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Looking at the 2011 lobbying expenditures from the likes of Google, Microsoft and others, these companies are spending more and more on lobbying. Is it because they are getting such a great return on that investment?
Absolutely. Look for example at a lot of corporations, and I’ll use General Electric as an example. I know they are not purely high tech as others, but General Electric is a company and you'll have to check the numbers on this, but I think their net profits last year were [over $14 billion] with a 'B,' and they paid no federal taxes. They paid no federal taxes because of the way the tax code was written, because they got all sorts of tax credits for government programs.
General Electric last year spent $300,000 a day, seven days a week on lobbyists in Washington, D.C. And I think that activity is very much connected with the fact that they are not paying taxes.
So I think lobbying is a huge huge problem because at the end of the day it is going to favor the ones that are most connected, and it leads people to not trust and believe in the fairness of the tax system, in the fairness of regulatory activities or anything.
There was a study done for example by Stanford University that shows even when it comes to the Securities and Exchange Commission detecting fraud and the punishment that comes related to fraud related to financial matters that politically connected companies are much less likely to be detected. And when they are detected they pay much smaller fines. So we are even talking about, in effect, our law enforcement system or regulatory system being compromised. So I think lobbying is a huge problem.
Companies like Microsoft got into the game later. They were kind of pushed there in the 1990s when the Department of Justice came with the antitrust push. And you have companies like Apple with Steve Jobs who had traditionally a pretty small lobbying operation. I'm not saying they shouldn’t do any lobbying. They have to protect their interests and the interests of their shareholders.
But there is a difference in my mind between defensive lobbying where you are effectively trying to bring sanity to certain ideas that certain government officials might have and expressing your concerns and offensive lobbying where you are not just trying to prevent the government from making your life miserable -- you are actually trying to get goodies and favors from the federal government. And more and more, it seems as if technology companies and others are spending an inordinate amount of time on the amount of lobbying time focused on offensive lobbying rather than just defensive lobbying.
You bring up the example of Apple which does not spend as much as Microsoft or others on lobbying yet is the most successful technology company in the world. It doesn't look like they got any stimulus windfall. It is hard to find them showing up on the corporate welfare radar. What does that say about Apple versus Microsoft and others?
I think it says a lot. Whatever anyone thinks about Steve Jobs -- you read reports that he was a pretty difficult guy to work with, very hard charging -- whatever anyone thinks about his management approach, there is just no question that this is a guy whose wealth and the success of Apple came from the simple fact that he produced products and services that millions of people wanted. You have to really look at that and say this is the quintessential idea of a technology company.
And I think some companies like Google started that way, and they have increasingly become much more connected with the political establishment in Washington. Their lobbying operations have dramatically expanded over the years.
Certainly the two founders and the company itself have invested in a lot of green energy companies that ended up getting loans and grants. So you even see Google, in effect, becoming much more corporate and Washington-oriented than it has been in the past, which to me is really quite sad.