Apple CEO Tim Cook pounds another nail into the Keynesian coffin

“Technology giant Apple Inc. has in the past few days been the recipient of juvenile attacks from U.S. Senators on both sides of the political aisle. Its alleged misdeed was the legal shielding of overseas earnings from corporate taxation stateside,” John Tamny writes for Forbes.”Funny here is that back in 2001 Sarbanes-Oxley was foolishly passed to ensure that CEOs watch out for shareholders. Twelve years later Apple chief Tim Cook is under attack for doing just that.”

“Congress, ever eager to spend money not its own, is bothered that Apple would have the temerity to not expose all of its earnings to U.S. taxation,” Tamny writes. “Politicians exist to spend, and Apple is apparently not complying despite the billions in taxes it hands to the feds on an annual basis. The hubris of the political class is surely limitless.”

Tamny writes, “After that, the Apple story offers a real-world path to analyzing the effect of Keynesian stimulus programs. It says here that the Apple example reveals with great clarity just how anti-growth is the oxymoron that is ‘government stimulus.’ That’s the case because whether right or left, it would be hard to find anyone so deluded as to say the federal government can allocate capital in ways more stimulative than could Apple.”

“Assuming Cook chose to expose all of Apple’s earnings to U.S. taxation he would not only have been fired, but it’s also the case that the revolutionary creator of iPhones and iPads would have less in the way of funds to access in order to continue to innovate. To Keynesians of the Paul Krugman variety, the above would not be a problem. In their staggeringly obtuse view of the world, how capital is allocated is of no consequence; the important thing being that money is spent with abandon. To the Keynesians who worship at the altar of consumption, the economic ideal is to get the money spent as quickly as possible,” Tamny writes. “Of course ignored by the Keynesian elite is that how capital is allocated is of great importance. In the private sector failed companies and ideas are quickly starved of capital so that they can waste no more of it, after which new and better ideas move to the front of the line for investment. That’s surely not the case when it comes to government outlays with the money of others.”

Tamny writes, “Looked at in the most basic of lights, does anyone think a federal government known for ‘Bridges to Nowhere,’ squirrel robots and loans to the Solyndras of the world is a better steward of capital than is Apple? Does anyone think federal spending is more economically stimulative than Apple’s careful, market disciplined capital allocations? The nature of the question answers it, at which point even the mildly sentient would have to agree that Tim Cook did the U.S. economy a huge favor for protecting Apple’s earnings from prodigal hands of politicians.”

Read more in the full article here.

MacDailyNews Take: One simple thing would fix a boatload of messes in the U.S. (which is why it will likely never happen): Term limits*.

Eliminating career politicians would be like removing a cancer on the country. Think they’ll vote for their own extinction? The horror of them having to get real jobs (and become regular citizens to whom the laws they’ve just passed also apply) is seemingly far too powerful a deterrent. Oh, well, every system has at least one flaw somewhere.

“One thing our founding fathers could not foresee… was a nation governed by professional politicians who have a vested interest in getting reelected. They probably envisioned a fellow serving a couple of hitches and then looking forward to getting back to the farm.” – Ronald Reagan

*Term limits for all branches or term limits for none.

Related articles:
If Apple paid more tax, we might pay less or something – May 22, 2013
Apple CEO Cook makes no apology for company’s tax strategy – May 22, 2013
Apple CEO Tim Cook charms Capitol Hill – May 22, 2013
Rush Limbaugh: ‘High-tech lynching: Senate attempts to crucify Apple’ – May 21, 2013
Nobody on U.S. Senate committee laid a glove on Apple CEO Tim Cook – May 21, 2013
Senator Rand Paul: Senate committee ‘should apologize to Apple for bullying one of America’s greatest success stories’ (with video) – May 21, 2013
Ireland: We have no special tax rate deal with Apple – May 21, 2013
Apple prepares for Washington onslaught: CEO Tim Cook isn’t taking any chances with senators looking to grandstand – May 21, 2013
Watch Apple CEO Tim Cook’s live testimony before U.S. Senate, starting at 9:30am EDT – May 21, 2013
U.S. Senate investigation found no evidence that Apple did anything illegal in avoiding taxes – May 20, 2013

91 Comments

  1. MDN is wrong about term limits. We have them in Michigan. What they do is ensure that the long-term professionals in the capital are the lobbyists. When a newly minted Representative arrives in town and is put face to face with a 30-year veteran of the city who happens to work for Cause X, and they take up an argument about Policy Y it’s the veteran who comes out on top, make no mistake. Term limits make things work worse. I have yet to see good evidence to the contrary.

