The Red Folder

Last updated April 15, 2024. 

Key stories for the week, brought to you by the distinguished newsman Sasha Morel.

Reading for the sake of reading sucks. Telling yourself to read to win a round is nice but ineffective. This condensed news brief helps you understand current domestic and international issues, analyze the news, and gives you opportunities to read more.

Domestic Stories

3 key domestic stories for the week:

1) Temu’s America Charlie Hui 

The Super Bowl. One of the most American things out there, probably only second to bald eagles and even balder Congress members. However, with the rise of Super Bowl 58, it wasn’t just the Chiefs that scored a touchdown, but Chinese E-Commerce giant, Temu as well. 

Despite being headquartered in Boston, Massachusetts, Temu finds itself with many Chinese strings attached. Specifically, it was its Chinese parent company Pinduoduo that financed the 7 million dollar Superbowl commercial viewers saw on game day and the 15 million dollars worth of deals and promotions that followed. No matter which way the string is cut, there are growing ties between China and the American consumer economy. 

Shop like a billionaire. Pingduoduo (PDD) has taken its daughter company Temu’s slogan to heart, as it has helped fund Temu’s spending spree of over one billion dollars outside the Asia-Pacific region last year alone. This amount of spending is not sustainable, much less profitable, but it isn’t the short-term gains PDD is after, but a stake in the E-Commerce market of the West. 

50 million users. That’s the consumer base Temu has built itself in the span of three years with its daddy PDD’s money. To put things into perspective, it took Amazon over a decade to accomplish half of that. By burning money at a hellish pace, Temu has lit a flame across continents, and consumers have been drawn like moths to a light. 

The Economic Noose. History is repeating itself. In the 1960s, American manufacturers outsourced production jobs to China in search of cheaper labor. In the 2000s, American business processing companies outsourced call center jobs throughout Asia. And now in 2024, it seems that no middleman is needed anymore, as Temu can do everything itself. 

Temu’s cheap products might allow American consumers to live like gilded royalty, but it is hurting the domestic economy. With over 1000 Dollar General stores closing, and Etsy in financial turmoil, some have turned to Temu as the main culprit. Yet in a landscape where no one can outcompete the Chinese company’s prices, all anyone can do is sit back and watch. 

Knot for Show. While PDD has now moved its own headquarters out of China, the presence of the CCP is a connection it can not escape. Like every other Chinese-originated company, PDD is bound to China’s 2017 National Intelligence Law that forces the company to disclose any information the authoritarian country deems necessary to protect its National security.  What this means for U.S. consumer security, only Xi will know. 

The Human Aspect There has been one thread connecting Temu’s success for the past three years: the affordability of its goods. With functioning tablets at prices oftentimes lower than ten dollars, it almost seems like the company has made a pact with the Devil to afford such low prices. Unfortunately, when you look behind the curtains, it appears the company has done just that. 

The Associated Press states that Temu has almost certainly been using forced labor to produce its products, something that immediately provides grounds to boycott the company. Yet the situation only worsens, as Human Trafficking Search has reported that Temu has been accused of using Uyghur slave labor as part of its production scheme. If Americans value freedom so much, why when it comes to Temu, can they look the other way?

The Answer. It’s because Temu is an ocean away. It’s because Temu is just a click away. It’s because Temu is cheap and Americans’ wallets are thin. It’s because unlike Tiktok, Congress members understand the world of big business and aren’t willing to budge. And it’s because the only thing more American than the Super Bowl is our willingness to accept the status quo. 

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2) California’s Economic Struggle: Who will Pay the Price? Roshan Shivnani

Despite a variety of sectors, hours, and tasks across America jobs, one underlying fact is something that most workers share: the yearning for higher pay. Yet after Floridian Governor Gavin Newssom’s bill AB 1228, hopes for Californian workers may have finally come to fruition. Under the law, the minimum wage rose from $16 to $20 an hour for restaurants that have at least 60 locations nationwide. What that effectively means is that 500,000 fast-food workers in California have now received a 25% pay raise overnight. More broadly, the rest of the nation is now looking for the good and bad of California’s increase to see the true impacts of minimum wage hikes.

So why was such an immediate raise implemented? The living wage per hour for one adult with no children inside of California is $27.32. That meant workers in the fast-food industry making the industry standard of $16 would either have to cut necessities, work extra hours, or live with someone doing those things. That context has made it unsurprising that California workers have demanded wage increases, as they would need them to continue surviving day-to-day in the state.

