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Comment by d--b | Hacker News Reader

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...

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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

> 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!

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.

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.

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

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.

> 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.

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