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How Superstar Companies Like Apple Are Killing America’s High-Tech Future

58 points by tomaskazemekas 12y ago

dark12222000 12y ago
So, the article is suggesting that everyone who uses GPS technology should be paying a fee.. to the government? Isn't that what we already call 'taxes'?
- jrochkind1 12y ago
  Sure. The government certainly could put a specific tax on sale or use of GPS technology. But what the OP seems to actually be suggesting is that tax loopholes are closed and high tech corporations are taxed more in general, yeah: > That’s why a company like Apple should be using a substantial portion of its super-profits to support government investment in the next generation of innovation. Instead, the company runs an entire division devoted to finding ways to avoid taxation. That's just one of the topics the interview talks about, I encourage readers to skim the others too, not assume the whole article is about taxation, it's not.
- wutbrodo 12y ago
  Well, in the US even those who don't use GPS technology are subject to taxes. There's a pretty huge difference (in incentives, in outcome, in tax/subsidy burden) between paying for something if you use it and paying for something regardless. In the case of the technologies mentioned, government made the explicit choice to publicly fund those things through taxes, with the assumption that the value to the economy from unfettered usage would be higher than the cost. That doesn't mean that taxes are equivalent to pay-per-use though.
  - quonn 12y ago
    But the cost of the GPS system does not increase with the number of users and it has to be deployed anyway for military reasons. There's no point in charging users.
    - wutbrodo 12y ago
      Well there's a couple things here: 1) I intentionally broadened my point to all the technologies mentioned in the article as opposed to just GPS, which was the example you used in your comment. I figured that the broader point was the more interested and more relevant one than that of GPS alone. 2) Less importantly: GPS has characteristics like that which makes it easier to give away for free. However, something having a high fixed cost and then lower on-going cost doesn't mean "there's no point" in charging: it helps defray the initial cost. There are many things that fall into this category (like drug research).
  - manicdee 12y ago
    Contrast the cost of maintaining GPS versus the cost of tracking every person in the western world by other means. It is a very good cost-to-utility ratio for the US.
    - Phlarp 12y ago
      Are you implying that GPS is used directly to track where each node is at? Or just that the ubiquity of GPS enabled devices makes it too easy for individuals to inadvertently share too much of their location? These are very very different points, and the first one is not really technically possible since GPS is just an ultra precise timestamp broadcast, there is no two way data.
  - olefoo 12y ago
    > in the US even those who don't use GPS technology are subject to taxes There is no way you don't benefit from the GPS system if you are a US Citizen. It's an infrastructure technology that means your roads are safer, your package delivery cheaper, your maps more accurate, your emergency services more effective; and a million other subtle benefits that you would have difficulty quantifying. As such it makes sense to fund it from general treasury; and to charge taxes on everyone in proportion to the benefit they get from society ( represented as income, including capital gains ). Since public infrastructure benefits the whole of society. That's the nature of public infrastructure. And the decadent libertarian fantasy that someone should be able to opt out of taxes because of their rugged individualism is just that; a fantasy. There is no such thing as individual success in an advanced technological society and anyone who tells you there is is a parasite on that society.
    - wutbrodo 12y ago
