Immigrants Help Fuel Tech Growth

Alex Nowrasteh.

People are the most valuable resource. We see this most clearly among entrepreneurs, scientists, engineers, and innovators. Creating wealth and new ways of doing things drive economic growth. This is especially true in the technology sector. Encouraged by free markets, individual liberty, and the right incentives, innovators can achieve technological wonders. But unfortunately, our immigration system limits their number.

Nowhere is the positive impact of immigrants more noticeable than in high tech startups. According to asurvey by the National Foundation for American Policy, immigrants have started nearly half of the top 50 venture-funded companies. Software, semiconductors, and biotechnology are the most common venture-backed startup firms started by immigrants. According to another report by Vivek Wadhwa, roughly 25 percent of all engineering firms founded between 1995 and 2005 were founded by immigrants.

A report from the Kauffman Foundation shows that immigrants are more than twice as likely as native-born Americans to start firms. Thanks to America's entrepreneurial culture, stories like those of the Hungarian-born Andy Grove, who founded Intel, and the Soviet-born Sergey Brin, who founded Google, are common.

There are many thousands more who create successful but smaller companies. EntrepreneurAndres Ruzo, who describes himself as "Peruvian by birth, Texan by choice," started the telecommunications firm Link America in 1994. He is also working on ITS Infocom, which manages communication networks for large companies. His firms also expanded into Latin America by trying to, in Ruzo's own words, "Americanize South and Central America: to bring the culture of performance and results and speed and punctuality and quality and reliability to Latin America."

With rare exceptions, immigrant entrepreneurs face immigration problems. Employment-based green cards, capped at 140,000 a year, are issued to some kinds of skilled workers and investors, under strict country of origin quotas and burdensome requirements. The H-1B visa is capped at 85,000 per year for temporary workers employed by American firms. Many times H-1B workers are issued a green card after several years. All the while, the worker has to be an employee, not an entrepreneur.

Roughly a quarter of master's students and a third of Ph.D. students in science and engineering at U.S. universities are foreign-born. Yet the amount of paperwork, bureaucracy, and requirements they face to stay in the U.S. after graduation throw up serious roadblocks to innovation and entrepreneurship. Innovators and entrepreneurs should spend their time starting new businesses, not navigating a byzantine and outdated immigration system.

America is uniquely meritocratic. We attract the best and the brightest from around the world, but our immigration system gets in the way. The government expects a potential entrepreneur to prove that he or she is an entrepreneur before he or she can start a business. There is no stamp or marking that shows who will be a successful entrepreneur ex ante. Only experience, not government fiat, can determine that. Our immigration rules need to allow for those experiences.

Many immigrant workers innovate within American firms, filling niche specialty roles. Many are graduates of the best universities and technical schools in the world. Jim Clark, the American founder of Healtheon (now WebMD), Netscape (now part of AOL), and Silicon Graphic affectionately calls his Indian engineers "the most talented engineers in the Valley... and they work their butts off." American-educated Indian engineer Srikanth Nadhamuni and others produced some of the most innovative websites and medical cost saving tools yet developed. His story is multiplied thousands of times over, but for every success that is realized, our immigration laws impede another through arduous bureaucratic barriers.

Chia-Pin Chang, a Taiwanese native and Ph.D. in computer engineering from George Washington University, co-founded the medical device firm OptoBioSense. In addition to the burdensome government regulations on medical devices, Chang faces yet another obstacle: He has to close his business in February and move back to Taiwan if he cannot secure an employer-sponsored green card.

Iranian-born Esmaeil-Hooman Banaei created an electricity generating fabric while getting his Ph.D. from the University of Central Florida. Now he is waiting for a green card and a legal chance to pursue the American dream while developing new technology. His invention may flop or it may produce benefits, profits, revenues, and opportunities for Americans. But we'll never know if he doesn't get a green card.

Immigration links together the world's most valuable resources, allowing immigrant and Americans to work together. The immigrants then become Americans and the process continues, replenishing America's talent pool.

The government cannot choose who will become an innovator or entrepreneur before they get an opportunity to do so. Immigration regulatory limbo ties the hands of hundreds of thousands of potential entrepreneurs and innovators. Those knots should be undone. Immigrants and Americans working together have produced enormous wealth and opportunities for everybody in the United States. Governments just needs to let them.

Iowa Compact: A Way Forward on Immigration?

By Alex Nowrasteh.

With the national spotlight on the Republican Iowa caucuses, a group of prominent Iowans are also entering the immigration fray. On Tuesday they produced the Iowa Compact, a proposal that calls for federal immigration reform that increases legal immigration and refocuses law enforcement on security threats--and away from trying to keep out farm workers.

