Donnelly and Friedman on our side???

Date: Wednesday, July 24, 2002 9:02 AM

*** H-1B NEWSLETTER ***

Get the Facts on H-1B at
www.ZaZona.com

I have heard that if you douse a fire with enough gasoline you can put it
out before the vapors ingnite. Paul Donnelly and Milton Friedman want to
douse H-1B by flooding the nation with "Instant Green Cards".

Both of them hate H-1B for different reasons. Friedman criticizes H-1B
because it's a subsidy to private industry. Donnelly understands that H-1B
is an indentured labor program and wants it stopped in the hope that foreign
workers will no longer be exploited so easily. When a "free market"
libertarian like Friedman criticizes H-1B he is attacking one of the pet
programs supported by the ultra-Libertarian Cato Institute. That in itself
is news to pay attention to.

I have no problem with their basic tenets that H-1B is a subsidy to greedy
corporations but their solution to H-1B is even worse. They want to give any
foreigner that wants to work in the United States an instant Green Card.
This idea will open the border so that companies can import cheap labor
whenever is suits their needs. This is truly throwing gasoline on the fire.

I have debated the instant Green Card concept with Donnelly many times and
I'll admit that he makes an interesting case. Of course I would expect him
to make good arguments because in 1990 he was press secretary for Bruce
Morrison when he was crafting the first H-1B bill. Donnelly has been trying
to kill the monster that he helped create ever since.

Donnelley's argument is that American workers will never get rid of H-1B
because there is just too much political and economic power supporting it.
He is probably right because I don't see the slightest hint that H-1B will
ever be defeated. The "win win" solution according to Donnelly is to open
the border to everyone that wants a job in the US by giving them permanent
residency.

I have debated Donnelly many times and we both agree on the problems with
H-1B but disagree on the solutions. He isn't concerned that his Instant
Green Cards will flood the labor market and force American programmers to
accept substandard wages. He said H-1B is already doing that and of course
that's true. Donnelly once told me that Americans have to learn to compete
in this new global labor market and if salaries are reduced then the
solution is to find another career. He uses twisted logic that "supply and
demand" doesn't lower salaries as long as the workers have Green Cards
instead of H-1Bs. His contention is that the reason H-1Bs lower salaries is
because they are indentured, not because they flood the labor market.

I have a debate between Donnelly and Matloff online at
http://www.zazona.com/ShameH1B/H1BvsGreenCard.htm. Since Donnelly said he
was amused that I inducted him on the Skunks page I invite you to check it
out also:
http://www.zazona.com/ShameH1B/Skunks.htm. Just search the page for
"Donnelly".

I will include Donnelly on this newsletter.

http://computerworld.com/managementtopics/management/opinion/story/0,10801,72848,00.html

H-1B Is Just Another Gov't. Subsidy

By Paul Donnelly
JULY 22, 2002

Despite big layoffs among IT workers and post-Sept. 11 concerns over the
immigration system, advocates of H-1B visas aren't going away. Indeed, IT
employers are lying low, hoping to quietly persuade Congress next year to
permanently raise the annual H-1B visa limit above 65,000. And why not? Like
most politically connected industries, IT employers have friends in
Washington who are arguing to expand what is in truth a government subsidy.
Take the Cato Institute, supposedly a small-government, antiregulation,
free-market advocate, which for 10 years has opposed deregulating
employment-based immigration. Buying green cards for new hires is a "tax,"
it argues, so Cato wants a permanent, massive, overregulated subsidy
instead.

Meanwhile, IT employers explain that H-1B holders are a "minor league," in
ITAA President Harris Miller's words - a try-before-you-buy approach, like
Major League Baseball's farm teams. But Nobel economist Milton Friedman
scoffs at the idea of the government stocking a farm system for the likes of
Microsoft and Intel. "There is no doubt," he says, "that the [H-1B] program
is a benefit to their employers, enabling them to get workers at a lower
wage, and to that extent, it is a subsidy."

>From free-market thinker Friedman, those are devastating words. The H-1B
program is a subsidy that distorts the job market for IT talent. (But watch
for hilarious letters from libertarians explaining how Friedman, a
contributor to Free Minds and Free Markets, doesn't know a free lunch when
he sees one.)

Two years ago, I participated in a National Academy of Sciences hearing
about IT workforce needs. After the ostensible libertarian in the room,
former Cato economist Steve Moore, laid out his case for permanently
recruiting foreign talent, the panel's economist called his bluff: "So,
there is no argument for a temporary visa, then?" Moore did a double take
before stammering, "Well, this is one of those wink-and-a-nod programs.
Everybody expects most of these workers to stay."

When the government supplies non-U.S. workers to an industry, that's a
subsidy. When those workers accept minor-league wages, that's a big subsidy.
When those outsiders want a benefit that can be supplied only by the
government, like a green card, even regulations intended to protect U.S.
workers can skew the labor market against citizens. American workers won't
support a minor league that runs against their interests, and winks and nods
don't fool them.

Meanwhile, unions and IT professionals risk getting suckered (again) into
supporting irrelevant training programs as a trade-off for H-1Bs. But the
more that's loaded onto the H-1B approach, the bigger the subsidy gets.

Let's face it: IT lobbyists ill serve the industry by perpetuating the
failed regulations of the H-1B and green-card programs, which could be
replaced with a market system that would deliver green cards as fast as
they're paid for. But laying off thousands of U.S. citizens and green-card
holders while retaining "temporary" foreign workers adds fuel to a growing
anger. So call the H-1B visa what it is: a subsidy that runs counter to the
real interests of both IT workers and free-market thinkers.

Paul Donnelly writes about immigration and citizenship. Contact him at
pauldonnelly@mindspring.com.

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