If America really wants to increase entrepreneurship, make health insurance portable and not tied to corporate America. That would encourage workers to start their own business.
Trying to tweak the immigration process in the name of "increased entrepreneurship" is often just a ruse for "open the borders!!!". Fine in and of itself if that's your beef. Just please file it right folder.
Letting Congress, political donors, H1-B employers and college administrators try and engineer the future by selecting "winners" seems like something they're going to mess up.
Better to have limited, legal only immigration based on a points system rather than turn it into a subsidy for Sand Hill Road.
I'd add two other things to fix too. The first is housing. It is not a triumph every time the cost of housing goes up. That just diverts funds that could have been spent on other things into housing, makes it considerably more expensive to move, and reduces the runway given a certain amount of funding. We would all be better off if houses were $1 each not $1m each.
The second is the pitiful broadband available all over the country. With better broadband it is far easier to take advantage of contributors all over the country. Telepresence would allow collaborators to feel as though they are in the same room, and is best served by high bandwidths. Data files keep getting larger so it helps there too. And if you are using a remote computer displaying locally then again it is best served by higher bandwidths (and lower latencies).
> "We would all be better off if houses were $1 each not $1m each."
We would? Last I checked $1 can't even build some branches and a tarp.
But to address your main point:
> "It is not a triumph every time the cost of housing goes up."
Indeed. Neither is it a triumph every time the cost of food goes up. Or the cost of gas. Or the cost of clothing. Or the cost of basic needs like the plumber or the mechanic. We would all (on a micro scale) be much better off if prices simply stayed put.
Except in an economy where all prices are fixed your entrepreneurship wouldn't go anywhere either... What you're proposing is a complete removal of the free market economy and putting vast portions of it under central planning. History has some indications as to how that works (tip: "disaster" doesn't begin to describe it).
Others have answered you far better. It should be noted that there aren't newspaper articles praising increases in the prices of food, gas or clothing, but there are for house prices. Heck increasing house prices are mentioned in the context of politicians and giving them credit for doing such good things (hence my wording of "triumph").
I don't know why you think the housing market is a free market. If it was then this headline would not be possible "Obama policies ended housing free fall". And what about all the tax credits - not a free market. And what about the government pseudo agencies (Fannie/Freddie) - again not a free market. Planning permissions and zoning regulations are also part of the discussion about a free market. Even relocation allowance being taxable or not is an issue. I'd be far happier with an actual free market rather than one favoured by tax and similar policies with the goal of increasing the prices and hence taking money away from other things. (I also believe in a separate social safety net - all residents should have shelter, food, health and justice.)
Back to my original point, which scenario do you think is better for a household taking home $4,000 a month - one where they spend $1 of that on housing or where they spend $2,500 of that on housing? I think the former would greatly benefit the country. (Obviously the exactly $1/house wouldn't happen but this is about the general order of magnitude of pricing.)
We would? Last I checked $1 can't even build some branches and a tarp.
You're ignoring, or haven't seen, the real meaning of his words.
Indeed, $1 houses will probably always be undesirable and poorly constructed. But, that doesn't mean $1 million is a reasonable amount to spend on a house.
The real problem is that housing has been turned from a durable good (like an automobile or a refrigerator) into a capital asset (like a stock or bond). So when housing prices go up, the people on the news say it's good for homeowners. However, it's only good for homeowners as a rise in stock-price is good for stockholders: the gain must be realized via an actual sale to someone who can afford this higher purchase price.
With stocks and bonds, it's easy-enough to say that there's always another investor, and if there isn't, then whoever died from lack of a share of stock? You might be totally unable to realize your financial gain, causing a stock-market bubble to pop and destroying your net worth, but only you, the asset holder, are taking any damage.
Ah, but housing is actually desired chiefly for its use-value, ie: to live in. So as the investment-ization of housing raises prices throughout whole markets at a time, it pushes out whole classes of people who just wanted somewhere to live, and increases the debt/mortgage burden for those who can still afford to buy.
So, to sum up this bit of the shpiel, a rise in housing prices only benefits society insomuch as it spurs the construction of new housing in useful locations by signaling through the market to real-estate developers to build more. When the housing supply is fixed, or growing far more slowly than the price of housing (as in places like San Francisco or Boston), a rise in housing prices is effectively just a zero-sum transfer of wealth from society in general to real-estate owners -- economic rent-extraction.
Contrast with automobiles, or refrigerators. We expect to buy them fresh and new, and watch them depreciate over time. It's entirely sensible to buy a used one, but we don't ever expect to buy a used car and sell it for more later. We do, however, expect these things to last a long time, whole decades.
It's easiest for current municipalities, in the thrall of property owners, to treat housing as a capital asset and use it to extract economic rent (income earned for ownership rather than production) from the rest of society. However, it's best for society if we manage to get housing treated as a durable good: worthy of our money, but ultimately something we produce rather than invest in.
We want housing to be like cars: expensive, but not so expensive that we feel a need to sell it off at a profit later and pervert both governments and markets to achieve that goal.
Entrepreneurs would be better off if houses were $1 each not $1m each because our wealth comes from our businesses. However, for much of the past century most of the wealth accumulated by middle class America has come from their real estate investments. It's common for an urban or suburban house bought for $50,000 in the 1960s - 1970s to now be worth $500,000. So it actually is a triumph for many Americans when housing prices go up. Until of course they rise too quickly and we have a crash.
I believe this common perception rests upon a conflation of wealth, asset, and income.
Middle class America received high incomes for a period of time, and converted a chunk of it into an asset in the form of residential housing, then thought it had substantial wealth embedded in that asset. Not so.
Residential housing can be somewhat modeled by the purchasers/debtors as a put option that the debtor's income will not fall below a certain floor (sufficient to service the note), with a 7 to 10-year expiration date (the average age of a mortgage in the US before it is extinguished). If the residential housing is purchased outright, then it is a put option on the area's prevailing wages, which in turn supports the valuation.
