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Tuesday, October 23, 2012

Book Review: The Immigrant Exodus

I came across this book, The Immigrant Exodus:  Why America is Losing the Global Race to Capture Entrepreneurial Talent, via the ILW site.  For those of you who are interested in U.S. immigration policy and law this is a good one to follow.  They have an excellent round-up of articles and editorials.  Being a U.S. emigrant I'm not directly concerned by the issues they write about but I find it useful to compare EU or Canadian policy to what's going on in the U.S.  I also take Patrick Weil very seriously when he says that immigration and emigration policy are connected and I think it makes sense to watch how both play out in my home country.

I read the ILW review and was intrigued enough to buy the book for my kindle. The author is a fellow to watch if you are interested in immigration policy for highly-qualified/investor/entrepreneur migrants. Vivek Wadhwa is well placed to talk about this.  He is an immigrant himself.  He studied in Australia before coming to the U.S. to work in the high-tech industry.  He started as a software developer and rose to the executive level before he left to teach and do research on innovation, entrepreneurship and globalization.  What I really like about his perspective is that he does not assume that all of these topics can be considered without looking at and taking into account the wider world outside of North America.  He's done some very interesting research on off-shore companies, global competitiveness, engineering education in Asia, innovation in countries like India and diversity (or lack of) in the U.S. IT industry.  With a CV like that I assumed that I would enjoy his book - how could I not love all my favorite topics rolled into one?  But after I finished it my feelings were mixed.  There were many things I agreed with but there were also a few moments where he lost me.  I would not pretend to his level of expertise in these matters but my own experience and perspective are clearly very different and so some of what he says raises some questions in my mind.

Let's start with what I liked about his book.  It's a call for action and I always admire someone who clearly states a problem and provides a path to fixing it .  He says (and I agree) that the U.S. immigration machine is broken.  What's the evidence for that?

One Great Destination Among Many:  Some of this has to do with the "rise of the rest."  The U.S. is still a choice destination but just one among many other possibilities that are just as good and maybe better.  I worked in the IT industry in my host country for French multi-nationals and ran teams in India,  Japan, U.S., Europe. I have also been an invited speaker several years running to students in the MBA program at the French school, Ponts et chaussées.  20 years ago almost everyone I met in IT outside the U.S. was interested in going there to live and work temporarily or permanently.  At that time the people I encountered simply could not believe that I left the U.S. West Coast for Europe to work in the IT industry here.  That has radically changed.  These days the kids I meet dream of North America (not necessarily the U.S.) AND Asia AND South America.  There's a lot more choice and where they do end up if they decide to work abroad depends a a lot on what kind of deal they can get.  This a complex calculation that is influenced by many things:  opportunity, the attractiveness of the destination country and the ease (or lack thereof) of getting a work permit.  These are very intelligent people with great qualifications and experience who are perfectly capable making rational, well-reasoned choices.  Wadhwa himself says, "If the conditions were as they are today when I started my own path to citizenship, I would have been a fool to leave Australia." (Australia was his first destination country.)

What Wadhwa is basically saying is that this a global competition for talent.  This is something Americans have a hard time wrapping their heads around.  The U.S. can no longer assume that the highly-qualified migrants will come and stay.  He points out that retention is becoming a problem as well - more and more foreign students are returning home or moving on to another country after their studies or first work experience in the U.S.  He also cites the declining number of immigrant entrepreneurs and investors in places like Silicon Valley.  Let's be brutally honest here.  If you were a young Chinese person today why wouldn't you:   Come to the U.S., get a degree, work for a few years in industry if you can get a work permit, and/or then head home to start a business or join a start-up in Shanghai.  Some call it "circular migration."  I call it, "making globalization work for people, not just companies."

Immigration Law and Policy:  Americans in the homeland might be a bit surprised (some might even be rather pleased) to discover just how unwelcoming the U.S. has become to such talent.  Wadhwa devotes an entire chapter to all the problems associated with the H1-B visa.   It is the number one method by which highly-qualified migrants enter the U.S.  to work.  Everything he says is absolutely correct.  Yes, it's still very popular but it has a number of downsides.  It ties the migrant to one employer (never a good thing) which encourages abuse:  low salaries and less than ideal working conditions. If the migrant is laid off and can't find another employer, he or she has to leave the U.S. immediately.  Spouses can't work and for many migrants that is a deal killer right there.

I've looked at the program through my immigrant eyes and what it really looks like is a "guest worker" program.  There is nothing about it that says, "We value you and your skills and would like you to stay." No, on the contrary, everything about it screams, "We'd like to rent you for a few years and then please leave."  If the U.S. were the only or best option then perhaps that might work but as we discussed above that is no longer the case.

Other countries offer a much better deal.  Wadhwa talks about Canada, Chile, China, Singapore and says, "These countries are offering stipends, labor subsidies for employers, expedited visa processes and other inducements to bring in start-ups. " Just check out this program called Start-Up Chile, "a program of the Chilean Government to attract world-class early stage entrepreneurs to start their businesses in Chile."  If you are accepted for this program the Chilean government  will give you 40,000 USD and a 1-year visa to move there and start a business.  That is one hell of an offer.   Or take a look at the Austrian Red-White-Red Card Plus which offers "unlimited labour market access" which means you can work for anyone who will have you.  Once you start looking at these different policies around the world, that H1-B starts to look like a really lousy deal in comparison.

Wadhwa documents all of this quite well and gives a very cogent argument for why all of the above is very bad for the U.S.  For some hard information read his chapter, "Why the Future of America Depends on Skilled Immigrants".  Immigrants are one of the motors of the U.S. economy - they are responsible for an astonishing number of start-ups and not just in the high-tech industry but also in the small business sector.  These folks are not taking jobs away from anyone - they are creating them.  And if they can't create them in the U.S. they will take their talents somewhere else.  The stakes are clear - the U.S. economy depends on attracting migrants.

