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Trump Defends ZTE Concession After Sparking Bipartisan Rebuke (bloomberg.com)
51 points by Ihmahr 7 months ago | hide | past | web | favorite | 43 comments

How is this not pure corruption? How is it legal?

Do we live in a banana republic?

I've seen it argued that it is illegal, a direct violation of the emoluments clause of the constitution. I'm not a lawyer, let along a constitutional one, so I can't say that with any authority, but everything about it certainly screams that it is a violation. And it certainly does seem like we're moving towards (if not already being there) a banana republic.

Never let a good tax cut go to waste. Or something like that anyway.

Forcing a company that employees 75,000 people in China out of business doesn't seem like the right outcome. I would expect the U.S. and China to negotiate some sort of more appropriate remedy that is better for all sides.

No the company made itself go out of business. First they violated export restrictions, then after apologizing and paying a fine it turned out they had explicit intent to continue violating export restrictions.

In response they were told they could no longer purchase American technology. Then they chose to go out of business.

They chose to go out of business. No one required that they break the law, and if they hadn’t they would be fine. The alternative is that companies can break the law however much they want if they’re large enough.

There are plenty of alternatives. I'm not suggesting the U.S. let ZTE wantonly violate sanctions or that a mere fine is enough to fix things. But there's surely some middle ground. Imagine if the top leadership of Apple had done something similar and sold a few prohibited items to Iran. Why destroy the entirety of Apple over that, most of which is a benign electronics business that employs massive amounts of people? Alternatives could include firing or arresting all of the top leadership, putting in place strong enforcement mechanics to ensure it never happens again (with the assistance and assurance of the State), trades for other things that are desirable for us, etc.

Perhaps the alternatives that the Trump administration will propose are weak and will be a terrible bargain, but that's a different matter than saying we shouldn't even consider alternatives.

The problem was that the fine was not sufficient. Then ban on using American component cam about because it was discovered the ZTE planned to continue selling despite explicitly stating that they wouldn’t, and having already been fined.

The ban that killed ZTE was not a result of them breaking the law. That merely resulted in a fine. The ban came about as a result of ZTE deliberately planning to continue breaking the law after already being caught, charged, fined, and explicitly agreeing to stop. Give. Than background what should have been done?

> No the company made itself go out of business.

And for that 75k people should loose their job? Or can we try to find a better solution?

If you have a better solution, something that guarantees that ZTE won't be making products for the US market that are designed to spy on Americans, I'm all ears.

This argument gets repeated a lot but I don't get the logic. If you don't like ZTE products don't buy them or even ban their use or import. ZTE doesn't just sell to the US market though. How is forcing ZTE out of business a proper solution to your concern about spying?

Edit: Please note that I am responding specifically to the argument that the ban was "something that guarantees that ZTE won't be making products for the US market that are designed to spy on Americans", which I have seen being used by politicians and other commentators.

The problem isn't selling things in the US or not, the problem is that they were deliberately choosing to sell to Iran and North Korea, despite trade sanctions and export restrictions.

They had been caught, they paid a fine, but then it turned out that they were deliberately planning to continue selling them, despite already being caught, charged, fined, and agreeing to stop.

The /only/ way that they could be made to stop selling restricted components from the US was clearly to prohibit them from using those components at all.

What do you propose as an alternative?

I added a note in my original comment to emphasize that I was responding to the specific argument by the parent comment.

On the factual basis the ban is reinstituted not for the reason you stated that "they were deliberately planning to continue selling them". That was part of the case the led to the original fine. The reimposition of the ban is on a more technical ground.

By the way under the original settlement ZTE is under much stricter supervision and audit. If you kill off ZTE you lose that control as well. The decision to reinstate the ban was apparently done without sufficient deliberation and hurts US interests on many fronts.

"Enforcement" short of the death of the company has not worked before.

In the criminal justice system, if you are out on probation after committing a crime and then commit the same crime, you go right back to prison, for longer this time. They've repeated their crime while on probation, and thus get a stiffer sentence.

Besides the libertarian nonsense of "if you don't like ZTE products don't buy them"... well, one of the things they're doing we don't like is violating export bans to Iran and North Korea. For another, as long as they're manufacturing, their products can just get rebranded through a couple of shell companies and wind up in the US anyway.

I am unclear why you think it's so important to not hurt them.

They will operate in one form or another that is for sure. All 75000 people are not just going to sit idle.