The housing structure and property itself is much more wage-linked asset than wealth that intrinsically generates income. It is wealth only in a derivative sense, as a high-latency indicator of prevailing wages in the area when it changes ownership.
To cheerlead for housing prices to go up as an unalloyed good is to misplace the context of why it goes up in the first place. For a certain phase of economic development, it can be good because of the cascading economic benefits that arise from the growth such pricing deltas signal. For America, at its current stage of economic, technological and demographic development, in its place in the world economy, it is at least highly debatable whether housing prices going up actually leads to much positive externality economic benefits as before.
It sounds like you're saying that since the valuation of housing is primarily based on the wages of the surrounding population it should not be considered wealth. And that we shouldn't praise rising prices because we're not sure if they have a positive effect on the overall economy. But how is this different from any other investment if stocks, businesses, bonds, currency, etc all have these same properties? Or do they not?
Also what is your definition of wealth? Even though most people don't receive income from their houses (unless it's a 2nd house), I think the intent to pass it on as an asset to their family would classify it as wealth since it would then be an abundant resource as opposed to necessary shelter.
And if we got rid of housing as an investment what does the middle class have left? I'd love to see more people get into business either as an entrepreneur or an investor the risk and upfront cash means it's not for everybody. CD's and bonds are safe but no longer give the returns they used to.
I appreciate the cordial discussion; this is a subject that in my experience touches a lot of raw nerves, so it is difficult to find people who can discuss the topics with a friendly tone.
I believe the answer to many of your questions can be addressed by seeking the answer to another question. How did the upper 10% (mostly the upper 0.1%), manage to capture over 90% of the income gains in the past few decades in America?
Consider that in a typical residential single family home in one of the hot real estate markets like SV, most of the valuation is embedded in the land and not the improvements. You can confirm this by checking the values SFH's are insured for; the insurance companies aren't stupid. If homes really appreciate in value, then their intrinsic utility modulo their location is expected to rise, and their insurance valuations to correspond. They don't.
In other words, most people aren't improving their houses to the extent justifiable by the inflation of the valuation placed upon them over time. The inflation goes into the dirt. There are two entities that mostly benefit from this: the local property tax assessment jurisdiction, and the bank. The upside for them in this arrangement is much more immediate than for the typical home debtor. A junior beneficiary is the real estate agency. Under very specific circumstances, a new home developer also stands in line to financially benefit before the home debtor does.
A home debtor's financial upside is mostly realized at the tail end of the life cycle of the transaction, when they sell (there is a significant sidebar here on whether or not selling is desirable). Most US federal tax filers take the standard deduction and even the MID doesn't benefit them.
If some outlier upgraded a house to boast its own energy production (like with solar and biogas), sewage treatment (like with constructed wetland), highly-automated integrated cycle aquaponics/vermicomposting/agriculture setup, and so on, and was able to sell a surplus production/handling capacity to their neighbors, I will grant that such a house has intrinsic wealth and its improvements justify an increasing valuation. But absent that kind of actual productive capability, most houses only sell based upon prevailing wages.
This is a very bad arrangement for the middle class because it strands a lot of capital into dirt for financialization purposes, instead of actually improving the house itself. If that stranded capital was put to use in upgrades that make a house easier to maintain, longer-lasting, more sustainable, more economical to operate, just about anything other than inflating a principal number so the returns from a percentage on that principal increase, then the middle class would actually immediately benefit from their houses.
The middle class in aggregate is not organized enough to generate on demand such an aggregate comparative advantage that they temporarily possessed about 5-6 decades ago anytime soon again, and waiting for history to hand it another such comparative advantage would be folly. My guess at a solution is for individuals within the middle class to find their own localized and organized comparative advantages.
This is kind of going far astray of HN's charter, so to pull us back towards a more HN-friendly territory, I will leave this response at the following. For the majority of actors in most real estate transactions for residential real estate for occupancy by owner, very few benefit from an increasing price that is misaligned with thirty-year sustainable prevailing income trends. In the specific HN-oriented context of technology business owners and employees, each dollar spent on residential housing not spent on improving the future valuation of employees and owners can be considered a flat, deadweight loss to the venture. I would personally much rather have my capital (of all sorts) working for me in my venture or directly improving my valuation where I have far more relative control over the outcome, than stranded in dirt and subject to the capriciousness of prevailing wages where I have far less relative control.
"One of the most important impetuses to the rise of financialization was the end of the post-World War Two Bretton Woods system of fixed international exchange rates and the dollar peg to gold in August 1971."
Healthcare access is keeping a huge important demographic out of the startup scene: older, experienced engineers with domain specific knowledge.
A startup I worked for was founded by an electrical engineer with a PhD and 20 years of experience in radio engineering. He had three kids, but was lucky to have a wife whose job provided health insurance. Many potential founders aren't so lucky. And I think that fact is reflected in today's startup scene. A lot of innovation in areas amenable to being worked on by 22 year old fresh grads, but very little in "hard" areas of engineering. Projects like Tesla Motors are an unusual exception, and those seem mostly to be second-projects for successful founders.
The fundamental problem is not that insurance is tied to employment, but that you need health insurance in the first place because healthcare is so ridiculously expensive. Make it more affordable and the lack of health insurance stops being such a big problem.
Of course some things are expensive - but there are still efficiency savings to be made; Americans on average spend more for the same health outcomes.
For example, American medicine has a culture of ordering lots of tests based on legal, rather than scientific guidance. Consider the Merenstein PSA case [1] for an example.
Increasing efficiency and driving down average healthcare costs ought to reduce insurance costs.
Still, someone will end up having to pay for a month in the ICU.
