Let the “brainy Indians” come in?

On Wednesday’s NYTimes op-ed page Tom Friedman forwarded on a novel solution to our financial mess and housing crisis:

Leave it to a brainy Indian to come up with the cheapest and surest way to stimulate our economy: immigration.

All you need to do is grant visas to two million Indians, Chinese and Koreans,” said Shekhar Gupta, editor of The Indian Express newspaper. “We will buy up all the subprime homes. We will work 18 hours a day to pay for them. We will immediately improve your savings rate — no Indian bank today has more than 2 percent nonperforming loans because not paying your mortgage is considered shameful here. And we will start new companies to create our own jobs and jobs for more Americans.” [Link]

Once you get past the model minority stereotyping in the first paragraph, he does have a good point. In all the talk of bailouts, stimulus, bad banks, etc., the one thing nobody is talking about (not even the Obama administration) is immigration policy. Now may be the best time to swing the doors open so highly skilled immigrants can enter the U.S. and help stimulate the economy:

… the U.S. Senate unfortunately voted on Feb. 6 to restrict banks and other financial institutions that receive taxpayer bailout money from hiring high-skilled immigrants on temporary work permits known as H-1B visas.

Bad signal. In an age when attracting the first-round intellectual draft choices from around the world is the most important competitive advantage a knowledge economy can have, why would we add barriers against such brainpower — anywhere? That’s called “Old Europe.” That’s spelled: S-T-U-P-I-D…

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p>If there is one thing we know for absolute certain, it’s this: Protectionism did not cause the Great Depression, but it sure helped to make it “Great.” From 1929 to 1934, world trade plunged by more than 60 percent — and we were all worse off.

We live in a technological age where every study shows that the more knowledge you have as a worker and the more knowledge workers you have as an economy, the faster your incomes will rise. Therefore, the centerpiece of our stimulus, the core driving principle, should be to stimulate everything that makes us smarter and attracts more smart people to our shores. That is the best way to create good jobs. [Link]

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p>Vinod quoted Greenspan in an earlier post where he offered the same advice. I know it may not be a good idea to quote Greenspan since he had a large hand it getting us in to this mess in the first place, but the logic here makes sense to me.

[Greenspan] estimates the number of new households in the U.S. currently is increasing at an annual rate of about 800,000, of whom about one third are immigrants. “Perhaps 150,000 of those are loosely classified as skilled,” he said. “A double or tripling of this number would markedly accelerate the absorption of unsold housing inventory for sale — and hence help stabilize prices.” [Link]

The counter argument to this strategy however, is that if every wealthy country followed it, it might result in an exodus of talent from the developing countries that most need to keep that talent. One commenter in Friedman’s op-ed even pointed out that this strategy would be terrible for India since it might lose some of it best upper-middle class to the U.S. (a trend that has slowed greatly in recent years due to India’s economic boom). As much as we want our economic problems solved, encouraging a bipolar world of talented and depleted populations will have a destabilizing effect which will ultimately end up hurting as well, argue the critics of Friedman and Gupta.

79 thoughts on “Let the “brainy Indians” come in?

  1. Tom Friedman is as corrupt as they come. He does not disclose that his first class flight tickets / accommodation / expenses are paid for by desi firms. With friends like Friedman the Indian IT firms dont need enemies.

    That’s possible. No H1B from Infosys I know thinks of buying a home in US. They do buy homes and take loans, but back in India. Last year, I listened to a NPR show where two senators actually busted the likes of companies like Infosys/Wipro etc.. they garner a substantial portion of H1B visas every year but file for very few green cards.

    There are different types of H1Bs, and typically the ones that come through established companies like Infosys / Wipro etc.. don’t stay in the US to settle down. They go back after a few years of H1. There are others who come through consultants and get a job in US companies and process their green cards through those US companies. They are the ones who could possibly buy homes not the ones from Infosys/Wipro.

  2. Addition to my earlier comment,

    There are folks who come for undergraduate/graduate/doctoral degrees who get H1Bs for work and probably settle in the US.

  3. Ponniyin,

    That is some brilliant insight, some of the ones on Wipro/Infosys projects go back because they have limited duration projects and they would most likely be on L1 instead of H1.

  4. That is some brilliant insight, some of the ones on Wipro/Infosys projects go back because they have limited duration projects and they would most likely be on L1 instead of H1.

