regulation

The Crony Media Protection Bill: Senator Cornyn says Schumer “Shield Law” is actually licensing of journalism

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Source: http://www.againstcronycapitalism.org

By Nick Sorrentino

The Crony Media Protection Bill: Senator Cornyn says Schumer “Shield Law” is actually licensing of journalism

 

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It should be noted that the number 1 contributor to Senator Schumer’s most recent campaign was law firm Paul Weiss which just happens to represent a large swathe of the old media industry. I wonder why the clients of Paul Weiss (who are clients largely because of Paul Weiss’s coziness with politicians) might want reporters to be de facto licensed?

Paul Weiss’s client list as reported on its website:

American Society of Composers,
Authors and PublishersApollo Global ManagementAlibaba GroupAlonzo MourningBarry WhiteBlue Man GroupCablevision Systems CorporationCirque du SoleilCitigroupDiscovery CommunicationsDreamWorks AnimationEndgame Entertainment

Ericsson

GeneralAtlantic

Goldman Sachs

Harbinger Capital

Home Box Office

Houghton Mifflin Harcourt

Ina Garten (“The Barefoot Contessa”)

Jim Cramer

John McEnroe

King World Productions

Lincoln Center Theater

Leiber & Stoller

Lincoln Center Theater

Lucasfilm

Major League Baseball

Martha Stewart Living Omnimedia

Marvel Studios

Meg Ryan

MTV/Nickelodeon

Miramax Film

National Football League

National Music Publishers’ AssociationNelvana StudiosNews CorporationNew York City OperaNew York YankeesThe Nielsen CompanyOprah WinfreyParamount PicturesRobert RubinRockstar GamesThe Roundabout Theatre

Shanghai Shendi Group

SEGA GameWorks

Spike Lee

Sony

Sony Music

Sony Pictures

Stephen Sondheim

Summit Entertainment

Sun-Times Media

Tencent Holdings

Thumbplay

Time Warner Cable

Time Warner

TV Azteca

Universal Studios

Viacom

Warner Brothers

Warner Music

The Weinstein Company

William Morris Endeavor Entertainment

World Wrestling Entertainment

Zagat

Draw you own conclusions but let’s just say that many of the clients above are in the information brokering business and they (along with establishment politicians) would love to shut down the new media. It’s a fundraising match made in heaven.

The government (and its partners) do not like the rise of new media. One hears over and over from folks in Washington about the “good old days” when we had more or less official gatekeepers of information and how much better things were then. When the “wise” establishment would tell Americans and the world the official version of events. When Walter Cronkite would literally sign off each newscast with “And that’s the way it is,” and people bought it. It was a time when consumers of news were unsophisticated and easily manipulated. That’s why the politicians (and many old media companies) long for this past time.

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Let’s not forget that Diane Feinstein recently said that free speech is a PRIVILEGE not a right. That 1st Amendment thing? Really more of a guideline.

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We must fight this effort to restrict speech and the press at every turn. we must never let what Schumer and Feinstein and their cronies want come to pass. Not in this country.

To paraphrase Winston Churchill-

“We shall fight in the Senate. We shall fight in the blogs and on Reddit. We will fight with growing confidence and growing strength in cyberspace. We will defend our Internet. We shall fight in Twitter and on Facebook, in Instagram and Tumblr. We shall fight in the old media. We shall never surrender.”

(From Breitbart.com)
 
“Now, you know, you start to put the dots together and the FCC’s recent discussion about placing monitors in newsrooms, you begin to see that this administration wants to control the information that people get and particularly any information that might be critical of them – which is, as you pointed out in the first instance… the function of a free press: to give people unbiased and factual information they can use to make their own decisions, not to collaborate with government in squashing speech that people find unfavorable,”

Click here for the article. 

Image credit: http://www.againstcronycapitalism.org


Nick Sorrentino
About Nick Sorrentino

Nick Sorrentino is the co-founder and editor of AgainstCronyCapitalism.org. A political and communications consultant with clients across the political spectrum, he lives just outside of Washington DC where he can keep an eye on Leviathan.

