Much of the $2.5 Trillion in Corporate “Overseas Cash” Is Already in the U.S.

How can you miss what never leaves town?

by Gaius Publius

Coming out of the season of merry and bright we'll be coming into the full blast of news about "what Trump will do." One thing he's going to do is drastically lower taxes on the wealthy and on corporations. Another thing he'll do is declare a "tax holiday" on corporate profit that's (so-called) "held overseas", the (so-called) "unrepatriated" pile of cash that extremely favorable U.S. tax laws allow corporations to delay paying taxes on.

To be fair, Clinton would likely have done the same thing — declare her own version of a "tax holiday" — probably in return for private investment in a public-private "infrastructure bank." Will Trump's sweet deal to corporations take the same shape? It's possible.

For example, we find this, the possibility of a huge tax giveaway on "offshore profits" to Silicon Valley high-tech companies, via Americans for Tax Fairness (ATF):

Trump Tax Plan Would Let Tech Industry Permanently Dodge Hundreds of Billions in U.S. Taxes

High-tech corporations hold 29% of all untaxed offshore profits held by U.S. multinationals

WASHINGTON, D.C.—President-elect Donald Trump met with CEOs of some of the most profitable corporations in America today [December 14] and likely promised them a massive tax giveaway on their untaxed offshore profits, which would mean American families have to pick up their tab.

A spokesman for Trump said one of the topics of his meeting with high-tech executives would be “access to capital,” which likely referred to the huge tax break he plans to offer U.S. multinational corporations to bring home the untaxed profits they are holding offshore.

U.S.-based Fortune 500 companies have $2.5 trillion in profits booked offshore [pdf], mostly in tax havens, on which no U.S. taxes have been paid. Researchers calculate that these companies would owe more than $700 billion [pdf] in taxes if they were to pay what they owe.

Trump wants to cut the tax rate on profits held offshore from 35% to just 10%. That would cut their tax bill to just $150 billion, losing $550 billion in revenue [pdf] that could be used to fund education, infrastructure, healthcare, veterans’ benefits or other domestic priorities.

Trump’s guests today are all members of the technology and information sector. Technology corporations have 29% of all untaxed offshore profits reported to the U.S. Securities and Exchange Commission (Fig. 9). Just 10 corporations hold 40% of the total untaxed offshore profits, five of them attending today’s meeting with Trump: Apple, Microsoft, IBM, Google and Oracle.

As The Los Angeles Times reported, many of the executives invited to today’s meeting are “invested in Trump’s plan to enable corporations to move tens of billions of dollars currently sheltered in off-shore accounts back into the United States by slashing the taxes firms would owe on the money. The overhaul of the tax code Trump envisions would give Silicon Valley a financial boost.” ...

ATF smells a deal involving the high-tech portion of those trillions in "offshore" profits. So do I. (Note the estimate of the size of Fortune 500 "offshore" profits — $2.5 trillion.)

"Money doesn’t stop at borders. Tax accounting does."

But there's a "given" in this discussion — an unexamined assumption — that those trillions in corporate "overseas" profit is, in fact, held overseas. Wolf Richter is here to tells us the assumption is false. A great deal of that money, perhaps most or all, is already in the U.S.

Richter (my emphasis):

Come on Moody’s, Spare Us These Falsehoods: That $1.3 Trillion “Overseas Cash” Is Already in the US

Some falsehoods simply refuse to die. No matter how many times they get stabbed in the heart, and no matter who stabs them, they rise again in their full glory.

The falsehood that a vast amount of US corporate cash, including much of Apple’s $250 billion, is “locked away overseas” is one of them. We’ve known since May 2013 from the Senate subcommittee investigation and hearings into Apple’s tax-dodge practices that a big part of corporate “overseas cash” is actually invested in the US.

Now Moody’s Investor Services repeats the same falsehood and explicitly lobbies Congress to give our poor, multinational Corporate Titans with their hardscrabble businesses another tax break.

Here's the quote from Moody's itself:

Most of the cash that companies have is generated and being held overseas. Moody’s estimates that the amount of overseas cash will reach about $1.3 trillion, or 74% of total cash, in 2016. That’s up from an estimated $1.2 trillion, or 72% of total cash a year earlier.

Note that Moody's estimate of "$1.3 trillion" is considerably less than the AFT estimate of $2.5 trillion, but Moody's may have an interest in keeping its estimates conservative when it comes to companies that most of us would call "tax cheats."

Richter is having none of it, the claim that the most of the "overseas" money is actually overseas:

But here’s the thing. In May 2013, Apple got into a pickle because it had decided to fund its stock-buy-back and dividend program by taking on a record $17 billion in debt rather than “repatriating” part of its “offshore” cash and paying income taxes on it.

The Senate subcommittee investigation and hearings, chaired by Senator John McCain, showed that Apple had sheltered at least $74 billion from US income taxes between 2009 and 2012 by using a “complex web” of offshore mailbox companies. The investigation found untaxed “offshore” profits of $102 billion held by Irish subsidiaries – which Apple refused to “repatriate” in order to keep that income from being taxed in the US.

But according to the Senate report, Apple doesn’t have to repatriate that moolah because it’s already in the US. The Irish mailbox subsidiaries, on whose books this money is for tax purposes, transferred it to Apple’s bank accounts in New York. The money is managed by an Apple subsidiary in Reno, Nevada, and is invested in all kinds of assets in the US. Apple’s accountants in Austin, Texas, keep the books[.]

Money doesn’t stop at borders. Tax accounting does.

There's much more at the link, but you get the gist. A very large amount of that money is already in the U.S., invested in U.S. assets, held in U.S. banks, and is only nominally held by offshore "mailbox" subsidiaries, since those subsidiaries are free to invest it anywhere in the world, including in the U.S.

Will declaring a tax repatriation holiday on "offshore profits" create new investments in the U.S.?  It would seem that all of these companies, Apple for example, are already invested in the U.S. to whatever extent they want to be. So to answer the question, No.

Bottom line — When you hear Trump (or anyone) claim that "bringing the money back home" will mean "new investments" in the U.S., you're being lied to. You're also being treated like a fool, since Trump knows as well or better than anyone on the planet what hiding assets behind "holding companies" and post office addresses actually means.

It means you can do anything you want with your money, send it anywhere at any time in almost perfect secrecy.

 L'il Abner's goin' fishing for Saddam's WMDs. He's been told exactly where they are. He's also going to hunt for some of Apple's "offshore" money. Let's try not to join him (source).

These are just flat lies, that all "offshore" profits are really offshore. Believing them is like believing the Bush lies about WMDs in Iraq. Accept those stories if you like, but they'll call you a rube and a bumpkin if you do, then laugh as they dine on frogs' legs before heading to the bank. Just saying.

