Update: US Government action on Apple-Ireland and "The Corruption Industry"

Obama Is Cracking Down on Corporate Tax Evasion

Headline from Fortune 16 September 2016.

Somewhat garbled, yet evidence of a potentially significant shift in the way the US Government considers the actions of companies like Apple in keeping cash profits offshore.

In refusing to repatriate funds to their headquarters in the US (Cupertino, California) Apple does not contribute to national welfare through the taxation scheme. The efforts by Apple to maximize profits through deals with the Irish Government where they pay almost zero tax - but create employment - is negative governments and citizens in both nations. Public culture suffers as a result.

There is much more to write about the link between the privatization of finance by public companies like Apple and the privatization of public interest. Simply put, privatization by Apple involves a claim in which they say the company owes nothing to American citizens in the companies home country. And anyway, they continue, our "home" is now Ireland!

They further claim that the private interests of their shareholders are more important than American citizens to whose welfare they refuse to contribute by paying their taxes. This is the double edge of privatization.  

The Fortune article struggles to make sense of what the Obama announcement means. And rightly so.

If Apple repatriates some of its case profits next year as Tim Cook has suggested, Apple should not get an American discount for the relatively low taxes they paid to the Irish Government. As they say in some parts of the world: "Pay up you Bastards!"

Does the Apple-Ireland deal epitomize "The Corruption Industry"?

Apple Inc. is making the news in a way it would rather avoid. The European Commission's competition chief Margrethe Vestager announced on August 30, 2016 that Apple has to pay the Republic of Ireland $14.5 billion for taxes it had otherwise avoided.

The headline to the EC's Press Release read

State aid: Ireland gave illegal tax benefits to Apple worth up to €13 billion

Under a scheme that wobbled around in the public shadows since it was introduced in 1991, the agreement between Apple and the Irish Government served two principle purposes:

It reduced Apple's tax bill

and

It brought technology jobs to Ireland.

From a public policy perspective is achieved one major outcome:

• It helped to impoverish the Irish population relative to what might have been achieved. 

That makes three colliding forces, of which the principle winner was the US corporation, while the subsidiary winner was the few folk working in Ireland in the technology sector. (Just how many is difficult to identify and in what kind of jobs - do services jobs like sales and marketing count?) Apple made and  sold its products under a system that increasingly makes the now dead and departed head of Apple, Steve Jobs, look like the one-dimensional person he really was - another American businessman maximizing profits in whichever way he could.

The Irish people be damned.

Meanwhile, the Chinese people making the products, could also be damned. We know this from published research about Foxconn. As if to add insult to injury, Foxconn announced in May 2016 that it is resolving its human resources issue by replacing 60,000 employees with robots. And thus the Apple machine rolls on.

The EC tax news was welcomed by critics of the the contemporary global corporate system operating under neo-liberalism. The EU move sharply brought to the surface of public debate the way neo-liberalism had been structurally imbricated into everyday life through agreements between global corporations and national governments. The public has little knowledge of how they are made or why. Challenging these agreements has escalated, despite the appeal of the very devices - primarily iPhones - that make Apple a success. It is somewhat like an ugly fruit that tastes good: the eater rejects the object, yet enjoys the experience.

Clearly, the terrific personal and social benefits arising from the use of smart phones come at a cost. In this case, the cost of being a subservient nation relying on the decisions of a corporation to outsource parts of its financial interests.

Source CNN Money


Previously, Apple and other technology firms have been able to control their message with Public Relations and publicity campaigns. That is why the EU announcement was like sour grapes to the Cupertino folk. Apple and Steve Jobs have been superb at using their events to sell hyper-personalized devices into the networked gee-wiz economy, flogging consumers the story that human value and virtue is tied to the private ownership of an Apple product. Millions of people accepted the narrative and bought Apple products, which for the most part, worked well.

Plus, they were none-too-subtly presented as luxury and social status items, with an expensive price point. (I use an Android because I could not abide the proprietary aspect of Apple iTunes and music libraries, which originally forced me to use Apple products on ipods). New entrants into the global economy, especially consumers in China, are new user-markets, and often, along with manipulable consumers everywhere, status seekers, for whom and iPhone signifies ascension into the middle class... of something. (More research on this please).

Apple CEO Tim Cook summarized the Chinese market:

I've never seen as many people coming into the middle class as they are in China," ... "That's where the bulk of our sales are going. We're really proud of the results there and we are continuing to invest in the country.

In 2015 iPhone sales in China surpassed sales numbers in the US. But the real story is the estimated $200 billion held offshore (the USA) by Apple.

