27.12.10

Merry Christmas again!

Regrettably the Washington Post chose to wait until after Christmas to publish this, so this post is not quite on time. Nevertheless, in the vein of the post of Christmas past I present you with Amazon.com‘s patented method (as yet unimplemented) for ameliorating the deadweight loss of Christmas, to theirs and the receiver’s benefit, and in some sense to the giver’s benefit as well:

Amazon patents procedure to let recipients avoid undesirable gifts

Apparently returned purchases are a major cost for retailers, especially otherwise largely-automated ones like Amazon.com. So avoiding shipping bad gifts, only to then have to process them again when returned, and possibly resell them at a loss, is a good way for Amazon.com to cut costs. (And though the article doesn’t mention it, presumably this system would act as an incentive for shoppers to shop exclusively at Amazon.com rather than elsewhere — even better from Amazon.com’s point of view.) Strangely (or perhaps not so strangely in today’s newspaper world, alas) the article doesn’t link to the patent itself, but it’s not particularly hard to find. I doubt many patents these days include “mildred” in their text. :-)

I express no position on the wisdom of permitting Amazon.com to patent this. But the idea itself is a good one.

11.12.10

A rather-belated response to Brain Drain Vs Foreign Invasion

(I considered posting this as a comment on the original post, but it’s grown enough that it warrant its own post. As a further aside, I find it interesting that the prevalence of post-to-reply varies across different planets. My impression is it’s much more common on Planet GNOME than on Planet Mozilla, for example.

And as one last aside, I’m amazed how much easier I find it to write on a topic I care about, presenting analysis I actually believe important, than to write on a topic I find uninteresting, or to espouse a position to which I hold little to no attachment — as most paper-writing in school tends to be, especially for one who is generally apathetic concerning literary analysis.)

Introduction

Shortly before Thanksgiving roc ruminated about the effects of choosing a foreign college over a local college, in particular making these observations:

I’ve always found it ironic that at the same time Americans complain about foreigners stealing US jobs, people in the originating countries complain about the “brain drain” of talent moving to the US. Can both groups be right? Would everyone be better off if talent stayed at home?

I think the right conclusion is that sound bites are rarely “right”. :-) There’s some truth and some incompleteness in both (even if the answer to the second question is unequivocally “no”).

The simplistic view

The obvious “cost” of “brain drain”, stated as such, is to the country losing the talent, and the obvious “gain” is to the country gaining it. Looking only at it in this narrow sense it’s just a zero-sum game. Of course more visas must be better for the gainer and worse for the loser!

The most obvious “cost” of incoming talent is that you must work harder for your position, and the corresponding gain is to those who get better positions than they had. Again it’s zero-sum: better for my labor force competitors, worse for me.

But since immigrants and not nations benefit in the latter case, “brain drain” can only be bad for the nation as a whole when it loses its best and brightest. So nations are better off if everyone stays at home in a state of autarky, right?

The unconsidered benefits

The narrow views ignore the benefits of migration. (One easy way to win a game of war: deal yourself the entire deck.) Examine both at once, and you see the incompleteness of either view.

The expats are better off

First, consider the value the expats, the people actually migrating, derive in doing so. They benefit from concentrations of people in their fields, or close to them, or perhaps even just of similar mental acuity, which would not necessarily be available if they couldn’t broaden their search radius to include the destination country. A country of four million like New Zealand may not be able to sustain world-class universities specializing in and job markets covering all of computer science, nuclear physics, oncology, aeronautics, and quantum mechanics. (Add more industries if you think New Zealand could field these.) If you can only study locally, you probably can’t study with the best in the field. If you can only work locally, you may not find your ideal job.

Incidentally, this point flatly answers the question, “Would everyone be better off if talent stayed at home?” Certainly some may see moving as a complete loss, but most will not.

Skill concentrations are more efficient

Second, consider the externalities from skill concentrations afforded by talent migration. If you get a lot of smart people working on a problem in the same location, you’ll likely get more progress than if they were geographically dispersed. The portion of the SpiderMonkey team that works in Mountain View, for example, is helped by being able to sit down and discuss issues, from small to large, in person. (Although to be sure, this is rarely necessary, as IRC, Bugzilla, and so on are adequate for all but the most intricate communication.) Functionally instantaneous communication lessens the gains of physical proximity, but it’s no substitute. This translates into more effective universities and more efficient companies. Heightened efficiency translates into reduced costs to provide products and services to the market (education is but one product/service). Reduced costs, in competitive markets (universities certainly do compete, as do most businesses), translate to reduced prices or increased quality. This is the oft-neglected good that reducing barriers to immigration provides; it is also one notably absent from the sound bites.

Restrictions burden even desirable immigration

Third, supposing that some restrictions are nevertheless desirable, consider that restrictions and impositions on visa quotas make it harder for the desired level of talent to migrate. Businesses and universities must fill out more forms and employ more people to process foreign talent. Immigrants who would be acceptable must still undergo more interviews, pay higher entry fees, and suffer more onerous restrictions on their freedom to modify their future plans. It’s hard to see how this yak shaving is good for anyone but the excess government workers employed to administer it (and demagogues who gain power promoting it).

A certain level of screening necessary to reject utter lowlifes may be unavoidable. Yet I see no rational relationship between this aim and, say, the rough US requirement that “you must remain continuously enrolled in a university or permanently employed while you remain on your visa”. And even a rational and properly limited policy might be the camel’s nose prior to truly excessive restrictions (no doubt spurred on by demagoguery and special interest groups).

Circling back

So if you add it all up, is brain drain good or bad when considered in total?

I think the benefits are much greater than popular rhetoric makes them out to be. Moreover, we should acknowledge that not every emigrant, say, who goes off to CMU to study computer science is forever lost to a country like New Zealand. Making exit easier for skilled workers does not necessarily doom a state to permanent loss.

Still, some people certainly will be worse off at the individual level. It’s also sometimes the case that groups of people, even entire industries, may be worse off with greater trade: the people the simplistic views focus on to the exclusion of all others.

To sum it up: the marginal gains from mobility of talent are widespread but small, while the losses are isolated and larger. But don’t expect special interest groups or demagogues, of whatever stripes, to acknowledge this.

A closing question, and answer

Having said my piece on the opening questions, I will close with one of my own, with an answer I hope may illuminate a deeper issue.

Take as a given that restricting “brain drain”, or restricting labor competition, is sometimes selfishly good policy. Why apply restrictions nationally and not at other levels? Why not at the level of the Swiss canton, the Indonesian province, or the American state (or in the special case of the European Union, the European country)?

It seems to me that the reason we see far fewer restrictions at non-national levels is that the overarching governmental units prohibit or severely curtail them, and special interests can’t overcome obstacles to changing that. But nationally, disparate special interests reach the critical mass to successfully push for restrictions. (At the international level the multitude of self-centered sovereignties make effective advocacy much more difficult.)

The national level isn’t really the appropriate level for restrictions on talent mobility. It’s merely the one at which special interests can be effective enough to get them enacted.