Soliciting brainpower...

This past week's Economist featured an interesting article on immigration policy in America. Recently passed legislation (i.e. the bailout) included an amendment from Senators Grassley and Sanders, whereby firms receiving bailout funds would be greatly constrained in using the H-1B visa program to hire foreign workers. This type of legislation, though rooted in a desire to help American workers, is just not sensible. I could understand a desire to require anyone receiving bailout funds to show that indeed there isn't American labor to do the job, but to start down the path of impeding the best and brightest from around the world from coming to America, well... that's going to end poorly for America. It is non-sensical and illiberal to create a protectionist environment at the high end of our labor market, when in actuality Americans aren't entering select fields (e.g. Engineering, Physics, etc) at nearly the rate that our advanced economy requires for continued innovation. Let alone the fact that you may end up with noone doing the job, or an unqualified person doing the job, the real nonsense in this change is that innovation and ideas are not exhaustive, but instead are exponentially collaborative. We should be opening our borders to a great many more educated folks, welcoming them to our lovely melting pot, in which they can add to the ideas of the educated Americans and spawn more innovation.

What of the criticism that these workers are displacing native scientists who would have been just as inventive? To address this, Mr Kerr and William Lincoln, an economist at the University of Michigan, used data on how patents responded to periodic changes in the number of H-1B entrants. If immigrants were merely displacing natives, increases in the H-1B quota should not have led to increases in innovation. But Messrs Kerr and Lincoln found* that when the federal government increased the number of people allowed in under the programme by 10%, total patenting increased by around 2% in the short run. This was driven mainly by more patenting by immigrant scientists. But even patenting by native scientists increased slightly, rather than decreasing as proponents of crowding out would have predicted. If anything, immigrants seemed to “crowd in” native innovation, perhaps because ideas feed off each other. Economists think of knowledge, unlike physical goods, as “non-rival”: use by one person does not necessarily preclude use by others.