Roger’s Rules

The EU vs. Apple

London. A story in The Financial Times today reveals that the EU, in its hyper-regulatory wisdom, has set its sights on Apple, which it accuses of profiting from “illegal” deals with Ireland. 

I put quotation marks around “illegal” because the case is far from proved. But as far as Brussels is concerned, Apple’s real sin revolves around the word “profiting.” “Profits” are what Brussels rakes in from its satraps around Europe. They are not something any individual state, let alone an individual company, is allowed to enjoy, especially if that company is as wildly profitable and innovatory as Apple.

Apple’s tort is compounded, of course, because it is American. (The EU is also going after Starbucks, Amazon, and other companies.) “EU investigators,” the article explains, “rest their case on whether Apple negotiated special tax treatment in Ireland that other companies do not enjoy.” Apple naturally denies all wrongdoing, just as it did when investigated by the U.S. Senate last year. All those billions of dollars — Apple apparently has something like $137 billion parked offshore — and the U.S. tax collectors can’t get their grubby hands on a penny! The really galling thing, for the bureaucrats who need more of your money to spend, is that Apple’s behavior, so far as has been determined, is completely legal.  They got the best deal they could, and did so legally. That really steamed the bureaucrats. Suffering from an inadequate appreciation of the distinction between meum and tuum, they just cannot contemplate a stack of cash without wanting to help themselves to a large bit of it.

Apple keeps so much money offshore because, since the U.S. corporate tax rate is so high, it costs them less to do that.  It is not illegal to do this. Nor is it unethical.  It is simply rational. They are responding to incentives. Perhaps the U.S. should try lowering its corporate tax rate to something that is competitive on the world stage.  I offer that startlingly original idea free and for nothing.

The EU is indulging in a snit similar to what motivated the U.S. Senate. Apple is the world’s richest company. Why aren’t their riches lining the pockets of Brussels bureaucrats?  That is the real, though unstated, question here.  Let’s see what the EU inquisitors — er, “investigators” — turn up.  I suspect it will be either be nothing or will be filed under the rubric “trumped up.”

Apple is as aggressive in its business dealings as it is innovative in its technology and marketing.  It is also very careful. It finds out what the law allows and it endeavors to take advantage of all that it can. All those qualities explain why it is so successful.  The last time I checked, being successful was not a crime in the EU. But perhaps I missed something. Maybe, buried in the tens of thousands of pages of productivity-blighting regulations, there is a clause forbidding conspicuous success.  It wouldn’t surprise me in the least.

The EU’s campaign against Apple is just the latest example of its outdated guild mentality on parade.  Europe is slipping into economic irrelevance even as it courts demographic catastrophe. It no longer has enough red corpuscles even to reproduce. So it sits around in drooling geriatric senility endeavoring to penalize anyone and anything that exhibits the lusty vitality of young life. No wonder more and more Brits want out of the EU.