      > There is no way you don't benefit from the GPS system if you are a US Citizen.It's an infrastructure technology that means your roads are safer, your package delivery cheaper, your maps more accurate, your emergency services more effective; and a million other subtle benefits that you would have difficulty quantifying. > As such it makes sense to fund it from general treasury; and to charge taxes on everyone in proportion to the benefit they get from society ( represented as income, including capital gains ). Since public infrastructure benefits the whole of society. Yea, duh. If you actually read my comment, there's no disagreement with this: in fact I tend to be more inclined to public funding of things like GPS and transit than most people (whether on HN or in the population at large). I was disagreeing with the contention that paying for something by taxes is the same as charging for it. The way the incentives and the burden falls is NOT the same for those two approaches. You're talking about whether or not this SHOULD be done: an entirely different discussion from the one being had on this subthread.
bond007rr 12y ago
He lost me at "America’s is falling behind other countries when it comes to innovation and technology". What are you talking about? Cheers from Silicon Valley :)
- normloman 12y ago
  Where we have the most advanced ways to hook up with strangers, order dry cleaning, post anonymous secrets, and hail a non-regulated taxi cab. And don't forget about our innovative ways of collecting user data for advertisers! We're number 1! U-S-A, U-S-A
  - wutbrodo 12y ago
    Oh please, pick up a newspaper sometimes instead of getting all your news from TechCrunch. If you honestly think that the extent of cutting-edge work going on in SV is social apps, that's just because you spend your time reading about venture funding rounds instead of the actual interesting R&D going on.
    - michaelchisari 12y ago
      High speed rail like Japan has had for 30 years would be nice. And fiber internet to every home like South Korea has. These are projects that startups, and even large corporations, can't do, but governments can.
      - tomsthumb 12y ago
        To be fair though, Japan is two-thirds the size of Texas and South Korea is two-thirds the size of New York state.
        hammerandtongs 12y ago
        ikr. We are the United States why even try?
        12y ago
rifung 12y ago
I agree with this in the sense that I wish companies would stop focusing on short term profits. It'd also be nice if companies would invest in their employees, although there I have an obvious bias. Still, is it really fair to say that companies should pay less dividends? And while I understand shareholders don't really contribute directly to the success of the company, if nobody paid dividends then what incentive is there for anyone to own shares? I get that the stock price may increase, but if stocks don't provide dividends do they have any inherent value at all?
- sremani 12y ago
  The bigger point is re-investment in to the scientific infrastructure - in spite of its inefficiencies feds seem to be doing an OK job but are cash constrained. On the other hand big profitable tech companies in spite of lots of cash are still playing the game of paying less for taxes and other financial engineering tricks and are doing basic minimum (which they are entitled to). One may say, its not their job, which is absolutely true. But the outcome here we want is, better investments into the scientific infrastructure so the US remains the dominant player for foreseeable future and that would not be possible with a massive companies sitting on tons of cash and who are unwilling to make investments in to the future because of the perceived "volatility".
  - wutbrodo 12y ago
    We shouldn't be trying to shoehorn entities into jobs that their incentives don't best align with. If the premise is that we want to allocate more capital into scientific infra but the Gov't doesn't have that funding, the solution is to give government the funding, not to somehow get companies to spend their cash the way we want it. Where would this extra money come from? Again, under the premise that we want to re-allocate money towards scientific spending, it would come from higher taxes. Fundamentally the issue you're describing is "gov't can't perform one of its competencies (scientific investment) well enough due to cash constraints". The cash constraint is a fundamentally political problem, and companies' decision-making vis-a-vis scientific investment is just a red herring.
saosebastiao 12y ago
