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The Mugging Of TikTok Should Embarrass Every Sentient American



It’s accepted wisdom that at least in terms of talent, Patrick Mahomes is the greatest quarterback in the world right now. Imagine then, the embarrassment Kansas City Chiefs fans would feel if they witnessed Mahomes belittling Las Vegas Raider third stringer Nathan Peterman about his career stats of 3 touchdown passes and 12 interceptions.

In a musical sense, imagine Beyonce Knowles viciously criticizing the singing of a young, aspiring singer merely thrilled to be showcasing her skills in front of the globally popular diva. More locally, imagine witnessing the richest kid at school teasing the poorest kid for his dated clothes and shoes.

This came to mind while reading about President Trump’s threat last week to ban the globally popular Chinese-owned video app, TikTok. The feeling was shame. It was embarrassment. Americans don’t do this, do they? Americans cheer entrepreneurial initiative, and crucial about this is that they’re in the position to cheer it. The United States is the center of remarkable technological progress, so as Americans we can thrill at others trying to do what Americans are the best in the world at doing. How does one put it other than that Americans have the means to be gracious. At the top of the hill, they can cheer others trying to be like them. In Mahomes and Knowles terms, neither needs to belittle the proverbial Peterman or young singer with stars in her eyes. Why would either? They’re stars.

Yet all-too-many Americans cheered President Trump’s threat of a TikTok ban. How very embarrassing.

All this time we’ve heard from angry Americans led around by fast-typing pundits that the Chinese don’t make anything. Thoroughly controlled by a communist government that suffocates creativity, the alleged contribution to global economic betterment from the Chinese was said to be substandard, unsafe products; those products said by the pundit class to be copies of American products on account of a need seemingly unique within the Chinese to steal.

How did we get here?

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Back in the 1970s and 1980s China was so poor that a failure to finish one’s meal in the U.S. was frequently met with “they’re starving in China.” Americans were concerned about our communist Chinese enemies when they truly practiced murderous communism, at which point one would think Americans would be thrilled that the Chinese had shed their impoverished, murderous past in pursuit of capitalist plenty.

But having done that, having become an essential part of global economic progress, having become a huge market for the U.S.’s greatest companies, the response from all-too-many Americans and way too many pundits has been that the Chinese got to where they are by stealing ideas from us. Which is presumably why pundits are pundits, and not actually in the arena of commerce. Think about it.

Not only is imitation of greatness incredibly challenging, it cannot be stressed enough that what is great today is rarely predictive of what will be great tomorrow. If anyone doubts this, revisit newspapers from 2006 when MySpace was thought to be the unbeatable social media monopoly, or 2007 when wise minds laughed off the iPhone’s threat to the globally powerful Blackberry, or how about how Blockbuster shunned Netflix twice when the latter asked the video rental powerhouse to buy it.

So the Chinese steal our best ideas? Ok, which ones? It’s hard to know what’s best. Implicit in the notion that their success has been a function of theft is that the Chinese were remarkably prescient in the way that admitted copycats like Ford, Edison, Gates and Jobs were; as in they knew what to copy. Alas, Gates has long acknowledged that most everything he tried at Microsoft failed….Jeff Bezos has said much the same. Does anyone remember how Jobs rolled out the Lisa? Look it up, after which maybe rethink your certainty that China’s success has been a function of thievery or imitation. You’re wearing your ignorance on your sleeve. Even the ideas that do succeed rarely stay on top for long. Does anyone remember when AOL was the most powerful name in commerce?

Of course with TikTok, this app wasn’t a copycat. It represented an all new approach to social media; one that rapidly took the world by storm. As opposed to imitating, the Chinese innovated, only for Americans previously troubled by their “theft” to call for an outright ban of what they’d created. The Chinese did exactly as Americans had obnoxiously told them to do, “make your own things,” only for them to have their own creation taken by the authoritarian mercantilist who populates the White House.

But wait, it’s not so simple say the defenders of the indefensible. You see, TikTok harvests “unnecessary levels of information” from its users, said one pundit about the company’s theft. It was comical to contemplate. How could this pundit have even a faint clue about what TikTok gathers? Furthermore, who would care? No one was forced to add the TikTok app to their phones, but oh-so-many did because they fell in love with the content on it.

After that, for as long as businesses have existed they’ve been trying to learn as much as possible about their customers and users. That’s the point. Learn about them to improve the user experience. To see what life was like when businesses did not care about customer and user needs, readers need only read about what life was like in the old Soviet Union, and yes, the China that was actually communist.

But wait, said one U.S. editorial, the app that it described “as popular with American children” had raised concerns within the U.S. foreign policy establishment about the “collection of data on U.S. users” (you know, the children watching dance videos….!) given “China’s averred policy of ‘civil-military fusion.'” Were they serious? Even if TikTok were uniquely gathering data for the CCP, as in even if TikTok were making a potentially business-wrecking economic decision, such a policy of data collection from an app “popular with American children” would be manna from heaven for U.S. technology companies only too eager to fill in where TikTok erred. Assuming it erred at all, which is doubtful. Again, the great companies make a point of learning as much as they can about their users. This same editorial concluded in puzzling fashion that the mugging of TikTok that’s still taking place “may be an example of the market increasing business competition and solving a political problem at the same time.” Oh dear. The definition of “market” has really evolved of late. Adam Smith might disagree, and “might” is just yours truly being polite.

Rather than accept what they know to be true about American companies, politicians, pundits and their followers assumed an app “popular with American children” was actually a front for communist expansion. It’s embarrassing to even write. Furthermore, it makes no sense. Not only would sinister use of data lead to TikTok being replaced, why would “China” feel the need to wreck a nation in the process of doing that on its own given its hysterical, and yes, command-and-control response to a virus? Assuming spying on young people and their dance moves might lead to useful information about the political establishment, can we ask what any sane person would care to learn about the thoughts inside the heads of people like Nancy Pelos, Donald Trump, Joe Biden and Mitch McConnell?

Oh well, it’s really immaterial at this point. A Chinese company innovated, met the needs of people around the world, and President Trump responded by threatening a ban of the company before brokering a potential forced sale of the company to an American company. And it’s the Chinese who are the “communists.” That Trump wants an investment banking fee just adds to the Twilight Zone we’re living in. How thoroughly embarrassing. The whole world is watching, Americans. We deserve neither TikTok nor the very Chinese people who, if we’re honest, are trying to be like Americans used to be.

Source : ForbesRead More

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The Trump campaign celebrated a growth record that Democrats downplayed.



The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.


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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.



The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.


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Ant Challenged Beijing and Prospered. Now It Toes the Line.



As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.


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