Apple keeping cash, jobs overseas



RICH KARLGAARD: Well if you project forward into the future just a few years, you're going to find that the Chinese labor cost won't matter anymore because everything will be done by robotics and 3D manufacturing. So at that point, does America have a chance at a manufacturing renaissance to create apples, automobiles, and healthcare, and that should be the key policy question. Right now with tax and regulatory fees I don't think so. Even the liberal Steve Jobs told President Obama during jobs dying days that things need to be fixed to reinvigorate Americas dying economy.

VICTORIA BARRET: I know, and it's an amazing thing coming from a guy who lived in a commune living in Silicon Valley barefoot and often time in Birkenstocks. Well yes exactly, I think his message to Obama is one we need to listen to. Granted there are issues with those factories in China that we are all well aware of. It is not a perfect system. Yes, but it doesn't mean all the issues are bogus which is the tragedy of that story being fabricated. My point is, I think it's actually a beautiful thing that we could get devices like the iphone and Ipad because apple could go to the most efficient route for labor. They could create these devices in the cheapest way possible. That's why we have these devices. So I actually think it's a testament to our system that we allow companies to pull labor from all over the globe. So we should continue fighting for that as well as making our system better.

MIKE OZANIAN: David I agree that apple is a perfect example that the cost of doing business in the United States is way too high. Before any business leader decides to invest in hiring people, or invest in factories, or real estate. They have got to say ‘this is what it's going to cost me, and this is what my after tax return is going to be.' Increasingly businesses in this country are going to say that the after tax return is going to be too low in the United States, I'm better off going overseas. This is one of the many reasons why companies in the United States have moved to the south in recent years. Why Boeing wanted to move because certain states in America have too much onerous tax codes. The cost of taxes is very important.

RICK UNGAR: There are certain realities about the cost of workers in china that are not going to change. It has a lot to do with things that we can't always impact. I'll tell you what troubles me, I lived outside of the United States for a lengthy period of time and you know what? I had to file my taxes in the United States, I had to pay my taxes in the United States, even though I was based somewhere else. My question is why do corporations like Apple get to keep all their money outside the country and not pay their taxes in the United States. You know what? We all think our tax rates are too high. I didn't like paying my taxes even though I was living in another country. You've got to pay your taxes. Lower them a little bit, you know what even lowering them a little bit, corporations are still going to try and avoid paying US taxes because we don't make them pay US taxes. Don't you think we make them do what we make citizens do?

DENNIS KNEALE: Every company and every American has their God given right to pay as low of a tax as legally as they possibly can. We are conflating two different issues here, one is that the there is 1.4 trillion dollars in US profit cash after tax sitting overseas. Why aren't we bringing it home? Because we are the only major nation in the world that actually taxes it a second time when you bring it home. We would bring home over 800 billion in cash easily, John Chambers of Cisco told me, if we would just cut the 35 percent tax rate to 5 percent. The second issue is sending jobs overseas. Apple has the right to make the goods at the highest quality at the cheapest price anywhere in the world it wants. That will make our economy stronger. The problem is when it earns money overseas in those markets it doesn't bring it home because it will get taxed again at rates that effectively rise up to 60 or 70 percent.

BILL BALDWIN: The tax situation is extremely complicated; I want to talk about the jobs. I happen to think apple shows what's good about American job markets. What's happening is that we get the marketing and design jobs and the assembly goes to lower wage countries. I think this is good. I think foreign trade is good. I think its fine that America lost all its banana growing jobs. I think its fine that Ecuador doesn't export filmed entertainment. This is called the law of comparative advantage. It works, except the politicians don't want it to work.


MORGAN BRENNAN: I'm not going to deny the fact that this could become an icky trend to be asked for your password as an employee. I'm also not going to deny the fact that this is a hot bed of legalities. With that being said, employers are doing this A because it has become a somewhat unregulated tool that they have been able to use towards vetting out potential employees. They look at social media, the behaviors that people express on social media and they think it's indicative on how they are going to be as an employee. And you know what? The truth of the matter is that the data actually supports it. The journal of applied social psychology came out with a report not so long ago that actually backs that theory up. So are we going to see some legal situations? Is there room for regulations? Yes. But they are doing this because they consider it a useful, valuable tool.

