Why would Apple give its customers part of their tax cut? Apple exists to make money. They’re going to stop doing that now and just give stuff away for below what they could sell it for? Are they run by insane people?
I don’t think people grasp how prices are set.
99% of Apple’s customers don’t know who Tim Cook is, or, if they do, know essentially nothing about him. First I’ve heard that he was gay. Nobody gives a crap about Tim Cook.
Way back in… '97, the American university where I was about to wrap up a Masters had this seminar where people from four different companies, all looking to hire people with postgraduate STEM degrees, would talk to us about how to present ourselves in an interview, their companies, etc.
One of them was an aerospace company. Another student asked, “do you hire foreigners?” “Uh, no.”
I broke the silence pointing out that they seemed to be in the wrong place, then. Even the lady from the university’s career center had been born in Cuba…
What are you talking about? Businesses move for tax cuts all the time. Are you saying businesses can’t be enticed to the US with tax cuts? We just a glass manufacturer from China move to my area.
Good question. Just dropping person A’s pay where person A is part of a large company, in isolation, you are right. Prices shouldn’t drop. But in a competitive market where many companies are competing, on price, then cheaper costs for them result in cheaper prices for the consumer. If you notice, a real life example is the cost of gas. Two or three years ago I was paying over $4/gal now I’m paying under $2/gal. Labor is the same way in a competitive market.
And look at the CCC. They built a lot of stuff. Some of it still around. This was possible not because of currency but because of underutilized labor. My idea is to let the market utilize all possible labor at true market value while government taxes and redistributes a portion to ensure, not equality, but a baseline of standard of living.
Gasoline is a commodity. iPhones are not. Apple, like every manufacturer, differentiates their product through a combination of branding and slight variation of features. If the cost of production decreased, Apple isn’t going to decrease the price of their phone because the price is set at a price point that has been deemed attractive to it’s target market. Too high, it’s unaffordable. Too low, it becomes too accessible and becomes a (perceived) inferior product.
So what? iPhone may not be a commodity but millions of other products have competitive substitute goods. Hell, I have 2 iPhones and 2 iPads but I’ll switch to Microsoft or Google in an instant if the price and feature set are competitive. I hate how controlling iOS is and that’s almost reason enough.
And you honestly don’t think companies compete on price? Of course they do. That’s why they make a myriad amount of products models. So they can target many consumers who have different price sensitivities. But you are needlessly nitpicking. In a competitive market prices on the inputs of production definitely have a correlation of profitable prices for the output. The cheaper the inputs the larger the profitable pricing range is. And let’s say that price didn’t drop. More profits means more taxes and more demand from the profitable entity for expansion. Or it means stock prices go higher or dividends get larger which enables those who own stock to have more income with which to buy more junk.
You honestly think that if energy were completely free that productivity wouldn’t be higher? That real wealth wouldn’t be higher? People are fixated on some old fashioned, vote buying, economically destructive, strategic competitor enriching failed policies like minimum wage when superior policy is possible. That’s sad. But, I suppose, appeals to populism are preferred to rational economic policy.
Both Democratic and Republican US politicians have been mired in promoting the philosophy “what’s good for General Motors is good for America”–either out of genuine belief, or out of the practical necessity of raising money to win office/retain office.* What existing giant industries want and what would actually increase productivity and standards of living, society-wide, are seldom the same thing–but both Democrats and Republicans are pledged (metaphorically) to pretend that they are.
It’s sad to realize that the Trump regime could provide a golden opportunity to change the dynamic–to actually seek to maximize productivity, instead of seeking to maximize the happiness of Exxon/Mobil and Walmart and GE and Toyota and AT&T.
But of course Trump isn’t interested in maximizing productivity or in lifting the American economy in general. In addition to building up his own wealth during his Presidency he does want to build the wealth of a cadre of newly-appointed middlemen (the privatizers who’ll be handed the tax funds now going to run schools, prisons, utilities, and police forces)–he will need their support and buy-in to stay in power. And he will want to get those new private prisons, etc. up and running so that he can hold rallies in areas in which these new jobs will be created. Trump, on a basic emotional level, needs those rallies. He yearns for those rallies.**
And there will be recognition within the Trump regime of this little fact:
Some of the unemployed or underemployed will be funneled into prison sentences in the new string of private prisons, and some will become cannon fodder in upcoming wars.
