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A fantastic cocktail of capitalism and corruption

Thursday, March 17th, 2011

Often I stumble upon on the same day, two different perspectives on the same topic. One of my favorite past time is to pick up random magazines from the library. The lucky winner the other day was The Progressive magazine. Very thought-provoking articles focused on current events in America, and with arguments that normally fly below the mainstream media.

Quite a few articles caught my interest due to the nature of the topics that I haven’t come across lately. An article, “Fighting Fire with Water” by Colman McCarthy, on the idea of pacifism was a great reminder of why the revolts in the middle east are so effective.

Another article by Luis J. Rodríguez, “the Latino vote” cleared up my common misconception of treating the entire Latino population in the US as one entity. On one of the panel discussions that the author was part of, an average American would have classified the panel participants as all “Latinos” but the author highlights that the only thing common amongst them was writing, if that.

But the best one was waiting just for me. The blockbuster article of the February edition was “The Rule of the Rich” by Bill Moyers. Some of you may know him from the PBS show Bill Moyer’s Journal – which I recommend if you are interested in thoughtful talk shows. The article is based on a rather lengthy speech he gave at Boston University in honor of Howard Zinn. Apparently, the Progressive article not available online in its entirety.

The article starts with defining the word Plutocracy (a new word for me and it means “state in which the wealthy class rules”) and goes on to open your eyes on why Richest Americans do not need the rest of America. The point of Moyers’ article is best summarized by this quote, ““There are two things that are important in politics, The first is money and I can’t remember what the second one is.”. What you will realize, after reading his speech (or the article if you can get hold of the magazine), is how in the name of capitalism, American politics and governance has outright sold itself to the wealthiest in America. Here is a key part of the article to ponder

from 1950 through 1980, the share of all income in America going to everyone but the rich increased from 64 percent to 65 percent. Because the nation’s economy was growing handsomely, the average income for 9 out of l0 Americans was growing, too – from $17,719 to $30,941. That’s a 75 percent increase in income in constant 2008 dollars.

But then it stopped. Since 1980 the economy has also continued to grow handsomely, but only a fraction at the top have benefitted. The line flattens for the bottom 90% of Americans. Average income went from that $30,941 in 1980 to $31,244 in 2008. Think about that: the average income of Americans increased just $303 dollars in 28 years.

Just a couple of days prior to reading this article, I was watching the PBS show, Need to Know and they had a fantastic segment on “Income inequality in America: An illustrated interview”. Try to watch the video on the link but the summary of it is that if this deadly canyon of inequality doesn’t stop, America may split into two parallel worlds.

If the trend that we’ve seen for the past 25 years were to continue over the next 25 years, I can’t imagine what the world would look like. Because suddenly you’ve got two separate education systems, two separate housing places. Two separate levels of experience. So, of course, I do not see how, in a system such as this, somebody that begins at the bottom can end up at the top.

Corporation, Profit, Politics & Corruption?

You know about six years ago I made a big decision to get a MBA from a reputed university. Which I did. But about half way into my short journey on business education, I realized I was losing appetite for corporate America’s lure. The courses I took, and some of the wonderful teachers at NYU made me discover what really clicked for me was the Social Enterprise Sector (Non-profit). I disliked finance, accounting and investment banking. I grew wary of Capitalism. Most students out of a business school get out deeply married to the ideas of Capitalism, I emerged crystal clear of its perils. The stories by Bill Moyers and Eduardo Porter reminded me of the heated discussions we used to have in the classes on corporate ethics, global economy and social entrepreneurship.

The subtle reality is corporate America is becoming monstrously huge and ruthless. The pointless year over year growth syndrome is driving corporations to seek wealth at any cost. Where the costs are too high, Washington devises clever policies to rescue Wall Street.

The agony is America is creating a fantastic cocktail of capitalism and corruption. The rest of the world is boozing the hell out of it.