Health insurance is a way to share the risks so that nobody has to die just because they can't afford treatment. The odds I'll need expensive medical care increase every year.
That doesn't work. Health care is inherently expensive. If you get a serious condition and need years of treatment, then it has to be paid for. But most people don't. This is why the insurance model exists -- the majority of people who aren't (yet) sick pay for the care of those who are.
You can't wave a magic wand and make major surgery or chemotherapy affordable. All real world solutions here are collective, they differ only in whether access is fair and what entity (public or private) does the collection and distribution.
Make health insurance universal and put downward pressure on the insurers' costs. The insurers then bargain down the health-care costs.
That's what we do over here, and the result is that doctors here complain about how hard they had to work to become merely upper-middle class rather than outright wealthy.
How about more doctors as well? - more supply to lower prices. I'd be fine with doctors who are educated in more crowded Medical Schools... for the most part, I can diagnose myself.
I think this is the best approach at the moment. No one can wave a wand and get rid of the expense of many cutting-edge treatments, and neither do we want to do away with all the expensive cutting-edge treatments in an effort to return to "simpler times" when life expectancy was lower. This is why we are trying to build solutions which reduce the wasteful inefficiencies present in America's healthcare system.
It was interesting listening to a fairly liberal guest on Bloomberg/Charlie Rose the other day, who claimed the search for "comprehensive" immigration reform was the biggest enemy of high-skill immigration reform right now.
Essentially everyone agrees on easier and longer (to permanent) visas for future or currently-legal but temporary visa entrepreneurs, high skill immigrants (for various definitions), etc. There isn't a clear consensus on how to handle pre-existing other immigrants, or future low-skill immigrants. There are also weird corner cases caused by long-term illegal/undocumented presence by children, which is what the DREAM act is supposed to address -- a child who was brought here shortly after birth, who grew up a US citizen, graduated high school, college, etc., really doesn't seem the same as an adult who recently and of his own free will crossed the border.
Part of it is racial/racism, but a lot of it is economics; trying to paint enemies of mass unskilled immigration or immigration amnesty as just racists is doing everyone a disservice. But it's also undeniable that the high-skill immigrants with problems are generally from India and China (where the H1B system is most broken due to nationwide quotas) and from other parts of Asia, Europe, etc., and the illegal/low skill immigrants are largely from Mexico, Guatemala, and other Latin American countries.
There is also some confusion about credentials vs. actual skills, too -- I'd rather bring Bill Gates in than most people with BA's from diploma mills or even legitimate PhDs.
The problem with comprehensive reform (as championed by the democrats and Obama) is that it's all or nothing, vs. incrementally solving each class. The proponents of comprehensive believe (probably rightly) that solving the most obvious and pressing problem (the 1 million or so skilled immigrants who are all currently legal) will take away the drive to solve the 12 million unskilled/illegal immigrants already here, or the many million who would immigrate without skills if it were easy and open. It would also quite possibly lead to a more restrictive regime for the unskilled vs. skilled.
Ultimately we seem to be solving the immigration problem by destroying the US economy (outside high tech and government, neither of which employs a lot of illegals), thus depressing wages and job opportunities for illegal/unskilled immigrants, while mexico continues to develop its economy -- it makes more sense to work there legally for 10% the cost of living and 30% the wage in many cases.
> It would also quite possibly lead to a more restrictive regime for the unskilled vs. skilled.
What I'm worried is that it'll also lead to more market distortion, as the government tries to micromanage specific industries and quotas, which will inevitably be based on which industries lobby the most. If it were a fairly general skilled/unskilled distinction, like Canada's points system, I'd support that, though.
>But it's also undeniable that the high-skill immigrants with problems are generally from India and China (where the H1B system is most broken due to nationwide quotas) and from other parts of Asia, Europe, etc., and the illegal/low skill immigrants are largely from Mexico, Guatemala, and other Latin American countries.
So what? The goal of any immigration policy should be what's good for the host country, not what the racial makeup of the immigrants is.
Not fully related to this article but inline with the comments what I am reading.
I am always amazed at the different kinds of programs and rules introduced by USA for giving permanency to illegal immigrants where as people moving/moved legally (H1b/L1b etc) have to wait forever(like 10 years and still waiting) to get that status.People on H1B/L1B can not start a side business and these are the tech people(mostly) who can add lots of value to the existing market.
Your statement that "H1B/L1B can not start a side business" is factually incorrect. Any legal non immigrant can start a business, who he/she cannot work for it. That's the problem.
Vivek Wadhwa writes about his pet issue yet again, with this article including the key point about his evidence, "I tell Desai’s and others’ stories in my book," and at least this time a reference to an study by the Kauffman Foundation
Get ready for the key statistic from the report: "The proportion of immigrant-founded companies nationwide has dropped from 25.3 percent to 24.3 percent since 2005. While the margins of error of these numbers overlap, they nonetheless indicate that immigrant-founded companies’ dynamic period of expansion has come to an end." Okay, so the change in percentage is within the standard error of measurement; a percentage change of that kind would be seen even if there were more immigrant-founded companies than ever, as long as more native-born Americans than ever found companies; and there is NO indication that Silicon Valley's flood of innovation has ceased.
What is the problem here? Quantitatively, what is the proof that any policy change is needed?
AFTER EDIT: Responding to the offense taken by the replies kindly posted below, let me explain my position. My PERSONAL position on immigration to the United States as a matter of policy is that I would be happy to see it go back to the way it was in the 1870s, when anyone could immigrate from anywhere with hardly any regulation of immigration at all. All of my ancestors arrived in the United States by those rules--all of my ancestors were in North America well in advance of the building of the immigration processing station at Ellis Island in New York City.
