It's time for an unbalanced rant on unbalanced capitalism. And we'll use the capitalist success-story of Apple as the object of our discontent.
source image by GDJ - source: Pixabay
It has been “obvious” to most people over the past 30 years that the creative dynamism of the free market, the energy of private individuals pursuing their own dreams, is the best driver of economic innovation. The global economy carries the indelible imprint of the brilliant visionaries who created companies such as Microsoft Corp., Apple Inc. and Google Inc. Innovation is a private affair, best left free of the typically sluggish and wasteful interference of government.
source: Bloomberg - June 20, 2013
This opening paragraph of a 15 year old Bloomberg article states the obvious: deeply rooted in most of us is this automatic and unquestioned belief in the wholesome nature of free individuals, creating and trading on free markets. This is seen as the best formula for success for individuals and societies alike. However, the title of the article is "Who Created the IPhone, Apple or the Government?" And that is indeed the right question to ask.
A central idea in capitalism is that if you invest in research on technology that might pay out in profits much later, after a long and expensive R&D phase, you should see some of the profits if they materialize. In the case of Apple Inc. the early investors are tax payers, American taxpayers primarily, and the same goes for most "success stories" in today's high-tech economy.
Many of the revolutionary technologies that make the iPhone and other products and services “smart” were funded by the U.S. government. Take, for instance, the Internet, GPS, touchscreen display, as well as the latest voice-activated personal assistant, Siri. And Apple did not just benefit from government-funded research activities. It also received its early stage finance from the U.S. government’s Small Business Investment Company program. Venture capitalists entered only after government funding had gotten the company to the critical proof of concept.
source: Harvard Business Review - March 08, 2013
The title of the above quoted article is no surprise either: Taxpayers Helped Apple, but Apple Won’t Help Them. Are we beginning to see a pattern here? Don't underestimate in how many ways the public has payed for the research and development needed for Apple's world-conquering toy. And don't underestimate the extent of the power of the capitalist dream of the lone entrepreneur that builds a business empire by his own blood, sweat and tears; how else did the world fall for the heroic story of Steve Jobs?
Here's Google's "entrepreneurial success-story" in a nutshell:
Other Silicon Valley companies, like Google, have profited in a similarly immense fashion: Google’s algorithm was funded by the National Science Foundation. Many of the “new economy” companies that like to portray themselves as the heart of U.S. “entrepreneurship” have very successfully surfed the wave of U.S. government-funded investments. Hence, one secret to Silicon Valley’s success has been its active and visible hand, in stark contrast to the Ayn Rand/Adam Smith folklore often bandied about.
source: Harvard Business Review - March 08, 2013
Now you might argue, as many free-market advocates do, that it is the government's natural role to invest in research for the public good, to better the lives of everyone. And also that, for example, something like GPS can be used by anyone and is not owned by Apple, but is freely usable by anyone:
Government backed research produced all of the basic technologies that went into the iPhone. So, why doesn't the government get a decent slice of Apple for having spent that money that way? However, the problem with this argument is that it ignores the basic economic point of why we have government fund basic research in the first place. Which is that government funds research precisely because it's not possible to make good money out of doing research. So, given this, we can't exactly demand that government make money out of research when the whole point of government funding the research is because we can't make money out of it.
source: Forbes - March 24, 2014
Which is all good and well, but if you want to argue that, than it also follows that those who eventually profit by selling the resulting technology, should contribute to that governments income by paying their fair share of taxes. Sadly, the opposite is the reality, as can be distilled by some of the articles' titles. Here's a nice one: Love your iPhone? Don’t thank Apple. Thank the US government. From that article:
Over the past few decades, the major tech companies have led the way in developing schemes to reduce their tax burden by setting up various shell accounts and subsidiaries in tax havens around the world. Eric Schmidt even bragged that he was “very proud” of Google’s tax-avoidance schemes, which he considers a central constituent of modern capitalism.
However, as a result of increased tax avoidance and the slashing of the corporate tax rate by successive governments over the past several decades, the amount of taxes paid by corporations has significantly declined both as a percentage of government revenue and as a percentage of GDP. This may seem like a positive development to corporate executives, but what it really means is that less money is available to fund the programs that are key to supporting small businesses and funding important research projects that lack a clear road to profitability.
[...]
Even though corporate giants are paying less in taxes, they’re not trying to replace the functions served by public dollars. Instead of investing more of their money in R&D, they’re sitting on record cash piles? —? Apple’s stands at more than $260 billion? — ?which they’re increasingly spending on stock buybacks and dividends to artifically boost their share price, making their executives and wealthy shareholders even richer.
source: Salon
There's never been a separation between government and the economy, as you can hear in the below linked video of Noam Chomsky explaining how this applies to the modern globalized "free market" economy.
What Apple and companies like it are really doing, is drying out the well they lavished themselves on. And this goes for all major fields of industry; agriculture, energy, weapons and surveillance, they all get subsidized by the taxpayer's money and they all refuse to pay back the ones that made them great in the first place. Instead they use the public-funded technologies to repress the public every chance they get. All according capitalism's prime directive of maximizing personal profits, power gets concentrated in ever fewer hands. The government that was supposed to guard us against these excesses inherent in capitalism, has become the government that promotes these excesses; state capitalism is what we get, courtesy of Apple and it's peers.
Noam Chomsky - The Future of Capitalism
The above is a slightly redacted version of a post I originally published on Steemit in September 2018.
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