decline of the middle class - inevitable?

[Associate Justice PiT]

     So, adding to the labor supply for IT will also increase the demand for IT? Or is there some other fashion in which this works out to be a positive-sum game?

Adding to the labor supply for IT in the US increases the demand for IT in the US.

What makes you surprised?

     I would expect the demand to exist more or less independent of the supply. Is in the US meant to contrast between demand for IT here versus demand for IT abroad, as in it would be outsourced otherwise?

[TheDeadFlagBlues]

    So, adding to the labor supply for IT will also increase the demand for IT? Or is there some other fashion in which this works out to be a positive-sum game?

Adding to the labor supply for IT in the US increases the demand for IT in the US.

What makes you surprised?

     I would expect the demand to exist more or less independent of the supply. Is in the US meant to contrast between demand for IT here versus demand for IT abroad, as in it would be outsourced otherwise?

I can't speak for ag but I think it's clear that this is what he means.

My interpretation of his posts is that he's referring to the idea of "economies of agglomeration"; industries develop cost-advantages when firms in related markets are "clustered". This is very similar to the idea of "network effects" or "economies of scale". Both the Silicon Valley and the Seattle metro area are important clusters of the tech industry; start-ups intending on attracting venture capital tend to locate themselves in both regions because there are obvious benefits to doing so. Firms can benefit from an already extant labor supply of workers who have human capital applicable to their field, it might be easier for them to be part of a supply chain and they also might benefit from "technology spillovers" etc.

In the tech industry, I'd argue that that the first point is the most important. Firms in this industry need highly-skilled workers and, if the labor market is tight, they need to be able to easily attract workers from elsewhere. It's vastly easier to get workers to relocate to the Silicon Valley or Seattle than it is to get them to relocate to Albuquerque or San Antonio etc. Those supplying their labor face "moving costs" and are aware that some position might be a bad fit or short-term so they're going to tend to be averse to moving to a city where they can't easily find work with another firm.

All of this lays the groundwork for ag's point: constraining the labor supply in the US for the IT industry could have the effect of generating competitor (?) agglomerations elsewhere that, in due time, would overwhelm agglomerations in the US. Because we're discussing an industry that is "international", where services and products are traded on global markets, this could have the effect of, over time, crushing the American tech sector. Now, I'm of the opinion that industrial policy matters so this might not occur: electricity is very expensive/unwieldy in India and Mexico, infrastructure might be limited, corruption might hamper things etc. Other countries would have to make strenuous efforts to develop a hub of the tech industry. However, they'd almost certainly be aided by a restrictive immigration policy in the US: our labor supply in the tech industry, whether we're discussing "entrepreneurs" or "R&D people" or mid-level employees comes from abroad. If we restrict immigration, we will cede our advantages to other countries. India and China would benefit; we would gain nothing.

[ag]

     So, adding to the labor supply for IT will also increase the demand for IT? Or is there some other fashion in which this works out to be a positive-sum game?

Adding to the labor supply for IT in the US increases the demand for IT in the US.

What makes you surprised?

     I would expect the demand to exist more or less independent of the supply. Is in the US meant to contrast between demand for IT here versus demand for IT abroad, as in it would be outsourced otherwise?

Well, that is a sort of an expectation that is, in general, not corrseponding to reality. This is especially so, if there are spillovers of the sort I have been trying to explain here.

In this particular case, the short answer is yes: if you block in-migration of qualified personnell, companies will move more jobs out of the US then they currently fill in with foreign (H1-B) labor. The reasons of this I have tried to explain in my previous comments. Have you read them?

[ag]

electricity is very expensive/unwieldy in India and Mexico, infrastructure might be limited, corruption might hamper things etc.

