H1b Ruined Economy

Article ^ | 12/26/02 | FlyingA

[FlyingA]

H-1B

Some facts:

1. The economy was tubing before George JR even was elected, and way before he was sworn in as President! It started tubing in the middle of July, during the election, and basically Clinton did nothing, but campaign for his wife, and count the silverware and select furniture (and young female aids) in the White House to take with him to his new "home" in NY.

2. The boom of the 90s was in fact 90% smoke and mirrors. It was built to flip (a principle that you can find numerous articles about). Buy low, make everything look good, and then sell high before it all implodes. A very select few made millions off the scam (and it went past the point of being a business model, to the point of being turned into a scam similar to pyramid scams).

3. The IT field was already dead and flooded with H1bs by this time. IT Companies had already pushed as much of their capabilities offshore as fast as they could by July of 2000. The stage was more than set for the fall of the IT industry. And in fact had already started the decline in 98, but had been made to appear to be OK by fancy accounting.

4. A Congressman best summed up what happened in the 90s during the Global Crossing hearings with the remarks to their former CEO: "You bought what you didn't need, with money you didn't have, and wrote checks for it knowing that they would eventually bounce. You played a shell game with the money, fixed the books to make things look OK, paid yourself huge salaries and bonuses, and made a huge personal fortune out of it, and then jumped ship before it all came crashing down, leaving everyone else to go down with the ship."

Face it, H1b, the 90s was an artificial boom (scam) created by a few top executives with some "get rich quick" schemes that netted them fortunes (and we will never know how much they really made because the majority of it went into offshore accounts that the Government can't get to, or if they can, they won't blow the sources over a fraud case) and left most of the people holding an empty bag. And, the worst part is that everyone seen it coming, knew it was coming, knew it couldn't be stopped, and still ignored it because they "wanted to believe" that the good times would never end. And they really didn't end until the Government stepped in and forced the CEOs, CFOs, and top execs to be personally, punitively, and criminally liable for the financial statements of their companies in July of 2002. What you will find, as very interesting reading, are all the revised financial statements listed on or about Aug 14 2002, on the SEC.GOV site. Most Corp's had filed by July 2002, showing great profits trying to boost their stock value (another important factor in "built to flip"...make things look good). Then, all of a sudden, they (CEOs, CFOs) could go to jail for, let's call it a lack of accuracy in their financial statements, and they quickly corrected the filings, showing the real situation (which by the way they knew all the time anyway, because they had been running two or three sets of books), which was none to bright needless to say. In a nutshell, during the 90s, illegal fraud had become so wide spread that it had become accepted as normal business practices. But, that ended also.

And now we are paying for the eight years of neglect. Paying with an economy that is in shreds, fear of foreign terrorist attack, companies that are still shoving infrastructure off shore as fast as they can, and definitely not enough jobs to go around. It took eight years to get in this mess, and will take a lot longer to get out because now the laws prohibit faking a recovery with fancy accounting. If there is going to be a recovery, it is going to have to be a real recovery, built on true growth, not "smoke and mirrors" and "fancy fraudulent" accounting. A real recovery built on tangible increase not fancy accounting. And, it takes a lot longer to build something good than it does to make something look good. I have a feeling it will take another 3 or 4 years before this mess is finally fixed.

[TopQuark]

You either mis-read my post, misunderstood my post, or are deliberately being misleading. Certainly not the latter, and I do not think that I misread your post eityher. There is another explanation: you do not understand what has been said.

let me correct you: I was commenting on HIGHLY TRAINED, WELL EDUCATED professionals in the Telecom, IT and EE (Electrical Engineering) fields. These aren't the low-educated people YOU wrote about. These are highly trained, highly educated professionals.

Exactly right. And that was the whole point: these workers are not always necessary, but they demand high salaries.

An army needs soldiers --- thousands of them, even if a thousand generals are available. Think about that.

In addition, you do not count the money correctly. Suppose I can hire a mid-range carpenter that can produce 5 chairs a week and agrees to work for $250/week. I can also higher the master carpenter: he is very productive and can make 10 chairs per week, but commands $600 is salary. Whom would you hire?

Who is more productive? When it comes to chairs, the expensive one is more productive, of course. But when it comes to creation of value, or wealth, it is the cheaper one that is more productive. Your manager is a hired hand, just as you are: he is hired by the owners of the firm to produce value. If he does his job right, in the situation just described he will higher a cheaper worker.

