Should Occupy Wall Street Occupy Silicon Valley Instead?
After publishing this blog, we noticed the IRS just busted Google on the tax abuses we write about below. Read "IRS Auditing How Google Shifted Profits Offshore to Avoid Taxes- Bloomberg".
Silicon Valley's incredible success in computer-based productivity solutions and global virtual business processes vaporized millions of jobs. Silicon Valley's innovative products and services created computers, machines and robots taking over millions of Americans' jobs, with virtually-connected, cheap offshore workers taking over millions more. Those American jobs may never reappear.
Silicon Valley's CEOs make more money than Wall Street CEOs, and tech companies pay lower taxes, getting many more special tax breaks than Wall Street bankers.
So why do protesters mostly focus on Wall Street? Why not Occupy Silicon Valley too? Better yet, why not rethink the protests in the first place.
Occupy Wall Street protesters claim Wall Street moved Main Street jobs to Asia. That bankers make huge bonuses, trade instead of lend money, get tax breaks, helped cause the housing meltdown, and curry too much influence with elected officials and regulators. It's clear that Silicon Valley is equally, and maybe even more responsible for lost American jobs, and all these other points too.
Many young protesters will think my suggestion to Occupy Silicon Valley is wrong and why protest against a good friend like Apple, Google and Facebook? Most young people love high tech and all the gadgets and services that come from these industries. They don't love banking. Young people hope to work in these great-innovator tech companies one day too.
And that's my point. While Silicon Valley vaporized more jobs than anyone else including Wall Street, young people don't consider Silicon Valley to be evil. It's innovation with technology is transforming the world, albeit with some pain.
I am not suggesting that we should do away with farm machines and hire cheap laborers to farm all produce by hand. My point is that Silicon Valley is not evil and neither is Wall Street evil. Wall Street is the biggest employer in the tri-state NYC area, and it pays the most taxes supporting NYC teachers, firefighters and policemen. Each Wall Street job supports up to 7 other jobs in the region too.
Innovation on Wall Street built the Internet in the boom 1990s, including many of these great Silicon Valley companies. Wall Street is helping to launch technologies and solutions for the future in health care, science, engineering and more now too.
Back to the real culprit. How about occupying government capitals too? Government forced Wall Street and banks to lend to sub-prime borrowers, and government's Fannie Mae and Freddie Mac took over close to 95% of the housing finance industry. These GSEs cooked their books, and innovated robo-automated-fraudulent-CDO mortgage financing. That's what crashed and burned housing and Wall Street.
The truth about jobs. Here's required reading for all protesters:New York Times op-ed columnist Thomas Friedman's new book “That Used to Be Us.” Friedman explains that routine American jobs are mostly history, and everyone needs to be creative and provide value beyond routine behavior. Routine work is now the domain of computers, machines and offshore cheap workers. Plus, I say that computers and offshore workers are getting increasingly creative, interactive and collaborative too.
We can't go back to the old way. EZ-Pass is replacing toll keepers. Each new EZ-Pass machine is fairly inexpensive to add to the system, but each toll keeper comes with a lifetime of salary, pension, and health care costs, especially when protected by collective-bargaining unions. ATMs replace bank tellers.
Most young people are used to using a computer or smartphone to buy goods and services, check themselves out, and handle their own online customer service and more. Their goods ordered are produced in China and emerging markets, and UPS or Fedex handle logistics, delivery and customer service. IBM is a huge company on a mission to turn almost every job possible into a computer job.
Silicon Valley tax breaks. Back to Silicon Valley getting too many tax and other breaks. Isn't it time to repeal Silicon Valley's tax loopholes like research and development tax credits and 100% expensing. And, rein in their transfer pricing abuses, with these companies hiding income in offshore tax havens? How can Apple, Google and others justify parking profits offshore, when Apple pays China under $6 per iPhone (per Chinese officials)?
Another point about Section 482 transfer pricing. To beat the tax man, tech companies are forced to hire more employees offshore versus onshore, and to move offices, sales, and property offshore too. It's sort of like Amazon doing their sales tax game in California. If they don't have an operation in California, they don't need to charge sales tax. Bingo, tax hand-outs in Washington are getting Americans fired too.
Another tax political hot potato. Most taxpayers making over 1 million per year live in CA, probably near Silicon Valley. In the 1990s, tech companies deducted multi-million dollar W-2s comprised mostly of stock option exercises, still another windfall tax break too. Will a debated millionaire income tax surcharge hit Silicon Valley too?
Silicon Valley innovation has been an important element in recent “creative destruction”, something embraced by the Austrian wing of economics (Joseph Schumpeter). Apple, Google and Amazon among others have destroyed millions of American and global jobs too, by breaking established old-economy business models and innovating new e-economy ones in their place. Just ask unemployed people laid-off from the record business (music), print media, publishing, advertising, sales, and retailing. Amazon is destroying state budgets with their sales-tax avoidance schemes too. Please protesters, focus some of your energies and innovation on the West Coast and emerging markets, and don't just protest suits on Wall Street. That makes you seem out of touch.
It's time to put some energy into protesting less and learning more. About how to use innovation and energy as a new-age creative worker in our machine versus global man-made economy. Check out and consider joining my Green's Entrepreneurs Network @ www.greensentrepreneurs.net. Do you sincerely want to work? If yes, hire yourself as an entrepreneur and don't wait for more creative destruction.
© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.