Steve Jobs: A “Free Market Capitalist” Who Got Rich Selling Computers to Taxpayer-Subsidized K-12 Public Schools





THE NANNY STATE CAN MAKE YOU FILTHY RICH: It is documented that Apple Computer might have gone belly up in the 1980s if it wasn’t for the fact Steve Jobs embarked on a rather ambitious strategy to create demand for his company’s products by aggressively marketing them to taxpayer-subsidized K-12 public schools throughout the United States.

In an article entitled, “Steve Jobs: Free Market Capitalist,” recently posted on, a libertarian-leaning website, Joseph Perkins, the author, made the claim that Jobs, unlike some entrepreneurs, received “no government help” as he helped build Apple into the multi-billion dollar company it is today:

There’s another aspect of the Jobs legacy that has been underreported, that has nothing to do with his technological prowess, or his keen entrepreneurial instincts:

In launching Apple, in building it into one of the world’s foremost companies, in helping to make California’s Silicon Valley the world’s high-tech capital, Jobs never relied on government subsidies.

Although Perkins might be technically correct in saying Apple did not depend on “government subsidies”–at least not directly–it is documented the company might have gone belly up in the 1980s if it wasn’t for the fact they created demand for their products by aggressively marketing them to taxpayer-subsidized K-12 public schools.

When Apple was formed in the late 1970s, there was no mass consumer market for personal computers. Not only was there no use for them in domestic households, but most people didn’t have a clue as to how they operated. If you wanted one, you had to assemble it from a kit and learn complicated codes to make it function.

Under Jobs’ leadership, Apple embarked on a rather ambitious strategy of creating a market out of thin air for its products. One way it did this here in California was to give away hundreds of free computers to schools across the state. In return for its “good deed,”  it got a very generous tax break from the politicians in Sacramento.

As the trade journal Infoworld observed in 1990:

Apple Computer’s involvement in elementary education in the early 1980s was a work of marketing genius. The then-fledgling company offered to donate one Apple II system to each elementary school in the country — that is, once the government guaranteed them certain tax advantages in exchange for their corporate largesse.

Many schools accepted Apple’s generosity. Immediately, they all faced the same question: “What does a school with hundreds, or in some cases thousands of students do with one computer?”

For many, the answer was to buy more Apple computers, build computer labs, and create computing programs. And, as schools began equipping labs with discounted Apple equipment, parents of elementary school children began buying up Apple II computers for use at home, paying full price.

Nearly 10 years later, elementary schools continue to buy Apple II technology. As a result, the strategy has kept what many industry observers contend is an overpriced and technically obsolete system in the mainstream. And it provided Apple with a virtual lock on the elementary school market that continues today.

In 1995, the New York Times reported that “Apple’s share of computer sales to elementary and high schools was expected to climb from 46 percent of all educational computers bought last year to 58 percent of the total being bought in the 1995-96 school year.” It further pointed out that:

The schools market is sizable: in the 1994-95 school year, the nation’s public schools bought nearly a million personal computers, spending roughly $2.5 billion on machines, printers, communications devices and other hardware. Besides the dollar amount, Apple hopes to win the loyalty of children who might grow into future customers, much as the company is doing in the college world.

According to the survey, conducted by Quality Education Data, or Q.E.D., an education market research firm based in Denver, the share of Macintosh sales to elementary and secondary schools jumped sharply in the last school year, while such sales of I.B.M. and I.B.M.-compatible PC’s fell. This was in sharp contrast to the market for business and consumer computers, in which the Macintosh has rapidly lost ground.

“Apple’s longtime courting of the school market has paid off in strong brand loyalty,” said Jeanne Hayes, president of Q.E.D., which says it surveyed 80 percent of the nation’s public elementary and secondary schools for the report. “Special pricing, strong service and support and habit have made the K-12 market an unusually loyal Apple niche.”

The public school district in Hampton, Va., for example, has 4,000 Macintoshes, all linked on one gigantic network. “We’ve had Apples for seven or eight years now and see no reason to change,” said Dr. Charles Stallard, director of information services and technology for the Hampton schools….

So as the evidence suggests, Perkins’ assertion that Apple received “no government help” during its transformation into a multi-billion dollar company is nonsense. Jobs did what many other “free market capitalists” in this country do to become filthy rich: they get the nanny state to buy most of their firm’s products.

Jobs’ behavior shouldn’t be of any surprise given he grew up in Silicon Valley, an urban settlement that developed around clusters of high tech industries built from the ground up thanks to billions of dollars of taxpayer money from the Department of Defense. Understand that birds of a feather really do flock together.

About Duane Roberts