2018 surplus of $45 billion, with a B.
September 19, 2018 9:34 AM   Subscribe

“Apple’s revenues come from purchases made by consumers across the entire wealth distribution, but the moment that money hits Apple’s ledger it comes under the control of the elite: most shares of Apple, like most shares of stock in general, are owned by the wealthy. While stock markets have reached record highs in recent years, fewer Americans own stock than ever before, with the top 10 percent of the wealthiest households owning 84 percent of all stock in 2016. (According to economist Edward Wolff, this is up from 77 percent in 2001.) The bottom 80 percent of households, by contrast, own just 7 percent of stocks. The preponderance of Apple’s income is transferred to shareholders, who largely fall into the upper echelon of the economy. - Apple redistributes more wealth upward than any corporation or country on the planet.“ Think Different ( Boston Review)
posted by The Whelk (36 comments total) 18 users marked this as a favorite
 
Does this take into account institutional investors? I was under the impression that the largest owners of stocks, by volume, are institutions such as pension funds, university and non-profit endowments, investment management companies, and so forth.
posted by SansPoint at 9:38 AM on September 19, 2018 [3 favorites]


I was under the impression that the largest owners of stocks, by volume, are institutions such as pension funds, university and non-profit endowments, investment management companies, and so forth.

IANAFI but most mutual funds available for 401k and the like don't have AAPL in their portfolios.
posted by Burhanistan at 9:41 AM on September 19, 2018


Sanspoint - it includes owners of stock directly, plus IRAs and 401(k)s. It doesn't mention pension funds or endowments.

It also says 52 percent of U.S. adults owned stock in 2016. How does that square with the top 10% scare stat? Seriously asking, don't understand.
posted by stupidsexyFlanders at 9:42 AM on September 19, 2018 [2 favorites]


Vanguard, i.e. various funds, is the largest shareholder of Apple.
posted by zeikka at 9:45 AM on September 19, 2018 [2 favorites]


IANAFI but most mutual funds, etc don't have AAPL in their portfolios, or really any other insanely high dollar value common stocks.

Come on. Why would they not?

AAPL Institutional holding

61% of AAPL is help by large institutions. Vanguard owns about 7% of AAPL. I'm pretty sure that's in mutual funds as that's all Vanguard does. Some of those other large institutions are hedge funds and things that are not mutual funds, but lots are.
posted by GuyZero at 9:46 AM on September 19, 2018 [10 favorites]


Profit is not an unalloyed good.

It is not easily removed by government by taxes. Government is subject to regulatory capture (eg IP laws), out of proportion to representation (eg tax laws that favour investment over income), and neglect of externalities (see conflict driven by coltan). Governments can be forced to compete for scraps (see the Irish tax havens). Profit is not limited by workers' contracts: collectivization and unions have been broken in hi-tech by law (see regulatory capture) and social pressure (see libertarianism).

The only thing that seems to reliably disrupt the long-term accumulation of profit is large scale violence: wars and revolutions and social collapses. This is why profit is not an unalloyed good; it runs blind toward megadeaths.
posted by bonehead at 9:50 AM on September 19, 2018 [5 favorites]


Ah, but even if your 401k fund does contain AAPL it isn't the same has having individual shares.
posted by Burhanistan at 10:01 AM on September 19, 2018 [2 favorites]


52 percent of U.S. adults owned stock in 2016. How does that square with the top 10% scare stat?

If I'm reading it right, it means the richest 10% of the population own 82% of the stocks that exist; leaving the other 18% for the other 42% of the population.
posted by ook at 10:09 AM on September 19, 2018 [3 favorites]


Reminder: not even a third of workers have money in a 401(k). Stock ownership is tightly concentrated whether or not you include retirement plans and other indirect ownership.
posted by enn at 10:14 AM on September 19, 2018 [5 favorites]


Are you a capitalist if you don't own any capital? And if you're not a capitalist, what are you? And why isn't there a revolution?
posted by seanmpuckett at 10:17 AM on September 19, 2018 [7 favorites]


IANAFI but most mutual funds available for 401k and the like don't have AAPL in their portfolios.

