Immigration Reform And The Jobs Bill

Last month congress passed and the President signed an $18bn jobs bill "providing tax breaks for businesses that hire previously unemployed
workers and extending funding for infrastructure and transportation

While I can't argue too much with the idea of using tax breaks to spur hiring and investing in infrastructure, I think smart immigration reform might be a better way to create jobs in this country. Tom Friedman agrees and in today's NY Times, he writes:

“Between 1980 and 2005, virtually all net new jobs created in the U.S.
were created by firms that were 5 years old or less,” said Litan. “That
is about 40 million jobs. That means the established firms created no
new net jobs during that period.”


“Roughly 25 percent of successful high-tech start-ups over the last
decade were founded or co-founded by immigrants,” said Litan. Think
Sergey Brin, the Russian-born co-founder of Google, or Vinod Khosla,
the India-born co-founder of Sun Microsystems.

It is not surprising that new companies are creating the jobs in this country. Most businesses don't last forever, they start, grow, hire, eventually get fat and happy, stagnate, and then fail or are sold off. Add to that assertion that technology is changing things and that companies based on older technologies are likely to suffer and decline, and you come to the obvious conclusion that new company formation is the key to job growth.

That second quote from Friedman's piece is about tech jobs, but I would bet that immigrant led business creation is not limited to tech companies. The "fat and happy" thing is unfortunately true about many US citizens. But immigrants are rarely "fat and happy" so they work hard, start businesses, hire employees, and build companies. That's the american way. To quote again from Friedman's piece:

What made America this incredible engine of prosperity? It was
immigration, plus free markets. Because we were so open to immigration
— and immigrants are by definition high-aspiring risk-takers, ready to
leave their native lands in search of greater opportunities — “we as a
country accumulated a disproportionate share of the world’s high-I.Q.

We need smart immigration reform in this country. We are not inviting many of the world's "high-IQ risk takers" to come to America any more. And worse, we are asking many of them to leave. That must change.

Regular readers of this blog know that I'm a big fan of the startup visa idea and have been working to get it made into law. That is a small, but important, part of the bigger challenge. We need comprehensive immigration reform in this country. We have always been open to immigration in this country. It is fundmental to what this country is. We cannot change our approach and expect to continue to have a prosperous country.

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#Politics#VC & Technology

Comments (Archived):

  1. HowieG

    I agree with your views on immigration reform. But your asking for Republicans, Heartland Americans, and Teapartiers to come fire bomb your home if you allow in a foreigner to start a company, vs helping an out of work American do so. The ridiculousness of that point is there is nothing stopping people in the US from starting such businesses so why aren’t we starting more? And if it takes a foreigner to come here and start one that then hires a bunch of Americans why don’t we allow it? Of course it threatens the white male power structure that is freaking out right now. The future of America is a true multicultural nation, not just White Western European when it comes to multicultural. And I think this is a good thing. But as what happens when these cultural shifts happen, the people who have the power would rather fight the future than do what is right.Forget just smart foreigners who can start companies. Watch what is going to happen this year in Arizona when either their farms are going to go under or their produce is going to triple in price because of the new law making it a felony to hire or house an illegal immigrant. Good luck finding natives to pick the crops. So we need true, realistic immigration reform in every way shape and form.

    1. fredwilson


    2. paramendra

      The race debate has shifted a lot in this country over the past half century. Maybe 50 years ago, if you were white, and you said the n-word, you might feel this white bonding coalescing around you in private circles. Today you say the n-word, and people will look at you in disgust, they will get physically uncomfortable. Some of these tea party people who are mouthing the n-word and the f-word (for gays), in their mind they are appealing to white solidarity. In reality what is happening is they are making it clear to large swathes of us – white and nonwhite – that they represent an endangered species.It really just boils down to self interest. Live and let live helps us grow the pie faster, better and all of us benefit. I feel very comfortable talking anti-racist talk in the company of many white people I know because I don’t feel any urge to defend sexist Indian males. Racism is not identity, sexism is not cultural heritage.

      1. ShanaC

        It is not hard if you live in an enclave of similar people. And enclave can be an enclave of the mind. It re-inforces the us feeling, which can feed into an us v them.And Racism can become part of one’s identity, same with sexism, if it becomes part of one’s value system. People don’t realize it, value systems are often personal expressions of identity.

        1. paramendra

          Sexism can be part of one’s value system, but I don’t want it to be part of mine.

          1. ShanaC

            Not mine either. It’s meant to be a wry statement about the states of societies…

    3. Dave Pinsen

      You think America will collapse if we can’t import Mexican laborers to pick lettuce? What ridiculousness. One of three things will happen in that case:1) We will import the lettuce from Mexico (or elsewhere), in which case, Mexico will bear the social costs (police, health care, etc.) of the lettuce pickers.2) We will figure out a way to automate lettuce picking, which will lead to new agricultural tech businesses.3) American lettuce farmers will have to pay more to attract legal workers, and we’ll all have to pony up 10 cents extra for a head of lettuce at the store.

    4. Emma

      After the “deport them now” crowd have had their way and all the illegal immigrants have been deported, I suggest that unemployed American citizens, for instance former auto workers in Michigan, be bused to pick oranges, lettuce etc in California and Florida. Also, after all the raids by ICE they need labor at dairy farms and meatpacking plants in Vermont. If the unemployed refuse, their unemployment benefits could be withheld.Not a good idea? So maybe we should legalize the hardworking illegal immigrants just like HowieG and other sensible people suggest.

      1. Dave Pinsen

        “Deport them now” is a red herring. What I’d venture most Americans are in favor of is enforcing our current immigration laws at the work place. Do that — require business owners to ask for and keep records of their workers’ REAL IDs, and fine business owners that don’t — and most illegal immigrants will go home on their own. In fact, some already have, as jobs associated with the housing bubble have dried up.As for “they” needing more labor at Vermont dairy farms and meatpacking plants, they can offer higher wages to attract more workers.The receipt of unemployment benefits is already contingent on the unemployed seeking work.Forcing people to pick crops against their will has a bad history in this country. It was called slavery.

      2. ShanaC

        I just saw Food Inc- I get the Sarcasm, 100% about how we don’t treat all blue collar labor “equally” especially when it comes to hazard.

  2. Mark Essel

    Bookmarking Tom’s post, those quotes make me definitely want to read its entirety.Thanks for the heads up.

  3. William Mougayar

    That’s how Canada has been operating for years. Immigration is an essential part of economic growth. It’s a well accepted and practiced fact.There are hoards of successful, smart (and some rich) people that would love to be plucked into the US system if it was made a bit easier for them to do so. It’s a no brainer that they’ll be contributing to the US economy, paying more taxes, creating jobs, innovating, creating IP, etc…, and building stronger bridges with their countries of origins. It’s not about taking jobs away from Americans, but about creating new ones for them.That said, integrating multiculturalism is not easy.

    1. fredwilson

      but we used to do it so wellwhat happened?

      1. William Mougayar

        I agree, having been in that “system” since 1976. Perhaps 9-11 was a turning point? I think that event changed the world in so many ways.

        1. kidmercury

          ding ding ding ding! +1 for william mougayar! when in doubt, blame it on 9/11! as regular readers know, i’m dead serious when i say that! http://www.patriotsquestion…. always remember: anyone who wants to seriously reform of US government tackles one of two issues (or both if they are cool like me): (1) monetary policy or (2) 9/11 truth.9/11 was an inside job and nothing else matters,kid mercury

      2. Lina Inverse

        Here’s one observation: when my Cajun mom entered elementary public school in the mid-40s, she spoke barely a word of English. English was the only language used to teach, and that worked well. In our family, she became a nurse anesthetist, a brother a NASA engineer.Dropping the attitude of English first and exclusively, as well as something akin to that for nationality … well, let’s put it this way, when was the last time you heard someone use the melting pot metaphor in the present tense?

