Capitalism vs Patriotism

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This is an excerpt from the transcript of a fascinating transcript of a CNN discussion between CNN’s Candy Crowley and Jim Hoffa, boss of the Teamsters union.

HOFFA: I think businesses are sitting on money. Look at Apple. They have $76 billion in their checking account. And they’re spending it.

CROWLEY: Which they are allowed to have.

HOFFA: But they are not doing anything with it. And instead of investing here, everything they do is in China or is in Asia somewhere. And the answer, look at Honda. Honda is building $1 billion plant, and they want to build it in Mexico. This is on the drawing board right now.

CROWLEY: It’s cheaper there.

HOFFA: Why isn’t it — well, we know that. But don’t they have an obligation to America to build it in America, to put people to work here instead of in Mexico? That’s what I believe.

You know, this is really — I think the president should challenge the patriotism of these American corporations that are sitting on the sidelines saying, why do we have high unemployment but I am not going to hire anybody? You know, they have an obligation just like the federal government, just like Obama. We have all got to get into the game. And I don’t see that happening. So the trillions and billions of dollars that they have on the sidelines, they have money, Pfizer and General Electric, they have trillions of dollars overseas, let’s start repatriating that money. Let’s start a program to get America going again.

The problem in America is not that we don't have enough money. We have got more money than any other country in the world. The problem is American businesses are not spending it and not getting it in the game. That’s how we are going to get America going again.

CROWLEY: I’m hearing tweets across the universe here because — I want to go back. Are you questioning the patriotism of Apple for sitting on money rather than hiring?

HOFFA: Yes, I am.

CROWLEY: Are you?

HOFFA: Yes, I am. What is it with a company that makes — and they sell most of their products here in the United States. I mean, they’re the biggest — Apple, you have got Apple Stores everywhere else.

They have been sitting on that kind of money and every time they do something, they do it in China, they do it somewhere else. There’s something wrong with that. Don’t they have an obligation?

CROWLEY: They would tell you that the high price of labor and the high cost of health care and the high cost of environmental — you know, drove them out of the country.

HOFFA: I don’t believe that at all. You know, we have companies here that make a lot of money like UPS. We have a number of great companies here that are functioning here that are union, Sikorsky, and they are doing very, very well.

You can do it here. But the answer is, you have to have the incentive. And so many companies like Mr. Coffee and all of these other companies that have closed and moved to Mexico, they are wrong. They are unpatriotic.

We have got to turn this around and say, hey, we are an American company, we owe an obligation to America, let’s put America back to work.

Funny thing: the only area when capitalism doesn’t conflict with patriotism is the so-called ‘defence’ industry.

Has the revolt begun against Apple’s iPad app fees?

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This morning’s Observer column.

How things change. It seems only a few months ago that magazine and newspaper publishers, maddened by the fact that the Big Bad Web enabled readers to access their content for free (and sceptical about the effectiveness of paywalls), decided that Apple’s iPad was just the ticket. Henceforth, they would publish their stuff not as web pages but as iPad apps. Not only did this offer them a shiny device that would display their wares in glorious living colour, but it would also force cheapskates and freeloaders to pay real money for the privilege of accessing them. This was possible because nothing happens on the iPad without going through Apple’s iTunes store, and Steve Jobs knows your credit card details. Thus the “free riding” that was commonplace on the web would become a thing of the past.

Accordingly, publishers fell like ravening wolves on the iPad, investing large amounts of money and effort in developing apps to run on the device…

How to get people up in the morning

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My friend Jonathan Steinberg has written a wonderful biography of Bismarck, which I’m reading in the Kindle edition and thoroughly enjoying. This passage about Bismarck’s time as a country squire and his behaviour as a host (or even an host) made me laugh out loud:

One night after a long journey, Herr von der Marwitz and a friend showed up unannounced at Kniephof [Bismarck’s estate]. Bismarck welcomed them, set out the usual fare, and the visitors and their host sat late and drank a lot.

He apologised in advance that he would not be able to see them at breakfast because he had to be in Naugard by 7am. The guests needed to go there too and, though Bismarck strongly urged them to sleep as late as they liked, they eventually agreed that Bismarck would wake them at 6.30 in the morning. They drank on and eventually went to bed. The friend said to von Marwitz, as they climbed the stairs to the guest room, ‘I have had more drink than I am used to and I want to sleep it off tomorrow morning’. ‘You can’t do that’, Herr von Marwitz said. ‘Wait and see,’ replied the friend who pushed a huge chest of drawers against the door.

