Monday, June 25, 2007

When Narrow Minded Guilds Ensure Zero Sum or Worse, Negative Sum

The Borjas Blog: George Borjas’s thoughts on immigration, labor markets, and random stuff, 24 June: ‘The Continuing Saga Of Jobs Americans Won't Do’.

The video may complicate the prospects for immigration reform this year. While most of the debate has been over what to do about low-skilled workers, including the 12 million illegal immigrants already in the U.S., the policies for high-skilled workers are now becoming controversial, too. Microsoft (MSFT), Intel (INTC), Google (GOOG), Oracle (ORCL), Motorola (MOT), and a host of other leading technology companies have called for new policies to make it easier for skilled workers to come into the U.S., including by making available more H-1B visas…..

….. Then Kim Berry, president of the Programmers Guild, an advocacy group for U.S. tech workers, took excerpts of the footage, edited them into a five-minute clip, and posted it on YouTube. The video has received tens of thousands of views so far...
…. Employers don't have to prove that they can't hire Americans to employ an H-1B visa worker. But if they want to sponsor that worker for permanent residency, then they need to take a series of steps to prove no U.S. worker is qualified, including placing ads in newspapers, reviewing résumés, and interviewing potential candidates…


What surprises me [George Borjas] is how naive people can be. Did anybody really expect employers not "to circumvent those rules"? Maybe it's time for some classic Adam Smith:

‘People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.’ ”


Comment
The quotation from Adam Smith is from Wealth Of Nations (I.x.c.27: p 145), and is apposite to aspects of the reports from George Borjas, Robert W. Scrivner Professor of Economics and Social Policy. Contact information:. Kennedy School of Government, Harvard University (i.e., a ‘heavy hitter’).

Take care when apply this (famous) quotation to modern circumstances. It does not only apply to employers and corporations, though most people using it think it does. Smith was referring to the behaviour of towns run by ‘trades’, which were in fact individual tradesmen and artisans, who under law (originally introduced to encourage ‘industry’ in the 16th century) had the exclusive power to manage the trades within them.

Naturally, being human, the original good intention was subverted by the incorporated trades to create monopolies, to restrict competition from non-incorporated tradesmen (i.e., those specialised workers who had not served a seven-year apprenticeship with a tradesman in the same town).

A famous victim of this policy to protect industry in a town (on quality and public safety grounds) was James Watt, who though a talented instrument maker was denied permission by the Glasgow Incorporated Trades to practise his trade there. If he had not been ‘rescued’ from unemployment by the senate of the University of Glasgow, exempted from the supervision of the Glasgow Incorporated Trades as a centre of learning, which appointed James Watt as the university’s instrument maker, he might never have been handed the university’s model Newcomen engine to repair in 1763 and then ‘improve’ after 5 years experimentation. Of course, that may have meant that the advanced Watt-Boulton steam engine would not have happened, and the process that led to power- driven machinery would have been delayed, perhaps by decades.

The then ‘modern’ monopoly measures of the Incorporated trades in towns across Britian were condemned by Smith, as in the quotation. Most of the early factories of the growth of industry were either new products or were made outside the boundaries of the ancient towns existing in the 16th century.

Looking at the report of the debates over immigration in George Borjaj’s article he mentions ‘Microsoft (MSFT), Intel (INTC), Google (GOOG), Oracle (ORCL), Motorola (MOT), and a host of other leading technology companies’ that have ‘called for new policies to make it easier for skilled workers to come into the U.S., including by making available more H-1B visas..’. So the ‘usual suspects’ are paraded and the gist of the complaints are that employers are fiddling the H-1B visas, which for some strange reason is judged to be against US interests (a nation of immigrants themselves!).

He also reports ‘Kim Berry, president of the Programmers Guild, an advocacy group for U.S. tech workers’, who posted excerpts from a video on Youtube, which has stirred up trouble for employers (what happened to international solidarity among labour interests?). Apparently, the system requires that employers wanting to recruit permanent workers ‘need to take a series of steps to prove no U.S. worker is qualified, including placing ads in newspapers, reviewing résumés, and interviewing potential candidates’. Here the interests of the Programmers Guild and those of immigrant skilled workers are in conflict.

Why do employer shave to go to the legislated trouble to employ people able and willing to work in industries crucial to the long term prosperity of the USA? Do the authors of these obstructions to employment realise what they are doing? Are they happy to be part of the hostility to foreign imports of low tech products from China, and sooner rather than later, high tech products where at present the US has the lead, but without additional supplies of high-tech capable workers it will not be for long?

Smith’s hostility to the behaviour of Incorporated Trades in the 18th century was directed at individual tradesmen given monopoly powers in the towns. These are the 18th century equivalent of the 21st century Programmers’ Guild (how aptly they name themselves!); not capitalist corporations, but trades unions (and Guilds) whose members oppose immigration because it widens the competition for work.

Their predecessors in Glasgow almost single-handedly delayed the process that led to the industrialisation of the world, which didn’t matter so much in the 1760s because no country was remotely close to Britain in being industrialised, and a few decades delay made no difference. The members of the Programmers Guild should look out of their windows. Today the USA is among scores of countries that are industrialised and capable of doing what USA Guilds prefer not to do. There are millions of Chinese, Indian, other Asian educated workers willing to travel across their countries and continents to work in Hi-Tech trades, plus the Europeans and, of course, fellow NAFTA countries.

Incidentally, Adam Smith was a member of the Senate at Glasgow University that responded to plight of the talented James Watt and which offered him a post in the University, with rooms to work in, and work to do.

From such incidents momentous changes become possible. Change in commercial societies is seldom zero sum, though the antics of the Guild trade unionists (ancient and current) and narrow minded employers, plus bigots and demagogues never find it difficult to make everything they influence zero sum, or worse, negative sum.

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