I am intimately familiar with United States immigration law, having formerly worked as an immigration lawyer (as described in my user profile here on Hacker News) and being the husband of a first-generation immigrant to the United States from Taiwan. I have lived abroad for six years of my life (in two separate three-year stays), so I have a pretty good idea of how one country treats foreign residents from America. The clients for my current occupation, teaching mathematics lessons through a local nonprofit organization, included first-generation immigrants from China, India, Russia, Romania, the Philippines, Korea, Ghana, Indonesia, Pakistan, Turkey, and other countries I may be forgetting at the moment. I like immigrants, and I like America to be full of immigrants--that makes life here more interesting.
But to persuade the legislative process in the United States to change the rules requires more convincing evidence than the anecdotes that Vivek Wadhwa repeatedly brings forward. Another comment here astutely pointed out that the recent trend line in immigration from Taiwan is that entrepreneur immigration to the United States is decreasing. That's because Taiwan has democratized, liberalized, and prospered during my lifetime. Now people who were born in Taiwan can pursue their advanced education in many different countries, being well prepared by the generally excellent primary and secondary education there, and then can decide for themselves where to settle to establish a career. They can go back to the country where they grew up and where their relatives and childhood friends live if they like. I think it's great for people to have choice like that. I don't think it is any problem for the United States at all if people from Taiwan develop their entrepreneurial businesses in Taiwan. The same is true of India and China. People from India and China continue to come to the United States in large numbers, as I can personally observe. Some study here and then go back to the countries of their birth. No one has made a case that United States policy has to change much to influence the numbers one way or another.
That's a fair criticism of the study, but you're misunderstanding the point Vivek is making. Policy change has ALWAYS been necessary. In fact, it is now a little bit easier than a few years ago to be an immigrant entrepreneur [1]. The point is that soon these entrepreneurs will just stay in their home country or move to a more entrepreneur-friendly country instead of going through all this trouble.
I'm an entrepreneur from Germany and I can't help but feel slightly offended by your comment. You seem to think either a) I should go back to Germany for some reason or b) it's cool for me to stay here, but only if I jump through a series of ridiculous hoops. If you don't feel that way, you should support a change in legislation.
[1] For example, you can get an EB2 NIW visa as an entrepreneur and I've heard of many cases where O3 was granted even though the person wasn't really "notable"
I have seen several pieces by Wadhwa in Techcrunch [1]. The point usually seems to be "Microsoft and Google can't hire all the developers they want at the price they're willing to pay; we should increase H1-B quotas".
This isn't to say that immigration is bad or that MS and Google aren't having trouble hiring, it's to say that MS and Google might very well be able to find more people within the US if they paid more.
Look at it in the context of six top tech companies being caught colluding to keep domestic employee wages down through no-poach agreements [2].
Seriously. Microsoft, Google, etc, are in no position to lobby for more H1B until they address the rampant anti-competitive employment practices in the industry.
I like to point out that Google has higher revenues per employee than Goldman Sachs, but a mid-level banker at GS makes several times as much money as a mid-level engineer at Google.
I did some quick Googling (ha!) and found that GS net income per employee for last quarter on an annualized basis was about $119,000, less than half Google's average
I think why this happens is this: if you're on a trading desk of 10 people that makes $10m, it's easy to quantify your contribution and use that as leverage to get a big bonus. If you're on one of 10 product teams that each have 10 people and in total generate $100m in revenue, it's hard to quantify your specific contribution and use it to negotiate a large bonus, even though you're bringing in the same revenue on an averaged basis.
I've always wondered why compensation in software engineering is lower compared to revenues than similar professions. A lot of the things that are either facially true or commonly held beliefs: software has low capital costs, good programmers are much more productive than bad ones, a lot of revenue can be brought in with a relatively small team, are the things that make banking, law, consulting, and even accounting more relatively lucrative for workers as opposed to shareholders. But I think there is this holdover perception of treating software engineers like other engineers, even though the dynamics of those fields is very different (massive teams coordinating to build pyramids with huge capital costs).
Commodity programmers have externally limited individual leverage (aforementioned 'teams building pyramids' strategy [1]) and systematically limited measurement (because their measurable output is blended with that of the supporting organization). On top of all that, any commoditized worker is going to have extremely limited leverage in salary negotiations due to the ease of replacing them.
pg's "How to Make Wealth" [2] does a great job of explaining the interplay between leverage, measurement, and wealth:
To get rich you need to get yourself in a situation with two things, measurement and leverage. You need to be in a position where your performance can be measured, or there is no way to get paid more by doing more. And you have to have leverage, in the sense that the decisions you make have a big effect.
Measurement alone is not enough. An example of a job with measurement but not leverage is doing piecework in a sweatshop. Your performance is measured and you get paid accordingly, but you have no scope for decisions. The only decision you get to make is how fast you work, and that can probably only increase your earnings by a factor of two or three.
An example of a job with both measurement and leverage would be lead actor in a movie. Your performance can be measured in the gross of the movie. And you have leverage in the sense that your performance can make or break it.
But then why isn't, say, academia incredibly lucrative? It's got both measurement and leverage in the form of research grants, and leverage as well in publications.
Academia can be incredibly lucrative for rockstar grant writers, leaders in scientific fields, and authors.
These folks typically don't command astronomical salaries (though they do get paid much, much more handsomely than you'd imagine). Rather, some of them publish bestsellers (and demand the university's help in getting access to leading magazines, publishers, press, etc.). Some of them start their own labs, companies, or institutions that are funded by the schools. Some of them clean up on the lecture circuit. Some researchers -- especially in biomedical fields -- make fortunes (for both their universities and themselves) by selling or licensing patents to private enterprise.
