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A $5 billion campaign donation to Trump

Summary:
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

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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.


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Scott Sumner
Scott B. Sumner is Research Fellow at the Independent Institute, the Director of the Program on Monetary Policy at the Mercatus Center at George Mason University and an economist who teaches at Bentley University in Waltham, Massachusetts. His economics blog, The Money Illusion, popularized the idea of nominal GDP targeting, which says that the Fed should target nominal GDP—i.e., real GDP growth plus the rate of inflation—to better "induce the correct level of business investment".

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