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Report: Silicon Valley Giants Enjoy Billions in Government Subsidies

July 5, 2018 By Chriss W. Street 2 Comments

The latest Subsidy Tracker reveals that some of the most prominent Silicon Valley tech corporations enjoy billions in government subsidies.

“Good Jobs First” is a not-for-profit organization that reviews state and municipal financial reports to track the size and justifications given by government entities to issue corporate tax abatements and direct subsidies that since 2015 have been required accounting disclosures under GASB Statement No. 77.

Most Americans are supportive of government providing defense, public safety, roads, schools, and public health. But the “Subsidy Tracker 2” reveals that governments are issuing record amounts of subsidies to the richest and powerful tech companies, many headquartered in Silicon Valley.

Supposedly entrepreneurial Silicon Valley has been America’s biggest winner in the corporate welfare game. Tesla has been by far the United States’ leader by collecting $2.4 billion in direct subsidies and over $1 billion in tax abatements since 2007. In addition, its SolarCity subsidiary picked up $1 billion in grants and tax abatements from the State of New York and another $497.5 million in U.S. Treasury Department cash grants.

Other Silicon Valley tech taxpayers miners include Google, the second-most valuable company in the galaxy with a market capitalization of $770 billion. It has enjoyed government largess of $766 million since 2000. Apple, the most valuable company in the universe with a market capitalization of $904 billion, banked $693 million in government handouts since 2011. And Facebook, the fifth most valuable company on the planet with a market capitalization of $558 billion, pocketed $549 million, according to the San Jose Mercury News.

But Silicon Valley is about to be displaced as America’s biggest corporate welfare hub by Seattle-based Amazon. According to the Subsidy Tracker, Amazon built its distribution and data centers network with up to $613 million in government grants and tax holidays.

Amazon is now holding the equivalent of a municipal subsidy auction for the right to host its $5 billion second North American corporate headquarters, HQ2.

In a bidding process that generated hundreds of proposals, Amazon named 20 municipal finalists in January. The subsidy packages for the nine locations that made public bids include 1) Raleigh, North Carolina with $50 million; 2) Denver, Colorado with $100 million; 3) Los Angeles, California with between $300 million to $1 billion; 4) Atlanta, Georgia with $1 billion; 5) Chicago, Illinois with at least $1.7 billion; 6) Philadelphia, Pennsylvania with between $2 billion to $3 billion; 7) Columbus, Ohio with $2.3 billion; 8) Newark, New Jersey with $7 billion; and Montgomery County, Maryland with $8.5 billion in tax abatements and infrastructure incentives.

Mercatus Center at George Mason University warns that elected officials, even with the best of intentions, “do not possess the proper incentives to manage taxpayers’ money prudently” when it comes to passing out corporate taxpayer subsidies.

When private investors act in markets they experience price signals, but government decision makers have no way to account for the value or costs of their decisions. When private investors fail they lose money, but it is taxpayers that lose when government fails.

This article was originally published by Breitbart.com/California

Filed Under: Top Stories Tagged With: Amazon, Apple, Google, Silicon Valley, SolarCity, Tesla

FBI Overreach in Pursuit of Apple Compliance

February 20, 2016 By Tim Sparapani 5 Comments

The Apple-FBI saga playing out in a very public way is a classic case of overreach by a law enforcement agency. The FBI is putting extraordinary (and unprecedented) pressure on Apple following the horrific San Bernadino shootings. The U.S. government has filed a motion in court to compel Apple to re-engineer its operating system so that the FCC can investigate whether the shooter used his iPhone to communicate or plan with other potential co-conspirators.

Forcing Apple to crack open its own code might appeal to some people clamoring for a quick fix for the ever-increasing threat of terrorism in our country. Unfortunately, there are no quick fixes and the government’s move is an extraordinary threat to civil liberty. It also won’t solve the larger problem. A backdoor won’t stop terrorism, but it will weaken smartphone security systems with no likelihood of any real public benefit. The public, and policymakers, should support Apple’s public resistance to the FBI’s pressure tactics. The FBI’s proposal is dangerous for at least these four reasons:

It Won’t Stop Terrorism

The FBI wants Apple to build a post-incident forensic investigation tool to unpack what may have happened. But that will not actually deter or prevent terrorism. Terrorists will simply switch to using encrypted phones from other countries.

