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.

8 Comments »

  1. Thanks for this.

    I’ll note that of the “unconsidered benefits”, none accrue to the source nation. Except maybe you could argue that skill concentrations in places like Silicon Valley produce benefits that flow worldwide and thence to the source nation.

    Comment by Robert O'Callahan — 11.12.10 @ 22:29

  2. Nice blog post. Another benefit (for the source nation) is that people trained, educated, or employed in the other country may return home and bring their new skills and capital with them, or they may even just send money back to family at home.

    Comment by James Napolitano — 11.12.10 @ 23:41

  3. Except maybe…

    Yes, that’s precisely the point. :-)

    Comment by Jeff — 12.12.10 @ 07:54

  4. As a Canadian attending University in the USA I was not allowed to take a job off-campus. However, I was allowed to start my own business! So, I did. I didn’t end up doing much consulting (I had a pretty good on-campus job) but I was shocked how easy it was to start up my own personal proprietorship. I understood why law-makers would have thought this was all reasonable, but at the same time it seemed ridiculous. Obviously, if I am starting a business I am still competing, but I guess it is at a much more desirable level.

    You mentioned that the competition from immigrants makes it more difficult for the natives to get jobs. If one of those immigrants starts the next Microsoft, it works the other way. Statistics probably work against this argument, but of course a large, successful company can have a positive impact on a nation that reaches far beyond the number of internal jobs.

    I am now back in Canada, working with a Canadian company that was recently purchased by an American company. A few times a year I cross the border to work on projects in the states. Although it has never happened to me, some of my coworkers tell me about how the border guards use the phrase “Stealing American Jobs”, as though the jobs were somehow the birthright of a natives and also somehow a piece of physical property that one could actual “steal”.

    Comment by mawrya — 12.12.10 @ 14:28

  5. The EU offers lots to study in terms of immigration, as different countries have different rules and there has been lots of change. For example, you don’t get a visa for France, you get a visa for the Schengen Area, which includes most of the EU, except the UK & Ireland, but does include non-EU coutries Iceland, Norway and Switzerland.

    A few years ago several Eastern European countries joined the EU, and therefore gained the right to work in other EU countries without a visa (including the UK & Ireland). At the time there was a lot of fuss in the about Polish people taking jobs and preventing them going to British nationals (I’m not sure if there were more people from Poland than the other new contries, or if it was just used as a generic term for Eastern European).

    More recently, the economies of Eastern Europe have been performing better than Western Europe, and a lot of the immigrants are returning home. Suddenly people in the UK are asking where all the hard working Polish builders have gone!

    Comment by Ian Thomas (thelem) — 12.12.10 @ 17:41

  6. I don’t disagree that labor competition with natives produces no benefits for the country in question. I generally tried to make clear that I thought this was the short-minded view of the situation. It seems to me that any analysis here relying on “obvious cause, obvious effect” reasoning is wrong. Economies are simply too complex to draw those sort of conclusions, and the obvious analyses are going to miss all the usual subtle benefits that make trade competition (in labor in this case) a good thing.

    Comment by Jeff — 13.12.10 @ 22:22

  7. Quite interesting, Ian. My slightly-informed understanding had been that internally, the entire EU was essentially a free-trade zone in the labor market for its citizens, but it sounds like the extent of the zone (zones, I take it) isn’t quite that.

    I wonder how much of the return immigration is a matter of culture versus economic considerations. Certainly in some cultures returning to family might be a strong consideration in deciding whether or not to move. In the US we have occasionally had strawman rhetoric about “jobs Americans don’t want”, one side arguing using this point against deporting illegal immigrants, usually the other side arguing there’s no such thing as a job Americans are too proud to perform. It seems, at least in the UK, people do appreciate such work in some circumstances. (The other is probably generally true as well. As I said, it’s mostly a strawman, and the arguments are mostly rhetorical posturing.) But of course this brings the legality or illegality of the immigration into the mix, and while one certainly could use the tools of economics to analyze the situation, the crux of the matter is philosophical and moral rather than economic.

    Comment by Jeff — 13.12.10 @ 22:40

  8. Jeff, interesting and good analysis. I have always been somewhat interested in those topics as they are discussed pretty vividly around here. Our country, Austria, one of the per-capita richest countries in the world, has been throughout long stretches of history and still is in a similar role as the US in that case, having lots of people from other countries, be it Eastern European countries, the Balkans, EU countries (Germany to a large part) or others (Turkey is a hot topic recently), come here seeking (and often getting) work, or come here for studying. For workers, we get most of the same arguments as I hear from the US (“stealing jobs”, and so on). For students, with our pretty strict measures for those and pretty cheap or even free but good-standard universities, most non-EU students go back to their own countries and are even seen as “brain drain” the other way round sometimes. ;-)
    On the other hand, I personally have a strong love for the US and so have been playing with the thought of moving there for a long time. It’s somewhat fun to see those same arguments in such a different economic system and in a migration-founded nation like the US (somehow reminds me of Austria having grown a lot through migration ourselves). It’s also interesting to see that it probably (haven’t tried yet) isn’t even totally easy for me to get a visa to go to the US, even though I’m coming from a per-capita richer country (and probably am a stronger US patriot than many US citizens – after all I’d go living in that country by my own choice). ;-)

    All in all, I think that in a globalizing world, all those migration policies necessarily leap along behind the rapid development of mobility that has grown far beyond nation borders. Well, when I think that humanity is slowly (way too slowly IMHO) discovering that there could be places to live beyond the thin atmosphere we’re currently inhabiting, I see we don’t have any policies or laws for that yet. As always, it takes those quite some time to catch up with reality.
    For now, we really need good ideas on how to make the rules/policies/laws catch up with the reality of near-to-infinite mobility within this thin but still significant “area” of planet atmosphere. And yes, we need to think about how to make sure not everybody crowds up the same place and that economies can deal with the migration that happens. But having fears lead us is almost surely wrong in that perspective – and a lot of the over-restrictive policies are driven by fear, ultimately. We need to evolve them to come out of that and be driven by a spirit for allowing humanity to succeed, grow and create the future.

    Comment by Robert Kaiser — 15.12.10 @ 12:00

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