 

 

Stealing from the Poor to Give to the Rich (Video)

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Source: http://www.againstcronycapitalism.org

By

Stealing from the Poor to Give to the Rich (Video)

 

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People often think that property rights benefit those with the most property the most. This isn’t true however. It is actually the poor who in terms of quality of life, benefit most.

In order to have property rights there must be the rule of law. Not the rule of might. In a place where property rights are not respected only the powerful are secure in their possessions (and even then.) If people are not secure in their property, for fear that a “king” or a crony capitalist with connections to the “king” might take their property – the economy suffers. People can’t make contracts with one another. They can’t leverage property. They can’t build wealth, even modest wealth, because any wealth created can always be taken.

Poor people by definition do not have much. But if they can be sure that what little they have will remain theirs and that even the most powerful in society are checked by the rule of law, poor people at least have the chance to build wealth and to escape poverty.

But where the state or private allies of the state can seize property with no regard to ownership (as is the case in many countries) the poor will remain poor.

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Image credit: http://www.againstcronycapitalism.org


Nick Sorrentino
About Nick Sorrentino

Nick Sorrentino is the co-founder and editor of AgainstCronyCapitalism.org. A political and communications consultant with clients across the political spectrum, he lives just outside of Washington DC where he can keep an eye on Leviathan.

 

A List Of 97 Taxes Americans Pay Every Year

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Source: http://theeconomiccollapseblog.com

By Michael Snyder

A List Of 97 Taxes Americans Pay Every Year

 

America-Is-Broke-300x300If you are like most Americans, paying taxes is one of your pet peeves.  The deadline to file your federal taxes is coming up, and this year Americans will spend more than 7 billion hours preparing their taxes and will hand over more than four trillion dollars to federal, state and local governments.  Americans will fork over nearly 30 percent of what they earn to pay their income taxes, but that is only a small part of the story.  As you will see below, there are dozens of other taxes that Americans pay every year.  Of course not everyone pays all of these taxes, but without a doubt we are all being taxed into oblivion.  It is like death by a thousand paper cuts.  Our politicians have become extremely creative in finding ways to extract money from all of us, and most Americans don’t even realize what is being done to them.  By the time it is all said and done, a significant portion of the population ends up paying more than half of what they earn to the government.  That is fundamentally wrong, but nothing will be done about it until people start demanding change.  The following is a list of 97 taxes Americans pay every year…

#1 Air Transportation Taxes (just look at how much you were charged the last time you flew)

#2 Biodiesel Fuel Taxes

#3 Building Permit Taxes

#4 Business Registration Fees

#5 Capital Gains Taxes

#6 Cigarette Taxes

#7 Court Fines (indirect taxes)

#8 Disposal Fees

#9 Dog License Taxes

#10 Drivers License Fees (another form of taxation)

#11 Employer Health Insurance Mandate Tax

#12 Employer Medicare Taxes

#13 Employer Social Security Taxes

#14 Environmental Fees

#15 Estate Taxes

#16 Excise Taxes On Comprehensive Health Insurance Plans

#17 Federal Corporate Taxes

#18 Federal Income Taxes

#19 Federal Unemployment Taxes

#20 Fishing License Taxes

#21 Flush Taxes (yes, this actually exists in some areas)

#22 Food And Beverage License Fees

#23 Franchise Business Taxes

#24 Garbage Taxes

#25 Gasoline Taxes

#26 Gift Taxes

#27 Gun Ownership Permits

#28 Hazardous Material Disposal Fees

#29 Highway Access Fees

#30 Hotel Taxes (these are becoming quite large in some areas)