It is worth noting that the US financial press tend to agree with Apple's strategy of keeping its profits in cash offshore, rather than repatriating it to the US to be taxed and invested. (How about investing in depressed parts of the South, the rust belt areas of the north east, and in education and training?)

Meanwhile, the Irish Government's technology sector has put up some impressive numbers for technology investments. For examples in 2014, Ireland's Direct Investment Agency noted the following inward movements  of announced investments:

• Intel’s recent $5 billion spend at its Irish fab.  
• Microsoft’s €170 million data centre expansion, bringing its total investment to €594 million. 
• Ericsson: 120 additional R&D positions. 
• SAP: 260 new roles (R&D/technology support). 
• PayPal: 400 new positions (including customer solutions/telesales).

Governments and corporations seek to control the narrative around the shift to high quality technology sector jobs. (I was once employed doing pretty much that in helping to establish Multimedia Victoria (Australia) in 1994-1996.)

In this context, Apple controlled the narrative, the inflated price for their products and a massive pipeline of profit. Then came the EC and several other public policy institutions, including the G20, suggesting another perspective on the Apple success story. Indeed, at its Brisbane, Australia 2014 meeting, the G20 issued the following (on 15 November):

13. We are taking actions to ensure the fairness of the international tax system and to secure countries’ revenue bases. Profits should be taxed where economic activities deriving the profits are performed and where value is created. We welcome the significant progress on the G20/OECD Base Erosion and Profit Shifting (BEPS) Action Plan to modernise international tax rules. 

The EC launched an inquiry into "transfer pricing" in 2014. It is too obvious to point out that once the interests of major global institutions like the G20, the OECD and EC converge, significant progress towards democratic polity can result?  The history of political economy would suggest that coordinated public policy interest serves as a major prompt for reform. Although it is usually too little too late.   

 Finally, 31 August 2016, the New York Times headline, one among many, pointed to the wind change: The-tax-man-comes-for-apple-in-Ireland.

The first response by Apple was predictable: A massive defense of its agreement with the Irish Government, promoting the thought that this is the pointy end of corporate America, and why senior executives earn their inordinate salaries:
Apple CEO Tim Cook collects his paycheck!  The Irish Government joined in, although as RT reported, rejecting a payout of about 14 Billion from Apple!  There is nothing quite as undignified as hearing politicians explain why the public should be worse off.

The  response from the US government varied somewhat depending on the media outlet reporting it. The Wall Street Journal  opted for "the EC is bad" subtext, in a commonplace US trope of making an enemy of anything that disagrees with it. (As a former rugby player, I think Americans would gain much from not only the rugby habit of shaking hands with opponents after a game then going to have a beer.) Active Telecoms at least covered the story from a distance. Although like The Guardian, it noted the abrasive tone coming from Treasury Secretary Jack Lew, who came up with the "supranational tax authority" criticism of the EC.

Apparently it is all right for US companies like Apple to be supranational, but not for the governing body for the EU to insist on its rule of law, when one of its member nations (Ireland) engages in State Aid (to Apple).

The ethics of all this is engaging, deserving much more public discussion.

More importantly, finding a way to critically engage with the behavior of Apple and the Irish Government offers a way to think through what the Australian academic Phillip Anthony O’Hara referred to as "The Corruption Industry."

Writing in the Journal of Economic Issues June 2014, O'Hara's article "Political Economy of Systemic and Micro-Corruption Throughout the World," made the point that corruption's long history incorporates the following:

...the promotion of vested interests against the common good in the form of bribery, fraud, embezzlement, state capture, nepotism, extortion and others.

 In many respects, the neo-liberal financial structure that made it possible for Apple and Ireland to make arrangements are an extension of this set of corrupt practices. In effect, Apple-Ireland serves as a case study for this method of interaction, in a political economy model that normalizes a kind of corporatized agency operating outside of and against the public interest.

The answer to the question in the title, does Apple Ireland epitomize "The Corruption Industry" is clearly Yes.

The EC should be congratulated for taking action in attempting to put a stop to a corrupt system of tax avoidance and financial organization. It should be encouraged to pursue the public interest and civil society, against the private and privatizing interests of corrupt and corrupting individuals, governments and corporations.    




 

Rupert Murdoch is at it again - after Brexit in the UK

As the UK ponders next steps about removing itself from the European Union it is becoming clear that the News Corporation, News International "newspapers" owned by Rupert Murdoch have had an important role in influencing public opinion.