It Will Open Security Loopholes

If the government is allowed to force Apple to provide a backdoor to its operating system, it will weaken security for all U.S. consumers on a go-forward basis This will not force committed terrorists to think twice, but instead could make Apple’s operating system vulnerable to the hacking of consumer data on a large scale given the way this story is playing out publicly as the hacking community will be awaiting the court decision with baited breath.

It Sets A Terrible International Precedent

If the courts force this technology mandate on Apple, it’s also making this technology available to the rest of the world. That means rogue regimes and dictatorships interested in cracking down on the communications and online interests of its citizens will have access to the same security busting technology as the U.S. government. Limiting security on iPhones could put regular citizens, journalists or freedom fighters, who are often on the frontlines of fights against oppression, in peril.

It Encourages Malware

What the FBI is requesting is as akin to introducing a dangerous virus into Apple’s operating system. The FBI is demanding that Apple create malware by reformulating its software. Backdoor access not only creates access for the government but it creates a flaw that black hat hackers will attempt to exploit. There’s a good chance this will create unintended consequences for Apple and its operating system, which could create a myriad of issues for millions of iPhone users.

Terrorism is a serious problem and one we, as a country, must face head-on. But we need to approach the situation in a way that yields results without creating new vulnerabilities. Knee-jerk reactions, like the one we’re seeing from the FBI are certainly not the answer. They only harm civil liberties and create new problems down the line. We need to hold true to our societal principles, including a right to privacy or we risk handing the terrorists their first real victory by causing us to subvert our values for a gamble that evidence collected after this attack might prevent future attacks.

Tim Sparapani is founder of the consulting firm SPQR Strategies and senior policy counsel for CALinnovates. He was the first director of public policy at Facebook and was senior legislative counsel at the American Civil Liberties Union. He is on Twitter: @TimSparapani.

This piece was originally published by Fox and Hounds Daily

Filed Under: Top Stories Tagged With: Apple, FBI, privacy, San Bernardino, Terrorism

New Legislation Targets Encrypted CA Smartphones

February 3, 2016 By James Poulos 5 Comments

A worldwide controversy over whether to ban encrypted smartphones has opened a new front in California, where lawmakers introduced legislation that would crack down on the devices.

Assembly Bill 1681, introduced by Assemblyman Jim Cooper, D-Elk Grove, would mandate that phones made “on or after January 1, 2017, and sold in California after that date” must be “capable of being decrypted and unlocked by its manufacturer or its operating system provider,” as CNET reported. “Any smartphone that couldn’t be decrypted on demand would subject a seller to a $2,500 fine. If the bill becomes law, there would be a ban on nearly all iPhones and many devices that run Google’s Android software across the state.”

With California home to both Google and Apple, observers quickly declared a broadening trend toward increased legal pressure on tech companies. But competing justifications for the crackdown have emerged, with lawmakers outside California opting to hang their own legislation on a different peg. As Ars Technica remarked of AB1681:

Despite very similar language to a pending New York bill, the stated rationale is to fight human trafficking, rather than terrorism.

AB1681’s language is nearly identical to another bill re-introduced in New York state earlier this month, but Cooper denied that it was based on any model legislation, saying simply that it was researched by his staff. He also noted that the sale of his own iPhone would be made illegal in California under this bill.

World worry

California policymakers have become an intimate part of the global push to prevent smartphone encryption from helping individuals and groups evade law enforcement monitoring and detection. At the Davos Open Forum, Rep. Darrell Issa, R-Calif., joined an international panel of public and private-sector officials to air concerns about the potential for over- or under-enforcement. “Governments claim the need for greater security and seek to monitor global communications, while citizens, more willing than ever to share, demand greater protection of their digital privacy,” according to Vice News, whose editor in chief moderated the discussion.

In the U.S., meanwhile, top law enforcement officials have sought to coordinate a nationwide effort patterned after California’s and New York’s, each of which drew support from its respective Attorneys General. “The National District Attorney’s Association hasn’t hidden its intention to mobilize its local offices,” according to The Verge. “The association, along with the International Association of Chiefs of Police, announced in November that they planned to partner with state legislators to enact mandatory smartphone decryption bills around the country. The group wrote in a letter that it looked ‘forward to working with lawmakers to strengthen our current laws, and ensure they are representative of today’s technology and the challenge public safety officials face in preventing crime and safeguarding their communities.’”