#31 Hunting License Taxes

#32 Import Taxes

#33 Individual Health Insurance Mandate Taxes

#34 Inheritance Taxes

#35 Insect Control Hazardous Materials Licenses

#36 Inspection Fees

#37 Insurance Premium Taxes

#38 Interstate User Diesel Fuel Taxes

#39 Inventory Taxes

#40 IRA Early Withdrawal Taxes

#41 IRS Interest Charges (tax on top of tax)

#42 IRS Penalties (tax on top of tax)

#43 Library Taxes

#44 License Plate Fees

#45 Liquor Taxes

#46 Local Corporate Taxes

#47 Local Income Taxes

#48 Local School Taxes

#49 Local Unemployment Taxes

#50 Luxury Taxes

#51 Marriage License Taxes

#52 Medicare Taxes

#53 Medicare Tax Surcharge On High Earning Americans Under Obamacare

#54 Obamacare Individual Mandate Excise Tax (if you don’t buy “qualifying” health insurance under Obamacare you will have to pay an additional tax)

#55 Obamacare Surtax On Investment Income (a new 3.8% surtax on investment income)

#56 Parking Meters

#57 Passport Fees

#58 Professional Licenses And Fees (another form of taxation)

#59 Property Taxes

#60 Real Estate Taxes

#61 Recreational Vehicle Taxes

#62 Registration Fees For New Businesses

#63 Toll Booth Taxes

#64 Sales Taxes

#65 Self-Employment Taxes

#66 Sewer & Water Taxes

#67 School Taxes

#68 Septic Permit Taxes

#69 Service Charge Taxes

#70 Social Security Taxes

#71 Special Assessments For Road Repairs Or Construction

#72 Sports Stadium Taxes

#73 State Corporate Taxes

#74 State Income Taxes

#75 State Park Entrance Fees

#76 State Unemployment Taxes (SUTA)

#77 Tanning Taxes (a new Obamacare tax on tanning services)

#78 Telephone 911 Service Taxes

#79 Telephone Federal Excise Taxes

#80 Telephone Federal Universal Service Fee Taxes

#81 Telephone Minimum Usage Surcharge Taxes

#82 Telephone State And Local Taxes

#83 Telephone Universal Access Taxes

#84 The Alternative Minimum Tax

#85 Tire Recycling Fees

#86 Tire Taxes

#87 Tolls (another form of taxation)

#88 Traffic Fines (indirect taxation)

#89 Use Taxes (Out of state purchases, etc.)

#90 Utility Taxes

#91 Vehicle Registration Taxes

#92 Waste Management Taxes

#93 Water Rights Fees

#94 Watercraft Registration & Licensing Fees

#95 Well Permit Fees

#96 Workers Compensation Taxes

#97 Zoning Permit Fees

Yet despite all of this oppressive taxation, our local governments, our state governments and our federal government are all absolutely drowning in debt.

When the federal income tax was originally introduced a little more than 100 years ago, most Americans were taxed at a rate of only 1 percent.

But once they get their feet in the door, the social planners always want more.

Since that time, tax rates have gone much higher and the tax code has exploded in size.

Why do we have to have the most convoluted tax system in the history of the planet?

Why can’t things be simpler?

In a previous article entitled “24 Outrageous Facts About Taxes In The United States That Will Blow Your Mind“, I listed a number of reasons why our federal income tax system has become a complete and utter abomination that is entirely out of control…

1 – The U.S. tax code is now 3.8 million words long.  If you took all of William Shakespeare’s works and collected them together, the entire collection would only be about 900,000 words long.

2 – According to the National Taxpayers Union, U.S. taxpayers spend more than 7.6 billion hours complying with federal tax requirements.  Imagine what our society would look like if all that time was spent on more economically profitable activities.

3 – 75 years ago, the instructions for Form 1040 were two pages long.  Today, they are 189 pages long.

4 – There have been 4,428 changes to the tax code over the last decade.  It is incredibly costly to change tax software, tax manuals and tax instruction booklets for all of those changes.

5 – According to the National Taxpayers Union, the IRS currently has 1,999 different publications, forms, and instruction sheets that you can download from the IRS website.

