$16.5 million — that’s how much Daniel Middleton, the highest paid YouTuber of 2017, made last year, according to Forbes. Since its founding in 2012, Middleton’s channel “DanTDM” has amassed over 20 million subscribers, 13 billion total video views and an active audience that keeps coming back for more gameplay videos.

Middleton’s position isn’t an idiosyncrasy. Falling only a few places behind him are the household names Logan Paul (18.5+ million subscribers) and Jake Paul (17+ million subscribers), who made $12.5 million and $11.5 million in 2017, respectfully. That same year, the highest paid female YouTuber was Lilly Singh “||Superwoman||” (14+ million subscribers), who made $10.5 million.

“Influencers are social media ‘stars’ who have monetised their subscriber base on Instagram by posting pictures and endorsing brands,” defines Yasmin Jones Henry of the Financial Times. The modern world of internet influencers/content creators, however, has only sprung up in the past decade, so how did these individuals go from making videos in their bedrooms to raking in millions of dollars? The answer is simple: advertisements.

In the past, advertisers have paired with traditional media, like television and radio, to focus on larger interests in hopes of having their product be a contender for the general audiences. Influencer marketing, however, has come along with more niche, new-form media, which has allowed advertisers to hyper-target consumers for more successful sales.

“One result of social media has been the democratization of influence and creativity. We no longer need the approval of large corporations to determine what content is truly worthy of views,” writes Matthew Biggins in an article on influencer economics for Medium. Biggins is right — we, the viewers, have taken the power out of the hands of big corporations and have redirected that decision-making authority to ourselves. We decide what we like and what content to ingest, which produces a positive feedback loop of receiving content that repeatedly satisfies us. This is where influencers come in. As viewers constantly returned to the same creators for reliable quality content, the influencer economy continued to expand, leader influencers naturally to become the next tool for advertisers to use.

“Sixty percent of Gen Z are more likely to believe what a YouTube star says over what a movie star says,” said Deborah Weinswig, the Managing Director of Fung Global Retail & Technology,

Images from Visual Capitalist.

In late 2017, roughly 70 percent of brands were using influencers. On just Instagram, which is a platform often used to establish or expand a creator’s social media presence, influencer marketing is a $1 billion industry, according to Retail Dive. Overall, companies primarily have been redirecting their advertising funds to online video and sponsoring Instagram posts, which can cost companies tens of thousands or hundreds of thousands of dollars per post.

Though influencer marketing is clearly the future of business and retail (and the large sums of money involved seem to indicate success), the newness of influencers still has kinks to be worked out when compared to traditional media advertising. While the number of traditional media viewers tends to be concretely-based, many pages with thousands of followers may consist of purchased, fraudulent fans, leaving companies to make investments they can’t be sure will yield the results advertised.

Nonetheless, the way consumers discover and purchase goods in our larger economy is changing for good. No longer can the intertwined economics of entertainment and retail sales rely on relating to the general public in hopes that something will stick.

“Beyond creating content for brands, another driving force of the influencer economy is the consumer’s hunger for representation,” writes Bof Team for Business of Fashion.

So, yes, individually liking something on Instagram is an economic transaction after all. Welcome to the influencer economy.

        Image Source: The Wall Street Journal

On Sep. 24, the United States will begin imposing tariffs of 10 percent on another $200 billion worth of Chinese goods. That tariff rate will rise to 25 percent beginning Jan.1. Subsequently, China retaliated as promised on Tuesday that it would enact tariffs on $60 billion in U.S. goods from aircraft to liquified natural gas.

From July this year, the trade battle between the United States and China started that the U.S. imposed 25 percent tariffs on $34 billion worth of Chinese goods as part of President Trump’s tariffs policy. As the trade war escalates over time, an unavoidable question occurs to me: what’s the meaning of the continuously escalating trade war with retaliation?

When searching “trade war” on the internet, the headlines like “Will tariffs hit American more than China?”, “What’s at stake for the U.S.?”, or “China once looked tough on trade. Now its options are dwindling.” popped up on the screen. Now that the negative effects of the trade war with retaliated tariffs can be realized by both sides, why not negotiate a peace treaty? A free trade is better than retaliated tariffs.

Early in 18^th century, an economist Adam Smith wrote in his book The Wealth of Nations: “It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.” This is the core of free trade: businesses concentrate on services or goods where they have a distinct competitive advantage so that they could swap something with lower cost and all profit by doing so. However, a free market is being devalued and tariff is becoming a weapon for the state’s rivalry.

