Bernie Sanders, posting on Twitter/X Thursday (don’t complain to me that he doesn’t use his Bluesky account):
Corporate greed is Tim Cook, the billionaire Apple CEO, claiming
that hiking prices on Apple products by over $200 is “unavoidable”
after it made $112 billion in profits last year & spent $310
billion on stock buybacks.These price hikes aren’t unavoidable. They’re unacceptable.
It boggles the mind how anyone could post this and not question the common sense napkin math of a company spending 3× its annual profit on stock buybacks. That’s theoretically possible, I suppose, but obviously unsustainable. A company would have to burn through a cash hoard or incur massive amounts of debt to spend 3× its profit on anything. It makes no sense. Someone who doesn’t consider the common sense of those numbers probably shouldn’t be spouting off on anything related to economics. And of course Apple files an annual report with the SEC, easily searchable via the web, which plainly shows that the company spent $89 billion on stock repurchases last year, and paid shareholders $15 billion in dividends. Those numbers make sense for a company that earned $112 billion in profit.
I suspect Sanders is so ignorant of basic economics that he sees the ampersand in his tweet as additive — that Apple made $112 billion in profit and spent $310 billion in buybacks and thus had something like $420 billion of money “in the black” with which they could eat the cost of rising RAM and SSD components. But they’re not additive. Stock repurchases are purchases. If Apple actually had spent $310 billion on stock buybacks last year — which, to repeat, they most certainly did not — even Karl Marx might excuse them for raising prices on their products this year, because they’d be in a $200 billion hole they needed to dig out of.
But such concerns, obvious to anyone who’s taken an Econ 101 course in college, seldom stop ideologues.
Putting aside Sanders’s factually incorrect and nonsensical $310 billion figure, let’s just consider this general scenario: A company makes a product that consists of essential components they must purchase from suppliers. Something happens — outside the company’s control — that causes those essential components to rise in price significantly. Therefore the cost of goods for the company’s product increases significantly. What should the company do? Raise prices and pass those increased costs on to their customers, maintaining the same level of profit for themselves? Or hold prices steady and eat those costs, accepting lower profits or even negative margins, so that customers remain unaffected?
One can hold logically consistent views at both extremes. At one end, the belief that business is business and higher costs naturally result in higher prices passed along to customers. At the other end, the belief that companies should put the welfare of their customers ahead of their own profit seeking. Perhaps you think the answer is somewhere in-between: somewhat higher prices and somewhat lower profit margins.
What you cannot do is hold a philosophically consistent logically coherent view where your answer to how a company should respond in such a scenario is contingent on what the “something happens” is that caused component prices to rise.
When the “something happens” is a global RAM and SSD shortage resulting from the AI datacenter capex spending spree, Sanders’s tweet makes clear that he’s of the opinion that Apple should eat these costs.
But when the “something happens” was Trump’s tariffs, Sanders argued that (emphasis added) “Trump’s across-the-board tariffs are not the way to do it. We do not need a blanket and arbitrary sales tax on imported goods which will raise prices on products that the American people desperately need.” And again: “Trump’s blanket tariffs will just raise prices for American consumers and hurt our relationships with allies, undermining our global position.” Not “might” raise prices. “Will” raise prices.
Sanders arguing today that Apple should eat the entire cost of rising RAM and SSD components makes no more sense than this tweet from Donald Trump a year ago:
Walmart should STOP trying to blame Tariffs as the reason for
raising prices throughout the chain. Walmart made BILLIONS OF
DOLLARS last year, far more than expected. Between Walmart and
China they should, as is said, “EAT THE TARIFFS,” and not charge
valued customers ANYTHING. I’ll be watching, and so will your
customers!!!
Sanders’s tweet is better punctuated and capitalized, but it’s the same illogic. Zero economic sense, 100 percent ideological wishful thinking. Yelling angrily doesn’t make your argument any more compelling or coherent.
