recently spent several days in Northern California and came down with a mild case of wealth poisoning. This often happens when I travel to places like San Francisco and Palo Alto. The greenness, tidiness, and modernity of the Bay Area start to chafe, like a Barbra Streisand interview, and I become homesick for the soothing grime of Los Angeles. The feeling is especially strong in Silicon Valley, which seems determined to show the world how rich you can get without having any fun.
But Im not actually complaining. Thanks to innovation in places like Silicon Valley, the United States remains economically competitive in the world. Its the Bay Area that allows California to lead the nation in high-tech exports, pulling in nearly $50 billion annually. Last year, 39 percent of all venture capital in the United States found its way to Silicon Valley, an indication that the companies there are doing something right.
This would all be very comforting, were the prosperity of Americas technology hubs not so fragile. Unlike heavy industry, which relies on factories that are expensive to launch and hard to move, the knowledge industry is mobile. Its also relatively simple to capitalize, because, fundamentally, information technology is all about the brains. Whoever gets the best ones wins.
For years, the United States effortlessly excelled at this game. The governments of China and India made conditions too disagreeable for innovators, while Europe and Australia effectively coasted. But our run of lazy luck is long gone. Today, China, India, the European Union, Australia, and other competitors are all vying to attract the most promising talents to their shores. China and India have greatly improved conditions for would-be entrepreneurs, and the EU is considering a skills-based “blue card” to compete with the green card offered here.
Now, we are starting to see our rivals pull ahead of us. In 2007, high-tech exports from the United States to other countries totaled $214 billion, but imports amounted to $333 billion. If we must do the math (and in this case we must, even if India offers to help), then we arrive at an ugly result: a high-tech trade deficit of nearly $119 billion. When the worlds leader in innovation cant break even, its a dubious leader.
One way to regain our dominance in the tech sector would be to get more of the brightest people in the world to move here. According to a recent report issued by Duke University and the University of California at Berkeley, roughly a quarter of technology and engineering start-ups in the United States have founders who were born abroad. Over half of Silicon Valley start-ups have at least one immigrant founder. And, according to Microsoft, 35 percent of its patents filed last year came from visa and green card holders. Skilled immigration has become central to innovation and entrepreneurship in the United States.
As things stand, however, were not exactly making new talent feel welcome. The United States provides advanced degrees to thousands of the worlds most gifted students and then sends them home, where they can work for our competitors. That we pursue such a policy only increases my concern that all the smart people in the United States have already left.
Students who wish to stay here after graduating must undergo arduous procedures that encourage people to exit rather than stay. Some are lucky enough to obtain O-1 visas or green cards purely on the basis of “extraordinary ability,” but requirements are so stringent that few students can meet them early in their careers. Most face years of working on H-1B visas, for which demand dwarfs supply. Because the H-1B relies on employer sponsorship, which can easily be revoked, foreign workers are vulnerable to exploitation, which makes the prospect of working here less attractive and drives down wages for everyone. And once the clock runs out on an H-1B visa, the line for an employment-based green card is daunting, with more than a million applicants waiting for just over 100,000 spots each year. Whats more, a maximum of 7 percent of employment-based green cards may go to citizens of any one country, meaning that Chinese and Indians are at an immense disadvantage to, say, Tuvaluans.
For many applicants, no option remains but to leave the country. Although precise numbers arent available, newspaper reports and statements by college professors and students suggest that today, in contrast to only five or ten years ago, students from China and India are more likely to return home after completing their education in the United States.
Capitol Hill isnt entirely oblivious to such problems. While there is immense disagreement over how to resolve the status of those who are in the country illegally, most members of Congress recognize that legally employed, accomplished immigrants are valuable to the economy. Even a hard-liner like Republican Tom Tancredo has conceded that “the kind of immigration that would have a positive impact would most likely be the kind that is made up of high-income, high-skilled people.” Nevertheless, because the entire topic of immigration has become so poisonous, even the most milquetoast stand-alone legislative proposals have stalled.
