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Summary:

On this 233rd celebration of U.S. Independence Day, in the midst of the worst economic recession in at least a lifetime, there is a national debate taking place as to the direction of the country. And while I’m confident that we will preserve our democracy and capitalism, I’m concerned about the tone and tenure of the discussion around immigration. Smart immigration policies will do more for American innovation and productivity than better math and science education, more spending on basic research and additional venture capital combined. If we get strategic about immigration, I believe the U.S. can preserve its economic leadership position in the world far longer than anyone currently expects.

Passport immigration stamp

When I was 8 years old, my father explained to me the secret to American prosperity.

Immigrants come to the United States and take menial jobs so that their children have a chance at a better future, he told me. While the jobs they take are below their intrinsic capabilities, they’re focused on giving their children a better life, not personal job satisfaction. Second-generation children, seeing how hard their parents work to give them an opportunity, in turn work hard at school, where, he noted, they often focus on mathematics and science in pursuit of the economic returns promised by careers in engineering and medicine. Third-generation kids figure the economic return on effort expended is better for business and legal professionals and pursue those professions instead of technical ones.  By the fourth generation, any immigration-related incentives to work hard are largely nonexistent.

It was a gross generalization used to explain to a child the importance of immigration, but one that I have since found to be generally accurate.

On this 233rd celebration of U.S. Independence Day, in the midst of the worst economic recession in at least a lifetime, there is a national debate taking place as to the direction of the country. And while I’m confident that we will preserve our democracy and capitalism, I’m concerned about the tone and tenure of the discussion around immigration. Smart immigration policies will do more for American innovation and productivity than better math and science education, more spending on basic research and additional venture capital combined. If we get strategic about immigration, I believe the U.S. can preserve its economic leadership position in the world far longer than anyone currently expects.

Why immigration is more important to innovation than broad-based science education

Shortly after President Obama was elected, The New York Times published an article by Ian Ayres in which he expressed support for appointing Larry Summers as Treasury Secretary. The article quotes Dr. Summers on his assumption that top physics researchers are 3-4 standard deviations above the mean in terms of I.Q. While I don’t have evidence to support his assumption, my intuition is that he’s right, including when he notes what a small group of people these great thinkers represent. Dr. Summers states:

“If…one is talking about physicists at a top-25 research university, one is not talking about people who are two standard deviations above the mean. And perhaps it’s not even talking about somebody who is three standard deviations above the mean. But it’s talking about people who are three-and-a-half, [or] four standard deviations above the mean in the 1 in 5,000, [or] 1 in 10,000 class.”

If we assume that talent is evenly distributed throughout the planet, that the U.S. population is around 300 million, that the global population is 6.7 billion, and that 1/5,000 people are the top candidates to push U.S. innovation forward, that gives us a pool of 60,000 people in the U.S. and 1.28 million outside of it.

Innovation will not be spurred solely by giving those 60,000 Americans access to math or science education, but by providing the right incentives for them to enter the scientific and technical professions. More importantly, we could radically increase the number of innovation candidates through targeted immigration of the 1.28 million people that hail from elsewhere.

The government cannot mandate desire

If the first benefit of immigration is importing talent, the second is that of importing “hunger.” Many countries lack a way to identify and reward their brightest citizens, while that has been the allure of the U.S. since our inception. So I would argue further that the “innovation probability” of a high I.Q. individual whose family has been in the U.S. for many generations is less than that of someone who’s new to our nation and has a comparable intellect, but far more desire.

The time for a strategic approach to immigration is now

Broad-based mathematics education will strengthen our nation by improving our workforce, but that is not best path to innovation. Basic research may create jobs and openings at universities to lay the foundation for innovation in certain areas, but the ROI on such investments is uncertain and sometimes misplaced. And the pool of available venture capital is not the constraining factor in new startups — lack of talent is.

It’s time for a more strategic and aggressive immigration policy, one that targets the best and brightest around the globe and makes it easy for them to become permanent residents. We should be recruiting the world’s best talent the same way top companies recruit the best talent. Talk to anyone who’s tried to become a resident here lately and you’ll quickly realize the process is long and often highly random — in other words, very discouraging.

