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.



23 Responses to “Gangster capitalism”

  1. Gravatar of dtoh dtoh
    21. September 2020 at 20:08

    BTW – It’s Crichton not Creighton and he’s an ignorant fool

  2. Gravatar of mbka mbka
    21. September 2020 at 21:39


    and where exactly is Crichton _not_ right?

  3. Gravatar of Benjamin Cole Benjamin Cole
    21. September 2020 at 23:06

    Still, Trump is playing by patty-cake rules.

    Here is how you do it:

  4. Gravatar of Cartesian Theatics Cartesian Theatics
    22. September 2020 at 00:13

    Maybe this is Trump’s exit strategy. He’ll slink of the stage and spend the rest of his life passionately advocating for patriotic curriculum in schools.

    Just kidding.

  5. Gravatar of Ray Lopez Ray Lopez
    22. September 2020 at 01:06

    As a Microsoft shareholder, I applaud the Jedi contract to MSFT rather than Besos, who already has enough and frankly is not a tech company.

    Bonus trivia: Trump’s aides believe money is neutral, and Fx cannot be manipulated. News story:
    Trump told thousands of supporters at a political rally in Dayton, Ohio, that his policies were saving jobs …
    “I go to my guys, ‘What about doing a little movement on the dollar?’” he said, but they countered that was not possible. “‘Sir, we can’t do that. It has to float naturally.’”

  6. Gravatar of JC1 JC1
    22. September 2020 at 04:15


    Recall when the Obama Labor Board went after Boeing for wanting to set up shop in free to work states?

  7. Gravatar of Michael Rulle Michael Rulle
    22. September 2020 at 05:44

    I have seen Tik Tok in the WSJ headlines daily for what seems like months. At some point I played this little game with myself——how long could I go without knowing what it does. I lasted pretty long. But I gave in last week. When I found it is 15 second whatevers (plus apparently “so much more”), I admit my surprise on its seeming inanity. I did know it was “Chinese” and therefore could brainwash us——:—)—— but little did I know it would brainwash global children. A friend of mine—-in his 50s——told me it is “addictive”. This was before I even had any idea what it does ——I obviously don’t understand it.

    I write this because I cannot believe anyone cares about this As a political other than the buyer and seller. As far as the 5billion is concerned——why does Scott pretend all tax money is not fungible? Trump too. And all other pols. The issue is will Trump push for “patriotic education”. Tik Tok as Dems like to say——is a “distraction”

  8. Gravatar of Skeptical Skeptical
    22. September 2020 at 06:45

    I’ll just repeat myself:

    Expect the pushback on China to be both randomly high cost and completely ineffective.

  9. Gravatar of Lizard Man Lizard Man
    22. September 2020 at 09:46

    Personnel is policy, so I don’t buy that Bezos is innocent of directing the newspaper he owns. Does anyone doubt that he would fire the editorial staff if they decided to make the newspaper into a conservative, pro-Trump outlet?

    Is it the case that far left activists engage in vanguardism, attempting to control key US institutions (like schools, government bureaucracies, and via courts HR departments in corporations) in order to force compliance from the population? That is the claim of the right. They would claim that Trump is only doing via the executive branch what the left has been doing via universities, schools, the courts, “public” and private media, Silicon Valley for decades, and they are not wrong about that. Of course the right engages in some of this as well, though only really via the courts and of course via HR departments against Unions. But the left is against Unions as well, else Bezos and the rest of the Tech titans wouldn’t be onboard with the Democratic Party.

    When every aspect of life is politicized, how can you have a free populace? When a majority of people fear that expressing the “incorrect” opinion will cost them in career terms, how do you not already have a kind of “soft totalitarianism”? If I remember the Cato Institute survey correctly, the only people who weren’t afraid that voicing their opinions would negatively impact their career was people with far left views. What does that say about who is and is not totalitarian?

  10. Gravatar of Michael Sandifer Michael Sandifer
    22. September 2020 at 09:59

    Ray Lopez admits to supporting banana republican government:

    “As a Microsoft shareholder, I applaud the Jedi contract to MSFT rather than Besos, who already has enough and frankly is not a tech company.”

    Contracts should be awarded based on merit, which is hopefully value, not on the satisfaction of a President with the owner of a company.

    Michael Rulle is also just fine with banana republican government, apparently having no idea what the difference between that is, and actual rule of law:

    ‘”As far as the 5billion is concerned——why does Scott pretend all tax money is not fungible? Trump too. And all other pols. The issue is will Trump push for “patriotic education”. Tik Tok as Dems like to say——is a “distraction”’

    It’s unconstitutional to enact a tax against a specific entity or individual. It’s illegal to tax without authority from Congress. Otherwise, you have government with another tool to punish specific individuals and entities, and hence directly influence their behavior. Why is this so difficult to understand?

    No one who understands the first thing about political science would hold these perspectives, unless corrupt.

  11. Gravatar of Sean Sean
    22. September 2020 at 11:46

    ok so realistically what do we do to fight back against banana republic watch. Wait 4 years for Trump to hit term limits? The choice is trump or the lynch mob mafia tactics of the left.

  12. Gravatar of ssumner ssumner
    22. September 2020 at 12:19

    Sean, I don’t have any solutions, but until we admit that we have a problem we won’t make much progress. It’s like AA.

  13. Gravatar of msgkings msgkings
    22. September 2020 at 15:58


    Since you have, probably correctly, recognized we have a problem, aren’t you interested in discussing possible remedies?

