I’ve trained myself to automatically assume that everything Donald Trump says is incorrect. It mitigates frustration and utter disbelief. It prioritizes my sanity. Most importantly, it causes me great surprise when he says something that is anything remotely near true. With Trump as our president, I keep Snopes bookmarked in my favorites bar.

One of Trump’s favorite hot topics is China. He called global warming a hoax created by China. He accused the U.S. of becoming at third-world country at the hands of China. He even tweeted that China did “NOTHING” to help the U.S. stop North Korea from creating nuclear weapons.

No matter how much I hate to admit it, though, President Trump’s take on trade with China does have an inkling of truth. In his 2017 Inaugural Address, he said:

“We’ve made other countries rich while the wealth, strength and confidence of our country has dissipated over the horizon. One by one, the factories shuttered and left our shores with not even a thought about the millions and millions of American workers that were left behind.”

While this is an extreme exaggeration, we should be careful not to brush it off as quickly as we do his take on global warming.

China, by all means, is a global powerhouse. However, it wasn’t always that way. For years and years, communist China had a downward-spiriling economy. But between 1991 and 2013, China’s exports increased from 2% of the world’s total to almost 20% (Freakonomics). The country transformed into a leading producer as a result of its plentitude of resources available and more importantly, its cheap labor. China was able to do this so quickly because of its sheer size and the massive potential amount of slack it had to pick up.

In the 1990’s, the Ports of Los Angeles and Long Beach exploded in use due to China’s manufacturing transformation. The two ports combined currently do the most trade in the U.S. (Port of LA Communications). Jobs in shipping–working at the port, sorting, on trains, etc–all either kept or exceeded their current demand. The one part of the labor market that fell apart was manufacturing.

Globalization, trade amongst foreign countries, raises the GDP of the countries at stake. This is not without adverse distributional consequences, though. And one of its biggest dilemmas is labor.

China’s rapid production development is one of the best things to have happened to the U.S. middle class. Chinese workers are employed and producing items to be exported to other countries. People in the U.S. are happy because everything they buy is so much cheaper, thanks to the low financial cost of labor in China and the super low cost of streamlined shipping thanks to the invention of TEUs (Gabriel Kahn). The net effect of the U.S.-China trade relationship is good.

The loser is the manufacturing labor market, a potential reason for why we are currently living in a country with Donald Trump serving as president. With China producing things at such low costs, the need for low-skilled or unskilled manufacturing jobs in the United Stated became virtually nonexistent. Manufacturing workers were laid off in the masses, and plants closed throughout America. From 2000-2007, one million U.S. manufacturing jobs disappeared, 40% of which was attributable to China’s newfound success (Autor). Highly-skilled U.S. workers were just fine, but those who were educated at that level lost their work to cheap Chinese labor.

Those low-skilled manufacturing workers were now out of work and needed to costlessly reallocate to their next best opportunity. This was not easy to do because for the most part because their adaptation skills were poor, making reallocations unsuccessful. This had adverse effects on other labor markets, which served the manufacturing plants that went out of business. The wages of manufacturing jobs that did still exist were lowered because of the low cost of Chinese labor. Public transfer benefits such as medicare, medicaid, food stamps, etc., became more widely used because low-skilled workers were out of work, and their skills levels made it hard for them to reallocate without any costs.

China’s transformation into a country of mass exports adversely created job loss, wage depression, and increase in welfare spending for a particular portion of the United States: manufacturing workers who aren’t highly skilled. The growth of China into a powerhouse nation was as a majority a global good. However, much to Trump’s and my dismay, it also fully disrupted a U.S. labor market–manufacturing–for the worse.

Climate change is not a concept accepted by everyone and certainly, not by President Donald Trump. But according to a recent study from a team of researchers for The Lancet, years of inaction battling climate issues negatively affected the economy and will continue to do so.

Data points to a massive sum of money spent due to the devastation caused by major weather events, like hurricanes and wildfires. An increase in natural disasters has been directly associated with the deteriorating climate.

“Between 2000-2016, there has been a 46 percent increase in the number of weather-related disasters,” the report stated.“Economic losses linked to climate-related extreme weather events were estimated at $129 billion in 2016.”

 

Those numbers represent 2016, not the even wilder hurricane season in 2017, which saw the damage of Hurricane Harvey and Hurricane Irma, both record-breaking storms, likely costing more than $200 billion all together.

That price tag seems high, but it might be lower than it is officially tallied at, considering the cost of damage can continue to rise months following an event.  Below is a graph detailing the change in unemployment when Hurricane Katrina hit in 2005. Even by June 2006, while the New Orleans employment sum had regained some of its losses, it was not near its previous stable condition.

