Apple Has Tons Of Money It Cannot Spend, America Has No Money But Spends Tons Anyway
I read an article a while back that explained how Apple has more cash than Uncle Sam does. And it worried me. I thought to myself, “Either Apple is so rich that it could buy anything it covets or the U.S. government is much poorer than I ever imagined.” As it turns out I was right on both counts.
This inspired me to do a bit of research to expand beyond Apple and the U.S. to see exactly how much money the wealthiest countries and the richest U.S. companies have.
To measure the countries’ holdings, I added their foreign reserves and their other hard assets like gold. For the companies, I tallied their cash, near-cash (short term holdings) and long-term investments (typically longer term government bonds). To be fair, I excluded financial companies which enjoy large deposits of other people’s money.
The resulting chart shocked me for several reasons:
Shock #1: The Top 5 Companies Are All In Tech
It turns out that the top 5 most cash-rich U.S. corporations are all tech companies– Apple, Microsoft, Alphabet (Google), Cisco, and Oracle. Respectively, they would be ranked the richest 10th, 15th, 19th, 21st, and 22nd nations in the world!
Shock #2: The U.S. only ranks #17, between Algeria and Turkey
I understand that the US dollar is the world’s reserve currency of choice and that we benefit by issuing cheap loans in the form of treasury bills/bonds to the rest of the world, but still our cash reserves are surprisingly low.
Shock #3: The U.S. companies combine for $1.7 trillion in cash
A trillion is a one with 12 zeros after it; it looks like this: $1,000,000,000,000. In school we learned that if a company does not have a good use for its cash, it should pay its shareholders a dividend so they can do something better with the money. I guess the textbooks were wrong.
Shock #4: A third of that $1.7T is held by AAPL, MSFT, GOOGL, CISCO, ORCL
If these five companies ever get bored, then can get together and pay off the national debt to almost any country in the world. An eye-opening corollary to this fact is that over 2/3rds of the corporate cash is hoarded by the top 50 companies. The rest have little cash (and more than a fair amount of debt). It turns out that there’s group of the 1 percenters in the corporate world too.
Shock #5: 60% of the Chinese Government’s wealth is in greenbacks
If China and the U.S. don’t play nice, then Beijing might end up with trillions of worthless treasury certificates. If there’s war, maybe China can use all the certificates to build a paper mache 2nd Great Wall?
Going Two Steps Further
Since I have nothing but time on my hands here in Bali, I wanted to go a bit further analyzing a couple of related items.
First, I was curious how productive the U.S. five companies were versus the wealthiest nations. For the American firms, I divided their net income by the number of employees. To get a similar statistic for the nations, I divided each of their GDPs by the number of people in their workforces. Instead of nominal GDP, I used the purchase power parity GDP. Basically, the PPP GDP multiplies everything the country made by how much it could sell those things in the U.S.
This looked pretty much like I thought it would. Apple leads the pack with an astounding $1.88M in net income per employee per year. The next four places went to Apple’s tech brethren. The top nation was Saudi Arabia with $140K per worker (the vast majority of these were foreign laborers). The U.S. clocked in at $110K per worker. Is it too late to nominate Tim Cook for President?
Speaking of Mr. Cook, the last item on my killing-time-on-Monday task list was to see how the top leaders of the Tech5 and the 20 nations fared with respect to approval ratings. I used Glassdoor.com for the companies and various polls conducted within the past few months for the world leaders.
Here, again, the tech companies reign supreme. Even the mercurial Larry Ellison of Oracle garnered 69% approval…and that’s on Glassdoor.com where many employees love to complain. Obama? He’s at 55%. I left out a handful of countries whose leaders have 99% approvals for the obvious reasons. On the political leadership front, if you believe the results, the top three highest approval ratings were for Putin of Russia (86%), Modi of India (81%) and Turkey’s Erdogan (70%). Apparently, Trump is a big fan of Putin’s; let’s see if he can match Putin’s domestic popularity.
So, anyway, there you have it. Apple is very rich and America is heavily in debt with little cash. The the problem for Apple is that 90% of its money is overseas (hiding from Uncle Sam), so it cannot buy much in the U.S. Conversely, America can issue debt so cheaply that even though it does’t have much cash, it can keep buying stuff it cannot afford.