  14. Gravatar of Benjamin Cole Benjamin Cole
    22. September 2020 at 16:24

    The Global Times, a CCP newspaper in Beijing, calls the proposed Oracle-Walmart-TikTok deal “robbery”!

    The Global Times says, “For instance, American citizens will take up four of the five board seats for TikTok Global and only one can be Chinese. The board of TikTok Global would include a national security director, who will have to be approved by the US.

    Oracle will have the authority to check the source code of TikTok USA and updates.”


    So, for TikTok, a condition of doing business in the US is essentially a transfer and loss of control over IP.

    Sounds familiar. TikTok, of course, has the option of not doing business in the US. If TikTok agrees to the terms, then they must feel it is in their interest to do so.

    But it appears the CCP will not allow TikTok to engage in the transaction.

  15. Gravatar of janice janice
    22. September 2020 at 16:51

    I like the deal.

    This is what’s called FAIR PLAY. If you don’t allow our companies to engage your market, without robbery of IP, then your companies cannot engage our market without the same. If you levy a tariff, we levy a tariff.

    It’s about time that we had someone as President who actually looked after the American worker.

    Who would have thought that it would take a billionaire playboy from NY to get the Job done.

    Peace deal with Israel and UAE.
    Arrests of corrupt academics
    lower business taxes to help us compete globally
    scrapping the TPP, which would have led to more job loss
    Standing up to corrupt Washington bureaucrats, causing a backlash the likes of which we have never seen (investigation, impeachment attempt with no evidence, and CNN, NYT meltdown).
    Sent Chinese graduate students connected to CCP back to China.
    Stood up to the BLM marxists, who support historical culpability.
    Refuses to meddle in international affairs, returning us to pre woodrow wilson (idiot president who thought we ought to intervene in every affair)
    Refuses to send aid money without preconditions, knowing full well that the aid money will end up in the private bank accounts of politicians.
    Reduced pharmaceutical costs by nearly 70%.

    Yes, he doesn’t have a vast array of knowledge. But he learns fast. He’s quick on his feet. And above all, he’s a man of action.

    Four More Years.

  16. Gravatar of mbka mbka
    22. September 2020 at 18:29


    he lives thanks to your gullibility. You’ve been had but you’re happy. Not to say the left doesn’t produce similar hypocrisy by their leaders and selective blindness by their followers, I’ve seen people gushing over the policy “successes” of Venezuela too.

  17. Gravatar of ssumner ssumner
    22. September 2020 at 21:35

    msgkings, Sure, I’d be glad to discuss remedies. I don’t have any good ideas—what do you suggest?

    Janice, LOL, enjoy your epistemic bubble.

  18. Gravatar of Mark Z Mark Z
    22. September 2020 at 23:51

    Not really (but kind of) related: Scott Lincicome’s new article in the Dispatch:

    The 50th anniversary of Milton Friedman’s famous 1070 New York Times article is a great time to celebrate 50 years of libertarian domination of American politics. From President John Hospers to House speaker Justin Amash, what a ride it’s been.

  19. Gravatar of LC LC
    23. September 2020 at 08:23

    I have often heard the refrain that China is not being fair to American companies, that what’s happening now is fair play. However, I have a hard time finding data that justifies the refrain. Does anyone have any data that shows total American companies revenues in China? Does anyone have any data that shows total Chinese companies revenues in America? The closest Google search I found is this Marco Polo report, showing American companies revenue in 2018 is $500B ( Adding in total American export of around $120B, total American exposure to China is about $600B. We know Chinese exports to America are about $500B, but not many Chinese companies operate in America in any meaningful way. In fact, looking at the list of largest Chinese firms, these tend to be industrial and banks and internet companies with limited exposure to America. Does anyone have any data that shows a more complete picture?

  20. Gravatar of ssumner ssumner
    23. September 2020 at 12:10

    Mark, That’s amusing.

    LC, Yes, you see a lot of people insisting that because China is not “fair” to Chinese consumers, the US government should not be fair to American consumers. (Although they usually use producer framing, as it sounds better.)

  21. Gravatar of Sean Sean
    23. September 2020 at 12:56

    I always blamed obama with starting this process. I remember Rahm saying to never waste a crisis. Then they forced thru obamacare with a slim temporary majority. Then identity politics began which significantly helped trump. Trump came to office or perhaps because Obama never achieved their dream led to the left radicalizing which in turn made many to desire trump even more. But maybe it started somewhere during Bush term, but I remember him atleast trying to unite under some kind of compassionate conservatism – or maybe its all the way back to clinton and impeachment over monica. Tit for tat seems in full play now. Radicals on one side leads to the other side being radicalized.

    I’m not sure how we get back to Romney/Clinton type leaders. If Biden was younger maybe he would be capable of controlling his radicals and leading us there.

    Social media I thought would lead to better understanding of the other side, but instead its led to group think and echo chambers reinforcing beliefs.

  22. Gravatar of ssumner ssumner
    24. September 2020 at 10:39

    Sean, It goes back to Gingrich. Obama had no choice, as the GOP adopted a scorched earth policy after he was elected. They would not cooperate on any plausible health care reform.

  23. Gravatar of Postkey Postkey
    26. September 2020 at 00:59

    Did ‘they’ need ‘cooperation’?

    “Democrats controlled the 111th Congress (2009–2011) with majorities in both houses of Congress alongside the country’s first African-American president, Democrat Barack Obama.”

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