“Michelle and I are saddened to learn of the passing of Steve Jobs,” President Obama said last Wednesday. “Steve was among the greatest of American innovators — brave enough to think differently, bold enough to believe he could change the world and talented enough to do it.”
Obama is right: Jobs was one of the greatest innovators, and businessmen, in American history. But while we all take a moment to celebrate his life, there are at least three lessons Obama could learn rom Jobs’ accomplishments.
Innovation doesn’t require government investment. Jobs’ famously sold his Volkswagen van for the capital needed to build his first computer prototypes in his garage with Apple co-founder Steve Wozniak. As they impressed hobbyists in the Bay Area with their new computers, attracting private investors along the way, Jobs and Wozniak never applied for a government loan,or help from the Small Business Administration. Even as Apple grew into a multi-billion dollar company, Jobs kept Apple away from the federal government as much as possible. As The Examiner’s Tim Carney has documented, Apple spent far less on lobbying than any other large tech company.
Obama has taken a decidedly more public-private partnership approach. From the auto bailouts, to the bank bailouts, to the Energy Department’s Solyndra loan guarantee program, Obama has demonstrated that he believes the federal government should take a very active role in directing how businesses operate.
China is not a threat to U.S. innovation. The iPod, iPhone, and iPad are some of the most innovative and widely used applications of technology in the world today. They were all imagined, designed, and programmed by Apple employees in the United States. Each product is a testament to America’s continued dominance of the technology sector. But none of them is manufactured in the United States. They are all assembled in China. According to a 2007 study by the Personal Computing Industry Center, Chinese workers contribute less than $4 in value to every iPod they assemble. But for every $299 iPod sold, American companies and workers capture $163.
Obama does not seem to grasp the benefits of this trade. Bemoaning the growth of solar panel manufacturing in China Thursday, Obama said, “I’m not going to surrender to other countries’ technological leads that could end up determining whether or not we’re building a strong middle class in this country.” But if the technology is developed here, the solar panel’s are distributed, and installed here, it shouldn’t matter where the panel’s were manufactured. Jobs got this. Obama doesn’t.
One size doesn’t fit all. Unlike Microsoft, Apple was always a niche company. Jobs specifically designed his beautiful, but expensive, products for a relatively small, but dedicated audience. By limiting his target market to a fervent, but high-spending minority, Jobs was able to bring many successful technological innovations to market, that were later added to products bought by wider audiences.
Obama has taken the opposite approach when it comes to his signature domestic accomplishment Obamacare. Instead of allowing Americans to purchase whatever health care products they think fit their needs, Obama has mandated that they all must buy insurance plans that conform to a government approved set of benefits. Analysts predict that these regulations will eventually turn all health insurance companies into de facto public utilities, thus killing all innovation in what has become the fastest growing sector of our economy.
China may succeed by having state-directed banks give subsidized loans state-favored companies to produce state-approved products. But that is their model. We are never going to out-China China. Instead of learning from their model of success Obama should look closer to home. Jobs is a good place to start.