6 – Our tax system has become so complicated that it is almost impossible to file your taxes correctly.  For example, back in 1998 Money Magazine had 46 different tax professionals complete a tax return for a hypothetical household.  All 46 of them came up with a different result.

7 – In 2009, PC World had five of the most popular tax preparation software websites prepare a tax return for a hypothetical household.  All five of them came up with a different result.

8 – The IRS spends $2.45 for every $100 that it collects in taxes.

9 – According to The Tax Foundation, the average American has to work until April 17th just to pay federal, state, and local taxes.  Back in 1900, “Tax Freedom Day” came on January 22nd.

10 – When the U.S. government first implemented a personal income tax back in 1913, the vast majority of the population paid a rate of just 1 percent, and the highest marginal tax rate was just 7 percent.

If it was up to me, I would abolish the income tax and shut the IRS down.

But neither major political party in the United States is even willing to consider such a thing.

So the monstrous system that we have created will continue to get even bigger and even more complicated.

We are literally being taxed into oblivion, and most Americans don’t even seem to care.

This article first appeared here at the Economic Collapse Blog.  Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.

 

 

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Image credit: http://theeconomiccollapseblog.com

 

Ben Bernanke Gets His Reward

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Source: https://mises.org

By

Ben Bernanke Gets His Reward

 

6700“Bernanke Enjoys the ‘Fruits of the Free Market,’” or so we’re told in a Reuters headline from March 4 about the former Fed chairman’s 40-minute speech in Abu Dhabi for which he received, ahem, $250,000. In the Reuters author’s defense, he was only quoting a DC lobbyist who was defending the amount, and added, Bernanke “will personally experience supply and demand.”

Well, yes, it’s just supply and demand and all that. No big deal and if you don’t like it, you must have something against markets. Still, it would be nice (and a bigger deal) if these reporters would quote someone outside of the accepted intellectual class of the Boswash corridor so compromised by being among the primary beneficiaries of all the new money Chairman Ben and his comrades created, ex nihilo, when he wasn’t shooting baskets in the Marriner Eccles building. If they did, they might hear some healthy skepticism about these events in which top officials cash in on their “public service” via contacts with the very industries they benefited while in office.

George Stigler explained such paybacks in his capture theory of regulation for which he received (rightly) the Nobel Prize in Economics, although I’d say they are better explained by the phrase, “quid pro and here-you-go!”

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Figure 1: Speech honoraria immediately upon leaving term of office. From CNBC.

Less-beholden observers might pause during Bernanke’s victory lap and note that the dollar has lost almost 30 percent of its value since he joined the Fed in 2002, and that’s only if you accept the lowball metrics used in official CPI statistics. It is likely twice that amount if price inflation is measured in more traditional ways, including forgotten factors such as the full inflation for out-of-pocket expenses or the cost to maintain a constant cost of living. Americans of 1977 may have had to suffer through bad hair and disco music, but at least they didn’t suffer discrepancies between (a) what they experienced the value of the dollars in their pockets to be and (b) what the government said it was. We do.

Yet, today, the Establishment celebrates Bernanke for keeping the funds flowing to those parties it needs to remain in power. But while Paul Krugman wonders where the inflation is, I did some back-of-the-envelope calculations of Bernanke’s speech honorarium. Again using the CPI’s numbers, $250,000 today buys roughly what $193,000 bought in 2002, which would have purchased 603 ounces of gold at the time. Today, those 603 ounces of gold would be worth over $805,000.

The point isn’t that all Fed chairs should contract their post-retirement speeches in gold at the beginning of their term of service, although maybe they should. It’s that payoffs such as this reflect about what you’d expect when a currency receives monopoly protection and legal tender status, neither of which has anything to do with the free market. And notwithstanding the opinions of DC lobbyists, neither does Bernanke’s speech.