        1. paramendra

          The English only thing went out the door with the Internet. The earth is multi-multi-multi-lingual. The earth is also not flat.

          1. Lina Inverse

            I’m afraid I wasn’t clear:In the school system, it was English only, i.e. total immersion. We *know* that works well for young kids.More generally, my point is that for those of us like Mr. Wilson who know we used to do a good job of this and wonder what happened, we should consider a return to an “English first” attitude. E.g. the first generation learns enough to get by (my mother’s father was more comfortable with French than English, although his ancestors had been in the US for a *long* time), the second should be completely fluent in English (and will be fairly fluent in their native tongue), and unfortunately the third generation will know just a smattering of the native tongue.I regret the latter (I was taught no French), but I think the older system is better than what we have today).

          2. ShanaC

            Back to that old post, there is a huge tie to knowing English and doing well in the modern economy. Knowing a second language/second culture leads you to think differently- but even code is based off of Latin/English characters, not Arabic ones, or Chinese ones, or Hindi ones. There is a global dominance for English, and I expect it to rise because of English’s flexibility (unfortunately in some ways…it also means the homogenization of some cultures.

          3. Orrin Xu

            Every language has its uses. English will definitely retain its dominance however must know languages have shifted. 10 Years ago latin was still considered a language that should be learnt however more and more places are dropping the teaching of it.

          4. paramendra

            The English language has its place in the current global economy. But that does not mean the world is not multi-lingual. It is very much so. The Internet helps it stay that way.

      3. Dave Pinsen

        Had you actually accepted my challenge back in October, I think you’d have a better understanding of why many Americans are skeptical of policies favored by you and Tom Friedman.

    2. Dave Pinsen

      You’re eliding two huge differences between Canada’s immigration system and ours. 1) Canada selects for highly-skilled legal immigrants. For the most part, we don’t. 2) We have a de facto policy of tolerating tens of millions of illegal, unskilled immigrants. Canada doesn’t.

      1. William Mougayar

        I recognize that #2 is a hot potato in the US. But isn’t #1 easier to do? The H1-B is about special-skilled labor.

        1. Dave Pinsen

          With unemployment the highest it’s been in 25 years, #1 is getting to be a hot potato too. Why import more H1-B workers when we have our own unemployed tech guys looking for work? It’s one thing to advocate for the Start-up Visa, since start-ups can create jobs for Americans, but it’s another to import more workers when jobs are so scarce.

  4. Lina Inverse

    Without endorsing HowieG’s frank and unfounded bigotry, it does need to be explained how it’s going to be politically possible to do what you want in what will sure looks to be a years long “jobless recovery”.Drilling down from that, without addressing and convincingly fixing the manifest H-1B and L-1 visa abuses we’ve experienced in the last decade you’re just not going to get a lot of support from working engineers.

    1. fredwilson

      why do you call it unfounded bigotry?

      1. Lina Inverse

        Unfounded: because the group of people he called out *aren’t* violent, full stop. (Unless you believe these All American Men of Steel can throw bricks into 33rd floor office windows. :-)Bigotry: I would hope that would be obvious. Me, I was born and raised in SW Missouri, spend a dozen years in the Boston area (MIT) and then a dozen in the D.C. area (jobs after Route 128 etc. died after the Cold War) before returning here.So while I know nothing of your fine city beyond the inside of Pennsylvania Station I do know that Americans are Americans and that even in the most Red State parts that are almost entirely comprised of “Republicans, Heartland Americans, and Teapartiers” we know and accept that we are a “multicultural nation” (although of course not in the sense that HowieG means it) and are we are not “freaking out” over the losses suffered by the “white male power structure”. Unlike Chris Mathews, we can go for days forgetting that Obama is black….Our concerns are a mite less grandiose, like jobs, personal and public budgets and debt and so on.To finish, I find HowieG’s essay unhelpful, for it tries to fit a problem into a framework which is just not relevant today, if it ever was.

        1. kidmercury

          in the beef between hga and HowieG, i’m siding with hga. i don’t think making racial accusations helps anyone and hinders everyone. i think the immigration conversation can easily be had without making blanket racial stereotypes.

        2. JLM

          Sheesh, it is so discomforting to see smart folks call simple minded names and to think and express themselves in such ignorant terms.The silly notion that there are Red States which are comprised of Republicans, Heartland Americans (whatever the hell that is) and Teapartiers is so lacking in intellectual rigor as to make one puke.One is cautioned to see that the intellectual basis for the Tea Party is a “movement” rather than a “membership”.Political parties are about party rules driving orthodox membership while movements are about common intellectual organizing themes driving a groundswell of like minded persons.While there may have only been a handful of French who joined the Resistance and actively opposed the Nazis, every Frenchman was a sympathizer.While there are only a handful of vocal volks who have joined the Tea Party movement, the country is filled with folks whose frustration with politics and both parties fuels their support and sympathy for the organizing themes. In the darkness of a million voting booths, they will speak up and express their frustration. As they did in Va, NJ and Massachusetts.Observers are looking for “the” SIGN while the signs are all around them. America is pissed off.Baseball is not the American pasttime because everybody plays it but rather because everybody is interested in it and embaraces the contest itself.

        3. ShanaC

          I think the larger problem is getting everyone out the echo chamber and onto the issues of what is important. At the base we probably all care about the same stuff (family values is a good example, most people want families to be happy and healthy and just are sorting out what this means today) and we need better ways of expressing this.Figuring out how to construct arguments that are soft on people and hard on issues and figuring out where we are similar within issues will probably help rhetoric levels die down a lot….

      2. willcole

        I think it’s because he identifies Republicans, Teapartiers, and Heartland American as white supremacists and misogynists. Teapartiers and Heartland America are filled with libertarians and independents whose views on immigration reform are completely in line with your post.

  5. IT guy looking for work

    I support the H1B program in principle, but as a contractor looking for a new contract in IT I observe abuse of H1Bs on a daily basis. I have lowered my rates severely since the Fall of Lehman, and yet employers want contractors to work even lower at H1B rates and some employers are even candid enough to lament how difficult it is to obtain an H1B visa in the midst of discussing the rate at which I am willing to work.Where there is a lock of skills, I am fine with H1Bs, but when H1Bs are simply being used to undercut rates where American skills are abundant – this is hard for me to support.

    1. fredwilson

      it’s a global marketplace for talent. trying to keep our rates unnaturally high will not work. it’s a fools game

      1. IT guy looking for work

        I appreciate your candor. I agree with the economic observation. What is distasteful is the dishonesty and disingenuous of the debate. If the US wants to allow people into this country to bring rates down let’s say that and have an honest conversation.

        1. Orrin Xu

          Your always going to get people who abuse the system. In any case companies are out to maximize profits not make people happy. Some companies choose to do that as well but that’s secondary to profits.

          1. IT guy looking for work

            So we all agree the argument made for the H1B program is dishonest and that companies knowingly violate the law.Therefore we conclude?”companies are out to maximize profits not make people happy”I don’t think that will be persuasive in expanding a dishonestly argued program that we agree is being violated.

          2. paramendra

            Spam does not make email a bad app.

      2. Lina Inverse

        I’d go a bit further. In the last 30 years we’ve seen nearly 3 billion people join the free market (the PRC, India after the partial dismantling of the License Raj and the USSR). Such a thing cannot happen without massive and painful discontinuities.

        1. fredwilson

          but it is going to happen and i don’t think we can stop it. we can slow it down at the detriment of our businesses financial health, but we cannot stop it

          1. kidmercury

            the funny part is that after china floats the yuan, they will be more free market than the USA….but because we are the land of ignorance, we will choose to doublethink…..after all, we already think war is peace…..

          2. ShanaC

            Freedom is slavery (not): You have to give people choice and knowledge to give them freedom really**I owe someone out there for that comment, thanks.

