patrick.net

"he was a shining example of the success that is available through capitalism"

Indeed. Soviet Russia had the same ability to create an Apple II yet their economy lacked the incentive and structure for people to chase their dreams like this. By the time they had copied the Apple II, the western economy had created the Mac and PC XT, and we began to really bury the communists in technology.

" his success is proof that capitalism is NOT a zero sum game. "

Too bad that so little what we call capitalism is as wealth-creating as what Apple has been doing, 1977-now.

And actually, Apple's more recent success does have a touch of zero-sumness to it, in that Apple is a major, major offshorer of production.

Back in the 1980s Apple did final assembly here in the US, and so did NeXT for that matter. This left more jobs here at home, but now everything is made in China, and for every $4 of Apple product the middle class buys, it only sees $1 in trade back with China. This is very zero-sum.

Apple also had a sordid history of rent-seeking in the late 1980s, attempting to leverage patent and copyright protections to support its rather massive 40% gross margins by keeping competitors out of its markets.

Only a more ruthless monopolistic competitor was able to break through Apple's IP protections in court to bring similar products to the masses, with Windows 286 & 3.0.

But Capitalism these days is paying $500B/yr for gasoline, $2.5T on health care (twice as much as the first-world per capita average), $3T/yr on housing. . .

Half or more of our economy is just paying rents these days, true capitalist enterprise is on the margins.

Yes, all the negative things you state are the result of government intervention. The larger government grows the more they suck off, and compete with, private businesses and private citizens. But its never enough, government constantly spends more than it takes in. Part of the governments clever solution is to TAX THE POOR. They do this with a hidden and insidious tax called inflation.

This and many other negative government sponsored activities causes costs to go up, making life worse for all of our collective society...comrade.

(Thats why limited, constitutional government is the solution)

Steve Jobs definitely would not have done all those great things if the capital gains tax were as high as the middle class income tax!

He did it all for that extra money he got from the lower capital gains tax.

Being an easily discouraged kind of guy, he would have just given up if he had to pay the same tax rates that the rest of us do. I mean, dying with only $6 billion in the bank rather than $8 billion would have been failure.

Right?

Bellingham Bob says

And actually, Apple's more recent success does have a touch of zero-sumness to it, in that Apple is a major, major offshorer of production.

Say what? Would you advocate government blocking out the sun to keep he candle making guild alive? Every single extra dollar that government bureaucrats can squeeze out of consumers by tariff is actually zero-sum or worse, negative-sum. Trade is positive-sum!

BTW, would you also advocate the banning of importation of cheaper oil and cheaper bananas? What kind of brain-dead autarky do you have in mind anyway? North Korean-style "Jeju"? Have you ever figured out why those wannabe self-sufficiency programs never worked? Here's the simple math: Chinese imports account for less than 2% of consumer spending in the US. American retailers and distributors make far more money on the imported goods than the Chinese manufacturers do. What do you think would happen to the retail and distribution jobs or value-added jobs using those goods if the less expensive imports were cut off or shifted to another country that charges more? On top of that, who do you think will pay for the wages of the tariff officers?

for every $4 of Apple product the middle class buys, it only sees $1 in trade back with China. This is very zero-sum.

The Keynesian "aggregate" mentality has really poisoned the minds of some people. The 4-to-1 ratio in national bilateral goods trade (not counting service or capital flow, which are in reverse) does not apply to Apple at all. Out of the $600 or so that Apple gets for selling an iPhone, the Chinese assembler gets only about $30. The various parts are shipped into China from elsewhere (valued at about $180 or so). The remaining $400 or so is for distribution, marketing, R&D and profit. Apple is actually a net-exporter to China simply because Chinese consumers pay more for the iPhones sold there than all the assembly cost for all the iPhones made for US, China and the rest of the world combined! Apple is a poster child for American ingenuity winning the world, and here you are talking trash and dragging its good name through sh*t on the day Steve Jobs passed away. Shame on you!

Steve Jobs definitely would not have done all those great things if the capital gains tax were as high as the middle class income tax!

He did it all for that extra money he got from the lower capital gains tax.

Being an easily discouraged kind of guy, he would have just given up if he had to pay the same tax rates that the rest of us do. I mean, dying with only $6 billion in the bank rather than $8 billion would have been failure.

Right?