… But what could happen if, in place of Trump, we magically had a President-Elect who was (like Trump) not a professional politician, but who happened not to be corrupt and conscience-free and easily bored?
We might see some policies aimed not at propping up the existing corporate behemoths, but at increasing the skills and training and opportunities for innovation that are now being either neglected or actively stifled. At a minimum we would see:
[ul]
[li]A massive upgrade in education–no, not the middleman-enriching privatized type that new Trump pick Betsy DeVos represents, but an actual K-12 and beyond push to nurture cognitive skills in kids at all levels and increase STEM graduates. Not every IQ is suited for work as an engineer (etc.) but more below-average kids could learn at a higher level than the current system allows.[/li]
[li]Subsidized training for trades-in-demand. We could be doing a lot more of this.[/li]
[li]Reform of patent law. A pro-productivity national policy that eliminated the “profession” of patent troll could lead to a renaissance of innovation.[/li][/ul]
Paying for it? Taxes on the established giganto-corporations that are more in line with those in place in well-run nations such as Denmark and Sweden. The corporations would howl, of course. But if we had a non-politician President who was both popular AND principled, it could happen.
*Bernie Sanders, famously, dissents from that philosophy; my problem with Sanders is that the philosophy he appears to have adopted in its place is 'giant corporations are run by bad, greedy people, and we need to shame them/get rid of them.’ Sanders appears not to realize that humans respond to the incentives they find in the system they live in–and can readily rationalize their ‘bad greedy’ actions. That’s what humans do. It’s not about getting rid of Bad Greedy People at the top–it’s about changing the incentives…but that’s another topic.
**And they will begin any day now, according to reports filed on November 17:
http://www.politico.com/blogs/donald-trump-administration/2016/11/donald-trump-victory-tour-of-states-won-231576
Trump: We’re ‘making progress’ keeping Carrier plant in U.S.
That’s because actions “like this” have a completely shit track record at actually creating or protecting American jobs. As this January 2016 article notes,
In other words, Trump’s plan to “cut taxes and scale back regulations” is nothing but the same tired old Republicanomics that helped crater the economy so disastrously 7-8 years ago. It didn’t work to create widespread American prosperity under Bush, and it’s not going to work under Trump. And the reason Obama didn’t propose “anything like this” is because Obama has the sense to recognize that it doesn’t work.
Bolding mine.
Overall I agree with all of your sentiment and some of your points.
But I wanted to point out that you need to be careful with the word “productivity”. In economist-speak “productivity” isn’t how much you produce. It’s how much you produce divided by what you cost.
Under that definition, corporations are always all about high productivity. They strive constantly to improve their worker’s productivity. Every time they get salaried workers to put in an hour of unpaid overtime or they give a raise below inflation (or better yet none at all) they enhance the productivity of their workforce.
Because “productivity” is *defined *as output/cost. If I can cut your wages in half I just doubled your productivity.
I know what you meant by “productivity”: to increase the tangible economic output of workers, both individually and hence collectively. And even more collectively by putting the unemployed and underemployed fully to work. etc.
An implicit assumption in all your thinking is that somehow the worker will capture the extra economic value he/she creates in your proposed new environment. IMO that’s a massively naïve assumption. The entity which captures any such value will be the one with the power. Absent unions or something similar it won’t be the workers capturing the value.
Many honest and good forward thinkers, e.g. Bill Gates, are all about upgrading the US school system, for the best, and for the average, and especially for the benighted poor. Because they want to enhance total US productive capacity.
And, less creditably, because they fully expect they will capture the lions’ share of the incremental value created, not the workers who’re creating it.
Seriously. What’s amazing is that there are still voters who fall for the ‘let *the rich guy keep an extra million instead of paying it in taxes, and he’ll use it to build a factory’ *line.
Funny that none of those voters seem interested in asking for examples of that happening after all the other GOP tax cuts. Guess it’s another “faith-based” thing.
Yes, very true. I was hinting at the problem in my remarks about professional-politician Democrats and Republicans being alike in wanting to keep the major corporations happy. But I should have been more explicit.
To ‘change the dynamic’ (to quote my earlier post) would require open discussion of the way the current rules privilege established corporations over both would-be start-up corporations, and individual workers. An obvious element in changing those current rules would be making unions, as you mention, viable again–getting rid of the “right to work” (ghastly misnomer) laws, for a start. Tax reform would be another element in changing the rules that now seem explicitly designed to increase income inequality.
