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Comment by program_whiz | Hacker News Reader

Ok what's the suprise here? If you give companies a chance to get cheaper "mostly the same" labor without a downside, or maybe with the upside they can't leave, they're going to take it. That's why I do believe globalization and the availability of huge amounts of cheap unregulated labor does hurt American jobs and industry. Its not xenophobia, its just common sense. I think if you look past any ideas of racism, xenophobia, etc, you'll see that in plain economic terms, Trump is right -- but it applies to every industry, not just SV. Imagine how if this is applicable to something requiring the skills of software development, how much more so it would be true of some low-skill job.

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It's not obvious at all. Shipping lower skilled jobs to other countries mean higher margins for US companies. Which is good in itself for the US economy. Buying manufacturing from other countries means it's easier to sell stuff to them as well, which is also good to US economy. The fact is that the US has a very good overall economy, so maybe one has to look at the issue of redistribution of wealth for instance.

Economy-wise, the problem is a lot more complex than what you make it appear. You can't just say: economically speaking it makes sense to close the borders...

I think you're missing two key points here - 1) what are corporations doing with their increased profits as a result of tactics like abuse of the H1B system?, and 2) what portion of H1B salaries ends up back in the US economy vs. abroad?

The net effect for the overall economy is only going to be better under the current H1B system if companies reinvest their profits into productive uses, which they haven't been [1]. And if H1B workers spend their earnings in the US instead of sending that money back home. I don't have solid data on this last point, but having worked with many H1Bs over the years I can at least anecdotally confirm it.

You can also look at our trade deficit with India as another data point here [2]. We are not, in fact, selling more stuff into India than they sell us. There's a pretty strong argument to be made that the current system is more harmful than helpful to the economy as a whole.

[1] https://www.nytimes.com/2016/01/24/magazine/why-are-corporat... [2] https://ustr.gov/countries-regions/south-central-asia/india

It's not about selling stuff to India, its about selling stuff to the world and Indian developers help us do that.

And it's not H1B abuse it's what it's intended for. Since we slammed the door on immigration 50 years ago, this program was created to release a tiny amount of the massive pressure of super smart people world wide who want to come to the US and help make it better.

It's funny that engineers don't get the massive benefits of free trade that built this country, and the huge risks (Smoot Hawley) of trade barriers to our economy.

Every dollar we send to India has to be spent in the US to be worth anything. They can save it, store it, send it to other countries, but it's nothing but imaginary paper if no one ever buys something from the US or reinvests it here.

And if you are tired of foreigners buying our T-Bills instead of our goods/services, then stop running such massive budget deficits and fix the corporate income tax system that is taxing reinvested capital so highly that US firms are forced to park their foreign profits overseas to avoid losing nearly half of them to federal and state taxes. It's like a farmer eating their seed corn.

I'm sorry, but I'm somewhat confused by your comment. Are you for or against the current H1B system? I'm not sure what economic outcome you're saying is its natural result.

To your point on corporate taxes, please see [1] and [2]. The effective tax rate on US corporations is on par with that for corporations in other large Western countries. I'm all for reforming the corporate tax code, but talking about it as though the effective rates are sky-high is not really going to get us very far.

[1] http://www.forbes.com/sites/taxanalysts/2015/03/25/the-truth...

[2] https://fas.org/sgp/crs/misc/R42726.pdf

Even after then restoring manufacturing may be non-trivial. I have been thinking that currently NAND fabs would be good, not to restore jobs but to restore the balance of trade. It is probably not a simple matter though.

And if H1B workers spend their earnings in the US instead of sending that money back home.

What? They're spending no money on rent, food or taxes? How's that possible?

And what about the Americans who save their money?

It's a matter of amounts, not of yes/no. Of course they pay rent and buy food, but in what comparative amounts? If you send half of your money outside the country, where very little of it makes its way back to supporting the US economy, that's worse than if your salary was given to someone who was going to use it all inside the US. If you disagree with that, please provide some numbers for us to use as examples.

Also, please point me to these Americans who save their money. The average domestic savings rate is 5.7% and almost all of that is money stored in US bank accounts and stocks, which in turn is used to help the US economy.

> 1) what are corporations doing with their increased profits as a result of tactics like abuse of the H1B system?

