Microsoft Threatens to Move (More) Work Offshore

The opening of this CNBC report on Microsoft and immigration policy says it all:

Microsoft does not want to move jobs out of the United States but certain decisions out of Washington could potentially force its hands, the company’s President and Chief Legal Officer Brad Smith warned.

This of course is an age-old threat by the industry: “Allow us to bring more foreign workers here, or we will move the work abroad!” This always resonates with Congress, conjuring up images of shuttered factories in the Northeast and South. But its one of the more deceptive lines in the H-1B debate.

First, of course, is that pesky little fact that Microsoft is overwhelmed with US job applicants, plenty of whom are well-qualified. The notion that Microsoft’s work won’t get done without foreign workers is just plain false.

But more interestingly, the two-faced nature of Microsoft’s statements like this has been exposed in the past. Back in 2001, for instance, a Microsoft employee smuggled out an internal slide presentation which contained the exhortation, “Pick  something  to  move offshore today!” In other words, instead of being forced to offshore work, the firm was actively seeking to do so. Microsoft has also been caught asking its contract workers to take a furlough, and admitting that most of its jobs are not open to older workers. All this, of course, while continually claiming they need foreign workers to fill their jobs.

The CNBC reported here should have been a little less trusting.


Just One Data Point, But…

Sorry for my lack of posting for a while. I have a ton of material to discuss, but just don’t have the time. But I couldn’t resist posting this one. Bear with me, as it takes some setting up.

Some of you know, or know of, Mark Regets, retired from the National Science Foundation. In his heyday, he was NSF’s biggest booster of the H-1B program (a high bar!). Well, both Mark and I recently got into using Twitter. I’ve had an account for years (@matloff), but didn’t really use it until an unrelated issue came up.

A week or so ago, journalist Noah Smith (@Noahpinion) and I were discussing PhD production in the US. Though Noah has been a big promoter of H-1B in his Bloomberg View column, the conversation wasn’t really about H-1B or foreign students. But I did state that we are overproducing PhDs, and in jest I wrote “Look at all those PhDs working as barristas!”

Well, Mark saw that, and said this a myth, the PhDs are mostly in decent jobs, etc. I replied that it was just a joke, but seriously many PhDs are UNDER-employed.

I am quite active in the R programming language, which is widely used in the data science field. The annual worldwide R conference, useR!, is currently in progress in Brisbane, Australia. One of the attendees tweeted, I believe seriously, the following:

BARISTA: What are you doing today?

ME: I’m at an conference .

B: Oh I love R, I just moved from SPSS and Stata!

(SPSS and Stata are two commercial products that are fast losing ground to the open source, better quality R.)


Once Again, China Treated As Bogeyman

Today’s Washington Post ran a piece in what is becoming an increasing popular genre: “China is overtaking the U.S. in science research.” I’ve argued that such claims are vastly overblown, made by those in the U.S. with vested interests and a sensationalism-hungry American press. Yet there are legitimate questions raised here that sorely need a national conversation.

The article of course cites AI (itself a sensationalist term)  an example, one that I debunked here a few weeks ago. And another perennial sensationalist favorite, supercomputers, is cited as well. I’ve debunked that one too. Actually, that example is even worse: In the AI case, at least the field is important, even if the claim of impending Chinese superiority is unwarranted, while bragging about having the world’s largest supercomputer is really akin to Trump and Kim arguing who has the larger “button.”

That said, though, there is absolutely no question that China is offering a much better deal to top researchers than is the U.S. — high salaries, mind-boggling signing bonuses, and most importantly, guaranteed research funding. The article greatly errs, though, in asserting that the U.S. is simply not allocating enough resources to STEM. Ironically, the problem is that we are overdoing it.

We are producing too many PhDs. The total amount of U.S. government research funding has been  generous over the years, but is being spread out among a larger and larger pool of researchers. It has thus become more and more difficult — a better word would be agonizing — for researchers at U.S. universities to secure funding.

The problem is compounded further by the increasing number of foreign students. A 1989 internal report in the National Science Foundation, one of the two main STEM funders in the U.S., actually advocated bringing in more foreign students, on the grounds of costs savings, and noted that as the foreign students flooded the labor market, fewer domestic students would pursue PhDs, further bringing down salaries and thus making doctoral study even less attractive, and so on, a vicious circle (though a virtuous one from NSF’s point of view, as they “get more bang for the buck” in their research funding).

Now “they” are warning that the foreign students might go home after their study here, or not come here in the first place. I think that warning too is overblown, but really folks, they can’t have it both ways.

