The tech behemoth is a multibillion-dollar ecosystem with more influence and clout than most countries, says Zachary Karabell.
FROM THE DAILY BEAST | APRIL 25, 2012
Yet again, Apple announced record sales and earnings. Yet again, its “Jobs report” stood in stark contrast to the monthly official jobs report. For the past four years, as the U.S. economy has stumbled, Apple has soared. As millions have lost jobs or stayed underemployed, Apple has sold more phones, iPads, and computers than most thought possible. While its success certainly has come at the expense of competitors such as Research in Motion (maker of the BlackBerry) and Nokia, it has generated tens of billions in revenue and sold tens of millions of devices by reaching new customers and not simply taking market share. And it has seen its most dramatic success during one of the worst economic slumps in the developed world.
Many have reveled in Apple’s efflorescence. But how has a company that sells relatively costly devices generated so much growth during a period of such global economic duress? How has Apple become one of the largest companies ever when the countries that have supplied the bulk of its revenue—the United States especially—have been mired in economic crisis?
The contrast between the otherworldly success of Apple and the fate of the national economies in which it functions is the conundrum of our era. Can Apple have done so well if we are—supposedly—doing so badly?
Since 2008, Americans have told a story to themselves about the financial crisis and the recession. It is story of corporate greed, too much debt, government ineptitude, and a Great Recession that saw millions thrown out of work and an economy in shambles. Different sides of the political spectrum argue about who was most to blame, but few debate the central premise of excess followed by near-collapse triggering three years of struggle. In that story, corporate greed and Wall Street assumed a place of villainy, especially for the left, with government a close second as a wasteful, profligate, and pernicious presence.
That story is now central to the presidential election, with Obama’s Buffett Rule and a call for a fairer tax code to redress the inequality between the 1 percent and the 99 percent. That is countered by the Republicans, who charge that the issues are a product not of Wall Street banks, but of government run amok.
These stories have no room for the success of Apple. In many ways, its growth makes no sense. If the economies of the developed world are suffering—and until very recently, Apple was not selling significantly in China or the emerging world—how has Apple made hundreds of billions of dollars? It is not an energy company; those profits make sense insofar as everything we do except sleep demands energy, and even sleep, if we heat our dwellings or cool them, requires some. It isn’t a food company; we all need to eat. It sells phones and computers and tablets.
Apple’s emergence is a prime example of the disconnect between nations and companies, between the relative affluence of countless people in developed nations and the relative poverty of their governments. And it is the most potent example of how companies have broken free of any one national economy and created the new transnational entity of Corporateland.
Apple has about 60,000 full-time employees around the world. Apple is a $600 billion company and growing. Nigeria has a population of about 170 million and a GDP less than half Apple’s market capitalization. Such comparisons may seem facile, but they should be made over and over until the full weight sinks in. Apple is not just a cool computer/phone/tablet company. It is an ecosystem and a society with more influence and power than most nations.
Like hundreds of its multinational brethren, Apple also is able to cherry-pick its costs. It can’t control the price of raw materials, but those are only a small portion of its expense. It does, however, have huge latitude in managing its labor costs. The imbroglio over working conditions in Chinese factories that produce Apple products spoke to the larger issue that Apple is so vastly profitable in part because it makes ideas but it does not bear the cost of labor to actually assemble its products. It contracts with labor, which means that the costs of education, retirement, and health care are borne by someone else, often by governments, sometimes by individual workers not fortunate enough to work for Apple directly.
There is nothing dark or sinister about these facts. Steve Jobs and now Tim Cook did not conspire to undermine American labor and underpay Chinese workers. Those iPhones could not have become a ubiquitous consumer product if made in America with its cost structures; and making those in China has been part of a massive enrichment of the Chinese in the past decade, even with attendant abuses.
In short, the net effect of these trends magnified across the world and across vast transnational companies is to create a Corporateland that absorbs global profits and a set of nation-states saddled with the costs of human beings, who don’t produce much when they are very young and can’t produce much when they are very old.
Apple’s success is the most dramatic symbol of the power of Corporateland. It also highlights the limitations of the stories we tell ourselves. Our national dramas about “the economy” have no place today for Apple and its brethren. Clearly enough people have enough income to spend on these goods and services, and clearly many believe their lives are better for what Apple—or hundreds of other companies—has to offer.
Of the tens of millions who buy those products, many are young and not yet gainfully employed, yet those devices may help them navigate a new world of employment. Some may be unwisely going into debt or funding the purchases with credit, but millions more are not. The past few years have been a challenge for America but not an equal challenge for all Americans; the same can be said of Europe. We could acknowledge those realities without signaling indifference to the real struggles of a significant portion of our population.
Apple is a triumph of design, marketing, and dreams. It is a next-wave company based on ideas and tapping into some mysterious collective meme. It is also, more prosaically, a leader of the most important force in the world today. It is first among equals in Corporateland. It is viewed through the prism of national economies, of an America mired in a story that is incomplete.
It is time to see it in a new light, as a global power more important to the world today and in the future than most countries that so dominate our collective consciousness.