Therefore, if you assume that costly hurricanes will be prevalent over the next decade or so due to climate change worsened by fossil fuels, then the economy will continue to have problems. Extreme weather has cost the U.S. economy an average of $240 billion per year, and now that total seems to be on the low end for what the future holds.

Sir Robert Watson, coauthor and director at the U.K’s Tyndall Center for Climate Change Research, told National Geographic that natural disasters are not created by climate change, but noted the “intensity and frequency” of such occurrences have been made worse by hotter temperatures.

Obviously, fighting climate change to handle extreme weather starts with the knowledge that clean energy is necessary to adapt as soon and as quickly as possible.

But President Trump and EPA head Scott Pruitt don’t see a need for reducing risk, as the administration hopes to roll back Barack Obama’s standards on curbing carbon emissions in favor of coal production.

The coal industry, however, doesn’t seem like its making a comeback, which means it’s time to favor the environment by focusing on jobs created by renewable energy. These jobs are being created twice as fast as any other industry, via Quartz Media, and mainly include solar and wind installers. The solar industry itself generated roughly 260,000 jobs for Americans in 2016.

Eight of the 10 states where solar jobs grew the fastest voted for Trump in the 2016 presidential election, per CBS, and in Oklahoma, Alaska and Nebraska, solar energy workers grew by 100 percent from 2015 to 2016.

So it seems in four years, Trump won’t be able to single handedly destroy the environment. More people have come to understand the value of renewable energy, which is needed to slow climate change and protect our planet from volatile weather incidents.

Following the referendum held on Thursday, June 23, 2016 to decide whether the UK should leave or remain in the European Union, the entire world questioned what Britain’s exit from the EU would actually entail for British – and global – businesses. While there are many moving parts still up in the air, one thing is certain: Britain will have to reach a new trade agreement with the European Union. This task will be highly complex and be carried out under the immense pressure of a two-year deadline.

 

Once the United Kingdom’s formal decision to leave the European Union was notified to the European council of EU leaders, under article 50 of the Libson treaty, the UK was given a formal notice of leave from the EU. Article 50 demands a two-year timeframe for the UK to renegotiate a new legal basis for trade relationships with the remainder of the EU (however, it does enable an extension if needed).

 

The trade discussions must consider the framework for exporting and importing goods, like food and cars, two very important imports and exports for the UK, and the basis for continued services trade, such as legal advice on a big company takeover to and from the EU. Britain’s trade negotiations also must ponder changes to customs procedures, passport controls for business travel, and regulation on safety standards, health and environmental issues.

 

All the aforementioned decisions, however, are contingent upon whether or not Britain undergoes a “hard” or “soft” Brexit, said BBC News.  Hard and soft are terms that were used increasingly in  debates focused on the circumstances of the UK’s departure from the EU. While there is no concrete definition for either term, they are commonly used to refer to the closeness of the UK’s continued relationship with the EU following Brexit. On one end of the spectrum, a “hard” Brexit would entail the UK refusing to comprise on issues like the free movement of people, even if it meant leaving the single market. On the other extreme, a “soft” Brexit would more closely resemble Norway, which holds a single market (as opposed to a common market with free trade) and is forced to accept the free movement of people as a result.

 

According to The Guardian, it will be challenging for the UK to pull off a trade deal in a meager two years, particularly if the option of joining the European Economic Area (EEA) is pursued, but the British government is hesitant to accept any freedom of movement as a quid pro quo.

 

While the entire idea behind Brexit is to instill change within the British government and trade policies, John Forrest, the head of internal trade at DLA Piper law firm told The Guardian, he did not think having the UK continue carrying on trading with the EU under the same free movement principles is out of the question. “…that means freedom of movement for goods, people and capital between the UK and EU will continue to operate.” For the millions of people who campaigned and voted for leaving the EU on that Thursday in June of 2016, this possibility will be a tough pill to swallow.

 

That “China owns the U.S. National Debt” has become an universal knowledge for American people, being taught from the lower school to the university. How does this debt relationship work? Will America ever pay off its debt? Why is China willing to keep borrowing to the United States?

The U.S. National debt exceeded $20 trillion on September 8, 2017, surpassing the American gross GDP. Based on the data as of May 2017, China has cut its American foreign debt holding to $1.102 trillion, no longer holding the largest portion. With $1.111 trillion, Japan now has become the No.1 U.S. debt holding country.

