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10/16/2005

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Eric Mortensen

Good points in general, and I'm all for letting more skilled workers into the US. But I don't think either of you answered the "brain drain" problem properly.

You both seem to be saying: yes, after the initial shift in the labor supply from all those workers migrating to the US, India will experience reduced supply. But this reduced supply will lead to higher wages which elicits greater supply. That is true, but the brain drain is still there, and it could still be substantial, especially since the bottleneck is the school system, and not entry into the labor market. The relevant issue surely must be how big the drain will be even after the system has settled into its new equilibrium.

The reduced labor supply in equilibrium would probably reduce Indian growth and frankly, right now it seems to me that the only good thing India has going for it is the hi-tech sector so that's where growth must come from. Draining all those engineers away would mean less engineers in India that would contribute to that growth.

David

I agree that America needs skilled immigrants from abroad. We also need foreign graduate students in the science and technology fields, because few Americans have the ability or the desire to enter these fields. Our science education is dismal (as opposed to our education in the "dismal science" :) ), and far too few talented American students are encouraged to pursue science a a career. If we do not get qualified students from abroad, American universities will no longer lead the world in scientific advances.

Terrorism is a legitimate concern, but screening must be done efficiently and intelligently. Non-citizens (especially Asians) in science and technology fields often have to wait weeks or months for a visa. This is encouraging them to either stay at home or go to Europe. The process needs to be streamlined. Not every chemistry student from China is a potential threat.

Finally, America needs to reform its own educational system. The curriculum needs to be rigorous, the teachers need to be well qualified, and the system needs to support them. There are too many problems with the educational system to mention now, but prime among them is the dismal performance of Americans in science. Maybe it's because we spend too much time debating about "intelligent design" and too little time teaching our children the basics of chemistry, biology, and physics.

Pranay Manocha

Eric says - "But this reduced supply will lead to higher wages which elicits greater supply".

This is very true and in the case of India the reaction can be almost immediate. A hundred private universities will open up in an year and there would be 100,000 more computer science graduates within 3 years. In the end, there will be little profitable impact on the US job market (of course there may be positive effects in macroeconomic scenarios) and India would lose as well as people would opt for computer sc. instead of engineering or arts jobs for which would pay substantially less.

So capping H1B visas is a good thing for now. But short term visas? What about Tourist visas? So many people would like to visit the US on a tourist visit - the visas drive them away though. Student visas are another such thing. Its easy for an Indian to get selected to a US university, but much harder to get a visa to go attend the course!

Any change in policy however, must be reciprocal. It must be made as easy for americans to work in India as it is for Indians to work in the US. This might not appear worthwhile, but open up the gates and you'll see the traffic that flows both ways. Free capital without free human movement will not work for much longer.

Cicero

Judge Posner (and Prof. Becker),

You are puzzled as to the political opposition to admitting more highly skilled immigrants. My explanation:

In economics, the lay person suffers from two faults. He cannot see the long term effects of a proposal and he only sees the effects on one group. Both are present here, but for brevity I will focus on the fault of looking at one group.

The problem in this instance is that highly skilled workers in the United States will oppose this immigration. They have a reason to consolidate, form a group, write their politicians and use their money and power to influence a isolationist policy. Their wages, as Becker points out, will drop if highly skilled immigrants are admitted. This group will pollute economic thinking in this area. Politicians, seeking to be re-elected, will respond by giving into these sorts of demands.

The vast, silent majority will never write their representative. This is because the masses never SEE the lower price they would otherwise receive and they never experience their increase in the standard of living because (1) both of those things are prevented from coming into existence and (2) to see them prior to coming into existence requires a keen economic sense. The masses, however, can see that the electrical engineer that lives down the street will lose his job - or will have a lower wage. The masses see the effects on the American engineer, but they never see the benefit. The masses suffer from a bad case of near-sightedness. They never see the benefit because it is prevented from coming into existence.

This problem is pervassive in economics. By the time one interest group has polluted the air with economic non-sense (more immigration is bad because Americans will lose jobs), it is too late for clear headed economists to undue.

The problem of looking at one group is pervasive in economics. Simply think of the traditional arguments against mechanization (it puts men out of work) or for tariffs (American producers will be forced to lay off men) or for farm subsidies (farmers will lose their jobs). They see one group because it is easy to see and because that group is louder. They never see the real effects.

Economics, like mathematics or physics, is complex enough. It becomes infinitely more complex by the introduction of special interest. The near-sightedness of the masses and the special interest of a particular group is too pervasive.

Mark Butler

Posner says: "The qualities of skilled immigrants that Becker rightly praises are a function of the size of the skilled-immigrant quotas; the lower the quotas, the more outstanding the successful applicant is likely to be."

This comment appears to ingore the practice at the US Citizenship and Immigration Services (nee INS).

If a pool of applicants meet the admittedly loose qualifications for EB3 classification (and the general non-criminal, non-terrorist, non-polygamist, etc. standards), the only criterion applied in deciding which cases to approve is the date the application was filed: the first case filed is approved first.