Of course, it is not the newspapers and their journalistic editorial staff, but the owner who seeks to influence public opinion in favor of his preferred outcomes. Mr Murdoch has a strong record of being an interventionist owner, of using his newpapers and since 1996, Fox News, his cable television channel, to influence politics in the UK, the US and Australia. 

Media and journalism scholars in the liberal tradition have argued that this is a morally repugnant abuse of ownership rights. That argument hardly holds up. Liberals embody a fantasy of objectivity in journalism, all the while steering clear of major social issues deemed of little interest to their readership.  

One example is the rise of the one percent, who have flourished due to tax laws that help them avoid contributing to the public interest and society, except through self-serving charities and philanthropy, on which they decide. Few media outlets challenge the importance of sustaining a progressive taxation base that redistributes wealth across the citizenry. Instead, greed and self-interest are considered inherently righteous. (The end of this default position in the US emerged with the rise of Bernie Sanders, who made economic justice a hallmark of his campaign). 

Rupert Murdoch's media empire has contributed to this consolidation of unfairness and injustice around the world. He has no shame in promoting politicians and political parties that promote this ideology. 

It is worth noting that Mr Murdoch has been an active protagonist for conservative causes for years, since he set about disabling the journalism unions in the UK during Margaret Thatcher's time as Prime Minister in the 1980s. Before that he set about undoing the Australian Labor Party Government of Prime Minister Gough Whitlam in Australian in 1975, a party whose election his national newspaper The Australian, had previously supported.   

Mr Murdoch's hand can be seen in his influence on two major British newspapers, The Times and The Sun. According to Roy Greenslade, writing in The Guardian on July 6, their editorials in favor of a new Tory leader showed disturbing uniformity in support of one candidate.  In reaching his conclusion, Greensland asks:

Am I being overly conspiracist in detecting Rupert Murdoch pulling strings at his two newspapers? Or is it mere coincidence that Times editor John Witherow and Sun editor Tony Gallagher reached the same opinion, and used the same phrases, to fight the good fight on behalf of Gove?

The answers are probably obvious. 

However, what caught my eye was a statement in the Comments section of the same Guardian article. (This section, indeed the entire Guardian enterprise, has been heavily criticized of late for cutting and editing comments and for its support of anemic Labour Party policies, promoting the launch of Off-Guardian... but that is another story.) 

 As Joseph Reagle noted in his recent MIT book, Reading the Comments: Likers, Haters and Manipulators of the Web, much media commentary says a lot about how some members of the public feel about pressing issues. In this "trollplex," writers looking for an opportunity to "vent" their prejudices as trolls say anything, mostly hurtful, generally destructive and in line with the increasing barbarity of the times. 

Jacob Weisberg noted in "Are we hopelessly hooked?" his comments about of the book in The New York Review of Books (February 25, 2016): "It's a world devoid of empathy."       

The Guardian comment that captured my attention came from an Anonymous contributor named:

sdetop

 Member since 6 Apr 2015

I once asked Rupert Murdoch why he was so opposed to the European Union.  

'That’s easy,' he replied. 'When I go into Downing Street they do what I say; when I go to Brussels they take no notice.'

This is a terrific piece of evidence. I wish the author would reveal him or herself, to authenticate the quote. It helpfully consolidates the criticism of Murdoch's attitude to his ownership rights to interference, not to mention the value of the European Union as a force that is less beholden to petty national concerns and the selfish interests of individuals. (This does not appear to apply to the influence of German and French financial institutions in the EU).

Much more could be said about this matter, especially the important task of finding politicians and political parties who can work out how to resist and deny Mr Murdoch's unhealthy influence. For the time being that appears unlikely.

What is a "self-radicalized individual?" The Internet has changed the culture

A number of people have pointed to the tragedy of the mass shooting in the Pulse nightclub in Orlando Florida on Sunday June 12, as an event defined by the grey area between a hate crime and the work of Islamist extremism.

Unfortunately, as George Washington Criminologist Fredrick Lemieux pointed out in an article about US mass shootings, there is a relationship between the number of guns in circulation and mass shootings. The conflation of hate with Islamist extremism is barely relevant when so many guns are in circulation.

For media and cultural studies scholars, are there more powerful questions to ask about the relationship between the Internet and hate-extremist acts? This would not only include acts of vicious violence, but the entire panoply of mediated interactions.

The major point of entry for this inquiry is the research by Gerbner and Gross that influenced effects theory then cultivation theory which I used in Uprising (pp.180-181) to discus the Internet and jihad. The relationship between television violence and the cultivation of violence generally can be applied to the Internet and individual behavior. There is some academic literature on this, little of which has had any influence on public policy in the US. Nevertheless, we must persist, seeing violence in its relation to television as part of a historical sets of shifts from public care to private and individual self-interest.  