      1. My fault, I’m sure. What I’m trying to say is this: Lobbyists don’t have term limits. When the politicians do have term limits you end up with a constant stream of neophytes into town to make decisions — people who have no wisdom about the town, about how things work, even about the internal complex history of the politics of the town. But the lobbyists do. The lobbyists become the only ones in town who have the long-term political memory, who have the deep insight about how things really happen, and who have the experience getting things done.

        When you have term limits you essentially end up with Lobbyists running your government through well-meaning elected politicians who have little recognition that they’re being manipulated and used.

          1. But term limits combined with a flat tax system would remove the huge lobbying incentive. Politicians derive their power from the ability to punish and reward groups using the tax system. Take away that power, and there would be less incentive to lobby for special interests.

            1. No, it wouldn’t. Term limits, particularly in the federal system, would just serve to constantly strip out those who rise to a senior position and can get things done. Term limits do absolutely nothing to attract or ensure quality candidates; in fact, it does the opposite. Why would you want to embark upon a career which you know will certainly end in 4, 6 or 8 years even if you perform brilliantly? The only thing to ensure quality candidates is for people to become educated on the candidates, not just the issues, and vote in candidates who will actually work for the betterment of their districts and the country as a whole.

              Lobbyists work off of much more than simply trying to get tax breaks put into law, so while a flat tax would solve many, many issues, it wouldn’t reduce lobbying.

            2. Please, no “flat tax.” Everyone seems to not realize that our current system started as a “flat tax.” We’ve already made that mistake, let’s not repeat history! We’d end up right back where we are now undoubtably in a few years.

              The solution is to end the IRS (and it’s corruption), end income taxes, and go to a simple national sales tax. You’d get your entire paycheck and only pay taxes when you buy something. Clean, simple, fair for all.

              No loop holes, no special interest tax breaks. April 15th becomes just another beautiful Spring day. And, no, it’s not harder on low income folks because below the poverty level it’s tax-free.

              And, please, before you criticize, research it a little first at Fairtax.org. I’ve been studying if for years and it’s THE solution we’re looking for for tax reform.

              By the way, it’s estimated that at least 4-5 TRILLION would come flying back into the USA that’s now being held offshore because the USA would suddenly become the best place in the world to have your money, to start a business, etc. Talk about your economic booms!

            3. Hmm. Interesting. I will have to learn about this. Not sure “when” you are referring to a flat tax.

              Probably you mean back in the 50’s when we ALL paid 35%?

              Now I pay 35% and someone making $1M is paying only 15% or less?

              Yes, I guess that’s fair.

              I currently live in a country where the tax is almost flat at 15%.

              The gvt here is quite rich. (Singapore)

              It’s the powerhouse of tiny country with only 6m people. Doing quite well.

            4. It’s not just taxes that bring out the special interests and lobbyists. Regulations do so as well.

              Consider the following current example: The EPA is attempting to require gasoline to be sold with a 15% ethanol content. That initiative is sparking reaction from corn growers and ethanol producers, automobile manufacturers and refiners, AAA, not to mention consumers worried about lower mileage or the likelihood that such gas will damage their older cars (like my classic ’89 Honda Prelude). Note that taxes are not the primary issue here.

    1. I live in California and the same is true – lobbyists end up being the institutional memory of the government. Worse, the politicians trade around jobs – from the Assembly, to the Senate, to some sinecure in state government. It is the law of unintended consequences.

    2. The problem isn’t the lobbyists, its an electorate that has its many hands out.

      “Ask not what your County can do for you, rather, ask what you can do for your Country” John F Kennedy 1961

      As an electorate we have embraced the credo of Johnson’s Great Society, in which the government uses monies it has to borrow to fund ill-begotten programs that have failed on a monumental scale.

      It is the electorate that influence politicians. Lobby money helps, but its votes the politician craves, and they get those by distributing “free” money.

      1. Politicians will say and do things for voters so they get votes, but the voters aren’t lining their pockets. The lobbyists are and they are up there all the time. The average voter seldom if ever actually sees their rep or senator in person. The lobbyists do.
        Everyone says cut this and don’t spend money, but if that money is going to be cut from your town then it doesn’t go over so well.

