{"id":28924,"date":"2014-12-12T00:01:58","date_gmt":"2014-12-12T05:01:58","guid":{"rendered":"http:\/\/quotulatiousness.ca\/blog\/?p=28924"},"modified":"2014-12-06T12:16:35","modified_gmt":"2014-12-06T17:16:35","slug":"qotd-apple-isnt-worth-the-same-as-switzerland","status":"publish","type":"post","link":"https:\/\/quotulatiousness.ca\/blog\/2014\/12\/12\/qotd-apple-isnt-worth-the-same-as-switzerland\/","title":{"rendered":"QotD: Apple isn’t worth the same as Switzerland"},"content":{"rendered":"

It is true that Switzerland\u2019s GDP is around $700 billion. But GDP is a measure of value added in a country in one year. That is, it\u2019s the income of the place. Apple\u2019s $700 billion valuation is the total value of the company: this is akin to wealth, not income. And of course the value of a stock is the net present value of all of the future income from it. So, that $700 billion for Apple is the current value (as the market estimates it) of everything that Apple will ever do in the future. The valuation of Switzerland, that $700 billion, is what the place made this year alone. Two very different numbers.<\/p>\n

To get to something comparable for Apple we need to work out this year\u2019s added value. A rough and ready definition of that is profits plus wages paid (this is approximately equal to the labour and profit shares in GDP which don\u2019t quite equal total GDP but good enough for rough comparisons). Apple\u2019s profits are around $40 billion, it employs a little under 100,000 people directly. Say each of those is paid $100,000 a year (obviously, some get very much more but when we add in the Genius Bar folks that might be reasonable enough as an average) which gives us another $10 billion. Not entirely accurate but reasonable enough to say that Apple\u2019s value add, the equivalent of GDP, is some $50 billion.<\/p>\n

When we go looking for a country at around that we find The Sudan and Luxembourg jointly on some $55 billion. And Luxembourg is some 400,000 people, and roughly half of the people in a country work (take out the kiddies, pensioners, housewives etc, roughly correct) giving us a Luxembourgois workforce of 200,000 people. 100,000 people in one of the most profitable companies on the planet produce about the same value as 200,000 rich world people in a country. OK, that\u2019s impressive for Apple but it\u2019s a much better indication of the company\u2019s economic size than any other measure. It is, around and about, fair to say that Apple produces the same economic value as Luxembourg. […]<\/p>\n

And to repeat the point at the top, we\u2019re never going to really understand corporate power or the size of the corporate sector (or corporations) until we start to understand what these different numbers being bandied about as valuations and value of production etc really mean. Corporations really are very much smaller than countries: even the largest and most valuable of corporations is really only comparable to a city sized country. To give you a much better idea of the size of Apple relative to economic output of an area then Apple\u2019s about the size of Raleigh, North Carolina, Omaha Nebraska, maybe, just maybe as large as Forth Worth, Texas, or Charlotte, North Carolina. Somewhere in that range at least. Or to use States, perhaps around Rhode Island or Maine.<\/p>\n

Corporations just aren\u2019t as large and economically powerful as some seem to think. <\/p>\n

Tim Worstall, “Apple Isn’t Worth Switzerland But It Is Worth All The World’s Airlines”, Forbes<\/em><\/a>, 2014-11-22.<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

It is true that Switzerland\u2019s GDP is around $700 billion. But GDP is a measure of value added in a country in one year. That is, it\u2019s the income of the place. Apple\u2019s $700 billion valuation is the total value of the company: this is akin to wealth, not income. And of course the value […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[831,25,41],"tags":[160,409,1008,528],"class_list":["post-28924","post","type-post","status-publish","format-standard","hentry","category-business","category-economics","category-quotations","tag-apple","tag-corporations","tag-luxembourg","tag-switzerland"],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p2hpV6-7ww","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/28924","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/comments?post=28924"}],"version-history":[{"count":1,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/28924\/revisions"}],"predecessor-version":[{"id":28925,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/28924\/revisions\/28925"}],"wp:attachment":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media?parent=28924"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/categories?post=28924"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/tags?post=28924"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}