Strategic immigration, together with our strong democracy, capitalistic system and melting-pot culture, will deliver a better standard of living for many generations of Americans to come. I am grateful to all of the immigrants in the U.S. on this Fourth of July. To them, I say thank you — for everything you do.

Mike Speiser is a Managing Director at Sutter Hill Ventures.

  1. Interesting ideas but you leave blank the consequences of this unlimited immigration. According to your idea we would inevitably create a mass populace of ambitionless lounge-lizards.
    Who do you choose to be immigrants? And what about overpopulation? When is one more immigrant too many?
    Too idealistic (translation: Liberal), and not well thought out.

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    1. I am not sure the author is actually saying that. The author is talking about recruiting only those people who are a standard deviation four greater than the normal. Ways to do that would be to give a green card to whoever has a PhD from a top 25 university in the US ( as one example ), or a MBA from a top 10 school and so on.

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      1. PhD from a top 25 university in the US or a MBA does not guarantee innovation. There are many PHD’s unemployed and driving cabs. Ther is already an O visa for extraordinary folks. Why is this not enough?

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    2. Cecil, I’m not saying that we should allow everyone in. In fact as Anirudh points out, my point was that if we are strategic we can increase the “productivity” of our immigration efforts without one incremental person. Having said that, I do believe that we can sustain heavier legal levels.

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    3. worlds biggest “kaabooom” on independence day.

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  2. Arjan Krishna Saturday, July 4, 2009

    Innovation also needs a climate to sustain it. The current process of importing cheap slave labor in IT destroys the environment of creating. How can you create when you have half a million workers imported each year who will work at 1/5th your normal wage. So the best and the brightest work in fields which will help them sustain rather than go up against the cheap slave trading Indian outsourcers.

    If what you suggest had been done we likely would not have been in this mess as we would have created new industries. But now it is too late with the perfect storm of events and the jokers plus traitors in Washington. Perhaps we ought to outsource them for real innovation to return to America.

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    1. Anyone who imports “cheap” labor to the comparatively expensive U.S. is making a bad decision. The best way to find cheap labor is to outsource the job to a comparatively cheap overseas outpost — as is increasingly happening. I don’t buy the cheap labor argument for innovation intensive businesses.

      As a veteran of Silicon Valley, the floors of the technology firms I have walked have been staffed with some wildly talented Chinese, Indian, Eastern European, and other immigrants.

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      1. Chad Steele Monday, July 6, 2009

        Having worked for HP and other software companies using strategic labor from mainly India. It was extremely rare to even see a single individual with even better than mediocre basic skills, after you get past the complete inability to communicate with anyone but their own regional ethnic group, you then encounter the lack of any innovation or creative problem solving.
        On teams of programmers the only innovative and creative problem solving came from the Americans and Europeans on the team. There were so many examples of enormous errors, mistakes and plain blunders made by the foreign teams it became routine to expect unusable output. This was ok with HP because at that time carly was the ceo and wasn’t able to determine good from bad from any HP department. However this was a common experience with any outsourced programming. If you ever wonder why Microsoft sucks so bad, check out their employment records they employ Indian programmers for large portions of the code.

        If you think a foreign worker is going to help innovate the USA out of it’s current situation you need medication. They will try to help their own country first. Pretty simple to figure out base motivation. Give an American a chance and they will help America, give a Indian a chance they will help India.

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    2. Arjan,

      I guess, when you say 1/5 of American Salary, you mean the salary in India and not the salary in the US.
      All H1-Bs in the US are paid on par with their American co-workers.

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  3. Brian Hayashi Saturday, July 4, 2009

    Here’s one idea for an economic stimulus: find the places in America where houses are being deserted, and provide 100,000 visas for Koreans and Indians and their families to immigrate to those places. There are perhaps 50 counties where a vast majority of the abandonments are taking place, start with those places. Gradually escalate their home payments so they have a way of ultimately buying their home from the bank. I guarantee you those people will work their butts off to turn around those communities and become productive US taxpayers, er, citizens.