In other words, our national STEM policy has been just plain wrongheaded for years, in many respects. We need to have a national, rational, vested-interests-free-zone discussion of just what it is that we want. I would pose the following questions as among those that urgently need discussion:

  • How important do we really consider STEM research, both fundamental and applied?
  • Do we want quality research (American tradition) or merely quantity (China’s current strategy)?
  • Is the policy of the last 30 years, which has the direct effect of discouraging talented U.S. students from pursuing careers in STEM research, acceptable? (And if not, why have we allowed it?)

I won’t hold my breath waiting for such a discussion, though.

Yes, China Too

An alert reader pointed me to this Bloomberg article on ageism in the Chinese tech sector. I’ve observed it myself, in the experience of a relative and her husband.

But the article incorrect in saying that the problem is even worse in China than in the U.S. Wrong! It’s just as bad in the U.S.; note that they even set 35 as the cutoff point (though some lower numbers are mentioned too), just like I do for the U.S. The U.S. firms are better at hiding it, that’s all.

One difference is that in the U.S. the primary motivation is cost savings, while in China it is a misguided notion that only young new graduates know the Latest and Greatest technologies. (U.S. companies make statements like that too, but it is mainly an excuse.)

China and AI

As you may have heard, the Chinese government is investing quite heavily in artificial intelligence (AI), aiming to become a world leader in the field within the next decade. And some in the U.S. believe it. But if I were advising the PRC government, I would suggest that this may not be the best field for China to focus on. The old tradition of a rote memory approach to learning is still thriving in China. There is no change likely, as it is a cultural issue, not just policy. And rote memory thinking is absolutely antithetical to good AI.

As I write this in China, the emphasis on AI is in evidence in many ways. One that really struck me the other day emerged in my visit to my favorite bookstore in China, Shanghai’s Shucheng (“Book City”). Wonderful place, five or six floors, mostly in Chinese. And there it was, an entire table devoted to AI:

IMG_20180427_202052.jpgThe other side of the table, not pictured, is also completely filled with AI titles.

This put AI on an equal footing with famous programming languages such as C++ and Java, and dwarfed the stock of two or three AI titles I saw on my last visit two years ago.

And yet, my talk about AI at a Chinese university the week before exposed the major cultural obstacle I described above. The hospitality shown me was great, and people asked good questions during the Q&A at the end of the talk. But one of the questions floored me: “How can you be so passionate about your subject matter?” I believe that the questioner, a grad student, was curious about this because he himself lacked such passion. He was there to study this field mainly because of a perceived hot job market. He will learn a few AI methods, but will have no idea as to what they really mean in actual applications. Keen intuitive insight is key in applications, and the rote-memory, learn-some-recipes approach just won’t work well.

This was not an isolated incident by any means, as I have written in detail before. Indeed, even though the professor who invited me does have a genuine interest in the subject, he too wondered about my passion, saying “It’s amazing that you are still so active” (i.e. in spite of my gray hair).

With such a huge population, China does in fact have some people who are not rote-memory oriented, and who are quite creative. Unfortunately, the system does not favor them, and arguably tends to weed them out. The Chinese government is aware of this and wants very much to remedy it, but I don’t think even they realize how deep the cultural roots go on this matter.

So, fear in the U.S. that China is breathing down its neck on AI is misguided. But so is the hoopla on AI itself. What is today regarded as AI is not traditional artificial intelligence in the first place. “AI” today means machine learning, which in turn is hype about old nonparametric statistical prediction methods, applied to modern huge and complex data sets. Highly important and useful, yes, but not new.

One thing the U.S. SHOULD do is not doom its own people trained in the field to short careers, which it is doing via the H-1B work visa, ironically done in part by hiring foreign students from China. U.S. policy on the visa should be similar to the one China has on foreigners working in their country — only take the genuinely best and brightest.

A Rare Expose’ Regarding Globalization

Those of us who grew up with Samuelson’s ubiquitous economics textbook “learned” that trade between two nations benefits both. Unfortunately, everyone took it for granted that the “benefit,” an increase in GDP, accrues to all. Even Samuelson rather recanted on this toward the end of his life, but many of those who never went beyond his book are believers. They are then easy marks for those with vested interests in promoting the globalist philosophy.

Hence the constant drumbeat in the mainstream media: Globalism is good for you, Trump missed a great opportunity by not participating in TPP, and so on.

I’m still in China as I write this. Recently on the train from Shanghai to Ningbo, I happened to be sitting next to a friendly, talkative man who is the general manager of a Chinese electronics company. Apparently the Trump administration had blocked his firm from doing business with the U.S., and the GM gave me the same line, that Trump is fighting against the natural world order in which everyone benefits from trade.