The Legal Arizona Workers Act and SB 1070 made immigration a state level issue in the 21st century. Since then, numerous states--Alabama, Georgia, South Carolina, and others--have passed restrictionist laws modeled on SB 1070. Frustrated with the federal government's inability to enforce its own unworkable laws, these states moved further restrict immigration by penalizing businesses, forcing everyone to comply with E-Verify, and other coercive actions.

Unfortunately, federal lawmakers seem willing to only consider restrictionist policies and President Obama is more concerned with enforcing existing bad laws than with changing them. As a result, state policy makers opposed to SB 1070-style laws have had to come up with their own approaches. Iowa is the latest state to do so.

The Iowa Compact would shift undocumented immigration from the black market into the legal market by creating legal alternatives through increasing work visas and green cards. Today, the vast majority of potential immigrants are not legally able to come to the U.S. The law, quite simply, doesn't let them. The Iowa Compact wants to eliminate unauthorized immigration by authorizing it.

These Iowans have made a good start in coming to terms with this contentious issue. The fury over immigration--both legal and undocumented--is out of all proportion to the supposed costs. There is no immigrant crime wave, no across-the-board decrease in wages, and no underclass ofundocumented immigrants on welfare. Some conservatives are realizing this and changing their tune.

The Iowa Compact took its inspiration from a similar proposal in Utah. In November 2010, former Republican Governor Olene Walker, members from the Salt Lake City Chamber of Commerce, Republican legislators, Democratic legislators, and myriad others signed the Utah Compact, which became the model for Iowa's version.

In early 2011 Utah took the unprecedented step of passing a milder version of SB 1070 with many of the most onerous parts exempted but also added a state-level guest worker pilot program. The program would allow Mexicans from the state of Nuevo Leon to temporarily work for Utah businesses with state-issued identity paperwork.

Providing a legal and comprehensive guest worker program would diminish undocumented immigration greatly. Many undocumented immigrants do not come legally because there is no legal avenue to do so. Utah is trying to eliminate the black market by allowing a legal one to exist.

Another state level group making an impact is Arizona Employers for Immigration Reform(AZEIR), a non-partisan group that holds conferences around the state. Todd Landfried of AZEIR has testified in Texas, Kansas, and other states in opposition to SB 1070-style laws. Landfried regularly invites conservatives, Republicans, and libertarians (like myself) to speak at AZEIR events and discuss SB 1070-style laws from different perspectives.

In California, some prominent conservatives are supporting a proposal strikingly similar to the Utah and Iowa compacts. Robert Loewen, the president of the Orange County Lincoln Club, recently said, "[I]mproving the flow of legal immigration based on businesses' demand would ease the flow of illegal immigration considerably, making border security easier and cheaper to manage." He went on, "[W]e do believe that conservatives have a unique opportunity to lead on this issue by making market forces work for us, instead of trying to stifle them."

Indeed, immigration restrictions were largely supported by anti-capitalist progressives, Democrats, and labor unions in the early 20th century, and, as Loewen says, "[A]ll too often, Republicans have fallen into their trap by either remaining silent about real solutions and/or adopting harsh rhetoric and aggressive measures to enforce flawed immigration laws that were enacted by Democrats in the first place."

While these state-level efforts are developing spontaneously, there long has been a steady and consistent intellectual voice influencing many of the conservative efforts: that of Helen Krieble, founder and president of the pro-free market Vernon E. Krieble Foundation. Her Red Card Solutionwould create a fast and secure guest worker program, partly run by private employment agencies, that would direct temporary workers to American firms and employers who need their labor. Thesystem would be an updated version of the Bracero Program, which successfully eliminated undocumented immigration during the 1950s and early 1960s. (Disclosure: CEI has received some contributions in past years from the Vernon E. Krieble Foundation for our work on immigration.)

Krieble, a consistent and principled conservative, pushed this reform idea after dealing with the monstrous federal immigration bureaucracy while hiring legal guest workers. She was once delayed in the process of hiring guest workers because the bureaucrat folded the form incorrectly. Like a true conservative, she realized the government's rules and regulations were the problem and privatization was the solution. Her speeches have influenced the Orange County Lincoln Club, California conservatives, Newt Gingrich, and many others on the state and local level who are coming around on immigration.

In reaction to increasing restrictions at the state level, many state level organizations are rising to push for more legal immigration and a solution that doesn't double down on a failed enforcement-only strategy. Federal lawmakers appear paralyzed on immigration reform--all they seem to do is to put more resources toward enforcement. The push for restrictions is on the state level, so the push for a better system has to come there too. With the intellectual weight of Helen Krieble'sideas, a nationwide, pro-immigration movement with conservatives involvement is gaining strength in the states.