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    1. Love it. Sort of an economic GI Bill like we had after WWII. Now that’s some creative thinking…

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      1. Chad Steele Monday, July 6, 2009

        Except the GI bill was to help Americans build America.
        Brian’s idea is to displace Americans even further.
        Bring over people that don’t speak English, have no resources and no jobs, that has to be one of the least thought out ideas I have ever encountered.

        We need people thinking about how to help America not destroy it.
        Provide the same opportunity to those that already have an investment with America.

        Stop banks from foreclosing on loans the taxpayers have already bought.

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    2. Why immigrants? Why not give laid off U.S. workers empty houses with the same deal? Why not the people who were forced out of these houses due to job loss?

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    3. Sumit Chachra Sunday, July 5, 2009

      I have proposed giving away 500k green cards to the first 500k people who can buy a house worth $500k or more on the condition that they keep it for 5 years or more.

      500k * 500k = $250 Billion pumped into the economy at almost no up-front expense to the Government, keeping highly paid individuals in the US, and guaranteed property tax for 5 years… and hopefully by then we’ll be out of the recession.

      More of a tactical move than a strategic one, but worth a shot. Sadly the Obama administration is all talk, no out of the box thinking… so many of the ideas here might be great, none will be implemented / talked about…. Sad!

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  4. USA: PEOPLE ARE OUR BIGGEST ASSET, IMMIGRATION IS OUR BEST STRATEGY & TACTIC

    I completely agree with Mike. As an immigrant to the US I have learned what amazing opportunities the US provides everyone. I relocated to India 22 months ago and in September I will relocate back to the US. Why? Because the US provides the best opportunities.

    Happy birthday USA! I am proud to be an American!

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    1. Awesome! Welcome home.

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    2. You can’t generalize this, I think India is an emerging nation that has high potential of opportunities for everyone. I’m not saying USA doesn’t have it, but INDIA is very near too.

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  5. Hernando Buitrago Saturday, July 4, 2009

    The theory discribing the relationship between immigrant generation and the incentive to work hard makes sense to me. Targeting the high IQ people around the world will affect innovation, no doubt. But, is it really fair for the US to draft all of the very talented people? Where does that leave other countries?
    In my opinion, the priority is for rich countries to deal with those displaced by international economic policies. That is where the immigration needs are at the moment.

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    1. My wife and I had this same debate as she read a draft of this post. My argument is that most great people outside the U.S. don’t have the same opportunities because of political, economic, and cultural reasons in their home countries.

      I think competition amongst nations for great talent will force the world’s governments to embrace democracy, capitalism, and reward the best talent. It’s a global version of U.S. Federalism ;–)

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      1. As an immigrant, I’d like to thank you for the recognition. I am thankful for the many great opportunities here and to be warmly adopted by the society.

        As of US is taking an unfair share of talent, I think while US is the clear winner in the high tech space, it is not going to vacuum all the talent in the world any time soon. Believe it or not many people prefer to stay home rather than joining the forefront of innovation.

        More importantly I worry about why my home town Hong Kong do not have similar program to attract outside talent. Actually they do have something. But the result is really lame. Any country will claim they want to create their own version of Silicon Valley. But it is easier to say than done. Many things have to be done right to create a flourishing ecosystem. Hong Kong’s appeal to immigrants is rather limited, both economically and culturally. This is probably true for many other aspiring countries also.

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      2. I think people outside the US are getting better opportunities every day. Take a look at Asia’s growth and prospects. It won’t be long before China, Singapore, India become the desired places to work and thrive. For example, Singapore already has great education, many jobs, stable government, incredibly low tax, easy immigration and a lot of incentives in place for individuals and companies to set up.

        My fear is that even with a more flexible immigration policy, we won’t be able to attract the best and the brightest. If you want to innovate and address a growing market with a huge population, Asia is the place to be. I see friends move to Asia daily, even in this recession. The job opportunities are immense.

        One should look at the EU example. UK’s immigration policy for educated individuals is very open, but they are not able to attract all the talent they want, because people chase opportunity elsewhere. Will US face the same problem?

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  6. Lou Dobbs – was that you breaking wind?