I see this delusion pop up all over and I can't help but just shake my head. Trying to tax a corporation is like trying to trap an octopus in a fishing net. They will always find a way to slide out. You have the perfect collusion of incentives: 1) Pooled self interest in the form of shareholders owning value. When a corporation spends money on the shareholder's behalf on lobbying or fancy tax law specialists, in benefits every single shareholder, because stock returns are apportioned. With the personal income tax, it is not in the immediate self interest for someone in the lowest tax bracket to help lobby for lower taxes on the highest bracket. Pooled self interest makes for higher lobbying power. 2) The corporate tax is not a revenue tax (as is the personal income tax), but rather a revenue-minus-costs tax. And businesses are diverse enough in their business models that you couldn't feasibly enact a revenue tax without unfairly penalizing low margin industries like grocery stores or temp agencies. What this means is that anything that the corporation deems to be a cost is automatically tax deductible. This leads to ridiculous shenanigans like using corporate jets to drop off documents that happen to need to be delivered to the same city as the CEO's daughter's university campus. If you want to enforce rules on corporate taxation, you are going to have to scrutinize every single cost they have on their books. Is it any surprise that the corporate tax has the highest compliance and enforcement costs, and lowest effective-to-nominal ratios of any tax form in the US? If you want corporations to pay their fair share of taxes, you have to have them distribute the money to their shareholders and then place the burden of taxation on them. Eliminate the corporate tax altogether, and tax capital gains and dividends as personal income.
- kemiller 12y ago
  How does this work for foreign shareholders?
- gamblor956 12y ago
  Very little of what you said was true. 1) A corporation spends money on tax specialists to benefit itself. Any benefit to the shareholders is usually incidental, and the corporation would eliminate these benefits if it increased the benefit to the corporation. 2) Corporate income taxes are profit taxes. The type of shenanigans you have suggested as a means of increasing expenses are what tax practitioners call "tax evasion schemes" that (a) would not work and (b) would result in heft fines and/or prison sentences for the executives, board members, and accountants involved. The US corporate tax code has the highest compliance costs because it has the most deductions and credits of any code in the world, but every dollar spent on compliance usually results in multiple dollars saved with respect to tax liabilities. If you want corporations to pay their fair share of taxes, you tax them on their profits. If the tax is levied only on distributions to shareholders, that will simply move the compliance games to the shareholder level. And this plays into enforcement as well--there are thousands of companies, but there are millions of shareholders, and it is magnitudes easier to enforce tax at the corporate level than the shareholder level.
zwieback 12y ago
Some good observations but I'm not convinced that the focus on shareholder value is to blame otherwise we'd see non-public companies systematically outperform public ones over the medium and long term. Also, there isn't much evidence that companies with a focus on short term financial results don't engage in long-term strategic planning. The two basically exist side-by-side.
Sven7 12y ago
When I look at the likes of Rockefeller, Ford or Edison and compare them with today's success stories at Apple, Facebook or Wall Street, the difference I see, lies in whose weakness they exploit to reach the top. Today's success stories are all about exploiting every possible customer weakness, while in the good old days it was about exploiting competitor weakness. Whether its exploiting people's weaknesses to get them to mindlessly consume content to sell ads, or cleverly misguiding them about mortgages and student loans, or tying social standing and aspiration(in the developing world) to the latest trinket in a phone...it makes me conclude that the best way to build the next superstar company, is to find a human weakness as yet unexploited in the ever growing bountiful list that cognitive and behavioral psychology are just beginning to provide and go to town.
- vvpan 12y ago
  I agree. But you are forgetting another exploitation - of the worker, which back in the day was the norm. Perhaps still is, depends on how you look at it.
