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Made In America: Foreign Entrepreneurs Who Will Compete Against Us

from the good-to-see dept

While I enjoy reading The New Yorker when I get the chance, it's rare they cover an issue that I'm deeply familiar with. So it's great to see James Surowiecki jump into the pool with an article about the problems with the US's view towards skilled immigration. It's an issue we've been covering for years, and I still can't figure out why people are against opening our shores to skilled immigrants. It often seems like the arguments against it are a mix of just under the surface racism with a healthy dose of ignorance about economics. Skilled immigrants help expand the pie, creating new companies and new jobs, rather than taking away from the market, as some falsely assume.

The Surowiecki piece is a good one in debunking many of those arguments and highlighting why we really need reform to let in skilled immigrants -- because as we keep turning them away, plenty of other countries have been welcoming them with open arms, meaning that they'll be building businesses that compete with domestic companies, rather than building companies in the US. And, even worse, a large number of those that we're turning away are people who were schooled here. So we're building our own competitors -- who want to stay here and help our economy -- and then sending them elsewhere to compete with us. How does that make any sense at all?
Of course, with unemployment here above eight per cent, too little immigration may not seem like a bad thing: surely we need more jobs, not more workers? But this is a shortsighted view. Economies are not static, with a limited set of resources to go around. As the work of the economist Paul Romer has shown, economies grow faster when there is more innovation, and having more smart people in the workforce is a key driver of innovation. And the quickest, cheapest way to get more smart people is to make it easy for them to move here. What’s more, historically there has been a clear connection between immigration in the U.S. and entrepreneurship, with immigrants creating companies (and jobs) at a disproportionate rate. In one famous study, the social scientist AnnaLee Saxenian showed that Chinese and Indian immigrants alone founded a quarter of Silicon Valley start-ups between 1980 and 1998, while a 2007 study found that a quarter of all technology and engineering start-ups between 1995 and 2005 were founded by immigrants. On a larger scale, more than forty per cent of the companies in the 2010 Fortune 500 were started by immigrants or their children.
Of course, the piece also explains why various bills to fix this (even with bipartisan support) don't seem to be moving: "there is no urgency in Washington on the issue, and voter anxiety about the weak economy and the scarcity of jobs gives politicians an excuse for inaction." Basically, some fear mongering among those who don't like "foreigners" during an election season is holding back good and useful policy, much to our own detriment.

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  1. identicon
    Anonymous Coward, 28 Aug 2012 @ 9:54pm

    "As the work of the economist Paul Romer has shown, economies grow faster when there is more innovation, and having more smart people in the workforce is a key driver of innovation. "

    Actually, this would seem mostly to be a reason to subsidize higher education, make student loans easier to get, and perhaps to change the tax burdens for those who do go to school.

    If you always have to go outside to get smart people, you end up with a country full of dummies... and those other guys who actually do everything for you.

    The real issue isn't workers from outside coming in, the real issue for America is that the middle class jobs have gone offshore. This isn't because we didn't let talented people in, it's because people in other countries are willing to do the work for a whole lot less, leaving America's middle (and lower middle) class with less and less jobs to do.

    It's actually a challenge in many places to find any small manufacturing companies in operation, rather more people these days deal with containers, shipping, and processing things coming from cheap labor countries.

    These jobs would be offshored no matter who you let in at the top. The smart guys would just design the new stuff, innovate, and then send it off to China, India, and Mexico to knock out the product on the cheap. There is no trickle down because there is little work done at the lower levels.

    The story is interesting, and he raises many good points. I just think that he (and you as well Mike) tend to ignore where the vast majority of people can and will work.

    Further, there are other effects to: The family member effect. How many people come into the country as a result of a skilled working coming to the US? How many of them have skills, and how many of them are unskilled (and often under educated) but willing to do a job an American would do for less money, less benefits, and longer hours? Remember, many immigrants bring not only themselves, but their immediate and sometimes extended families with them. Your population doesn't get a +1, it might get a +4 or more. It may not be net as good as you make it out to be.

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