Generally, tariffs opposing free trade can be used for five reasons: protecting domestic employment, protecting consumers, protecting infant industries, national security, and retaliation. As President Trump claimed that US jobs got “stolen” by China and increased tariff on imported goods can boost American business interests, he enacted tariffs for protecting domestic employment, businesses, and consumers.

In terms of employment and businesses, it is true that jobs have been lost in America due to cheaper foreign imports under free trade. However, protectionism will destroy more jobs than it can create. The economist Milton Friedman famous for his support for free market wrote in his book Free to Choose: A Personal Statement (1980, p41): “our real objective is not just jobs but productive jobs—jobs that mean more goods and services to consume.” Increased tariffs do retrieve some labor-intensive manufacturing industries, but jobs provided by them will lead to increased producer costs, increased producer costs will lead to increased products costs, increased products costs will lead to fewer sales and fewer tax recipients, fewer sales will result in fewer jobs and fewer profits.

As for consumers, increased imported tariffs will limit consumers’ freedom to choose products and force consumers to pay more for products while free trade can increase the number of goods that domestic consumers can choose from and decrease the cost of those goods through increased competition. In the long run, the living standard and quality of consumers will be negatively affected by trade barriers. Also, the government has to spend more subsidies on an increased demand for public services because of increased living costs.

In addition to the US, China will also be negatively affected by the trade war in the same way although Chinese policymakers think they have a prudent financial and monetary policy to face the pressure from Washington. China’s economy is always much more vulnerable to exports than America’s economy and China is still trying to shift its growth model to one relying more on consumption and less on investment and exports. Thus, it could take a bigger hit from the escalating trade war.

The free market with free trade is not perfect but it can correct itself better than state, because sometimes government regulations will be used for political rivalry regardless of long-run losses, for example, the current trade war.

There are not many countries that want to be associated with violent tyranny, the absence of freedom, and a disgusting lack human rights. This makes finding a trade partner very difficult for the North Korean government. It doesn’t look very good when you supply your main export, coal, through child labor and what is essentially slavery. On top of that, international organizations like the United Nations and NATO often require members to impose strict sanctions in response to the way North Korea treats its citizens. So how does a country that is so universally hated survive?

North Korea’s economy is still up and running for one reason: China. 83% of North Korea’s exports are to China. Though countries like India, Russia, Pakistan, and Burkina Faso are also trade partners, China’s relationship with North Korea is immense in comparison.

Though one may think that China simply wants to expand its economy and trade with whoever it can, there is another glaring reason for its support of the authoritarian regime. China is not only North Korea’s trading partner, but also its neighbor. If Kim Jong Un’s iron fist lost its grip, millions of refugees may seek shelter across the border, giving China big problems.

Information about the Chinese-North Korean relationship is pretty available, but there is another major country accused of trading behind the scenes: Russia. In Spring, eight U.S senators wrote a letter to Trump urging him to take immediate action against Putin. Lawmakers, along with many analysts, strongly believe that Russia is employing North Korean prisoners in Siberia, trading oil, and exporting supplies related to chemical weapons to Syria. If these allegations are even remotely true, then Russia would be outright defying several international organization agreements, such as U.N-wide sanctions.

Looking forward, North Korea may be thinking about expanding its economy beyond its current limits. Some experts believe that Kim Jong Un is looking for ways to improve trade. U.S President Donald Trump thinks so too.

Back in June, Donald Trump and Kim Jong Un met in Singapore for a historic summit. After the meeting, Trump said that Un had agreed to begin denuclearization, and that once that happens, trade with the notoriously isolated country might just be an option for the United States.

“They (North Korea) have great beaches. You see that whenever they’re exploding their cannons into the ocean. I said, ‘Boy look at that view. Wouldn’t that make a great condo?’” Trump told reporters after the summit.

If North Korea were to suddenly abandon its nuclear weapons and give its citizens basic rights, its economy could skyrocket. However, signs of that actually happening are still slim.

A turbulent few years of American politics has created new groups of activists across the nation standing up for themselves, what they believe in and what they feel is right. The #MeToo movement disrupted Hollywood and has spread to Silicon Valley and to Washington. Black Lives Matter rallies have filled the streets of the United States. Celebrities and professional athletes have made statements of support on national TV. As we are living in a time of activism, people are encouraged to participate.

It is no longer acceptable to just stand by – for individuals, or for companies. This age of activism is translating to the way consumers behave. Support – or disapproval – of a company’s values is shown in purchase behavior. It may seem like a risky PR move for a company to stake a political or social stance, but recent events have demonstrated the possible pay-off.