      2. No, the problem is the electorate doesn’t educate themselves on the person they’re electing. Most people usually vote on party lines, regardless of whether they have a saint or snake on their ticket, or vote on one or two issues important to them. They rarely vote on a candidate’s qualifications.

    3. I was just thinking of not only lobbyists, but the “civil service lifers” who stay on the job for a lifetime. Ex-elected officials quickly move into department heads and lobbyist positions.

      1. Exactly. It is entrenched bureaucracy, more than lobbyists, that affect how well (or not) government functions. These people are drinking at the public trough as much as (or more than) anyone on welfare.

        I would much rather see government employees and politicians have a cap on how long they hold a position, than truly needy people receiving any welfare.

        Eight years ought to be long enough for anyone… and let’s end government retirement benefits. Considering what they get paid, it’s a disgrace that politicians also get retirement pay for life.

    4. “Term limits would increase the likelihood that people who come to Congress would anticipate returning to careers in the private sector and therefore would, as they legislate, think about what it is like to live under the laws they make.” – George Will

      1. And George Will is completely wrong. How does a professional leave his medical or law practice, or business, for 2, 4, 6 or 8 years, then just come back and pick it up again? No way.

        1. Why not? People (at the risk of sounding sexist, often professional women) take 5-6 years off from their profession to have children, then return once their children are in school full-time, all the time!

          Maybe a surgeon can’t easily do this, but the other 95% of us can leave our professions and come back a number of years later just fine.

    5. The same has been true in California. When you toss aside veteran politicians (regardless of whether they may be actually GOOD at their jobs), the lobbyists end up running the show.

      Heck, even in Congress, which has no term limits, the lobbyists control the purse strings and write the bills.

  2. “The hubris of the political class is surely limitless.”

    I like that quote and I’m afraid it’s completly true. As for term limits, the dufuses who go to the ballot box have the power to enact them. They’re just too stupid or lazy to do so in the appropriate cases.

    1. Yes they could get the heave-ho but don’t, proving once again the old truism, “all politics is local”. Stupid politicians get reelected because the bring home the bacon for their voters despite what may be good for the country at large.

      1. Does doing what is needed to keep a $200 a year job make the politicians stupid? I’d say they’re pretty clever. Not that we shouldn’t give the bunch the heave-ho, but they clearly know how to work the crowd, or stack the deck so you can’t unelect them.

        I think the quickest way to fix the problem with Congress is to limit their salaries to the median national income and their health insurance to that of the lowest 10% of Americans. They would be simultaneously motivated to raise the national median income, fix healthcare and to find better jobs. But they would have to vote to make that happen. Curses, foiled again.

  3. Smart guy, that Reagan. Considered a radical right character in his time, he is lauded as a hero by people who reject his measured approaches and attempts at bipartisanship. He wouldn’t have a chance in the rarified atmosphere is today’s loony fringe driven GOP.

    1. You couldn’t be more wrong. As one of his first acts, Reagan fired the unionized air traffic controllers, an act most beltway Republicans did not want. It was the right move. He pressed for lower taxes constantly, something all beltway Republicans like John McCain reject. He went against his own speech writers in publicly calling the Soviet Union the “evil empire” and he was right, even though Henry Kissinger and Gerald Ford opposed this kind of talk. Reagan was vilified by all of the Democrats as an idiot actor and a reckless cowboy who would start WWIII. He was none of that and he outwitted them on most things. But he was a conservative in the mold that you see today in Sarah Palin, Ted Cruz, Rand Paul, and Scott Walker. Not John McCain or John Boehner, who were the types who opposed what Reagan did. The elder Bush by the way was an opponent of Reagan who did not like his policies or his style. And he was rejected after one term when he lied about raising taxes.

      1. Reagan:

        1) raised taxes 11 times; and even before the presidency he signed the law that was the highest tax increase in the history of USA among any State up until then — unthinkable not only to the GOP of nowadays, but even to the Democrats, which became more conservative than Republicans of 1970s or 1980s;

        2) almost TRIPLED federal budget deficit — nothing like small government, cutting spending or anything like that. In fact, he has increased the debt to thrice of amount that was accumulated in previous eighty years — this tradition continued in W-Bush years;

        3) withdrew troops from Lebanon after almost 250 USA’s soldiers killed there — not started two more wars like later Republicans did;

        4) gave full amnesty to three million undocumented immigrants;

        5) was fully for background checks: recollecting the life-threatening assassination attempt he survived, Reagan wrote: “This nightmare might have never happened if legislation that is before Congress now — the Bradley bill — had been law back in 1981”.