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    1. Funny. He who smelt it, dealt it.

      It’s easy to blame others for our problems as Lou Dobbs does, but the American people are far too wise to fall for that nonsense.

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  7. I like your article. Innovation as a cure for the economy is a great idea. Many companies started during economic downturns. There have been some articles in the New York Times Opinion Section stating that innovation is needed to help get the country out of this economic slump. Unfortunately, most people measure economic help by short-term stock market peformance, unemployment, and gasoline prices. Gasoline prices are not near record highs yet. I don’t think that the stock market performance over a week or two can be used to generalize to the entire country. You mention that there are 60,000 people in the USA to push forward innovation. The DREAM Act (Senate bill S.729) would give legal status to undocumented students if they meet certain requirements such as completing 2 years of college or join the military. These students are untapped resources for innovation who have been educated in this country. The bill would benefit approximately 65,000 students. Out of these beneficiaries, you may get 3,000 people who will make great contributions to push forward innnovation. The rest will earn good salaries and contribute income tax and to Social Security. With research companies cutting jobs at alarming rates, the laid-off workers will easily help to get to that 60,000 people number to push innovation.

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  8. Owing to far too many people like cecil and a very bland and unappealing culture, combined with some very deep seated racial and affluent driven hatred, the question of desire to even be in such a country is missed out.

    The premiss rests on an assumption that all of the 1.23 million would actually want to be in the US, from my experience around the world the vast majority don’t; due to what the US is by it’s international behaviours and attitude, let alone that of most of the people there.

    I’m lucky enough to be some where in the higher end of IQ, skill, education and experience and I’ve boycotted the US for a very long time due to the disgusting attitude I face every time I have to cross the border, the US has long proped itself up as an ivory tower, and now it’s isolating itself as a castle prison.

    I do agree with the piece on the observation of hunger & desire, or more accurately; “the lack of a sense of entitlement” which Americans seem to be born with. Believing you can make it opposed to believing some jingoistic nonsense that you should get life on a plate (with a hummer on the side and super size it all just to up the national levels of obesity some more).

    After dealing with 30+ years of listening to how great Americans think they are stomping around the world, mainly with their wars (as well as bad shirts, arrogance & lousy beer), I think and hope that the current rebalancing of greed to reality can only be a good thing.

    A good thing in so much as actually understanding a place in the world, opposed a selection of self-serving myths wrapped up in a shroud of delusion, that is then attempted to be sold to others.

    Time to take the red pill and face the reality, before that is done everything else is just reorganising the current delusion.

    Taking the cream of the immigrations for innovation, and the low end for menial that Americans think they are above, only leaves a floundering middle. Combine that with out sourcing manufacturing and IT (as another poster mentioned) and what is left ? The US sold itself to immigrants in the hunt for short term profit, and lost what ever was left paying the bills.

    Happy birthday, and good luck, with the world reputation you’ve built yourselves you’re going to need it !!!

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  9. Mike, I think that you’re absolutely right, and I’d like to offer an example to support your claims.

    Israel during the early 90′s went through an astounding immigration wave – around 1 million immigrants from the former Soviet Union came to a country of ~5.5 million at the time (the US equivalent would be bringing in 50 million immigrants over a few year period).
    These immigrants, on top of their willingness to work hard, had on average a higher level of education, especially in math and sciences, than the general population at the time. In other words, they represented an import of high-skilled labor, where the development of those skills over a long period (i.e. education) was paid for by another country.
    The result: an economic revolution spurred by a technology sector that grew to become world class within a few years and remains the driving force behind the rest of the economy.

    Note however that Israel went through other immigration waves over the years, some of which were just as big but did not have the same effects. I believe that the key to the success of the soviet immigration wave of the 90′s was that these were highly skilled workers. A huge influx of skilled workers willing to work for less ended up, rather than taking jobs from Israelis, creating more jobs and eventually significantly raising the average pay for everyone.

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  10. I can’t imagine the type of hateful comments this article would have generated on alleyinsider. As a regular reader of both; I must say your readers are more thoughtful and mindful when commenting than on other blogs.
    Happy Independence Day.

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