        2. IT guy looking for work

          If that were the argument or even the language of the H1B law – that would be an honest conversation. To characterize the purpose of the H1B program as to bring into the US skills it lacks (which is what the H1B program asserts) when in fact the H1B program’s purpose is to bring low cast labor into the US is dishonest.What part of “dishonest” do people here not understand?

      3. kvs

        Unfortunately, Fred, H1Bs are mostly tied to an employer. It is difficult for them to transfer out because if you’re let go from the new place you have 30 days(?) to find something new or you have to leave the U.S. Plus, if you want green card it is at the discretion of the employer (unless you have a Ph.D.) Such restraints on visa holders give employers upper hand at negotiation tables which in turn drive the labor prices down.Therefore, we cannot say let the market decide the prices here because the playing field is not leveled. We need to free the H1Bs from employers and let them compete for the job fair and square with their counterparts in the U.S. Then, lets observe where the prices settle.

        1. fredwilson

          i would support that

        2. ShanaC

          Is there a way to detie them from the employer- it also could cause perverse incentives (donate lots of money, get the most visas)

  6. anomalous

    No real evidence that we need more cheap labor and more outsourcing labor (H1-B).Anecdotes < falling real wages.

  7. William Mougayar

    To those that are rushing to mention H1-B’s: that’s only the tip of an iceberg. Fred & Tom’s points are about more profound issues than the H1-B’s.

    1. IT guy looking for work

      Understood, but it would enhance the credibility of the “profound issues” if the H1B program expansion arguments weren’t disingenuous. Anyone that works in IT sees H1B program abuses firsthand and they aren’t being fooled.

      1. paramendra

        In an economy of 300 million people, 300,000 H1B visa people are pulling you down? C’mon.

        1. Lina Inverse

          What fraction of those 300 million are in IT?How many low wage immigrants (don’t forget to include the L-1s) are needed to drastically change things?All you need for a bottom line here is to plot out real compensation. If there were truly a shortage, it would be going up; the greater the shortage, the more it would climb.

    2. paramendra

      True. The H1-B debate is about a few hundred thousand, the immigration reform debate affects of tens of millions.

      1. William Mougayar

        Actually, the 2011 quota for H1-B is only 65,000 + 20,000 that have Masters degrees.

        1. paramendra

          There you go.

  8. kidmercury

    1. the jobs bill, brilliantly called the HIRE Act (the acronyms are great propaganda, the people always fall for it) contained a clause that puts additional tax controls in place. zerohedge has a much better assessment:… be sure to check the comments as well. the ZH article calls it capital controls, but i think tax controls would be a better description (but tax controls lead to capital controls, so same ballpark IMHO)2. you’re not going to any type of quality reform in any area of government until the massive structural issues with government are fixed. i’ve said this many times before, i’m sure it will be ignored, but i’m leaving this comment again so i can say “i told you so” later, which i will enjoy dearly.3. you classified this as photo of the day, presumably you meant politics

    1. fredwilson

      fixed that mis-categorization.thanks kid

  9. anomalous

    America was built by … Americans.(yes, immigrants helped. a little.)No evidence that immigrants are more entrepreneurial than natives. No evidence that they work harder. No evidence that they are smarter. FDR (liberal democrat) said it best: We have within our shores today the materials out of which we shall continue to build an even better home for liberty.We’re doing fine. No need to panic and make bad choices. Cheap labor advocates and immigration lawyers don’t need any more subsidies.

    1. fredwilson

      the workers who built the NYC subway system were almost entirely immigrant labor. same with much of the railway system. no, they did not start companies but they did huge work for low pay and our society has reaped the benefits of their labor.when someone arrives in this country looking to work hard and build a better life for themselves, i say we call them americans. then your opening statement would ring true to me

      1. awaldstein

        “when someone arrives in this country looking to work hard and build a better life for themselves, i say we call them americans.”Great line. A verbalization of the image of the Statue of LIberty.

      2. ShanaC

        It is so much more complicated than that- my family history alone is a testament to that fact. My generation line in my family tree on my father’s side, as a general rule, is the first to not understand Yiddish largely due to how immigrants/ethnic minorities were integrated into the General Boston area.

        1. fredwilson

          my statement was a wish not a statement of fact

    2. RichardF

      All Americans are immigrants apart from Native Americans.America has been built by immigrants.Some people have just forgotten that’s their heritage.

      1. fredwilson


      2. paramendra

        The “Native Americans” are also immigrants. They walked over when Russia and Alaska were a connected landmass.

        1. Vasudev Ram

          Good point, paramendra. Coincidentally, I blogged about that walk here, a few days ago:The Bering Strait:…Check the satellite photo of the strait in the Wikipedia article linked from my post …

          1. paramendra

            Nice picture of the two islands.

      3. anomalous

        welp. All nations are “nations of immigrants”,then Except maybe Ethiopia. Think about it.At no point in history have immigrants exceeded 20% of population. No evidence for exceptional productivity in immigrants. QED: Natives built America.Let’s send the proper wage signals to current and future generations of Americans! Work hard and pick the right trade and you can do well. There won’t be any special government intervention on behalf of the wealthy to undermine your wages via targeted, cheap labor immigration subsidies. yes. Rich California agriculture and technology are the major advocates of targeted H1-B and illegal immigration. Why not invest in capital and pay higher wages? That’d solve a lot problems.

      4. JLM

        America was built by adventurers.Did you know BTW that more English criminals were exported to the Colonies than to Australia?

        1. RichardF

          Between 1600 and 1950 something like 20 million people left Britain to live overseas. Without it there would have been no British Empire.I like your point about adventurers, it still holds sway today.

  10. paramendra

    My favorite solo blogger just keeps getting better. First there was the post about wireless broadband and spectrum wars, then there was one about the NYC subway – the subway is where the city I love comes together for me more than any place else – and now this post on immigration reform. All three speak to me directly, at the bone level.The debate on immigration reform will also be partly ugly like it was for health care, but this too shall pass. There is a reason I was one of Barack’s earliest people in the city. (http://democracyforum.blogs… Just yesterday I was at an event put together by some of the founders of Manhattan For Obama.Immigration is what America is all about. Immigration is America’s DNA. Take away that DNA and America will no longer be the number one economy in the world.

  11. Orrin Xu

    I think with china’s policies on startups, immigration and getting as many of the smartest minds as possible, the US really needs to buck up and be more competitive

    1. Tom Hughes

      Hear, hear. That’s the bottom line; and if it’s China today, it will be India tomorrow, Indonesia or Brazil. 150 or so years ago, it was the U.S., willing to work harder for a little less money, yet making us all wealthier in the end. Protectionism has never worked, not once ever in the history of capitalism, and globalization just makes protectionism fail quicker. Let’s hope the protectionists don’t drag our country down with them.

      1. Dave Pinsen

        “Protectionism has never worked, not once ever in the history of capitalism…”Protectionism has been used to help build manufacturing bases in a number of economically successful countries, including the United States. Whether it’s the right policy for us now is another question, but the answer to that should be based on critical thinking and objective analysis, not dogma.

        1. Mark Essel

          But unilateral dogma is so much easier. My favorite is open always wins. I keep getting reminded how many closed systems kick opens tail based on quality control. I guess I like slightly messier and free but I’ve voted recently on the opposite side with my wallet (the vote that counts).

