Racing to Expand Entrepreneurial Visas: Sometimes It's Better to Be the Turtle than the Hare

By W.D. Reasoner on August 27, 2012

There's an interesting article by James Surowiecki in the August 27 edition of The New Yorker magazine titled "The Track-Star Economy". Although I disagree with the premises of the article in fundamental ways, it's thought-provoking and well worth a read.

The author makes the case that the United States lags behind other developed nations, such as Australia and Canada, in providing adequate opportunities for alien entrepreneurs to live and work here. The author's views toward immigration are unambiguous: "The national debate on immigration makes it seem as if immigrant workers were competing with native-born workers for shares of a fixed pie. That's always a questionable assumption, but in the case of skilled immigrants, it's simply wrong." In short, Mr. Surowiecki is flacking for the "Startup Act 2.0" bill, although he never once addresses it by name or even obliquely refers to it. (For a quick background on this bill, see my May 25, 2012, blog, "Zig-Zagging to the Finish Line: The GOP's Disturbing Lack of Consistency on Immigration Policy"; and for background on its predecessor, see the March 25, 2011, blog of Center Fellow David North, "Looking Carefully at the Proposed Immigrant Entrepreneur Bill".)

To support some of his assertions as to the value of immigrant entrepreneur contributions, Mr. Surowiecki cites "one famous study [by] the social scientist AnnaLee Saxenian [who] showed that Chinese and Indian immigrants alone founded a quarter of Silicon Valley start-ups between 1980 and 1998."

Honest disclosure: I have never read the study. But I will admit to a healthy skepticism when I see statistics put to such use. So pardon me if I don't quickly buy into the underpinnings of the study. But here's a core dump of some off-the-top-of-my-head reactions to what the author says about the study:

First, there's a radical distinction between start-ups and successful businesses that go on to thrive instead of failing after a year or two (as most start-up business do, without regard to the nature of their enterprise).

Second, if my memory serves me, the timeframe cited fits within the first "Silicon Valley bubble". And that bubble burst, sending stocks tanking and casting aftershocks throughout the economy. Which brings us back to my first point. Wonder how many of those start-ups collapsed in the bubble?

Third, when I think of successful entrepreneurial giants in the IT field, among the first three names that come to my mind are Gates, Jobs, and Zuckerberg, all American-born.

Then there's the case of Google, co-founded by Larry Page (American-born) and Sergey Brin (Soviet-born, though he immigrated to the United States at an early age). How do you categorize that? A win for the "home" team, or the "away" team? Or does each side gain a scratch on the scoreboard? Or do you just zero out that blended mega-success, and any other like it (however bizarre doing so would be to your final analysis), because there's really no way to accurately tally it as either native-born or immigrant? If you do, then how can your findings be meaningful?

See what I mean? Kind of messy trying to come up with an empirically valid way to figure out such cases. Many great entrepreneurial successes are the result of team efforts that include both native- and foreign-born innovators. That's fine; in fact, it's as it should be. But can you wonder why I doubt the utility of a study based on nationality body counts?

Still, let's assume momentarily, and solely for the sake of argument, that the findings are valid in a meaningful and relevant way. Is the answer, then, really to import more immigrant entrepreneurs to fill the gap, as the author suggests? Simplicity itself! Well, I don't know about that. If true, then aren't the deeper questions: 1) "How and why are we failing as a society that we cannot produce such entrepreneurial spirit and genius for innovation in a nation of over 314 million people?" and, 2) "What must we do to change that?"

As I said at the beginning, I don't agree with much of the article, but it does leave me thinking. In addition to the questions I've asked just above, among the things I'm pondering are these:

  • What happened to "brain drain"? We used to hold to the notion that we had an obligation to developing countries not to deplete them of all their brightest stars through "brain drain" by luring their foreign students and graduates to remain here instead of returning home where they have the opportunity to bootstrap their countries into the modern age. Have we become such hardened venture capitalists of the intellect, so self-absorbed as a nation that we no longer care about a stable and sustainable future for the third world?

  • Everybody isn't a winner. In suggesting an expansion of entrepreneurial and foreign student-oriented visas, the author notes (correctly) that ours is primarily a family-based visa system. But while arguing for a vastly expanded pool of enterprise visas, he does not propose a commensurate offset of the family visas now embedded in the quota system, perhaps because in his view, "economies grow faster when there is more innovation, and having more smart people in the workforce is a key driver of innovation. And the quickest, cheapest way to get more smart people is to make it easy for them to move here." Quick and cheap, okay, but smart? That's a hard sell, and not just to me but likely to most Americans. Massively increasing inflows of aliens is not an "everyone wins" game. There may be some real benefit in modifying our outmoded visa quota model in favor of more balance toward skilled workers. But we are already the most generous nation on earth, where migratory inflows are concerned — expanding by nearly a million resident aliens per year, speaking strictly about the legal influx. If we are to increase the number of entrepreneurial and post-graduate student visas granted to aliens so that we can benefit from their ingenuity and talents, then we should also be considering what family-based preference categories to eliminate or substantially reduce.

  • We need a level playing field. Increasing the number of entrepreneurial visas sounds good in theory, but when left to bureaucracies (or even inept lawmakers), intent often falls short of reality. The Start-up Act or any variant needs to be carefully and thoughtfully crafted to ensure that we are not granting thousands of green cards to foreign students who simply meld into large corporate entities (Microsoft comes to mind) where they toil in anonymity while displacing equally qualified American engineers, programmers, technicians, and others. There's nothing entrepreneurial in that; nothing at all.

The problem with our immigration laws, in a nutshell, is that everyone wants to dabble with them with an eye to their own interests. Large corporations want cheap labor. Open-borders advocates and interest groups want comprehensive amnesty for the illegal masses. The travel industry wants a significant expansion of the visa waiver program and substantially more visas to be issued by consular officers, even if there's a good chance that the entrants and recipients will simply overstay, joining the millions already here who have already done so.

None of them seems to be looking to the common welfare or to care about the after-effects of what essentially becomes a never-ending slot system to fill their vacancies "cheaply and quickly". And to get what they want, these disparate groups are often willing to join in unholy alliances to achieve it.

Perhaps it's time we took a slower, more measured and systematic approach. Perhaps the time has come for another "Hesburgh" or "Jordan" commission — one whose members are balanced not solely through bipartisan participation, but also by the lens through which they view immigration policies — instead of racing to lobby for passage of poorly considered, badly drafted legislation, or (worse) legally dubious and unilateral executive action.