- Zigurd 12y ago
  You are romanticizing the past. Take a look at the ads in LIFE magazines from the first half of the 20th c. There's consumer exploitation going on that would make Zynga blush.
  - freshhawk 12y ago
    Yeah, blush in embarrassment at how blatant, transparent and ineffective it was. It was very unsubtle - and shocking to us now because of that. But they still thought that things were best sold by convincing people that their product was the best. And many though that actually being the best was a cost efficient way to convince people of that. Pretty childish by todays standards.
- orbifold 12y ago
  In the good old days they also exploited their workers a fair amount, hired private security to break strikes (e.g. Homestead strike). Nowadays the most profitable businesses need nearly no unskilled labor or if they do, it is usually the subcontractors that mistreat their employees.
leepowers 12y ago
Another article from the author helped clarify the points being made in the original article: https://hbr.org/2014/09/profits-without-prosperity https://hbr.org/2014/09/profits-without-prosperity A gist of the argument: 1. Companies with large profits are spending an enormous amount of money on open market stock buy backs. 2. Buy backs are almost exclusively done for stock manipulation reasons: to stabilize or increase the value of a stock. 3. Most executive compensation is in the form of stock. So the incentive of management is to maximize stock value. 4. Instead, management should be incentivized to engage in activities that increase reinvestment, research, and development. Of which longer-term, more stable employment is one positive effect; increasing U.S. innovation and inventions is another. My own amateur take on #2 is that it's popular because it's a non-risky, conservative action that management can take. If Company X has a billion dollar profit, spending that on open market buy backs of company stock effectively keeps the the profits within the company, without incurring a tax penalty. Combined with the stabilizing effect on stock prices makes it a no-brainer for many. Also, having a profit doesn't justify increasing R&D spending, or automatically expanding into new markets. It's only wise to risk an expansion if you have confidence it will generate a return. The author conflates government spending (which is unbound by risk) with private spending (which necessarily must be bound by risk). A billion dollar publicly funded research project that results in no measurable return for society will not bankrupt the government. A risky, unwise, billion dollar private investment that does not generate a return can destroy a company.
Htsthbjig 12y ago
If you don't want "stock buybacks", do not print money. The Federal Reserve prints money(Qualitative Easings) for big companies and Governments, and of course companies buy their own stock with their cheap money. Government buy back their own bonds. Basically they are taking wealth from little savers and giving it to big Government and big companies, in one of the biggest transfer of wealth ever, making the people at the top 1% have a bigger and bigger share of the wealth. It is not a problem of big companies,but a problem of the Government distortion of the financial world for their benefit(because they are basically broke). The "lending of last resort" has become the first and normal way of financing for them. Of course, there are always people that believe, like this man, that the solution is always Central Planning, more Government and more taxes.
- deleted 12y ago
  [deleted]
- hnnewguy 12y ago
  QE isn't "money printing for big companies and Governments" and stock buybacks are just another way to return capital to shareholders. How is it that so many articles devolve into the criticism of banks? Why do people bother commenting on subjects they know little about (and in this case are only tangentially related to the article)?
krick 12y ago
Oh, please… No, not that what he says is entirely incorrect, but with reasoning like that we could go basically anywhere. Aplle, Google, my grandma — they all benefit from an accumulation of knowledge created by Euclid and Pythagoras, so why we all don't pay taxes to Greece? Seems unfair.
sogen 12y ago
google kills the next google simply: buy startup, shut it down. Repeat

