The Startup Visa Act Must Be Stopped
businessinsider.com
businessinsider.com
What this act tries to do, in a sense, is outsource the decision making (to the investors).
The biggest problem with the H1B visa is that it allows the employer to hold this unholy ax over the visa holder. It's absurd and counterproductive. These are people we should want in this country. Arguments against illegal immigration do not apply here.
So, if an investor actually invests in a startup with a foreign founder, just give that person a green card or a long visitor's visa depending on what he wants (I assume not everyone wants to move to the US). The whole talk of a successful entrepreneur is ridiculous when so many startups fail. We want that entrepreneur even if this particular venture fails.
For instance, we trust the government with software patents right now and over and over again they approve what we consider to be horribly damaging patents. We should trust them to evaluate an entrepreneur as well?
There is a reason this decision is outsourced to the employers/investors: it's actually the more free solution. Otherwise it's up to the government to determine who's/what's worth paying for, and just hoping they are right. This way we've already established a market for the person before they enter the country. It's far from perfect, but if you just give people green cards how many people do you think will suddenly want to be entrepreneurs to get their green card?
The government doesn't seem capable of regulating anything right now, so I'm pretty content to outsource the decision to investors and employers. At least that way they have a chance to get a Fred Wilson, instead of a guarantee not to.
We're only relying on them to identify some likely candidates. Those who work out get to stay.
A good change should error on the side of being overly accepting.
The problem is that when you propose something like that, you get all these groups that are opposed, from the "dey took our jawbs" crowd, equally split among the left and right, to the straight up xenophobic crowd, which mostly lean right.
However, if you dress it up and make it sound like we're only importing the right kind of foreigners, with money and oxford accents, it's possible to actually pass something.
So that's what we have. The choice is between whittling around the edges to get a few more people in, or not. Unfortunately, wider reforms are off the table at this point, so a preference for them isn't really a valid reason to oppose incremental bits like this.
A summary is available here: http://www.usatoday.com/tech/science/2009-07-08-science-engi.... The full RAND study is at: http://www.rand.org/pubs/issue_papers/IP241/
This is in reference to a RAND study that provides very substantial evidence that engineering and science careers now lag badly behind other options available to highly educated people in the US.
I think there's a very sophisticated argument to be made that a visa program designed to remedy a "shortage" of engineers doesn't make much sense. I'm alright with disagreement, of course, but it's very frustrating to hear people dismiss this as a "dey took our jawbs" xenophobia. Does it make sense to create a special visa program in a field that is already, according to objective research, lagging behind other fields? Keep in mind, we're not talking about general immigration here, we're talking about very specific legislation targeting a narrow part of the economy.
So, we can change some of those systemic factors, which I'm all in favor of but in the short term, creating new Americans who may look a little different and have a funny last name will do more to increase the number of American engineers than not doing so.
Regarding the too-easy dismissal of this concern as xenophobia, I'll only say that I've met a bunch of people who are for immigration reform in general, but once you talk about H-1B or a similar program, all of a sudden that program's a ripoff which helps the corporations at the expense of the little guy by increasing labor supply. So, what, it was ok to import garden workers but we can't import tech workers? (not aimed at you, aimed at my strawman which I have indeed heard from several otherwise liberal people).
Anyways, yeah, once you advocate reducing immigration for the express purpose of not unduly expanding the labor pool, I'm going to call it "dey took our jawbs" -- if that makes the person uncomfortable, they should argue from a different position :)
If engineering is more difficult and pays less, than you'd expect a shortage. Markets will correct this shortage naturally, since bidding wars will emerge for the smaller number of qualified engineers, wages will rise, and people who would otherwise do law or medicine would look at engineering with more interest. Unfortunately, if you allow industry-specific immigration (or worse, guest worker) programs, this market correction will never occur. This is a big part of why many people who are not opposed to immigration in general take a very dim view of the H1B (keep in mind that Milton Friedman (not exactly a guy who advocates "reducing immigration for the express purpose of not unduly expanding the labor pool" was a critic of the H1B program for this very reason). It's not that it expands the labor pool, it's that it does it in a very uneven way. You're essentially saying "we'll let you in here to do engineering, but not to do, say, law." This amounts to a government program designed to discourage Americans from studying engineering and get them into law school instead.