Apple could have died in the mid-90's if its retained earnings from earlier times had been taxed away at higher tax rate. The company barely made it through the crunch as it was. Many thought it was going to die before Jobs came back; even after he came back it was questionable (hence the $1 salary and "interim CEO") until the iMac came out meeting good reception from consumers.

Patrick, it appears that you believe that government is the solution to all our problems and that government is our friend. I contend it is neither. I believe limited, constitutional government is our country's only hope. If we keep doin' more of the same, we'll keep getting the same result...expecting something different is the definition of insanity.

And what would the government have done with $2 Billion they could have potentially looted from Jobs? Do the words waste, fraud, mismanage, misallocate, abuse come to mind?
If $2 Billion was really the solution to anything, we'd no longer have any problems in our country. Handing money over to a small group of fiscally irresponsible people (the government) is also insanity. It solves nothing.

Throwing money at a problem is rarely the solution to anything. America doesn't have an "income" problem...it has a debt and spending problem.

Thats why limited, constitutional government is the answer.

Honest Abe says

I believe limited, constitutional government is our country's only hope.

We already have one of those, so the rest of your post is wasting your time and ours.

Vincente, your distorted view of the world is the cause of your liberalism. Your post's = Zzzzzz. Wake me when its over.

Steve Jobs definitely would not have done all those great things if the capital gains tax were as high as the middle class income tax!

That couldn't possibly be true, Patrick (to clarify, per my comment below, yes, I know you were being sarcastic). Under the original tax code of 1986, introduced by the Reagan administration, capital gains were taxed the same as income, by design. This is so people would be neutral between labor and investment. Lots of tax wonks believe in this principle. I actually talked to Reagan's tax guy about this once -- not the figurehead political type who talked about it, but the actual deputy who did the real work along with his reports.

It's more under Bush II that we created such a huge disparity between income tax and capital gains/dividends.

Reality says

Apple could have died in the mid-90's if its retained earnings from earlier times had been taxed away at higher tax rate.

That's non-sense. Patrick was talking about capital gains taxes having a different rate from income tax. Retained earnings weren't taxed as either -- they were the profits left over after paying corporate tax. Your comment makes absolutely no sense.

I think you missed just a (teeny,tiny) touch of sarcasm in Patrick's comment.

bob2356 says

I think you missed just a (teeny,tiny) touch of sarcasm in Patrick's comment.

No, I got the sarcasm (the rest of the post is quite obviously that way, so I read that portion as sarcastic too). I just wanted to point out the facts there to underscore that, even if we ideologically wanted to believe that sarcastic rationale that is commonly given, it still couldn't possibly be true, and because of Reagan. Also, it helped show why "Reality"'s point made no sense too.

This thread is stupid.

Steve Jobs was proof that people with actual talent will do great work regardless of how they're compensated, taxed, or regulated.

99% of CEOs contribute little to nothing to their companies, their shareholders, their customers, or the world in general.

Also, giant, industry-dominating corporations aren't the only form of capitalism. If anything, they're closer to a socialist model. A much better form of capitalism would be one in which dozens, or even hundreds of companies compete aggressively in any given industry.

In all due respect to Steve Jobs he was great as a manager. He didn't program or design his products. They went to him for his OK and he had very high personal standards.

In the early 80's apple had some bad products (LISA and Apple 3 come to mind). Apple 3 had a odd solution if there were issues with it
http://en.wikipedia.org/wiki/Apple_III

"However, many Apple III's experienced heating issues, allegedly caused by insufficient cooling and inability to dissipate the heat efficiently. To address the heat problem, later Apple III's were fitted with heat sinks. But still, the case design made it impossible for enough heat to escape. Some users stated that their Apple III became so hot that the chips started dislodging from the board, the screen would display garbled data, or their disk would come out of the slot "melted". In a technical bulletin, customers who were experiencing certain problems were instructed to lift the machine 3 inches (76 mm) and drop it in order to re-seat the chips on the logic board."

Much of what Apple made after he came back in '97 was designed by other companies they had Apple hire. Frog Design comes to mind.

There's nothing wrong with companies hiring others as not everything can be done in house. Computer manufactures such as Dell, toshiba, Lenovo have companies like Intel and AMD make processors. Add in a OS from a different company, hardware from a different one and quickly it nearly appears to be like the car industry.

Apple can do well without Jobs. Anyone suggesting otherwise would be insulting the programmers, designers and technicians at Apple.

Vicente says

We already have one of those, so the rest of your post is wasting your time and ours.

