HOW APPLE PROFITS FROM THE STATE
By Mark T. Fliegaof
[This article published April 28, 2014 is translated from the German on the Internet, http://www.sueddeutsche.de
. In San Francisco, Apple critics demand the corporation pay more taxes. Apple depends on taxpayers (for the Internet, GPS, touch screens and Siri). Can taxpayers depend on Apple?]
Intelligent screens, language recognition and countless Apps: Apple makes billions in profits thanks to state innovation promotion. However the company refuses to give back anything – and so endangers the development of new technologies.
Apple sparkled withy a profit before taxes of 10.2 billion Euros in the first quarter of 2014. The corporation did not only surprise Wall Street analysts but further develops its enormous financial reserves. Still something is rotten with the tech-giant. Apple should systematically give that investor its share that made possible the success of the Californians: the state.
Hardly another business has profited more from state innovation promotion than Apple. Introduction of the iPhone in 2007 hoisted the former computer manufacturer from Cupertino to the Olympiad of entertainment electronics and made ex-CEO Steve Jobs into the worldwide icon of innovation and entrepreneurship. In 2013-2014 Apple realized net profits of $90 billion with the sales of iPhones alone. The state is the real entrepreneur behind the iPhone whose core technologies like multi-touch screens, GPS, the Internet or micro-hard drives would be inconceivable without state foresightedness and promotion.
The iPhone revolutionized the cell phone market with its multi-touch picture screen. However Apple acquired the technology for “intelligent” screens making possible development of the iPad tablet computer through the purchase of a small firm named Finger-Works. Apple did not develop this itself.
FIRST THE RESEARCH, THEN THE TAKEOVER
A professor of computer- and electronic-technology and his doctoral candidate at the University of Delaware stood behind Finger-Works. Both researched for years with the financial support of the American National Science Foundation backed by public funds before they developed the first commercial prototypes and products. Then the company was taken over by Apple along with all the patents for the innovative technology.
What wou9ld the iPhone be worth without Apps or Google Maps? Neither GPS nor the Internet would exist without the strategic foresightedness of state bureaucracies and their financial resources. In both cases, the visionaries had their home in the Washington Pentagon, not in Silicon Valley. The global positioning system arose out of the motive to better coordinate American military contingents abroad while the Internet originated from the attempt to build a decentralized communication system that could resist a nuclear attack.
Thus the readiness of the Defense Advanced Research Projects Agency (Darpa) to demand and promote high tech research in electronic networks was indispensable for development of the Internet. Darpa laid the foundation for the further commercial development of the global network on which the App- and iTunes stores of Apple run.
BILLIONS IN RESEARCH FUNDS FROM THE STATE
Since the 1960s, the American state invested billions in the research of computer-, semi-conductor and information technologies before Steve Jobs and Steve Wozniak began experimenting in their garage or the often praised venture capital scene in California sprung from the ground.
Such promotion enables essential innovations that Apple extols in its advertising. Siri, the language processing software of iPhones, is an example. It enables us to speak with the smart phone. It also comes from a Darpa-project that was transferred to the research institute of the Californian Stanford University.
GERMANS HELP INDIRECTLY
The German taxpayer also invests in Apple – not only the American taxpayer – even if indirectly. The research of the physicist and Nobel Prize winner Peter Gruenberg on giant magnet resistance represented a quantum leap in the development of hard disks whose micro-versions underlie Apple’s iPod, iPhone and iPad. Since the 1970s, Gruenberg has researched at the Julich research center whose budget is supported annually by the regional district Nordrhein-Westphalia with 400 and 500 million Euros.
The genius of Steve Jobs was to unite trailblazing technologies and transform them into revolutionary products. However innovation never arises in a vacuum de novo. Innovation needs an ecosystem in which all participants contribute. Apple refuses.
RISKS ARE SOCIALIZED AND PROFITS PRIVATIZED
Instead of at least referring to the investments made by the state side, Apple systematically evades tax payments though the state had a share in the profits of the firm. The management and CEO Tim Cook horde 115 billion Euros (#158.8 billion) in cash reserves – a considerable share in tax havens like the British Virgin Islands. In comparison, the debt burden of five East German states amounted to 67 billion Euros in 2013. Berlin’s huge debt mountain came to 60 billion Euros.
At the same time Apple uses other tax avoidance strategies. The company transfers profits gained in Germany, France or Australia for example to subsidiaries in Ireland (e.g. AOS, Apple Overseas Services), an island with a much more favorable tax rate. According to estimates, the German budget loses 250 million Euros annually and the United States three billion dollars every year.
Innovation eco-systems can only exist when risks and profits are in a profitable relation. The innovation-economist Mariana Mazzucato who has focused in depth on the state promotion behind Apple’s technologies rightly criticizes Apple. While states invest billions in risky future technologies, businesses like Apple rake in profits – and refuse a fair distribution of these profits.
In this way, risks are socialized and profits privatized. The long-term survival of the innovation system is endangered. This is the rotten core hidden under the glittering shell of Apple.
On the author:
Mark T. Fliegauf is a fellow of “Neue Verantwortung” (New Responsibility), a Berlin think tank that grapples with the social-political challenges of the 21st century. Political scientist Fliegauf directs the project “Innovative Governing.”