While most fields aren't nearly as closed off to "new Americans who may look a little different and have a funny last name" as law is, there mere absence of a widespread visa program can have a similar effect. So you'd also expect this program to encourage Americans who might otherwise have studied engineering to become real estate agents, mortgage brokers, nurses, and physical therapists.
I don't like to hear people say "dey took our jawbs", but I think it's very legitimate to ask "why did the government set up a system where engineering (and a few other) jobs were the only ones they were allowed to take?"
Especially when independent, objective research like the RAND study suggests that engineering isn't experiencing any kind of labor shortage.
BTW, there is one final factor here, which may explain what is going on. Many jobs are lucrative to the person doing them without producing much wealth. Engineering is generally the opposite - produces great amounts of wealth, but not always lucrative for the practitioner. To over simplify, a tax lawyer who saves a client a million doesn't produce a million in wealth, but he'll be paid by his client as if he had. An engineer generally does produce this wealth. So society, in general, has more interest in producing engineers than individuals have in becoming engineers. So I suppose the US has decided to resolve this by seeing if we can lure away someone else's engineers. That way, we can be lawyers, real estate agents, and so forth, and still have someone producing the wealth that the rest of us get to divvy up. As long as you ban those new people from taking anything other than an engineering job, and you don't mind watching Americans abandon the field in large numbers, should be fine, right?
Well, wait until we can't get engineers from overseas, and need to suddenly revive a profession that we essentially destroyed through policy. I actually think this could end very badly, which is often the case with the unintended consequences that occur when you regulate markets unevenly. I think that in the long run, these programs could create a severe shortage that will be very damaging.
When I was a grad student in engineering at Berkeley (about a decade ago now), I become accustomed to being the only person who grew up in the US in class, study groups, and so forth. For the reasons I described above, I think this is a dangerous situation for the US. In fact, I actually think that our graduate engineering schools (this is based on my limited experience at Berkeley) are starting to assume a European or Asian type of undergraduate preparation, where students tend to specialize earlier, than an American one, where we do more general education and specialize later. While I actually think that Americans from top undergraduate colleges are very well educated, they probably aren't at the same point in their particular branch of study as international students who have studied their subjects more exclusively as undergraduates, so we may soon be at a point where the structure of US graduate education in engineering is less accessible to people who have come up through our own education system.
By analogy, supposed you majored in English and went to law school, having never taken a law class. That's how it works in the US. Now imagine if 95% of your classmates spent the last 4 years at Oxford studying common law, including substantial amounts of study of the US legal system. Well, you'd struggle no matter how wonderful an undergrad student you'd been. I think this structural shift is well underway in US based graduate engineering programs.
Interestingly, US students do enroll in undergraduate engineering programs, because those degrees pay. They just tend to avoid graduate programs in favor of law, business, and medicine - and if you look at the numbers, it's hard to conclude that this is not a highly rational decision.
I'll grant you that money isn't everything. I'm sure some would argue that I don't love engineering enough to do it anyway, and the field is better off without me. Maybe they're right, but I figure there are other areas that can be interesting and suffer from less of the wage and job pressures engineering is facing. You can imagine my surprise when I started to get excited about engineering and then I did my research and found the 'shortage' is really not so dire or real as public pronouncements had me believe.
I think it's a complex problem and would agree that dismissing any doubts against it as being largely xenophobic is a little unfair. I don't know what the answer is, but if we really want American born engineers we should recognize that we have a problem here. If we don't mind importing them, maybe this is a cheaper way at the cost of pushing Americans into other fields.
http://evans.washington.edu/files/zumeta-attracting-the-best...
A particularly relevant passage:
"...to the extent policies do respond to perceived shortages, they tend to be shortsighted and exacerbate longer run problems. This is true of recent policies that simply expand the number of visas granted to foreign scientists to fill empty job slits in industry, and of government R&D support policies that pay little heed to impacts on graduate students. Expanding imports of young scientists to fill empty slots at bargain wages dampens the market signal that more opportunities and higher salaries would provide to domestic talent..."