It followed the most reckless term of service of any central banker in U.S. history. He printed trillions of dollars to rescue a portion of Wall Street that could have internalized its post-crash losses and financed budget deficits that served to transfer capital to the fringes of military empire and out of reach of domestic workers. He “depression-mongered” the U.S. economy in September 2008 even though that market meltdown paled in comparison to those of 1987 and 2000-2001, thus setting the stage for Depression 2.0, and many billions in stimulus spending, bailouts, and other malinvestments.

Was all this simply an effort to test his faulty academic research of the 1930s? Perhaps partly. But remember that cartelizing factions on Wall Street created the Federal Reserve itself in 1913 for the cartelizing factions on Wall Street. Since those who receive the new money first benefit the most, it stands to reason that those interested parties would shower accolades and a share of the loot on Bernanke in the form of $6,250 per speech minute — and assume Mrs. Yellen is paying attention.

An amusing backdrop to the speech news is the continuing crises affecting Bitcoin and Mt. Gox, the fraudulent and now bankrupt Bitcoin exchange that appears to have lost deposits while itself engaged in fractional reserve banking, something only the protected class of modern banks are allowed to do. Understanding the uncertain future of both the dollar and the country’s power elite in the post 9/11 United States is key to understanding the rise of competing digital currencies (of which Bitcoin is just one). Their demand would never have been as strong had the dollar been inflated relatively less, and had market corrections been allowed relatively more, during the years of the so-called Great Moderation. It is safe to assume that establishment bankers are trying hard to use the Mt.Gox fiasco to demonize any movement toward peer-to-peer banking, which could easily have the effect of making banking as we know it go the way of the buggy whip industry in the nineteenth century.

If it does, one casualty just might be Bernanke’s future honoraria.

In a rational world, being paid $250,000 for this speech would cause many to wonder what is really going on. But such a world has not existed in banking since, perhaps, the 1830s. Until another one comes about, appreciate the irony that Bernanke is being paid in a fiat currency he himself helped devalue, and since his own successor at the Fed promises to continue operating in a Bernankean tradition, he will pay someone to diversify it, quickly, into real assets to protect its purchasing power.

Bernanke’s speech has little to do with supply and demand. It has more to do with being rewarded for extending the road down which we have been kicking the economy can. It’s a road that will eventually dead end.

 


 

About the Author

Christopher_WestleyChristopher Westley

Christopher Westley is an associated scholar at the Mises Institute. He teaches in the College of Commerce and Business Administration at Jacksonville State University. Send him mail. Twitter @DrChrisWestley 

 

 

Image credit: https://mises.org

Feds probe Maryland’s (and other state’s) disastrous Obamacare marketplace

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Source: http://www.againstcronycapitalism.org

By

Feds probe Maryland’s (and other state’s) disastrous Obamacare marketplace

(4 of the 14 state exchanges are now under investigation)

 

Funny, Obama’s not so smug these days.

Funny, Obama’s not so smug these days.

 

Obamacare is the train wreck that Democratic Senator and chair of the Senate Finance Committee Max Baucus said that it would be. It has been a complete failure in nearly every way. But its biggest failure may be the crony capitalism which infects the program at a cellular level. From the the deals given to the health insurance companies which will cost taxpayers billions, the deals the drug companies made which will cost taxpayers billions, to the “non-profit” navigators on the take, to the contractors which failed almost universally to deliver a workable online product, the American people have been lied to and stolen from. And I’m not being over the top. The president himself (along with his underlings) repeatedly lied to the American people. The theft is ongoing.

Obamacare may be the biggest domestic program disaster in history. It certainly is for the amount of time it has existed.

(From CNBC)
 
Harris said the probe should seek answers to several questions, including: “how federal dollars were spent on the exchange,” “the procurement process, which may have included contractors with no expertise,” whether federal funds can be recouped from the state “in light of their obvious lack of proper oversight” and “who specifically failed in their responsibilities to safeguard federal taxpayer money.”
 