GP
 

I don't need or want a new computer, but it looks like Apple isn't going to take "no" for an answer

Plus: There's a lesson somewhere in yesterday's Dilbert

-- from Apple's macOS Sierra Web page (click to enlarge)

by Ken

Dear Apple,

What about those of us who:

• have absolutely no interest in having Siri on our Macs?
• don't want help rediscovering our best photos, whatever that means?
• can already shop online way faster than we can pay for any of the stuff?
• and don't believe that you would actually help us work "more seamlessly between devices" even if we had devices we wanted to work "more seamlessly" between?

Yrs truly --
A longtime loyal Mac user

The question isn't meant to be rhetorical (I really would like to know), but it is, because I'm pretty sure I know Apple's answer: Drop dead.

I don't wanna talk about Matt Lauer, and for that matter I don't wanna talk about the vanished headphone jack (as previously threatened) on the new iPhone. I don't have an iPhone, and for all the trouble I've had learning to use my already-aged android phone, I have no intention of getting an iPhone, in part because of how badly things have deteriorated between Apple and me. For a long time I was a proud and happy Mac user, but that goes back a ways, to before Apple made it clear that it doesn't give the tiniest damn about my computing needs, and merely sees me as a captive patsy for forced software and hardware upgrading.

As it turns out, the "news" to which I'm responding is three months old. But it's news to me, so let the panic proceed.

I survived a scare awhile back when the company decided -- for no necessary technological reason, as far as I could tell -- to stop supporting OS 10.6.8, the perfectly good operating system then in use on both my main computer, an aging iMac, and a refurbished notebook computer I bought mostly for writing purposes. Suddenly, for one thing, my bank set a term limit on the time it would allow access to its website for pre-OS 10.7 Mac users. Not being able to access my account online would be a serious disruption in my life. Then I discovered that, while the notebook computer, which is almost contemporaneous with the iMac, indeed can't be upgraded beyond good old OS 10.6.8 (which I supposed is why it was so cheap), the iMac could be.

After adding some memory, I could not only upgrade the OS but jump it all the way to the current system, OS 10.11, El Capitan -- and I did just that. I know I've read all sorts of terrible things about El Capitan and why users shouldn't upgrade from OS 10.10, Yosemite. However, I haven't had any problems with it. Of course this could be because I don't do any fancy stuff with my computer. Mostly, I write and I go online. Just like I did in contemptibly obsolete old OS 10.6.8. As witness the fact that the notebook computer does these things quite okay, despite having not a whole lot of memory. (Hoping at least to speed it up a little, and heady with success from my successful iMac memory upgrade, I actually tried to jack up the memory, only to discover -- too late to seek relief from the vendor -- that the battery compartment is somehow locked closed! The joke was on me, as it usually is.


ENTER macOS SIERRA

Now I learn, via e-update from the vendor from which I bought my memory upgrades (which, by the way, was very nice about allowing me to return the notebook upgrade I couldn't install), that although Apple didn't mention it at the big announcement of the new iPhone (with the disappeared headphone jack), the company has announced online that on September 20 it's releasing a new Mac OS: macOS Sierra. (That's right, after all this time, no more OS X, or 10. So if you laid down any bets that there would never be an OS XI, or 11, it's time to collect.) As usual, the Apple folks are giddy with excitement about all the wonderful new stuff packed into Sierra -- see above.

Then, among the e-update's appended list of "Related Articles," I fixed on the last one: See If Your Mac, iDevices Are Compatible with Sierra, iOS 10. Do tell, I thought. Okay, here goes (note that the "today" referred to is in fact June 14):

Today’s WWDC keynote saw the unveiling of the next iterations of iOS and the newly named macOS. The announcements of iOS 10 and macOS Sierra will lead many to wonder whether their devices or Macs will support the new operating systems.

The Rocket Yard [the blog of the vendor, OWC, aka MacSales.com -- Ed.] has put together a quick guide of devices compatible with the new operating systems.

It appears that for the first time since 2012, older Macs will be dropped from compatibility and will not run macOS Sierra, many of which are 2007-2009 models.

Uh-oh! Now, as I think I've made abundantly clear, I could care less about what iOS which iPhones will or won't support. You can find that here. But I care very much about those "older Macs," from 2007-2009, that are apparently on the Sierra chopping block. Gulp.

Here is a list of Mac models that will be compatible with macOS Sierra, according to Ars Technica:

• MacBook: (Late 2009 and later)
• iMac: (Late 2009 and later)
• MacBook Air: (2010 and later)
• MacBook Pro: (2010 and later)
• Mac mini: (2010 and later)
• Mac Pro: (2010 and later)

I don't want a new computer, and given my computing needs, I don't need a new computer. At least I won't until Apple turns its back on all the pre-Sierra OS-es, and all the Web outlets that hate having to support Macs to begin with follow suit.

It would be one thing if these software and hardware upgrades offered significant upgrades to the way I do the stuff I do. But they don't. Of course, the very fact that I'm not a frequent upgrader probably explains why Apple doesn't care about me, or my patronage, or how badly they piss me off.


BONUS: THERE'S A LESSON LURKING
SOMEWHERE IN YESTERDAY'S DILBERT

DILBERT by Scott Adams

[Click to enlarge.]

#

The Fascist Right Goes To War With Apple

Herr Trumpf, tweeting away on his iPhone6, is advocating a boycott of Apple because the company refuses to buckle under to the American National Security State and create a "back-door" so that Apple customers-- including Herr Trumpf-- can be spied on. That's too complicated for him and way too complicated for his fan boys. I have a feeling many of them aren't in the Apple target demos anyway.

Even before Herr caught on there was some political hay to be made over the FBI's dispute with Apple, the homophobic, Grindr-using neo-fascist senator from Arkansas, Tom Cotton, was labeling Apple as terrorist friendly. One of Cotton's colleagues mused to me on the phone today that although Cotton went to Harvard, "he's as dumb as a box of bricks" [and doesn't have the capacity to either] employ critical thinking or understand the abstractions behind the case." Cotton also seems to expect Apple to spy on its customers who are suspected of "drug-trafficking, kidnapping, and child pornography."

I think it's worth publishing Apple CEO Tim Cook's letter to Apple customers explaining the issues more clearly than either Herr Trumpf or Cotton want to.

The United States government has demanded that Apple take an unprecedented step which threatens the security of our customers. We oppose this order, which has implications far beyond the legal case at hand.

This moment calls for public discussion, and we want our customers and people around the country to understand what is at stake.

The Need for Encryption

Smartphones, led by iPhone, have become an essential part of our lives. People use them to store an incredible amount of personal information, from our private conversations to our photos, our music, our notes, our calendars and contacts, our financial information and health data, even where we have been and where we are going.