Right up to this point I was in total agreement with Wadhwa.  So where did he lose me?  Here's my perspective on a few things:

Is it really all about immigration policy?  All of Wadhwa's solution have to do with with reforming immigration law and policy and all of them would certainly help matters.  However, the choice of one country over another is not entirely driven by access to legal residency.  It is just one factor among many and today the U.S. is becoming less attractive to migrants for reasons that have nothing to do with immigration policy.  I once sat next to a charming gentleman from India on a flight to Canada and he had a whole list of reasons why he went to school in the U.S. but choose to live and work in Canada instead.  Almost all of them had to do with government services and infrastructure:  lack of a national healthcare program and decent unemployment benefits, poor roads to drive on, decaying bridges, and K-12 public schools that he felt were not very good compared to other countries.  That was a couple of years ago.  These days I'm hearing things like high unemployment rate, a huge national debt, a very confusing and sometimes frightening political arena, uncertainty about the American economy, and anti-immigrant rhetoric.  People in the United States might argue that all of this doesn't really represent the reality but since many of them think the country is not moving in a good direction, it should not surprise them that people outside the U.S. have similar concerns.  

What about other policies that effect immigration?  I don't mean to beat a dead horse here but it should be mentioned that there are other policies that indirectly impact immigration and one of those is citizenship-based taxation.  As a result of the IRS crackdown and the arrival of FATCA, more and more potential migrants are becoming aware of the tax implications of moving to the U.S. Articles are starting to appear in the North American (Canada) and Asian media (India and Japan) warning people about this.  Explain to some bright technology worker that spending too many years in the U.S. or becoming a U.S. citizen means that he will be subject to taxation on his worldwide income and/or an exit tax  and then kick back and watch him think very carefully about the implications of that.  I've had the occasion to talk to a number of potential migrants about this and not one would take that deal.  Oh some would still go the U.S. but only to attend school or work for a time before moving on.  This is likely to get worse since all the media attention around FATCA is making more and more people outside the U.S. aware of what it means to be a U.S. Person and all the reasons that this might not be in one's best interests. Wadhwa doesn't talk about this at all and I think he should.  The very people he thinks America should attract are also the ones most likely to be negatively impacted by the U.S. worldwide reporting and taxation regime.

So what?  It occurred to me as I was reading his words that, on some level, I just couldn't get too worked up about it.  So fewer highly-qualified migrants move to the U.S. and start businesses?  The world will continue to turn.  It might even be a better world as a result.  Why does the U.S. have to be THE place for innovation?  Wouldn't we all be better off if there were many such places all around the world?  Are there ways, in fact, that innovation is stifled when it's only nurtured in a few places?  I remember reading an article about innovation in India and some of the very creative ideas that people had based on local conditions and needs and I recall thinking that no North American or European would have ever come up with some of these things.  If highly-qualified migrants started scattering themselves a bit more evenly around the globe would innovation cease or slow down?  Wadha implies that this is what would happen and says this would have a terrible impact on the rest of the world.  

Yes, he says, other countries are rising to challenge the U.S., "But none of these countries have come close to replicating the idea factory and entrepreneurial power of the United States."  I'd like to see some hard evidence for that statement and even if it's true now there is no reason it has to be true in the future.  And I really really doubt that this will cause some sort of worldwide innovation implosion.   On the contrary I am positively jazzed at the idea of having many poles of innovation and brains circulating from one country to another.  I agree with him 100% that the way things are going is very bad for the U.S. but I don't agree that this is bad for the rest of the world.  In fact it might just be the very best thing for everyone.

So I'm not going to get too bent out of shape about this though I will admit that while we are both immigrants my perspective is not his.  You see, Mr. Wadhwa, I don't live in the U.S. and my money is on the rest of the world.  If I didn't believe that, I would never have left Seattle.


Anonymous said...

Hi Victoria
Great review and I enjoyed your personal perspective.

You may be familiar with the series "Justice" by Michael Sandel, a Harvard professor and philosopher.

At the request of the BBC he has done a session in Dallas on immigration. The podcast is available at:

You might enjoy listening.


Victoria FERAUGE said...

Hi there. No I was not familiar with Michael Sandel but I'm listening right now and I'm really enjoying the podcast. Wow! Very well done.

I'm going to finish listening and will post the podcast tomorrow. Thank you so much for the link.


StillAmerican said...

Victoria, thank you very much. I enjoyed reading your article and I am forwarding it to friends and family who are dual citizens. I went to the USA when I was 25 years old as a physician and I worked there for 30 years in many capacities. Now, since 2001, I decided to come back to my home town in Brazil wher I am still working part time, peparing to retire. My life has become a nightmare with the US citizenship taxation and FABRS and all. SInce 2009 I can´t sleep well at night. I have spent a lot of time and money trying to do the right thing to comply to the IRS and Treasury Department. For the first time in my life I regret having become an US citizen. I am warning my friends and family not to do this!

Victoria FERAUGE said...

@StillAmerican, Thank you again. I'm really touched that you are circulating the Flophouse among your friends and family. This is a really small blog and I'm not a professional blogger or accountant or anything like that. What I try to do is give our perspective and try to find ways to take this very complicated issue and make it understandable and accessible to anyone who is willing to listen.

I can really relate to your feeling about having become a US citizen. My spouse who studied and lived a few years in the US is watching all of this and is now thanking his lucky starts that he didn't become a US citizen when had the chance. That is really hard to hear but I can't disagree with him. He's also telling all this to his friends, co-workers and family. Pretty sad, isn't it?