong Democracy Council, an advocacy group, wrote on Twitter that he “woke up to media reports that I am a wanted fugitive.”—NBC News, today.
—-30—-
Many have advocated appeasing Beijing. Others, such as the No Balls Association (NBA) and Disney, advocate mute accommodation.
Some promised that increasing trade with China would make Beijing better.
I am not so sure Trump is wrong on China. Like America’s left wing, China apologists have become increasingly abject,
1. August 2020 at 15:57
My bad, I missed the implication here that a Microsoft acquisition would be sufficient “ Yes, we can’t have a Chinese firm involved in US social media. And everyone knows that Microsoft is secretly owned by the CCP.“
1. August 2020 at 16:27
https://www.nytimes.com/2020/07/11/world/europe/russia-protests-putin.html
Scott Sumner posits that Russia is more dangerous than China. Well, that’s a geo-political proposition and like a macroeconomic proposition, the nice thing about such debates is that no one is ever wrong.
But see the New York Times story above. Would citizens in China even dare to protest? And to my knowledge Russia has not incarcerated three million political prisoners (Uyghurs) in concentration camps.
Putin strikes me as a thug. But perhaps when he dies Russia will join Europe.
The CCP, on the other hand, is deeply enmeshed into the Sino economy and political apparatus, and numbers in the hundreds of millions. To put it mildly, Russians lack Han organizational skills, but like vodka (how did Putin rise to the top? He wasn’t drunk).
I can tell you this: Anywhere in the Western Pacific (and also 1.4 billion Indians), people are far more concerned with Beijing than Moscow.
1. August 2020 at 17:35
Scott, what did you think of the Congressional hearings this week? I understand that the Democrat questioners in particular were very focused on the big platforms’ past mergers and self-favouring practices. Don’t you think that under a Biden presidency the US will introduce tighter regulations around the platforms? Maybe not quite going as far as breaking them up but limiting further acquisitions and requiring much more transparency around vertical self-dealing?
1. August 2020 at 17:46
“to argue against Facebook and Google having monopolies in general social networking and general search, respectively, is absurd. Google’s YouTube also has a monopoly on video sharing.”
It’s not absurd at all. Facebook isn’t even close to having a monopoly on social media. It has like 30% of the market. Google doesn’t have a monopoly on digital advertising at all. A monopoly on “search” is meaningless as it is a free service.
The cost of digital advertising has not risen, it has fallen significantly. There were big crisis resulting from that plunge as many business models suffered, including newspapers’ digital presence!
1. August 2020 at 20:19
Sumner.. For once I agree with your view, which I assume was once again conceived from the summit of your granite tower (ivory towers are reserved for professors that are affiliated with universities that people have actually heard of… although your employer does share the name with one of my favorite vehicles, which I earned with the actual value I added to society). But you’re right… it’s ridiculous that a government pick winners or losers on the basis a company’s country of origin. But if this is so egregious, then why are you ok with a handful of Fed governors in a board room deciding what the price of money should be? Or advocating for juicing NGDP, even though you readily admit that the monetary forces that could achieve a target NGDP, cannot boost REAL GDP in the long run? You’re kind of a joke Scott….. BTW, your friend J Powell is trying his best to adopt your “ingenious” policy ideas… if you’re so confident, put your money where your mouth is. I’m buying GDX calls and physical gold… let’s touch base in five years when you’ll still be attempting to lecture people on NGDP targeting from your “cardboard tower”…. all while I’ll be aggressively trying to contain my laughter… because we all know how dangerous it is to laugh while trying to swallow filet mignon. I can hear it now “if only the fed had printed $10 trillion more dollars, we could have avoided this.” I honestly don’t know how you can take yourself seriously. Anyways… have a great weekend!
1. August 2020 at 20:59
Scott,
well at least that will put a stop on anyone who criticizes Russia or China for protecting local champions, silencing their competitors, or confiscating private property. We have finally arrived in a world where the US government does the same thing.
Of course it is a sign of weakness when the US has to exert major pressure just to delay the launch of communications products the US is unable to produce (5G – Huawei) and to silence competitors to Silicon Valley even in pretty banal products (TikTok). Not to mention the fear of losing major spying opportunities when the backbone of the world’s communications one day will no longer be dominated by US companies providing back door information to the NSA (Cisco) but spread more evenly between firms not under US control (Huawei). It doesn’t matter so much IMO whether Huawei really give information to China. It matters that the US is losing spying resources it presently has.
