(^34) Best columns: Business
Look past the rhetoric and you’ll see America is
losing the trade war with China, said Shawn Tully.
President Trump said that Chinese manufacturers
would reduce prices to absorb the cost of his tariffs.
They haven’t. On the contrary, in 2018, U.S. domes-
tic prices rose “one-to-one with tariffs levied in that
year,” according to one new study. Consumers paid
every dollar of those tariffs. But at least the govern-
ment collected that levy and could “cycle it into the
economy by funding anything from aid to farmers”
to infrastructure. Now, though, companies looking
to save on the 25 percent tariffs have gone to cost-
lier, less efficient producers in other countries, such
as Mexico and Bangladesh. The companies overpay
by as much as 20 percent, consumers still take a hit,
and the government gets nothing. By contrast, look
at China. “Instead of slapping one-size-fits-all tariffs
across vast categories of goods, Chinese President Xi
Jinping is targeting only products the country can’t
buy at comparable cost elsewhere.” China has im-
posed a 28 percent levy on soybeans from the U.S.,
because it can get them from Brazil and Argentina.
But the duties on airplanes, cars, and pharmaceuticals
remain below 3 percent. “At the same time, China
has lowered tariffs on every other country,” making it
even harder for U.S. manufacturers to compete.
In perfectly Orwellian fashion, some of George Or-
well’s words are getting reworked in Amazon’s vast
virtual bookstore, said David Streitfeld. I recently
bought a dozen fake and unauthorized Orwell books
from Amazon. Some were “straightforward counter-
feits, like the edition of his memoir, Down and Out
in Paris and London, that was edited for high school
students”—without permission from the author’s
estate. Others contained “typos galore, flap copy
lifted directly from Wikipedia, covers that screamed
‘amateur.’” Worse, some copies distorted the au-
thor’s original message. One added a paragraph on
the copyright page to Animal Farm that Orwell “re-
spects all individuals, organizations & communities,
and there is no intention in this novel to hurt any in-
dividual, organization [or] community.” Orwell said
no such thing. In this edition, there was no mention
of the original copyright year of 1945; the book’s
past no longer exists. Amazon’s online marketplace
“blew the doors off the heavily curated literary
world” to let anyone become a publisher. “Breaking
down the doors, however, also let in people who did
not appear to care about the quality of what they
sell.” Amazon could vet every title the way physical
bookstores do. That, of course, would cost more,
“dragging profits down.” Getty
China is
winning the
trade war
Shawn Tully
Fortune
On Amazon,
a bazaar for
fake books
David Streitfeld
The New York Times
Get ready for the most polarizing initial pub-
lic offering of the year, said Dan Primack in
Axios.com. Among the most highly hyped of
the multibillion-dollar startup ‘unicorns,’ We
Work filed the prospectus for its long-awaited
IPO last week, raising expectations that the
office-rental company, valued at $47 billion,
could go public in September. But “there is a
ton of investor skepticism over WeWork’s busi-
ness model.” While it nearly doubled its rev-
enue ($1.5 billion) and membership (527,000)
in the past year, it remains deeply unprofitable,
losing $904 million in the first half of 2019.
It’s also a “one-man” show, built around its
high-profile founder, Adam Neumann. And, boy, that man has
found some striking ways to profit from his company, said Matt
Levine in Bloomberg.com. For instance, WeWork paid Neumann
$5.9 million to acquire the trademark “We.” That’s right: “Neu-
mann owned the name of the company he founded and sold it to
company.” This is unusual. Mark Zuckerberg “not only invented
Facebook, he also named it Facebook. But it did not occur to him
to charge à la carte for those services.” WeWork has also given
Neumann loans to buy buildings, then leased those same build-
ings back from him. The IPO will give him enough special voting
shares to control the company for his lifetime—and if that’s not
long enough, he decides who gets those voting rights after he dies.
“I am very excited to see who will pony up for shares” in this
IPO, said Elizabeth Lopatto in TheVerge.com. “Our mission,”
WeWork’s prospectus says, “is to elevate the world’s con-
scious ness.” WeWork has sure succeeded in elevating my
consciousness—I’ve never seen anything like this document.
It’s not enough for this company to lose
money on office space. It wants to rebrand
itself as “The We Company” and jump into
private schools (WeGrow) and apartment
buildings (We Live). It’s about “inclusivity”
and “inspired” communities. Amid all this,
WeWork has been trying to pose as a tech
company to naïve investors. “It’s not a tech
company. It’s a soap opera.”
Whether you call WeWork a tech company
or a real estate company doesn’t really mat-
ter, said Jeremy Bowman in MotleyFool
.com. What’s important is that “WeWork has
dominant mindshare in its space.” WeWork’s critics keep compar-
ing it to other office rental companies. Really? When I tell people
I work in a co-working space, they always assume, albeit wrongly,
that it’s WeWork. “No one has ever mentioned another co-
working company to me.” That’s why WeWork is “growing at a
torrid pace.” Sure there are reasons to be skeptical about WeWork,
but “remember that investors pay for growth above all else.”
Yes, growth “gets investors justifiably excited, and they may
be willing to overlook eye-watering losses,” said Shira Ovide
in Bloomberg.com. But WeWork’s “outlandish mission state-
ments,” “Russian nesting-doll” structure, and massive losses
make it shocking even by current standards. WeWork has taken
the “startup mania era to its logical extreme.” The current crop
of tech unicorns, such as Uber and Airbnb, have spent billions to
bust into traditional businesses and “forced every conventional in-
dustry to change what it does or risk death.” But it’s not clear that
these unicorns will thrive and profit in the era they’ve sparked.
WeWork: Startup mania reaches its apex
Neumann: $5.9 million for the name ‘We’
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