Flaws in the hype around Startup Visa Act

Tuesday, March 15th, 2011

Vivek Wadhwa wrote an article yesterday in BusinessWeek, Startup Visas Could Boost U.S. Entrepreneurship, in support of the proposed Startup Visa Act. The article purports that the Startup Visa bill, if approved, will result in “thousands of new startups”.

After you have read the BusinessWeek article, I suggest you also read Vivek’s brief summary report on skilled immigration statistics.

As outlined in the Business Week article, the summary of the legislation in itself has quite a few conditional clauses. I have to assume the detailed legislation that would go into effect, will have more specific gotchas. I am not sure how they arrived at all the numbers but within the boundaries that they have defined, I do not think we will see thousands of new American jobs – which is the goal of this legislation. It might create a few hundred American jobs, at best. We all can certainly pray for a Yahoo! to emerge out of this.

Note, I agree with his assessment of the immigration limbo (last but one paragraph in the article) on how skilled workers are jailed in the visa system, waiting for permanent residency. In my humble opinion, tying the skilled worker immigration fiasco with the Startup Visa Act is not entirely logical. I find certain flaws in the arguments and assumptions that Vivek is making in support of Startup Visa Act.

First, if an immigrant in the US has a business idea and wants to start a venture around it, they will find a way to do it. If there are legal ownership issues, they will find a resident or citizen partner to work with them. If someone landed in the US yesterday as an immigrant and dreamed up a brilliant idea last night, what they need this morning is money to make it happen! In its absence, they have to work their rear off through the network of known people to fund it. If this individual is passionate and aggressive, she will somehow find and pitch to VCs or enter one of the scores of startup / business plan competitions out there. As long as they can stay in the US legally, they will continue to look for ways to startup their idea. Case in point here: How Archana Patchirajan, who moved to the US only in 2004, launched her idea, founded a company with two other friends and secured funding from BMW.

As a matter of fact, I had gone through the process of forming a business so we could open up a retail franchise (this one) in our town in New Jersey. If things had gone right, we would have created at least 5 American jobs. We didn’t pursue it because the bank insisted a higher proportion of startup funds from our personal savings than we could pull. The accountant, attorney, and the bank executive who helped us didn’t question once about my immigration status – which was, and still is, H1B (very last stage though!).

So, as long as you are a legal immigrant, starting or owning a business in the US is not impossible. There may be a few immigrants who would take advantage of the Startup Visa Act, but it will not magically make thousands of skilled immigrants sprint overnight to Silicon Valley.

Second, the Kauffman report says

…India and China are racing ahead as centers of research and innovation. Further research may confirm what seems likely—that returnees from the United States are increasingly fueling this growth. Our interviews reveal these returnees typically went home because they saw tremendous opportunity in their home countries.

Greatest prospects for skilled labor is elsewhere

I would caution that anecdotal statement is somewhat misleading. Many of my friends have returned to India in last few years. A few of them returned specifically because they didn’t get a green card soon enough and got sick of being stuck with same employer and same job on a H1B visa. But the telling story is: Almost all of them returned to India, because India is the damn land of opportunity at the moment. They find wider range of jobs, faster career growth, better titles, higher pay in some cases, almost the same quality of life as in the US. In essence, they are simply as opportunistic as they were when they came state side. Let’s be clear: not everyone returning to India is starting a company there. I don’t have any research to back up that point but so is the quote above. Some returnees indeed start business there, immediately or eventually, yet the majority of India’s recent entrepreneurial growth is purely organic (read this and this). Internet boom and new media has opened up access to know-how and inspiration for all Indians, while India’s younger generation is doing the heavy lifting by embracing the culture of entrepreneurship.

On the other hand, American is wobbling, majority of industries have negative or stagnated growth, American corporations themselves are betting on their firm’s growth in International markets. For heaven’s sake, Chinese, Brazilians, and Indians are returning to their country because that’s where the greatest hope for the skilled person’s growth and prosperity is. Not because that’s where the next Silicon Valley is.