Most of what we discussed is the basics of management and economics. As I said earlier, you can form opinions but not understand management by observing it, just like you cannot learn the structure of the engine by driving a car. Study it. Until then, it is probably wise to withhod any opinion, rather than advance a wrong one. I am sorry to say, but this is what you are presently doing.

[EverOnward]

Your insults notwithstanding, you seem very knowledgeable about H1b visas and threatened by any negative discussion regarding the selling of American jobs overseas. And your line of business is?

[TopQuark]

threatened Are you joking?

by any negative discussion regarding the selling of American jobs overseas.

That's not what this visa program is about. Moreover, a job that has not been created in America and given to someone oversees is not an American job.

[SteveH]

And your line of business is?

Apparently, the business of selling out the experienced American worker...

(Nothing personal, T.Q., just calling a spade a spade...)

[SteveH]

As recently as in mid-1990s the commonly known, historically observed fact was that the unemployment level we have today was impossible to achieve without hurting the economy. If you have low unemployment, wages rise, and you have inflation. What is the lowest unemployment level that does NOT cause inflation?

No. Inflation is not caused by workers demanding and being paid too much money. It is caused by injecting too much money into circulation from an artificial source (eg, the printing of money by the Federal Reserve).

Do the economics. Or look it up in the dictionary.

[SteveH]

Whom would you hire?

By your definition, if I do my job "right", I hire the cheap carpenter until he becomes an experienced master carpenter, and then lay him off and hire more cheap experienced carpenters.

I also act to ensure the reliable supply of cheap carpenters, even bribing congressmen to change the law to make the importation of cheap carpenters legal, so I can continue to replace experienced local carpenters with cheap H1-B carpenters. If I am not in a position to bribe congressmen personally, I make myself maximally useful and supportive of those who do. The ethical implications of rising unemployment is not my concern, or explainable by economics professors on my behalf (thanks!).

The world is about money, and profit, and nothing else! Long live the global economy!

[lewislynn]

I'm of the mind that there's never a shortage of talent, there's just a shortage at the price you're willing to pay.

Good point. And it isn't hard, nor does it take a lot of time to teach someone who is willing to learn, to read a tape measure or make a circle .

The person taking the alternative of not hiring someone who is willing to learn is really the stupid one.

I guess on the job training is a thing of the past.

[TopQuark]

Do the economics. Or look it up in the dictionary. Thanks, I draw my knowledge of economics from other sources.

[optimistically_conservative]

Absolutely.

My opposition to the 1999 law was that it was reacting to a future projection that IMHO was unrealistic. As it turns out, it was. At the time I knew that I could have been wrong, but there was too much history that showed there would be a recession and the "boom" economy (again IMHO) seemed more paper than actual product/profit.

There are many occupations that can benefit from drawing from overseas employees on a visa. Endowed Chairs and Visiting Professors are examples in academe, but let's be honest, institutions of primary, secondary, or higher education as well as nonprofit research organizations are already exempt from the 195,000/FY cap. I'm not opposed to the H1-B concept, but I'd like to hear a more honest debate about the occupational shortfalls than I heard in 1998 and 2000.

Representative Thomas Tancredo (R-CO) authored the H1-B visa reduction legislation HR 3222 to rollback the temporary H1-B visa quota from 195,000 down to its former level of 65,000. I support this.

"Last year, the high technology industry announced layoffs of over 520,000 people. During this same period, the INS reported receiving applications for more than 324,000 temporary H1-B visas." - ICAA

I would like to see the numbers weeded out to identify where the shortfalls really are, and where employers are taking advantage of the system. Then a better law to help employers who truly can't find needed skills in the American marketplace and jail for the employers scamming the system.

[optimistically_conservative]

but you speak on the matters that belong in a different area --- economics.

I think that is what absolutely burns me about the 1998 and 2000 bills to raise the caps and create new exemptions in this program. The economists predicting the requirement were DEAD WRONG.

Any economist, or financial advisor, predicting future events is worse than a weatherman. At least the weatherman has near real time satellite imagery and other near real time metrics.

An economist has data that is months to years old, placing absolute trust in questionable sources, and using models to predict trends that have questionable correlations.

But then, if we knew how to do it perfectly, what fun would capitalism be?

[gcraig]

Moreover, a job that has not been created in America and given to someone oversees is not an American job.