          1. Dave Pinsen

            Says the man with the brand new iPad. 🙂

          2. Mark Essel

            My “scarlet letter”, the word iPad branded on my head

        2. Michael Jung

          An Economy is not a Business Entity. You can’t manage/police an entire economy (with its depth) with the knowledge of an CEO Comanyname, or accountant. And vice versa.Many make that mistake, to assume what helps businesses (create an unfair competitive advantage; bribery, intellectual properties, create unnatural constraints around resources) to be better than their competitors, will help the economy too and do the same (create an unfair competitive advantage; tariffs on imports/exports, labor laws and unions, pay and bonus limits, taxations, protectionism in general, and on and on).In the end, eventually you will hit a wall. An economy is not a business.”Protectionism has been used to help build manufacturing bases in a number of economically successful countries, including the United States.” And the US has hit a wall which ‘finished’ the manufacturing industry (sort of). Got for you one example where protectionisms (from above ie politics just for the jobs and in fav of polls) isn’t worth it;…supported by this…Other interesting manuf things I can recommend;…To sum it up; net loss of jobs (in manuf et al) can be attributed the the inability (complacency) to replace lost jobs with high skilled, high productivity jobs which make products for the domestic and the export market. That is a rule of thumb not only for the USA, but OECD in general.

          1. Dave Pinsen

            “An Economy is not a Business Entity. You can’t manage/police an entire economy (with its depth) with the knowledge of an CEO Comanyname, or accountant.”I am not sure who you are arguing against. Who is advocating a command economy?”And the US has hit a wall which ‘finished’ the manufacturing industry (sort of).”The U.S. remains the world’s leading manufacturer, even though manufacturing employment as a percentage of the workforce has declined in recent decades. I believe we need to increase the size of our manufacturing sector significantly, but saying that American manufacturing is “finished” when we still lead the world in manufacturing output is utter nonsense.”To sum it up; net loss of jobs (in manuf et al) can be attributed the the inability (complacency) to replace lost jobs with high skilled, high productivity jobs which make products for the domestic and the export market. That is a rule of thumb not only for the USA, but OECD in general.”It’s a bit more complicated than that, as I’m sure you know. But the purpose of my comment wasn’t to argue for protectionism, just to point out the the falsehood of the previous commenter’s claim that “Protectionism has never worked, not once ever in the history of capitalism”, which I have done.

        3. Tom Hughes

          Re-reading my initial comment, I plead guilty to sounding dogmatic (or at least glib). So, thank you for calling me on that.I do disagree with the contention that protection can be a net gainer at the level of a national economy. Of course, it’s true that protection almost always benefits somebody, at least in the short run: as in the Wikipedia example you linked to, where Northern manufacturers believed that tariffs on manufactured goods benefited their interests. (That article implies that protection benefited other interests as well, like the transcontinental railroad, which seems strange to me — how would trade restrictions benefit a transport network whose profits depend on trade?)I think the argument for protection often proceeds from the idea that there is one best way for an economy to grow, and that the task of policymakers is to move the economy along that path as rapidly as possible; so the move from an agrarian economy to a manufacturing economy is, in this argument, supported by protection of “infant industries” that would otherwise be crushed by more advanced economies. (There are lots of other, populist arguments too, of course — mostly in the “job protection” category.) The theory of comparative advantage, however, points in the opposite direction — in favor of diversity of outcomes as different economic actors find and hone the things they do best. Protection inhibits that, usually by defending entrenched interests at the expense of creating the maximum possible wealth in the economy as a whole.But what I was really cheering on in the original comment was the call to compete, which seems to me so essential. Competition, in my experience, is the energizing factor in so much of what goes on, and the most insidious effect of protectionism is that it allows the unwary or unprepared to believe that somehow they don’t need to compete. That, in turn, seems to me an especially seductive, and especially dangerous, illusion to hold onto in an era of accelerating globalization.

          1. Dave Pinsen

            Tom,You’re welcome. You deserve credit for rereading your initial comment with a critical eye.”I do disagree with the contention that protection can be a net gainer at the level of a national economy.”History suggests otherwise. Look at the histories of the postwar economic growth of Japan, South Korea, etc. Protectionism played a key role in their economic advancement.

    2. paramendra

      What is China’s policy on immigration?

      1. Dave Pinsen

        Internal migration (from its rural west to its urban east) is probably a much bigger issue for China than external immigration.

        1. Lina Inverse

          Use your favorite search engine to check out the labor shortages in e.g. the Pearl River Delta and you’ll see that things in this area seem to be changing with amazing swiftness.The really big medium to long term change I’m focusing on is the consequences of the one child per family policy.

          1. Dave Pinsen

            The Pearl River Delta has been ground zero for China’s export-oriented manufacturing economy. The bigger, more immediate change to focus on, IMO, isn’t the consequences of the one-child policy, but China’s attempt to transition from “export-oriented growth to a greater reliance on inner dynamism”, as James Kynge has put it. So far, Kynge’s thesis seems to be holding up.

          2. Lina Inverse

            My question here, tying these two ideas together, is how much will the changing 4-2-1 demographics plus the meager safety net retard the “inner dynamism”? As it is, don’t the residents of the PRC have something like a 50% savings rate?

          3. Dave Pinsen

            Good point about the connection between the savings rate and the safety net in China. The point has been made elsewhere (including by the editors of the FT), that China needs to work on its social safety net to give its citizens the security they need to increase their consumption. And yet, it’s America — which already consumes too much — which just added a new health care entitlement. That we have been focused more on social spending than sustainably promoting economic growth was a criticism raised by a Chinese economist named Yu Qiao in the FT last year.

          4. Lina Inverse

            Do you think the government has enough credibility to make this work?I.e. the unique selling proposition is something to the effect of “Don’t worry about buying a car today because if you get cancer 10 years from now we’ll take care of you”. The people are being asked to trade future security (e.g. consumption) for current non-essential consumption … in the context of a rapidly aging society where essential consumption will be absorbing more and more of the output of those few who are young enough to work.That latter factor isn’t I gather big yet, and may very well take a long time for the people to realize (beyond the level of what’s happening in their extended families to what this means for the society as a whole), but it can get very nasty.As soon as Japan gets firmly in this stage they’ll have a stark local object lesson to observe.

          5. Dave Pinsen

            Maybe the Chinese government doesn’t have the credibility to make this work itself, but it could open the door to private insurance companies and health care facilities. I don’t know. It will be interesting to watch though.I wouldn’t be too concerned about Japan though. China will be lucky if it ever gets to that level of prosperity. Japan has an enviable first world economy (even after their two decades long malaise) and they seem to be finding ways to adjust to a smaller population by investing in technology, rather than importing unskilled immigrants.

          6. Orrin Xu

            I think its a bit different in China and Asia in general as we have different principles. We’re taught from a young age you reap what you sow so if your pov, down and out, you can only blame yourself and don’t expect anyone to give you a hand.That could be why China is aggressive in exerting itself in the current climate. Not only the chinese but most of the developing world are hungry to succeed and get rich so they in my opinion will be unstoppable juggernauts.

        2. Michael Jung

          You can’t compare China with USA.Only one example (for China). Every day where I have some sort of work or income or can make it till tomorrow, is a good day. Every day where I can improve my situation marginally, is a good day. China has no safety net, no pension system, no health care system, no government funded higher education.Compare that to the situation of USA. Every day where I don’t find a job is bad, but I still have tomorrow, I still have next week where my unemployment check comes into the mail (6 months or longer). Economic studies showed that the longer smbd is unemployed, the more likely is somebody to accept a job with lower income than his previous gig, or an other job less satisfying, less suitable to his skill set.China doesn’t need immigration, they need education (systems). And they work feverishly on that.

          1. Orrin Xu

            China currently has an extremely good education system. From my understanding the Chinese have multiple routes for higher education be it diploma, bachelor or post grad. The biggest problem for them is everyone wants to work for the Google’s and Facebook’s of China so everyone moves to Shanghai and Beijing. So because of this, you have many people out of work in the big cities. My cousin was in Beijing for a whole year before getting a trial gig. During that time his parents supported him.Universities in China are government funded and in fact the privately funded ones are labelled as dodgy (obviously a generalization). Historically the Chinese have rewarded hard work no matter what industry so its just not in the chinese culture to issue hand outs. In fact if you look at Asia as a whole, the majority does not have handouts. This i think doesn’t mean Asia is behind the western world but more shows the difference in ideals.Again China has a very good health care system for public servants. My grandpa has all his medical bills payed for by the government. He gets free upgrades to his apartment and he gets a pension which is equivalent to his salary when he was working. Younger people don’t get as good benefits in comparison but the benefits are still pretty darn good. In China if you work for as a public servant, the department will subsidise the cost of an apartment for you!