The issue now is to understand what the phrase "self-radicalized individual" means. It is a phrase used by President Obama in seeking to explain what happened in the Orlando nightclub shooting. In Remarks by Obama after Orlando Shooting the President reached for the phrase. Then he left it hanging. Surely, when he referred to "self-radicalized individuals in this country," he immediately gave the Internet more salience.

In the follow up, some of the media focus has pinpointed the role of the Internet, even down to a video excerpt that excluded other comments about the National Rifle Association and gun violence. Such coverage privileges the Internet, offering a hinted cause without a reason.

President Obama made the following comment:

The one thing that we can say is that this is being treated as a terrorist investigation. It appears that the shooter was inspired by various extremist information that was disseminated over the Internet. All those materials are currently being searched, exploited so we will have a better sense of the pathway that the killer took in making the decision to launch this attack.

President Obama also said: 

As far as we can tell right now, this is certainly an example of the kind of homegrown extremism that all of us have been so concerned about for a very long time.

Changes in attitude are underway.

 ...that one of the biggest challenges we are going to have is this kind of propaganda and perversions of Islam that you see generated on the Internet, and the capacity for that to seep into the minds of troubled individuals or weak individuals, and seeing them motivated then to take actions against people here in the United States and elsewhere in the world that are tragic. 

From the ISIS perspective, the idea of terror is effective when it is  translated into any action, even an action taken by an individual that names ISIS. This marks a shift in the culture that should interest media and cultural studies analysis. 

A discussion about the change in culture as a result of technology  was recently noted by Edward Mendelson in a review of several books in  The Depths of the Internet Age. He points to the shifts in culture traced to technology. This is no surprise. But as I have been saying for years, it is clear that we have to make a connection between Internet technologies and media and the assumptions of liberal democracy. In fact, liberal democracy as it is known is coming to an end as the Internet establishes new social and economic relations.  

It is pointless to refer to "self-radicalized individuals" then pretend that there is not a cause and effect between the Internet and jihad violence.  

This technological determinism defines the complexity of contemporary society, including the end of the culture as we know it. Individuals act in their relation to the Internet not in relation to the physical presence of others. The spectacle of the Pulse shootings can be seen as the expression of an individual performing his radicalized self. It is an act determined by the digital information flow of narrowed down options that makes it commonplace to think of others as wrong, evil and worthy of annihilation. 

In some ways the "self radicalized individual" could be seen as the ideal type - the perfect counter-intuitive extension of all that the Internet could achieve. As Judith Butler might put it in Notes Toward a Performative Theory of Assembly (2015) our interdependence as human beings has being made more precarious as the old political forms of assembly are disassembled. 

The Internet has empowered the individual against society, against public assembly in more intense relations with other individuals. The result is that everyone in the US feels more isolated, more precarious and nothing President Obama says helps.                    

Randy Nichols - Bentley University for Boston Media Theory

‘Smog Jog’ Through Beijing, Zuckerberg is Ignored

The obsession with digital media applications is everywhere - well almost! Almost every moment of our contemporary lives is commonly consumed in and around screen space. Panic ensues, as the real, non-digital world disappears into the virtual. Hand wringing ensues, as images of civilization in decline appear. Unless you are one of several billion people who could not care less!

Facebook founder Mark Zuckerberg would probably be delighted to have the entire planet connect to his Social Media Application. One should also assume that the US Government shares this enthusiasm for all things socially-defined by a young American. Thankfully, this is not the case.  

As this image from The New York Times of  "The Zuck" and his colleagues shows, Mao-Tse-Tung is more interesting than a young American billionaire!  

The New York Times did NOT draw attention to the crowds of Chinese presumably listening to stories about the Great Helmsman as they visited Tiananmin Square, their backs tuned to The Zuck. The Times article, sadly pre-occupied with all things American, was about the implicit stupidity of Zuckerberg who went for a run in Beijing on a day when the air pollution was dangerously high.
  
This is a kind of metaphor for the digital revolution. Power on 'bro, and insist on doing whatever you were doing, regardless of the risk to personal health, the social impact on people regardless of their circumstances or the alignment of national public interests with private preoccupations.

To reiterate this point of criticism, all things digital are overpowering non-virtual everyday life in the west with a view to universalize the digital.