dark12222000 12y ago

So, the article is suggesting that everyone who uses GPS technology should be paying a fee.. to the government? Isn't that what we already call 'taxes'?

jrochkind1 12y ago
Sure. The government certainly could put a specific tax on sale or use of GPS technology. But what the OP seems to actually be suggesting is that tax loopholes are closed and high tech corporations are taxed more in general, yeah: > That’s why a company like Apple should be using a substantial portion of its super-profits to support government investment in the next generation of innovation. Instead, the company runs an entire division devoted to finding ways to avoid taxation. That's just one of the topics the interview talks about, I encourage readers to skim the others too, not assume the whole article is about taxation, it's not.
wutbrodo 12y ago
Well, in the US even those who don't use GPS technology are subject to taxes. There's a pretty huge difference (in incentives, in outcome, in tax/subsidy burden) between paying for something if you use it and paying for something regardless. In the case of the technologies mentioned, government made the explicit choice to publicly fund those things through taxes, with the assumption that the value to the economy from unfettered usage would be higher than the cost. That doesn't mean that taxes are equivalent to pay-per-use though.
- quonn 12y ago
  But the cost of the GPS system does not increase with the number of users and it has to be deployed anyway for military reasons. There's no point in charging users.
  - wutbrodo 12y ago
    Well there's a couple things here: 1) I intentionally broadened my point to all the technologies mentioned in the article as opposed to just GPS, which was the example you used in your comment. I figured that the broader point was the more interested and more relevant one than that of GPS alone. 2) Less importantly: GPS has characteristics like that which makes it easier to give away for free. However, something having a high fixed cost and then lower on-going cost doesn't mean "there's no point" in charging: it helps defray the initial cost. There are many things that fall into this category (like drug research).
- manicdee 12y ago
  Contrast the cost of maintaining GPS versus the cost of tracking every person in the western world by other means. It is a very good cost-to-utility ratio for the US.
  - Phlarp 12y ago
    Are you implying that GPS is used directly to track where each node is at? Or just that the ubiquity of GPS enabled devices makes it too easy for individuals to inadvertently share too much of their location? These are very very different points, and the first one is not really technically possible since GPS is just an ultra precise timestamp broadcast, there is no two way data.
- olefoo 12y ago
  > in the US even those who don't use GPS technology are subject to taxes There is no way you don't benefit from the GPS system if you are a US Citizen. It's an infrastructure technology that means your roads are safer, your package delivery cheaper, your maps more accurate, your emergency services more effective; and a million other subtle benefits that you would have difficulty quantifying. As such it makes sense to fund it from general treasury; and to charge taxes on everyone in proportion to the benefit they get from society ( represented as income, including capital gains ). Since public infrastructure benefits the whole of society. That's the nature of public infrastructure. And the decadent libertarian fantasy that someone should be able to opt out of taxes because of their rugged individualism is just that; a fantasy. There is no such thing as individual success in an advanced technological society and anyone who tells you there is is a parasite on that society.
  - wutbrodo 12y ago
    > There is no way you don't benefit from the GPS system if you are a US Citizen.It's an infrastructure technology that means your roads are safer, your package delivery cheaper, your maps more accurate, your emergency services more effective; and a million other subtle benefits that you would have difficulty quantifying. > As such it makes sense to fund it from general treasury; and to charge taxes on everyone in proportion to the benefit they get from society ( represented as income, including capital gains ). Since public infrastructure benefits the whole of society. Yea, duh. If you actually read my comment, there's no disagreement with this: in fact I tend to be more inclined to public funding of things like GPS and transit than most people (whether on HN or in the population at large). I was disagreeing with the contention that paying for something by taxes is the same as charging for it. The way the incentives and the burden falls is NOT the same for those two approaches. You're talking about whether or not this SHOULD be done: an entirely different discussion from the one being had on this subthread.

bond007rr 12y ago

He lost me at "America’s is falling behind other countries when it comes to innovation and technology". What are you talking about? Cheers from Silicon Valley :)

normloman 12y ago
Where we have the most advanced ways to hook up with strangers, order dry cleaning, post anonymous secrets, and hail a non-regulated taxi cab. And don't forget about our innovative ways of collecting user data for advertisers! We're number 1! U-S-A, U-S-A
- wutbrodo 12y ago
  Oh please, pick up a newspaper sometimes instead of getting all your news from TechCrunch. If you honestly think that the extent of cutting-edge work going on in SV is social apps, that's just because you spend your time reading about venture funding rounds instead of the actual interesting R&D going on.
  - michaelchisari 12y ago
    High speed rail like Japan has had for 30 years would be nice. And fiber internet to every home like South Korea has. These are projects that startups, and even large corporations, can't do, but governments can.
    - tomsthumb 12y ago
      To be fair though, Japan is two-thirds the size of Texas and South Korea is two-thirds the size of New York state.
      - hammerandtongs 12y ago
        ikr. We are the United States why even try?
      - 12y ago

rifung 12y ago

I agree with this in the sense that I wish companies would stop focusing on short term profits. It'd also be nice if companies would invest in their employees, although there I have an obvious bias. Still, is it really fair to say that companies should pay less dividends? And while I understand shareholders don't really contribute directly to the success of the company, if nobody paid dividends then what incentive is there for anyone to own shares? I get that the stock price may increase, but if stocks don't provide dividends do they have any inherent value at all?