All that information needs to be protected from hackers and criminals who want to access it, steal it, and use it without our knowledge or permission. Customers expect Apple and other technology companies to do everything in our power to protect their personal information, and at Apple we are deeply committed to safeguarding their data.

Compromising the security of our personal information can ultimately put our personal safety at risk. That is why encryption has become so important to all of us.

For many years, we have used encryption to protect our customers’ personal data because we believe it’s the only way to keep their information safe. We have even put that data out of our own reach, because we believe the contents of your iPhone are none of our business.

The San Bernardino Case

We were shocked and outraged by the deadly act of terrorism in San Bernardino last December. We mourn the loss of life and want justice for all those whose lives were affected. The FBI asked us for help in the days following the attack, and we have worked hard to support the government’s efforts to solve this horrible crime. We have no sympathy for terrorists.

When the FBI has requested data that’s in our possession, we have provided it. Apple complies with valid subpoenas and search warrants, as we have in the San Bernardino case. We have also made Apple engineers available to advise the FBI, and we’ve offered our best ideas on a number of investigative options at their disposal.

We have great respect for the professionals at the FBI, and we believe their intentions are good. Up to this point, we have done everything that is both within our power and within the law to help them. But now the U.S. government has asked us for something we simply do not have, and something we consider too dangerous to create. They have asked us to build a backdoor to the iPhone.

Specifically, the FBI wants us to make a new version of the iPhone operating system, circumventing several important security features, and install it on an iPhone recovered during the investigation. In the wrong hands, this software-- which does not exist today-- would have the potential to unlock any iPhone in someone’s physical possession.

The FBI may use different words to describe this tool, but make no mistake: Building a version of iOS that bypasses security in this way would undeniably create a backdoor. And while the government may argue that its use would be limited to this case, there is no way to guarantee such control.

The Threat to Data Security

Some would argue that building a backdoor for just one iPhone is a simple, clean-cut solution. But it ignores both the basics of digital security and the significance of what the government is demanding in this case.

In today’s digital world, the “key” to an encrypted system is a piece of information that unlocks the data, and it is only as secure as the protections around it. Once the information is known, or a way to bypass the code is revealed, the encryption can be defeated by anyone with that knowledge.

The government suggests this tool could only be used once, on one phone. But that’s simply not true. Once created, the technique could be used over and over again, on any number of devices. In the physical world, it would be the equivalent of a master key, capable of opening hundreds of millions of locks-- from restaurants and banks to stores and homes. No reasonable person would find that acceptable.

The government is asking Apple to hack our own users and undermine decades of security advancements that protect our customers-- including tens of millions of American citizens-- from sophisticated hackers and cybercriminals. The same engineers who built strong encryption into the iPhone to protect our users would, ironically, be ordered to weaken those protections and make our users less safe.

We can find no precedent for an American company being forced to expose its customers to a greater risk of attack. For years, cryptologists and national security experts have been warning against weakening encryption. Doing so would hurt only the well-meaning and law-abiding citizens who rely on companies like Apple to protect their data. Criminals and bad actors will still encrypt, using tools that are readily available to them.

A Dangerous Precedent

Rather than asking for legislative action through Congress, the FBI is proposing an unprecedented use of the All Writs Act of 1789 to justify an expansion of its authority.

The government would have us remove security features and add new capabilities to the operating system, allowing a passcode to be input electronically. This would make it easier to unlock an iPhone by “brute force,” trying thousands or millions of combinations with the speed of a modern computer.

The implications of the government’s demands are chilling. If the government can use the All Writs Act to make it easier to unlock your iPhone, it would have the power to reach into anyone’s device to capture their data. The government could extend this breach of privacy and demand that Apple build surveillance software to intercept your messages, access your health records or financial data, track your location, or even access your phone’s microphone or camera without your knowledge.

Opposing this order is not something we take lightly. We feel we must speak up in the face of what we see as an overreach by the U.S. government.

We are challenging the FBI’s demands with the deepest respect for American democracy and a love of our country. We believe it would be in the best interest of everyone to step back and consider the implications.

While we believe the FBI’s intentions are good, it would be wrong for the government to force us to build a backdoor into our products. And ultimately, we fear that this demand would undermine the very freedoms and liberty our government is meant to protect.

I wonder if Cotton would understand that the $59 billion worth of products Apple sells to China annually might be jeopardized if Apple started creating back doors so U.S. spy agencies could access people's data. As Katie Benner and Paul Mozur mentioned in the NY Times yesterday, Apple "is playing the long game with its business. Privacy and security have become part of its brand, especially internationally, where it reaps almost two-thirds of its almost $234 billion a year in sales. And if it cooperates with one government, the thinking goes, it will have to cooperate with all of them. 'Tim Cook is leveraging his personal brand and Apple’s to stand on the side of consumer privacy in this environment,' said Mark Bartholomew, a law professor at the University of Buffalo who studies encryption and cyberlaw... If Apple accedes to American law enforcement demands for opening the iPhone in the San Bernardino case and Beijing asks for a similar tool, it is unlikely Apple would be able to control China’s use of it. Yet if Apple were to refuse Beijing, it would potentially face a battery of penalties. Analysts said Chinese officials were pushing for greater control over the encryption and security of computers and phones sold in the country, though Beijing last year backed off on some proposals that would have required foreign companies to provide encryption keys for devices sold in the country after facing pressure from foreign trade groups."

That's way too complicated for Herr Trumpf or the Grindr closet-case senator guy from Arkansas. Perhaps Ted Lieu (D-CA) could take pity on him and explain why this is important to get right. "This FBI court order, by compelling a private sector company to write new software, is essentially making that company an arm of law-enforcement," he informed his Los Angeles area constituents. "Private sector companies are not-- and should not be-- an arm of government or law enforcement. This court order also begs the question: Where does this kind of coercion stop? Can the government force Facebook to create software that provides analytic data on who is likely to be a criminal? Can the government force Google to provide the names of all people who searched for the term ISIL? Can the government force Amazon to write software that identifies who might be suspicious based on the books they ordered? Forcing Apple to weaken its encryption system in this one case means the government can force Apple-- or any other private sector company-- to weaken encryption systems in all future cases. This precedent-setting action will both weaken the privacy of Americans and hurt American businesses. And how can the FBI ensure the software that it is forcing Apple to create won’t fall into the wrong hands? Given the number of cyberbreaches in the federal government—including at the Department of Justice-- the FBI cannot guarantee this back door software will not end up in the hands of hackers or other criminals." Let's make sure we don't elect anymore-spying authoritarian types to anything.

Nothing to read here -- go on to whatever else you had in mind

I know you won't have any interest in what follows, which is just for me. I feel bad, though, so I thought you might enjoy this Roz Chast cartoon from the same issue of The New Yorker referenced below. (Click to enlarge.) Oh, and also the Dan Roe one below.

by Ken

I know there are important things happening in the world which demand comment from me, but they'll just have to wait another day (or possibly more). Because today is 9/10.

