Apple and value creation

04 September 2018
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Ann Crotty, in the Financial Mail (The price we pay for Apple’s greed, 16/08/2018) paints Apple as a blight upon our civilization, an entity that only takes and gives nothing in return. Apart from the assumption that businesses must ‘give back’ (which goes unexamined in articles attacking capitalism and profit), the biggest problem with Mrs Crotty’s argument is that it rests on the idea that Apple held a gun to its customers’ heads and forced them to hand over their money. 

If you bought Apple’s latest flagship phone, the iPhone X, you probably decided that the value you would obtain from it was greater than the $1,000 you gave them in exchange. Apple’s value has been created through voluntary trade with customers; it has convinced its customers that its products are worth more than those of its competitors, and clearly their customers agree.

An immense amount of groundwork was done by people who came before Apple and Steve Jobs, all of whom Crotty credits. But none of them had the vision or the drive of Jobs, and for that he should be considered a titan of immense worth. Jobs put it all together unlike anyone before him – he had a vision that no one before him had formulated, and he managed to implement it. In a market, the creator can only implement his vision as best he can and then wait and see whether the market responds. The way people responded by buying Apple products is testament to Jobs’ vision.

The products that Apple has produced have made it possible for millions around the world to have power in their hands: a Mac gives a student the power to do the research she needs to do to obtain her degree; an iPhone in the hands of a businessman gives him the tools to make contacts and build his business; an iPad in the hands of the talented photographer allows her to organise her latest display and sell her work to the highest bidder.

Aside from putting power and knowledge in the hands of people who previously were denied it, consider the emotional value people enjoy through their Apple products. The ability to communicate with friends from all over the world, the ability to see photos of a grandchild on another continent, the enjoyment from watching the latest Marvel movie - all of this is incredible and cannot be demonised.

Knowledge of the world used to be the reserve of the elite. Now more and more people can access an ocean of knowledge that they will never come close to consuming in its entirety. That’s progress. One hundred years ago, you had to rely on a letter to hear from your beloved, sometimes waiting months or even years for it to arrive. Now you can talk to her instantly via video and tell her how much you love her.

Before the explosion of interconnectedness and the power of the internet, driven by consumers who have voted for Apple products by exchanging their money, corruption and abuses in both the private and public sectors went largely unnoticed with only a few exceptions here and there. While fake news has become a problem in recent years, the efficacy of democracy has been enhanced because people have access to information that governments before would have been able to prevent. I consider that incredible progress.

The higher taxes are raised, the more companies are going to try and protect the wealth they have created, which means that they may well look to taking their wealth elsewhere. If Apple sets up shop in a country, it agrees to the laws of that country and the tax implications thereof. One wonders how much taxes a business, and citizens, must continue paying when you see the endemic corruption and waste committed by governments around the world. If it is your personal view that tax avoidance is deeply immoral, you may decide not to support any company that engages in such a practice. Just as you can choose to use their products, so, too, can you choose whether or not to support them.

Apple’s products make their customers’ lives better; people would not exchange their hard-earned money for something they do not value. As opposed to the South African government, which forcibly takes and wastes more and more of our taxes, Apple engages in value-for-value, voluntary trade, and that is profoundly moral.

I adore obnoxious individuals who push the boundaries of whatever fields they occupy; they set the bar higher than before and should be lauded for it. Apple does not exist thanks to the benevolence of those who came before; it exists, and has grown incredibly, thanks to the vision and work of its founders and the people who work there now. Apple does not need anyone’s sanction to do business. According to historical data, this is the greatest time to be alive. Apple has contributed to that data in a substantial manner.

Chris Hattingh is a Researcher at the Free Market Foundation

 

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