    I think Indian companies are skillful in exploiting the various immigration visas. They used to exploit H1Bs a lot and when they got a lot of bad press, moved into the L1 visas silently. Actually they prefer L1 because they have a tighter control over their employees in L1. But then anti H1Bs haev wisened up to that too and are now making noises about L1.

    he..he.. I like these games. Who knows there could be some Q9 visas that we can use . :-)

  5. That’s possible. No H1B from Infosys I know thinks of buying a home in US. They do buy homes and take loans, but back in India. Last year, I listened to a NPR show where two senators actually busted the likes of companies like Infosys/Wipro etc.. they garner a substantial portion of H1B visas every year but file for very few green cards

    Thats why as I argued earlier@24 that doing away totally with H1-Bs and instead clubbing permanent residency with a “skilled” worker job is best for America. Though that doesn’t mean permanent residents will invest less in India and more in America but the chances are that there will be more involvements and investments in the local community through children, marriage, colleges, taxes, consumption etc. in America increases further.

  6. 52 · Ponniyin Selvan said

    Tom Friedman is as corrupt as they come. He does not disclose that his first class flight tickets / accommodation / expenses are paid for by desi firms. With friends like Friedman the Indian IT firms dont need enemies.
    That’s possible. No H1B from Infosys I know thinks of buying a home in US. They do buy homes and take loans, but back in India

    Friedman is a naive simpleton who writes inane nonsense usually. Forget about H1Bs, even indians who have become american citizens do not buy homes, or contribute to the communities they live in, as much as other ethnicities. Chinese and Filipino americans have much higher home ownership rates than indian-americans.

    As for the meme of “brainy indians” which is relentlessly pushed by indians themselves (and by those who are paid to do so, like Friedman) the facts such as IQ scores and the backwardness and shoddiness of India make the pushers of that meme look like sleazy con artists who are up to no good.

  7. Forget about H1Bs, even indians who have become american citizens do not buy homes, or contribute to the communities they live in, as much as other ethnicities. Chinese and Filipino americans have much higher home ownership rates than indian-americans.

    Can you link me to the study?

  8. And btw can anyone explain why is “paying rents” less off a contributor to local communities than owning homes ?

  9. 59 · Priya said

    And btw can anyone explain why is “paying rents” less off a contributor to local communities than owning homes ?

    Because this is an ownership society Gods damn it!

  10. 60 · NV said

    59 · Priya said
    And btw can anyone explain why is “paying rents” less off a contributor to local communities than owning homes ?
    Because this is an ownership society Gods damn it!

    It may very well maybe…but I don’t agree that people who don’t own homes here are some how inferior contributor to the communities. But I do agree that immigrants instead of owning homes here in America buy/invest in homes in “desh” are not satisfying their local responsibilities towards America. At the same time I think there are many cases where immigrants earn just that much for living a decent life here, saving for expensive american college education for their kids and saving for buying a house for retirement in “desh”.

  11. Couple of quick points:

    1. The H-1B requires an employer-employee relationship: it requires a job to exist in the first place (and it also requires a temporary labor shortage – either in the area or the job category. The average H-1B either transfers from a student (F-1) visa, or a business visitor visa (B-1) or just comes in fresh on an H-1B. Since (s)he comes in to a job that already exists, (s)he is not creating any new jobs (for others) directly, not for a good while, if ever. The likelier situation is that the H-1B supplants either a recent immigrant or a native-born American. The average H-1B may actually save a higher proportion of his salary than an American would, and furthermore, likely makes less than an American would in the same job. Thus the H-1B’s impact on overall consumption is small, if not marginal. Also, the saving is more directed toward buffering his own consumption against adverse job situations (benching, layoffs, fewer hours per week, lower average salary) than towards investing in real estate.

    2. Numbers: It’s more like (65,000 + 20,000)*6 = 0.5M approx at any given time, not counting those on H-1B extensions on the way to the green card, who are also significant. The 0.5M looks small against 100M ‘all US jobs’ but more significant against (approx) 20M professional jobs, and even more against 5M ‘IT and knowledge sector professional’ jobs. I mention this since there are people arguing that the labor wage impact of 65K should be marginal.

    3. There is a separate visa category for ‘investors’ in the US economy – that already exists. Those who invest something significant, don’t have the details right with me, but say 0.5M and result in 5 US Citizen jobs (for example) get permanent visas on a fast track. Again, this already exists, and as far as I know doesn’t have a set quota.

    People should keep the ‘investor visa’ and ‘temporary job visa’ concepts separate when discussing things, otherwise you can get hopelessly confused on categories and definitions. Also, back during the 1990s IT boom, Greenspan famously said that it was the visa workers who were keeping wage inflation in check so that there could be a Goldilocks economy. So he has a history of saying things like this. So does Friedman. It’s not bad to discuss these things, as long as the economic assumptions – immobile factors of production, economic equilibrium, long term, downward wage and price stickiness, and others (which have the effect of essentially divorcing the model’s implications from the real world) are kept in mind. When it’s not your job on the line, no idea is altogether too wacky to put out there. Not enough jobs? Why, let’s let in 2M people who need more jobs.