For instance, I'm a writer by hobby. As such, I tend to hang around a lot of other writers (note: I don't recommend this). A common complaint among writers is that writing doesn't pay well. And, on average, that's true. But the world of writing isn't a neat, Gaussian distribution of income. It's a power-law distribution. Most writers are lucky to clear $50k a year in academia, or working for a large and respectable publication. But Malcolm Gladwell earns well north of $10 million a year. Michael Lewis probably makes even more. And don't even get me started on fiction. The woman who wrote "50 Shades of Grey" makes, on average, $3 million a week. J.K. Rowling is a billionaire. Stephen King is probably a near-billionaire. That guy who crapped out "The Da Vinci Code" could just about afford to purchase the Mona Lisa from the Louvre, were he so inclined.
Writing, like academia, is an all-or-nothing sport. There tends to be a very small slice of outsized winners, and a very large slice of abject losers. I don't mean "winners" and "losers" in a pejorative sense. I mean it in the sense that the pie is divided very, very, very unevenly. The average is very low, but the high end is quite high.
This is in stark contrast to, say, i-banking -- wherein a small proportion make an outlandish amount of money, but everyone else still makes a really large chunk of money.
- Research universities aren't generally for-profit organizations and so the simple calculus of profit generated versus salary paid isn't directly applicable.
- Professorship in many disciplines (i.e. liberal arts) is a glamour job, that is one with an effectively bottomless supply of qualified aspirants that do not have easy access to higher-paying alternative jobs.
- "Rainmaker" grant writers pretty much can write their own ticket within academia, but they won't necessarily be able to capture a lot of the grant money as salary. They should still be able to set their own hours while running projects with top-shelf employees and equipment. There's no guarantee that the most interesting, respectable research will be appealing to the types of people who fund research though. (n.b.: I am only guessing on this last point.)
That's not the right question. How many highly qualified Google or Facebook engineers would jump for the chance to work at Microsoft if it meant that their salary would double or triple overnight? Suddenly Microsoft doesn't have a tech hiring problem.
Edit: Also, more of our "best and brightest" would choose tech majors (thus qualifying themselves to work at major internet companies) if they paid as much as traditional white-collar professions.
I don't think many (any?) engineers from Google or Facebook would jump to Microsoft for higher pay. If money was the one motivating factor then surely said engineers would be working in finance rather than at Google or Facebook.
Thought experiment for you: what fraction of current salary would it take to get a current Googler to flee the company? Would they still do the work for $30k rather than $150+stock?
No company with with an HR department is going to their average employee over $100k without a business reason.
I think the offense you've taken results from the way two almost unrelated issues are completely merged in the debates around specialized visas for STEM workers. An extremely simplified version of the discussion goes like this:
A: "There is a shortage of stem workers, therefore, we should facilitate immigration for stem workers"
B: "No, there is no evidence of a shortage of stem workers, therefore, we should not facilitate immigration specifically for stem workers"
A: "I'm amazed that you wouldn't support legislation that would make it easier for highly skilled and productive people to stay in the US."
The problem for me in this debate (which I'm still hoping can be a discussion) is that I think that the "shortage" of STEM workers is generally a rational response to market conditions when you consider the other opportunities available to highly educated workers. I also think that targeting specific professions through immigration programs (while restricting mobility in others) can end up distorting the market badly and deterring US Citizens from entering these fields, something that could badly harm the US economy in the long term.
To me, this is almost completely unrelated to the question of whether we should make it easier for high skilled immigrants to come to the US in a more generalized way (like Canada or Australia's points system). To that question, I'd answer "yes".
In general, I think this is an honest misunderstanding, but I do think that some of the PR machinery behind the lobbying for specialized visas does take deliberate advantage of the ambiguity.
I agree with you. And I also feel a bit offended with the parent comment. If you're not an immigrant trying to overcome all the hoops and doing ridiculously steps to try to stay "legal" in order to pursue your goals then you probably don't get it... And your goals will (although probably not directly) translate to improve the economy.
I just don't get it. We as immigrants pay as much taxes as anyone else, however we have far less benefits and probably much more obligations. This freaking country was founded by immigrants, unless you tell me that all the senate is constituted by native americans, don't bring the crap that immigrants will somehow fuck the economy. I would actually like to see evidence that having more flexible immigrant laws will harm the economy.
Also, having your health system tied to corporate America, and not something universal is just stupid: how is it reasonable to tie something as important as health to your employer?
Anyway, I don't see anything changing anytime soon. So we should just stick to complain every now and then and keep doing what we know best (everyone knows what that is for them).
I would argue that immigration as a solution to economic growth is a zero sum game, and we need to look at different answers.
Gifted, driven, talented entrepreneurs tend to succeed wherever they end up, but there is a finite natural supply.
What Western nations should concentrate on is growing and exploiting their not-quite-natural-born entrepreneurs. yC seems to be quite good at this but a wider government policy is the most likely way to see sustained growth - not inviting the cream of Indias crop to nip over and pay taxes for twenty years. Delhi is not stupid, and there will be a race to the bottom.
I agree with your broader point, but if the United States has a comparative advantage in entrepreneurship, it's not actually zero-sum.
That is, if the American legal system, venture funding, etc., combine to offer a foreign entrepreneur a better likelihood of building a successful company there than in her home country—and there's some evidence that that's often the case—then letting her emigrate to the United States should be a net gain for the global economy.
True, but for every non-us company that creates broad democratic institutions and enforceable contracts, then that countries comparative disadvantage shrinks, probably towards a meaningless point.
Look at India - democratic, enforceable contracts, and vast internal Market. Sound familiar?
Go to New Mexico, or southern California you will find tired, poor huddled masses.
I think a more salient point lies later in that same paragraph:
Missing are the Taiwanese—their proportion dropped from 5.8 percent to 1.1 percent. This is probably because, as Taiwan became a developed nation and improved its universities, fewer Taiwanese have been coming to the U.S. to study and work.
