The Code

by Margaret O'Mara

  The White House blanched at the sight of a Democratic governor and a bunch of barely reformed Congressional liberals shilling for corporate tax cuts and lowered regulations, and decided to get competitive about competitiveness. By the summer of 1983, the president announced the creation of his own commission on industrial competitiveness, appointing Silicon Valley bigwigs like Noyce and HP’s John Young to the roster. The group was charged with addressing “the technological factors affecting the ability of United States firms to meet international competition at home or abroad.”20

  The semiconductor crew was elated by all the political attention. “We are gaining champions in Washington,” crowed Jerry Sanders. “We’re no longer considered Cowboy Capitalists, Boutique Manufacturers or California Crybabies.” Before Reagan’s time in office was out, the SIA had morphed from an odd little band of political outsiders into a lobbying powerhouse. Its member companies joined with computing heavy hitters like Control Data and Honeywell to create the Microelectronics and Computer Technology Consortium (MCC) in 1983, a Japan-like private research collaborative to push forward next-generation computer technology. Cities across the nation competed furiously to become MCC headquarters, throwing bouquets of tax breaks and public subsidies; the winner, Austin, enjoyed a hefty assist from computer mogul Ross Perot, who offered MCC’s executives unlimited flights on his corporate jet as an enticement to move to Texas. Old Valley hands, familiar with Perot’s tactics, looked on with annoyance and amusement. It was so predictable. Perot was not going to be denied.

  Consortia bloomed in MCC’s wake, thanks in good part to the lobbying muscle and political connections of the SIA. A bill loosening antitrust enforcement to allow joint research between companies sailed through a Republican-controlled Senate in 1984. A few years later, the chipmakers won approval for a landmark public-private research consortium, called Sematech, to develop the next generation of semiconductor technology.21

  But the most striking change came from the party of the New Deal and the New Left, the party trying to scrabble its way back into the White House, the party whose brightest new stars believed the party’s future depended on moving to the business-friendly political center. As the 1982 midterm elections neared, the House Democratic Caucus had decided to sponsor a report on long-term economic policy, and asked Tim Wirth to write it. The result, titled Rebuilding the Road to Opportunity, demonstrated how much things already had shifted. “It is up to our party to rekindle the entrepreneurial spirit in America,” the report declared, “to encourage the investment and the risk taking—in private industry and in the public sector—that is essential if we are to maintain leadership in the world economy.”

  While including a healthier dollop of job retraining programs and other measures targeted to the Democrats’ beleaguered Rust Belt constituencies, the report was remarkably in tune with what Jerry Brown’s Californians had suggested. “The clearest feature of the emerging world economy,” concluded the Democrats, “is that the future will be won with brainpower.”22

  AN APPLE FOR THE TEACHER

  Ah, brainpower. That was another issue where politicians fretted about Japan. For the Japanese challenge wasn’t just about Walkmans and microchips: it was about the pipeline of smart math and science students to one day build the next generation of high-tech products. The Japanese and Singaporeans had year-round schooling, highly rigorous curricula, soul-crushingly high standards; the Americans had struggling students, aging buildings, cash-starved school districts. But the U.S. had Silicon Valley and its high-tech wizardry. Which is how Steve Jobs ended up bending Pete Stark’s ear about computers in classrooms.

  Stark wasn’t an Atari Democrat in the least. The California congressman from the East Bay was a staunch liberal, quick to criticize what he saw as the pretensions of the new breed. “Tim Wirth talking about economics is preposterous,” he scoffed, “and Gary Hart is saying the same thing Ronald Reagan is.” Yet Stark was quite literally closer than most in Congress to the center of the high-tech world: his East Bay district was next door to Silicon Valley. Plus, he was a subcommittee chairman on the tax-writing House Ways and Means Committee, giving him power that few Atari Democrats could match. Those two things brought Steve Jobs into Stark’s orbit in early 1982, making a pitch for a new tax break.

  By this point, Jobs had reached new heights of celebrity. Yet, as was always the case in the ever-volatile tech industry, the smooth facade covered a bumpy reality. IBM was diving into the personal-computer business. Other Silicon Valley companies were scrambling to retain their slivers of market share. Now, Apple’s education-sector business became more important than ever before to the company’s bottom line—and, for Jobs, a critical proof point for why Apple was a more creative, altruistic, and forward-thinking kind of company than anyone else out there. When students use computers, Jobs explained earnestly to ABC’s Ted Koppel during one appearance on the wildly popular news magazine Nightline, they see “a reflection of the creative part of themselves being expressed.” The result is “something quite democratic.”23

  There was a limit to how much the education market could grow, however. Places that had been early and enthusiastic adopters of personal computers approached market saturation (Minnesota had a staggering 97 percent of its high school seniors taking computer classes). The property tax–capping Proposition 13 passed in 1978 in California had sent that state’s school budgets into free fall. Similar measures in other states choked off schools’ main sources of revenue. Reagan had come into office promising to make deep cuts to the Department of Education’s budget, and he had been largely true to his word. The money simply wasn’t there for schools to buy computers, especially fully tricked-out Apples. The way to get more computers in schools was for the companies to give them away. But that came with a steep price tag. Didn’t it make sense, Jobs reasoned, to ask Congress to help pay for something that would bring so much to so many?