I should explain that on the subject of this momentous date I wrote approximately two versions of a post in my head and then decided to omit them, under the influence of John McPhee's latest New Yorker "Writing Life" piece, "Omission: Choosing what to leave out" (September 14), which I read on the subway ride home from work, while I was also writing those posts in my head. McPhee's new piece is a miraculous turnaround from his last, deeply obnoxious "Writing Life" piece, "Frames of Reference" (March 9), which I wrote about here and here. My resulting omissions represent a benefit not just to readers but to the writer as well -- since those pieces hadn't actually been written yet, there is a significant saving in labor.

So, what's 9/10? you ask. Of course yesterday, 9/9, was Bridgegate Anniversary Day, and tomorrow, 9/11, is, well, you know. But 9/10? Well, for me it's New Phone Day Maybe --the day when I can upgrade my smartphone without having to pay a $50 upgrade fee (but apparently not without paying a $30 activation fee). I have a number of options, and I can make a strong case against all of them.

The smart thing to do would be just to deactivate the thing and save both the $78/month and the bargain price I'll be offered on, say, a not-quite-current model Samsung Galaxy or iPhone. (No, of course I'm not being offered one of the brand-new iPhones.) This would be especially smart because it's looking like a really tough financial year ahead, as I continue paying off a dental bill I thought I'd paid off, except that there turned out to be a whole bunch of other charges that hadn't been billed yet. By the time the thing is paid, it will have consumed, by my rough calculation, more than a third of my humble yearly take-home pay.

And it's not as if I couldn't live without a smartphone. In the two years of my current contract I've hardly ever used my Galaxy S4, which I understand even less about than its predecesor, an S2 that I'd actually started to use -- at least as a telephone -- before it succumbed to supposed water damage that the Samsung people in Texas declared beyond repair; I thought it was kind that they paid shipping both ways, though. (Based on one phone call I attempted with the then-new S4, it sucks as a telephone, except maybe if you use earphones to hear and speak right into the mic, as I notice people doing.)

Or I could instead do one of the above-hypothesized upgrades. After all, everyone insists that the iPhone is way easier to learn to use than an Android. I might actually have gone that route two years ago, except that my carrier, Credo Mobile, didn't offer iPhone service. (Naturally they began not long after I made my two-year commitment to the S4.) Now, however, I have reached the point in my mounting loathing of Apple and everything it has come to stand for (can you tell I'm an old-time Mac user?) where joining the iPhone legions is, shall we say, burdensome.

An upgrade to whatever Galaxy model Credo is offering might make sense, except that it would be based on the same theory as my last Galaxy upgrade: that this time I would learn how to use the damn thing. In my defense, I actually attended a class in Android basics at the public library, and came away knowing approximately less than when I went in. I could, of course, spend nothing on a new phone and continue "using" (for want of a better word) my S4 -- with the same probable outcome.

Before I left work today, I went online to see what's actually on offer now that my New Phone Day Maybe is here, thinking that perhaps this would make it all become clear. Instead, it became murkier, if possible -- except for the part about my having to pay the $30 activation fee this time, which I didn't two years ago. That part seemed pretty clear. (I don't know, maybe it was waived then, and might conceivably be again. This hardly qualifies as movement in the direction of clarity, though.)

So it looks like New Phone Day Maybe is going to have the accent on the "maybe," or maybe the "maybe not."

I can't think about it anymore, especially since now I have another situation to worry about. On this evening's subway ride, after I finished the McPhee New Yorker piece, I was thumbing through the issue and noticed that, along with all the other New Yorker Festival events for which tickets go on sale tomorrow, there's Calvin Trillin's 14th annual Village-to-Chinatown eating tour, which I know sells out immediately if not sooner -- even assuming I'm prepared to pay $150. I might be, partly because it's by all accounts a great event, but also because Trillin is probably my favorite living writer, and who wouldn't pay $150 for the privilege of making a tongue-tied gibbering idiot of himself in the presence of his idol?

How cool, though, that I discovered this the day before registration starts! Or maybe not. Because I also learned that there's a full day of early registration, like today, for MasterCard users, and by consulting a financial self-cheat sheet I keep, I was reminded that no, I don't have a MasterCard anymore, since CitiBank -- another of my great corporate hates -- canceled mine because I wasn't using it. So in all likelihood by the "start" of registration tomorrow the event will be sold out anyway.

"You call that a bon mot?"

#

Apple Says They Aren't Going To Help The CIA And NSA Illegally Spy On Their Customers Any More

Do you believe them? Or any of the big tech companies? They all lied and lied about protecting our privacy while allowing the spy agencies easy access to all our personal information and communications, as though we are all legitimate suspects in some kind of Orwellian dystopia.

Apple CEO Tim Cook, is savvy enough to know how that cooperation with the worst aspects of the National Security State has damage Apple's precious, hard-earned brand, which has already been tattered around the edges. Yesterday Cook released this statement at Apple.com:

At Apple, your trust means everything to us. That’s why we respect your privacy and protect it with strong encryption, plus strict policies that govern how all data is handled.

Security and privacy are fundamental to the design of all our hardware, software, and services, including iCloud and new services like Apple Pay. And we continue to make improvements. Two-step verification, which we encourage all our customers to use, in addition to protecting your Apple ID account information, now also protects all of the data you store and keep up to date with iCloud.

We believe in telling you up front exactly what’s going to happen to your personal information and asking for your permission before you share it with us. And if you change your mind later, we make it easy to stop sharing with us. Every Apple product is designed around those principles. When we do ask to use your data, it’s to provide you with a better user experience.

We’re publishing this website to explain how we handle your personal information, what we do and don’t collect, and why. We’re going to make sure you get updates here about privacy at Apple at least once a year and whenever there are significant changes to our policies.

A few years ago, users of Internet services began to realize that when an online service is free, you’re not the customer. You’re the product. But at Apple, we believe a great customer experience shouldn’t come at the expense of your privacy.

Our business model is very straightforward: We sell great products. We don’t build a profile based on your email content or web browsing habits to sell to advertisers. We don’t “monetize” the information you store on your iPhone or in iCloud. And we don’t read your email or your messages to get information to market to you. Our software and services are designed to make our devices better. Plain and simple.

One very small part of our business does serve advertisers, and that’s iAd. We built an advertising network because some app developers depend on that business model, and we want to support them as well as a free iTunes Radio service. iAd sticks to the same privacy policy that applies to every other Apple product. It doesn’t get data from Health and HomeKit, Maps, Siri, iMessage, your call history, or any iCloud service like Contacts or Mail, and you can always just opt out altogether.