I'll answer that for anyone confused: stock buybacks, of course!

> Shipping lower skilled jobs to other countries mean higher margins for US companies. Which is good in itself for the US economy.

US companies and the collection of US voters are different. Their interests do not always coincide.

One might say that higher margins are "good for the US economy", but that doesn't mean they're good for every person participating in the US economy -- which is what the US voter cares more about.

It's important to recognize that US Companies, to a great degree, are owned by shareholders. It is the shareholders who receive the profit.

The fact that Walmart sells goods manufactured overseas, giving it higher margins, has allowed various members of the Walton family to become billionaires. But someone working as a Walmart greeter probably sees very little benefit.

And, of course, the now unemployed US manufacturing workers/voters do benefit a little from Walmart's lower prices as customers. But, it's reasonable to question whether such workers are better off unemployed, even if they are able to buy cheap products from Walmart.

The shareholders are us, our 401ks, our pensions, etc. Overall, higher margins are good for us.

Walmart should not sell higher cost products just to have them made in this country. The ability to specialize is why free trade makes both parties wealthier, if we can't make bicycles as well as the chinese, then let them make the bikes and we'll sell them smartphones and apps.

If you were a lawyer making $300 an hour and could type 200 WPM, would you hire a secretary for $30/hour who could only type 100 WPM to type your filings for you? Of course you would because that means you can bill more $300 hours. Thats the specialization of free trade.

> The shareholders are us, our 401ks, our pensions, etc. Overall, higher margins are good for us.

The people working shit jobs at Walmart don't have 401ks or pensions. Or maybe they did, back when there were some good manufacturing jobs that produced goods locally, instead of being outsourced to the other side of the world.

Running a cash register isn't a high skill job, do you think they'd get paid more if the goods were american, because they wouldn't.

But the savings passed to consumers is spent on lots of things, like apps. And app developers are doing pretty good.

The economy is much more fluid that you seem to understand.

Specialization only works on seller's market, i.e. when there's more demand than capacity. If there's more capacity than demand, it makes sense to try and capture bigger share of the market while being less efficient at delivery.

I think the basic idea is that the economy has operated on credit since the 1970s, with both a budget and a trade deficit. The idea is that debt increases over time, and obviously they want to get as much as possible of the extra debt. That is why higher profit margins are good for the US economy.

There have been many studies on this.

Conservatives usually use the phrase "at best, the impact is nil"

Liberals usually use the phrase "at worst, the impact is nil"

Because the study shows there is negligible impact. Every laborer is also a spender. If the person saves, then every laborer is also an investor.

If you believe in the mainstream economic theory, more jobs are produced for the ones that are "taken."

You might ask where are those jobs, and then people will say they are in new fields and require training etc.

The debate goes on: why aren't tech jobs in short supply? A: They are. Q: I don't see that, where? A: there isn't one "tech", there are many different fields and they are in short supply in the important ones etc.

It is not as straightforward as you make it out to be.

Every job taken from Americans is another American taking from the system. Taking tax money. So its not as easy as you would think either.

Oh, that is true.

The unhired foreigner would not end up taking taxes.

I wonder how the math works.

If the company has to pay the extra tax hit when laying off the American, that might let the company decide if it is worth it.

> Because the study shows there is negligible impact. Every laborer is also a spender. If the person saves, then every laborer is also an investor. See the sweatshops, guess they are just "another spender": http://www.dailymail.co.uk/news/article-2103798/Revealed-Ins...

I said immigration may not cost jobs.

And you responded with poverty is bad.

If that was a response to what I said, I don't see how.

Your point was that the impact of using non-American labor was essentially nil in every study ever done. My point was that replacing a $25 / hr union factory worker who has healthcare and PTO, with a $2/hr factory worker in a "suicide sweatshop" is not nil. You said that in general, the replacement workers are just economic spenders too, and I provided a counter example (don't seem like these Chinese workers are likely to buy $800 iphones anytime soon).

Okay, I now see what you are saying. So let's take apart those two points.

You might be asking how could replacing a $25 worker with a $2 worker -- foreign, domestic, etc doesn't matter -- have no economic impact on jobs and wages?