However, just because salaries rise doesn't mean much unless the cost of goods remains stagnant. Otherwise, the “extra money” families take home wouldn’t mean much, as it would just go into the extra costs for their normal goods. Unfortunately, California was a victim of this very situation. As previously predicted, once major restaurants had to increase worker pay, they look for other ways to maintain a profitable bottom-line, which usually just means raising the costs of their goods. Big corporate chains have taken action; for example, Burger King has reported the price of their menu items increased by 12% since the new law took effect.

While many view the prior-listed impacts as confirmation that the minimum wage hikes only hurt the economy, many issues could be fixed through more effective legislation. So how exactly could more effective minimum wage legislation be achieved? A place to start could be a franchise-specific policy. Under California’s legislation, all locations of said companies are forced to follow the same pay laws, and the same conditions, and face the same punishments for not doing so. This meant that smaller franchises were often subject to pay raises they couldn’t instantaneously follow. The result is layoffs, as seen in two Pizza Hut franchises in California, which laid off more than 1,000 delivery driver employees and opted to rely on gig delivery drivers instead.

To stop a cost of living crisis plaguing the nation, states will need to find a way to increase baseline pay without compromising jobs or opportunities for those who need it. By learning from the successes and failures of bill AB 1228, we can understand how to strike the balance between aiding workers and businesses. 

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3) The American Promise of Safety…In Israel AmandaLesly Miranda

In a significant diplomatic move, the Biden administration has reiterated its commitment to providing aid to Israel. The announcement comes amidst escalating tensions in the region and underscores the enduring partnership between the United States and Israel. President Biden's pledge reaffirms the longstanding support that Israel has received from successive American administrations.

The aid package, a cornerstone of U.S. foreign policy in the Middle East, encompasses various forms of assistance, including military aid, economic support, and diplomatic cooperation. This commitment underscores America's strategic interest in maintaining stability in the region and ensuring Israel's security amid complex geopolitical dynamics.

At the forefront of this pledge is the military assistance provided to Israel. The United States has been a key supplier of advanced military equipment and technology to bolster Israel's defense capabilities. This support enables Israel to defend itself against external threats and safeguard its borders in a volatile neighborhood.

Economically, aid from the United States plays a vital role in bolstering Israel's economy and promoting its development. Beyond financial assistance, the partnership facilitates trade relations and investment opportunities, fostering economic growth and prosperity in both countries.

Moreover, the pledge of aid underscores the close diplomatic ties between the United States and Israel. The two nations have supported each other, ever since the United States became the first country to recognize the provisional government of the state of Israel when it was founded in 1948, and has received billions of dollars in U.S. foreign aid since their founding.

However, the Biden administration's pledge of aid to Israel has not been without controversy. Critics argue that the unconditional support for Israel undermines efforts towards a peaceful resolution of the Israeli-Palestinian conflict. They contend that U.S. assistance emboldens Israel's hardline policies and hampers prospects for a two-state solution.

Additionally, concerns have been raised regarding the use of American military aid in the occupied territories, where it has been implicated in human rights violations. Critics argue that U.S. assistance indirectly perpetuates the Israeli occupation and contributes to the suffering of Palestinian civilians.

In response to these concerns, the Biden administration has emphasized the importance of upholding human rights and international law in the region. President Biden has called for a balanced approach that respects the rights and dignity of both Israelis and Palestinians. The administration has expressed support for efforts to resume negotiations toward a two-state solution, recognizing it as the only viable path to lasting peace.

As tensions persist in the Middle East, the Biden administration's pledge of aid to Israel carries significant implications for regional stability and U.S. foreign policy. It reaffirms America's commitment to its allies and underscores the importance of diplomatic engagement in addressing complex challenges.

Ultimately, the pledge of aid to Israel reflects the enduring partnership between the United States and Israel, rooted in shared values and strategic interests. However, it also highlights the need for a nuanced approach that addresses the concerns of all stakeholders and advances the cause of peace and security in the region.

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International Stories

3 key international stories for the week:

If you’re any extemper worth your money, you’ll know that Zimbabwe is synonymous with ‘that one country that printed a 100 trillion dollar bank note’. Although that was back in 2008, even now, their economic struggles haven’t gotten much better. 

After years of financial mismanagement and corruption by both past and current presidents and the Reserve Bank of Zimbabwe, the country has cycled through 5 different currencies to try and calm down inflation, including the most recent one, the Zimbabwean dollar (it’s also known as the Real Time Gross Settlement Dollar, Zimdollar, etc- about as changing as the currency value itself). That currency lost around 80% of its value compared to the USD, and was so devalued you’d have to trade 28,720 banknotes for a SINGLE dollar. 

In response, the Reserve Bank announced last week that they were launching a new currency, Zimbabwe Gold (ZiG) that was backed by foreign currencies, gold, and precious minerals like diamonds. The goal(d) is to make the new currency less volatile because it’s backed by nearly 2.5 metric tons of solid gold (nearly $185 million worth). Zimbabweans have 3 weeks to trade in their old RTGS dollars for this new currency.