Finally, I want to be absolutely clear that we have never worked with any government agency from any country to create a backdoor in any of our products or services. We have also never allowed access to our servers. And we never will.

Our commitment to protecting your privacy comes from a deep respect for our customers. We know that your trust doesn’t come easy. That’s why we have and always will work as hard as we can to earn and keep it.

Tim

Earlier today we looked at the widespread belief that Obama Administration has the very worst record in history for transparency, even worse than Cheney and Bush, which is saying a lot. Apple claims that they are "working for greater transparency and protects on behalf of our customers" and that their "commitment to customer privacy doesn't stop because of a government information request. Government information requests," they write, "are a consequence of doing business in the digital age. We believe in being as transparent as the law allows about what information is requested from us. In addition, Apple has never worked with any government agency from any country to create a 'back door' in any of our products or services. We have also never allowed any government access to our servers. And we never will."

Last week we took a look at what Ed Snowden had to say about these kinds of claims that, are, obviously very self serving. From Michael Gurnow's book, The Edward Snowden Affair:

Snowden divulges that his greatest fear is not death but his efforts might ultimately be in vain, "[ ... ] that nothing will change. People will see the media, all of these disclosures [and] they’ll know the lengths that the government is going to grant themselves powers unilaterally to create greater control over American society and global society, but they [the American people] won’t be willing to take the risks necessary to stand up and fight to change things, to force their representatives to actually take a stand in their interests." He closes the interview with a prediction of where the current state of affairs might ultimately lead: "And the months ahead, the years ahead, it’s only going to get worse until eventually there will be a time where policies will change because the only thing that restricts the activities of the surveillance state are policy. Even our agreements with other sovereign governments, we consider that to be a stipulation of policy rather than a stipulation of law and because of that, a new leader will be elected ... they’ll find the switch ... say that 'Because of the crisis-- because of the dangers we face in the world-- some new and unpredicted threat, we need more authority, we need more power' and there will be nothing the people can do at that point to oppose it and it will be turnkey tyranny."

Early in the dialogue, Greenwald bluntly puts to Snowden, "Does it [the intelligence community] target the actions of Americans?" Greenwald wants to have the world hear, directly from the lips of a high-ranking ex-CIA employee and NSA contractor, what is taking place behind the surveillance curtain.

"The NSA, and intelligence community in general, is focused on getting intelligence wherever it can, by any means possible. It believes-- on the grounds of sort of a self-certification-- that they serve the national interest. Originally we saw that focus very narrowly tailored as foreign intelligence gathered overseas. Now, increasingly, we see that it’s happening domestically and to do that they, the NSA specifically, targets the communications of everyone. It ingests them by default. It collects them in its system and it filters them and it analyses them and it measures them and it stores them for periods of time simply because that’s the easiest, most efficient, and most valuable way to achieve these ends." He continues, "Any analyst at any time can target anyone, any selector, anywhere. Where those communications will be picked up depends on the range of the sensor networks and the authorities that analyst is empowered with. Not all analysts have the ability to target everything, but I, sitting at my desk, certainly had the authorities to wiretap anyone from you or your accountant, to a federal judge, to even the president if I had a personal e-mail." He adds that the American populace should take notice "[b]ecause even if you’re not doing anything wrong, you’re being watched and recorded, and the storage capability of these systems increases every year consistently by orders of magnitude to where it’s getting to the point where you don’t have to have done anything wrong. You simply have to eventually fall under suspicion from somebody even by a wrong call, and then they can use this system to go back in time and scrutinize every decision you’ve ever made, every friend you’ve ever discussed something with and attack you on that basis to sort of derive suspicion from an innocent life and paint anyone in the context of a wrongdoer."

Apple admits that the "most common requests we receive for information come from law enforcement in the form of either a Device Request or an Account Request. Our legal team carefully reviews each request, ensuring it is accompanied by valid legal process. All content requests require a search warrant. If we are legally compelled to divulge any information and it is not counterproductive to the facts of the case, we provide notice to the customer when allowed and deliver the narrowest set of information possible in response. National security-related requests are not considered Device Requests or Account Requests and are reported in a separate category altogether.

"On devices running iOS 8, your personal data such as photos, messages (including attachments), email, contacts, call history, iTunes content, notes, and reminders is placed under the protection of your passcode. Unlike our competitors, Apple cannot bypass your passcode and therefore cannot access this data. So it's not technically feasible for us to respond to government warrants for the extraction of this data from devices in their possession running iOS 8."

Sounds like an ad. But the trade press seems persuaded and, of course, Yahoo couldn't be more eager to sing Apple's praises. How about you? Do you believe them?

Watch Watch: I don't really care what the Apple Watch does, but if you do, we've got a demo you can watch

Is this thing hideous or what? By comparison Dick Tracy's anciently futuristic wristphone (see below) was a thing of beauty.

by Ken

Since I really want to know as little as I can get away with about the Apple Watch, I'm just going to go with Alexandra Petri on this, in her washingtonpost.com ComPost post "In defense of the wristwatch, after Apple unveils a watch of its own."

I admit that, as long as I'm within range of a computer, I often have a tendency to poke at e-mail oftener than I should. Okay, sometimes every few minutes, but usually that's only when I have a really, really lot of work to avoid. Yesterday, I admit, I was peeking at the e-mailbox more frequently than I should have been, but in fairness I have to say that an awful lot of interesting things were coming in.

And then there were breathless live-blogging-type reports from the Apple press conference. Yes, real-time reports of develoments as they developed at, ferchrissakes, a press conference, a lousy new-product announcement.

I realize that the future of the Modern World is generally held, if less securely in the post-Steve Jobs era, to be more or less the future of Apple's new-product developments. But even though I have been an Apple customer for, I don't know, 20 years?, since I bought my first (used) Mac, I'm all too clearly not on the company conveyor belt.

I do have two iPods, one of which was partial payment for a job I did and the other of which was a gift, but I've never really learned to use them. (In the years when I was listening to music portably it was all on CD. Say, weren't those portable CD players once iSomethings? It seems so long ago.) I don't have an iPhone or an iPad and don't want either. (I have a different kind of "smartphone," which doesn't seem that smart to me, since it doesn't do anything. Mostly it affords me the privilege and pleasure of paying out a considerable sum each month for cell-phone service I never use, but I guess that constitutes pulling its weight.) I know there's such a thing now as Apple TV, but I don't know what it is, and I figure if I don't know what it is, I don't need it.

Come to think of it, I'm also now a couple of decimal generations behind on my Mac OS. Once the "improvements" started being mostly about finger-swiping, which I don't do, and nothing else in the upgrade list looks like it will remotely improve my life, I started passing. Eventually, of course, I'll have to upgrade just to be able to run current software, but I'll deal with that when it happens, just as I have in the past -- in proper panic and desperation.