The article is concerned about the 4.1% reduction in the number of people from other countries starting companies in the US, but dismisses the 81% (not 427%, thx denniedarko) drop in companies founded by Taiwanese immigrants. Essentially, the author's saying that the people living in India and China haven't built universities that can attract students and professors better than American universities can, so the people born there are leaving.
How about the title of the linked article? When speaking to immigrants, what does keep your entrepeneurs mean? I can see if you were speaking to another country, but to immigrants? And if they are immigrants doesn't that mean they are already here?
I think one issue that people tend to forget in the debate is that immigrants are also additional customers for existing and new US businesses. They may or may not work in a job that an American could do, but they will always be customers of businesses in the United States. Given that the overwhelming majority of GDP is based on US-produced goods and services, that means that the overwhelming majority immigrant income is contributing to the growth of the US economy (foreign manufacturing only a couple % of GDP).
Immigration around the ~1870s was effectively the greatest "importation of customers" this country has ever seen.
A simple rule like anyone with assets in excess of $300k and work that pays $50k+ per year can move here with no restrictions would be great for the country. Bonus points if we allow everyone that already works remotely and internationally to come here ASAP if they want to (i.e. people with jobs they are bringing with them)
Allow the world's 1%ers to come here freely and you are essentially importing domestic growth for everyone already living in the US.
"The clients for my current occupation, teaching mathematics lessons through a local nonprofit organization, included first-generation immigrants from China, India, Russia, Romania, the Philippines, Korea, Ghana, Indonesia, Pakistan, Turkey, and other countries I may be forgetting at the moment"
Just to be clear I'm understanding correctly: first-generation immigrant means born outside the USA and now living in the USA, right?
So you teach math to first-gen immigrants from Russia? Are these adults or children? If children, I guess there must be a couple of kids who went thru the Russian education system that are bad at math. :)
You asked a clarifying question. The clients are the parents, persons born abroad and usually educated abroad through their undergraduate degrees. They arrived to the United States after being born abroad, so they are first-generation immigrants (as is my wife). The students are elementary-age pupils, typically born in the United States, whose parents seek supplementary mathematics lessons for the children when they observe how weak the mathematics instruction is even in schools in the United States that are in desirable school districts in one of the states of the United States with the highest level of academic achievement. There is a lot of "ceiling" above the best curriculum provided to bright students in United States schools that can only be reached with supplemental programs such as the one I have helped organize here (which is based on a program that originated in Michigan, among the Indo-American community there). Native-born American parents who are alumni of MIT and a variety of foreign-born parents have all recommended my program to their friends from various countries.
P.S. I used to use a book that was written in Russian (by Estonian authors before the break-up of the Soviet Union) and then translated into English as one of my course textbooks.
The Russian mathematics textbooks are often very good indeed, and much more clear and more challenging than typical textbooks in the United States. You might find it interesting to read a link I learned about from another HN participant, "Word Problems in Russia and America," by Andrei Toom,
which is full of interesting information about the differences in approach between mathematics lessons in Russia and mathematics lessons in most United States schools. The contrast between schools in China and the United States
One of my first jobs out of college was with MobileWorks, a YC company founded in part by foreign graduate students at Berkeley. I wouldn't have been employed if the founders hadn't managed to navigate the atrocious laws preventing foreign entrepreneurs from starting companies in the US.
I'm sure that for every American with a story like mine, there are dozens of people who could have been employed at companies started by foreign-born entrepreneurs but never had the chance. The US is doing serious, long-term damage to itself with these wrong-headed policies.
I just found that the H1-B visa requires a bachelor's degree. You can't get work in the US if you're a talented designer or programmer and don't have a degree.
To give you a little background : I'm a 20-year-old international student, currently pursuing a bachelor's degree at a US university, and have been employed full-time at a mid-sized software company in Silicon Valley as a UI engineer/backend developer for a year through the CPT program -- a program which basically allows international students to work at a company outside of the university as long as the line of work matches the major.
After several months of working there, my company showed interest in giving me an H1-B visa, which basically got me really excited as I, to be blunt, enjoy the work a whole lot more than college. I thought I could bypass the whole educational process and join the workforce directly. Turned out, I was wrong. When the company went through the visa process, they figured it's not possible to give out H1-B visa to foreigners without bachelor's degree. [1] It's possible to substitute the degree with I think ~7 years of professional work, but I have nowhere near that experience.
So here I am, trying to finish school as fast as I can.
[1] They just figured this out as they never offered visa to a degree-less foreign employee before.
The exact requirement is "bachelors degree or equivalent ". So if you have at least 5+ years of work experience in the specific field/employer, you might be able to get it. But yes, it is extremely tough to prove the *equivalent" part because it can mean anything.
Except that whole "paying for it thing", there are very very few grants/scholarships for international students and they pay out-of-state fees plus a little more for being foreigners. Plus, outside of CPT you're not allowed to work in the US (only 20hrs max, on campus employment is allowed, if you can get it) to make money.
The original complaint was that someone wanted to come into the US, but the visa he wanted required that he have (at least) a bachelor's degree before he could get the visa.
My response was that this was a fairly straightforward hurdle to cross.
Pointing out that it's possible to do things differently by obtaining another type of visa really doesn't change the original situation.
Except that whole "paying for it thing", there are very very few grants/scholarships for international students and they pay out-of-state fees plus a little more for being foreigners. So yeah ... not as easy as it seems.
I know a very talented and widely respected Canadian developer who was offered a job at a well known company but turned down at the border based on this requirement. They make occasional exceptions but it is handled case-by-case and often depends on who reviews your file.
There is an exception for people who have worked a long time in the field (I don't recall the exact number, but something like 12+ years) and can document that.
Huh? Even in the US, highly skilled workers are often able to find jobs without college degrees. It is harder, but possible. So why place that burden on foreigners?