By being overly draconian you generate a ground swell of ill will against US suppliers. Everyone in China will be looking to replace their US components as soon as it is feasible.

For what is its worth, ZTE actually self reported the recent faux pas that led to the reimposition of the sanction. Even if they don't get any credit for self-reporting it shows that the threat of intrusive audits works. ZTE right now is a lot more under the US government thumb than any other Chinese tech company. If anything Chinese government should just let the corporate form die to end the humiliation. US on the other hand, by being the executioner, only ensures that ZTE will be replaced by another Chinese player not subject to the same supervision.

A company that has repeatedly violated sanctions against Iran and North Korea. A company that all of the three letter agencies are sure is using it's phones to perform state sponsored surveillance.

I don't think we should be engaging in a trade war with China, but of all of the companies we should be offering concessions to, ZTE is not anywhere near the top of that list. Call the whole thing off, but don't single out ZTE as someone to alleviate the pains for.

Hostile behavior is hostile behavior, regardless of how many people they employee.

ZTE should be near the bottom of the list, right there with various Russian money-laundering real estate shell corporations.

Won't ZTE's factories be sold off to people who will employ the same workers to do the same things?

It was the huffington post which first pointed out the timing of Trump's ZTE concessions relative to a Trump Organization-affiliated project the Chinese government agreed to finance.

Financing article: http://www.scmp.com/news/asia/southeast-asia/article/2145808...

HuffPo correlation story: https://www.huffingtonpost.com/entry/trump-china-zte_us_5af9...

This is not to say that the two are necessarily connected so much as it's to say that not investigating the timing of the two is to exhibit a lack of due diligence.

> This is not to say that the two are necessarily connected so much as it's to say that not investigating the timing of the two is to exhibit a lack of due diligence.

They don't even have to be connected with any explicit quid pro quo between the parties. It could all be implicit from the Chinese government knowing full well who the owner of the Trump Organization is.

Trump had a recourse, he could have easily put his assets in a blind trust. Instead, he should suffer the consequences.

Further, when it comes to other high offices, like judges, the appearance of conflicts are as problematic as actual conflicts. Such that care beyond standard conflict checks is required to prevent having to investigate every relationship and decision.

I've always found this deeply disturbing. By not putting his assets into a blind trust, Donald Trump made it easy for foreign governments to create the appearance of impropriety. This suggests that he may not fully grasp how dangerous it is to give someone the power to blackmail you.

Anyone in public service should understand this, though clearly Trump isn't alone on this one.

Oh he did this on purpose. He clearly wants the money.

Yes, but the money can't possibly be worth the punishment normally associated with what he's done. My net worth is dramatically lower than what Trump claims to be worth, and I wouldn't take anywhere near this much risk just to make money.

Mind you, I dabble in day trading. I do stupid, risky things to make money with far more of my money than is probably wise (I lost $4k yesterday, which sadly, wasn't that bad compared to some of my previous losses). So clearly my sense of risk/reward is a little off kilter.

That said, I'd never do something blatantly illegal (possibly unconstitutional!) in order to make money! Especially not if it represented 1/20th of my self-reported net worth! That would be a positively stupid amount of risk for such a small reward.

Trade negotiations are underway. This is a part of that, as was the initial ban. Trump does this again and again: he creates leverage in the form of negative consequences should he walk away from the table. Then he gives some of it back much to the relief of the other side, in exchange for something else he needs. He negotiated thousands of deals, some of which were very complicated. It could well be that he’s the strongest negotiator we ever had in that position.

>It could well be that he’s the strongest negotiator we ever had in that position.

So strong that he can't negotiate deals beneficial enough for him that he can afford to hold up his end of them, and instead files for bankruptcy so that he doesn't have to pay for it. He's taken such good care of all of the hard working US citizens he's interacted with in his days as a business man.

Do you think Trump played no part in negotiating peace between the Koreas? No president has been able to accomplish that in 53 years...

Looks like good negotiation to me. South Korea’s foreign minister even credited him for his work on the deal (which is still ongoing).

Hate Trump all you want, but fact of the matter is he’s a damn good salesman, marketer and negotiator. It’s how he won the primaries and the presidency. And now it’s how he’s winning diplomacy.

You can have a problem with his tactics, but at this point the results are really starting to speak for themselves.

>Do you think Trump played no part in negotiating peace between the Koreas? No president has been able to accomplish that in 53 years...

That's exactly what I think. I can't begin to fathom why anyone would think that he does. Because of the ridiculous tweets?