One thing I learned in the course of those breathless roll-out e-mails yesterday from Apple Central is that the Cupertino kids were finally unleashing a New Product on the world --

THE APPLE WATCH

As with Apple TV, I don't really know what the Apple Watch is and don't really want to find out. The chances that it will improve my life seem infinitesimal.

So I'm going to trust Alexandra Petri's preliminary go-around with the newly announced electronic creature, even though I can see that we're not at all the same kind of users.

For example, she pronounces herself what I might call "time-resistant."

[A]s a committed Late Person, I think the rise of smartphones is bad enough. This watch trend needs to be nipped in the bud. If everyone has Apple Watches, we will all know what time it is. And that would be terrible.

Actually, I myself am kind of time-obsessive. I need to know what time it is, well, pretty darned frequently. And over the years, especially with the advent of wonderfully accurate quartz watches. (I was terrible with the wind-up kind, always winding them either too much or too little, neither conducive to producing regular time readouts of any credibility.) I now own three not-very-expensive watches that suit me just fine and also guarantee that on any given morning, if I can't find where I set down the watch I was wearing yesterday when I took it off, instead of setting off on a mad Watch Hunt, I can just slip on the "alternate" watch, and on those less frequent days when both "regular" watches are in hiding, there's still that third one in the box, assuming I remember where the box is. It's a system that runs like, well, clockwork.

The watch I actually like best, a Timex (I usually have a Timex), doesn't even have a date readout -- just the time. The ones that have a date readout require that extra adjustment on the first of any month following a non-31-day month, and I rarely remember exactly how this is accomplished on any particular watch. Sometimes I realize I'm attempting to duplicate the method used on a watch that went out of my life ten years ago. As for the day-and-date kind, well, that's several grades above my resetting skill level. It's not that I always know the date, or (goodness knows) the day of the week, but I figure there are other ways of getting hold of that information. Like with a calendar.

Still, for all our user differences, Alexandra and me, I note that we approach the advent of the Apple Watch with kindred skepticisms. And she stakes out her Apple Watch position promptly, in no uncertain terms: "No, Apple," she declares. "This time you have gone too far."

You may have made an Apple Watch, but for once, I must say: I do not want what you have to offer. I will not bite the apple, serpent!

You may have designed some fancy new product with all kinds of capabilities. Fine. The Apple Watch can do all kinds of things that a traditional watch cannot. Monitor your heart rate (this seems like something out of “Gattaca”). Tell a touch from a tap (I can barely tell a touch from a tap myself). Track your every movement (if I wanted my every movement to be tracked, I would just violate my parole). Show you text messages. (Not wanting to receive any text messages just now was why I left the house with my watch and not my phone in the first place!) All of these features are very nice, if that is the kind of thing you like.

Alexandra, for one, can produce a list of features of regular watches which, while not identical to my own, is at least headed in a similar direction. We've already touched on one of the things a regular watch does which endears it to her:

Tell you what time it is while giving you no other information.

This last thing is somewhat more valuable than I think we realize. We live in a great age of More Information Than You Require, where if you are not careful, any query can send you down an Internet rabbit hole from which you emerge, dazed, six hours later, having read all there is to read about the 2003 “Peter Pan” for reasons you are unable to recall. Just getting one piece of information from any tool is increasingly rare — and, correspondingly, precious.

That's pretty convincing, don't you think? Here are the other things a "traditional" watch can do which she wonders if the Apple Watch can:

Be slightly, slightly off the correct time in a way that makes you late to everything?

Stop mysteriously one day when you have a lot of things to get to so you don’t notice until you realize it’s been 2:40 for the past several hours?

Fall into water and stop working? (That I bet it can.) [I bet it can too, Alexandra. -- Ed.]

Tell you what time it is, loosely, if for some reason you do not have your cell phone with you?

Either have a digital display, which apparently proclaims to business associates that you “don’t know how to tell time” (a valuable skill in case you ever get transported to 1830 for some reason), or a round face with series of Roman numerals on it, the last holdouts from an empire that has been extinct for more than a thousand years, probably long enough that we should be able to admit freely that XII is a dumb way of writing “12.”

Give you something to look at to tell the meaning of “clockwise” or “counterclockwise,” otherwise baffling and meaningless terms with little relevance to modern life.

Clash horribly with your outfit.

Require a tiny battery that is only sold somewhere in the Far Distant Suburbs and has to be installed by an elderly jeweler who only works during the precise hours you have to be in the office.

Actually, after decades of battery angst, I overcame this source of grief when I stumbled onto a lovely Chinese gentleman who has a watch stall in a storefront on Canal Street. He's so good, I almost look foward to my batteries dying.

With any luck, I'll go before he does -- or at least maybe I'll have stopped worrying about the time so much.


NOW THIS IS WHAT I CALL A WATCH

#

Orwell Updated-- In An Infiniti Q50 TV Ad?

Or maybe it was Aldous Huxley's 1931 dystopian novel, Brave New World that the creators of Infinity's new television ad for the Q50 ("Factory of Life") based the new ad on. The blue chip advertising company, TBWA\CHIAT\DAY (part of the edgy and "disruptive" Omnicom marketing group) was also responsible for Apple's classic "1984" campaign for the newly introduced Macintosh (below) thirty years ago! That ad was conceived of by Steve Hayden, Brent Thomas and Lee Clow at Chiat/Day, in Venice, California and directed by Ridley Scott, who had just directed Blade Runner, based on Do Androids Dream of Electric Sheep? by Philip K. Dick, the year before.

Lee Clow, formerly Chief Creative Officer of TBWA/Worldwide, is now Chairman and Global Director. Advertising Age says he's the advertising industry's "art director guru. With his low-key, casual manner belying his hard-work ethic, the bearded adman-in-flip-flops' leadership style has brought TBWA/Chiat/Day virtually every national and international award and honor." Clow earned a 2-year degree from a community college, Santa Monica. He's obviously read 1984 and seen Blade Runner. I have no idea if he's ever heard of Huxley's Brave New World, but I'd bet he has and that the team that did the Infiniti ad has as well.