Third, if the Startup Visa were to “open the flood gates” (it won’t, but glad if I am proved wrong), it will be for the benefit of and because of Silicon Valley’s elite. The legislation’s clause mandates

“The investor must be a qualified venture capitalist, a ‘super angel’ (a U.S. citizen who has made at least two equity investments of at least $50,000 every year for the previous three years), or a qualified government entity.”.

I don’t exactly understand the logic of this restrictive “investor clause” but I suppose it was to prevent misuse. We can speculate what that misuse could be, but, this clause, by design binds and favors the Venture Capital community. That is good if some Venture Capitalist already knows you personally and can’t wait to cut a cheque in your idea’s name. If you don’t know anyone, then take a bus to South By South West (SXSW) or shunt coast to coast looking for business plan competitions.

I suspect quite a few VCs out there know entrepreneurs outside the US that they would like to fund and bring over to Silicon Valley, for good reasons – mentor and hook them up with best of the valley to eventually make a ton of $$$. Indeed, if such a legal framework exists, I would do it too.

One statistic intrigued me the most in Vivek’s Kauffman report.

In 2006, foreign nationals residing in the United States were named as inventors or co-inventors in an astounding 25.6 percent of patent applications filed from the United States, a substantial increase from 7.6 percent in 1998. Foreign nationals also contributed to a majority of some U.S. companies’ patent applications, including Qualcomm—72 percent, Merck— 65 percent, GE—64 percent, and Cisco—60 percent. More than 40 percent of the U.S. government-filed international patent applications had foreign authors. These numbers did not include immigrants who had become citizens at the time of filing.

Vivek asks, “so, why weren’t they becoming U.S. citizens and filing patents as Americans?”. Great question. Once you come into the US in a skilled worker visa category, the queue to the permanent residency and citizenship is enormously long. The irony is the Dream Act, whose primary focus is illegal immigrants, is taking up all the air time leaving no time or will to make the path to citizenship faster for skilled, legal immigrants. I bet very many of them will go on to start or own small (and big) businesses, spurring job creation across America.

No doubt, we need more Start-Ups, Not Bailouts but it largely must come from inside America, not outside. The Startup Visa Act will create American jobs, but it won’t make a dent on the job market or economy. Unless, of course, the Gods answer Vivek’s wish and bless US with another Facebook economy of some sort to spring out of it.

Jailed by the US Immigration Process

Sunday, March 6th, 2011

Vivek Wadhwa makes a decent argument on TechCrunch Why Silicon Valley Immigrant Entrepreneurs Are Returning Home. He is getting a lot of heat for what he is saying, but how you judge his opinion depends on what your experience is.

Though I am not an entrepreneur (yet!), I am a victim of the pathetic US immigration law, practically jailed in the immigration process for over a decade and there are no good reasons to hope we will get green card anytime soon. Of course, what Vivek outlined in the article rings painfully true to me.

Let’s be very clear, most immigration laws are well intended. But the immigration policy decisions, for good or bad, made in the last decade has forced millions like me to stick to same jobs, employers and settle with restricted career paths. While many employers, including mine, are doing everything legally possible to treat professional immigrants with equal opportunities, the reality is we are stuck in the system with too many legal restrictions and no easy way out.

The great nation of migrants

Though owning a house was possible, it was daunting paperwork-wise. Visiting the DMV every couple of years to renew my driving license as an immigrant is an experience I dread. Getting a parole and EAD every couple of years is a financial overhead as well as a legal risk in the event it doesn’t get approved or gets approved late. Let’s not even talk about the necessary evil of facing up the immigration officials after returning from trips abroad. I just suck it up.

These pains force me to contemplate return to India more often than not – forced by the never ending immigration fiasco. There are scores like me who would attest for similar experiences and emotions. From all our vantage points, Vivek’s article is on the dot.

Yet, not many days go by without being thankful for this great country for the opportunities I have had. It’s not just that immigrants are successful in the US, it’s that this is the only country that flourished by capitalizing and absorbing immigrants. Too sad that we might be witnessing the demise of that Great America in our lifetime.