The exchange’s now-fired contractor, Noridian Healthcare Solutions, had been paid nearly $65 million by Maryland, and had billed the state for $13 million more. Additional spending is projected to bring the exchange’s total cost to a total of $261 million.
 
The bulk of Maryland’s funds for its Obamacare exchange came from federal grants.

Click here for the article.

Image credit: http://www.againstcronycapitalism.org
 

How Pizza Hut Is Preparing for the Coming Hikes in the Minimum Wage

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Source: http://www.economicpolicyjournal.com

By

How Pizza Hut Is Preparing for the Coming Hikes in the Minimum Wage

 

Super cool automation that will replace high cost waiters, waitresses and cashiers.

 

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Screen capture of pizzahut produced video added to Bob’s original post.

 

“Too Big To Fail” designation of banks makes economic disaster more likely

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Source: http://www.againstcronycapitalism.org

By

“Too Big To Fail” designation of banks makes economic disaster more likely

 

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The big banks, which in 2008 nearly went belly-up because they were overleveraged and needed a taxpayer funded bailout in order to survive a reversal in the economic tide, are even bigger today. They pose more risk than they did 5 years ago. Because they have been designated as “too big to fail” the megabanks now enjoy an implicit subsidy courtesy of you and me. Their borrowing costs are lower because we backstop them. Because of the backstop and lower costs bankers are incentivized to take on more risk. Sooner or later this will create major instability as the market mechanism has been distorted and will seek to correct for this distortion.

 

(From Bloomberg.com)
 
Do markets still view the nation’s largest banks as too big to fail? Have regulators failed to eradicate the perception that, when the next crisis comes, the government will again come to the rescue?
 
Given that the largest banks are now even bigger than they were before the last financial crisis, it’s a pressing question. Unfortunately, a careful look at the data suggests the answer is less encouraging than many policy makers think.
 
Expectations of government bailouts create dangerous distortions. When, for example, creditors assume they’ll get rescued in an emergency, they don’t demand higher interest rates from banks that take on bigger risks. This lack of market discipline gives bankers a strong incentive — consciously or not — to engage in behavior that makes disasters more likely. Taxpayers effectively end up subsidizing activity that threatens their own well-being.

Click here for the article.

Image credit: http://www.againstcronycapitalism.org


Nick Sorrentino
About Nick Sorrentino

Nick Sorrentino is the co-founder and editor of AgainstCronyCapitalism.org. A political and communications consultant with clients across the political spectrum, he lives just outside of Washington DC where he can keep an eye on Leviathan.

 

Obama nominates Pro-SOPA lobbiest to lead Trans Pac Partnership talks

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Source: http://www.againstcronycapitalism.org

By

Obama nominates Pro-SOPA lobbiest to lead Trans Pac Partnership talks

 

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Remember SOPA? The hiddeous beast of a bill sponsored by Hollywood which sought to jam the file content sharing genie back in the bottle? The bill that the whole Internet world rose up against and forced the politicians to back down on? Remember that? Well one of the lobbyists who headed the effort to severely restrict the Internet so that the media companies could cling to their outdated business models has now been nominated by Obama to head the effort in the secret (to us – hundreds of corporations are in on what is going on) Trans Pacific Partnership talks.

The TPP is a comprehensive trade agreement which will define how trade is done around the Pacific Rim in the years to come.  There is a lot riding on the negotiations, especially for Hollywood which now sees the agreement as a way to get the restrictions on content sharing that it couldn’t get through Congress.

And Obama just helped them do it.

(From Republic Report)
 
This morning, President Obama nominated Robert Holleyman as deputy U.S. trade representative. If confirmed by the U.S. Senate, Holleyman will help lead the effort to pass the controversial Trans-Pacific Partnership trade deal.
 
Notably, Holleyman is a former lobbyist who led efforts to pass the Stop Online Piracy Act legislation, better known as SOPA, when he was leader of the Business Software Alliance. The SOPA debate (along with its sister legislation, PROTECT-IP, in the Senate) brought a spotlight on industry efforts to undermine Internet freedom through what many considered to be draconian intellectual property policy.