  Fortunately, there were plenty of people on the Hill who believed in “computer literacy” as strongly as Steve Jobs. (Al Gore cared about it enough that he had put on computer classes for his fellow congressmen.) The U.S. tax code already featured a big tax write-off for companies that gave computers to higher education institutions. It didn’t seem that unreasonable to extend the break to K–12 schools. After all, argued Jobs, “the kids can’t wait.” Stark was hardly one to cuddle up to big corporations, but he was readily won over by Jobs’s powers of persuasion. In short order, the congressman introduced the legislation written in large part by the Apple team as “The Technology Education Act of 1982.” Insiders called it by a less official title: “the Apple Bill.”

  Steve Jobs, the political neophyte who’d never bothered to vote, focused all his star power on getting Congress to pass the Apple Bill. Following in the footsteps of the chip-making entrepreneurs who had been his mentors, “I refused to hire any lobbyists and I went back to Washington myself,” he boasted. “I actually walked the halls of Congress for about two weeks, which was the most incredible thing. I met probably two-thirds of the House and over half of the Senate myself and sat down and talked with them.” It was a whirlwind introduction, but Jobs wasn’t terribly impressed. “I found that the House Members are routinely less intelligent than the Senate and they were much more kneejerk to their constituencies,” reported the 28-year-old mogul. “Maybe that’s what the framers wanted. They weren’t supposed to think too much; they were supposed to represent.”24

  The Apple Bill had enthusiastic support from the expected quarters—Al Gore testified in support of it, as did Jim Shannon, who had inherited Paul Tsongas’s old House district along Route 128—but, much to Jobs’s annoyance, many members expressed skepticism. Wasn’t this just a giant giveaway to the personal-computer makers? Why did a rich company like Apple need a tax break? In front of Stark’s committee, Jobs testily took on the critiques point by point. There were more efficient ways to increase Apple’s education sales, he asserted. Pl
us, the bill would benefit all of Apple’s competitors as well as the company itself. He conveniently didn’t mention that Apple held a very large share of the education market. “Congress would be crazy not to take us up on this,” he concluded.25

  The House ultimately agreed, and the Apple Bill passed there by an overwhelming margin. Everyone was worrying about the state of American education and how to give their kids the skills they needed for the modern workplace. In a midterm election year, putting computers in schools was a good vote to have on your record.

  Then—failure. On the Senate side, the bill didn’t come up until a lame-duck session after the 1982 election. There it stalled, dead in the water. Stark promised to introduce it again the next year. A fuming Jobs, unschooled in the glacial legislative dance, threw up his hands. He’d given up two whole weeks to personally lobby for this bill, and he had nothing to show for it. Washington was as useless as everyone always said it was.

  Fortunately, Apple had California. At the same time that he had been lobbying Congress, Jobs was successfully ensuring that the Apple Bill became a key recommendation of the California Commission on Industrial Innovation—and that California support a similar kind of tax measure as a backstop if the federal legislation failed. With bipartisan support in the legislature and Jerry Brown in the governor’s office, the measure had become law by September. Steve Jobs may not have conquered the nation, but he had conquered its largest state.

  The computers-in-education bid marked the visible entry of Silicon Valley’s latest generation into politics, and many observers liked what they saw. “Apple has exercised responsible entrepreneurial citizenship—a regrettably rare quality,” wrote Inc. columnist Milton Stewart approvingly. By the start of 1983, Apple’s new “Kids Can’t Wait” program—a four-person operation personally set up by Jobs—was shipping close to ten thousand Apples to California schools. Thanks to the California tax credit, the ultimate cost to Apple was about $1 million, a rounding error in a year that Apple was raking in hundreds of millions of dollars in revenue. For a fraction of what it spent each year on advertising, the company had made the Apple II the first computer thousands of California schoolchildren ever touched.26

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  Steve Jobs may not have gotten his federal tax break, but enthusiasm about computers in education continued to surge. For in that same spring of “Kids Can’t Wait” came A Nation at Risk, the scathing assessment of the state of American schooling produced by President Reagan’s commission on educational excellence, which memorably pronounced that “the educational foundations of our society are presently being eroded by a rising tide of mediocrity.” All the educational gains made after Sputnik had been squandered, trumpeted the report. Students were lazy, undisciplined, unprepared for the global challenge before them. Things had to change, and it had to happen fast. “History is not kind to idlers.”27

  As educational competitiveness turned into a five-alarm fire, the cause of “computer literacy” became a touchstone for politicians of all stripes. Many of the problems enumerated by the commission would entail massive, structural fixes—from lengthening the school year to changing how schools were funded to (thorniest of all) rectifying the deep racial and economic inequities that persisted in American education. All of these were hard, expensive, and politically fraught. In contrast, increasing access to computers was easy, fast, and politically beloved.

