Apples and Oranges, but still!

From Business Insider:

According to the latest daily statement from the U.S. Treasury, the government had an operating cash balance of $73.8 billion at the end of the day yesterday.

Apple’s last earnings report (PDF here) showed that the company had $76.2 billion in cash and marketable securities at the end of June.

In other words, the world’s largest tech company has more cash than the world’s largest sovereign government.

That’s because Apple collects more money than it spends, while the U.S. government does not.

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  • Another sad reality is that amidst all this political angst regarding the debt NONE of the proposals actually balance the budget and begin to pay down the debt. All of the proposals ADD to the overall debt; they only cut the yearly deficits to smaller sizes. After all of this craziness we still will be adding to our debt!!!

  • Perhaps this is due to the fact that Apple is a for-profit organization, whereas our government is not? I would like to see Apple’s charitable spending versus our government’s care for its citizens.

  • That’s because Apple is not required to disperse its cash pile as dividends to stockholders (yet). The govt, however, is required… and there seems to be more recipients on the govt dole than actually paid for the “stock.”

  • Mark Z.

    That’s because Apple’s purpose is to make a buck, while the U.S. government’s purpose (or so it says in the manual) is to establish justice, ensure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty for us and for our posterity. None of those activities are especially profitable–you’ll notice Apple isn’t doing any of them.

  • Fish

    As with probably 99% of corporations, had Apple not been able to borrow, leverage and use debt, there would be no Apple today.

    Had I not been able to borrow several times my annual incoming revenues and go into debt for several decades, I’d still be living in a rental house.

    Had I not been able to borrow money to buy a car when I graduated with no money and lots of debt from college, I couldn’t have been able to get to work.

    If you want to run government like a business, you would not constrain it to only run on cash flow without short- or long-term debt.

  • Fish

    And Apple is also highly motivated to increase its revenues, whereas that option is off the table for approximately half our legislators.

    What business on the planet would not consider increasing revenues if in debt?

    Again, a highly significant difference between saying we want government to run like a business and actually acting like it.

  • Peter

    This is not “securing the blessings of liberty for our posterity.” I know that it’s apples and oranges to compare the US Gov’t to my own household, but sometimes I wish these folks could attend Financial Peace University. We don’t need to be like Australia (I read last week that they can get great interest rates because they’re so frugal, but have neglected schools, roads, etc), but surely we appear to be more at risk of becoming Greece (“junk bonds”; sigh). I am not an economist, but many that I read believe that we are well past the “healthy” level of indebtedness.

  • Yes, Apple can raise revenue, but they do it by providing things people want, not by threateing you with jail if you don’t send them money.

    But the other side is Apple has great incentive to handle their money wisely. The feds have none.

  • Joe L

    I am an economist. I know the difference between the Keynesian school and other views. I am not taking sides in this current sad spectacle going on in Washington, DC. What I do know is that allowing our government to pile up more debt year after year than it can ever hope to repay is dangerous for the country and dangerous for citizens. It is unscriptural in my view and it threatens the ability of churches and of Christians in the US to carry out our mission. I do not expect our goverment to consult the Word of God but I do know that when the government operates, fiscally and otherwise, in a way that God warns against, we and generations to come are all in for trouble.

  • Amos Paul

    @ 5 Fish,

    I vehemently disagree with your statements. I am a recent graduate swimming in government school debt that, could I go back, would not have at all. I was young and jumped into college without a plan. I could have gotten the same education starting part time at a community college and paying for classes as I went as I worked my way up and learned the ropes in the employment world. I ended up dropping out for over a year anyway to work and re-direct myself in life. I went back in with a plan and finished without earning a single dollar more in school debt.

    I’ve also got a decent quality, fuel-efficient car. I didn’t take out a loan. I saved up and hunted for a deal. Sure, I had to drive junkers to work my up to that… and ride my bicycle to get places, a lot–but it was worth not going into more debt.