    3. JLM

      Did you ever think you would see —The largest Communist nation in the world becoming its leading capitalist? China is spinning companies out from under governmental control. China is creating public ownership.The largest capitalist nation in the world become its leading socialist? The USA is drawing companies into its grasp. The USA is creating government ownership.I use “socialist” simply in its intended manner as a definition of a political governing philosophy and not as a slur or a pejorative.This is the wonder of our changing world!

  12. Alan Warms

    First of all, the Republicans and Independents and Conservatives I know are ALL FOR immigration reform along the lines of what you’ve written. One of the fundamental philosophies we share is that a) capitalism works better than any other economic system b) individual freedom depends on capitalism and c) in general, independent business and the free market does a better job than government in solving problems. In your post above, the point is these were super successful businessmen getting together to solve real problems. Not career bureaucrats, or politicians – but people who’ve solved real problems for years and years before helping to solve some of these problems for the public. The reality is a bunch of independents out there and of course Republicans are extremely worried about the course our country is taking to put more and more of our economy into the hands of the government, vs individuals and private businesses. Here’s a great recent speech on this very topic: http://www.realclearpolitic… .

    1. fredwilson

      great, another platform item for the far center party

      1. kidmercury

        you should blog the “far center” platform. i want to see if it is legit or not. i also want to see what others think. there are some obama haters here in fredland, and while i agree with them, i want to make fun of them because i think they are basically going to support whoever the rethuglicans trot out (still waiting for them to apologize for voting for bush TWICE….lol wtf….). if you do a blog on far center, it could give me the pretext i need to beef with them. i hope you will consider.

        1. fredwilson

          that will take some work. i’ll need the help of others. but it won’t be aron paul agenda.

          1. kidmercury

            Will it be a truth agenda, that is my only concern. Cynthia McKinney is an example of a truther who is not a Paulite (she does defer to him on many matters pertaining to economics and monetary policy). Webster Tarpley is another truther who is a non-Paulite, he actually hates Paul and thinks Paul is an idiot (not blunt enough to phrase it that way, but that’s the basic message). He tells the truth and is not willfully ignorant, though, so I can’t pounce on him and have to respect him.Here’s a prediction: you won’t be able to address the tough points I raise in the comments. I hope you’ll prove me wrong. Btw, please include your plan to address the economy, as well as the “far center” platform on the carbon tax. LOL, see what I mean?

      2. Alan Warms

        Far center? What’s that

        1. fredwilson

          it’s the party i wish i could belong to where compromise, reason,pragmatism, and good sense prevail

          1. Alan Warms

            Me too!

          2. Dave Pinsen

            Alan,Most people are in favor of reason, good sense, etc. The problem is that we have different ideas about what is reasonable, sensible, etc. That’s why advocating “centrism” is essentially a cop out. We have different ideas of what centrism is.

          3. Mark Essel

            The judgement of the above qualities would cause a heavy dose of internal conflict, although I prefer opposing opinions grinding away towards truth finance flows to the one cluster or the other.Our political system has iterated on two dominant parties. To shake up the status quo will require a reset of the ideas of what parties really are. What interests do they best serve.

          4. Yule Heibel

            There’s a Centrists group on LinkedIn, the core message being that people are sick of polarization along right-left lines.It’s a big issue. Bill Bishop’s book, The Big Sort; Why the Clustering of Like-Minded America is Tearing Us Apart, looks at this problem from a built form perspective (cities, towns) and transposes it to politics: people literally group together in neighborhoods or counties (but not necessarily states), according to political allegiances, and folks on one side of the fence refuse to talk to folks on the other side.That separatism then replicates all the way to Washington (Senate, Congress).Bishop then describes previous eras where everyone (well, ok: the old boys) would meet up for martinis, irrespective of political allegiances, or the wives hosted cocktail parties. But now that it’s poison ivy to have a nice home in the Beltway plus a nice home in your constituency (because it’s not politically correct to be a rich bastard, pardon my French), politicians are literally segregating from one another when they’re in DC, too, and are only listening to their constituents in their (highly segregated) counties/ neighborhoods (vs working for the common national good).What I find additionally interesting is how social media, both as a reinforcement as well as a disruptor, contributes to “the big sort.”It really behooves those of us who do speak out loud to keep the conversation from becoming “sorted,” to create hubs or platforms where people feel comfortable speaking their piece, regardless of political stripe.Sorry, long rant, off-topic to discussion at hand, which is about immigration! /end of rant ;-)PS/edit: and of course “Fredland” (h/t Kid Mercury) is just that kind of platform/ hub. So keep up the good work, Fred!

          5. fredwilson

            frank rich has a good piece on obama in the NYT todayhe argues that Obama is largely a centrist and the proof is both the rightand the left are very upset with him right now

          6. JLM

            The combination of the NYT, Frank Rich and Obama all drifting arm in arm toward the center strikes me like going to Dr Kevorkian for an annual physical.Obama has enacted some very radical legislation — fairly, a bit of it forced upon him — while basically embracing the Bush foreign affairs doctrine. His best Cabinet officers have been a political rival and a Bush holdover indicating that those who have opposed him are more effective in helping the Nation.We are long removed from the “cult of personality” theorem whereby Obama was going to charm Iran into behaving and the rest of the world was just going to fall in love again w/ America.The real problem is that Obama neither knows who he is anymore nor what he is doing. Most of his theories have been blunted by the reality of reading that first Presidential Daily Brief.

          7. Dave Pinsen

            By that logic, George W. Bush was a centrist because the left hated him, and plenty of folks on the right were upset with him as well regarding his domestic policies (e.g., Medicare Part D and the immigration policy he tried, unsuccessfully, to ram down their throats). Not to mention the smaller, though still significant, number of conservatives who opposed Bush’s foreign policy as well.

          8. JLM

            The notion that politicians “…are only listening to their constituents…” is nonsense.The American public did not want this healthcare bill by an overwhelming margin.Politicians are listening to their funders, their contributors and their party leadership.The reason why the Tea Party is gaining ground is because it specifically is NOT a party, it is a grass roots movement. It is not creating “members”, it is awakening “sympathizers”. Huge difference.How many folks go to a Yankees game? How many root for the Yankees? Beware the Tea Party “rooters”!

          9. Yule Heibel

            I have to admit that I’m out of my depth with regard to understanding the passions around the healthcare bill, JLM (especially since I don’t live in the US anymore and see the issue from a distance).But one of Bishop’s points is that the “sorting” he writes about means that people from one neighborhood (or county) to another have no idea what their neighbors a couple of blocks or miles down the road believe, and instead think that “everyone” believes as they do. I know people who look at the anti-healthcare brigade as if they were aliens, dropped on the planet by some malevolent force. And others who look at the healthcare “socialists” as if they had horns and cloven hooves. It’s mighty bizarre.