Zumeta also gives some numbers on what top S/E undergraduates are doing instead of graduate engineering programs (interestingly, it isn't law, it's generally MBA or health professions. Of course, there's a potential complication here - Zumeta is only tracking S/E grads with quant GREs above 750, so he isn't considering the undergraduates who decided earlier on that engineering isn't for them (I suspect the US starts to lose most of its engineers in 8th grade).
I'm glad you agree that accusing people like Zumeta of being "xenophobes" is a little unfair (I think it's more than a little unfair, really, it's a pretty horrendous way to use personal attacks to suppress what should be a fair, honest, and open discussion). But a lot of very high profile writers (Moira at Business Week, for instance), continue to do this.
One argument I imagine people make is, assuming H1B and other visa programs suppress wages, and this in turn retards the desire for young Americans to get into these fields, why is this a problem?
I suppose one could argue that restricting immigration will lead to higher wages, which ultimately will lead to more engineering students, but at a much higher expense. Ultimately this won't be globally competitive and is unnecessary when there are plenty of students from elsewhere in the world who will do equal caliber work at much lower cost.
I suppose one could argue that, but I wouldn't. Intellectually though, I'm hard pressed to say why our engineers really should be American born in larger quantities than they are today. I suppose we've all been witness to what happens when we push bright individuals into finance instead of engineering. It doesn't necessarily end up being advantageous innovation.
This reminds me of Phil Greenspun's (perhaps tongue-in-cheek) opinion
"What's my idea for changing the incentives? I don't have any. I'm not one of the people who complains that there aren't enough women working as professors, janitors, or whatever. For whatever reason we've decided that science in America should be done by low-paid immigrants. They seem to be doing a good job. They are cheap. They are mostly guys, like other immigrant populations. If smart American women choose to go to medical, business, and law school instead of doing science, and have fabulous careers, I certainly am not going to discourage them. Imagine if one of those kind souls that Summers was speaking to had taken Condoleezza Rice aside and told her not to waste time with political science because physics was so much more challenging. Just think how far she might have gone..."
(full link at: http://philip.greenspun.com/careers/women-in-science)
Personally, I'm not nearly as cavalier about this, because I think that the availability of cheap foreign labor in a critical field is a short term phenomenon. India and China are already starting to lure back their students, and this trend will increase. I wouldn't be surprised if the day comes where India and China are hiring away US born engineers - it's still decades away, but it may well happen.
Some would say "ok, then market incentives will increase, and Americans will start to return to engineering." Sure, but slowly. I personally don't think it's quite that easy. It's more a question of population dynamics. Think of a species that has been reduced greatly in population... the passenger pigeon was headed for extinction without intervention even when large flocks were still observed.
Engineering takes time, effort, a system, a pipeline, mentorship, and so forth. Basically, it takes people like my grandfather (an engineer) encouraging me to take up the profession, and me encouraging my son, daughter, nephew, the kid on the street, to take it up too. I think that if you break this chain severely, it can take generations to restore it to health, if you manage to do it at all.
It seems easy to import engineers right now, but it won't always be so. There was that story about Hemingway asking a man how he went bankrupt - the reply was "I went bankrupt slowly and then all of a sudden". I think the cheap availability of talent is what masks the destruction of this profession, and I think the US could very quickly find itself in an very bad position.
I think that ensuring a healthy, engaged, optimistic domestic pipeline of engineers should be a top priority for the US, and our policies seem to be giving us the oppposite (by the way, a healthy percentage of international students and practitioners enhances this, the problem is when the US interest starts to plummet to dangerous levels).
Of course I'm in Vancouver (BC) and these are guys being frustrated by the US process. Some of them hope to eventually open branch offices in Silicon valley so you will pick up some of the outsourced work.
aditya: dude, if you can't create at least 5 jobs in 2 years with $250K in capital, you're a pretty pathetic excuse for an entrepreneur.
The article is a little too sensational, which seems to be the norm with BusinessInsider these days.
I hope you're right and that's how it will work out, though.
