The Old-Fashioned Way

Steve Jobs returned to Apple on February 7, 1997. Five weeks later, Apple announced that it was laying off almost a third of its workers — 4,100 jobs. Almost fifteen years later, Apple had 60,000 employees, and Steve Jobs died with $7 billion to his name.

Nobody resented his wealth.

Years after he returned, Jobs would say that Apple was ninety days away from bankruptcy in 1997. Fellow computer magnate Michael Dell infamously said that October that if he was in charge, “I’d shut it down and give the money back to the shareholders.”

Nobody resented Apple for killing jobs.

After all, that’s how capitalism works: Companies rise, companies fall. And some companies rise again from the ashes.

Contrast this with how vulture capitalism works:

Romney’s private equity firm, Bain Capital, bought companies and often increased short-term earnings so those businesses could then borrow enormous amounts of money. That borrowed money was used to pay Bain dividends. Then those businesses needed to maintain that high level of earnings to pay their debts.

And when Bain businesses couldn’t maintain artificially inflated earnings to pay Bain dividends, Bain businesses went bankrupt, leaving lenders — and employees — holding the bag. Bain’s business model profits from misery, not production.

This is the second time this week we’ve compared Apple to Bain, and for the same reason: One company practices capitalism as everybody understands it. The other company games the system.

Mitt Romney says that his critics are putting the free market on trial. Problem is, Mitt Romney has made a very lucrative career out of avoiding it.