The glorification and, sometimes deification, of various entrepreneurs as almost single handedly bringing the world out of the darkness is complete bullshit and merely an example of the fundamental attribution error writ large (http://en.wikipedia.org/wiki/Fundamental_attribution_error).
People just completely forget that a) the world is an incredibly complex system that rarely has single factor causes to various effects and b) that people just don't matter - the ecosystem that surrounds them matters much more.
For example not worrying about personal security frees up employees to take more risk. A strong rule of law that attempts to equate wrongs allows people to focus on value added services rather than the fear of litigation. Access to cheap raw materials (plentiful mining/food/water) allows one to easily build things that would be quite simply uneconomical anywhere else. A capitalist system allows more niches to be profitably exploited than centrally planned economies. "Special innovative people" are by far the least of your worries.
Systems matter more than any one person and anyone who gives you the "A player" talk is full of crap - "A player" yourself out of Afghanistan as a sick female and we'll see who's talking.
I chuckle a bit and then move onto the headline "America to immigrants: ‘Give me your tired, your poor’ but keep your entrepreneurs" Written by Vivek Wadhwa and chuckle some more.
I then having got past the title got to read a rather insightful article about how it is easy to come and work in America and visa's for that exist. But if you which to start a company and as such have a situation were you have to apply for citizenship, then you could have a top 25 existing company in-play already employing American's and pay lots of TAX then you can still be told sorry no. That said there was mention of a % drop in immigrant started companies and this still points to them happening.
I suspect the tighter limits has meant raising the bar beyond what it needs to be for many and with that perhaps a new type of VISA needs to be made. I don't know the whole American VISA system that well, but certainly some middle ground from worker VISA to citizen VISA to cater for those employing American's can be met. Maybe if they employ so many then they qualify. So for example if you can form a company and employ say 5 people full time then you are granted say a 5 year business VISA which is reviewed every 5 years to see that you meet checks and after say 3 period gain a full citizenship. Something like that, though a lot more detailed against loopholes I suspect.
But still, very nice read and very good article, despite the interesting choice of title, albeit once you have read the article you will see why it is just on so many levels sadly.
I'm not a political scientist but being an immigrant myself (not to US but Germany), I've never understood why the whole issue can't be as simple as just letting people come in with a visa, applying for jobs (without law enforced disadvantages), and pay taxes, after x amount of years working and paying taxes then applying for citizenship and basta. I don't see what countries have to lose except skilled laborers that are working and paying taxes, boosting the economy and fostering innovation...
You're considering one case. But in a modern western country, citizenship comes with many benefits. It obliges the country to educate the immigrant's kids for free for 13 years each. It obliges the country to extend its social welfare programs to the immigrant and his family. It's reasonable for the country to want to control what obligations it incurs. You act like its risk-free for the host country, but it's not. You consider the immigrant who gets a job and pays taxes, but what about the ones that fail to get jobs and need welfare?
There are pretty easy ways around this e.g. require new immigrants to put enough money in escrow to cover a trip back to their home country and prevent them from claiming any sort of state benefits for a certain period.
Regardless, I don't really think many immigrants go to another country just to be unemployed and claim benefits, especially for the people we're talking about here (those from developed Western countries who want to come to the US to be entrepreneurs/work in tech), which makes me think people are really concerned about wage deflation rather than anything else.
Once someone is here, sending them back is a challenge.
And there aren't a ton of well-established people from western countries clamorimg to come here. There are some, but the majority are less established people--students, etc. It's a higher-risk demographic than you imply. Entrepreneurship is inherently quite risky, and there are plenty of unemployed people in tech.
Unemployment is not pleasant in the US. I'm inclined to believe that most people from a Western nation would up and leave willingly if they weren't having much success, and that people from less developed nations would too if they weren't able to claim benefits. Being an immigrant isn't easy after all - if you're going to be unemployed it's probably easier to be unemployed in your home nation where you have a support network.
While I may agree that the US should do more to encourage immigrant entrepreneurs, I do not think that the author chose a good openning example.
The author points to statistics about tech companies started by immigrants and presents Desai as part of the team that developed new technology, but Desai studied MBA and he was only doing an administrative job at IR Diagnostyx[0].
Moreover, the openning example does not seem to be precise; the author claims that Desai was not given an opportunity to start his business, which does not seem to be aligned with Desai being affiliated with IR Diagnostyx from 2009 to Feb 2012[1]. Furthermore, upon graduation in 2009, the US did give Desai 12 months of OPT[2], for which self-employment does qualify. In fact, if Desai had studied Science/Tech/Engineering/Math, he would have been give
an an extension of 17 months of OPT[3], for a total of ~2.5 years to work on his business.
Re: "But the U.S. government wouldn’t provide Hardik with a visa to start the company. Hardik had no difficulty in getting an H1-B visa that allowed him to work, but immigration rules did not allow him to work for a company that he started. So, he abandoned his entrepreneurial dreams."
Obstacles like this shouldn't stop an entrepreneur. I had to do the whole H1-B thing myself, while bootstrapping another business on the side - and there are no rules against that. I know others who did the same. Have a job, launch a company in your spare time.
As an American citizen working in Canada I have the same problem on the other side of the fence. My work permit is tied to my Canadian employer and it is not possible for me to get a work permit as a self employed worker or an entrepreneur.
From what I understand this is a fairly universal problem with immigration policy. Most developed countries are unwilling hand over work permits for hopes and dreams. I wish there was a way around this but as far as I know you cannot start a company without permanent residency.
I wonder if there are any stats or correlations between universal healthcare (or something similar) and entrepreneurship. It's supposed to increase job churn, which is awesome for the economy, and you'd think more people would start their own businesses if saving their healthcare wasn't a consideration.