What Carrier themselves actually say about this is merely that they’re “in discussions” and have “nothing to announce” at present:
In other words, Trump is bragging about spending his Thanksgiving personally pleading with one US manufacturer not to move to Mexico, in order to preserve 1400 US manufacturing jobs, and it’s unclear whether that will even have any effect at all.
Note, by the way, that the US has shed five million manufacturing jobs since 2000. Even if Trump’s much-publicized personal coaxing efforts actually manage to preserve the 1400 jobs at Carrier, he’d have to achieve about 3500 similar persuasions to coax 5 million manufacturing jobs out of employers averaging 1400 US workers. That would be around five such “negotiations” per day every day for the next two years.
Does that sound to you like a serious policy proposal for restoring US blue-collar labor markets on a large scale? Or is it simply a publicity stunt by a self-promoting huckster which impacts only a tiny number of workers, while achieving nothing to address the actual systemic factors that are eliminating US manufacturing jobs in general?
Nope.
It would be a targeted tax break. Build the factory then get the tax break. Create the jobs then get the tax break. Once the costs of manufacturing in the USA are somewhat on par with China or Taiwan, then it makes sense to build here. The bigger issue is that there is a dialogue going on. Perhaps, Apple will say we need x number of engineers to make it happen. Then Trump says lets fund the education of x number of students." How do we make this happen?" is what Trump is asking.
See Trump is not an ideologue. Conservatives and Republicans wanted tax breaks for the wealthy out of principle. “They earned it so they should get to keep it. If you want something, go get it yourself.”
:dubious: The average Chinese factory worker makes less than US $300 per month, while the average Taiwanese one makes less than US $700 per month. The very highest-paid Chinese tech professionals make about US $1500 per month.
Exactly what strategy are you envisioning for changing “the costs of manufacturing in the USA” to be “somewhat on par with China or Taiwan” so as to provide significant employment for US workers? Because the kind of labor cost differential we’re looking at here does not seem like something that can be counteracted with a simple tax break.
“Manufacturing in the US would also greatly increase Apple’s tax bill and this would be by far the largest cost to the company of reshoring this work.”
A more detailed quote from your cite:
So you think that as long as Apple could get excused that $3.6 billion extra tax on foreign sales, they just wouldn’t care about the more than half a billion in extra labor costs incurred by manufacturing in the US? :dubious: How you figure?
I’d like to know exactly what those workers are doing?
How many hours of labor go into an iPod?
Also: China is famous for pollution - what processes are used that would contravene US Clean Air/Clean Water regs?
Are we ready to race to the bottom with public health?
Not germane (I really hope) to the Apple production: I’ve heard that old computer chips are melted down in open pots and the tiny bit of gold in them extracted. I don’t want those jobs anywhere in Western Hemisphere.
Before Apple (or GM, or Monsanto) pays American wages, they will invent and build robots to do what the Chinese can do cheaper than robots.
About the only reason anybody has a job is because either the work can’t be automated or the human is cheaper than the machine.
This is the reality that has been going on simply forever.
The big reason humans were in use after about 1950: Eye and/or brain.
The huge difference in price and reliability of machines over humans meant machines will be built as quickly as possible.
We need to figure out how the post-employment economy is going to work.
Fighting over who gets to be the last of the people involved in manufacturing does not address “What do you do when that last robot comes online?”
That is what we need to do.
1950 - all good jobs in US
1980 - those Japanese are taking over consumer electronics. Sewing jobs are going to lowest bidder.
1995 - Japan owns the US auto market. Now the Koreans are getting into it.
2000 - Hey! China is dirt cheap! Let’s all move to China
See a pattern?
Aside from Apple and minimum wage/productivity arguments - how does Germany do it? They are known for high paid, high skill manufacturing jobs and low unemployment rates. I know they have apprentice programs, partnering govt. with big (and small) businesses. Workers representatives are oftenon company boards. I think they also have free (or nearly so) collage. Does anyone know how all of this works and how well?
If the workers absolute standard of living in real terms triples I have no problem with a few billionaires having their wealth quintupled. Relative inequality in wealth isn’t an issue for me.