          10. JLM

            Forget about whether the exemplar is the “healthcare bill” or legislation “X”. It is illustrative of an important point nevertheless and perhaps more easily seen by ignoring the social implications of healthcare.This is a piece of legislation which was forced upon us in the face of a vast majority of folks who were quite happy with the status quo.On a personal note, I have been a founder/buyer/seller/funder of companies for a third of a century and have always provided health, dental, vision, life and wellness insurance to my employees. Without one iota of government intervention or encouragement. I simply thought it was good business.It would not be unfair to describe my personal philosophy of life as “conservative” and I was certainly opposed to the legislation but to suggest that I was “anti-healthcare” is simply not true.I have been providing healthcare coverage for decades. While others talked, I acted. My opposition was purely pragmatic and not idealogical as I was already providing the benefits.While certainly 15% of Americans had some kind of deficiency as it relates to healthcare coverage, the other 85% were generally quite content. I doubt you could get 85% support for free vanilla ice cream in America.Why did we focus on the 15% of turmoil rather than on the 85% of seeming contentment?Because the debate became about “free” healthcare coverage rather than reforming health insurance abuses, opening markets for healthcare competition, minimizing healthcare litigation costs, reducing delivery costs and a myriad of other subjects which we have been told are subsumed into this massive 2700 page monstrosity.Who wrote the bill?Who read the bill?Who understands the bill?This was not politicians listening to their constitutents.

  13. Dave Pinsen

    Tom Friedman’s immigration ideas are intellectually incoherent, as I noted in a blog post the last time he wrote about them. He doesn’t just want high IQ immigrants, he wants a “constant flow” of “blue collar” immigrants, even though research has shown that1) unskilled immigrants raise unemployment rates and lower wages for native unskilled workers.2) the children of unskilled immigrants are failing to assimilate to mainstream norms of educational or economic achievement.

    1. paramendra

      I have a beef with your line of thinking. Immigration is an economic positive at both high and low ends.

      1. Dave Pinsen

        Unskilled immigration may be a boon to unskilled immigrants themselves (though perhaps less so today, after the housing bust), but it isn’t to the U.S. These immigrants tend to consume more in government resources than they pay in taxes, and they lower wages and increase unemployment for Americans at the bottom of the economic ladder.Then there’s the matter of their kids doing lousy in school. That makes our educational stats look worse, and prompts pundits like Tom Friedman to claim that we need more immigration because American kids just aren’t that good in math and science anymore. Wash, rinse, repeat.

        1. paramendra

          “These immigrants tend to consume more in government resources than they pay in taxes…”That is a factually incorrect statement. The opposite is true.

          1. Dave Pinsen

            “That is a factually incorrect statement. The opposite is true.”No, the statement was correct. Here is a study based on census data which backs it up.

          2. JLM

            I have a natural prejudice to believe the opposite as I live in Texas and love the Mexican people — legal and otherwise.However, I am completely convinced you are correct since I have begun to study the issue and read a number of well resourced and written such reports.

          3. Dave Pinsen

            This is an emotionally charged issue, because we all have immigrant ancestors, and it’s natural to believe (and hope) all other groups of immigrants will follow similar paths of advancement. Ellis Island and the Statue of Liberty loom large in our national iconography. You deserve credit for having an open mind and coming to a conclusion based on the data.

        2. Michael Jung

          RE: “These immigrants tend to consume more in government resources than they pay in taxes, and they lower wages and increase unemployment for Americans at the bottom of the economic ladder.” via @davepinsenD’oh! Yes, bc they compete for the same good (job). Competition drives down price. Economic law.RE: “Then there’s the matter of their kids doing lousy in school. That makes our educational stats look worse, and prompts pundits like Tom Friedman to claim that we need more immigration because American kids just aren’t that good in math and science anymore. Wash, rinse, repeat.” via @davepinsenD’oh! Yes, because that has something to do how you manage and organize immigration (policies). EVERY country with immigrants (including Germany, France, UK, Spain, Italy, etc OECD) got the same problem (only one you mentioned above). It is a matter of policies how to handle the aftermath of crossing the border. How do you integrate immigrants, families, kids. How do you make them American? Do you want to make them American? How do you handle immigrants and their social believes (ie arranged marriage, honor killing (Ehrenmord)) and religion (ie recent ban of new mosques in Switzerland, or France’s ban on the burqa… )?I had this discussed (in parts) already in an German blog. The blog post was about a TV report (30 mins) where a primary school in an low income district (consisting of unemployed, low wage income, and immigrants) (1) is so much different than a primary school in a high income district (2) of Munich.Kids of (2) go away on the weekends, visit museums, their parents read books to them, they bring a proper healthy lunch pre-packed from the mommy in the morning to the school, they got all their stuff with them in the backpack, and so forth.Kids of (1) their parents don’t make holidays, aren’t really educated, don’t read books to them, don’t help with homework, many had no breakfast when they come to school and have no lunch pack from mommy, forgot to do their homework, watch all day TV, maybe get help from an older brother with homework, come late to school because their parents don’t wake them up (yes, when parents unemployed, parents don’t get up in the morning, that was this particular case). Thus, the abilities to read, math, speak was across the board on the school sub-par. Dragging down the whole ‘educational stats’.What I back then proposed were, mandatory day schools, and sort of freelance school workers payed by the federal state. They help as 2nd or 3rd teacher in the classroom and visit on a monthly basis the parents to check the environment and help out there.It is hard to change parents and their parenting style. I have problems to get my flatmates to clean after them because they were not taught, show, didn’t experience it (clean household. If you don’t know it, didn’t have it, how come that you want it now?).The same is it with this, you don’t raise a better person when you don’t expect it from yourself to be a better person day to day. Or simply don’t know how to be a better person from day to day, getting better and better at parenting and doing homework with your kids, restricting TV time, giving them an in-formal education, manners, and social life.Immigration itself, the aftermath, the complexities, … sure it is worth it discussing it here in comments with <300 words. Sure it is worth it making you mark on the issue in a blog post. Sure it is worth it pointing out this and that and bringing up China, 9/11, politics. It might even worth the effort reading all the comments till down here (Hello!).But don’t expect that your line is the best line is the one line to be written in law. There is no best solution. There are only steps towards betterment. And even these single steps are very difficult and hard fought by extremes.

    2. ShanaC

      Do we know in sum total why the kids are not integrating into “American” norms. I remember that post- in the comments Jewish integration was talked about extensively. Although I can say housing covenants and college/prep school quotas have fallen- red lining? Timing?I’ll chat with you later about it. Maybe we aren’t giving integration enough time.

  14. andyswan

    How about this two-step, radical idea for creating jobs, Mr. President:1. Take entrepreneurship and the private sector out of your crosshairs. Stop passing laws, regulations and taxes designed specifically to hurt us.2. Stop threatening to “fundamentally change” things. Let us have clarity on what the playing field will look like 2-8 years from now.We don’t need “cash for clunkers” for employees. We don’t need gimmicks or more of the government intervention and “economic planning” that got us into this mess (affordable housing initiatives, FTL!)These two things alone would get me to start a company tomorrow, with about 4-6 initial employees— next week.

    1. Lina Inverse

      Let’s take the above further and tie it into the alternative that is being proposed in this posting:The current environment of profound uncertainty in political economics (as it was called in a more honest age) makes you unwilling to start up a company today; pretty obviously you’re very concerned about it failing.What about the immigrants who in theory will be attracted with an entrepreneur’s visa bill? They have even less of an idea how this is all going to sort out, and their penality for bunsiess failure is deportation including their family.For many this is going to be a non-starter.

      1. andyswan

        Totally agree…uncertainty of what the nanny gov will do next crushes ambition.  I’m not worried about failure….thats always a zero….what this admin and congress make me worry about is success….for the first time in my professional life the successful are openly targeted by government and are just beginning to be looted.

        1. Mike

          Don’t waste life in doubts and fears; spend yourself on the work before you, well assured that the right performance of this hour’s duties will be the best preparation for the hours and ages that will follow it.- Ralph Waldo Emerson:

          1. JLM

            Great quote and a noble sentiment. Great inspirational advice for an individual.I think the problem has become a “macro” problem rather than a “micro” problem.The business entrepreneur warrior chieftain class is not inspired by the political climate to create new businesses and therefore new jobs.Many successful entrepreneurs are wealthy and can afford tacos for the rest of their lives. They are in the game for psychic benefits.The current environment is projecting so many uncertainties that the default reaction has become inertia.This is a huge problem. Inertia will soon give way to atrophy.