There is no reason to believe that applicants who filed earlier are better qualified than those who filed later, and no reason to believe that the low quota would discourage disproportionately applicants with lower qualifications. In fact, the low quota may have the opposite effect:

The better-qualified applicants are more likely to have other opportunities for employment either in their home country or in third countries. The long waiting periods imposed by the quotas may discourage those applicants, leading to abandonment of their applications. The pool of applicants would then be disproportionately filled with persons having relatively lower qualifications.

On another matter, the operation of the H-1B and EB1, EB2 and EB3 quotas referred to by Becker and Posner is leading the whole system towards a trainwreck. Some fraction of the cohorts of H-1B workers who arrived during the 3 or 4 years when the quota was 195,000 have applied or will apply for permanent residence. Even if only half apply, the waiting period for EB3s (and most H-1Bs will be EB3s) will double each year. Furthermore, dependents of an H-1B worker (who are not counted against the H-1B quota, whether that quota is 195,000 or 65,000) will be counted against the EB3 quota when they seek permanent residence. Thus waiting periods for EB3 visas could easily stretch from the current 4.5 years (5.5 for China and 7.5 for India) to double or triple that.

Arun Khanna

If we want public policy to reflect good economics consistently then perhaps we need a economics graduate of University of Chicago in the White House.

Corey

I worked in computer and networking equipment design for 7 years alongside some extremely bright and capable Indians and Chinese, most of whom were my friends. I never once felt myself unable to compete with them, my pay went up each of those years. I don't know anyone in the field who really believes that immigration is the reason they lost their jobs. Try mismanagement and short term profit-mongering.

The problem for American workers didn't occur until the companies figured out it was easier and cheaper to move the whole design center to India or China than to sponser immigrants here.

One company I worked for laid off several of its Indian workers, invalidating their visas. After a brief desperate job search, they were forced to sell off their possessions and move back to India. They were later re-hired by the same company in its new Bangalore design center for a fraction of the real dollars.

I agree with Becker and Posner that the US should be encouraging skilled immigration. At least when the jobs are located in the US then Americans can compete for them. Neither American workers nor American universities nor any other fixed asset benefits when the site of progress relocates overseas.

"If we want public policy to reflect good economics consistently then perhaps we need a economics graduate of University of Chicago in the White House."

The day that happens I will quit my job and move to Montreal.

R

you can't seriously think that scenario would be worse than the present one. The political positions espoused by Becker and Posner (though not the majority of the commenters here) are considerably more thoughtful than the current executive platform.

Not that Montreal isn't lovely.

As far as this weeks' posts, there is very little to disagree with. I wonder why the best solution wouldn't be to substantially raise the quotas for all three sub-categories. I suppose that Posner's proposal is motivated more out of political expedience than any other concern.

Rob

Posner argues with an uncharacteristic level of certitude that an increase of skilled workers will lower wages for individuals in the specific field. I wouldn't be so "sure" about this. H1 Visa's require "sponsorship" by individual companies, and a painful process of paperwork, regulations, and government ineptitude. Many times, permanent sponsorship can only be gained when one has worked for the same company for an extended period of time, so the worker becomes an indentured servant of sort incapable of bargaining for better wages. The paperwork and regulations donít allow for a smooth movement of workers and a traditional market-clearing price. Wages in fields that cater to highly skilled foreigners are lowered by these ìtransaction costsî, and an elimination of these costs as suggested by Posner would likely increase these wages, not decrease them as Posner suggests. As an American PhD working in one of these fields, I welcome Posnerís suggestion because I believe that my wages would go up.

Rob

Puzzled by the political opposition? I'd be willing to bet that both Posner and Becker have some "highly skilled" foreigners sitting right there in the office with them, and I'd be willing to bet that they are not being paid very well under the guise that they don't yet have that PhD after their name. Yet, they are likely doing some very high-level work including teaching, tutoring, and research. The reason that foreigners pursue PhDs at a much higher rate than Americans has a lot to do with the lost wages that Americans face by spending more time in school. Foreigners donít face these ìopportunity costsî because foreigners are allowed student visas (that only allow them to work on campus), but not working visas until they receive a higher degree. Becker and Posner both ignored their ìcoworkersî in the post. Ahh Ö but these arenít ìworkers,î they are ìstudents.î Ironic, given that these ìstudentsî ìworkî at the same job as Posner and Becker: teaching, research, and tutoring. If immigration law were simplified for ìhighly skilledî individuals, Universities would likely see an increase in what they have to pay these individuals even when they insidiously describe them as students, not workers.

Why the political opposition to increasing the quotas? Can it be that powerful universities and companies benefit from artificially keeping these wages down?

albatross

All these problems with student vs work visas, H1B visas that put some high-tech employees into a position where they can't change jobs, etc., is just about what you ought to expect when the government tries to manage outcomes in a market. The system is bureaucratic and introduces all kinds of perverse incentives, and it has largely been captured by different interest groups.

