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13 October 2012

Comments

Wade I

"Give me $25B, and I can ‘save’ any buggy whip or solar chip maker that you can dredge up."

I agree wholeheartedly. In fact, I think many of us with a pulse and a free degree or two from the local government-run university system, could, given enough federal cash, guaranteed loans, cost-plus contracts, or negative points at the discount window, be Mitt Romney "saving" the Olympics or Lee Iacocca or Jack Welch or Jamie Dimon.

But, then again, I don't believe in the irreplaceable Galt theory of economics.

Also: Would not either Marx or Smith expect to see *some* level of serious wage inflation in particular sectors if this were really structural and not cyclical unemployment? Where is it?

Speaking of inflation... no, really. There isn't any. The Fed could print (buy toxic assets from wealthy banks) at twice or thrice the rate with interest rates at the zero lower bound and we still wouldn't see any. The money supply has tripled in recent years and we still can't hit 2%.

As to H1Bs? Higher-income protectionism has a constituency with a measure of political power. This is not limited to Dems...

George Rebane

WadeI 124pm - Why would wages (cost of labor) increase during high unemployment (high levels of unused labor supply)?

Why are the Dems prominent in keeping legal immigration at a low roar, and also prominent in promoting fast track immigrant status to illegal entrants?

Wade

George 347

Your whole post specifically asserts high structural unemployment (high labor demand, low labor supply) with millions of unfilled jobs. How is high demand, low supply not reflected in rising prices?

Again, professional level protectionism has proponents in DC for obvious reasons. Perhaps they are more likely to be Dems because most software engineers don't live in Alabama or Oklahoma.

George Rebane

Wade 1144am - (I think you meant 'George 327'?)

Not sure I understand your first question. Can I rephrase it 'Why aren't offered wages increased to reflect the demand for labor that is in apparent short supply?' I'm not sure that the offered wages aren't appropriately increased to the level that alternative solutions to hiring one limited function worker aren't applied by combining positions, using more technology, or other changes to operations.

Re "professional level protectionism", you certainly have a plausible explanation. Don't know how uniformly Democratic are the locations where techies work, or how liberal the techies are. Most certainly more than software engineers are involved here. But given proposals like that of Microsoft, the problem most certainly is real. Do you know the Dems' stated reasons for opposing the import of technical talent?

Wade

My first question is this: You (and other Republicans) assert that today's high unemployment is structural rather than cyclical. Structural unemployment is, as you point out, characterized by a mismatch between desired and extant skills in the labor pool. If there are truly millions of job openings requiring certain skills going unfilled, the laws of supply / demand say you'd see upward wage pressure in particular sectors. We don't. At all. That is a strong indication that the current unemployment is, in fact, cyclical (low labor demand, high labor supply). So: in what sort of hypothetical high structural unemployment scenario do we not see upward wage pressure in the sectors with "millions" of job openings? Your answer of "alternative solutions" is fine as far as it goes, but then that belies the urgent need for a sharp increase in foreign workers, doesn't it?

That employers who employ expensive, skilled labor would love to cut their costs by flooding the market with cheaper, more pliable foreign talent is not surprising. Trying to justify this desire by pointing to "millions" of phantom jobs requires proof of their actual existence.

Where do techies work? Rte128 in MA, Silicon Valley in CA, NYC, and elsewhere but the big concentrations are certainly places represented overwhelmingly by Dems. Just like farm-state conservatives love ag-protectionism, tech-state Dems are going to like professional protectionism. Regardless of the politics of their constituents. Republican farmers don't send their welfare checks back and Republican programmers don't want to compete with a glut of onshore foreign talent who cede any ground just to keep their visas.

I don't know. Do you?

George Rebane

Wade 132pm - On your foreign worker question, I would refer you to Microsoft and its willingness to pay upwards of $10K to the feds for letting them import tech workers. And the 3M open jobs figure has been reported for some months now by the WSJ and other outlets.

As I accepted in my 1205pm, the protectionist scenario you paint seems to me plausible, although I have read of no such discussions among tech workers. Discussions of job protection that are rampant in the media between adherents (and opponents) of union shops.

In my last hurrah at bizrate.com we (I) hired H1-B techies and had close to 100 professional techies (out of 200+) employees. And we were hurting for more techies, but I heard no current ones seeking to keep anyone (citizen or alien) out of our company. But that is only an anecdotal sample, it may have been and still be a different situation elsewhere. My experience just dovetails with what I read in today's reports about the dearth of technical talent in the country. (I was surprised about the 600K non-tech jobs going wanting.)

Wade

I've worked with plenty of H1Bs myself and you are absolutely right: I have never heard even the slightest grumble. I, and everyone else I have worked with, always cared far more about having competent coworkers. I have worked with more than a handful of illegal Canadians and Israelis with no complaints. No visas to speak of save a long expired tourist stamp. Don't even get me started on the White Russians or Taiwanese.

So, no. I haven't seen it myself, but I'm aware of some level of political pressure against unlimited foreign professional hiring.

I am disinclined to take the WSJ seriously. Pre-Murdoch, I always gave the "news" part the benefit of the doubt. The editorial section has been a joke since before my, or even Bill Kristoll's time. Now? Hahaha. Reputable source, please.

Wade

Also, too: if there is no money (wage inflation) trying to fill these jobs then they don't exist. I call "bunch of stuff" and "malarkey."

Again, Marx or Smith, hell, even Hayek or von Mises, would expect to see inflation in a high demand scarcity market.

George Rebane

Wade 552pm - this rube has been a lifelong WSJ subscriber, among many other news/commentary pubs of all persuasions, and I have not had the experience of the newspaper ever having been reporting to anything except the highest standards. Given its preeminent subscription and distribution stats, much of the world appears to agree. Are we then all fools?

Perhaps you have a publication that would better advise and inform us.

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