Unfortunately, there’s more to this story. People weren’t trying to rely on the Zimbabwean dollar in the first place- longtime mistrust stemming from the 2008 bout of hyperinflation has left nearly 85% of all financial transactions in Zimbabwe done in the US dollar. Zimbabwean locals prefer using the USD as a ‘store of value to protect savings from persistent inflation.’

The real kicker here, though, is that the government is already contradicting itself. Despite proclaiming that the ZiG will be the only legal tender accepted at banks and other places, local magazines have reported that this new currency is unable to buy fuel, which is mostly imported from abroad. Because fuel suppliers in ZImbabwe prefer trading in the USD, the Reserve Bank of Zimbabwe made a sweeping exception to allow fuel trading in foreign currencies. Even further, they’re still requiring tollway fees be paid in dollars too. 

This is likely to cause confusion and, in the short term, while Zim Dollar notes still remain legal tender until the end of the transition period, it’s resulting in an unavailability of change, as some vendors continue to accept Zim Dollars and some reject it. Already, this switch is forcing businesses strapped for change to round off prices for services like commuter buses to US$1.  

But these all seem to be short-term consequences. Will this truly work in calming inflation? Some locals are hopeful. Yeukai Chiripanyanga, a Harare taxi driver, is hopeful for this currency to work so he no longer has to carry around huge wads of near worthless bills when customers pay their fees in cash. Some are less so- Tino Kapesa, a 23 year old college student, is skeptical that the ZImbabwean government will make any meaningful change to their monetary policy to prevent hyperinflation from occurring even with a gold backed currency.

He may be right. Simply creating a new currency does not create any guarantees that Zimbabwe will end its longtime unofficial policy of simply printing more money when its spending inevitably exceeds the amount they raise from taxes and tariffs. In order to establish a prosperous hyperinflation-free world for Zimbabwe, officials must be aware their overspending is only contributing to the problem.

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2) Shadow Wars: Israel v. Iran Rowan Seipp 

The old city of Jerusalem is a fascinating cross-section of the world's three major religions. For Islam, the old city holds the Al-Aqsa mosque, where Prophet Muhammad was transported from the Scared Mosque in Mecca to Al-Aqsa during the Night Journey, and then on to heaven. For Jews, the area holds the Western Wall, the only remains of the retaining wall surrounding the Temple Mount, the site of the First and Second Temples of Jerusalem. For Christians, the area is home to the Church of the Holy Sepulcher, where Jesus died, was buried, and rose from the dead. All of these sites were treated to a bit of a light show recently- green rockets. In one of the most provocative moments in the Israeli-Palestinian conflict, Iran fired around 170 drones, 30 cruise missiles, and 150 ballistic missiles toward Israel last night. While all of the rockets were intercepted by Israel’s defense systems in conjunction with the US, UK, and Jordan, this attack is a foreboding warning about the future of the conflict. Regardless of the reader's personal opinion of the conflict, the idea of this already bloody war (I prefer the term massacre) spreading is dangerous. 

To put it bluntly, Iran’s foreign policy toward the US and Israel has not been kind. Ideologically, Iran views Israel as a usurper of Muslim lands and a threat to Islam. Tehran also views Israel as an extension of the United States. The Islamic Republic calls the United States the “Great Satan'' and Israel the “Little Satan.” With so much hatred, it then becomes understandable that Tehran views any organization that works in opposition to Israeli interest as a benefit toward Iran’s interest. This means that Hamas and Iran see a mutually beneficial relationship. However, the two's relationship has been rocky. Notably, Iran cut funding in half towards Hamas’s Damascus-based operation after the group criticized the oppressive dictator Bashar al-Assad. Following this debacle, Hamas pivoted toward more Sunni political powers, notably Egypt and Qatar. However, this move failed miserably, particularly with the ousting of Egypt’s Islamist president, Muhammad Morsi. His successor Abdel Fattah al-Sisi adopted a blockade against Gaza. 

After this change, it no longer became beneficial for Hamas to align itself with Sunni interests. This meant that Hamas had to turn back toward Tehran. In the wake of their reunification, it appears evident that Iran has been supplying Hamas with weapons in a shadow war against Israel. Principally, there is evidence that Iran helped supply the weapons that led to the attacks on October 7th. Iran's shadow war has had the strategy of supplying weapons to groups like Hamas and Hezbollah. The Islamic Republic's operations have long been conducted in the shadows but this Saturday, that changed. This sudden shift in policy begs the question, why? 

