The Red Folder

Archived from 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.

Read more here:

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.