Click here for the article.

Image credit: http://www.againstcronycapitalism.org


Nick Sorrentino
About Nick Sorrentino

Nick Sorrentino is the co-founder and editor of AgainstCronyCapitalism.org. A political and communications consultant with clients across the political spectrum, he lives just outside of Washington DC where he can keep an eye on Leviathan.

 

Restaurants Charge Customers for Obama Care

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Source: http://bastiat.mises.org

By Joseph Salerno

Restaurants Charge Customers for Obama Care

 

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Florida and California have tacked on a surcharge to their diners’ food and beverage bills to help defray the looming costs of the Affordable Care Act.  The Gator’s Dockside chain of restaurants  in Florida has  added  a 1 percent surcharge while Republique, a trendy restaurant in Los Angeles, is increasing patrons’ tabs by 3 percent.  A sign in a Gator’s Dockside restaurant advises customers:

The costs associated with ACA compliance could ultimately close our doors.  Instead of raising prices on our products to generate the additional revenue needed to cover the costs of ACA compliance, certain Gator’s Dockside locations have implemented a 1% surcharge on all food and beverage purchases only.

Half of the Gator Group’s 500 employees work full time and the company opted for  the surcharge in lieu of avoiding the costs of Obamacare by reducing the hours of these employees so that they qualify as part-time.  The company estimates the costs of extending Obamacare to their full-time hourly employees, who currently do not receive any health benefits,  to be $500,000.  The surcharge is expected to to raise $160,000.

Image credit: http://bastiat.mises.org

 

Will Washington Take Down Apple — And Why?

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Source: http://www.againstcronycapitalism.org

By

Will Washington Take Down Apple — And Why?

 

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Is Apple being given a hint to fork over more campaign contributions?

The US Department of Justice has not only successfully sued Apple for arguably non-existent anti-trust violations in the e-book market. It has even demanded– and gotten– a court appointed “monitor” placed inside the company to supervise the company’s pricing decisions.

This is a company that went from an $18 billion market value in 2000 to a $455 billion market value in 2013. During the same period, Microsoft’s market value fell from $603 billion to $290 billion. Should anyone expect the success story to continue now that the government is meddling with all the company’s pricing?

Apple appealed the anti-trust judgement this Tuesday, but was unable to get the government “monitor’s” work suspended while the case is under appeal. Among the interesting facts that have come out about the “monitor,” Michael Bromwich: he bills for his time at $1,100 an hour and charged $138,432 for his first two weeks of “work.”

Apple has labeled Bromwich’s appointment “unprecedented and unconstitutional.” We wish it were unprecedented. This form of government price interference and intimidation has become increasingly common.

Joseph Covington, who headed the Justice Department’s Foreign Corrupt Practices Act Division in the 1980’s, told Forbes, in reference to monitors appointed to enforce that act: “ This is good business for Justice Department lawyers who create the marketplace [ for monitors] and then get…a job there [ after they leave government].”

Nor is it limited to the Justice department. If a company gets into the sights of the Federal Trade Commission (FTC) or even the Food and Drug Administration (FDA), the terms of settlement increasingly include “monitoring” by highly paid lawyers, who are typically former FTC or FDA employees.

This is not just the small time corruption it might seem. It is tremendously damaging to the economy. The collapse of the Soviet Union should have demonstrated once and for all how important honest and unimpeded prices are for an economy.

If the government takes control of pricing, as it is doing in more and more sectors of the economy, it is guaranteeing unemployment and economic suffering. It is also guaranteeing an ever greater problem of crony capitalism, as companies respond by increasing their campaign contributions or take other steps to buy influence in Washington.

Apple is and ought to be ramping up its Washington presence. A Politico article of May 2012 wondered about the earlier naivete of the company leadership. Did they really think they could get away with lobbying expenditure of only $500,000 in the first quarter of that year compared to $5mm for Google and $1.8mm for Microsoft? Did they really think they could get away with having no company political action committee (PAC) from which to make campaign contributions?