Huxley, who was living in Mussolini's fascist Italy when he wrote the book (set in London in the year 2540), has told people he was influenced by H.G. Wells' A Modern Utopia and Men Like Gods, although there is some controversy over whether or not Huxley also drew from Yevgeny Zamyatin's We. Fascism, corporate tyranny, behavioral conditioning and America's growing role in the world are all interwoven into the novel. He's not a fan of fascist, anti-Semitic American car manufacturer Henry Ford. Neil Postman contrasted the world's of Orwell's 1984 and Huxley's Brave New World:

What Orwell feared were those who would ban books. What Huxley feared was that there would be no reason to ban a book, for there would be no one who wanted to read one. Orwell feared those who would deprive us of information. Huxley feared those who would give us so much that we would be reduced to passivity and egotism. Orwell feared that the truth would be concealed from us. Huxley feared the truth would be drowned in a sea of irrelevance. Orwell feared we would become a captive culture. Huxley feared we would become a trivial culture, preoccupied with some equivalent of the feelies, the orgy porgy, and the centrifugal bumblepuppy. As Huxley remarked in Brave New World Revisited, the civil libertarians and rationalists who are ever on the alert to oppose tyranny "failed to take into account man's almost infinite appetite for distractions." In 1984, Postman added, people are controlled by inflicting pain. In Brave New World, they are controlled by inflicting pleasure. In short, Orwell feared that what we fear will ruin us. Huxley feared that our desire will ruin us.

Special Monday afternoon DWT bonus: my favorite song by The Feelies:

Big Business Has A Friend-- Congress

Monday we looked at Jason Farago's definitive Cory Booker analysis in the Guardian. One conclusion that struck me was about his lackey-like relationship with Big Business in general and Wall Street in particular.

Booker has the unwavering support of the big bad industry just across the river from Newark. Since his days as a city councilor, he has hoovered up cash from the financial services sector-- but unlike many other tri-state Democrats who seduce the Street in a marriage of a convenience, Booker legitimately thinks that big money knows best and the public sector should do its bidding. When, in May 2012, Booker confessed that he found it "nauseating" for the Obama campaign to impugn Mitt Romney's career in private equity, Democrats were shocked. They shouldn't have been.

Booker's whole career has been a testament to a poisonous financial-corporatist consensus, which dresses up the interests of big money in post-ideological garb. (That helped him win the support this weekend of the most powerful man in New Jersey: George Norcross III, the feared political boss and owner of the Philadelphia Inquirer, who said he liked Booker because he was "a Democrat that's fiscally conservative yet socially progressive.")

Because I used to be a corporate CEO, I still get corporate CEO magazines and communications. One came this week that I actually opened instead of deleting. It was celebrating the easy access corporate CEOs and their agents have to Members of Congress. They cited a study based on a survey by George Washington University that included 328 congressional staffers from both sides of the aisle. No telling how many of their bosses are as subservient to Big Business as Cory Booker, but the study found that "65 percent of Hill staffers have a positive opinion of corporations-- calling them very or somewhat trustworthy. Additionally, the poll finds that 71 percent of Hill staffers found meetings with CEOs and top executives to be helpful when learning more about the issues that affect business." Just under half the Capitol Hill staffers surveyed say the same positive predisposition towards organized labor. 64% of Hill staffers said that meeting with corporate lobbyists was a helpful activity in formulating policy, while only 45% reported that meeting with labor lobbyists was useful.

This is great news for the business community since many corporations and associations host congressional fly-ins for their employees and membership base. A face-to-face meeting with a legislator helps you connect with your legislator and his or her staff on a personal level and can be important in building relationships for you and your organization. As proven by the study, elected officials enjoy meeting with their constituents, but many people compete for their time. When meeting with your elected official or staffer, be sure to remember the following to ensure an effective meeting:

Be Flexible
When scheduling an appointment, provide as much advance notice as possible and try to be flexible about dates and times. If you have to schedule a meeting on your own, keep in mind that your legislator will be able to spend more time with you if you schedule the meeting at his or her district office when Congress is not in session.

Be Prompt and Professional
Once you have made the appointment, be sure to keep it. It is wise to confirm your appointment a day or two in advance and plan to arrive a few minutes early. Dress professionally and make sure you are prepared to deliver your message persuasively.

Respect the Legislator’s Schedule
Remember that your legislator’s time is limited, and you are there to discuss important issues. Know in advance how long the legislator can speak with you and make certain the meeting does not exceed the allotted time. Be sure to stick to your topic, keep your comments and questions brief, and allow time for your legislator to ask questions and provide you with feedback.

Be Organized for the Meeting
Know your issue and the facts behind it thoroughly before you reach the meeting. If several people will be attending, designate one individual to act as spokesperson for the group and make sure you are all agreed on the message you are there to deliver. When you arrive at the meeting, introduce all of the attendees and allow the spokesperson to explain why you have requested the meeting. Be as specific as possible to help your legislator better understand the big picture.

Clearly State Your Position and Seek Feedback
Explain specific reasons you support or oppose the issue, including the impact of the issue on your business, your community, colleagues and industry. Stick to the issue at hand; bringing up other topics will lessen the force of your message. Ask your legislator’s position on the issue, but don’t try to force him or her to commit to a position. Request that you be kept updated on the issue and be sure to provide your contact information.

Avoid Arguing
While you are entitled to disagree with your elected officials, remember that you are not just there to win: You are there to build a positive relationship. Becoming argumentative will not help. Even if you are unable to persuade your legislator to your point of view, it is always best to leave on friendly terms so that you will be welcome another time.

Provide Leave-Behind Information
Whenever possible, leave appropriate documentation that supports your position with the legislator. Such leave-behind information will help the legislator remember your views and allow him or her to refer back to them after the meeting is over.

Follow Up with a Personal Letter
Be sure to send a thank-you letter after the meeting, regardless of whether you were able to reach an agreement. A thank you letter demonstrates that you appreciate the value of your elected official’s time and allows you to reiterate your position and underscore your concerns.

I bet it didn't take many personal follow up letters from Steve Jobs and Tim Cook of Apple to members of Congress to curry favor with the government, not if you read a new report from the Associated Press about domestic spying the same way I do:

Apple says it received between 4,000 and 5,000 requests from U.S. law enforcement for customer data for the six months ended in May.

The company, like some other businesses, had asked the U.S government to be able to share how many requests it received related to national security and how it handled them. Those requests were made as part of Prism, the recently revealed highly classified National Security Agency program that seizes records from Internet companies.

Prism appears to do what its name suggests. Like a triangular piece of glass, Prism takes large beams of data and helps the government find discrete, manageable strands of information.

Prism was revealed this month by the Washington Post and Guardian newspapers, and has touched off the latest round in a decade-long debate over what limits to impose on government eavesdropping, which the Obama administration says is essential to keep the nation safe.

Apple Inc. said that between 9,000 and 10,000 accounts or devices were specified in data requests between Dec. 1, 2012, and May 31 from federal, state and local authorities and included both criminal investigations and national security matters.

...Facebook Inc. has said that it received between 9,000 and 10,000 requests for data from all government agencies in the second half of last year. The social media company said fewer than 19,000 users were targeted.