One bill that seemed to have a decent chance at passage was sponsored by Republican Senator John Cornyn in 2007 and would have removed caps on employment-based green cards for workers with advanced degrees. (The bill wouldnt have scrapped H-1Bs, but it would have made them more easily available, which is better than nothing.) This went nowhere. Arlen Specter proposed something similar. This went nowhere. Last year, congressional Democrats such as Zoe Lofgren of San Jose proposed lifting the 7-percent-per-country cap on green cards. Guess where that went.
Lately, with the country in recession, Senators Charles Grassley and Dick Durbin have tried to restrict H-1Bs even further, stating that Americans should get an easier shot at available jobs. One especially prominent opponent of increased H-1B immigration is Professor Norm Matloff, a computer scientist at the University of California at Davis. Matloff believes that Silicon Valley is blinded by two vices: greed and ageism. Because of greed, technology companies hire H-1B immigrants, who save them money. Because of ageism, Silicon Valley pushes out older programmers who are perfectly qualified to do the work. Such practices not only force talented older Americans out of the technology industry, they also discourage bright young Americans from entering it, thus squandering some of the countrys finest potential talents. American technology workers would be doing better if there were fewer foreign workers, says Matloff, and Silicon Valley would be just as profitable and innovative, if not more so.
Now, theres no way to say for sure that Matloff is wrong. But two points work against his overall line of thinking. The first is that high-skilled U.S. workers have enjoyed tremendous increases in wages in the past few decades, while low-skilled workers have seen losses and stagnation. To the extent that immigration has had a negative effect on the wages of American-born workers, the burden hasnt been borne by graduates of MIT.
The second is that from the perspective of the United States as a whole, its worth remembering that even if Matloff is right about ageism in Silicon Valley (and if he is, we have a legal system to address such claims), the point of nourishing such a place isnt only to provide American technology workers with employment. Its to provide the nation with wealth and a technological edge. Its to help right our trade balance through high-tech, high-income industries. And to do that, we need to do more than simply fill available vacancies with qualified applicants. For any endeavor that aims to be the best of its sort, an oversupply of talent is necessary. For every professional violinist in the United States, dozens of nearly-as-goodor sometimes even superiorviolinists are out of luck in the quest for orchestral employment. If we examine a different sector, such as professional basketball, all these principles are taken for granted. Take Yao Ming of the Houston Rockets. Hes a one-man multimillion-dollar business, and his talent creates work for hundreds of Americans who work for him directly or indirectly in support roles. Undeniably, though, he is also taking away a job that an American-born basketball player could do instead, and there are thousands of American-born basketball players unable to find employment in the field. If the point of having basketball teams is to provide as many American basketball players as possible with jobs, then the United States is following a very wrongheaded immigration policy. (Out of fewer than 500 NBA players currently employed in the United States, more than seventy are foreign-born.) But if the point is to create the most competitive teams in the world and to broaden the appeal (and export, and merchandising, and ticket sales, and broadcasts) of basketball to as wide a world market as possible, then our current policy is rather good.
A sensible immigration policy would cease placing undue burdens on low-income Americans (in the form of millions of low-skill workers) and start adding to the ranks of high-skill workers, who generate greater innovation and wealth. An immigrant janitor competes for one of a limited number of janitorial jobs, and an oversupply of candidates merely drives down wages. But an immigrant inventor may devise a product that will be manufactured, distributed, marketed, and even exportedall processes that create jobs. While low-skill workers tend to take jobs, high-skill workers tend to make jobs. And high-skill workers who are displaced can at worst usually move down the job chain: an unemployed nuclear physicist may take a temporary job as a cashier. But low-skill workers who are displaced can rarely move up the job chain: an unemployed cashier cannot take a temporary job as a nuclear physicist.
The way forward, then, should be pretty simple in principle. Any student with an advanced degree in science, technology, engineering, or math should be offered a reasonable chance at permanent residency in the United States, provided that she can obtain (and retain) employment in her field. The overall aim of any policy we devise should be to prevent an exodus of the people weve educated.
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