According to von Marwitz’s account,

“At 6.30 in the morning, Bismarck knocked at the door. ‘Are you ready?’ No sound from the room. Bismarck turned the doorknob and pushed the door against the heavy chest. A few minutes later he called out from the courtyard. ‘Are you ready?’ No sound from us. Two pistol shots crashed through the window-glass and knocked plaster onto my friend, who crept to the window and stuck a white handkerchief out on the end of a stick. In a few minutes we were downstairs. Bismarck greeted us with his usual heartiness without a word about his little victory.”

Hmmm… This might work with teenagers. I’ll need a gun licence, though.

So is Amazon finally stamping on Kindlespam?

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Some time ago I wrote about the scourge of Kindlespam — the way in which opportunists were producing hundreds, and in some cases thousands, of phoney ‘ebooks’ using the Kindle Direct Publishing system. I wondered why Amazon wasn’t stamping on the practice, and cynically assumed that it was because the company continued to make money on every one of these ‘books’ sold on the site. If so, this seemed short-sighted, as it couldn’t be in Amazon’s long-term interests to have the Kindle marketplace swamped by this kind of spam.

Now, however, it looks as though the company has woken up. Witness this email received by an ebook self-publisher and posted on a forum that specialises in Kindle publishing under the heading “All My Amazon Ebooks have Been Taken Off The Shelf!”

Hello,

We’re contacting you regarding books you recently submitted via Kindle Direct Publishing.

Certain of these books are either undifferentiated or barely differentiated from an existing title in the Kindle store. We remove such duplicate (or near duplicate) versions of the same book because they diminish the experience for customers. We notify you each time a book is removed, along with the specific book(s) and reason for removal.

In addition to removing duplicate books from the Kindle store, please note that if you attempt to sell multiple copies or undifferentiated versions of the same book from your account, we may terminate your account.

If you have any questions regarding the review process, you can write to kdp-quality@amazon.com.

Best regards,

Kindle Direct Publishing
http://kdp.amazon.com

About time. Kindle Direct Publishing is a great idea for enabling user-generated content and it would be a shame to see it destroyed.

Struggling with a great contraction

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Martin Wolf has a sobering column in today’s FT. This is how it begins:

Many ask whether high-income countries are at risk of a “double dip” recession. My answer is: no, because the first one did not end. The question is, rather, how much deeper and longer this recession or “contraction” might become. The point is that, by the second quarter of 2011, none of the six largest high-income economies had surpassed output levels reached before the crisis hit, in 2008. The US and Germany are close to their starting points, with France a little way behind. The UK, Italy and Japan are languishing far behind.

Further down, he has some pretty harsh things to say about Obama and Merkel. Thus:

The depth of the contraction and the weakness of the recovery are both result and cause of the ongoing economic fragility. They are a result, because excessive private sector debt interacts with weak asset prices, particularly of housing, to depress demand. They are a cause, because the weaker is the expected growth in demand, the smaller is the desire of companies to invest and the more subdued is the impulse to lend. This, then, is an economy that fails to achieve “escape velocity” and so is in danger of falling back to earth.

Now consider, against this background of continuing fragility, how people view the political scene. In neither the US nor the eurozone, does the politician supposedly in charge – Barack Obama, the US president, and Angela Merkel, Germany’s chancellor – appear to be much more than a bystander of unfolding events, as my colleague, Philip Stephens, recently noted. Both are – and, to a degree, operate as – outsiders. Mr Obama wishes to be president of a country that does not exist. In his fantasy US, politicians bury differences in bipartisan harmony. In fact, he faces an opposition that would prefer their country to fail than their president to succeed. Ms Merkel, similarly, seeks a non-existent middle way between the German desire for its partners to abide by its disciplines and their inability to do any such thing. The realisation that neither the US nor the eurozone can create conditions for a speedy restoration of growth – indeed the paralysing disagreements over what those conditions might be – is scary.

Yep.

Time Warner: profiting from hacktivism?

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Aw, isn’t this lovely? When members of the hacktivism group Anonymous appear in public to protest against censorship and corruption, they wear plastic masks of Guy Fawkes, the celebrated 17th-century terrorist. But guess what?

Stark white, with blushed pink cheeks, a wide grin and a thin black mustache and goatee, the mask resonates with the hackers because it was worn by a rogue anarchist challenging an authoritarian government in “V for Vendetta,” the movie produced in 2006 by Warner Brothers.

What few people seem to know, though, is that Time Warner, one of the largest media companies in the world and parent of Warner Brothers, owns the rights to the image and is paid a licensing fee with the sale of each mask.

Groucho Marx, where are you when we need you?