  12. No H1B from Infosys I know thinks of buying a home in US.

    I am one of them. Given my H1-B status, I won’t even get to stay beyond the stipulated 6 years. Why would I buy a home?

    they garner a substantial portion of H1B visas every year but file for very few green cards.

    Only the Sales/ Client-relations staff from India get their green cards. Indian IT companies don’t file green cards for techies. It makes sense to have people who will get you clients and work stay permanently in the US. A techie can be replaced at will.

    There are others who come through consultants and get a job in US companies and process their green cards through those US companies. They are the ones who could possibly buy homes not the ones from Infosys/Wipro.

    Permanent residency instead of H1-Bs is the answer to that. One can make a large investment only if he is sure he is going to stay long enough to see any returns.

  13. Permanent residency instead of H1-Bs is the answer to that. One can make a large investment only if he is sure he >is going to stay long enough to see any returns.

    What prevents policy makers from realizing that doing away H1-Bs completely and instead having work for immigrants = permanent residency best for American economy ? I came to know recently that like H1-Bs there is one more new backdoor way of temporary jobs i.e. extended OPT visa Why are American policy makers so much in love with temporary skilled workers ? Doesn’t these temporary jobs hurt American workers more ?

  14. 59 · Priya said

    And btw can anyone explain why is “paying rents” less off a contributor to local communities than owning homes ?

    Currently, the US has a large stock of homes that no one wants to live in, at least at current prices. If we invite foreign nationals to move to the US, on the condition that they buy a home, then this stock will go down, which will help ease this short-term mismatch between demand & supply.

  15. 66 · Gori Girl said

    59 · Priya said
    And btw can anyone explain why is “paying rents” less off a contributor to local communities than owning homes ?
    Currently, the US has a large stock of homes that no one wants to live in, at least at current prices. If we invite foreign nationals to move to the US, on the condition that they buy a home, then this stock will go down, which will help ease this short-term mismatch between demand & supply.

    Do we want to inflate demand for the housing stock? It’s not like it’s especially good housing stock anyway?

  16. What prevents policy makers from realizing that doing away H1-Bs completely and instead having work for immigrants = permanent residency best for American economy ? I came to know recently that like H1-Bs there is one more new backdoor way of temporary jobs i.e. extended OPT visa Why are American policy makers so much in love with temporary skilled workers ? Doesn’t these temporary jobs hurt American workers more ?

    I think you are expecting too much from govt. officials. Typically, making someone a permanent resident (through work) takes many years. It is not as simple as someone applying to become a permanent resident and the official gives the permit after just one interview (like they do for temp. visas).

  17. Currently, the US has a large stock of homes that no one wants to live in.

    Or rather they can’t afford them and/or keep them. Newly built, never occupied homes are only a small part of the problem. One of the more disturbing things about some of the schemes proposed for disposing of “excess” homes… selling them to immigrants or bulldozing them and turning the plots into parkland… is that they assume that the former owners will be leaving the middle class permanently. That’s scary on a lot of levels…

  18. 69 · Branch Dravidian said

    Currently, the US has a large stock of homes that no one wants to live in.
    Or rather they can’t afford them and/or keep them. Newly built, never occupied homes are only a small part of the problem. One of the more disturbing things about some of the schemes proposed for disposing of “excess” homes… selling them to immigrants or bulldozing them and turning the plots into parkland… is that they assume that the former owners will be leaving the middle class permanently. That’s scary on a lot of levels…

    Or maybe we are just redefining the boundaries of a “middle class” lifestyle. People can lead perfectly fulfilling and happy lives without necessarily needing one full acre of land, 1,500 square feet of house per person, and 40 to 60+ minute commutes for everyone.

  19. They should open a test case for Friedman’s visa proposal which also holds Friedman accountable.

    Proposal: Allow 1,000 highly skilled IT workers (Indian/Chinese) to move to Fort Myers, FL. This may help with the foreclosures. Some northeast financial/pharma companies can outsource down south, for slightly reduced wages.

    Friedman’s retirement will be used to buy two Fort Myers’ businesses: a lawn service and a pool cleaning company. Friedman will have to work but he can also Twitter away as he applies herbicide and vacuums the pools.