I had dinner with an old friend over the weekend who designed-- and then ran-- a computer system for a sensitive division of one of Wall Street's biggest banks. He told me the feds asked them for access to between 30,000 and 50,000 individual accounts annually and claimed it was covered by "money laundering" statutes, although it was clear to the bank that very little of it involved a search for money launderers. The news didn't come as a surprise to me, just as the revelations in the press about Prism and other NSA domestic spying didn't come as a surprise to me. I have, after all, always taken President Eisenhower's 1961 warning about the power of the Military Industrial Complex to heart. He was certainly in a better position to understand it than any president who came after him.

Big Brother Wants More, More, More-- Demands Apple Share Encryption Codes

If Obama isn't bad enough, imagine what's probably coming next

The Big Oil and Gas companies endangering the rest of society in their insane pursuit of profits, have refused to tell regulatory agencies which cocktail of toxic chemicals they shoot into the earth during fracking operations. They claim the formulas are "trade secrets." Apparently, our e-mails aren't.

The DEA has been trying to hack into Apple's encrypted messaging system but have thus far failed. They're making a lot of noise about Apple turning over the keys to the encryption technology to government agencies. The libertarian think tank, CATO, suspects the DEA whining could be little more than disinformation.

Tech news site CNET has an interesting, but I suspect somewhat misleading, story today suggesting that text messages sent via Apple’s iMessage service—an Internet-based alternative to traditional cell phone SMS text messages—are “impossible to intercept” by law enforcement. Yet that is not quite what the document on which the story is based-- an “intelligence note” distributed to law enforcement by the Drug Enfrocement Administration-- actually says.

The DEA memo simply observes that, because iMessages are encrypted and sent via the Internet through Apple’s servers, a conventional wiretap installed at the cellular carrier’s facility isn’t going to catch those iMessages along with conventional text messages. Which shouldn’t exactly be surprising: A search of your postal mail isn’t going to capture your phone calls either; they’re just different communications channels. But the CNET article strongly implies that this means encrypted iMessages cannot be accessed by law enforcement at all. That is almost certainly false.

...Which brings us to the question of why, exactly, this sensitive law enforcement document leaked to a news outlet in the first place. It would be very strange, after all, for a cop to deliberately pass along information that could help drug dealers shield their communications from police. One reason might be to create support for the Justice Department’s longstanding campaign for legislation to require Interent providers to create backdoors ensuring police can read encrypted communications-- even though in this case, the backdoor would appear to already exist.

The CNET article itself discusses this so-called “Going Dark” initiative. But another possible motive is to spread the very false impression that the article creates: That iMessages are somehow more difficult, if not impossible, for law enforcement to intercept. Criminals might then switch to using the iMessage service, which is no more immune to interception in reality, and actually provides police with far more useful data than traditional text messages can. If that’s what happened here, you have to admire the leaker’s ingenuity—but I’m inclined to think people are entitled to accurate information about the real level of security their communication enjoy.

Apple... INsourcing

Apple is such an iconic American brand that many Apple evangelists feel hurt that the company outsources so much of its maufacturing overseas. People are more emotionally attached to Apple than to most brands-- and want it to be all-American... or at least, more American. And that may be happening. According to CEO Tim Cook, Apple is planning to bring back some of its production to the U.S. from China next year. In fact, some of the newest iMacs no longer carry the embarrassing "designed in California, assembled in China" label.

Looks like Apple is sick of being the face of outsourcing. America's most valuable company is bringing production of one of its Mac lines to the US, CEO Tim Cook says in a pair of interviews out today. "We've been working for years on doing more and more in the United States," Cook tells Brian Williams at NBC, pointing out that the iPhone's "engine" and screen glass are already produced domestically. "Next year, we will do one of our existing Mac lines in the United States." (No word on which one, or where said manufacturing will happen.)

"The consumer electronics world was really never here," he adds. "So it's not a matter of bringing it back, it's a matter of starting it here." In a Bloomberg interview also released today, he reveals that the company will do more than "just assembly" in the US. "We wanted to do something more substantial. So we'll literally invest over $100 million." But Cook also sounded committed to Foxconn, boasting of all the work Apple was doing to improve conditions there, including educating workers about their rights.

Cook, who estimates that Apple has created more than 600,000 new jobs since 1980, isn't making this move just because Apple is embarrassed over the labor situation at Foxconn or to do something that feels good for American Apple enthusiasts. As Gary Marshall at TechRadar explained, Apple isn't taking this step to show what patriots they are. "It's doing it out of self-interest. Outsourcing just isn't as attractive as it used to be.

Apple isn't the only firm bringing assembly work back home: The Atlantic describes how General Electric decided to assemble water heaters in the US instead of outsourcing, enabling it to make the same units more quickly, to higher standards, for less money than if it outsourced the jobs, and other firms are following suit.

The phenomenon has been dubbed "insourcing."

Firms are insourcing for several reasons. Fuel prices are soaring, making shipping more expensive, while in the US a natural gas boom means energy costs are falling.

US workforces are more productive and less unionised than they used to be, while Asian workforces are-- quite rightly-- demanding better pay and conditions. It makes for great PR, especially when people are experiencing economic hard times. And it also stops your suppliers from nicking all your best ideas.

As the always-perceptive Horace Dediu writes on Asymco.com, "An insidious problem emerges when outsourcing: suppliers tend to become competitors. It happened in the PC industry with Acer vs. Dell. But it's also happening to Apple."

As he points out, it's interesting how Apple's key supplier, Samsung, managed to go from "near zero market share in smartphones to being the largest vendor in two years, a feat that Apple itself could not accomplish."

Apple isn't cutting out subcontractors and setting up its own enormous Mac factories yet-- Tim Cook says that "this doesn't mean that Apple will do it ourselves, but we'll be working with people, and we'll be investing our money"-- but it's clearly heading down that road, and that sounds like good news to me.

Irrespective of Apple's reasons, the consequences of insourcing are positive: as I wrote earlier this year about Apple's A5 processor being made in Texas, "Samsung's A5 processor plant means that 1,100 Texans are taking home paycheques, paying Texan taxes and patronising Texan businesses."

Scott Paul, Executive Director of the Alliance for American Manufacturing, was even more happier-- if acutiously so-- that the garden variety Apple fan. "We’re very pleased to learn that Apple is among the growing list of major manufacturers that see the United States as an attractive location for manufacturing. We’re also pleased that Apple will be doing more than simply 'turning the final screws' on its products in the U.S., and is committing to use some local suppliers. But if Apple wants to avoid being labeled a 'red, white, and blue-washer,' it must show that this one line of computer manufacturing is part of a larger trend, and not an outlier. Apple is committing about $100 million to production in the U.S. next year, a small fraction of its revenues and market valuation. It can do better, but this is an important step in the right direction. "The 'Made in America' label is a valuable commodity, and we’re happy Apple has discovered this."