Wednesday, May 22, 2013

The Apple of My Eye

Long-time readers of my blog and friends of Team Actor212 know I’m in the tank for Apple products. By my count, I’ve either purchased for myself or as gifts about two dozen Apple products over the years. Without getting into a Windows v. Mac debate here, I find Apple’s technology and ease of use, combined with its sophistication to be far superior to anything MicroSoft has had a hand in. I use a PC at work, so it’s not like I’m a Luddite.

Well, I am, but an informed Luddite.

Which is why the developments over the past twelve months in the Apple universe have been so distressing:

The Irish government on Tuesday denied it shelters some of the world’s largest corporations, such as Apple, from paying taxes, saying its long-standing low corporation tax regime is transparent and doesn’t make it a tax haven.

The U.S. Senate investigation report, published on Monday by the Senate’s Permanent Committee on Investigations, said that in Ireland, Apple “has negotiated a special corporate tax rate of less than 2%.”

Ireland’s Prime Minster Enda Kenny told lawmakers Tuesday that: “Ireland does not do, let me repeat, does not do special tax [relief] for companies, ” but that companies do exploit loopholes that arise from the interaction of different national tax systems.

To be clear, the issue isn’t confined to Apple. Last week Google was in front of the U.K. Parliament’s Public Affairs Committee to discuss its tax arrangements in the U.K.

Couple this with the ongoing Foxconn controversy, and Apple is starting to become less of an attractive technology supplier to me.

I want to stress something here: none of what Apple has done is either illegal or unique to Apple. And I am not going to go full Rand Paul and demand an apology to Apple.

Apple has taken advantage of perfectly legal tax loopholes written into our tax code by the corporate overlords through their Orc minions, Republicans, Inc. and Corporatist sympathizer Democrats. Likewise, Apple has exploited the fact that Chinese workers in many instances are willing to work as cheaply as American prison inmates.

They still suck for doing so. Let me illustrate with an analogy.

Say I’m walking along the street, and I find a purse or a wallet. Looking inside, I see many thousands of dollars, some unsigned debit cards, and a winning lottery ticket.

The right thing to do is to find the owner’s phone number, call him or her and return the item whole.

Apple has rummaged through the wallet, taken all the cash and cash equivalents, and oh yes, checked the cellphone for the phone numbers of hot women and any naked photos the owner may have had.

It’s one thing to do what is legal, it’s another thing to do what is right.

Now, Senator…and I can’t believe he actually has that title…Senator Paul would claim that Apple did do the right thing. For the investors in Apple, the only audience it needs to please.

Senator… and I can’t believe he actually has that title…Senator Paul is right. But also very wrong.

You see, Apple shareholders are just a small piece of what many economic theorists call “stakeholders.” These are people to whom Apple must also demonstrate what business lingo would call “core competencies.” Stakeholders would include its employees (many of whom even in the US make less than minimum wage,) its landlords, its suppliers – and most important, its customers and the government. All of these groups, along with others, have a “stake” in Apple’s future and its operations.

GM closing a plant in Flint, MI and opening in Mexico may please the shareholders in the short term, but Flint residents losing the income and being unable to purchase GM cars makes GM vulnerable in the longer term, as an examination of the gas crises of the 70s implies: people had less money, so they bought cheaper, more fuel efficient cars. Take the income from their pockets and you can guarantee they won’t buy your cars ever again.

Eventually, your shareholders are impacted by this. It might get lost in the shuffle, but you’ve stopped operating at maximum efficiency by trying to operate at maximum efficiency.

You can sum this up by saying the perfect is the enemy of the excellent. And I want Apple to be excellent.