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An Open Letter to Andy Puzder

Mr. Andy Puzder
Former CEO
CKE Restaurants

Mr. Puzder:

I was quite surprised to hear you – a former CEO of a successful business – agree with Pres. Trump that Apple can completely avoid the higher production costs caused by his administration’s tariffs by moving its manufacturing to the United States.

Specifically, you assert that “Apple can also take actions, as they clearly would if the situation continued, to try and lower their production costs. First of all, they’re not going to have to ship the phones to the United States, so they’re going to lose the shipping costs. If they build them here, there’s no tariff involved; they’ll be able to get rid of that cost. They may be able to be more effective, more efficient. They may be able to build plants that make it easier to get their products out to the public…. Building in China is just the easy solution. What Trump’s saying is maybe you need to look into this and figure out how you can do this more effectively and not damage the American economy.”

Your claim, in short, is that Pres. Trump has correctly divined that Apple – because of either ignorance or laziness – has been leaving money on the table by not taking advantage of all the efficiencies available to it. But your claim doesn’t pass the smell test.

When you were CEO of CKE Restaurants, did you ignore – absent government prodding – opportunities to increase the efficiency of your company’s operations? Were government-imposed obstructions to CKE’s supply chain necessary to prompt you to avoid “the easy solution”? Did you welcome the imposition of such obstructions as necessary to spark you to profitably lower your production and distribution costs? And would you have regarded such obstructions as having no long-run negative consequences on your bottom line?

I’m confident that your answer to each of these questions is “no.” Therefore, can you explain why you believe that Apple CEO Tim Cook and his colleagues are so much more inept at running their company than you were at running yours that they, unlike you, stick with “the easy solution” until forced by punitive taxes on some of their supplies to achieve maximum possible efficiencies?

More generally, can you tell us why you have such a low opinion of the business acumen of American corporate executives that you believe that they maximize efficiencies only when they are led to do so by the economic interventions of politicians?

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030