An uphill battle

But pushback has already begun from within the crypto and tech communities. On the one hand, advocates and activists have long warned against granting governments a so-called “backdoor” to the data and metadata stored on devices and accessible through them. “There have been people that suggest that we should have a backdoor,” Apple CEO Tim Cook recently said on “60 Minutes,” as the Silicon Valley Business Journal noted. “But the reality is if you put a backdoor in, that backdoor’s for everybody, for good guys and bad guys.”

On the other hand, however, going further, “legal and technical experts argue that even if a national ban on fully encrypted smartphones were a reasonable privacy sacrifice for the sake of law enforcement, a state-level ban wouldn’t be,” as Wiredobserved. “They say, the most likely result of any state banning the sale of encrypted smartphones would be to make the devices of law-abiding residents’ more vulnerable, while still letting criminals obtain an encrypted phone with a quick trip across the state border or even a trivial software update.” For that reason, both the California and New York bills face an uphill climb, despite strong pressure to pass them — or some version of them — into law.

Originally published by CalWatchdog.com

Filed Under: Top Stories Tagged With: Apple, Attorney General, cellphone, Google, Jim Cooper, Legislature, smartphone, Tim Cook

Silicon Valley Moving Toward Alliance With Big Labor

October 8, 2015 By Ed Ring 3 Comments

Artists rendering of Apple’s new headquarters (public domain image)

Back in the late 1970’s something happened to the Santa Clara Valley. Increasingly it became referred to as the Silicon Valley, because the emerging silicon based semiconductor industry found its first home in plants nestled along the southern shores of the San Francisco Bay. Boasting what are among the finest universities in the United States – Stanford and Cal Berkeley – and the best weather in the world, high technology companies began choosing the San Francisco Bay Area in the 1940s and never looked back. Where once there were endless orchards of Prune, Apricot and Cherry trees, a sprawling ecosystem of high tech companies and venture capital firms now attracts talent from everywhere on earth. The Silicon Valley became, and remains, the epicenter of the most dramatic technological advances in history.

For the first 25 years or so, certainly through the end of the 20th century, the mantra in the Silicon Valley was “better, faster, cheaper.” Entrepreneurs were creating entire new industries, as digital technology enabled “mini-computers” to replace mainframes, and “work-stations” to replace mini’s, which were in-turn replaced by PCs and laptops, which are themselves being replaced for many applications by smart phones. But as we move to the “internet of things,” and as the Silicon Valley ecosystem matures from a jungle of creative destruction to a forest where a handful of gigantic firms wield unprecedented economic power, the “better, faster, cheaper” mantra is fading away.

Silicon Valley’s new breed of entrepreneurs have realized they don’t necessarily have to compete for customers who will voluntarily choose their products over those offered by their competitors. They have realized the government is a customer with very deep pockets, that more regulations will empower big companies and destroy the emergent ones, that environmentalist mandates will force consumers to buy their products as they forge OEM relationships with manufacturers of durable goods, that the security state is a voracious consumer of high technology, and that public bureaucrats can be sold billions of dollars worth of educational hardware and software.

The Silicon Valley’s new breed of “entrepreneurs” have realized something else, too. They’ve realized that as they evolve from competition to cronyism, big labor can be a powerful political ally.

A recent report in the San Francisco Chronicle entitled “Unions and tech: A most unlikely political alliance forms,” sums up the new reality. Author Joe Garofoli writes:

“Led by the 1.4 million-member Teamsters union, some in labor are ready to support friendly tech companies when the corporations face regulators in San Francisco, Sacramento and beyond. Support from the Teamsters will make labor-backed Democrats much more receptive to the needs of a tech company. ‘Labor supports their employers in a lot of cases,’ said Rome Aloise, Teamsters International vice president. ‘We fight with them, but we support them — because they’re the creator of jobs, which creates members for us. On the other hand, for the ones that don’t pay decent wages and benefits, we’re not going to be supportive of them.'”

This has little or nothing to do with wages and benefits. The firms where the Teamsters have already gotten a foothold, eBay, Zynga, Yahoo, Genentech, and Apple, can easily afford to offer their drivers pay and benefits that render union dues a superfluous drain on their paychecks. And if these well heeled high-tech corporations haven’t granted their drivers and other service employees stable hours and competitive pay, that is a shameful omission they ought to correct without union intervention. They should, they could and they would. But they don’t want to. Because what this is really about is acquiring political power.