  Give American kids computers, and they could learn math and science as well as their Japanese peers. Teach them BASIC and have them play computer games, and they’d be ready to compete in the new economy. Put computers in struggling inner-city classrooms, and the vast gulf between the haves and the have-nots would disappear. What’s more, you’d improve American education the American way. Computers were tools for creativity, for intellectual exploration, for access to information and independence from rote learning. The ideas that had percolated around computers and education since the first days of the PCC and the LO*OP Center now had gone mainstream—and become publicly subsidized.

  Over the course of the 1980s, fired up by the prospect of computer literacy and not wanting to lag behind, one state legislature after another passed mandatory computer education programs, which meant that schools had to cough up the money to buy computers for the classroom. Realizing the opportunity presented by a large and captive market of future customers, computer companies began offering schools huge discounts in the hopes that their products would become the platform of choice. But Apple remained king. The presence of so many Apples in the schoolhouses of California reinforced its dominance of the education market. By the 1985–86 school year the company provided 55 percent of the close to 800,000 microcomputers in American classrooms.28

  Yet computers weren’t the magic elixir for American education. In fact, they reflected and magnified some of its biggest problems. In a highly unequal and socioeconomically segregated system, some schoolchildren got the gift of computer literacy sooner than others. Districts that were poorer and those with large minority enrollments received computers later than majority white and affluent districts, and training and software lagged behind as well. What’s more, in districts rich and poor, the rivers of public money putting computers into schools rarely came with adequate training programs for teachers.

  In California, training came via a rather cursory series of seminars offered at independent computer stores. “The donations are coming whether the schools are ready or not,” reported The Los Angeles Times. “Some principals report that their donated Apple computers remained stored in their boxes for months because they didn’t have trained staff, anti-theft devices or the money to buy educational programs.” Students who already were computer-savvy made the school computer lab a favorite after-school hangout. For those who didn’t already have access to computers and video games at home, computer time wasn’t unleashing creativity—it was an exercise in frustration. “To err is human, but to really foul things up requires a computer,” quipped one.29

  The greatest beneficiaries of the whole business seemed to be the computer companies and software makers who had tapped into a large and newly computer-literate group of educated citizens. The shortcomings of the rush to computer literacy were abundantly clear to many on the front lines of American education. World-weary teachers hoped that the tech craze would abate so “we can go back to real teaching.” But it never did.30

  Three decades later, the seeds planted by Steve Jobs’s brief adventure on Capitol Hill had blossomed into a giant, multibillion-dollar business. As one reform wave after another washed over America’s educational policy landscape, the one constant was bipartisan agreement that computer literacy and student access to tech were essential to twenty-first-century schooling. Tech giants made their presence known in nearly every American classroom, as cash-strapped states and school districts eagerly accepted discounted software from Microsoft, free cloud apps and Chromebooks from Google, e-readers from Amazon, and—yes—iPads and iMacs and iEverythings from the PC era’s original ed-tech champion, Apple.31

  CAPITOL GAINS

  As the chipmakers gained traction and Steve Jobs evangelized for computers in education, the venture capitalists who’d long been championing high-tech entrepreneurship on Capitol Hill were busier than ever. Leading the pack was one of the most familiar figures from the Carter-era tax fight, now an elected official ready to out-Atari the Ataris: Republican Congressman Ed Zschau, who arrived on Capitol Hill in early 1983.

  The blues-crooning CEO had caught the political bug in the Steiger Amendment fight, and he’d never looked back. When Pete McCloskey left his seat to embark on a failed bid for the Senate, Zschau waltzed in, the favorite-son Republican in a district engineered to stay a GOP seat. Zschau was the kind of candidate that district voters liked. He wasn’t a conservative like Reagan and all those defense hawks down in Orange County. He was a millionaire on a motorcycle, commanding Sand Hill Road boardrooms and
Stanford classrooms, equally at ease at the Wagon Wheel or The Oasis. He was one of them.

  Silicon Valley’s congressman approached high-tech advocacy differently than the Atari Democrats. People like Tsongas and Wirth might represent high-tech districts, but they’d never run high-tech companies. Their vision of industrial policy was big-government liberalism dressed up with a silicon exterior. They were frantically trying to copy Japan without appreciating the Silicon Valley miracle already in their midst. For Zschau, the answer wasn’t an elaborate scheme of subsidies and training programs; it was in keeping the cost of capital low and opening up export restrictions so American companies could compete freely. “One of my great concerns is that in the mad dash to show concern for high technology, somebody will screw it up,” he told one reporter earnestly. “I come from an industry that has grown like Topsy and has never asked for government help.”32

  True to form, Zschau dove into his new job at full force, working furiously to get his message heard despite being a freshman member of the minority party. He went to the hearings that no one else attended, he sat in on committee meetings and took copious notes. He got the band back together, joining David Morgenthaler and lobbyist Mark Bloomfield in a “Capital Gains Coalition” to argue for another tax cut. Now they had a much easier case to make, and they’d won over converts on both sides of the aisle. Paul Tsongas had voted no on the Steiger Amendment, but he had been so impressed with its aftermath that by 1984 he was declaring that the “bill had more to do with the economic renaissance of my congressional district than I have.”33