Owning U.S. Treasury notes benefits China by increasing the demand of U.S. dollar and so decreasing the value of RMB (as the Dollar-to-Yuan conversion increases) . Thus. Chinese exports are cheaper than those of America. Consequently, Chinese cheap exports gain global market and produce more jobs opportunity for Chinese people. The strategy of devaluing RMB led Chinese economy to grow 10 percent annually for the past three decades.  On the other side, American people can enjoy lower consuming prices and lower interest rates. American economy also grows.

Will America ever pay off its debt to China? Probably never. There are three paths for America to pay back its debt: cutting spending, raising taxes, and boosting GDP. Unfortunately, there is not much in American budget to cut to save $1.102 trillion. It would terminate any politician’s career to raise tax for paying off Chinese debt. Boosting GDP is far more difficult to execute than to say.

However, such double-win situation might not last longer. Since the Chinese government purposefully decreases the value of RMB, the Chinese businessmen are hurt by the interest rate. They start to take loans in dollars or invest outside, leaving cash flowing out of China. Moreover, the Chinese government has asserts its voice in the global market through this low-value RMB process. The Chinese government ambitiously aims to replace RMB to Dollars as the global reserve. On November 30, 2015, the International Monetary Fund awarded the RMB status as a reserve currency. The IMF added the RMB to its Special Drawing Rights basket on Oct 1, 2016. At last, that the American government allows the value of dollar to drop made the debt China holds less valuable.

As China begins to sell parts of debt out, the situation is shifting to a double-lose. American interest rate would rise, and the economic growth slows. The Chinese exports also loses competitiveness.

The anxiety is not necessary. China would not sell all or large amount of U.S. debt at one time because it will drastically devalue dollars and ruin the international market. The American and Chinese economy will still be bonded together through this tremendous debt for a long time.

Sources:

https://www.thebalance.com/dollar-to-yuan-conversion-and-history-3306089

https://www.thebalance.com/national-debt-by-year-compared-to-gdp-and-major-events-3306287

https://www.thebalance.com/will-the-u-s-debt-ever-be-paid-off-3970473

https://www.thebalance.com/u-s-debt-to-china-how-much-does-it-own-3306355

https://www.thebalance.com/yuan-reserve-currency-to-global-currency-3970465

Do you remember where you were on June 12, 2017? I certainly do; I was riding a very delayed 1 train on the New York City Subway Red Line to the 59^th Street stop just two blocks from my office. With the fear of being late to work driving my actions, I omitted my morning coffee from Starbucks and ran to the 9^th floor of my building. I was greeted by a too-quiet office in which each one of my co-workers’ eyes were glued to the television screens playing CNBC. The bold chyron stating, “Amazon to Acquire Whole Foods” at the bottom of the screen silenced me faster than I could regain my breath.

 

The implied monopoly of Amazon’s takeover of Whole Foods provides a tremendous threat to brick-and-mortar retailers. Following the announcement that Amazon was buying the mega health food chain, stock prices of top grocery stores all declined. Shares of Kroger, the parent company of Ralphs and Food4Less supermarket chains, were down 14.41% to $21.02. Target and Costco shares fell 9.7% to $50.08 and 6.83% to $167.77 respectively.

 

Meanwhile, thousands of Whole Foods employees began to ponder whether Amazon’s inclination for automation would result in their jobs being replaced by robots.  Amazon’s ability to cause such a resounding effect on the stock market after the announcement of a proposed acquisition, while simultaneously intimidating suppliers and competitors, highlight’s their dominance in the economy.

 

Wall Street Investors are placing large wagers that Amazon and the new fast fashion trend will knock out numerous stores in the next months and years to come.

 

Traditionally, the retail industry has been admonished by the stock market. This assertion is supported by Bespoke Investment Group’s stats on the average percentage of shares that investors are shorting, or essentially betting against. Fortunately for investors and unfortunately for retail companies and employees, this retail short sale has been a winning trade.

 

Insipid sales stemming from low investor confidence has resulted in hundreds of store closures, bankruptcies, and countless layoffs. On average, 15.6% of shares among retailers are being shorted, which, by the Street’s standards, is very high.

 

The investors of Wall Street are not the only demographic to blame, as many Americans favor the ease and hassle-free experience of online shopping as opposed to taking trips to local malls. Meanwhile, the brick-and-mortar stores that have survived are struggling to compete with fast fashion-modeled stores like H&M and Zara. Due to this blatant shift in consumer behavior, Wall Street experts have grown exceptionally bearish when it comes to investing in multiline retailers, including general merchandise chains like Kohls and department stores like Macy’s.

