American competitiveness and foreign labor

The March 24th edition of "The Economist" included a brief commentary piece on America's reduced willingness to welcome foreign skilled workers into the country's labor market. Part of the problem is the blockage created by America's inability to deal properly with the problem of illegal immigration. The application process for visas has become a tangled mess, and rising protectionism allowed the H1-B program to shrink back to its 65,000 worker limit in 2003, even though qualifying workers tend to be exactly the sort of people that would provide America a competitive advantage. Fixing this problem, however, gets ignored as America struggles to figure out what to do with 13 million residents who are in America illegally (for my opinion on that subject, see this post).

The problem is made more acute, however, given that it occurs at a time when talented foreigners have more choice than ever:

Many other countries - including Australia, Canada, Britain, Germany and even France - are bending over backwards to attract talented people. European companies can easily draw on the skills of an entire continent, thanks to the free movement of labour there. At the same time the Indian and Chinese economies are booming. Indian companies such as Infosys and Wipro have California-style campuses, state-of-the-art equipment and generous pay packets (which, incidentally, allow employees to afford a house full of servants).

The kicker comes a few paragraphs later discussing skilled worker willingness to go through the hassle of the US Visa process:

There are still good reasons for immigrants to put themselves through all this. America has the world's greatest universities and biggest opportunites for the truly talented. But American officialdom needs to stop thinking that people will tolerate any humiliation to work here. UProoting yourself from your native culture is difficult enough, without having to deal with unnecessary bureaucratic obstacles. America also needs to realise what will happen if the immigrants stop coming. University departments will grind to a halt. High-tech companies will be starved of personnel. New York could find itself eclipsed by London as the world's financial hub.

Why do universities with national stature manage to field better sports teams than those with more regional scope? Quite simply, they get to cherry pick from the entire United States for prospective athletes rather than being forced to confine themselves to those who just happen to live in the immediate area.

We have a world of over 6 billion people, and America accounts for only 300 million of the total. What offers the best prospects for world-beating American teams - one that creates protectionist walls that forces companies to only hire from the local area (drawing mostly from those accidentally born in the United States, in other words) - or one that allows American companies to cherry-pick the best and brightest wherever they might be found?

Those skilled workers can always remain overseas, boosting the development of permanent competition to American companies. Barring draconian protectionist policies (something that would impoverish America, as such policies aren't without international consequences), Americans really can't escape the need to compete on a global scale.