    If Friedman’s businesses gain more clients (indicating more economic prosperity in the area), then the plan expands. If it fails, he’s forced to spend six months helping out at an Aangan home.

    He knows enough about the “flat world” that he should have no trouble navigating . . .

  20. Should there really be more immigration? Cream of the crop will always get in but a significant portion of those who came in during the IT influx of the 1990s are not the ‘best and the brightest’ of immigrants. They are not much better than average American IT workers and they indeed contributed to the lowering of wages which has lead to resentment, for example, of Indian immigrants among many ‘native’ IT workers.

    I don’t see why sharing a common cultural background should mean a desire for having more of ‘us’ in the country. For example, the ‘illegal immigrant’ problem has negatively affected earlier immigrants from Central America and the Carribbean though many of these earlier immigrants are for letting more in without considering the implications. This has affected the improvement of earlier immigrants since, for example, a lot of schools are more crowded and, in the current economic climate, social services may not get the highest priority…

    For similar reasons, the South Asian immigrants who came in during the 90s may be the one who may be affected most if even more IT workers come into the country and worsen their wages. I am not saying that South Asians (or other recent immigrants) should argue for shutting the door but, until the current economic climate changes, further flooding of the job market will not improve anything.

  21. I think Indian companies are skillful in exploiting the various immigration visas. They used to exploit H1Bs a lot and when they got a lot of bad press, moved into the L1 visas silently. Actually they prefer L1 because they have a tighter control over their employees in L1. But then anti H1Bs haev wisened up to that too and are now making noises about L1.

    I started off many years ago on an L1 and then was switched to H1B. Left once I realized that becoming a citizen is a nightmare!!! Australia any day is much better- bar the fires and floods ;)

  22. @ UMMM

    I think the size of America’s Desi community is probably about just right for my tastes. We’re big enough that we can have services tailored to us (grocery stores, places of worship, theaters that will play bollywood movies sometimes, etc.) but not so big that we put the majority on edge.

    We could probably stand to be just a tad bit bigger. We don’t have self-sustaining ethnic enclaves the way many other groups do (or maybe that’s just a sign of the times since most of the “model minorities” are basically assimilating into non-existence). That plus given our rates of exogamy we’d need a much larger population if we want a sense of Desi culture to propagate into the future instead of fade out within 3 or 4 generations (which giving decreasing immigration from home it probably will at this rate). That is if we want to retain some Desi identity. It’s entirely plausible that most of us aren’t especially attached to it, or at least not attached to it enough to want to impart it to our children.

  23. NV,

    I live in the NYC area and we do have some South Asian communities, relatively speaking… One great thing about the increase of Indian population in the US is the availability of good (South) Indian vegetarian food compared to even early 90. :-)

  24. Then you will have less Lou Dobbs and more Cesar Chavez (with national health care, to boot).

    Will the unfair Lou Dobbs bashing ever stop here.

  25. “Then you will have less Lou Dobbs and more Cesar Chavez (with national health care, to boot).

    Will the unfair Lou Dobbs bashing ever stop here.”

    Question is, who’s going to pay for it?

    I don’t listen to Lou Dobbs but I can gather what he’s about from the “bashing” that goes on. As for Chavez, if he’s the one I’m thinking of, he was a Mexican American activist, great friend poitically and personally of RFK, and worked his heart out for the migrant workers–the legal ones. He was deeply discouraged and depressed towards the end, about the influx of illegal Hispanics. He knew they would undo all the work he’d done for his cause.

  26. I think you are expecting too much from govt. officials. Typically, making someone a permanent resident (through work) takes many years. It is not as simple as someone applying to become a permanent resident and the official gives the permit after just one interview (like they do for temp. visas).

    Oh ya…I forgot abt. security concerns especially post-9/11 !

  27. Look at what Fredman and Gupta is saying “We will work for 18 hours and save a lot of money and then buy the houses” Right? The implication here is, its not necessary to import two million indians, its their work culture which americans need. If Americans work for 18 hours a day and save lot of money, then can revive their country without importing the biological entities

  28. I suprisingly agree. Of course our family owns a gas station and of course we employee people. The gas station is a direct result of our family’s ability to capitalize on [high-paying] jobs, then leave their respecitve industries to start their own businesses.

  29. If ever I want to read India bashing, I visit sepia. Amazing how much many of u hate browns/Indians and esp Hindus. India now has good living for more and more people and I am not surprised so many of u want to visit/ return. Must be terrible hating your color/origins so much esp as so many of you and your parents received highly subsidized education in India which stood u in good stead and helped with work habits, jobs and yes, good correct English. And many realized they knew more than then their colleagues, work wise….