      2. ShanaC

        There was just an article this weekend in the WSJ about corruption, economies, and change. I think this issue is largely a global issue- we’re not quite sure how the world is supposed to be like in the face of the radical amounts of change that has occurred in the past 60 years, and especially in the past 20. The US is not alone in this matter. I think it is globally hard to be productive until we settle down and try to understand what politically and socially has happened to us by the amount of technological and sociological changes. Then maybe we can try for massive structural change in business again.

    2. JLM

      You cannot demonize and punish the entrepreneurial, job creating and capitalistic segments of our society while simultaneously expecting them to be WILLING to create jobs.”The beatings will continue until the rate of job growth increases.”

  15. Emma

    I agree. The Start up visa is a great idea, but it has to be included in a comprehensive immigration reform bill. Obama has shown no leadership on immigration reform. He, his fellow Democrats and all Republicans who sit on the sideline or oppose immigration reform in 2010 should know that the immigrant community will punish them at the polls in November. Obama promised immigration reform in his first year in office. He has no excuse anymore for not rolling up his sleeves and pushing actively for reform in 2010.

  16. Tereza

    Not much to add here on this sunny day, except to say that I strongly agree with you on this…

  17. Michael Jung

    The “fat and happy” was worth quoting. http://michaeljung.tumblr.c…Speaking for myself (born 1983 in East-Germany, Zwickau) and my family. We left EVERYTHING behind when we escaped to the Prague Embassy of West-Germany and were eventually granted emigration into West-Germany in ’89 (…. I don’t remember these 3 days, but my first childhood memories are about the time in the ‘reception center?’, playing with the other kids in the hallway, the bunk beds, and eating in the big cafeteria with the other East-German refugees. My family was welcomed by an West-Germany family, we still have contact to and occasional visits, till my dad found new work and could rent a flat. We started a new life, from zero. In the meantime (1 month later) the iron curtain fell completely.And in the Summer of 1990 (when I am not mistake), my dad decided that the family should return ‘home’, bc now there is no iron curtain and things will get better over time, and we can live there rent free bc he/we were still owners of land and a house etcetera. Starting over again, a new life, from zero.Now, my dad founded his own company in 1998, how that turned into a million Euro (EBIDTA) is a complete new story.

    1. fredwilson

      somehow i think i’ll regret that “fat and happy” quote 🙂

  18. JLM

    Immigration policy exists on a number of different levels. At the low end, it is a challenge to staunch the flow across our southern borders while acknowledging that the toothpaste cannot be put back into the tube for the balance of those folks who are already here.First, you have to close the borders and then you have to admit you cannot get the toothpaste back into the tube. Fail to do either and you fail to do anything.At the top end, it is an elitist discussion whose merits are what they are. Face it, at the top end, we are pandering to the wealthy and talented and educated. So what? Just do it and get done with it.I am totally unsympathetic to the argument that immigration takes American jobs. In reality, the American who cannot compete is at a disadvantage whether that job is “taken” within the continental US or is held in China and the product is imported into the continental US. The labor component is the same and only the zip code is different.You cannot inspire Americans to go to work by giving them 2 years of unemployment.The third rail in this discussion is the inability to fashion a coherent policy on the exportation of American jobs. I am sick of businesses and businessmen who want access to US markets, stock markets, VC funding, banking, securities laws, courts, judicial system, patent protections, standards of living, education and want to create their wealth by employing cheaper foreign labor.

    1. fredwilson

      JLM, cheap (or cheaper foreign labor) is a reality and we can’t put thattoothpaste back in the tube either. why not deal with that reality and takeit head on instead of chastising those who simply are recognizing it.let’s take cheap indian outsourcing labor. it may be true that we couldcompete with those outsourcing companies in some of our most economicallychallenged regions (detroit??)why don’t we have a policy to train our workers to do that work and competewith the indian outsourcers instead of demonizing them and the companiesthat use them

      1. JLM

        There is “cheap” and there is “cheaper” and their is unethical.Chinese prison labor incorporated into products sold in the US? <<< not for meSweatshop, less than “living wage” labor in China, Mexico, Far East and India? <<< not for me$25K per year Indian MBAs accessed remotely from the US? <<< lines begin to blur a bit but still not a strategy I would personaly be proud ofThis is primarily a governmental policy issue. Will those Indian MBAs be paid a “fair” wage and will they be provided with universal health care? How can we support Obamacare and then use its very expense as the fulcrum upon which we leverage the cost differences?Where the dilemma begins is when profits are made on the back of cheaper labor and then repatriated into the American system of business relying upon access to US markets, etc as noted above. If you want to operate from across the globe, then keep your profits there.To raise these questions certainly does not strike me as “demonizing” anything.This is a fair debate and was the intellectual basis for the policy of requiring foreign auto makers to produce their products in the US using American labor if they wanted to access the US market. It was a fair and reasonable resolution.Last point is that the US has been underwriting the safety of the world for a long, long time and our percentage of GDP spent on defense (ours and the world’s) is huge. While not directly a cost of labor, the tax burden to provide this is a cost to the marketplace which should be considered in global labor decisions.

        1. Yule Heibel

          I wonder if any of you would take the time to watch Jeff Rubin (former Chief Economist of the Canadian Imperial Bank of Commerce World Markets and author of Why Your World Is About To Get A Whole Lot Smaller) in this video, as he speaks on the topic of “the Business of Climate Change” (and the end of cheap oil, including bunker oil, used to transport cheaply manufactured goods back to markets in countries that no longer manufacture goods themselves) …and maybe post some feedback?I found Rubin’s arguments (which included a couple of riffs on tariffs and protectionism) compelling. I know, it’s heresy to mention those words. But can we throw the changing energy conundrum into the equation for a second? A good part of the percentage of GDP spent on defense goes toward securing sources of energy. As cheap energy becomes more of a historical anomaly vs. a given, re-tooling will happen. So, unless we find some magic source of “free-ish” energy (without a ton of negative externalities), outsourcing manufacturing will at some point stop making economic sense, no?As for immigration, it’s fine to attract the “high-I.Q. risk-takers,” but why aren’t we training people to make things anymore? I have “vintage” windows in my house – there’s one guy in the city who’s really qualified to work on these things, and he can’t find apprentices. My city will soon have to deal with scads of retiring city workers who are taking the nuts-and-bolts knowledge of how the city works (its sewerage, its power lines, its underground creeks, its various buildings) with them into retirement. Meanwhile, that same city is spending hundreds upon hundreds of thousands of dollars to hire senior level management – what will they manage? Will they go into the manholes? Will they recognize what they see? Nope.There’s this stigma attached to manual labor – that’s not right. Not everybody can be chief, we need a few “indians” too. (And I don’t mean the overseas outsourced kind.)

          1. JLM

            A compelling story. First, the Canadian banks are the only ones who have avoided the meltdown, so it makes sense to listen to those who engineered their fates differently.The entire defense industry is in great part focused on the oil producing regions of the world. No oil, nobody would have a glimmer of interest in the politics or geography of the Middle East.We could favorably impact our international defense posture by developing domestic sources of energy (e.g. nuclear power) as a replacement for the trillion dollar cash flow from our country to a region of the world which foments trouble, which spawns terrorism and which consumes American blood and treasure.

        2. fredwilson

          i agree about prison labor and suchi was thinking more about indian outsourcing, eastern european developers,etc

        3. Orrin Xu

          People need to remember costs of living are different for different places. What may be slave labour to you, could be an upper class wage for them.

          1. JLM

            Great observation and fair comment! I agree with you. Thanks for sharing yur wisdom.

