Just Another Rotten Apple

Political corruption, yes, and seemingly enough of it to provoke the people’s discontent and destabilize a democracy. We are seeing it in Spain, Italy and so many other places. If any good is to come out of this crisis, it is likely to be that the higher ethical standards people are beginning to demand are here to stay. Fingers crossed, gone are the days of evading responsibilities with excuses like “everyone was doing it” or “you’re worse!” The people have learned — are learning — that the harm done to democracy, equality and the future is so significant that it can neither be tolerated, excused nor contextualized.

But while we raise ethical standards in the public sector, it is also time to consider standards of business ethics. Let us not forget that many of the problems we are dealing with today, in Spain and in the rest of the advanced economies, have to do with the lack of ethical standards in the private sector. Sadly, many of the financial sector’s practices that led to the current situation were legal, but that does not make them valid or acceptable. Hiding behind the legalities of something that is manifestly abusive is not a good argument.

All this stems from the revelation that, in the middle of this crisis, a significant number of multinationals admired for their innovation are behaving greedily, taking advantage of loopholes in tax systems in order to avoid paying the taxes that, legitimately and legally, they should pay in correlation to their sales.

Apple — Google, too — is the best representative of cutting-edge technological innovation as well as elitism, design and the fusion of brand, fashion and personal identity. Look no further than this blog, written on a MacBook Air, a machine that captivates with its performance, elegance and usability. And when this blog began in November 2011, shortly after the death of Steve Jobs, one of the first entries — a controversial one at that — pointed out the irony that, not only were Bill Gates’ machines inferior to Apple’s, there were even people who labeled Gates’ philanthropy counterproductive and ideologically skewed. Meanwhile, Steve Jobs took all the glory and didn’t even do any good works, justifying his failure to do so with the argument — wide open to criticism but not entirely invalid — that his contribution to improving humanity lay in making machines that performed well and made people happy.

But now we discover that Apple, so proud of the Zen-inspired minimalist design of its stainless steel products, evades taxes thanks to accounting tricks that allow it to declare losses, despite having sold products valued at 142 million euros in Spain in 2012. Add to that the fact that Apple is sitting on an immense pile of cash that it will neither invest nor distribute to its shareholders.

Corporations are not people, it could be said, and moral standards cannot be imposed on them. That is only partly true. We might recall multimillionaire Warren Buffet’s reaction when he discovered at his company’s Christmas party that the office cleaning lady paid more taxes than he did; Buffet is now a leading flag bearer of Obama’s tax reform. Consumers, who buy not just a product but an extension of their personal identity, will also have something to say on the matter. We may well continue to use Apple because it has good products that solve our problems, but now that Apple’s own ethical standards are out in the open, I very much doubt whether people will want to stick the bitten apple bumper sticker on the back of their car.

Just as important as preaching at Apple is doing something about it, however. Last week, three European finance ministers, George Osborne for the United Kingdom, Pierre Moscovici for France and Wolfgang Schauble for Germany, signed an open letter to the Financial Times entitled “We are determined that multinationals will not avoid tax,” in which they announce a joint initiative within the framework of the Organization for Economic Cooperation and Development to change the regulatory framework that allows Apple and others to avoid taxes through legal tax dodging. Three finance ministers — where was Cristobal Montoro? — from three countries that have recently been significantly divided over the direction of economic policy and European integration.* On this occasion, however, the United Kingdom, France and Germany agree. Corporations acting like fiscal predators and refusing to contribute to the common good cannot be permitted to go unpunished while the people suffer the diminishing of their rights because of reduced tax revenue.

*Translator’s Note: The Spanish Minister of Finance.