Date: Wed, 11 Feb 2009 22:15:13 -0800 From: Norm Matloff To: Norm Matloff Subject: Tom Friedman chimes in on the Kerr/Lincoln study To: H-1B/L-1/offshoring e-newsletter I've revised and extended my posting yesterday on the Kerr/Lincoln study (the one that claims great innovative prowess for the H-1Bs). I've added some new points, and included the e-mail message I had sent Dr. Kerr back in December when he had asked for my comments on the draft of his study. You may find that e-mail message interesting, as he ignored all my comments, making me wonder why in the world he had asked for them in the first place. You can read my revised/extended posting at http://heather.cs.ucdavis.edu/Archive/KerrLincoln.txt It turns out that the prominent New York Times columnist Tom Friedman also mentioned the Kerr/Lincoln report yesterday. Indeed, a well-known journalist who is very savvy on the workings of U.S. politics told me today he thought the KerrLincoln.txt study would become a landmark in the H-1B debate, a possible game changer in Congress. He may well be right. The journalist also asked me how I felt that such fundamentally flawed study would attain such status. The fact is, I'm used to seeing bad students get lots of attention on the Hill. Indeed, the industry lobbyists actually commission university studies to give "impartial" academic cover to the lobbyists' selfish agendas. Please note that I am NOT saying that Kerr and Lincoln have been bought, but it definitely happens. In addition, there are many sincere but highly misguided analyses too. And as I said, Congress can be suckers for academic studies, even the badly-flawed ones, whether unwittingly or deliberately flawed. Austin Fragomen, head of the nation's largest immigration law firm (this is of course the same firm that was helping Cisco to avoid hiring American workers last year, though as usual, in full compliance with the law), told Workforce Magazine in March 1996 (emphasis added): "[When Congress was considering clamping down on the H-1B program in 1996], the business community mobilized, forming American Business for Legal Immigration (ABLI), a Washington, D.C.-based lobbying group that represents a number of associations and employers, and COMMISSIONS ACADEMIC STUDIES TO SUPPORT ITS POSITION." Which brings me back to Tom Friedman. Is he just an independent reporter, thinking up his globalist ideas on his own, with no personal vested interests? Well, no. No way. Friedman was extensively "tutored" by Silicon Valley executives in preparation for his "Flat World" book extolling globalization, and I think it's a safe bet that he didn't seek insights from experts on the other side of this issue. He is known to be a member of the consulting firm Intellibridge, undoubtedly a lucrative gig, and I suppose he consults for other firms as well. His book has sold millions of copies, and I'm sure he commands fat speaking fees. Good for him, and he may well believe the things he writes--but he has highly powerful incentives to write them, and to ignore information to the contrary. See http://heather.cs.ucdavis.edu/Archive/TomFriedman.txt and http://heather.cs.ucdavis.edu/Archive/TomFriedmanSV.txt for some details, and for my explanation of the fundamental flaw in one of his favorite examples. As to Friedman's remarks below, they sound quite plausible, but his premises and sources are wrong. Yes, it's great to bring in "the best and the brightest" from around the world, but as I've shown both statistically and qualitatively, the vast majority of H-1Bs are not in that league. (See http://www.cis.org/articles/2008/back508.pdf) Yes, it's nice to have great entrepreneurs, but even Friedman's source Vivek Wadha agrees that the immigrant engineers and the natives have the same rates of entrepreneurship; having immigrants in Silicon Valley instead of natives has not increased the number of startups. Norm http://www.nytimes.com/2009/02/11/opinion/11friedman.html?_r=1&th&emc=th Times Topics: Economic Stimulus Leave it to a brainy Indian to come up with the cheapest and surest way to stimulate our economy: immigration. "All you need to do is grant visas to two million Indians, Chinese and Koreans," said Shekhar Gupta, editor of The Indian Express newspaper. "We will buy up all the subprime homes. We will work 18 hours a day to pay for them. We will immediately improve your savings rate -- no Indian bank today has more than 2 percent nonperforming loans because not paying your mortgage is considered shameful here. And we will start new companies to create our own jobs and jobs for more Americans." While his tongue was slightly in cheek, Gupta and many other Indian business people I spoke to this week were trying to make a point that sometimes non-Americans can make best: "Dear America, please remember how you got to be the wealthiest country in history. It wasn't through protectionism, or state-owned banks or fearing free trade. No, the formula was very simple: build this really flexible, really open economy, tolerate creative destruction so dead capital is quickly redeployed to better ideas and companies, pour into it the most diverse, smart and energetic immigrants from every corner of the world and then stir and repeat, stir and repeat, stir and repeat, stir and repeat." While I think President Obama has been doing his best to keep the worst protectionist impulses in Congress out of his stimulus plan, the U.S. Senate unfortunately voted on Feb. 6 to restrict banks and other financial institutions that receive taxpayer bailout money from hiring high-skilled immigrants on temporary work permits known as H-1B visas. Bad signal. In an age when attracting the first-round intellectual draft choices from around the world is the most important competitive advantage a knowledge economy can have, why would we add barriers against such brainpower -- anywhere? That's called "Old Europe." That's spelled: S-T-U-P-I-D. "If you do this, it will be one of the best things for India and one of the worst for Americans, [because] Indians will be forced to innovate at home," said Subhash B. Dhar, a member of the executive council that runs Infosys, the well-known Indian technology company that sends Indian workers to the U.S. to support a wide range of firms. "We protected our jobs for many years and look where it got us. Do you know that for an Indian company, it is still easier to do business with a company in the U.S. than it is to do business today with another Indian state?" Each Indian state tries to protect its little economy with its own rules. America should not be trying to copy that. "Your attitude," said Dhar, should be " `whoever can make us competitive and dominant, let's bring them in.' " If there is one thing we know for absolute certain, it's this: Protectionism did not cause the Great Depression, but it sure helped to make it "Great." From 1929 to 1934, world trade plunged by more than 60 percent -- and we were all worse off. We live in a technological age where every study shows that the more knowledge you have as a worker and the more knowledge workers you have as an economy, the faster your incomes will rise. Therefore, the centerpiece of our stimulus, the core driving principle, should be to stimulate everything that makes us smarter and attracts more smart people to our shores. That is the best way to create good jobs. According to research by Vivek Wadhwa, a senior research associate at the Labor and Worklife Program at Harvard Law School, more than half of Silicon Valley start-ups were founded by immigrants over the last decade. These immigrant-founded tech companies employed 450,000 workers and had sales of $52 billion in 2005, said Wadhwa in an essay published this week on BusinessWeek.com. He also cited a recent study by William R. Kerr of Harvard Business School and William F. Lincoln of the University of Michigan that "found that in periods when H-1B visa numbers went down, so did patent applications filed by immigrants [in the U.S.]. And when H-1B visa numbers went up, patent applications followed suit." We don't want to come out of this crisis with just inflation, a mountain of debt and more shovel-ready jobs. We want to -- we have to -- come out of it with a new Intel, Google, Microsoft and Apple. I would have loved to have seen the stimulus package include a government-funded venture capital bank to help finance all the start-ups that are clearly not starting up today -- in the clean-energy space they're dying like flies -- because of a lack of liquidity from traditional lending sources. Newsweek had an essay this week that began: "Could Silicon Valley become another Detroit?" Well, yes, it could. When the best brains in the world are on sale, you don't shut them out. You open your doors wider. We need to attack this financial crisis with green cards not just greenbacks, and with start-ups not just bailouts. One Detroit is enough.