Huh? Any market-cap weighted large-cap or whole-market index fund is going to own a bunch of AAPL in it.

If you own an S&P 500 fund, like the Vanguard 500 or any similar fund—which are the most popular mutual funds in the world, and featured in many retirement plans and widely advised—almost 4.35% of your investment is in AAPL. It's the single biggest component of those funds.
posted by Kadin2048 at 10:17 AM on September 19, 2018 [3 favorites]


Ohh.... "Can't revolt, too busy scrolling Twitter etc"
posted by seanmpuckett at 10:18 AM on September 19, 2018 [1 favorite]


Yeah, sorry, I got that wrong but having shares in an index fund that has AAPL doesn't give the same benefits as being an individual stockholder.
posted by Burhanistan at 10:19 AM on September 19, 2018


IANAFI but most mutual funds, etc don't have AAPL in their portfolios, or really any other insanely high dollar value common stocks.

Huh? Mutual funds will hold "insanely high dollar value common stocks" in accordance with their investment objectives. These are publicly traded stocks; anyone can buy them if they are willing to pay the price asked by the seller. An equities index fund that seeks to hold stocks in rough proportion to their relative value vis a vis the rest of the market is quite likely to own AAPL, which has a huge market capitalization. That's literally the point of an index fund. AAPL is the single largest holding in Vanguard's 500 Index Fund.

Ah, but even if your 401k fund does contain AAPL it isn't the same has having individual shares.

There are some technical differences, but ultimately you hold AAPL indirectly through your ownership of a vehicle that owns AAPL. Economically it's more or less the same. You'll be benefiting if the price of the stock increases.
posted by praemunire at 10:21 AM on September 19, 2018 [2 favorites]


(Sorry, burhanistan, I was writing my post while you (and kadin) were posting...but you're still effectively wrong about the benefits. You usually can't vote in corporate votes, which is, under most circumstances, of very little value to begin with. That's the major difference for the individual investor who is not going to be perfecting appraisal rights in a merger or some such. Dividends get passed through. If you sell a share of the mutual fund, the price will reflect the performance of the stock.)
posted by praemunire at 10:24 AM on September 19, 2018 [2 favorites]


> Profit is not an unalloyed good.

Beyond this, I'd go so far as to say that profit is an unalloyed bad. It's a measure of waste — it's the money that's spent by consumers but fails to reach workers. some amount of private profit may (may!) be necessary to keep industry running under our current economic arrangements, but it's imperative that it be kept to a minimum even if it can't be eliminated.

[disclaimer: Although it's unrealistic to expect our capitalist-controlled governments to treat profit as waste and try to minimize it, it's nevertheless a useful exercise to think in these terms. We're continually encouraged to see things from the perspectives of owners — profit is good, increased wages are bad, regulations are burdensome, etc. — and it can be clarifying to instead see things from our own perspectives, even or especially when our perspectives can't ever be taken into account by our current political-economic systems.]
posted by Reclusive Novelist Thomas Pynchon at 10:25 AM on September 19, 2018 [8 favorites]


having shares in an index fund that has AAPL doesn't give the same benefits as being an individual stockholder.

I'm not really sure that's the case, but only because I'm skeptical of the additional value you'd get from being an individual stockholder, unless you're super-rich enough to own enough shares that your votes matter. The ability to vote your shares doesn't amount to much if you don't at least have a few percent. Hence why Google has non-voting shares that trade at only a small discount to their voting shares. For normal people, they're the same.
posted by Kadin2048 at 10:27 AM on September 19, 2018


In more positive news: Apple has paid Ireland 13.1 billion euros ($15.3 billion) in back taxes following a regulatory order two years ago. The 2018 Irish budget was 78 billion euros, so that represents something like 8% of the government's budget over those two years.
posted by jedicus at 10:28 AM on September 19, 2018 [3 favorites]


The bottom 80 percent of households, by contrast, own just 7 percent of stocks

This seems like a 1-2 punch of "they also have 7 percent of wealth" and "the wealth they have is locked up in housing." And maybe a bit of sting remaining from the "subprime financing" sucker punch.
posted by pwnguin at 10:41 AM on September 19, 2018


The concern is always being raised that if we tax business, if we expropriate, if we do anything, we'll be hurting regular people whose superannuation or whatever is invested.

