Desperate cities give Apple a pass
Cities clamor to get an Apple store in hopes that the electronics giant will drive local growth.
Do Apple retail outlets provide a guarantee of economic growth? And if so, should taxpayers be forced to ensure they come to town?
That could soon become a major debate as rumors swirl that Salt Lake City is offering Apple (AAPL) the chance to build at least one new store without having to spend a dime on rent for five years. Similarly, Cult of Mac reports that New York City is charging Apple only a fraction of what it charges other retail occupants.
Why would either city offer Apple, a company that is already very profitable, such a hot deal? It's true that Apple employs thousands of Americans. But it doesn't manufacture a single item in America, so there aren't any jobs to be saved by using taxpayer dollars to subsidize new Apple Stores.
This doesn't have anything to do with jobs, however. Instead, the two cities are hoping to use Apple as a driver for economic growth. Apple Stores are a hot attraction, especially when new iPhones and iPads are released. By drawing customers to a particular area to check out Apple's new technology, Salt Lake City and New York City officials are hoping that people will stick around, spend money locally and bring more economic success to the community.
If this were a proven strategy, then taxpayers might be able to get on board with the concept. But at this point, it is little more than a hope.
Don't call it a "bailout," exactly
General Motors (GM) received a fair amount of negative press for taking a government bailout even though the company was supposed to pay the money back. However, the same cannot be said for Apple and the aforementioned deal.
If either city has made Apple a killer deal to open new locations, the company gets to walk away with all the benefits and all the profits just for coming into town.
When taxpayers discover this, how do you think they will react? Do you think they will simply be happy just to have an Apple Store in their neighborhood? Or will the idea of tax-funded Apple Stores anger taxpayers when that money could be used for schools, police, health care, or something else entirely?
Apple closed Monday at $561.28, up 5.83% for the day, while GM closed at $21.54, up 1.7% for the day.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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