It appears that this sudden use of open aggression can be traced to years of prolonged US and Israeli killings. Three events have sent this conflict spiraling open. The first was the 2020 operation that killed the top Iranian commander Qassem Soleimani which was conducted by a United States drone attack.

The second was the late December assassination of another top Islamic Revolutionary Guards Corp commander in Syria, Razi Mousavi, in an Israeli air raid amid the fallout of the war on Gaza. 

The third and most direct reason is the Israeli strike on an Iranian consulate in Damascus that resulted in the killing of Iran’s top soldier, Brigadier General Mohammad Reza Zahedi. After this strike, the IRGC began Operation True Promise, which is the most direct conflict the Middle East has seen between two nations since the Iran-Iraq war in the 80s

With Israel on fire and an aggressive war with Hamas unfolding, Iran's involvement has detrimental consequences for Israel, the US, and the world. With this war quickly spreading past the stage of a proxy war, it is becoming apparent that this was a long time coming, guided by a need to satisfy Iranian strategic interests and pushed to the forefront by provocative Israeli actions. 

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3) Vietnam’s War on Corruption: Firing Squads and Free Trade Paul Robinson

The nation of China is not known for its human rights. Still, it may come as a surprise to many that China is by far the largest user of capital punishment; its executions account for well more than half of the world total.

The precise number, though, is a closely guarded secret. The World Coalition Against the Death Penalty estimates that at least 8,000 people per year have been executed in China every year since 2007. That is nearly 450 times the number of executions carried out by the United States in 2022 and over nine times the total in the rest of the world combined in the same year. Murder is a capital offense, as it is in most every country which retains the death penalty. Drug trafficking warrants a death sentence too, as it does in many other Asian nations such as Indonesia and Singapore. But what sets China apart from any other country is its use of capital punishment against those who commit corruption or other white-collar crimes.

China had been unique in this regard, until last Thursday when a court in Ho Chi Minh City, Vietnam handed down a death sentence to 67 year old billionaire Truong My Lan. The crime for which the state has decided she needs to die: corruption. Truong has committed one of the biggest financial crimes in all of history, stealing 44 billion dollars from a Vietnamese bank. For context, Bernie Madoff constructed a Ponzi scheme which stole a mere fifth of what Truong had managed to do. Elizabeth Holmes, who constructed an entire fraudulent health company, stole less than two percent of what Truong did. This case is without question the biggest case of fraud in Vietnamese history, and quite possibly the biggest in world history.

^Truong My Lan as her death sentence is pronounced in a courtroom in Ho Chi Minh City

But what is significant about this case is what it shows about the state of Vietnam and its notoriously high corruption. In order for Truong to get away with a fraud this large, hundreds or even thousands of people must have known but looked the other way. The true list of people complicit in this fraud likely ranges from low-level police officers to high-ranking politicians or officials.

The sheer scale of this fraud is unique in its enormity. The fact that something like this can happen is an embarrassment to Vietnam. In its ruling, the court cited not only the damage Truong’s fraud did to her victims, but to the Communist Party. And they’re not wrong. Vietnam has an economy which is growing very rapidly. It is fast approaching a GDP of half a trillion dollars. They are using the same playbook as China, by attracting foreign investment in manufacturing; labor is now cheaper there than in China, potentially attracting many new investors in the country.

However, the fact that one can apparently embezzle the entire GDP of Latvia without anyone noticing is a very obvious reason not to invest in Vietnam. Corruption in Vietnam threatens not just foreign investment, but the security of the Communist Party as well. Outrage over corruption is rapidly growing, and there is a real possibility that it could be enough to entirely topple the Communist government. Nguyễn Phú Trọng, the party’s leader, has announced a nationwide war on corruption, attempting to root it out so that the nation can grow unhindered. The death sentence passed on Truong is a public statement of the gravity of the Party’s position.

No matter how many people Vietnam may put in front of a firing squad, this does not address the issue that economic growth in Vietnam is making corruption more prevalent. With billions of dollars flowing in, the incentives will continue to grow, and a fear-based approach will not solve the problem. The average Vietnamese citizen makes under ten dollars a day, and the prospect of thousands of dollars is well worth the risk of being arrested.

Vietnam is trying to fight corruption without slowing economic activity, which may prove to be an impossible task. As the government becomes more and more involved in the economy, and keeps punishing those who are even suspected of wrongdoing, it will create red tape that may prevent free participation. Whether the CCP admits it or not, free markets were essential to producing China’s growth. As Vietnam attempts to move forward by destroying corruption by brute force, it creates an Orwellian society which is not at all conducive to economic growth. Eventually, the Vietnamese government will have to choose between two evils: looking better by cracking down on corruption, destroying the economy in the process, or letting the economy grow, even if that does mean that corrupt practices are even more prevalent and create even more problems in Vietnam.

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