The US will then allow you to come in and buy their companies - as long as they get a few % commission to Wall st.
Hacking Washington isn't the same as hacking computers.
If you are a smart, clued-in high tech founder who isn't completely in love with your initial vision, then it's possible to iterate from a potentially disastrous idea into something people will pay for.
With the Startup Visa Act, if the initial flawed piece of legislation doesn't produce some notable successes, then unimaginative lawmen who didn't like the idea in the first place will point to the initial lack of results and kill off any hope of iteration number two or three - which may be what in fact is necessary for the Act to succeed in achieving it's original aims.
All the criticism about the Startup Visa seems right, but still, for someone seeking a visa it's still better to have also this option than not having it.
People criticize things for not being perfect (or actually very imperfect) when what is important is if it is a step in the right direction. Does the existence of the Startup Visa make things easier for foreign entrepreneurs compared with what we have now? Yes it does.
A lot of people lost confidence in "conditional immigration" categories (ie., we'll let you immigrate provided you become an engineer, an entrepreneur, pick grapes in napa during the harvest season and leave afterwards) after watching how these programs actually work (the H1B, in particular).
I had my own experience with this (as most programmers have). The company I worked for, a "startup", wasn't making much progress and had burned through a lot of cash. Investors and managers got frustrated. They moved the office a long distance and banned telecommuting completely. The took away private offices and put us into a cubicle farm. And, of course, they diluted everyone's stock.
So, what did I do? I quit. But I'm a US citizen, so I didn't face deportation when I did this. But the H1B workers, all Indians who have to wait longer than normal for green cards because of the longer queue, didn't quit. Of course they didn't, they'd been there for 4+ years, are they going to give up now, when they're so close to a green card?
So management pretty much got away with it. Well, they didn't, the company tanked 4 months later, but they sure succeeded in bullying the workers who lack freedom. And the thing is, while I did get to quit, if more and more workers are governed by this arrangement, then this sort of treatment will become the norm, and free citizens will not want to work in that field anymore (which I think is already clearly happening - I personally believe that Americans avoid engineering not because they're too dumb or lazy, but because pay and benefits in engineering are lagging behind other options for highly educated people who are free to pick a different career (1)
Personally, I'm certain that this visa will lead to widespread bullying of tech founders by investors who control their dream of becoming free citizens of the united states. That will be much worse than what we have now.
I can't get behind any type of conditional immigration. I've seen it in action, and I'm convinced these programs are utterly corrupt and end up making the environment so bad that free people will end up choosing other careers (exacerbating the shortages that the programs claim to remedy).
(1) Based on a RAND study
A summary is available here: http://www.usatoday.com/tech/science/2009-07-08-science-engi.... The full RAND study is at: http://www.rand.org/pubs/issue_papers/IP241/
In fact, in some ways, it's not even entirely appropriate to compare it to indentured servitude, since these folks were essentially "owned" - the main difference being that they were released at the end of their term of service (the reality was pretty brutal, from what I've heard).
On the other hand, the H1B is particularly offensive in that the quid pro quo is purely visa and green card "sponsorship". The employer is allowed to bestow a government status - legal residency - that the worker could not otherwise obtain.
I'm actually kind of amazed that people put up with this in 2010, that a corporation would have that kind of power over an individual. I think a lot of it comes from a lack of understanding of what's really going on.
To build on your analogy, it's like burning half of an incomplete work of art, to get wall space for another one.
The Act does not tip the power construct unfavorably towards investors. Any VC worth a damn is a partner not an adversary. If a VC uses conditions in the Act to exert leverage in negotiations, he is not worth having as a partner in the first place.
The Act does not increase entrepreneur risk. Every founder has to consider many different areas of risk to his business, to his family and to his lifestyle. Rather than increasing risk, the Act presents an opportunity. As with any opportunity to gain something, there is a chance that you will fail. The Act would only increase entrepreneur risk if it changed the law in that it reduced opportunity - it doesn't.
The Act is bad for (US) investors because good entrepreneurs will self-select away from the US? Come on! That is absurd and in fact the opposite should happen.
Sorry, but the article seemed for the most part insincere or misinformed.