Social Media has produced then reproduced the one per cent in their celebrity bearing and new-found wealth. These new Gilded gurus are the cause of all sorts of envy. They are apparently brilliant and so on.

I can hardly bother trying to find the words to describe their unchallenged dominance at the pointy end of the triangle of wealth and power at which they reside, not to mention the volumes of uncritical journalism, Public Relations, Marketing and Advertising circulating around them. Nor can I expend much energy on the thousands of wanna-be innovators, the Business School courses operating within a non-humanistic, uncritical perspective, dedicated to making more profit, wealth and whatever else the dream is made of this time around.  

On the other hand, thank you to Google for contributing $500,000 to Patrice Cullors, one of the founders of Black Lives Matter, to "further develop a program to help Californian residents monitor and respond to acts of police violence," as Jelani Cobb reported in the March 14, 2016 edition of The New Yorker magazine. See The Matter of Black Lives 

Imagine if Google gave all its money to social programs and economic development?  

If The Zuck's application and business focused on fighting racism, poverty and social despair, the Chinese visiting Tianamin Square may have noticed him ... For now he is irrelevant to them.

It is worth remembering the great achievements of Chinese society, following Mao Tse Tung's successful overthrow of feudal interests and foreign powers in 1949.

I hope that the Chinese continue their development in such a way that The Zuck and those like him who spend time focused on Social Media, will remain or become irrelevant to the Chinese. This is unlikely, but worth the effort, in order to build a multipolar, differentiated planet.  And hopefully find the place where smog is not an issue!

Virtual tales, Western fantasies vs Fundamentalism

Visiting Washington D.C., Australian Prime Minister Malcolm Turnbull adopted a very Australian idea for reducing the influence of ISIS on line.  The suggested solution? Contradict, mock and disprove their ideology. 

Isil may have an archaic and barbaric ideology, but its use of technology and social media, in particular, is very sophisticated... As Isil uses social media for its propaganda, we must respond rapidly and persuasively with the facts. It was clear to me from my recent visit, that the Iraqi government and other anti-Isil forces are not reacting quickly enough to contradict Isil’s online messages, which have been used both to recruit new fighters and demoralise those who oppose them and we should help them with this. Isil claims must be mocked and disproved as soon as they are made ... the cyber sphere demands reactions as rapid as the kinetic battlefield. 

It is hard to take this analysis seriously. Presumably, this Comedy Central approach will take off in cyberspace, when ISIS fighters have some down time. Ridiculous.

The opponents of ISIS believe that rationality informs ISIS and its fighters and that a solution can be found in appealing to that rationality. Such rationality is based on western bourgeois notions of liberalism. It is blind to the way religious belief operates when it becomes fanatical. In other words it is blind to the contradictions: the Islamic faith is highly rational, until like all religions, it moves into the mystical realm, then it is no longer rational. 

As I have argued previously, the combination of religious belief and the Internet offers ideal conditions under which irrationality can operate. The countervailing forces (to quote John Kenneth Galbraith in another context) on which liberalism relies for its survival, are evacuated within fundamentalist belief, then reified (made concrete) through the Internet. Fundamentalism removes every obstacle to singular belief and action. ISIS and the Islamic State are the result of this unsurpassed alchemy.

A rational program of belief gives way to the mysticism of belief.  

The central contradiction of the Internet - social media or any virtual tool - is its ability to take and make a belief system so completely that no questions can be asked. This is nothing new. It is "ideological grooming." This idea, discussed in Uprising and in previous blogs, does not receive adequate discussion because it may be too close to home for some promoters of Internet applications. There is a blind spot among many people, in their inability to reflect on the way ideology is constructed by the Internet.   

The French academic Armand Mattelart in his 2001 book Information Society makes the point that there is "A new ideology that dare not speak its name..."(2). This idea needs much more consideration, not just in light of the way ISIS uses the Internet. 

Meanwhile, Turnbull made some helpfully nuanced comments about ISIS which suggest that the challenges of addressing a fundamentalist minority within the larger streams of Islam will require more detailed analysis. 

We should not be so delicate as to say Isil and its ilk have ‘got nothing to do with Islam’. But equally we should not tag all Muslims or their religion with responsibility for the crimes of a tiny criminal minority. That is precisely what the extremists want us to do

He immediately gets this wrong as well. Fundamentalists are not criminals. They are singular believers with a utopian ideal that is fully realized in three layers: 

• the religious experience 
• virtual remediation  
• the eternal. 

This mix makes a Comedy Central solution pointless.  It requires deliberation on how to address ideology in the context of religion and in relation to ISIS, in the context of the history of the Middle East.