Really the whole China tech spying hysteria is the full blown fear that China would do to the world exactly what the US is currently doing.
The final straw will come if and when China attempts to take over financial transactions. Since they’re miles ahead in fintech over any other country, this may come from a corner that the US currently does not expect, i.e., not from currency markets.
2. August 2020 at 02:14
That is because Chinese tech is filled with malware, and it’s used maliciously by the CCP. You know very little about technology. In fact, you have a very difficult time with simple tasks such as making sure your audio device is on during interviews. I would really appreciate if you kept your posts to economics, because I actually work in technology. This is my field. You have not reversed engineered any of those applications. I have! And those apps are NOT safe. I understand you have Chinese relatives, and perhaps that in some way affects your judgment. It is true that these apps don’t have malware when launched, (unless they know it can remain hidden upon review), but it is often updated with Malware after approval, because Google and Apple cannot monitor Billions of applications. I’m sorry, but you are way way way outside your area of expertise. It is almost comical listening to this, because it’s the equivalent of a layman walking into a doctors office and telling the doctor the blood tests are wrong. It’s bizarre. And this is not just my view. Kaspersky Labs, the most prominent coding laboratory in the world confirms it!
2. August 2020 at 02:19
I don’t think you fully grasp how easy it is to hack into your computer and take all of your files. Or to turn your camera on and sit around watching you. And no, it cannot be stopped. Anyone can do it. Which is precisely why Mark Zuckerberg places black tape over his camera. You guys are tech illiterate. You really have to listen to the experts here. It’s good policy!
2. August 2020 at 06:14
I know less than Scott about tech—-although I have missed the “war” on tech. But I like Janice’s posts——I am familiar with many of her comments am glad she is writing them.
Scott commented that China is less dangerous than Russia—-“except” maybe they will takeover Taiwan.
I don’t know how he can come to that conclusion. Russia is Brazil with an oil pipeline to Germany and Nukes. Maybe that makes them more desperate. But China is truly the desperate one. He quotes Ben Thompson who approvingly states that China is “older” as a nation than the US. True, but what does that have to do with anything? 5000 years or so——yet look what they just did under Mao. Xi is Mao with a profit gene.
2. August 2020 at 10:16
Rajat, I did not see the hearings. I’d expect a few regulations limiting free speech, but nothing that would substantially reduce their market power. The Dems wouldn’t want to kill the golden goose.
FWIW, I’d like to see us weaken intellectual property rights. I have a new book coming out, and I think a 10 year copyright is more than adequate.
Nick, You said:
“Fed governors in a board room deciding what the price of money should be? Or advocating for juicing NGDP”
Of course those are not my views. If you want to be taken seriously here, you might want to learn my actual views.
mbka, You said:
“Really the whole China tech spying hysteria is the full blown fear that China would do to the world exactly what the US is currently doing.”
Exactly.
Janice, You may be an expert in tech, but you are not an expert in reading comprehension. You did not provide a single argument against Microsoft buying TikTok.
Michael, You said:
“I don’t know how he can come to that conclusion.”
Really? You don’t know? Russia recently invaded the Ukraine, which is internationally recognized as an independent country. It annexed part of the Ukraine. Perhaps you did not know that.
China might or might not invade Taiwan, which is internationally recognized as a part of China, even by Taiwan itself. Russia is an actual expansionist power, with far more nuclear weapons than China, and a history of coming close to accidentally launching a nuclear war against the US. But if you more concerned about TikTok, then that’s your choice.
2. August 2020 at 10:24
Scott,
You replied:
“Michael, Are you commenting on Tyler’s post or mine? I never said anything about Google having a monopoly in search.”
I wasn’t suggesting anyone in particular argued against either Google or Facebook having monopolies, but just dismissing those arguments out of hand. But, I am aware Cowen argues against Facebook and Google having monopolies.
2. August 2020 at 10:25
anonymous,
You should read my post again.
2. August 2020 at 12:03
We should expect the US effort to pushback China to be:
a) comically ineffective
b) randomly high cost to individuals or groups (it won’t be broad based tax increases to pay for ‘defense’ nor will it be a pseudo-industrial policy to replace the supply chain)
My hypothesis given these priors: It will be mostly ‘for show’ measures that are ineffective and punish people almost randomly. Expect harsh immigration restrictions, or removing student visas from Chinese students, or ridiculous prosecutions for ‘working for Chinese labs’, or tariffs against countries that install 5G Huawei devices, or xenophobic panic at Chinese firms buying US firms.