Do not count on this. I mean, IT needs no more electricity than car manufacturing - and those guys have managed

I can easily see the Queretaro/Leon corridor in the Bajio taking off, if somebody decides to play it right. Guanajuato has a very decent university with a top-notch math department. San Miguel Allende is already full of Anglos - it is one of our best and largest "Gringotepecs". So, there are already English-language schools, galleries, publications, etc., etc. There are international airports in both Silao and Queretaro (with space to grow). A bunch of manufacturing clusters (with lots of engineers) is already there (including new car factories by GM, Mazda and Kia and even some helicopter manufacturing in Queretaro). Queretaro is, in general, probably, the most orderly Mexican metropolis - with both a great historic center and very nicely built suburban developments. Climate is great - never cold, never hot. Air is clean. Tourist attractions are galore (colonial towns, mountains and other nature wonders - whatever). Lots of good restaurants (not limited to the local cuisine - though that one is great) - and great local produce (Irapuato, besides being an industrial monstrosity, is also the historic center for strawberry production in the country). Though none of this is near the coast, beaches are only a short hop by plane away - and, in fact, a car ride would not be too bad (roads are great, by the way). And, most importantly, the area is fairly safe (once you get a bit north of the Michoacan state border, where there are a few towns that are best left alone). In fact, I know of many Mexico City based big shots who have moved their families to Queretaro or who maintain vacation homes in San Miguel - when you see a rich Mexican taking his kids on a regular bike ride along a highway, you know he is not expecting bandits to emerge out of the bushes.

So, add a good tax regime for start-ups, reinforce the regional migration office to make sure that there are no processing delays of any sort (make sure every work-permit request is dealt with within, at most, a month of submission), create a few scholarships in local universities for grad students/positions for post docs and spread the word - this could be very attractive. I really hope some people here are already working at it - and, if not, I will make sure to give this advice, if asked.

[Associate Justice PiT]

     So, adding to the labor supply for IT will also increase the demand for IT? Or is there some other fashion in which this works out to be a positive-sum game?

Adding to the labor supply for IT in the US increases the demand for IT in the US.

What makes you surprised?

     I would expect the demand to exist more or less independent of the supply. Is in the US meant to contrast between demand for IT here versus demand for IT abroad, as in it would be outsourced otherwise?

Well, that is a sort of an expectation that is, in general, not corrseponding to reality. This is especially so, if there are spillovers of the sort I have been trying to explain here.

In this particular case, the short answer is yes: if you block in-migration of qualified personnell, companies will move more jobs out of the US then they currently fill in with foreign (H1-B) labor. The reasons of this I have tried to explain in my previous comments. Have you read them?

     I think it makes more sense to me now. That is, the United States has a competitive advantage in IT (for complicated reasons), but the nature of the IT profession means that it could easily lose that competitive advantage, even for IT services done for American companies. Visa policies that allow us to gather top IT talent from around the world is critical to ensuring that the country retains that advantage, and along with it the broad-based economic benefits that proceed from having a competitive advantage in IT.

     Am I summarizing the situation correctly here?

[ag]

     So, adding to the labor supply for IT will also increase the demand for IT? Or is there some other fashion in which this works out to be a positive-sum game?

Adding to the labor supply for IT in the US increases the demand for IT in the US.

What makes you surprised?

     I would expect the demand to exist more or less independent of the supply. Is in the US meant to contrast between demand for IT here versus demand for IT abroad, as in it would be outsourced otherwise?

Well, that is a sort of an expectation that is, in general, not corrseponding to reality. This is especially so, if there are spillovers of the sort I have been trying to explain here.

In this particular case, the short answer is yes: if you block in-migration of qualified personnell, companies will move more jobs out of the US then they currently fill in with foreign (H1-B) labor. The reasons of this I have tried to explain in my previous comments. Have you read them?

     I think it makes more sense to me now. That is, the United States has a competitive advantage in IT (for complicated reasons), but the nature of the IT profession means that it could easily lose that competitive advantage, even for IT services done for American companies. Visa policies that allow us to gather top IT talent from around the world is critical to ensuring that the country retains that advantage, and along with it the broad-based economic benefits that proceed from having a competitive advantage in IT.

     Am I summarizing the situation correctly here?

Yep. Pretty much.

[Person Man]

Maybe there is a new definition of Middle Class. A Middle Class that is smaller, wealthier, and more "exclusive". Maybe they are the next 20-30% of households and people who have technical degrees, "elite" degrees, or are in licensed professions that require a technical or graduate degree. Maybe people people who make roughly twice the median income for their household size. 65K / 100-120 k for a family.

It just seems like Jenny or Jonny that makes 45,000 a year as an accountant  or teacher after graduating from State U with an undergraduate in businness or something has more in common  with the working class.

[Associate Justice PiT]

     So, adding to the labor supply for IT will also increase the demand for IT? Or is there some other fashion in which this works out to be a positive-sum game?

