Company
Apple

The Plundering of a Nation by a Beloved Company

Burgess COMMENTARY

Peter Burgess

The Plundering of a Nation by a Beloved Company ...

Does the 'tax-avoiding, research-appropriating, cost-escalating, wage-minimizing, self-enriching Apple Corporation' really have a very strong moral compass? It's time consumers know the truth about the company's theft from taxpayers and the exploitation of workers and customers.

An emotional response to any criticism of the Apple Corporation might be anticipated from the users of the company’s powerful, practical, popular, and entertaining devices. Accolades to the company and a healthy profit are certainly well-deserved. But much-despised should be the theft from taxpayers and the exploitation of workers and customers, all cloaked within the image of an organization that seems to work magic on our behalf.

1. Apple Took Years of Public Research, Integrated the Results, and Packaged it as Their Own

Apple’s stock market value of over $700 billion is about twice the value of any other company. It is generally regarded as innovative, trendy, and sensitive to the needs of phone and computer users all around the world. Many of us have become addicted to the beautifully designed iPhone. But the design goes back to the time before Apple existed.

Steve Jobs once admitted: “We have always been shameless about stealing great ideas.” And reaping most of the benefits. As economist William Lazonick put it, “The iPhone didn’t just magically appear out of the Apple campus in Cupertino. Whenever a company produces a technology product, it benefits from an accumulation of knowledge created by huge numbers of people outside the company, many of whom have worked in government-funded projects over the previous decades.”

In her revealing book, The Entrepreneurial State, Mariana Mazzucato explains that “Apple concentrates its ingenuity not on developing new technologies and components, but on integrating them into an innovative architecture.” She goes on to describe 12 major technologies that have their roots in government research, including memory and hard disks, displays, cellular technology, GPS, and all the Internet protocols. Much of it came from the Department of Defense, the Department of Energy, NASA, the Air Force, and other U.S. agencies. The biggest expense in the iPhone is the touchscreen, which was developed at the CERN laboratories in Europe.

The “stealing of ideas” has not been accompanied by a reciprocal contribution to research. Apple spends much less than Microsoft and Google on R&D as a percentage of revenue.

It gets worse. Apple effectively takes all the credit for much of our public R&D by invoking the 1980 Bayh-Dole Act, which allowed publicly-funded work to be patented by companies. In 2011, for the first time, Apple spent more on patent purchases and lawsuits than on R&D. And worst of all, patents can make it extremely difficult for other researchers to continue work on the ideas behind newly developed products.

2. Even After Taking Our Research, Apple Does Everything in its Power to Avoid Taxes

In 2013 Apple CEO Tim Cook proclaimed, “We pay all the taxes we owe – every single dollar.” Delusion teams with denial. When questioned about the “Double Irish” scheme that allowed Apple’s Irish subsidiary to pay ZERO taxes from 2009 to 2012, Apple executive Tony King said he had “no idea” what the questioner was talking about.

Apple recently announced that its overseas, untaxed cash hoard, currently about $157 billion, is expected to reach $200 billion by 2017. But rather than pay taxes, Apple, along with other tech companies, has been part of a “fierce attack” on plans to crack down on tax avoidance, lobbying instead for a repatriation tax holiday to allow the billions of overseas dollars to come home at a greatly reduced tax rate.

3. Overcharging Customers

The manufacturing cost of a 16 GB iPhone 6 is about $200, and with marketing it comes to about $288. But without an expensive phone contract with Verizon, AT&T, or one of the other wireless carriers, the cost to the customer is at least $650.

4. Underpaying and Mistreating Employees

In response to criticisms of Apple, Rand Paul advised us to “apologize to Apple and compliment them for the job creation they’re doing.” The company claims to have “created or supported” over a million jobs in the United States. But in reality it has 66,000 employees in the U.S., about half of them retail store workers.

Apple has an efficient way of undermining workers, earning nearly $600,000 profit per employee while paying their full-time retail “specialists” less than $30,000 per year. Thus each store worker gets about $1 for every $20 in profits that he or she helps to generate. As for higher-level employees, Apple is alleged to have conspired with Google and other Silicon Valley each firms to hold down the salaries of engineers and analysts.

Regarding laborers at notorious Chinese factories like Foxconn, Apple CEO Tim Cook said in 2012: “We care about every worker in our worldwide supply chain.” The sentiment went deeper three years later in 2015, when Apple VP Jeff Williams assured us that “We care deeply about every worker in Apple’s global supply chain.” But investigations have revealed little change, with a continuation of low wages, forced overtime, safety hazards, employee abuse, increased production quotas, and manipulation of student interns. Before the launch of the iPhone 6 in late 2014, workers put in 15 hours a day for 10 weeks without a day off.

5. Apple Has Figured Out How to Spend Most of its Untaxed Money on Itself

Much of Apple’s ‘offshore’ money is reportedly held in the U.S., in the form of U.S government securities, earning interest from U.S. taxpayers. When the company needs cash, it simply borrows the money at a near-zero interest rate, often using that cash to pay off shareholders with stock buybacks, which use potential research and development money to pump up the stock prices for shareholders.

After spending $90 billion on stock buybacks last year, Apple has now proudly announced a 2015 “share repurchase authorization” of $140 billion, almost the entire amount of its currently hoarded cash. Buybacks benefit company executives and investors. Beyond that, Apple’s ever-growing $.7 trillion stock market value is spread among relatively few Americans. The richest 10% own 91 percent of U.S. stocks.

Apple’s View

The tax-avoiding, research-appropriating, cost-escalating, wage-minimizing, self-enriching Apple Corporation has, according to CEO Tim Cook, a very strong moral compass.