I guess what it comes down to Sam, is that even if the Indian education systems isn't generally as good as that of the US, it is clearly capable of producing a large number of literate, well educated knowledge workers. I'll even concede that many of them receive their college level education in this country. Those workers are often underemployed in India because the Indian economy is not developed enough to provide jobs for them all. So they seek their fortunes elsewhere.

Sam, even assuming that your observations hold generally true, I'm not sure it matters. If it takes 3 Indian workers to replace one American, so long the compensation for an Indian averages less than 1/3 that of the American they replace, the firm is making the rational decision, assuming the work product is identical.

If the work product is not as good, then one of two things will happen 1. They will replace the Indians with Americans negating the problems or 2. They will live with it, because total profits are still higher.

Option 2 can happen because as you said, perhaps the lone competent American remaining behind is able to fix the mess by working a lot of extra hours at no pay. But wait a minute, what that does is lower his hourly rate. He has made the choice to stay and take a pay cut, something you were arguing he should be allowed to do on the other thread, so I guess that's not really a problem at all.

The companies that use foreign labor wisely will benefit, those that do not, will reverse course or be hurt because of it. Provided we let the market work.




Sam, it seems to me, that if you are right, there is a tremendous opportunity for you to get rich. All you need to do is find a company who has traded American programmers for Indian programmers, hire the American programmers at their old wage and offer the same types of products that the companies with foreign workers provide. You should be able to provide a better quality product, on a better time table, at no more than the same price.

Re: Steaks, that's the beauty of markets, you see no difference, enough people do to make Ruth's Chris' price structure viable vs. Outback's. You get the satisfaction of saying we're all suckers, we get what we perceive to be superior food and service for the price premium. At the end of the day, we're both happy.



I've explained above why immigration policies have everything to do with economic policy. Again, in case you didn't catch it. There are three basic factors of production land (incl. raw materials), labor and capital (financial as well as physical). Immigration/guest worker regulations impact the total amount of labor available, so any policies that restrict the free flow of this labor, can be said not to be laissez-faire. Thus immigration policy is economic policy. Particularly, when in the case of the two visas we're looking at, they are specifically dealing with guest workers, part of the labor force. So it's really inane to deny that those policies do not have an economic impact.

In terms of benefits, you seem to be bothered that the foreign workers don't receive benefits. But we know the issue is separate because the firms are under no obligation to continue benefits to the American workers either. So I don't see why the benefits have anything to do with the issue.




Sam - I used the term laissez-faire in an attempt to characterize your "too many regulations" view. I myself see value in markets, but would not characterize myself as laissez-faire. I believe the natural tendency of laissez-faire capitalism is monopoly and income inequality. I don't think either of those are particularly good outcomes for society. But I recognize the power of markets to innovate and create wealth, so I want as few distortions of markets as possible. The market can be a cruel mistress. Think of farriers, who through no fault of their own, saw their trade evaporate as cars replaced horses. I see a role for government in offering aid to those who find themselves like farriers. Does this type of aid interfere with markets? Sure, the funds for the aid have to be raised somehow, but I think programs for displaced workers have fewer short term impacts than those that keep workers in jobs at too high a wage.

The time value of money will always bias business toward the short run, a dollar today is worth more than a dollar tomorrow, so let's grab as much as we can today. So it is the role of the people as expressed through their government to keep an eye on the long run.

In terms of the long run viability of the American economy. There may be nothing that can stop some of the changes to come. Look at China and India, huge labor forces, still largely tied up in agriculture. However as modern farming methods are applied, it will continue to free up labor for non agricultural productivity. At some point soon, the US will no longer be the largest economy in the world (although it will be sometime before it isn't the largest per capita).

I think the long run solution is to invest in innovation, so that we can bring the standard of living of the rest of the world up to ours, rather than have ours drop. That means growing the economy world wide, not trying to live in isolation, in an economy that would inevitably stagnate and collapse under the weight of all the implicit costs imposed by protectionism.

Well Sam, if it isn't cyclical, then in theory the demand for telecom is a big today as it was at the height of the IT boom. If that is the case (I'm not saying it is), then those services are being provided by fewer workers, which implies a huge productivity boost. We are the same output with fewer inputs. In the long run this is a good thing.

In terms of redistributon I favor progressive tax policies (tax the more wealthy at a higher rate), I favor a social safety net, I favor education policies that subsidize lower income students, I favor tax credits for creating jobs in areas hard hit by structural economic issues. I favor means testing of social security. It's Robin Hood stuff, but I think it can be done in a way that minimizes its impact on markets.

Oh come on Sam -

1.Process improvements resulting in productivity gains
2. Inventory levels sufficient to meet consumer demand even at lower production levels
3. Lack of investment by business creating lower demand for certain classes of goods.
4. Uncertainty about the future clouding hiring decision

None of it is a freaking mystery Sam. I'd imagine you could find all of these explanations just by keeping up with the weekly newsmagazines.

Your information is outdated. The economy has actually been adding jobs, and has for each of the last three months.

http://www.msnbc.com/news/990515.asp

Note, that manufacturing is still losing jobs and the gains are in the service sector, it's not across the board. Also note that a number of the new jobs are fairly low paying, and that many are temporary in nature (although one of the analysts indicates that this represents pent up labor demand combined with a bias against hiring).

It still looks like it will be some time before we see any real wage growth or significant decline in the unemployement rate as the economy is not yet growing fast enough.

I read your article, sure the quote that comes from it is accurate, and what I would expect given my belief that many of our manufacturing processes can be done more efficiently overseas. But look at the rest of the article, McTeer says

"The wealthier a society, the less the income they spend on food, and less the income they spend on hard goods, and more they spend on services," said McTeer. "That we have become more a service economy is not something to worry about."

Honda, Toyota and others built their factories here to circumvent tariffs. It would be easy to infer that they picked places like Kentucky because it would be easier to keep wages low.

Actually I was answering your question about the reasons why these car plants came to the U.S. in the first place, and that was the quickest way to show you. There was a great deal of pressure brought to bear on Toyota an Honda at the time by domestic workers. This is how they solved that problem and why you have several plants here in the U. S.
As for your other comment, you will note that manufacturing in the United States still spirals down, and there are few shoe manufacturers as well as television and VCR and DVD manufacturing plants in the U. S. now. Many shoe factories closed down in the early 80s.



There is no such thing as a laissez-faire immigration policy when the government begins programs such as H1B and L-1 visas. That runs contrary to the direct meaning of laissez-faire and is government intervention, which is contrary of laissez-faire. I can not believe you actually wrote that. It makes no sense at all.
I don't favor restrictions, I want the visas removed, period. That is the example of classical laissez-faire, no visas, no government intervention to create that.

You're the one who isn't making any sense. If you don't favor restrictions, then what you want are unlimited visas. The least restrictive system (most laissez-faire) is one where there would be no barriers to immigration. To allow for some guest workers is to move closer to laissez-faire, not further away from it.

In a perfectly laissez-faire world, there would be no restriction on border crossing of outputs or inputs. Our national policy is to place a general restriction in place then to make exceptions for several reasons (hence the alphabet soup of visa designations).

When the government places restrictions on immigration, it is reducing the supply of labor available to potential employers, and is thus interfering with the economy.

Then the economy added net jobs, even after those cuts took place. See my citation that includes the stats for job creation in October.