RICK UNGAR: You know where does it stop? First we want states asking women what they are using birth control for. Now they are going to ask for facebook passwords, whatever happened to this country? You can know anything. I'll tell you what. You want to know how I'm going to be as an employee? Why don't you put a camera in my bedroom? If you want to see what is on my facebook page, go to it. But you know what if have to friend me first you are going to have to ask.

ELIZABETH MACDONALD: yeah that's right and in fact if you went on my facebook page you would find out that I am actually struggling with the tic- tac diet. All this stuff is out there in plain view. There are probably legal problems here but you know what? Law enforcement makes use of this because they don't want to be hiring gang members as cops or security guards. You could just set up another site under a fake name, that's the way around it.

RICH KARLGAARD: Hey I invite employers to try, it's their right, but you three major problems. One is that you not going to attract anyone who is talented. Number two, you're going to have a massive PR problem and I hope the internet and activist just rise up and punish employers to ask for this. And three, you do have a lot of legal exposure because you can't ask during the hiring process about your religion, sexual orientation, age and all of those things can be inferred on a facebook page so it is a can of worms.

JOHN TAMNY: Well it does but I think we have to remember that these are private companies that spend a lot of money to hire new employees. To me, it's my right to know how tall you are, how much you weigh, what you look like what's on your facebook page whether you drink or smoke. And the reality is that it's also the right of those who want jobs to say I'm not interested in that company. I think it's an obvious answer that I think we let the free market decide. If companies are being too intrusive, as Rich says, they will lose out of the best people.

VICTORIA BARRET: I think that if your job is to hire good people and you think you need someone's facebook password you are not really good at your job. It's a really lazy move. You should be able to interview someone and if you are good at that job, know within 5 minutes whether they are going to be a good fit. So I think this speaks more about the companies that are doing this than the people who are doing the hiring than the people who are trying to hire.

Yeah but I don't think you need for facebook page, what is it going to tell you? That they went out on a Friday night and had drinks with their friends? You are really getting into stuff that doesn't tell you much. I don't think it's very useful. I think you should be able to ask someone questions in the first 5 minutes of an interview that get you the right answer you want.


DENNIS KNEALE: In that what we need is for people to start buying homes again to rebuild this industry right? Well if you're busy paying $300 a month, $500 a month, $750 a month on a college loan, you have that much less cash flow to make on a monthly mortgage payment. Now I know that statistically people will say it's not true but guys I pay $325 a month on an unemployed nephews' college loan. I guaranteed it, I pay it, I can't afford to buy a place and that's one extra reason. But now here's the alarming thing, our government is now spending $125 billion a year on these loans. 56 percent of all college students take these loans. We are breeding dependency and hurting cash flow.

MIKE OZANIAN: It certainly doesn't help the economy David, but I think Dennis is exaggerating it a little bit. Not on the facts, but the impact is having on housing. I think that these students that are in debt represent a very small percentage of potential homebuyers. I think the bigger problem is that the overall economy is very weak. For example, wages and salaries, right now adjusted for inflation in his country are lower what they were a year ago. That's a bigger problem I think.

BILL BALDWIN: I think that this tuition debt load is not just going to hurt the housing market, but the restaurant market, and the car market and all parts of the economy. This one trillion dollar monkey on our back is something you can't chuckle off in a personal bankruptcy. Worse than that, I think that a lot of the people who owe it are realizing that wasted a lot of their higher education spending. In China they study engineering, and here we spend four years studying gender bias and Shakespearian drama.

RICK UNGAR: I'm with Oz on this; I don't think it's as big as a problem as some might paint it to be. It's not that big of deal. It will be a factor, as things get better it will get better.

ELIZABETH MACDONALD: College tuition is causing parents to sell the families silver to stay solvent. Now college tuition has sky rocketed- way higher than when you were going to college David. Here's the numbers quickly-one trillion in college debt, 2.8 trillion in underwater mortgages, out of an 8.9 trillion mortgage debt market- that's a big deal.


MORGAN BRENNAN: Home Properties (HME)

BILL BALDWIN: Eaton Vance Tax-Managed Global (NYSE: EXG)

ELIZABETH MACDONALD: Senior Housing Properties Trust (SNH)