In light of all this, I was pleased to be tipped off by a reader concerning this article. This passage is refreshing, to say the least:

Take, for instance, Caterpillar. The United States’ 74th largest company has long been a symbol of domestic advanced manufacturing prowess, a firm that leverages American ingenuity to take capitalize on growth around the globe. Since announcing a big bet on the China market in 2010, Caterpillar’s stock has soared 178%. But that success hasn’t translated in to more American jobs, as the firm employs fewer Americans today than eight years ago, according to its latest annual report.

Interesting in that I read this the same day I went past a large Caterpillar building in Shanghai. But how can this seemingly contradictory situation arise? Over the years of writing on these topics, I’ve proposed some thought experiments that explain why.

This was during the time NYT journalist Tom Friedman was telling us that “the world is flat,” his symbol for the benefits of globalism. Yes, Friedman told us, some IT work is being shipped from the U.S. to India, but those Indian coding shops are cooled by Carrier air conditioners, thus creating jobs for American engineers. I countered that engineers are basically a fixed cost for Carrier; selling extra AC units in India is not likely to require the firm to hire many more engineers, if any. And as to U.S. factory workers, well, where is Carrier likely to manufacture those AC units to be sold in India? Roy Beck’s old quip about U.S. firms preferring to do their IT in India instead of Indiana probably applies here.

Ironically, years later Carrier was the first firm that Trump tried to strongarm/sweet talk into keeping jobs in the U.S. The results have been mixed so far, but thank you, Tom Friedman, for the suggestion. 🙂


Gaming the Zero-Sum Game

I am in China currently, and the other day I gave a talk at a Chinese university. The hospitality was wonderful, and we had a great exchange on the topic of my talk (neural networks, and why I believe these modern things are actually equivalent to some very old-fashioned ones).

We were joined at a delicious lunch by a pleasant young professor who is the local Party Secretary. Though that may sound ominous to some in the U.S., it is basically analogous to the role of a shop steward in a unionized U.S. company. But yes, she is representing the government, and when the topic of politics came up, she politely expressed concern about Trump administration policies. Were they worried about tariffs? Of course not. No, their fear was that Trump would reduce the number of foreign students from China allowed to come to the U.S. for study.

Knowing from past experience not to get into politics in these situations, I replied, “Well, this is a highly complex issue,” and left it at that. I could have stated (as they may have already known) that I have my own concerns about the foreign student program. Policy really should be tightened up, though of course not specific to China and possibly not directly involving the F-1 student visa. Reducing the H-1B and employer-based green card programs would reduce the number of foreign students, though not necessarily surgically.

One of the problems to be fixed is the “two fer” regulation set by the Obama administration that granted work rights to certain H-1B spouses, which the Trump administration is now considering reversing. A former H-1B spouse, who became a U.S. citizen years ago, recently wrote a New York Times op-ed in which she describes the Trump people as being misinformed if not downright xenophobic demagogues.

The author of course brings in the obligatory “It’s not a zero-sum game” argument.

Restrictionists assume a zero-sum math for workers: A job gain for a foreigner  is a job loss for an American. By that logic every college graduate who enters the job market would be cause for mourning. But that’s backward, given that skilled individuals create, not take away, jobs, and no economy succeeds by shackling qualified people.      

The fact is that if a profession has a labor surplus, producing lots of new graduates in that profession IS a problem. In fact, occasionally a responsible university will indeed reduce the size of such a program.

And if that profession suffers from rampant age discrimination, as in the computer fields, it is especially not a zero-sum game situation, Young new graduates are hired in lieu of older (35+) professionals. In fact, the author’s statement,

[The H-1B spouses] also happen to be between the ages of 26 and 35 — peak productive years

actually is the root of the PROBLEM, rather than the virtue she views it as. Sadly, the REASON those are now viewed as “peak productive years” — which wasn’t the case in pre-H-1B times — is in fact the overproduction of new graduates. That excess is largely due to the foreign student program. And granting work permission to some H-1B spouses makes that even worse.

My stance is yes, one can sympathize with the forced unemployment of those spouses, so they SHOULD be allowed to work. But, for the reasons given above, they should count toward the H-1B cap. Otherwise it is indeed gaming the system.

Note carefully that China really does have a “Best and Brightest only” technical immigration policy. They welcome (only) those who are prominent in their field to come work in China, and pay them a pretty penny, quite a contrast to America’s discount-rate policy.