On September 4^th of this year, Nike released the following ad starring Colin Kaepernick:

Kaepernick was the part of a highly controversial protest starting in 2016. He and other NFL players began kneeling during the national anthem to protest racism, police brutality and social injustice. President Trump politicized the protests and many viewed it as disrespectful to those who have served our country. Nike took a huge risk with this ad, that would potentially alienate many of their previous customers.

Backlash seemed immediate after the ad was released. Social media sites flooded with videos of people burning their Nike products and criticizing the language of “sacrificing everything.” President Trump even partook in the conversation:

Although many – including fellow athletes LeBron James and Serena Williams – supported Nike’s decision to run this ad, the media primarily emphasized the negative reactions. This made Wall Street and Nike investors nervous. On the day the ad was released, there was a larger than normal sell-off of Nike stock.

However, as seen in the graph above, it was very insignificant in the scheme of things. In fact, since the ad was released Nike’s stock has seen reached an all-time high.

Instead of the #NikeBoycott approach, many people actually showed their support for the brand by going out and buying their products. According to the research firm Edison Trends, online sales jumped – sales rose 31% from Sunday (September 2^nd)  through Tuesday (September 4^th). While that spike didn’t last long, it demonstrated the way consumers felt towards Nike and the divisive stance they took.

The support shown on social media, in sales and in pieces of journalism like, This Life: If Nike can stand with Kaepernick, I can shell out extra for sneakers, speak to the way retail activism works in this political climate. While the long-term stock and sale performances will likely not be heavily effected, the immediate reactions of consumers are telling. People will remember what Nike stands for when they go to buy their next pair of running shoes, and an individual’s own beliefs will impact whether they buy Nike or a competing brand.

Recently, the Trump administration decided to pay subsidies to farmers to offset the impact of the trade war between the United States and other countries. A similar government intervention policy called “government cheese” had been used during the 1970s by President Jimmy Carter.

All these cheesy stories started in 1949. When the Agricultural Act of 1949 got passed, the U.S. government established the Commodity Credit Corporation to take charge of stabilizing farmers’ incomes. It was the first time for the government to purchase dairy products like milk and cheese from farmers.

In the later 1970s, The U.S. federal government distributed 300 million pounds of government cheese, an almost neon orange mixed cheese, to do food charities. This kind of cheese was five pounds per block, had a rectangular shape, and attached lots of USDA stamps. The primary purpose was to maintain the price of daily supplies. President Jimmy Carter, along with Congress, raised the price of milk 6 cents per gallon and kept increasing the price with inflation in 1977. Also, the government put $2 billion subsidies to save the dairy food industry. Although this strategy saved the dairy food industry from its shortage, the government itself became the primary customer. It bought all the milk that couldn’t be sold by farmers and processed the milk into cheese. Without the market, the government had to store all the cheese in thousands of warehouses and even some caves in 35 states.

“Probably the cheapest and most practical thing to would be to dump it in the ocean,” a USDA official said in 1981. Although the government cheese was useless for the USDA, most Americans at that time still suffered from the after-effects of the recession. Therefore, American citizens harshly criticized President Ronald Reagan and the federal government for the waste of these daily food products, which include cheese, butter, and milk powder.

Surprisingly, Agriculture Secretary John R. Block showed up at a White House event with some pieces of government cheese on his hand and said, “we can’t find a market for it, we can’t sell it, and we’re looking to trying to give some of it away.”

To distinguish the government cheese from regular cheese products, the Commodity Credit Corporation established some new supporting programs to deliver the cheese to lower-class families. One joke related to this was that if you give cheese to people who cannot afford regular cheese, it is not a behavior to hurt the current market. Obviously, it is not true. This government cheese story has shown the butterfly effect of one government intervention. Ultimately, the Temporary Emergency Food Assistance Program released more than 30 million pounds of cheese around the nation.

When the dairy prices came down in the 1990s, the government finally took itself out of this “cheese charity” business.

However, as the U.S. Department of Agriculture secretary Sonny Perdue announced the plan to provide $11 billion subsidies to assist the farmers who had struggled during the Trade War, the same organization Commodity Credit Corporation comes back and start to do its job again.

Sources:

https://www.history.com/news/government-cheese-dairy-farmers-reagan

https://www.npr.org/2018/09/07/645459818/government-cheese-well-intentioned-program-goes-off-the-rails

The Tyranny and the Comfort of Government Cheese