    And no, I didn’t start from a position of particular privilege. I’m from a small town and have had little to no support from my parents since I’ve lived on my own (discounting my now wife) from age 17. My wife had some loans and credit card debt when we got married. We paid them off while I was still finishing school and we were working part time. I’ve even had quite a few un-insured medical emergencies. It sucked, and was incredibly expensive. We’re taking care of it.

    Joe @9 aptly references Scripture in that God consistently warns against falling into debt. It’s unwise. It’s financial slavery.

    Why can’t people learn to live within their means? Save up? Plan for their dreams and start business when they are financially ready for it? There might be far less failed business out there if they did.

    Theoretically, the only asset I’ve learned that *might* be worth the risk of debt *may* be real estate due to its incredible value, but even that is not necessary. I’ve learned from several Mennonites I’ve met that they don’t take out loans for homes. They work and save up. And if that takes too long, Rent-To-Own agreeements are becoming quite popular these days due to the struggling housing market. It’s good for both seller and buyer, generally.

  • Gloria

    Amen and amen to Amos Paul’s wisdom (no. 10). We are also debt free, own a small home and purchase our cars with cash that we have SAVED up.

  • pam w

    Apple did not go to war and borrow to pay for it. Whena democracy is at war (we’re in 2 1/2), you have to raise taxes. Apple charges us for what we get.

  • pam w

    Apple did not go to war and borrow to pay for it. Whena democracy is at war (we’re in 2 1/2), you have to raise taxes. Apple charges us for all of their work. The tea party should not be allowed to drive on our roads or drink clean water from our faucets (EPA work).

  • RobS

    Apple is also looking after (& deciding how to best use) the money they earned by selling a product. They are responsible for what they worked (& we could say God allowed them) to earn. I’m suggesting they are stewarding their own money.

    The government stewards (or lack thereof) someone else’s money.

    I firmly believe people are much more careful in stewarding their own resources than being responsible for someone else’s. When one can spend someone else’s money for little to no accountability there is a poor result.

  • RobS

    I’m not sure how to model Watchman’s suggestion in #2

    Is it fair to consider that Apple cannot (or should not) spend a ridiculous amount of money they do not have? Can we give the government credit for spending money on citizens that it does not really have?

    Can we count salaries on both sides? Apple employees are likely good people that work hard and Apple pays them for that which allows them to provide for their families. I can’t complain. Does Apple provide health care to those families in part? How about life insurance, disability insurance or other benefits? An employee with an Apple 401k is likely going to have more retirement value from that vs. Social Security income I’d think.

    I’ll freely admit, I don’t know the answer to the question, but it’s probably not realistic to suggest Apple is completely void of providing any benefit to society.

    And I’d agree with Mark on (4). But also, I don’t believe that we WANT Apple doing any of those things (common defense?? nah!). We’ve turned over many of those responsibilities to the government and given away our individual rights to administer judical procedure (in the sense of the court system for example) and allow the government to do it — which is probably a good thing.

  • Richard

    @ 9

    “It is unscriptural in my view and it threatens the ability of churches and of Christians in the US to carry out our mission.”

    Wait, what? Are you talking about individual household debt or do you see Federal debt as a legitimate threat to ability of churches and individuals to follow the Mission of God?

  • Tim

    Why not cut military spending? Why is this costly ticket item being exempted?

  • DLS

    It’s not being excepted, Tim. Second, it’s not even close to the cause of the problem. Third, contrary to many other forms of spending, it’s actually one of the few that is mandated by the constitution.

    The second, of course, is the most important point in response to your post though.

  • Patrick

    We’re in a pickle cause most of us want medicare and SS and they are the basic problem with our budgetary model.

    I don’t know when it was, but, we stopped having kids somewhere in US history and those programs were predicated on lots of youngsters funding a few oldsters and the oldsters forgot to have kids.

    Far as defense cuts, we could draw that way down, but, we couldn’t fulfill our role of the global arbiter. I suggest we first lose the ambitions, then cut funding.

  • Fish

    Amos #10,

    I agree that debt can be a bad thing. After I bought my first car on credit, I have paid for all future ones with cash.