Here's where I need to step in. The H1B program continues while the IT industry is in it's worst condition ever. The really frightening part is the rush to offshore. Bank of America, for example, is laying off talented and skilled American IT professionals and replacing them with offshore workers in India. It is impossible for an American to work for $4 a day and live in our society. How the hell do we compete with that? This must stop, and I intend to do everything I can to tell the public servants that I voted for; President Bush, Senator Dole, Representative Myrick, that they need to stand stop this before it significantly damages our ability to maintain a standard of living in the United States, among other concerns.

[optimistically_conservative]

Representative Thomas Tancredo (R-CO) authored the H1-B visa reduction legislation HR 3222 to rollback the temporary H1-B visa quota from 195,000 down to its former level of 65,000. I support this.

[1rudeboy]

I merely posted it for general info.

[optimistically_conservative]

Exactly right. And that was the whole point: these workers are not always necessary, but they demand high salaries.

An army needs soldiers --- thousands of them, even if a thousand generals are available. Think about that.

That's a good argument if highly trained, well educated professionals in the Telecom, IT and EE fields were not being sought after through the H1-B program right now. However, System Analysts, Programmers and EE's are in the top 5 occupations sought after through the H1-B. No master carpenters though.

"The unemployment rate for all engineers increased from 3.6 percent in the first quarter of 2002 to 4.0 percent in the second quarter, data from the U.S. Department of Labor, Bureau of Labor Statistics reveals. The rate for electrical and electronics engineers (EEs) rose from 4.1 percent to 4.8. The rate for computer scientists, which includes systems analysts, jumped from 4.8 to 5.3 percent. Overall unemployment fell from 5.9 to 5.4 percent."(1)

[1rudeboy]

My previous recollection of the figures was sadly understated.

More like grossly overstated. Even at 190,000/year and at 5 years a pop, the total number of H-1B workers here would doubtfully exceed 1 million.

[optimistically_conservative]

Remember the 195,000/FY cap was a raise from 65,000/FY previously. Visas are for six years and extensions don't count against new applications.

H1-B has been around for much longer than 6 years, but the 4 million H1-B workers here under 1st time approvals and extensions may not be exact.

[optimistically_conservative]

Then again, it's hard to imagine 8 million or more illegal immigrants working here [/sarcasm]

[billybudd]

Your post is very incoherent. Listing a bunch-o'-facts about corporate crooks that you got from media soundbites does not an argument make. You did not even end up discussing why you think H1B visas ruined the economy - you make it sound like corrupt CEOs did that. In any case, your presentation reflects a lack of thought or knowledge of the subject. The '90s boom was most certainly not caused by H1B visas. The H1B program was in existence before the '90s and it contributes only a tiny fraction to the economy. H1B visas are used to fill highly skilled, technical positions for which there are temporary shortages. One of the rules to obtain work under that program is that the potential employer has to put out an ad in the paper advertising the position, in order to give Americans the chance to take it first.
The '90s boom was also not caused by corporate crookery, although that amplified certain aspects of the boom, and made the bust more severe. "Cooking the books" and such things actually only occurred at a few corporations that were sensationalized by the media - most corporations are serious, well-run organizations. Also, "cooking the books" does not explain why investors dumped trillions of dollars into companies that never even claimed to make a dime of profit.
The boom-and-bust can most easily (and perhaps simplistically) be explained by: 1. the end of the cold war and a general feeling of peace, 2. the emergence of revolutionary technologies (PCs, internet), 3. the massive injection of new capital and new, inexperienced investors via online trading, CNBC, etc.

[optimistically_conservative]

From #12:

[H1-B] was a bad program, but it was not responsible for ruining the economy. The economy did what it has done for the last 50 years, adhered to a 10 year cycle. The "irrational exhuberance" in the stock market wasn't new either.

What was irresponsible was the greed of the CEO/CFO, Rubin's Treasury Department and the individual investor. By declaring an end to the business cycle in the "new" economy, by promoting appearance over substance, by placing personal and stockholder's interest over long term corporate health, the bubble (not boom as in the Eisenhower and Reagan) economy was inflated and fools easily parted from their money were given bad advise by sham snake oil sales(persons for the PC among you.)

[1rudeboy]

I don't see what illegal immigration has to do with the topic of this thread. You are correct, however, that a H-1B is good for 6 years. Bearing in mind that H-1B visa holders are entitled to petition for permanent residency, I still think that the total number of H-1B visa holders is being over-stated on this thread. Come to think of it, all I see is speculation.