Meanwhile,
in the bat cavereal world, China is about as poor as Mexico. They will eventually regain their status as the premier civilization but they’re decades away at minimum. The US will learn to live with being the #2 world power and every sane person who doesn’t care about such things will be happy hundreds of millions of people have been lifted out of global poverty.2. August 2020 at 15:56
You are likely correct.
On the other hand, I am uncomfortable with a do-nothing or appeasement policy, when the CCP puts 3 million people into concentration camps, and throws booksellers in Hong Kong into prison, among other repressions too numerous to even catalog. the trends are all dark, exactly the opposite of what China apologists have been promising for decades.
A physical war is out of the question.
More or less, that leaves jawboning and trade adjustments.
We can count on America’s multinationals, led by such outfits as Disney and the No Balls Association (NBA), to enable repression in China.
Should the US government join the multinationals in enabing Beijing and the Communist Party of China? The multinationals certainly think so.
3. August 2020 at 01:23
” . . . every sane person who doesn’t care about such things will be happy hundreds of millions of people have been lifted out of global poverty.”
Not unless there is a way to prevent the negative externalities?
3. August 2020 at 03:03
I read this column for Dr. Ben Cole’s views and a few others. Sumner often provides comic relief. So Sumner’s main beef is that Trump talking down China so it sells TikTok at a lower price to US-based Microsoft is a bad thing? Does Dr. Sumner know about Dr. Coase’s law? Or does he feel such jawboning is bad precedence for China buying and selling other assets to the USA? (Japan and its investments in the USA despite strong anti-Japan sentiment in the 1980s undercuts this thesis)
PS–Liber-OIS yield spreads down to pre-Covid-19-Crisis levels, but silence from Sumner. Despite a clear “win” for monetarism, Sumner refuses to take the win, and snatches defeat from the jaws of victory. Loser.
3. August 2020 at 11:33
I love when Ray begs for attention from blog hosts.
Such a lonely person.
3. August 2020 at 15:36
Dr. Ray Lopez is a very smart guy, and the rare thinker who Lacks pomposity.
4. August 2020 at 00:26
A ‘test’ of S.B.S.’s ‘ideas’?
“Japan – like the USA – may prove another fascinating test of different theories. Over the last 30 years it has had both the lowest rate of broad money growth in the world and the lowest rate of increase in nominal GDP. (For years the Bank of Japan has declared a 2% inflation target, and inflation has remained stubbornly beneath it. If 5% plus money growth [at an annual rate] now emerges, inflation of above 2% would be expected by a quantity-theory economist.) On 16th March the Bank of Japan announced that it would buy “aggressively” exchange-traded funds at an annual pace of around ¥12 trillion (about $110b.), double the amount previously planned. The budget deficit has also widened dramatically and – as elsewhere – will be financed to some extent from banks. An upturn in money growth has occurred, with the three-month annualised rate of increase to May reaching 15.7%, which is an extraordinary figure by Japanese standards. If Japan in the next few quarters hits and exceeds its 2% inflation target, this might persuade sceptics that inflation is indeed a monetary phenomenon and not a by-product of “national psychology” or some such nonsense. It might also persuade the far too numerous monetary economists who focus on the base and narrow money that an all-inclusive, broadly-defined aggregate is the one to watch. “
https://mv-pt.org/wp-content/uploads/2020/07/Monthly-e-mail-2007-Global-money-round-up.pdf
And yet.
Here: https://standpointmag.co.uk/issues/june-2009/the-unnecessary-recession-features-june-09-tim-congdon-gordon-brown-alistair-darling/
he is arguing that Q.E. worked?
“Is quantitative easing working? Lags between economic policy and its effects are unpredictable, and celebration would be premature. Nevertheless, the first two months of quantitative easing have seen startling improvements in several areas. Most obviously, the UK stock market has soared by 30 per cent and corporate fund-raising has been on a massive scale. Anecdotally companies are saying that cash pressures are less severe. Business surveys have also turned upwards, with a key survey of the services sector suggesting earlier this month that almost as many companies planned to raise output as to reduce it. If there are more output-raising than output-reducing companies, the recession will be over.”
4. August 2020 at 05:34
” . . . will be financed to some extent from banks.”
Depending on the magnitude of the finance, it may be this that will lead to an upturn in inflation in Japan?