Protectionism is Not the Solution

The immigration and off-shoring debate is certainly an emotionally charged issue. In the spirit of the balanced debate that I called for in my Monday post, I’d like to respond to one of the commenter’s points individually:

• “Slave Wages” – according to the US Dept of Labor, median annual earnings of computer programmers were $62,890 in May 2004. The middle 50 percent earned between $47,580 and $81,280 a year. The highest 10 percent earned more than $99,610. In 2005, the median household income was $45,817. Putting it another way, the average wage for all occupations in the US in June 2005 was $18.06 per hour; the average for math and computer science professions was $35.30 per hour. Any way you slice it, these are hardly “slave wages”.
• “Shortage of willing…” – unemployment in Silicon Valley has hit a 5 year low at 4.1%, below the national average of 4.4%. Also, studies (1, 2) have indicated that tech jobs will be some of the fastest growing professions over the next 10 years. I doubt that there is a shortage of people willing to work for wages that are well above the national median; however, as the demand for talent increases, the US is in danger of a real skills shortage.
• Education Debt – most college grads, regardless of profession, are carrying an obscene amount of debt (we should have the same concern for nurses, teachers, social workers, etc). If we want to increase the attractiveness of math, science and engineering as a profession, we should provide more scholarships, student aid and loan forgiveness programs. We should also develop programs that make it attractive for people to want to become math and science teachers. In a recent study, the US placed 27th in math literacy on a global scale – unfortunately, most kids have decided long before university that math and science is not for them. We need kids to be passionate about math and science – pursuing it for the love of it – not for the promise of riches. This passion needs to be instilled in kids early by enthusiastic and well-trained teachers. Passion is where true innovation and technical leadership is going to come from.
• Politics– protectionist measures that artificially drive up wages in the short-term will all but ensure that these jobs will eventually go off-shore. We need to make it attractive for companies to keep the jobs in the US through investment in infrastructure and in an educated workforce. However, this will require substantial, real and long-term policy changes. Rather than pushing for zero-sum protectionist policies (that in the long run will make the US less competitive on a global scale), we should encourage our politicians to increase direct and indirect R&D investment (R&D investment in physical and engineering research has stagnated over the past 25 years), invest in math and science education, make it easier to start technical businesses and invest in the retraining of displaced workers.

America was founded on the idea of being a meritocracy (whether it is or not is open for debate [sub required]). Regardless, how can we uphold these meritocratic ideals if we limit the reward structure to the 27th best in the world? Thomas Friedman points out in The World is Flat, with China and India now in the global workforce, there are millions more college educated people in the global workforce now competing for “whitecollar” jobs. With tighter global economic integration and better communications infrastructure, we can either entice best and brightest to come to where the jobs are, or watch as the jobs go to them.

The debate about US visa programs is a symptom of a wider issue – the real issue is that the US is in danger of losing its leadership position in technology and science. However, increasing the number of visas is an equally a short-term measure that does not address the root issue – our education policy is failing (is 27th something to be proud of?); our R&D investment policies are failing; and our economic development policies are failing. Why is it that Intel just spent a billion dollars to build a plant in Vietnam and why Google is putting 500 more jobs into Ireland?… These countries have robust development agencies that the US lacks. If a business wants to build a plant in the US, they have to negotiate with local, state and federal agencies separately. This is process is time consuming and often fruitless. In places that are serious about economic development, you get assigned a business-friendly program manager that does the local negotiations for you and tax breaks to make attractive. Lower wages are just one part of the picture. Rather than debating single facet of the issue, like how many bright and talented people are we going to let into the country next year, I would urge our politicians to look at non-protectionist measures that have a substantial and long-term impact on the country’s competitiveness.