Steve Jobs and Napoleon: an exchange

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My Observer piece about Steve Job’s place in history prompted some interesting responses, in particular an email from my friend, Gerard de Vries, who is an eminent philosopher of science. “With all the articles about the genius of Apple’s Jobs around”, he wrote

Tolstoy’s War and Peace came to my mind. This is how historians used to write about Napoleon: as the genius, the inspirer, the man who saw everything coming far ahead and who designed sophisticated strategies to win his battles.

That image was destroyed by Tolstoy.

Was Napoleon in command? Well, he may have given commands but – as Tolstoy’s novel stresses – a courier had to deliver them and maybe the courier got lost in the fog, or got shot halfway and even if he arrived at the right spot and succeeded to find the officers of the regiment, the command to attack may have been completely irrelevant because just a half hour before the courier arrived, the enemy had decided to launch a full attack and all Napoleon’s troops can now do is pray and hide, or flee. Tolstoy’s point is that Napoleon’s power is projected onto him – first by his admiring staff and troops and later by historians. Napoleon plays that he is “Napoleon” – that he is in command, that he knows what he is doing. But in fact he too was a little cog in a big machine. When the machine got stuck, the genius of Napoleon disappeared. But in our historical narratives, we tend to mix up cause and effect. So the story is that the machine got stuck because Napoleon’s genius ran out.

Isn’t this also the case with Jobs? He played his role as the genius CEO and was lucky. Is there really more to say?

The best advice to generals, Tolstoy remarked somewhere, is to publish your strategy after the battle. That’s the only way to ensure that your strategy relates to what has happened.

I was intrigued by this ingenious, left-field approach. It reminded me of something that Gerard had said to me when we first worked together way back in 1978 – that War and Peace was quite a good text for students embarking on the history and philosophy of science, where one of the most important obligations is to resist the Whig interpretation of history — which is particularly seductive in the case of science.

I replied,

I don’t think Tolstoy’s analysis fits the Jobs case exactly, for two reasons: we have corroborated accounts by eyewitnesses/subordinates of Jobs’s decision-making at crucial junctures of the story (when the likely outcomes were not at all certain); and there’s the fact that Jobs’s strategy was consistent in an interesting way, namely that his determination to keep the Mac a closed system was a short-term disaster (because it left the field wide open for Microsoft and Wintel) but a long-term masterstroke (because it’s now what enables Apple to produce such impressively functional mobile devices).

To which Gerard responded:

I’m less convinced by the eye-witness reports: Napoleon’s staff also thought well about his judgements and determination (until the French were defeated and had to retreat from Russia, of course). What IS however a good point is that Job’s name appears on a large number of patent-applications (there was an interesting report about that in IHT/NYT last week which also pointed out that this could not only be motivated by the wish to boost Job’s (internal and external) company stature, as patent offices are keen to check whether the people who appear on patent applications have really contributed to the innovation.) Jobs seems to have been active not only on the level of “strategy” but also on the level of detailed engineering and design work in Apple (and that would be a difference with Napoleon: I don’t think Napoleon ever did some shooting himself. As I remember, he kept a safe distance from the actual fighting).

The more one thinks about this stuff, the more one realises how important it is to try and see technological stories in a wider context. For example, I vividly remember how Jobs was castigated in the 1980s for his determination to maintain absolute control over both hardware and software — in contrast to Microsoft, which prospered because anyone could make DOS and Windows boxes. Now the cycle has come full circle with Google realising that it will have to buy a handset manufacturer if it is to be able to guarantee “outstanding user experiences” (i.e. iPhone-like performance) for Android phones.

And that, in turn, brings to mind Umberto Eco’s lovely essay explaining why the Mac is a Catholic system and the PC is a Protestant one.

Later, another friend, Jon Crowcroft commented:

“Well Jobs is a Buddhist and Gates is agnostic – that certainly tells you something. People I know that talked to Jobs on various projects support the idea he had a major hand in project successes. I think his early failure was a common one of being too early to market; once he got re-calibrated after Apple bought NeXT to get him back, then he had it all sussed.”

Still later: Comparison between Apple and Microsoft is also interesting, as David Nicholls pointed out in an email. In terms of market cap, Apple is now worth considerably more, but:

While it is true that Apple is doing amazingly well at the moment, and ‘gaining ground’ over Microsoft, when it comes to the total amount of money made over the years, Microsoft is still well ahead.

I did a quick bit of digging and found that Apple’s total Net Income from 2001 to 2010 (the only figures I could find) is around $35.5 billion. In the same period Microsoft’s equivalent is $119 billion. These figures aren’t corrected for inflation but that obviously won’t affect the relative amounts.

Microsoft’s figures are available back to 1991, and the 1991-2010 total is around $151 billion.