If you redistribute whatever is taken properly, though, those who might conceivably suffer will receive back what they've lost, probably more so for many.

Especially if you actually set up proper guaranteed old-age pensions and the like for the retirees who might lose out. The logic just doesn't hold up for me that I should care if some small proportion of a business is technically owned by regular people.
posted by AnhydrousLove at 10:42 AM on September 19, 2018 [1 favorite]


Perhaps of interest... Vanguard—which is the largest operator of index funds (and, as an interesting bit of trivia, isn't based on Wall Street or even in NYC at all)—publishes a summary of how its funds voted their shares.

Spoiler alert: they vote with management virtually all the time, and typically against shareholder proposals/initiatives. There are some exceptions, though, which you can find if you open a report1 and then scan down the far-right column and look for "AGAINST" votes (that's voting against the company management's recommendation).

Some of the only exceptions I could find are a protest vote against Google's non-voting share structure,2 which is ironic given how seldom they actually vote against management, an (unsuccessful) opioid-related reporting proposal,3 a (successful) climate-change reporting proposal4, and a couple of Board directorships5 which are presumably some sort of inside baseball stuff. Those seem to be representative of cases where they went against management; I'd guess without actually crunching the numbers that it's well below 1% of votes cast and probably only a few percent of shareholder-led proposals.

1: E.g. the Vanguard 500 report is here.
2: See Alphabet Inc. from the Vanguard 500 report, specifically "PROPOSAL #4: APPROVE RECAPITALIZATION PLAN FOR ALL STOCK TO HAVE ONE-VOTE PER SHARE". I don't think this was successful, and Google has enough insider-held shares to make it mostly an empty threat, but it's interesting.
3: Specifically, Vanguard supported the shareholder proposal requiring AmerisourceBergen to “report steps taken to manage the financial and reputational risks associated with the opioid crisis.” It may or may not be relevant that Vanguard is also headquartered in Philadelphia along with Bergen.
4: Andarko Petroleum, specifically. I believe this one actually went through. The proposal requires the company to produce a report assessing the impact of "two degree" carbon-limit rules on the company. There seem to be similar proposals on other petroleum and fossil-fuel companies. Weak sauce, but not bad.
5: Baker Hughes seemed to have a particularly contentious election, for reasons that aren't obvious from the voting record.
posted by Kadin2048 at 10:57 AM on September 19, 2018 [7 favorites]


Shareholder proposals are more often than not activist investors causing trouble or private equity strip miners but as a holder of index funds, I'm not paying for Vanguard to be a sacred guardian of the equity. I literally don't care. I pay them to mechanically buy the index and re-balance. Literally any other activity is active management, which is a cost. Trying to second guess management about how to vote means analysts and monitoring which is a cost. which I have shown I don't want by virtue of buying a index. Indexes should always vote with management and if the decision is wrong, the stock falls out of the index and a new one joins.
posted by Damienmce at 11:08 AM on September 19, 2018 [5 favorites]


And why isn't there a revolution?

I'll take Bread and Circuses for $600, Alex.
posted by DigDoug at 11:09 AM on September 19, 2018 [4 favorites]


"And if you're not a capitalist, what are you? And why isn't there a revolution?"

My government has myriad ways to obliterate me and I don't even like doing violence.
posted by GoblinHoney at 11:11 AM on September 19, 2018 [3 favorites]


I'm too weary from daily wage-earning (and, let's face it, age is a factor as well) to be able to hold up a pitchfork and torch, let alone march with them.
posted by Greg_Ace at 11:36 AM on September 19, 2018 [1 favorite]


...revenues come from purchases...

This is true for every company out there. Companies make money by selling stuff.

A more appropriate target of this article would have been Walmart which more directly profits from the lower classes. Apple is more click-batey though.
posted by LoveHam at 12:42 PM on September 19, 2018


Indexes should always vote with management and if the decision is wrong, the stock falls out of the index and a new one joins.

