Wednesday, April 11, 2012

More Talent Economic Indicators

Are there winners and losers in the Talent Economy? Yes. The "man with a beer" economic indicator:

Ethiopia isn’t the first place you would look for clues about Asia’s economies. Nor does Jose Rabacal, a 29-year-old Filipino sipping beer at an Addis Ababa airport cafe, think he’s a human economic indicator.

But he is, and so are his 10 compatriots as they bided their time recently during a multihour layover. Each moved to Africa from the Philippines for opportunities that leaders failed to offer at home. Each left behind a family they see once a year, if they are lucky.

I see a positive human economic indicator. The Bloomberg journalist sees a negative human economic indicator. Jose Rabacal's story represents the failings of the Philippines.

The Knowledge Economy is about nation-states. The Talent Economy is about people. Where Filipinos are succeeding is irrelevant. Filipinos are thriving. The above bit of news is good.

The Knowledge Economy frames talent migration as a zero-sum game. There is brain drain and brain gain. Michael Clemens presents the folly of such thinking:

This week, Professor Jonathan Wolff has warned the world that the United States “steals doctors from poorer countries” because it “simply does not train enough doctors to meet its voracious appetite for medical attention.” This is a strong accusation. Professor Wolff, a philosopher, should reconsider several dubious assumptions that his strong claim requires. ...

... Too much of the writing on health worker migration appears oblivious to the notion that health workers have agency or rights, and to the idea that the realization of health workers’ ambitions is an inherent good. I would expect philosophers to be the first concerned with such things, not the last. To anyone reading this post, I plead: If you ever say that health workers from poor countries are “stolen” or “poached”, please stop. That small change will mean that you begin to speak of them as human beings rather than owned property. Discussions of their movement must start from that premise, inside or outside our departments of philosophy.

In this paper I offer a non-technical summary of research on the above claims, and on related claims about the effects of skilled-worker migration on poor countries.

Your community doesn't own the talent born and/or developed there. The booming Sun Belt didn't still your native sons and daughters. Cities aren't Sirens hypnotizing your children to leave a rural town. Migration should be celebrated, not demonized. People develop, not places.

I am disturbed by the ignorance about the Talent Economy in the United States. Policies at all levels within the country are counterproductive if not destructive. Charles Kenny penned a great piece about the problem in Foreign Policy:

All of this suggests those well-meaning folk in rich countries keen to put a travel ban on anyone from a developing country with a degree might want to reconsider their position. But it also contains a lesson for American economic policy. The United States benefits immensely from its talent imports -- immigrants account for over 60 percent of Ph. D. software engineers and more than half of its medical scientists, suggest McKenzie and Gibson. The country should do all that it can to ensure that inflow continues. And it could also do considerably better when it comes to talent exports. The most recent data suggest the United States had less than a third the number of high-skilled emigrants that Britain had -- despite having a population five times larger -- and half the number of Germany. If having a large high-skilled emigrant base in other countries is a powerful source of trade and investment links, the United States ought to be finding ways to encourage more of its best and brightest to spend some time elsewhere.

But in fact, the United States is heading in the opposite direction, on both sides of the trading equation. International applications to U.S. graduate schools only last year returned to their levels in the 2002-2003 academic year after a post-9/11 slump, a function of the stagnant economy and toughened immigration procedures. And at the other end of the degree process, there is growing concern about a "reverse brain drain," as more foreign graduates from U.S. schools decide to return home rather than find jobs in America -- again, often on account of byzantine immigration rules. Meanwhile, the U.S. House Appropriations Committee has proposed deep cuts to State Department international exchange program budgets that support the Fulbright program, among others. This shortsightedness regarding a program that promotes the talent trade in both directions isn't just bad news for the development prospects in Africa or Asia; it's likely to convert into a further erosion of America's long-term productivity.

Bottom line, talent retention is foolish. Pittsburghers sipping beer in DC bar while watching the Steelers on television is not an indicator of failure in Southwestern PA. In fact, this migration explains Pittsburgh's strong economic growth coming out of the last recession.

I'll end with an article I read yesterday:

India is challenging a U.S. law that raised visa fees for high-skilled foreign workers as a violation of global trade commitments and is planning another case against U.S. import duties on steel pipe, Indian officials said on Tuesday in the latest sign of prickly trade ties between the two allies. ...

... Indian Trade Minister Anand Sharma raised the visa issue during a meeting with U.S. Commerce Secretary John Bryson, who visit in India late March, the official added.

India's complaint is about a U.S. law from 2010 that almost doubled visa fees for skilled workers to $4,500 per applicant. The bill's sponsor, Senator Charles Schumer, a Democrat from New York, said at the time that the move was aimed at a small group of companies exploiting U.S. law to import workers from abroad.

If you are trying to plug the brain drain, then good luck explaining why India would complain about a policy that would discourage talent from leaving India in order to move to the United States. The Talent Economy is here, whether or not you recognize it.


pete-rock said...

Jim, the more I read your posts on the Talent Economy the more I agree with you. I think more and more places and their leaders are losing out because they have no understanding of this dynamic.

There's a metaphor that I think explains why there's this lack of awareness about the talent economy -- "standing on third base and thinking you hit a triple." Too many leaders think their town was great because of something THEY did, when in fact it was a set of fortuitous circumstances that led to growth. Once leaders recognize they need the "flow" to thrive, things will get better, until then...

Jim Russell said...

Pete, Thanks for your comments. I'm gaining confidence in the idea that the Talent Economy is the successor to the Knowledge Economy. And I like your metaphor. One person does not make a town great. People make a place great.

Noel Maurer said...

Let me inject a note of disagreement. I don't think you're quite correct if:

(1) Economic spillovers and other positive externalities from "talent" are greater within national boundaries than across them;

(2) Spillovers are geographically localized

(3) People care about residents or citizens of their nation more than others;


(4) Outmigration is caused by market failure at home.

No? Doesn't mean that you're wrong, not at all, but there are wrinkles.