    But if you have a widget business that sells 10000 widgets a year and you get an order for 10,000, in all practicality you are either going to borrow money to fill those orders or lose them.

    How would the economy work if a company wanting to build a new factory and employ say, 1000 people, had to wait until they had $10M in cash on hand to build it? It would never get built.

  • Fish

    DLS #18,

    How can defense spending not be a problem when the wars and the Bush tax cuts, per the chart here the other day, represent almost half our deficit? When we are borrowing to finance said wars?

    How can defense spending not be a problem when the US spends fully HALF of the WORLD’s military spending?

    Our addiction to military power and enforcing our will on the rest of the world ala’ Rome is a root cause of our financial problems. It may be constitutional but it is foolish, irrational, and self-destructive.

  • Tim

    When push comes to shove do American Christians follow Jesus or Mars/Mammon?

  • RobS

    Just fyi, talks with friends in the department of defense (here in Washington, DC) confirm that they are adjusting their budget plans to cut $400-$800 billion over the next 10 years. A fair number of officers have been cut from the military recently as well. I think some changes are happening there. This isn’t to say the numbers are right or wrong, but just observation around who I have heard from recently to suggest some general actions are in progress even before this budget debate began.

    I did see Dave Ramsey contemplated the question of Apple having more cash than the government topic on Twitter. His tweet suggested: “[Apple] produce[s] something we like.”

  • @RobS wrote: I did see Dave Ramsey contemplated the question of Apple having more cash than the government topic on Twitter. His tweet suggested: “[Apple] produce[s] something we like.”

    Really? Seriously?

    Not that government, populated with humankind infected with the fallenness of sin that plagues all, is a universal panacea.

    But just about every modern marvel you enjoy or depend on is the result of government produced — the internet (including the protocol and modems that facilitate such communications) I am typing this message to share, the transistor, the interstate highway system, utilities, water supply, police and fire fighting, military protection, courts and justice system (even as it’s flawed and tilted to the rich), agricultural support, science research, etc.…

    Were it not for what the government has produced, there would be no Apple…

  • Matt

    Maybe you guys would know whether or not they are counting assets in the equation for Apple or not. Are they saying this is liquid?
    Reason being is that I’ve yet to see an accounting of the sheer number of assets the US possesses as part of the equation. For example: we have 540B in student loans/securities out…250B in TARP loans…90B invested in AIG, Freddie Mac and Fannie Mae. This is not to mention the gold we have and other free services offered by the government.
    I’m not saying it makes it okay, but if you were discussing your own debt or company debt (apples and oranges is the name of this post, right?), you would not fail to include your assets.

  • Matt

    Sorry, read the article closer and realized we are discussing operating cash for apple.
    I do agree though that they have to get a budget that doesn’t plan on going further and further in debt or none of it really matters.

  • RobS

    @Naum (24)… sure, just re-quoting the Twitterverse!

    I truly have not thought of government as the primary inventor/driver of most of the good in modern society.

    Internet is largely built by telecom companies today — buying routers from Cisco, etc, and then laying the fiber.

    I’m not good at transistor history, but most integrated circuits today produced by private industry, right?

    Other public good items — oh, I agree it’s more effective to have the government control those things. Having private companies managing small individual pieces of public infrastructure begs for some challenges.

    George Will had a thought provoking column today that pointed out how private industry must change and adapt. Should they fail (ie. Kodak) they go out of business. Should government fail at something, ‘we’ declare the reason for failure is the project was “underfunded” and throw another billion dollars at it vs. admitting defeat and moving on. It was an interesting (more libertarian) take, and I don’t agree with it all but it was a thought:

  • Joe L

    Richard @16 Both. I absolutely see out of control Federal debt as a threat to churches and to Christians as well as all Americans.

    When the government gets desparate enough and starts to look for ways to increase tax income do you not think that tax exempt organizations will be in focus? Remember, separation of church and state can mean whatever the government in power wants it to mean. Do you not see that higher taxes and economic instability puts pressure on what we as Christians have available for outreach to the needy and for the spreading of the gospel?