So one might argue the following: The company paying the $25 to the first worker, now has $23 in profit/savings. What happens to that money?

They might reinvest it, they might pay it out as dividends, or they might use it for an acquisition, or they might reduce the cost of the good sold (passing it to the consumer). And so on.

Whatever they choose to do will end up creating more jobs and boosting wages in something else.

Now, you might say -- and I won't disagree -- that if they pay them out as dividends then the kinds of jobs they will produce is ship building for yachts, and massages for rich people and perhaps you don't agree with that kind of redistribution.

That may be, but purely from an economic perspective the net impact of jobs and wages has not been significant.

"from an economic perspective the net impact of jobs and wages has not been significant."

I suppose you mean "from a global financial economic perspective". And you are right, of course: income equals expenditure.

From a economic local perspective, you have now a worker that before won 25$ and now doesn't. He is pissed off, and it's going to vote somebody that looks angry too.

You have 23$ in profit that will go (with a short stop in Ireland first) to buy an empty condo-mine in London or will be invested in places with 2$ waves in order to repeat the operation.

But, yes, the USA commercial deficit is totally the fault of the Chinese.

No, I did not mean from a "global" perspective.

Most of that money is likely to be re-invested or spent in the United States.

You make a whole host of claims in your 4th sentence about the London condo mines etc. which I don't understand.

Just to be clear: the price of commodities don't get magically untaxed by Ireland. The transfer pricing only applies in cases where the value-add is not objective such as IP.

If the $23 were re-invested it would increase jobs and increase wages too.

> Whatever they choose to do will end up creating more jobs and boosting wages in something else.

not if they stash it in an offshore tax-haven in the Cayman Islands.

If Walmart replaces it's american made bikes with chinese bikes, and saves every family in america that shops there $10 on their bike purchases, that savings gets spent elsewhere in america.

The dollars that go to china get either spent or reinvested here. And Chinese purchases of iPhones has exploded over the last few years.

> Every laborer is also a spender. If the person saves, then every laborer is also an investor.

What about laborers who send most of their earnings back to family in their home country?

How will a laborers family spend US Dollars in a foreign country? Hint: the money always gets spent back in the US by someone.

Good point. I am not sure how that would work. (Any economists reading HN?)

There are two things to be said from the studies:

1. So far that doesn't seem to be significant, although I don't know if, in theory, it could get worse.

2. I wonder if that country consumes a lot of US goods, it might still end up netting a positive. (Not sure about this).

"The impact is nil" is impressive distillation of each side's philosophical endpoints :)

But, since we are talking about political ends, the words 'should be' probably belongs after 'impact'.

Do you have a link for the studies?

> That's why I do believe globalization and the availability of huge amounts of cheap unregulated labor does hurt American jobs and industry. Its not xenophobia, its just common sense.

I'm not sure what you mean by unregulated labor, but the bigger problem in this specific case is not the foreign worker, but the fact that they don't have freedom of movement once hired. If they could transfer job easily, companies would have to pay closer to market salaries.

Was referring more to general case, like using less regulated labor abroad (China, Mexico). It has an impact because workers in the US or other first world countries are essentially in an unfair competition those workers can't demand benefits or higher salaries, and the US workers can't "skirt the law" to take lower wages or benefits (for example you can't pay a factory worker $2 / hr in the US). Put it another way, the law essentially says "If you use workers here, your minimum cost is $X. You have unlimited freedom to use workers elsewhere though, and you don't have to follow these rules in that case."

Globalization has made the US massively wealthy since the American Revolution. We rely on the ability to sell our goods and services across the world, cut off the world and we get poorer. Look up Smoot Hawley.

These engineers will be working for our foreign competitors if Trump has his way, how is it good for our economy if more apps are sold by foreign firms, that Samsung sells more phones, etc, etc?

It's made the wealthy US 1% wealthier.

In reality, it's made more than just the 1% wealthier, but the balance is that it's made a whole lot more people poorer. I don't have references, but I remember reading them at some point, in terms of numbers there have been more losers than winners when you look at inflation adjusted wages.

My point here is that its not surprising that a company takes a better cheaper option that can't just leave, and often costs less and has fewer regulations. That means that its worse for the average American worker, because they either have to lower standards and wages to compete, or just lose the potential job.

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