Not too long ago, I saw a comparison slide in Martin Ford’s talk on the “Rise of the Robots” *1.
While the slide was projected onto the wall, Martin said: "What you see on the slide is a comparison of General Motors, which in 1979 had jobs for about eight hundred and forty thousand (840,000) people, and that compares with Google in 2012 that had less than 5% of that number and yet, Google actually generated, in inflation-adjusted terms, 20% more in terms of earnings. So, Google was actually a more profitable company than GM ever was."
Now, before you continue reading, let me ask you one question:
In your opinion, which of the two companies did better?
Regardless of your origin, education, technological preferences, or even your economic stance, you are much more likely to choose Google. As numbers clearly show, Google made 20% more in earnings than GM.
So, let me give you a slightly different perspective. And I am not saying this as a supporter of either of these two companies, but instead as someone who cares about all human beings equally. Keep in mind that regardless of who did better, the profits of both companies will end up in the hands of just a few people. No, I am not saying that profit is a bad thing, but I am saying that there is more to the picture than that.
According to the same slide, General Motors provided income for 840,000 employees, while Google did so for only 38,000 employees.
If we take into consideration that the average household consists of around 3 people, and if we consider that only one person is the provider, we can calculate that 3 * 840,000 = 2,500,000 people, in comparison with Google 3 * 38000 = 114,000 people. During employment people from both companies and their dependants can enjoy security, roofs over their heads, food on their tables, and all the other commodities that make life easier. From this point of view, GM did better. Or, more precisely, GM did 21 times better than Google.
Now think again: What is more important, to give decent lives for many or very luxuries lives for few?
I do not have anything against people living luxurious lives, but there is something else — a certain “secret” of many major tech giants called ... tax evasion. This year, Apple, the world’s largest company, could owe more than $8 billion in taxes as a result of a European Commission investigation *2; and if Apple didn’t hold $181 billion overseas, it would owe $59 billion in US taxes. Last year Facebook paid just £4,327 in corporate taxes, despite the £35 million in staff bonuses *3. In comparison, the average UK salary is £26,500, of which employees will pay a total of £5,392.80 in income taxes and national insurance contributions. And Google is yet another company giant that, among other things, is known for having perfected the “double Irish arrangement” tax avoidance strategy. *4
What does that mean for the average citizen? A whole lot!
For example, the National Health Service (NHS) based in United Kingdom is one of the largest employers in the world, and the biggest employer in Europe, with over 1.3 million staff. For the NHS, a typical day involves over 835,000 people visiting their GP practice or practice nurses. Since the NHS is mainly funded from general taxation and National Insurance contributions, the NHS will suffer some kind of cuts each time someone (person or legal entity) avoids paying taxes. This could mean either layoffs or restructuring the quality of the services they provide, so both employees and patients who receive care on behalf of the NHS will suffer. If we take into account that the average NHS salary is $42,000 (£30,000) *5, then we can see that Apple has “evaded” the salaries of 190,000 people for entire year. Now, multiply that number by 3 in order to see how many other people are directly affected. Then, multiply whatever you get again by at least 10 to see all the other people in the market chain (shops, transport, real estate, or other industries) that will also be affected by this.
As the numbers show, tech giants are currently doing a poor job of providing income security for a large number of people. Furthermore, due to their harmful tax behavior, they are causing even more issues than they are resolving. They are not preventing or fighting poverty; rather, they are likely the ones who are causing poverty and income insecurity for a significant portion of the population.
So, are they making the world a better place?
I don’t know about you, but I’m not too sure about that anymore.
Tell me what you think about this, and please comment on Twitter, reddit, Voat, Hubski, or any other platform?
While my editor was working on this text, BBC has broadcasted the show “The Town That Took on the Taxman” *6. Somewhere in the middle of it, a mind boggling numbers have been displayed, showing how huge is the real scale of the tax evasion scheme. Just in Amsterdam (Holland, Netherlands) for the year 2013, there was total number of 14668 companies that were registered there for the sole purpose of evading taxes, total amount of money flown at the end of that year was $7.861.000.000.000 (~ 8 trillion US dollars) that was more than 10% of world’s GDP *7 for the same year.
Notes & References:
1. Martin Ford on the Rise of the Robotsyoutu.be/h0VS-a-3bos
2. Apple tax evasionwww.bloomberg.com/news/articles/2016-01-15/apple-may-be-on-hook-for-8-billion-in-taxes-after-europe-probe
3. Facebook tax evasionwww.theguardian.com/global/2015/oct/11/facebook-paid-4327-corporation-tax-despite-35-million-staff-bonuses
4. Google tax evasionen.wikipedia.org/wiki/Double_Irish_arrangement