I don't think there's any way to fix this within the context of having the government try to manage the results of the market. They're not that smart, they're not that pure-hearted, and they will make a hash of it whatever policies they try to pursue.

The obvious free-market answer is to charge an entrance fee sufficient to do the background check and blood tests for known contagious diseases, and some kind of a bond to cover possible damage (if they end up on welfare, say). Other than that, if you have a job and can demonstrate that you're not likely to cause some big problems (like move here and consume lots of taxpayer money without paying much taxes, or start blowing up buildings, or spread your HIV infection among all your sex partners), you should be able to come here and work and live.

I'll say it again: As soon as we get away from this kind of neutral "gatekeeper" role for government, and start trying to manage the outcome of different parts of the labor market for the benefit of the American economy, we'll have something no better than the current system, and it will be a net loss for everyone.

michael persoon

Great posts by both Becker and Posner. I really do not think there is much of an argument for the the H1B quotas; benefits of trade, free movement of goods and services, GATT, GATS, TRIPS, etc.

I think it is interesting to see if the same arguments apply to "unskilled" laborers. I am a law clerk in an immigration firm and from my experience, most aliens seeking an adjustment of status work. They are not here to "go on the dole." They also generally have strong family and community units that help with economic and social support to a degree well beyond what the best US social welfare program does. Why should we exclude these persons but allow "skilled" laborers entry and status?

I agree with the posters who point to the problems Europe is facing in funding its welfare programs and think it is fairly well accepted that Germany, for example, is reliant on the very immigrants (Polich plumbers?) that it is afraid of to support its social welfare. "Unskilled" laborers can contribute in this manner just as skilled workers. Also, just like "skilled" laborers, many "unskilled" laborers have employers who would gladly sponsor them. Any argument put forth for the proposition that attracting "skilled" labor will help the "skilled" labor market is also true for the "unskilled" labor market. Legitimze people, give them status, collect their taxes, and enjoy the benefit of their labor. (C.f. "A Day Without Mexicans").

michael persoon

Sorry for the way that I did not clearly distinguish issues of work visas and residential status. They are distinct, but for the immigrant/alien worker they are often related.

day4day

I agree with Becker and Posner on this one. In addition to their arguments, there's also a cultural layer of benefits to immigration that should be considered. Skilled immigrants help America prepare for increasing globalization, they attune us to the ideas, events and tastes of the larger world, they reduce our fear of other countries which soon appear to us as neighbors rather than "exotics," and help other countries to understand us and indeed share blood ties with us, increasing goodwill toward our country. New cultural hybrids spur creativity in the arts and in industry. New words are minted, new cuisines created, and so on. In a globalized world where some of America's more important exports are cultural, this can be important, not to mention exciting. Not only is immigration key to American soft power, it makes America a beautiful and exciting place to live in. Without quality immigration, we may not continue to be the center of the world.

I agree with the economics and the need for engineers scientists in particular. But when selling immigration to the public, policy makers seem to lose track; they seem to focus on the steak and ignore the sizzle.

scottynx

posner says:
[The more who immigrate, reducing the supply of Indian software engineers to Indian software producers, the higher the wages of those engineers in India. This will tend both to reduce the numbers immigrating to the United States and to elicit a greater supply of engineers for the Indian market.]

I agree but...takes high IQ people. Doesn't that lower the average IQ of the sending country over the long-term? The best and brightest of India that graduate from IIT are taken out of India's gene pool. One should keep in mind the effect on Europe of losing 6 million jews in WW2 (a high IQ population). This could have something to do with Europe no longer being the world's center of innovation.

Corey

"Doesn't that lower the average IQ of the sending country over the long-term?"

You are over-valuing the genetic input into intelligence vs. the social/educational. But even so, India has over a billion people. There are plenty of people at the top of whatever bell curve you want to apply to fill IIT.

Further, highly educated Indians who come here and work send back remittances to their country of origin and to their families. This enables more Indians to become highly educated. Or, by your terms... more people born with the high IQ genes can actually afford to exploit them.

In the case of China, many of my engineering friends who came from there received extremely lucrative offers to return. (In some cases more real $ than they could have made here.) It was hard to convince them that they should stay as paranoia about terrorists and spies continued to ratchet up.

If the US wants to compete with India and China in the future we should give out as many work visas as student visas and make sure that the economic and cultural life in America is friendlier than in China. Sadly, these days that is becoming a harder sell.

albatross

If you started out accepting the principle that anyone who got state services growing up owed them back when they emigrated, it seems like you'd end up giving countries the power to make it impossible for their skilled (or even unskilled) citizens to leave. "Sure, you can leave, but then we tax your income at 99%." Or "Sure, you can leave, as long as you pay off your $10 million debt to the state first."

Jerk

POSNER: I am puzzled by the political opposition to increasing the quotas for highly skilled immigrants.

Wow. You must also be puzzled over opposition to increasing quotas for women in academia, minorities in colleges, and both in the government.

Tired Immigrant

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