Vanguard founder Jack Bogle would disagree with this point, and has written a book calling for passive investment funds to take an active interest in corporate governance. As he puts it:
When we have strong managers, weak directors, and passive owners, don't be surprised when the looting begins.
posted by ContinuousWave at 12:52 PM on September 19, 2018 [6 favorites]


And why isn't there a revolution?

I'll take Bread and Circuses for $600, Alex.


I cannot recall ever being given bread or a circus.
posted by srboisvert at 2:54 PM on September 19, 2018 [1 favorite]


I have retirement savings, so indirectly own stock, but I have no ability to vote on how any corporation is managed, which is probably not a good thing.

Apple could easily afford to pay workers who manufacture its highly profitable hardware living wages. Could easily afford to make sure musicians are fairly compensated for the music they sell, could pay workers in its retail stores a fair wage with benefits. They are an excellent choice for the article.

You don't think the current US administration is a circus?
posted by theora55 at 3:25 PM on September 19, 2018 [1 favorite]


I cannot recall ever being given bread or a circus.

Call it fast food and Netflix, then.
posted by Greg_Ace at 4:25 PM on September 19, 2018 [3 favorites]


honestly our system is meh on the provision of circuses and frankly terrible at providing bread.

It’s raw force that keeps the capitalists in charge. Work long hours and live, oppose capital and die.
posted by Reclusive Novelist Thomas Pynchon at 5:39 PM on September 19, 2018 [2 favorites]


Just as a note, Apple does pay its retail workers a fair wage with benefits. Some of the best health insurance, 401(k) matching, and stock program you can get in retail, actually. Available to part-timers too. Not that that erases other problems, but for the record.
posted by snowmentality at 8:32 PM on September 19, 2018 [3 favorites]


Capitalism will surely eat itself if it continues on this path. This is one thing I've never understood. What happens when people are too poor to buy their products? They must have considered this. It's completely unsustainable in the long run, to say nothing of the effect on the planet.

But I already know - they don't care about the long run. In the long run we are all dead, as Keynes said. Humanity will be destroyed by machines of its own creation after all - only they won't be robots, they'll be corporations.

I can only hope we realise this before it's too late, but maybe it's too late already.
posted by Acey at 8:00 AM on September 20, 2018


> Capitalism will surely eat itself if it continues on this path.

That's what Marx thought. Apparently, though, it can continue eating us indefinitely without ever quite eating itself.
posted by Reclusive Novelist Thomas Pynchon at 9:17 AM on September 20, 2018 [1 favorite]


I think there is a legit problem with large companies hoarding cash but ultimately it's reflected in the share price so I dunno, maybe it's a wash. Someone call a real economist. It's a little crazy to think that a quarter of AAPL's market cap is just their cash holdings - like $268B out of just over a $1T market cap.

The other thing about AAPL's cash hoard (and this applies to other hoarders as well like GOOG, MSFT or CSCO) is that a lot of it is overseas because of tax laws. So in some sense it's really a benefit to American shareholders who get value out of other countries' cash that's being saved overseas. The companies then get US loans (or sell bonds) backed by this overseas cash and suddenly it's liquid again without actually being liquid.

It's basically exactly what Trump describes except the roles are perfectly reversed - US companies are sucking cash out of every other country in the world and funneling it into the US. So not only is the wealth distributed upwards - it's distributed upwards from poorer countries to the US.
posted by GuyZero at 9:33 AM on September 20, 2018


Capitalism will surely eat itself if it continues on this path. This is one thing I've never understood. What happens when people are too poor to buy their products? They must have considered this. It's completely unsustainable in the long run, to say nothing of the effect on the planet.
The depressing, but IMHO correct answer:

From the perspective of a business, the ideal point for us in the great unwashed masses is "barely able to afford" {product_name}. So if we can't afford a product, then a company will create one that we can afford -- but only just. Anything less is "inefficient".

This balancing act is why capitalism works so well.

This balancing act is why capitalism works so poorly.
posted by -1 at 10:25 AM on September 20, 2018 [1 favorite]


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