I know personally that I started my own business specifically because I was allowed to stay on my parents healthcare until I'm 25(26? Shit I should figure that out) so even with $5k in savings, I was like why not?
That's a massive over-simplification of my insatiable call to be a builder, but without the security of health insurance coverage I might not have done it straight out of college.
I actually know that it is possible to get an H-1B for a legitimate business that you, as a foreign entrepreneur, founded. I also know that such applications are very rare and very thoroughly scrutinized to make sure it's not an immigration loophole, and there is the restriction that you cannot be a majority shareholder, which kills it unless you have partners.
Less known is that a person can also sponsor you for an H-1B if you are going to be working for them.
“H-1B workers may be hired even when a qualified US worker wants the job, and a US worker can be displaced from the job in favor of the foreign worker.” US Department of Labor
oh its a vivek wadhwa piece...if vivek says the sun rises from the east, i'm much more likely to believe it must be the west. vivek periodically writes these half baked partisan anecdote-ridden pieces & calls it "research"....as a former immigrant and a recipient of the so-called "genius visa" (EB1), i'm very sympathetic to the cause. yes, immigration to the USA is very hassly and the laws must be vastly simplified etc... but this won't do. this sort of article is akin to a startup job post on HN. "Immigration. Its broken! We must fix it. We are a group of yc founders who will build immigration from scratch in Ruby on Rails. For the harder parts we will ofcourse use PHP. You must be a rockstar immigrant with 100 years of immigration behind you. For bonus points, show me your immigration in github. Solve this immigration puzzle on our website using only backbone.js and coffeescript, and you can score an exclusive lunch with us, cooked by immigrants, catered by immigrants, exclusively for you, the immigrant. Don't forget to carry your H1B visas on your person, you never know when you might be deported! Apply already, but only after you decode our bcrypt secured ROT13 encrypted immigration email and pay processing fees of 13 dollars 26 cents exclusively in bitcoins".
founding companies is not simply a matter of talent and risk-appetite, which, arguably, the STEM immigrant has more of. its also a matter of feeling secure with your finances, having a house in a good school district, having a CD or two for the rainy day, having some connections to the VC community, having the time & desire to hack up a prototype & blog about it & build a community & attract enough interest...all of which immigrants are less likely to do, given that we are already preoccupied with keeping a job, keeping our immigration papers in order, gradually building up savings, digging ourselves out of the negative equity hole that most of us are in because we borrowed money to get here in the first place...i could go on and on, but i won't. suffice it to say, the sun definitely rises in the west, because vivek has said its the east.
O visa is for exceptional ability and they really mean exceptional. So who qualifies for those ? people with scientific researches, publications, inventions etc. Not the average hacker.
No. EB5 category allows you to start your business but it has it's own conditions. You get a provisional EB5 visa during which you must invest $1M and employ 10 people to qualify for a permanent visa. Up until recently, VC funding was not a qualifier towards the $1M number.
The US isn't the only place to start something, try Berlin and say goodbye to any visa problems.
Top 5 reasons why you should move to Berlin, now:
1. Lowest livings costs with highest quality of living. Stay in gorgeous, perfectly renovated apartments in pre-WWII residential buildings with high ceilings, right in the middle of the center and pay a fraction of costs of any other capital (even cheaper than any Eastern European capital). No need for a car—Berlin has one of the densest subway nets and wide streets make biking fun.
2. A vibrant and fast growing ecosystem of smart people. A vast number of new software talents, founders, software companies and VCs are moving to Berlin, every day (Twitter, Google, Soundcloud, Early Bird and many more).
3. People here are open-minded, outgoing, mix well and international—no need to learn German, everyone speaks English! Making new friends is a matter of days. Visit tons of networking and startup events, every week.
4. Easy work permissions—Europeans do not need any and can work from day one and the rest applies for the hassle-free Blue Card.
5. Berlin's night life is unmatched, huge and changing every day (plus ridiculously cheap). Berlin has got some of the most dazzling, naughty, and original clubs on the face of the Earth.
Berlin is calling and getting the new tech hub of Europe. If you are passionate about building great software, we’d love to talk with you. If you don't live in Berlin yet, we could help to fix that.
You are painting a rosy picture of entrepreneurial life in Berlin. That's fine, but entrepreneurship in Germany has several downsides including:
-Less VC funding
-Regulations make it distinctly harder and more expensive to fire employees
-A less risk-tolerant culture
-A completely different mindset around "misses" - if your business fails once, you are labelled as a failure and will have a harder time getting support and funding in the future.
Also that is possibly the worst job page if you want to attract talent that isn't used to living in Berlin and/or don't know urge.io (hint you have to sell the candidate on the idea).
> The US isn't the only place to start something, try Berlin and say goodbye to any visa problems.
Really? AFAIK anyone who's not an EU citizen still needs to get a visa before moving there. And most companies won't hire someone who doesn't live there.
I wouldn't want to start a company in Germany, but I wouldn't mind working there. I like Berlin though I would hate to help pay the bailout money for Greece.
What's your attitude to starting a company in the USA? The Greek bailout is puny next to the projected Medicare deficit. Then add Social Security, state and local pensions...
I don't mind bailing out medicare or SS. I just don't want to transfer my work to somebody who will shit on me for doing it and then use the funds to pay people who call me evil.
Greece has a population of about 11 million. That's slightly (20%) more than the population of Michigan, capital Detroit. Let's not pretend that US taxpayers aren't bailing out anyone.
Trying to tweak the immigration process in the name of "increased entrepreneurship" is often just a ruse for "open the borders!!!". Fine in and of itself if that's your beef. Just please file it right folder.
Letting Congress, political donors, H1-B employers and college administrators try and engineer the future by selecting "winners" seems like something they're going to mess up.
Better to have limited, legal only immigration based on a points system rather than turn it into a subsidy for Sand Hill Road.