sremani 12y ago
The bigger point is re-investment in to the scientific infrastructure - in spite of its inefficiencies feds seem to be doing an OK job but are cash constrained. On the other hand big profitable tech companies in spite of lots of cash are still playing the game of paying less for taxes and other financial engineering tricks and are doing basic minimum (which they are entitled to). One may say, its not their job, which is absolutely true. But the outcome here we want is, better investments into the scientific infrastructure so the US remains the dominant player for foreseeable future and that would not be possible with a massive companies sitting on tons of cash and who are unwilling to make investments in to the future because of the perceived "volatility".
- wutbrodo 12y ago
  We shouldn't be trying to shoehorn entities into jobs that their incentives don't best align with. If the premise is that we want to allocate more capital into scientific infra but the Gov't doesn't have that funding, the solution is to give government the funding, not to somehow get companies to spend their cash the way we want it. Where would this extra money come from? Again, under the premise that we want to re-allocate money towards scientific spending, it would come from higher taxes. Fundamentally the issue you're describing is "gov't can't perform one of its competencies (scientific investment) well enough due to cash constraints". The cash constraint is a fundamentally political problem, and companies' decision-making vis-a-vis scientific investment is just a red herring.

saosebastiao 12y ago

I see this delusion pop up all over and I can't help but just shake my head. Trying to tax a corporation is like trying to trap an octopus in a fishing net. They will always find a way to slide out. You have the perfect collusion of incentives: 1) Pooled self interest in the form of shareholders owning value. When a corporation spends money on the shareholder's behalf on lobbying or fancy tax law specialists, in benefits every single shareholder, because stock returns are apportioned. With the personal income tax, it is not in the immediate self interest for someone in the lowest tax bracket to help lobby for lower taxes on the highest bracket. Pooled self interest makes for higher lobbying power. 2) The corporate tax is not a revenue tax (as is the personal income tax), but rather a revenue-minus-costs tax. And businesses are diverse enough in their business models that you couldn't feasibly enact a revenue tax without unfairly penalizing low margin industries like grocery stores or temp agencies. What this means is that anything that the corporation deems to be a cost is automatically tax deductible. This leads to ridiculous shenanigans like using corporate jets to drop off documents that happen to need to be delivered to the same city as the CEO's daughter's university campus. If you want to enforce rules on corporate taxation, you are going to have to scrutinize every single cost they have on their books. Is it any surprise that the corporate tax has the highest compliance and enforcement costs, and lowest effective-to-nominal ratios of any tax form in the US? If you want corporations to pay their fair share of taxes, you have to have them distribute the money to their shareholders and then place the burden of taxation on them. Eliminate the corporate tax altogether, and tax capital gains and dividends as personal income.

kemiller 12y ago
How does this work for foreign shareholders?
gamblor956 12y ago
Very little of what you said was true. 1) A corporation spends money on tax specialists to benefit itself. Any benefit to the shareholders is usually incidental, and the corporation would eliminate these benefits if it increased the benefit to the corporation. 2) Corporate income taxes are profit taxes. The type of shenanigans you have suggested as a means of increasing expenses are what tax practitioners call "tax evasion schemes" that (a) would not work and (b) would result in heft fines and/or prison sentences for the executives, board members, and accountants involved. The US corporate tax code has the highest compliance costs because it has the most deductions and credits of any code in the world, but every dollar spent on compliance usually results in multiple dollars saved with respect to tax liabilities. If you want corporations to pay their fair share of taxes, you tax them on their profits. If the tax is levied only on distributions to shareholders, that will simply move the compliance games to the shareholder level. And this plays into enforcement as well--there are thousands of companies, but there are millions of shareholders, and it is magnitudes easier to enforce tax at the corporate level than the shareholder level.

zwieback 12y ago

Some good observations but I'm not convinced that the focus on shareholder value is to blame otherwise we'd see non-public companies systematically outperform public ones over the medium and long term. Also, there isn't much evidence that companies with a focus on short term financial results don't engage in long-term strategic planning. The two basically exist side-by-side.

