A couple of years ago I was touring an American corporate campus when my perky docent said something odd:
In the East Building we have HR and the cafeteria on the first floor, the second floor is Brazil, and on the third is accounting…
Wait, what do you mean by ‘Brazil’ on the second?
Oh, all the work on the second floor is off-shored to Brazil. I’m honestly not even sure what they do.
What is directly in my field of vision has been off-shored to Brazil? I think most people have a familiar facial countenance that emerges when it suddenly occurs they are speaking to a lunatic. With this expression probably unmistakable, I conceded my skepticism that the ‘off-shoring’ initiative had been flawlessly executed.
Chuckling in response, my escort explained that ‘Brazil’ meant the people not the place (was this a Kakistocracy reader?) and that the entire floor was occupied strictly by that country’s nationals. Whether they were imported en masse by a contractor or materialized as the result of focused internal hiring is a matter I didn’t pursue.
And there was little cause for pursuit regardless. The uniform business perspective is that there is a scarcity of American workers willing to toil in the air-conditioned presence of break-room Foosball machines, and no option to fill that void but by alien labor. Certainly compensation can’t attract an American off his BarcaLounger. And even if it could, there’s not a libertarian economist alive who wouldn’t commence ritual self-cutting at the suggestion.
But I think the lack of language precision is one of the catalysts for miscommunication between emissaries of The Economy and a corresponding human being. For instance, when the former says something like “insufficient labor supply” they innocently omit the suffix: “at the price corporations prefer to pay.” Readers may have to simply accept on faith my assertion that this employer wage preference is remarkably modest.
As a result, workers are well-advised to seek salary support contingencies rather than rely exclusively on the good faith of Mark Zuckerberg. One of these additional supports would normally be the levitating effect of supply and demand. Restricted supply (such as the population of America) with equal demand results in higher salaries. And so while Mark may desire to pay his drones in FarmVille credits, because their skills are relatively scarce he is obliged to concede dollars for the talent.
I can assure you this concession is not granted voluntarily. It is borne as a corporate bridle. And men of Z’s ambition naturally seek to cast off their restraints. The costs of labor scarcity being the most galling of all.
Fortunately, there’s a path to circumvent those domestic labor units scheming to use corporate revenues to raise their selfish families. That is by increasing the labor supply (preferably into the cosmos), which drives down wage prices proportionally while stripping workers of pricing power. None of which is any novel insight.
Though I do wonder if importing thousands of competing Indian economists could cut faculty costs in half while ending employee health care and vacation allotments at George Mason University?
Did someone say something? Anyway, these considerations occurred to me upon seeing a recent tweet by the wheedlers and automatons at the Cato Institute.
Let’s get rid of H-1B visa quotas so we can hire the best & brightest from all over the world, & better our economy.
For those readers unfamiliar with key industry terms, the capacity utilization rate of that tweet is impressive. That is to say the actual sophistry output is very close to its maximum economic potential.
Everyone by now at least vaguely understands the H-1B program. It is a Mexican Coyotes program in suits. Voiding the quotas attached thereto is to put the country’s immigration laws completely under the liberal discretion of corporate HR. Whatever job you do, Cato wants seven billion others in domestic competition.
It doesn’t require a vivid imagination to understand the dramatic leveling effect this would have on American living standards. And by level, you should understand it to mean one centimeter above Calcutta. You’d be amazed by how inexpensively the world’s best and brightest will agree to work. As I have written previously, simply consuming the institutional and social capital of the West alone represents an enormous “raise” for most of the Earth’s labor pool. What they are paid beyond is gravy. Thus Cato is asking you to relinquish the acvumulated wealth of your forebears in exchange for larger CEO gold caverns. I’m personally unimpressed with the offer, though it’s each man’s to judge.
Then there’s that appealing tweet coda: and better our economy. It’s become almost a universal charlatan’s tic to substitute plural pronouns where the first person singular is plainly intended. “Our” economy. Who’s our? The American IT staffs training their foreign replacements? Those who can’t find work in their field? Or just the ones who haven’t received a raise in years while working in a Marrakesh bazar? Hopefully their sullen families will understand the big picture.
Though our economic benefits don’t come without costs. Its own pernicious employment cycle being one rarely mentioned. In fields highly impacted by foreign supply, the compensation inducements for domestic entry deteriorate. This lending more pie chart credence to actually exacerbate the original cause. For instance, the most highly intelligent young people are naturally going to flow toward career arcs that don’t place them in jeopardy of benefitting our economy.
Thus a 3SD student with options in any field will tend to select those with the most comfort and compensation. That means a consistent top-tier refresh rate for derivatives voodoo at Goldman Sachs, but much less motivation toward IT and engineering fields. What, you don’t want a 40 year career job-swapping with tribalist Asian peers in constant cut-throat global competition? Unless starting their own company, the incentives for bright youth in this area are distinctly uninspiring.
All of which ultimately leads to fewer Americans entering heavily disincentivized fields, and louder squalling for even worse incentives to make up the difference. An alternative approach would have been to offer improved compensation, conditions, and prestige to induce higher IQ talent into fields that were alleged to suffer deficits. This creating a virtuous cycle of domestic refreshment.
But it was never about worker shortages, best and brightest, or our economy from the outset. This was all just another sordid display of how the cunning fleece the credulous. In this instance the latter being relieved of their national inheritance.
And that is something you will never hear mentioned on the second floor Brazil.