  19. ShanaC

    I think it is often outsiders who see what we don’t see: I’m not sure if it is an immigrant thing or a wide variety of factors. Maybe we need to educate sensitivity towards differences and an uncomfortableness to our place so that we will all work harder?

    1. Michael Jung

      “often outsiders who see what we don’t see” & “Maybe we need to educate sensitivity towards differences”That is so true; financial crisis, immigration, economic policies (protectionism, labor laws), china controversy, russia, oil dependency, pollution, global warming, …

  20. Jose Reyes

    @FredI do not think Americans in general are fat and lazy…..well maybe fat, but not lazy………. I think your perception is skewed by ONLY seeing these international entrepreneurs…. If you lived in FRANCE or SPAIN or perhaps any other country in the world you would see we are all very similar. I think there are great people all over the world but certain societies at certain times value things differently. America is the land of the finance major and MBA….. Some countries are all CS majors….. Perhaps if you grew up under a different time period you would work as an engineer instead of a financier??? Much of this has to do with nurture I believe… Americans are no less intelligent or motivated in my opinion… Take wallstreet as an example… while I am not saying these are the brightest people, but surely you cannot say they do not “slave” away for endless hours….. End of the day, most people chase the dollars, why become an engineer with a 1/1,000,000 chance of making big money when you can choose to become a finance guy and almost certainly make big money……Money Talks

    1. fredwilson

      very true, i have an engineering degree from MIT and worked as a softwareengineer for a couple years. but i moved to NYC and there weren’t many ofthose. so i decided being a VC and financing software engineers would be agood thing to do. it worked out.

  21. goldwerger

    I wholeheartedly agree.I just secured a visa for a new manager joining our NY-based startup from overseas. I had to go through ton of effort to do so, and I was able to do that due to a very specific set of uncommon circumstances and an extra determination. And we will benefit.The simple fact is that the success of our US-based venture depends on getting the best talent to drive innovation. The more opportunity we create to talented and driven entrepreneurs to come into this country, the more successful and competitive our companies will be, and the more local jobs would in turn be created (and in the right sectors).Not to mention that the free flow of labor also has great social value and its ethics are rooted in how we all got our opportunity in this country, in this or an earlier generation. This country’s origins of growth, dynamism and deep culture of entrepreneurship are rooted in past influxes of immigrations which brought diversity of culture and ideas. As well as a sense of optimism, urgency, and renewal.We will better for it. Economically and socially.Eyal GoldwergerCEO, TargetSpot

    1. Michael Jung

      Congrats @Eyal Goldwerger@Fred: How do your (funded) startups cope with hiring? Is it easy or ordinary or hard to find the right people these times? And how is the quota of people you would hire but can’t. That would be great testimony for startup visa.

  22. Matt Chua

    While I like the “startup visa” idea, I think it is too limiting, there are plenty of high quality workers/contributors that aren’t necessarily startup types. Let’s just make this simple, and use an existing system for admission to the US: post secondary education. You get a 4 year degree from a major college: greencard; you get a masters/PhD: citizenship. We need to stop kicking out educated people that want to be here.

  23. Jonathan Betz

    We definitely need immigration reform that favors entrepreneurship, but Sergey Brin is a very weak example – his parents came to the US when Sergey was 6, and his father was a math professor. Nothing I’ve heard about the startup visa act would encourage academics to come to the US.

  24. S C

    I think you are short-changing American workers and their kids by bringing over more “high IQ risk takers” (we already have a quota and it’s the most generous when compared to other ‘first-world’ countries). American workers want to work; you and Friedman make it seem like the Country doesn’t have have hungry, smart, energetic, passionate citizens that want to lead new business enterprises — For every Sergey there is a Bill and for every Vinod Kholsa there is a Steve Case. Moreover, if you wan to really change American business for the good, you would tax upper-middle class 1B Visa holders extra taxes that get pumped into public school math and science programs. By not providing a good, math/science-centric public education you are betting against America. And I know, what you will argue — that by taxing these well-to-do “high IQ” immigrants we will lose them to other countries; well, we wont. India, China, etc just don’t have the infrastructure to create meaningful business enterprises.

  25. Mihai Badoiu

    Here’s one bill which may have a chance of passing (remember, the Hispanic caucus is opposing most immigration bills, unless comprehensive immigration is on the table) The idea is very simple: offer a green card to every single medal winner in international Olympiads or even to all contestants, if they come to study college in the US. Here why I think this would be a good thing:- In sciences, outside of the US, this is by far the most prestigious thing, and this is what science oriented high-school students do. In effect the most successful students at high school level tend to go to these Olympiads.- We’re talking about a small market of about 24*80/2=960 high school students (counting only IMO, IOI, IPhO, IChO, and IBO) and taking into account some people go more than once (the /2 factor) A similar bill passed 2-3 years ago for 1000 visas for models.- You bring bright people to study in US. It’s already happening at a large scale, but this will increase the percentage. At MIT, most of the international admits have been to science Olympiads (about 150 international students per year)- Most of these guys, if they decide to stay, they will eventually get green cards. Because of the current system, they have to work for a company after school to get the green card first. A bill like this would just speed up the process and enable them to be more entrepreneurial here and be able to take more risks when they are young.- Diversity. Really, since about 80-90 countries are represented, you cannot get more diverse than this. You also get some of the smartest from all these countries.- Since we’re talking about sciences, and these students already invested in this, they will most likely continue in sciences, and there’s a shortage of top scientists and engineers. It’s good for the country.- This kind of bill will hopefully create more brain drain from other countries to US, and would increase entrepreneurship. Moreover, when they come to study for undergrad here, they will learn more American values. (it’s harder to do it at a later age; right after high school is a good time, because you know something about a person’s abilities and they are young enough to learn how to do well in the American culture)I’d love to be in a position to push this kind of reform. Any suggestion how we could push this?

  26. Richard Koffler

    Friedman’s point about new jobs coming from start-ups is spot on. Sadly, his left hand erases his right hand’s good deed when he proclaims, “There are only two ways: grow more by improving our schools or import more by recruiting talented immigrants.” He shows his statist’s DNA with the operating words “only two ways”. The fact is that the most powerful way to create start-ups is for government to get out of the way of entrepreneurs and their investors. We want job growth? Kill myriad idiotic job-killing laws and regulations — starting with SarbOx, the corporate income tax, and the expensing of stock options (which becomes moot if there’s no corporate income tax).

    1. Richard Koffler

      Oh! And I forgot: Get rid of Nanny-State labor laws that are making it a worsening nightmare to be an employer in this country. Shall I mention ObamaCare as the latest albeit certainly not the first?

    2. Tereza

      Another angle which no one’s considered at the policy level is childcare.It’s one of the things that prevents women from starting companies. It’s incredibly expensive, and the childcare tax credit is a pittance.Unless your husband is rich or you have a trust fund, you really need the recurring salary of a ‘regular job’ if only to cover that recurring nut of childcare. For a really good nanny in a high expense locale, you’re easily talking $30k-50k annually. It goes higher with the OT that you’d expect in a challenging job such as a tech startup.I know we have a paucity of technical women in our country — a separate problem which needs to be addressed.But I also hear of women being criticized for lack of focus or lack of commitment, when what I see behind the scenes is them patching together a delicately woven knit of childcare providers (including relatives) to make it all work. And it can fall apart on a dime, and that can be nerve-wracking.Surely there are potential job creators and startup talent in our own midst who are hobbled by the childcare issue.I’m not saying I’m thrilled at the prospect of raising taxes yet further nor suggesting nationalization of childcare. But the current structure is certainly prohibitive and prevents us access to a large segment of talent.Separate but related, lots of women want flexible- or part-time roles. It would seem there are opportunities to match them with startups who can’t afford FT folks but still need good smart people. These circles of people rarely cross, demographically, but it would seem there may be a win/win if the right ones could be matched together.