Brain Drain From U.S. to China

By: Mike_Shedlock

In response to High Tech Research Moves From U.S. To China, I received this Email from Mark N. ...

Hello Mish,

Great article about High Tech research moving to China.

This, unfortunately, fits in with my personal observations.

Many of my daughter's friends who are graduating college this year plan on beginning their careers in other countries.

The schools they are graduating from include Harvard Business School, MIT, Colorado School of Mines, St. John's College and Stanford.

They will be starting their careers in New Zealand, France, South Africa, Canada, Brazil and England. Even my daughter's job choice will probably have her traveling to Italy and Germany on a regular basis.

It was startling to see that many bright young people so willing to leave this country. I don't know how many of those young men and women will actually retain their U.S. citizenship. Some really didn't seem to care one way or the other.

From my conversations with them, it is my understanding that they are very aware of what is happening in this country, as well as the world, and just wish to keep their options open.

This anecdotal observation, combined with conversations with other parents and articles that I've read, leads me to believe that the U.S. is about to encounter a "brain drain" of the next generation.

Very concerned about the ramifications of current U.S. policies and humbly yours,
Mark

Blog Comments Of Note

Malencid Writes:

In my science department 20 years ago the graduate students were 80% American, 20% foreign, mostly European and Japaneese. They all returned to their countries of origin. The INS was on their case 10 days after graduation. Today the ratio is 85% Chinese 15% Americans. None of the Chinese I've known ever return to China. All the support is ultimately coming from grants awarded to the Principal Investigator. These funds are all Federal.

Fedwatcher Writes:

This is Great Depression II papered over by programs created in Great Depression I so that the government's GDP figures hide the fact. Wake Up America! Silicon Valley's lust for indentured servants, H1-Bs, has morphed into the mechanism to transfer Silicon Valley to China and India.

The train has left the station and anyone paying on an $800,000.00 mortgage on a $1,000,000.00 Silicon Valley house will in as little as five years see themselves 50% underwater and their wages declining.

We need to immediately give a green card to every H1-B worker and end the H1-B program. If we need them, why should we ask them to leave? We either need them or we don't need them. As for foreign hard science Masters candidates, a green card, as for foreign hard science PhD candidates, a fast track to citizenship. But let us end this "indentured servitude" that harms the American worker and the H1-B worker. I don't want them to leave, I want them to be free to stay and not be exploited. This would take away the corporation's ability to cheat and game the system. Many of the successful start-ups in Silicon Valley were started by former (that is green card carrying) H1-Bs who latter became citizens.

The incentives today are for them to go "home" and start businesses there. We need to reverse that trend. For those of you not familiar with Applied Materials, they are the ones who make the secret sauce that transforms a silicon wafer into a product that drives technology. There are two firms that hold the keys to this kingdom: Applied Materials and KLA-Tencor. Now with Applied Materials moving to China, we have at most 5 years to fix things before it is "Game Over".

Hang10-In-Panama Writes:

I'll offer a few observations that have provided some context for me during a 20 year career as an engineer and corporate executive.

1 - I'm an American-born/raised, formally trained engineer (Registered Professional Engineer in Mechanical Engineering [FL]), trained at a top 10 engineering college here in the US. Many of the graduate students at the school I attended (casual observation suggests a majority) were either Indian or Chinese nationals, who were:
* very bright
* hard working
* multilingual
* self-motivated
* willing to travel wherever in the world their services were required
* did not have any sort of entitlement attitude - they worked strictly in a meritocracy

2) In my career of more than 20 years, I have worked with a number of individuals who were outstanding engineers (mostly field engineers as opposed to research engineers) who had no "formal" college-level engineering training. They were simply people with high levels of intellectual curiosity, and innate mechanical aptitude.

3. At present I'm engaged in systems-oriented work, and am working here in the US with two gentlemen from India who speak 4 languages, have Master's Degrees in Computer Science, are willing to travel away from their families for months at a time, do outstanding work (nights/weekends included) and are eager for the opportunity to apply themselves. All this for $32/hr US, which is roughly $64K/yr US (excluding benefits).

My personal response to the changing landscape is to have learned a foreign language (Spanish in my case), and gravitated towards work in areas that are less susceptible to globalized wage equilibrium. Specifically, those areas that outsourcing can't easily overcome, as the competitive advantage is related to geographic proximity. Things like domestic transportation/distribution optimization and strategic inventory management. Even so, there are large regulatory headwinds in even these areas that are a competitive disadvantage (ever try managing hazmat and/or CARB related items in California?)...

The next few years will be very interesting to watch in terms of where production and technical talent migrate, and more telling, what portion of the flux is driven by regulatory and bureaucratic considerations.

Should make for good fun watching from the sidelines as an expat in Panama...

Meanwhile Back In The U.S.

Here is an article that typifies job hunting at its finest. Please consider Scores of job seekers vie for 75 positions

A line of hopeful job applicants snaked Friday through the parking lot of a grocery store that will open May 7 in Thousand Oaks. Throughout the morning, a steady stream of people kept arriving in the hope of finding work at Sprouts Farmers Market, which has taken over the former Circuit City location at Lynn Road and West Hillcrest Drive.

“I expect we’ll have about 1,000 to 1,200 applicants if it keeps up like this,” predicted Norv Rivera, who is overseeing the two-day job fair held all day Friday and again today from 9 a.m. to 2 p.m.

Rivera, the California human resources manager for the Arizona-based Sprouts, said that in the current slow economy, applicants are coming from all walks of life, with only about 15 percent having any direct retail experience.

“We have folks coming from the construction industry. We had an actor come by, and there are a lot of folks coming in from non-retail backgrounds,” he said.

There are many interesting anecdotes in the above story offering strong evidence that Brain Drain and underemployment are both rampant.

By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

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