Adding to the labor supply for IT in the US increases the demand for IT in the US.

What makes you surprised?

     I would expect the demand to exist more or less independent of the supply. Is in the US meant to contrast between demand for IT here versus demand for IT abroad, as in it would be outsourced otherwise?

Well, that is a sort of an expectation that is, in general, not corrseponding to reality. This is especially so, if there are spillovers of the sort I have been trying to explain here.

In this particular case, the short answer is yes: if you block in-migration of qualified personnell, companies will move more jobs out of the US then they currently fill in with foreign (H1-B) labor. The reasons of this I have tried to explain in my previous comments. Have you read them?

     I think it makes more sense to me now. That is, the United States has a competitive advantage in IT (for complicated reasons), but the nature of the IT profession means that it could easily lose that competitive advantage, even for IT services done for American companies. Visa policies that allow us to gather top IT talent from around the world is critical to ensuring that the country retains that advantage, and along with it the broad-based economic benefits that proceed from having a competitive advantage in IT.

     Am I summarizing the situation correctly here?

Yep. Pretty much.

     Glad to hear it. Bringing it back to the original topic, IT is currently a good path to the middle class. Understanding that global competition is inherent to the nature of the profession, I wonder if the decline of IT (and many other STEM fields) as a path to the middle class is indeed inevitable.

[ag]

     So, adding to the labor supply for IT will also increase the demand for IT? Or is there some other fashion in which this works out to be a positive-sum game?

Adding to the labor supply for IT in the US increases the demand for IT in the US.

What makes you surprised?

     I would expect the demand to exist more or less independent of the supply. Is in the US meant to contrast between demand for IT here versus demand for IT abroad, as in it would be outsourced otherwise?

Well, that is a sort of an expectation that is, in general, not corrseponding to reality. This is especially so, if there are spillovers of the sort I have been trying to explain here.

In this particular case, the short answer is yes: if you block in-migration of qualified personnell, companies will move more jobs out of the US then they currently fill in with foreign (H1-B) labor. The reasons of this I have tried to explain in my previous comments. Have you read them?

     I think it makes more sense to me now. That is, the United States has a competitive advantage in IT (for complicated reasons), but the nature of the IT profession means that it could easily lose that competitive advantage, even for IT services done for American companies. Visa policies that allow us to gather top IT talent from around the world is critical to ensuring that the country retains that advantage, and along with it the broad-based economic benefits that proceed from having a competitive advantage in IT.

     Am I summarizing the situation correctly here?

Yep. Pretty much.

     Glad to hear it. Bringing it back to the original topic, IT is currently a good path to the middle class. Understanding that global competition is inherent to the nature of the profession, I wonder if the decline of IT (and many other STEM fields) as a path to the middle class is indeed inevitable.

It is only likely to happen if you go the isolationist route. Blocking off things like H1-B visas will make it very likely the industry will develop elsewhere.

There is no reason to fear competition. America has been built on competition.  It is protection against competition that destroys prosperity.

[Jeffster]

     So, adding to the labor supply for IT will also increase the demand for IT? Or is there some other fashion in which this works out to be a positive-sum game?

Adding to the labor supply for IT in the US increases the demand for IT in the US.

What makes you surprised?

You sound like a supply-sider Republican from 30 years ago. But instead of talking about taxes, you are talking about immigration.

[ag]

     So, adding to the labor supply for IT will also increase the demand for IT? Or is there some other fashion in which this works out to be a positive-sum game?

Adding to the labor supply for IT in the US increases the demand for IT in the US.

What makes you surprised?

You sound like a supply-sider Republican from 30 years ago. But instead of talking about taxes, you are talking about immigration.

Well, you, guys, are going to try it the other way around. Be my guests, do. I just hope that when you are, finally, starving to death you will remember this conversation. Will be a good reason for me (by then safely upstairs) to laugh.

[Gustaf]

Just to be clear here, obviously competitors to Silicon Valley outside the US already exist and do well. I have friends in the sector working in Stockholm which does pretty well when it comes to those sort of things, for example. So I don't think it would necessarily take massive investments or startup costs - if the US shuts out foreign talent I expect they'd flock to other places and then make those places more attractive for American workers.

Of course, ag's reasoning relies a bit on Trump allowing Americans to leave the country. He could be the guy who transforms the US into a place needing walls to keep people in rather than out.