America is sabotaging itself in the global battle for talent

In fact they are extra-useful, since their skills tend to complement those of locals. They bring different experiences, knowledge and contacts, making local co-workers more productive. A Harvard study tried to measure this by looking at what happened to researchers when a colleague died. The loss of an immigrant brainbox reduced co-workers’ productivity (measured in patents) by nearly twice as much as the loss of a native. From this, the study estimated that immigrants in America, though only 14% of the population, are responsible for a colossal 36% of innovation. As the globalisation of capital stagnates, the flow of brains across borders becomes an ever-more important way for new ideas to spread.

Most rich countries are reluctant to let in many more labourers or asylum-seekers, but claim to be eager to attract top talent, especially in fields deemed strategic (such as AI) or of obvious benefit to voters (such as medicine). America, China and most European countries all profess to welcome such people. Monaco even has an “attractiveness secretary” to lure high-flying entrepreneurs.

Yet other priorities often intrude. China’s obsession with security has made life irksome for foreigners there. Police snoop on them, their local lovers are warned they may be spies, and consultants they hire may be arrested for sharing information subsequently deemed a national secret. In Britain an obsession with cutting overall migration has led the Labour government to urge tech firms to hire fewer foreign engineers, on the false premise that this will create more high-tech jobs for natives. As for America, though it has the world’s most attractive labour market, it has one of the world’s most dysfunctional immigration systems.

The border brain barrier

When a company applies for an H-1B (temporary work visa) on behalf of a highly skilled worker with a six-figure job offer, there is a 75% chance it will be rejected. But not quickly. It can take a year of faffing: an eternity in the tech business. And if the over-achiever in question eventually wants permanent residence—so she can settle in, plan for the future and not worry about her children being deported when they turn 21 and are no longer deemed dependants—she had better not be from a populous country. Thanks to a ludicrous rule that no more than 7% of work-based green cards may go to any one country each year, Indian citizens can expect to wait 134 years for one.

Many give up and go elsewhere. Some 73% of foreign graduates of American universities tell pollsters they want to stay in America, but only 41% actually do so. The blockage in the pipeline from campus to job is one reason why American universities, though the best in the world, have been losing market share to Australian and Canadian ones for two decades.

Contrast this with Dubai, where anyone with a salary above a certain threshold can get a work visa in a week. Settling in is easy—a fully digitised system lets you obtain a driving licence, open a bank account and so forth in a few days. Expats can sponsor nannies for work visas, so both halves of a power couple can work. This extraordinarily welcoming system has helped turn Dubai from an obscure port on the edge of the desert into a global business hub in barely a generation.

Democracies cannot simply copy autocratic Dubai. Voters like to feel in control, and would not tolerate being outnumbered nearly nine to one by migrants. And few welfare states could get by without an income tax. Nonetheless, Dubai is a useful benchmark for how a government can make an immigration system nearly frictionless for the people it most wishes to attract. Its success is an implicit rebuke of places that still have paper forms and surly border officials, such as America. If they want to, democracies can quickly improve their immigration systems, as Portugal has, turning itself from a relative backwater into an oasis for digital nomads in a decade or so.

A smart system for attracting talent should observe two principles. First, removing obstacles is more effective than offering inducements for specific professions, as many governments do. Second, the criteria for deciding whom to admit should be as simple and objective as possible. For example, a country could accept anyone who earns more than a certain amount, or who has graduated from a reputable university. Some guardrails are needed, to avoid salaries being faked or diploma mills offering shoddy degrees solely for the purpose of obtaining work visas, as Canada has found. But objective measures are quicker and fairer than allowing too much bureaucratic discretion. Immigration officials are poor judges of business plans or research projects.

The downsides of attracting more talent are mostly manageable. If expat bankers bid up the price of housing, allow more house-building. Another worry, that talent-poaching rich countries may leave poor places bereft of human capital, is more complex. When scientists move to better labs, they innovate more, to the greater benefit of humankind. When people emigrate from poorer countries they earn more and send money home, often paying for their relatives’ education.

Studies find that developing countries benefit from a “brain drain” of up to about 10% of their graduates, meaning India and China could afford to lose a lot more. Many poorer nations suffer from higher outflows, though the migrants themselves benefit hugely, and it is not obvious that their countries’ interests should trump theirs. In any case, it is not altruism that stops most rich countries from poaching footloose talent more effectively. It is incompetence. Those that fail to roll out a better welcome mat will squander a chance to speed the spread of knowledge and make themselves more prosperous.

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