A few examples should suffice to convey the nauseating threat heralded by this new reality:

When the crony “greens” want to force every toilet and faucet manufacturer to install sensors to micro-monitor indoor water consumption, when the crony “education reformers” want to force every home school parent to purchase laptops wired with approved educational software, when the crony security and law enforcement “innovators” want to sell more drones and remote sensors to look into our backyards and listen in on our living room conversations – the unions will be there, adding their political muscle, public and private, to make sure our elected representatives do the right thing.

If union activism in the Silicon Valley was merely about wages, benefits, work hours, and dignity, they would have a legitimate role to play. Ideally, in those situations, private sector unions earn their clout by acquiring and retaining members voluntarily in a right-to-work environment. But unions, unfortunately, care just as much about power and organizational aggrandizement as the big corporations they purport to fight. That’s why they thrive in the powerful places where they are needed the least, in monopolistic entities with captive markets who can afford them – government and giant corporations – entities that realize union alliances will help them intimidate the political objectors, appease the union controlled pension funds, and obliterate the commercial competition.

The dawning unionization of the Silicon Valley is an ominous development. It must be challenged. The people who run Silicon Valley should consider what will happen when there’s an economic downturn, and labor contracts curtail their options to restructure. They should ask how their new allies will view utilization of self-driving cars and countless other labor saving innovations. They are putting the culture of “better, faster, cheaper,” at mortal risk, a culture that has enabled unprecedented global prosperity, and has the potential to offer wondrous new achievements for decades to come.

* * *

Ed Ring is the executive director of the California Policy Center.

Filed Under: Top Stories Tagged With: Apple, Bay Area, Ed Ring, san francisco, Silicon Valley, unions

Is Apple Ready To Jump Into Electric Car Market?

September 27, 2015 By James Poulos 3 Comments

California was poised to make automotive history again as Apple met with the state’s Department of Motor Vehicles. As the Golden State grapples with divisive choices over emissions regulations, electric and self-driving cars have emerged as the latest home-grown innovation with big political stakes.

The move put the self-driving car under development by the tech titan — codename: Project Titan — at the center of a flurry of speculation, opinion and analysis. Citing documents it had obtained, the Guardian reported that Mike Maletic, a senior legal counsel, “had an hour-long meeting on 17 August with the department’s self-driving car experts Bernard Soriano, DMV deputy director, and Stephanie Dougherty, chief of strategic planning, who are co-sponsors of California’s autonomous vehicle regulation project, and Brian Soublet, the department’s deputy director and chief counsel.”

Alongside Google and Uber, that makes three Silicon Valley heavyweights lined up to crank out driverless cars at some point in the future, the Guardian added, noting “Google already has a fleet of robot cars on the streets of California and is planning to have several hundred built in the near future.”

Critical mass

But the competition in driverless cars has already heated up around the world. “According to the California DMV,” Fast Company noted, “their autonomous vehicle program has issued permits for testing to Volkswagen, Mercedes-Benz, Tesla, Nissan, BMW, and Honda, along with Google and auto component manufacturers Delphi, Bosch, and Cruise Automation.” That program, begun at the start of this year, “is working on ways to guarantee autonomous vehicles are safe, tested, and meet quality and performance benchmarks.”

The race to deploy a robocar has led those companies, plus Toyota, Ford, and GM, to line the Valley’s main thoroughfare with research laboratories. The Central Expressway, reaching roughly from Stanford University to San Jose Mineta International Airport, has become so crowded with competitors that Apple’s penchant for secrecy may be at risk if it takes its cars out for a neighborhood spin. “Although Apple recently bought a 43-acre parcel in North San Jose, it doesn’t have much room in Silicon Valley to test its automotive ideas with the secrecy that usually surrounds its tiny devices,” the San Jose Mercury News surmised. “The question is: Would it be willing to test in public?”

Busy rivals

Traffic in secrecy has run both ways, however. Whatever Apple has under wraps, the Mercury News concluded, “its actions have contributed to a frenzy from rivals — especially in the auto industry — to take ownership of autonomous technology, in-car mapping software, vehicle-to-vehicle communication and dashboard Internet applications that could reshape the way we get around in the decades to come.”

To vault to the top of the pack, however, Apple would likely have to square off against Tesla, which has enjoyed a substantial head start. “In the next few years, Tesla has the potential to become the Apple of electric cars, even if Apple enters the industry,” according to Quartz. “The company will have four models on the streets — the Roadster, the S, the X, and the 3 — by the time Apple or any other competitor is likely to have a single model. Tesla will also have its Gigafactory — a massive production facility in Nevada that can produce up to 500,000 cars a year — up and running. If Tesla can bring down its prices, its cars could become a common sight on roads.” Of course, Tesla has automotive rivals of its own, with Audi, Mercedes and Porsche all poised to deliver electric vehicles in about five years or so.