Your one-liner ignoring the real issues is a waste of time.

Your mistake, abe, is that you've convinced yourself that 'liberal' means to be anti-capitalist, and steadfastly refuse to hear otherwise, and thats why its impossible to dialogue with you. Its a convevient prop for your position but its just not the case generally.

Oh, and i resent you using the death of one of the greatest americans as a prop to push your own agenda. Have some respect..

kentm says

Have some respect..

Rhetorical Question/Statement, there, kentm.

mdovell says

In the early 80's apple had some bad products (LISA and Apple 3 come to mind)

Apple had grown into a rather large(r) company by then with full corporate governance, politics, etc. Lisa and Apple III development was being run by full-blown teams without much if any contribution from Steve, other than negative contribution like Steve's insistence that the /// not have a fan.

By early 1981, Jobs had shifted his VP managerial focus to the Mac, leaving the Lisa and /// teams to continue as they would.

mdovell says

Much of what Apple made after he came back in '97 was designed by other companies they had Apple hire. Frog Design comes to mind.

Frog Design was an 80s thing. What Apple made in the modern area was designed by Apple in-house.

The iMac (1998), iBook (toilet seat version, 1999), PowerMac G3/G4 (1999), PBG4 (2001), iPod (2001), G4 iMac (lamp-style, 2002), iBook (white, 2002), PowerMac G5 (2003), iMac (AIO, 2004) -- these were all internal designs.

Also, Apple does do its own board-level integration, and I'm always impressed with the quality of their work.

Back when I was working at Apple, my new PBG4 had a buzzing issue and I was able to take it over to building 6 and talk with the design engineers directly.

Apple spends oodles of money in hardware R&D. And it shows, though they only integrate what is available and not really advance the state of the art at the board level (eg. Apple keeps to what Intel gives them to work with).

Add in a OS from a different company, hardware from a different one and quickly it nearly appears to be like the car industry.

There's a great synergy that comes from one campus owning the whole product. You can see this with Microsoft's xbox 360, too. Apple is the only PC company that has this advantage, and they've had it since their OG competitors (Atari, Commodore) folded.

Apple can do well without Jobs. Anyone suggesting otherwise would be insulting the programmers, designers and technicians at Apple.

Indeed. Apple did *better* after Jobs left the first time, though Jobs was on the right track in 1985 wanting to create a UNIXy Mac at Apple.

Anybody of good intelligence and general industry chops can run Apple now. Deciding which directions to go next is a complicated and difficult thing, though. I'd like to think I'd do a good job as Apple CEO, but I'd probably fuck it up somehow, since inventing the future is not easy or straightforward.

Blah, blah, blah. Jobs success proves that the opportunity available through capitalism (the opportunity to fail or succeed) trumps the guaranteed, forced, dismal results of creeping socialism, communism, fascism, soft tyranny, or any other state mandated system.

Ignorance is using a fiat currency which is guaranteed to revert to its intrinsic value. Ignorance is taxing the poor through inflation while pretending to be compassionate. Ignorance is trying to fix a debt and spending problem with more debt and more spending. Ignorance is having the Fed price fix interest rates. Ignorance is following the same failed policies but expecting a different result. Ignorance is spending more than is brought in. Ignorance is contempt for our founding documents and disregarding the rule of law. Ignorance is believing that government intervention is the solution to free market problems. Ignorance is believing that profit is a four letter word.

Prosperity based on force, fraud and lies can never be permenant. Redistribution of wealth through government coercion is nothing more than theft by force. Lasting wealth can never be created by force, theft, dishonesty, inflation or borrowing...to believe otherwise is ignorance.

I could go on for hours and hours...but I'm at work.

There you go again. Ignorance is stating ideology as if it's fact.

OK, lets pick one and discuss it. Taxing the poor through inflation while pretending to be compassionate.

That been happening for decades on end, hasn't it? Is it "ideological" to point out the ugly truth?

And as to the point of inflation, the rich whose wealth DOESN'T inflate will lose more in inflation than the poor who only have loads of debt, which tends to shrink during inflationary times.

So your first assertion is arguably wrong to start with. The poor BENEFIT from inflation, as long as it comes as a wage-price spiral like 1920s Germany and 1970s US.

We're certainly not going to earn our way out of the $50T+ hole we dug the last decade:

http://research.stlouisfed.org/fred2/series/TCMDO