Sven7 12y ago

When I look at the likes of Rockefeller, Ford or Edison and compare them with today's success stories at Apple, Facebook or Wall Street, the difference I see, lies in whose weakness they exploit to reach the top. Today's success stories are all about exploiting every possible customer weakness, while in the good old days it was about exploiting competitor weakness. Whether its exploiting people's weaknesses to get them to mindlessly consume content to sell ads, or cleverly misguiding them about mortgages and student loans, or tying social standing and aspiration(in the developing world) to the latest trinket in a phone...it makes me conclude that the best way to build the next superstar company, is to find a human weakness as yet unexploited in the ever growing bountiful list that cognitive and behavioral psychology are just beginning to provide and go to town.

vvpan 12y ago
I agree. But you are forgetting another exploitation - of the worker, which back in the day was the norm. Perhaps still is, depends on how you look at it.
Zigurd 12y ago
You are romanticizing the past. Take a look at the ads in LIFE magazines from the first half of the 20th c. There's consumer exploitation going on that would make Zynga blush.
- freshhawk 12y ago
  Yeah, blush in embarrassment at how blatant, transparent and ineffective it was. It was very unsubtle - and shocking to us now because of that. But they still thought that things were best sold by convincing people that their product was the best. And many though that actually being the best was a cost efficient way to convince people of that. Pretty childish by todays standards.
orbifold 12y ago
In the good old days they also exploited their workers a fair amount, hired private security to break strikes (e.g. Homestead strike). Nowadays the most profitable businesses need nearly no unskilled labor or if they do, it is usually the subcontractors that mistreat their employees.

leepowers 12y ago

Another article from the author helped clarify the points being made in the original article: https://hbr.org/2014/09/profits-without-prosperity https://hbr.org/2014/09/profits-without-prosperity A gist of the argument: 1. Companies with large profits are spending an enormous amount of money on open market stock buy backs. 2. Buy backs are almost exclusively done for stock manipulation reasons: to stabilize or increase the value of a stock. 3. Most executive compensation is in the form of stock. So the incentive of management is to maximize stock value. 4. Instead, management should be incentivized to engage in activities that increase reinvestment, research, and development. Of which longer-term, more stable employment is one positive effect; increasing U.S. innovation and inventions is another. My own amateur take on #2 is that it's popular because it's a non-risky, conservative action that management can take. If Company X has a billion dollar profit, spending that on open market buy backs of company stock effectively keeps the the profits within the company, without incurring a tax penalty. Combined with the stabilizing effect on stock prices makes it a no-brainer for many. Also, having a profit doesn't justify increasing R&D spending, or automatically expanding into new markets. It's only wise to risk an expansion if you have confidence it will generate a return. The author conflates government spending (which is unbound by risk) with private spending (which necessarily must be bound by risk). A billion dollar publicly funded research project that results in no measurable return for society will not bankrupt the government. A risky, unwise, billion dollar private investment that does not generate a return can destroy a company.

Htsthbjig 12y ago

If you don't want "stock buybacks", do not print money. The Federal Reserve prints money(Qualitative Easings) for big companies and Governments, and of course companies buy their own stock with their cheap money. Government buy back their own bonds. Basically they are taking wealth from little savers and giving it to big Government and big companies, in one of the biggest transfer of wealth ever, making the people at the top 1% have a bigger and bigger share of the wealth. It is not a problem of big companies,but a problem of the Government distortion of the financial world for their benefit(because they are basically broke). The "lending of last resort" has become the first and normal way of financing for them. Of course, there are always people that believe, like this man, that the solution is always Central Planning, more Government and more taxes.

deleted 12y ago
[deleted]
hnnewguy 12y ago
QE isn't "money printing for big companies and Governments" and stock buybacks are just another way to return capital to shareholders. How is it that so many articles devolve into the criticism of banks? Why do people bother commenting on subjects they know little about (and in this case are only tangentially related to the article)?

krick 12y ago

Oh, please… No, not that what he says is entirely incorrect, but with reasoning like that we could go basically anywhere. Aplle, Google, my grandma — they all benefit from an accumulation of knowledge created by Euclid and Pythagoras, so why we all don't pay taxes to Greece? Seems unfair.

sogen 12y ago

google kills the next google simply: buy startup, shut it down. Repeat