        “Damn leebs” would love to have Reagan as their president now, considering how insanely conservative Republicans and Democrats have become since then.

        1. Reagan first slashed corporate taxes in particular, which stimulated significant increased revenue for the federal government because businesses were able to keep their money, reinvest, hire more people (thus more payroll and income taxes), and get business booming.

      2. I think you may be lionizing Reagan a bit too much. Some of the facts you point out tell only half the story. It is true that he pushed for lower taxes, but he did not match that with lower spending. Rather, government spending and the national debt as a proportion of GDP vastly increased in his administration, for the first time since WWII. This without a war going on or major recession to stave off.

        Plus, when given the option to reduce the number of nukes in the world from tens of thousands to just 50 each for the US and USSR, he chose to stand up against the “evil empire” and back the failed SDI “Star Wars” program instead.

        1. Yes -congress appropriates. The President just gets to sign the bill. Tip O’Neill was the Democrat Speaker of the House and he is the reason spending did not reduce but increased. If Reagan were all powerful he would have reduced spending but he had to work with a Democrat majority. To those who say he raised taxes, cut me a break. Reagan is most known for the dramatic across the board tax cuts. That was his platform and he did it. And he funded the military and reduced regulations. All opposites of what the current administration does, and Reagan economic polices launched the expansion that continued through the 90s and was present while Apple was going from infancy to big corporation.

    2. He wouldn’t have a chance, possibly, but it is not just the fringe GOP, it is largely because of the militant radical left that has taken over. It is because we now live in the age of “identity politics” where political identity trumps rational thinking and priorities.

      You can drive your country into bankruptcy as long as you promise your illegal population citizenship, your gays marriage, your women free abortions, your blacks welfare and social services, etc.

      You can carve away at civil liberties bit by bit as long as the individual identity groups perceive that you are on their side. You can even call the Constitution a “flawed document” and find ways to circumvent it.

      And don’t forget to promise everyone that someone else will pay for it all.

      Anyone who says, “Uh but…” you immediately shout down, label a racist homophobe lowbrow and you maintain the ad hominem assaults because you know they’re no good fighting it. They’re horrible at it actually.

      And to top it all off you have a mainstream media that accepts their talking points from you.

      In other words, as long as you keep everyone on the ship concentrating on the amenities in their particular cabins, the people yelling about the ship sinking are ignored, and in that sense I agree with you. Reagan’s approach would never stand a chance in Obama’s 2013 America.

      1. I completely agree with your assessment of our current day USA. But I think Reagan would have done rather well in today’s political environment. Obama and Reagan have one thing in common- they could both give a speech. Difference is, Reagan’s words were substantive. Obama’s, hollow, and purely for political effect. Reagan truly cared about the country. Obama cares about purely about politics and his lopsided agenda. Reagan was a leader. Obama has a lot to learn.

        1. Spoken like a true partisan. It’s so easy to say what you did, but in reverse: that Obama’s words are substantive, and Reagan’s were hollow and purely for political effect. Invading Grenada to focus attention from the Marine Corps barracks terrorist attack? Pretty hollow to me…

          Reagan was a leader. He was also an actor and knew how to deliver a scripted line. Obama is a leader. You just don’t like where he’s leading the majority of Americans who voted for him.

          1. Obama is definitely NOT a leader. He can’t even get his own budget passed (or get a single vote for it). He wants nothing to do with working with either party to accomplish something, it’s just his way or the highway. That’s not a leader.

          2. Obama has accomplished exactly nothing that he ‘spoke’ about. The border; the economy; transparency; uniting (the complete opposite has happened, from physically shutting out republicans during the ACA debate, to bitterly dividing our constituency, etc, etc)- he has done noting but publicly criticize and humiliate the ‘other side’- last time I checked, a great leader that does not make. The list goes on.

            He was chosen as the Democratic leader based on his ability to speak, and to rally the troops. He had virtually NO experience at all in any type of leadership position, and it shows. He had NO record to speak of. His signature accomplishment thus far (and his only ‘accomplishment’) is the passage of a publicly unpopular healthcare bill- a bill which was unconventionally passed via a democratic supermajority, thus intentionally circumventing the democratic process; which not a single republican voted for; which the public AND congress knew NOTHING about (until it was passed, of course); and for which he sold out some very good members of his party. Nice leader that is.