Meanwhile, few inside the auto industry have thrown in the towel on more traditional vehicles. “When it comes to actually making cars, there is no reason to assume that Apple, with no experience, will suddenly do a better job than General Motors, Ford, Volkswagen, Toyota, or Hyundai,” GM ex-chairman Bob Lutz told CNBC, predicting that Apple’s labors would become “a giant money pit.”

Originally published by CalWatchdog.com

Filed Under: Top Stories Tagged With: Apple, Electric car, Google, Silicon Valley

Apple Inc.’s Success Highlights Both Trends and Anomalies

February 3, 2015 By John Seiler Leave a Comment

Apple Inc. continues to lead California’s high-tech economy — with no end in sight for now. The earnings it rang up for the last quarter of 2014, a record for any company, were based on selling 74.5 million iPhones worldwide.

That’s a harbinger for the rest of the state, Esmael Adibi told CalWatchdog.com; he’s the director of the A. Gary Anderson Center for Economic Research at Chapman University. “The economic growth is in that area,” he said. “This is the growth of social media at Apple, Facebook, Google, Yahoo and other companies. It’s design and research in Northern California.”

But not even Northern California can contain all the tech. The Playa Vista area of Los Angeles also is burgeoning with new developments.

The Los Angeles Times reported that in January, “Yahoo Inc. is moving its Santa Monica operations to Playa Vista, joining the droves of major tech companies that have opened offices in the booming Westside neighborhood.

“The Sunnyvale, Calif., Internet company signed a long-term lease for about 130,000 square feet at the new Collective campus in Playa Vista. The move will bring at least 400 jobs from its current location, with space to accommodate growth.”

And Google Inc. “has spent nearly $120 million on 12 vacant acres next to a historic hangar where aviator Howard Hughes built his famous ‘Spruce Goose’ airplane in the Playa Vista neighborhood near Marina del Rey.

“Google is also expected to lease the Hughes hangar built in 1943. The 319,000-square-foot building … could be home to as many as 6,000 well-paid, highly educated workers.”

Manufacturing

Adibi said this is a major difference from the high-tech economy of decades past, which centered on manufacturing. But that sector has declined as aerospace jobs have moved to other states. And as Apple and other companies moved manufacturing mostly overseas.

Apple ended its California manufacturing when it closed its Fremont plant in 1993. Now most Apple devices read, “Designed by Apple in California. Assembled in China.”

Adibi said California’s factory employment dropped to 334,000 in 2014 from 664,000 in 1990. Most factory jobs are for the middle-class workers of the type who built the state, especially Los Angeles and its surrounding communities. Jobs include skilled work, such as for engineers; accountants and managers; and unskilled work for those on the assembly lines.

By contrast, the new tech jobs largely are for the “digerati,” the high-IQ, well paid workforce of the information economy.

New economy

The changeover to the new economy, which Apple’s phenomenal recent growth underscores, brings up the worm in the apple, as it were: the worry economists have over income inequality, which is something politicians are taking up.

The New York Times reported today on President Obama’s new budget proposal, a 10-year plan that “stabilizes the federal deficit but does not seek balance, instead focusing on policies to address income inequality as he adds nearly $6 trillion to the debt.”

A U.S. Census Bureau report found that, from 2012 to 2013, California was one of 15 states to see income inequality increase.

And a new study by the Economic Policy Institute found income growth in California from 1979 to 2012 rose 190 percent for the top 1 percent of income earners — but declined 6 percent for everybody else.

Such inequalities inevitably bring calls for higher taxes on the wealthy. But taxes for higher-income earners in California already have risen, with the top state income tax rate currently set at 13.3 percent, compared to 9.3 percent as recently as 2004 — a 43 percent increase.

California’s economic future is bifurcated by its gleaming high-tech companies climbing to ever-higher success — as the rest of the economy struggles and falls behind.

Originally published by CalWatchdog.com

Filed Under: Top Stories Tagged With: Apple, Income Inequality

Report: Silicon Valley Giants Enjoy Billions in Government Subsidies

FBI Overreach in Pursuit of Apple Compliance