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US Data
ANDERS CORR is a principal at Corr Analytics Inc., publisher of the Journal of Political Risk. He is an expert in political science and government. Anders Corr
Ban China’s TikTok Now
TikTok algorithm influences US political beliefs in Beijing’s favor
Tiktok, the wildly popular and youthful social media app, is controlled by China and tripled its ad revenue in 2022 to $12 billion. Companies want access to this latest conduit to mold youthful preferences, and every year, they’re willing to pay a lot for the privilege.
Sixty percent of TikTok users are in the age range of 16 to 24, a highly sought demographic for both their impressionability and enduring market potential.
But hapless TikTokers are also apt to lose their private data to Beijing, which ultimately controls TikTok. And the Chinese Communist Party (CCP) uses its control over TikTok’s parent company, ByteDance, to manipulate the TikTok algorithm to favor political messaging that promotes China’s national interests over those of freedom, democracy, human rights, and the United States itself.
Brendan Carr, a commissioner of the U.S. Federal Communications Commission, rightly noted on June 28 that “TikTok is not just another video app.”
“That’s the sheep’s clothing,” he said. “It harvests swaths of sensitive data that new reports show are being accessed in Beijing.”
Carr has called on Apple and Google to remove TikTok from their app stores because of its violation of their rules.
TikTok collects user data for micro-targeted advertising that China can already deploy for political purposes using TikTok users’ unique IDs. Inexplicably, the Biden administration is giving Beijing access to these unique IDs.
According to a recent Buzzfeed News report cited by Carr, Beijing can access all of TikTok users’ data anyway, as there are plenty of backdoors built into the software, which is fully controlled by the CCP, even if U.S. TikToker data is stored in places such as Virginia, Texas, and Singapore.
So anything a Tiktok user puts on their feed—including cat videos, political beliefs, and their most personal of preferences—is known to Beijing, which can track and correlate them and micro-target political messaging to users. This could have major effects in democracies, where voters’ political preferences lead directly to changes in government.
In Colombia, for example, an obscure mayor named Rodolfo Hernández used TikTok and a team of young supporters who posted his folksy material to the app. Hernández consequently gained 600,000 followers. This allowed him to rise to national prominence during the second round of the presidential election in June.
If it can happen in Colombia, it can happen in the United States.
A peer-reviewed study by Zuza Nazaruk in 2021 found that TikTok’s algorithm is biased against topics seen as sensitive by Beijing, such as the Tiananmen Square massacre, the genocide in Xinjiang, and the TikTok algorithm itself.
“While none of the topics was fully censored, TikTok’s algorithm showcased videos supporting the CCP line at the top of the search, despite their lower number of likes or earlier posting dates,” Nazaruk said.
There’s no good reason for the American people, represented by their government, to allow TikTok to grow into the next big thing. There are plenty of other social media companies and a host of up-and-coming services that could be the next place to go for millennials who don’t want to use mom and dad’s preferred social media.
Each generation wants to reinvent itself, which gave TikTok an opening. But it doesn’t have to be that way; the app could be banned by Congress on national security grounds.
The prior administration did ban TikTok by executive order. However, two federal court rulings blocked the ban, and the Biden administration rescinded it altogether.
Congresspeople should step into the breach and protect the privacy of U.S. TikTok users. The only way to do so is to direct them, through a ban, to other more trusted social media companies. This will also protect U.S. national security by ensuring that Beijing can’t use the TikTok algorithm to influence voters’ political beliefs.
The fact that the Biden administration and Congress are apparently scared to ban TikTok for fear of the ire of TikTok users and their voting power, is proof that the law is needed. The longer our democracy waits, the harder it will be.
MILTON EZRATI is chief economist for Vested, a contributing editor at The National Interest, and author of “Thirty Tomorrows” and “Bite-Sized Investing.” Milton Ezrati
Can the Fed Do the Job?
The Fed must recover the public confidence it lost last year
Since the federal Reserve began its counter-inflation effort in March, it has acted forcefully. It has raised its benchmark federal funds interest rate by 1.5 percentage points and reversed its long-standing program of quantitative easing.
Instead of buying bonds to inject money into the financial system, it has begun to withdraw some of those inflationary monies by selling from the hoard of securities it had built up previously. And the Fed has promised to continue withdrawing liquidity and raising interest rates until inflation comes under control.
But, in no small part, because its tardy response to inflation last year eroded public confidence, the Fed now faces an especially tough fight.
This issue of confidence is important. Without it, people will come to expect inflation and alter their behavior accordingly. Workers, for example, will demand wage gains to get a jump on expected increases in the cost of living, and managers will grant them readily, confident that they can make up the effect on the bottom line with price increases.
Inflation, in this way, will gain a life of its own, and as the experience of the Great Inflation in the 1970s and 1980s showed, it will become that much harder to bring under control. Reestablishing confidence now is as important to the anti-inflation fight as future interest rate increases and other technical policy moves.
Fed behavior last year was indeed confidence-killing. Policymakers surely could see that as much as supply chain issues had an effect, price pressures had roots in years of near-zero interest rate policies and waves of quantitative easing. There could be no mistaking how these practices had financed huge government deficits with new money, the digital version of running the printing press, and a classic prescription for inflation.
Yet even as price pressures gained force, Fed Chairman Jerome Powell chose to ignore this fact and carry on with an easy monetary policy. He insisted for months in front of Congress and the public that the inflation trend was “transitory.” He blamed it on everything but these underlying forces.
Powell wasn’t the only one at fault. Treasury Secretary Janet Yellen echoed him. Even President Joe Biden, as late as last fall, claimed that the recent inflationary surge was “expected” by his “experts” and is expected to abate. Biden’s claim that all was expected was suspect even at the time because no such inflation surge appeared in either earlier Fed forecasts or the White House’s own budget.
Powell only “retired” the word “transitory” early this year. The White House continues to ignore the underlying pressure and blame inflation on Russian President Vladimir Putin.
Because this year of gaslighting—intentional or otherwise— has prompted people to question the policymakers’ ability and willingness to deal with the matter, the Fed will now need to make especially forceful counter-inflationary moves. It would also help if the Fed were to publicly acknowledge the inflationary effect of past policies.
If Powell were to state unequivocally that it was inflationary to buy roughly $5 trillion in new federal debt, as the Fed has in the past couple of years, it would reassure people that monetary policymakers have no intention of returning to such highly inflationary practices.
Also, by putting politicians on notice that they’ll no longer have such financial help in the future, this kind of admission by the Fed might also offer some hope of restoring the fiscal discipline that has clearly been absent from government spending practices and has also contributed to inflationary pressures.
Had the Fed acted promptly in 2021, when the inflation problem first became evident, it would now be in a much better position than it is. It would not only have a year of counter-inflationary action behind it, but it would also be riding a wave of confidence that would keep inflationary expectations at bay. Because the Fed failed, it now must overcome lingering doubts about both its abilities and its will to do what’s necessary.
Powell is beginning to show that he has that level of determination, but because of last year’s antics, doubts remain. Those doubts will rise again as the negative economic effects of ant-inflationary monetary policies become more evident, and the Fed comes under political pressure to change course. Hopefully, the Fed will do better on this future test than in the one it failed in 2021.