 

The impending apocalypse for the brick-and-mortar stores isn’t here just yet, though. Some retail giants have maintained their dominance in the industry; take Best Buy, for example. Many consumers and investors alike feared the Technology and Electronics chain would be quickly overpowered by Amazon; however, Best Buy’s stock is up 37% and is actually outperforming the online shopping megastore.

President Trump was elected into office a little over 10 months ago. At which time, his political platform differed vastly from the rest of the conservative candidates, for he was the only one to call for a radical, even extreme, stance against immigration and refugees. The reason for this, in his words, was to “bring jobs back to America”, a phrase that hints at the competition immigrant and refugee workers bring with them. However, a recent New York Times article respectfully disagrees, at least partially to the entire idea of that incoming workers may hurt the country’s economy.

The truth is, studies have shown that refugees do have a positive side to their hosting country. The article notes that, while the Trump Administration rejects this finding, the refugees will be “paying more in taxes than they consume in public benefits, and filling jobs in service industries that others will not.” In other words, the refugees may not create such a burden as widely imagined by the Americans upon the American economy, and will likely not cause tension within the already competitive industries.

Still, the rejection of this finding does not come as surprising, as anti-immigration is a core pillar supporting the Trump political platform. It is not uncommon for politicians to “selectively accept” findings that are convenient to them and deny the rest. The climate change debate that has been going on within the American politics for years, which has long become a laughingstock of the United States in other countries, only showcases this further.

Disregarding the debate of terrorism associated with refugees and looking at the matter purely from an economic perspective, the economic gain of cheap labor combined with a solidifying of the working force demographics could only benefit the United States. The States, like Canada, are both immigration countries whose very foundations were made up by immigrants from the 17th and 18th centuries. Unlike China and India, the United States never had a substantial domestic population to support its economy, and to turn away from immigration is to undoubtedly a move away from the foundation of this fine nation.

Perhaps, if President Trump truly intended to “Make America Great Again”, he should reconsider the basis of some of his policies.

Naw, this Evan kid is just fake news. Don’t listen to him. We’re good. We’re great. America’s great. America’s gonna be great.

 

One of the most amazing concepts about social media is that as a business, it operates at an unimaginable scale with what is essentially an intangible product. By “intangible product” I mean that a company like Snapchat, Twitter, Instagram or Facebook doesn’t actually have a product that uses traditional distribution methods since it’s online, and you can’t physically touch what arises from it (contrary to Amazon).

Thus, the use of servers end up becoming the company’s main cost if the product successfully scales to thousands, or in the best case, millions. 

One of the best examples of the one-of-a-kind scaling nature of social media is the rise of Instagram. It launched in October 2010, and within three months, had 1 million users. In February 2011, the company received $7 million in Series A funding from Benchmark Capital. About a year later in April 2012, Instagram was valued at $500 million after securing an even bigger round of funding, $50 million, from Sequoia Capital.

All Instagram allowed you to do was share photographs with your friends and other people you know. It doesn’t sound like anything revolutionary, but when it exists within a instantaneous medium, it ultimately changes how people communicate. So at first, even if the idea doesn’t seem world altering, its value is actually greater than one would expect. Similar to how the telephone and telegram revolutionized mass communication, new age companies like Instagram, Twitter and Facebook have certainly restyled the way in which people interact.

The real issue for these businesses is making legitimate revenue. Since their product isn’t actually built to sell, the main way they make money is through striking advertising deals. So in the early stages when these companies don’t have ads running, investors bet massive sums of money based on user growth. The logic is, once ads sell to a huge user base, the company will then be worth all those dollar bills.

According to TechCrunch, Snap Inc. was projected to amass near $1 billion in revenue in 2017, but through Q1, it notched only $149.6 million, and at the Q2 close, it hit $181.6 million. These numbers have steadily increased over the years, as you can see from the graph below of the 2015 quarterly revenues. From $4 million of revenue in Q1 to $33 million in Q4, the growth of revenue was obvious in 2015 because the user growth was still flying high.

Since user growth has slowed in 2017 for Snap, the revenues haven’t been going up at such quick of a rate. With this trend happening, it appears Snap is trying its best to convince advertisers to use the app, releasing an Ad Manager platform in June that helps to optimize ads for appearance on the app.

Fifty years ago, most of what I’m talking about in relation to technology didn’t exist. And people would’ve thought building a billion dollar company, while making little to no revenue, was impossible. But now, the ever increasing use of mobile technology has opened up a market for intangible products, whether or not the actual money being earned measures up to the product’s hype.