The obvious reason for the increased discussions between North and South Korea is that China has been less and less supportive of North Korea - a trend that started long before Trump took office - and Kim Jung Un isn't an idiot. Without China's support, North Korea ceases to exist. The only way for Kim Jung Un to survive with any measure of power is to make nice with the South.

Trump has absolutely nothing to do with it.

Let's also not forget that North Korea's nuclear weapons facilities were recently damaged in an earthquake.

As we say in finance, if you think the world undervalues a thing then you buy it, and if you think the world overvalues a thing then you sell it. Kim's weapons program suffered a significant setback, making it less valuable in his eyes. Meanwhile the rest of the world still places a high value on getting Kim to abandon the program.

In other words, Kim probably has more to gain from abandoning the program than he does from trying to repair the damage. Even if we had a sack of potatoes in the White House, it still makes sense for Kim to try to make a peace deal right now.

Let's also not forget that North Korea's nuclear weapons facilities were recently damaged in an earthquake.

No, their test facilities were damaged. It was a hole in a mountain used to test their warheads, and the hole in the mountain has collapsed.

NK completely retains the ability to produce and launch warheads if they want.

More than likely NK doesn't need to test their weapons anymore. They're a fully capable nuclear power now and they will be bringing that fact to the negotiating table.

So the South Korean foreign minister is just making things up?

Or maybe you have a preconceived notion you are unwilling to reconcile with the evidence in front of you?

> So the South Korean foreign minister is just making things up?

Sure. South Korea’s relationship with the US government (whoever heads it) is important, and fawning—even if false (heck, perhaps especially powerfully when verifiably false)—public praise is a well-known important tool to maintain good relations with Trump.

Kang is good at her job.

And yet he still has 4 billion dollars and is a president of the US. Must be pretty good at negotiating.

That's like saying Pablo Escobar was good at business because he amassed billions of dollars.

Technically, Pablo Escobar was a good businessman.

And there's the rub. Economics are amoral. There's nothing inherent in capitalism that says "We only make money in ways that are legal and ethical". Corruption is part of the nature of the beast. This is why we need to regulate markets.

Make a desirable product illegal, and you've improved the profitability of that product's market, by increasing friction. (As an aside - as Peter Thiel points out, in a free market, profits are driven to zero. That's just math. All profitability is derived from friction, from failure of the free market.) Society winds up attracting the least ethical businesspeople this way - the Pablo Escobars, drawn by the incredible profits that illegal products can generate.

Corruption is a similar problem. Politicians, especially executives, wind up with massive monopoly leverage that can reward or punish businesses. This creates a strong incentive to offer personal financial gain to politicians in exchange for favor. The fact that this is illegal only increases the amount of reward that must be offered.

This makes "businessman" politicians exceedingly dangerous. If they're used to shortchanging ethics in the name of profit already, the power of office is far too potentially profitable to resist.

Except Pablo Escobar was actually a very good businessman.

And actually had a net worth in the billions.

Two traits Trump does not share with Escobar.

> president of the US. Must be pretty good at negotiating

My understanding is that Paul Manafort, Donald Jr, etc are the ones who did most of the negotiating with Natalia Veselnitskaya.

No, remember they tried to solicit interference in our electoral process by a hostile foreign power, but were unsuccessful. Apparently that's better... for reasons which no one seems to be able to adequately explain.

There isn't actually any evidence he is worth 4 billion dollars. (And even Forbes, which barely does any work to verify this sort of stuff, has revised it down to 3 billion)


His actual personal net worth is likely closer to a few hundred million, and almost all of that is from his inheritance. He would be worth more if he had just put all of the money his father had given him into an index fund tracking the S&P 500.

Basically all of his net worth beyond that is in how he values the Trump name as a brand. This doesn't make much particular sense, as the Trump name has not helped Trump Steaks, Trump University, Trump Entertainment Resorts, etc. etc. etc.

He's a con man and you've been conned.

Any proof of that 4 billion dollar figure?

> And yet he still has 4 billion dollars

Well, no, they doesn't seem to be true, but he has quite a bit net worth, as a result of generating mediocre returns on family-derived wealth. Unless he negotiated with his Creator for what family he would be issued when sent to Earth, that's not really much of an endorsement of unusually strong negotiating skills.

> and is a president of the US.

Mostly a product of an unusually weak opponent, not negotiating strength (to the extent there is anything arguably unusual about negotiations by Trump on the road to the White House, it's the “who with” and not the “how well”.)

What deals? What complications?

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