Apple might have thought it was safe, even untouchable. Was not the company an icon of American economic leadership? Did not Apple employees overwhelmingly direct what campaign contributions they made to President Obama? Even with the lawsuit, had not Apple employees in fact given 93 percent of their contributions to Obama in 2012 and only 7% to Romney? Wasn’t that good enough?

Well no. Google employees gave 98 percent of their money to Obama and it was a whole lot more money ($727,702 versus $338,752). Apple CEO Tim Cook hadn’t even maxed out ( given to the legal limit) in his own contribution.

This lack of political involvement may be contrasted with Amazon’s Jeff Bezos, who stood on the other side of the anti-trust suit, even though he had created what certainly looked like a near monopoly in e-books, the subject of the suit. Apple is not wrong to argue in its legal filing that its entry into the sector “marked the beginning, not the end, of competition.” But Bezos has bought the Washington Post, and Washington officials will think twice about tangling with him.

In thinking about Apple’s relative lack of political involvement in the past, we should also keep in mind what Politico reported last month: “ President Barack Obama has a plan to save the Senate’s tenuous Democratic majority: sell a populist message… and raise lots of cash.”

In Washington doing favors for special interests is one way of raising cash. But so is intimidating them. Either way you get paid, whether from gratitude or fear.

In addition, there is another reason why Apple could now be in the crosshairs of the Justice Department. On November 5, 2013, the company issued a report containing this: “ Apple has never received an order under Section 215 of the USA Patriot Act. We would expect to challenge such an order if served on us.” This made jaws drop both in Silicon Valley and Washington. It was daring, perhaps foolhardy. It was directly taking on the government.

Before leaving the besieged Apple, we might pause to consider how the company also gives the lie to one of the great economic myths of our day: that falling prices ( deflation) hinder an economy. Here is a typical version of the myth from an AP story last month: “ Many economists have worried that the Eurozone may be about to suffer a debilitating bout of deflation….Falling prices can hurt an economy as consumers postpone spending in the hope of getting cheaper deals in the future while businesses fail to innovate and invest.”

This all backward. Businesses innovate and invest in order to become more productive. Being more productive allows them to lower prices, improve quality, and get more customers. Everyone benefits from lower prices, but especially the poor and the middle class, who have the most trouble dealing with rising prices.

Apple is a good illustration of all this. Various tech experts on the internet have been discussing what an Apple Iphone would have cost if available in 1991. What would we have had to pay to get similar features and power in some form ( clearly not hand held)? The estimates vary but the top one approaches $4mm.

Shouldn’t it be obvious ( to anyone other than a Federal Reserve official) that falling prices, produced by innovative and productive businesses such as Apple, are exactly what we should be hoping for? If so, why is the government determined both to create inflation and to interfere with Apple’s price setting decisions?
 

Image credit: http://www.againstcronycapitalism.org

 


Hunter Lewis
About Hunter Lewis

Hunter Lewis is co-founder of AgainstCronyCapitalism.org. He is co-founder and former CEO of global investment firm Cambridge Associates, LLC and author of 8 books on moral philosophy, psychology, and economics, including the widely acclaimed Are the Rich Necessary? (“Highly provocative and highly pleasurable.”—New York Times) He has contributed to the New York Times, the Times of London, the Washing­ton Post, and the Atlantic Monthly, as well as numerous websites such as Breitbart.com, Forbes.com, Fox.com, and RealClearMarkets.com. His most recent books are Crony Capitalism in America: 2008–2012, Free Prices Now! Fixing the Economy by Abolishing the Fed, and Where Keynes Went Wrong: And Why Governments Keep Creating Inflation, Bubbles, and Busts. He has served on boards and committees of fifteen leading not-for-profit organizations, including environmental, teaching, research, and cultural and global development organizations, as well as the World Bank.

 

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