            He continually and stubbornly refuses to be accountable for any wrongdoings or scandals associated with his administration. The list goes on and on.

            Reagan (and Clinton for that matter) knew that in order to get anything done, regardless of personal agenda, they had to reach across the isle, and the results of their actions were beneficial to the faction that matters the most- the people of this country. Obama? Not even close to cooperating.

            Reagan had an outstanding record as California Gov. He knew the political system, and cherished the Constitution. He got things done. And he took down the most threatening institution of that era with the stroke of a pen.

            Nice try.

          3. When you said Obama is a leader I just threw up in my mouth a little. From Fast and Furious when we handed assault riffled to Mexican drug lords to carry our their terror campaign including kidnapping and murdering Americans, to a corrupt IRS that targets conservatives, to giving money to phony environmental groups, to the Benghazi disaster, or numerous other foreign policy disasters like Egypt, ignoring the people of Iran and watching impassively as they were crushed.

            At least his golf game has improved, and his wife has some snazzy new dresses, so at least there is that.

      2. From the movie Rushmore:

        Max Fischer (Jason Schwartzman): So you were in Vietnam?
        Herman Blume (Bill Murray): Yeah.
        Max Fischer: Were you in the shit?
        Herman Blume: Yeah, I was in the shit.

        This country is truly in the shit unlike during the Reagan years. Thanks, Uncle O.

  4. The problem with term limits is the fact the thousands of people in Washington DC that really understand the numbers would still be there. Politicians in general have no analytical skills and rely on these people. I am afraid the naive new politician would be steam rolled by these guys. Just a thought.

  5. Out government has gone waaaaaaaay beyond what Keynes wrote about. He was for banking money during the good times so that you’d have a reserve to stimulate the economy during the bad times. He was never for constant deficit spending.

    1. And the reason why there are deficits is that taxes are too low because of the Bush tax cuts. The problem with the economy is that the average person does not have enough money to spend on products and services. Raising private sector wages and higher taxes to pay for needed public services and infrastructure is the way to get money money for the average person and increase sales and profits for companies like Apple. Too bad Apple doesn’t have a clue. They, of all companies, should know that if consumers have more money, they profit.

      1. The reason deficit spending is so bad is because, over the past 60 years or more, our government has obligated itself to ever-expanding programs like social security, medicare, medicaid, and now Obamacare, which gobble money like Pac-Man eating dots. While the goals of those programs are laudable, they are horrifically flawed in their design (essentially a public Ponzi scheme) and have no ability to account or adjust for changes in lifespan, numbers of applicants, cost containment, etc.

        1. “The reason deficit spending is so bad is because, … our government has obligated itself to ever-expanding programs like social security… ”

          Social Security does not have anything to do with the deficit. Nothing at all.

  6. AMEN on term-limits — which is why Huntsman (the only Republican candidate pushing the idea) was quickly dismissed during the primaries — the revolving door of money and politics protects its interests – Huntsman was and is the best Republican candidate (besides perhaps Christy) but because of the crazies on the far right, and the ridiculous clown show called the Primaries, they likely will never get a shot – which means Republicans will keep losing presidential elections.

  7. OK. No term limits.

    How about public financing of campaigns. Those big corporations who, honest, have the best interests of the county at heart, could get a tax break for donating some portion of their taxes to financing political campaigns, a check-off just like the individual tax payer. And then NO MORE CONTRIBUTIONS outside the system. Every politician would get money on the same equitable basis, and be barred from soliciting contributions outside this system.

    1. Sure, let’s throw more of our tax dollars out the window. Why not, when the next presidential election is predicted to cost the winner $1 Billion or more? Now add in his opponent, and all of the 5-10 early party candidates, and now all of the Representatives and Senators, plus their opponents, plus all of the primary opponents.

      I’m sure the feds wouldn’t miss $20 billion or so spent on campaigns.

  8. Cook’s presentation to the committee is a classic. Anyone who says he doesn’t know his stuff is talking nonsense. He is firm, articulate and full of conviction. His defence of Apple, not just in terms of tax issues but in terms of everything the company stands for, clearly outlines why the world in the relevant areas is divided basically between Apple and “not-Apple”. A clip of his address can be found on CNN. It’s probably available elsewhere too. Go watch it if you haven’t, and irrespective of whether you are an Apple supporter or a neutral.

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