SOCIAL RIGHTS: THE 8-HOUR WORK DAY
May 1 is a holiday. Only a few apparently remember the struggles for social rights. But these few point the way to the future.
By Hans Springstein
[This article published on 4/30.2014 is translated from the German on the Internet, http://www.freitag.de
What I came to know and experienced as a child in East Germany as an “International Day of Struggle and Holiday of Workers” was then more an obligatory demonstration day and holiday. In the expanded Germany, it is still a holiday as a “Day of Labor.” Many use this to celebrate, some to demonstrate and others for rioting. Still others see this date every year as “revolution.”
The struggle for the social rights of people seems trivialized, the German Union alliance (DGB) bemoans. In its call to May 1, the DGB emphasizes “the dignity and rights of workers.” Isn’t the DGB interested in those who are not working? The history of this day answers the question. In 1886, workers went on strike in Chicago. They demanded introduction of the eight-hour day. A violent police action ended the strike. 17 persons were killed and over 100 injured. The alleged ringleaders were put on trial. Four of them were executed.
But history continued and work is still a determining part of life but for fewer and fewer people. The DGB call “Good Work. Social Europe” hardly sounds aggressive. “Politics and society have finally set out on the way to a new system of work.” We are reminded of the European elections and the works’ council elections. An investment offensive for Europe is urged that should bring new jobs. All this sounded rather softened and adjusted.
There was no call to “revolution.” The call to May 1 comes from a small group of social organizations People’s Solidarity in Ratingen (North Rhine-Westphalia). In the call, they remember that social rights must be contested, fought for and defended and aren’t a merciful “gift” of the rulers. I quote this call here in its entirety since it is a model of clarity.
A SOCIAL EUROPE FOR EVEYRONE – WITH GOOD WAGES FOR GOOD WORK
By Gabi Evers
“Good Work, Social Europe” is this year’s motto of the German DGB union for May 1. Something is missing: good wages. “Good work” is only possible with good wages. They can only happen together. No one can be satiated by work alone. Good work ensures good results. This means good profits for businesses…
People’s Solidarity supports the minimum wage without exceptions. Long-term unemployed may not be excluded. Exceptions only benefit the businesses. This justice-gap must be closed. This is true for present differences in the minimum wage in East and West. Avoiding old age poverty is not enough. With 8.50 Euros, no one receives a pension that protects from poverty. Therefore good work must be well paid.
Good working conditions are part of good work. These may not be cut back. Otherwise work quickly becomes a strain. Too many people have stopped working for health reasons. Working conditions are the most important reason for this. This is true for different occupational groups and not only for those who do hard physical work.
Good work and good wages may not be limited to Germany but must be possible everywhere in Europe. Only in that way will Europe be social. Only in that way will people have something wherever they live. Good work and good wages cannot be unequally distributed. These make life worthwhile within the European Union. People must have perspectives where they live.
Europe must be more than a Europe that serves the economy. Europe must be oriented in the social interests of its citizens. Only then will they accept it. The bottom will be knocked out from those rightwing pied pipers or rat-catchers who seek votes with the fear of Europe. A social Europe also means being open for others. The gates may not be closed to those fleeing war and terror. If Europe wants to be social, it must live solidarity. It must support other countries instead of exploiting them.
Good work, good wages and a social Europe will not be given as gifts. They must be contested, fought for and defended. To that end, May 1 must be remembered again and again.
Sikkimoto: Good wages are already part of good work. The unions can be criticized for much passivity (this is in their nature. They represent the workers and can hardly be more radical than the workers). However employees and unemployed may not be played off against one another. Not allowing that is one of the great achievements of the DGB.
Farhwax: “A society centered on the irrational abstraction work inevitably develops the tendency to social apartheid when the successful sale of the commodity labor becomes an exception instead of the rule. All fractions of the work camp overarching the parties have long accepted this logic on the quiet and robustly helped it along.”
Overcoming work is everything other than a hazy nebulous utopia. The world society cannot continue 50 or 100 years more in its present form. That the opponents of work have to deal with a clinically dead work idol does not make their task easier. The more the crisis of the work society intensifies and all repair attempts end as failures, the more the gulf grows between the isolation of helpless social monads and the demands of an aggregate social appropriation movement. The increasing unruliness of social relations in large parts of the world demonstrates that the old work- and competition consciousness continues on an ever lower level. The de-civilization by degrees seems the natural form of crisis amid all impulses of unease and discomfort in capitalism.
Amid all the negative prospects, it would be fatal to put the practical criticism of work as a comprehensive social program at the back of the queue and limit oneself to building a precarious survival economy on the ruins of the work society. The criticism of labor only has a chance when it fights against the stream of de-socialization instead of being dragged along by it. Civilized standards cannot be defended any more with democratic politics but only against it.
Video: “Why Capitalism is Killing the Planet,” April 2014, 27 min http://www.youtube.com/watch?feature=player_embedded&v=WLq0eRQP1cY#t=282
Free Internet Book: All on Board: Making Inclusive Growth Happen, May 2014, 202pp http://www.oecd.org/inclusive-growth/All-on-Board-Making-Inclusive-Growth-Happen.pdf