Open Door to what?

I got Tom Frieman's article from New York Times forwarded to me from multiple sources yesterday. It is definitely pleasing for desis to see a prominent american columnist advocating for wider immigration when in fact that immigrants are probably the first ones to bear the brunt of lost jobs and an economy in peril - no wonder the brown blog, Sepia Mutiny had all praises for it. But is there any substance to his assertions? 

“If you do this, it will be one of the best things for India and one of the worst for Americans, [because] Indians will be forced to innovate at home,” said Subhash B. Dhar, a member of the executive council that runs Infosys, the well-known Indian technology company that sends Indian workers to the U.S. to support a wide range of firms. 

Really? I wonder why Indians are so hell-bent on pushing for this, if indeed this is good for India. Tom Friedman definitely got his head spinning seeing the Infosys campus in Bangalore, but the reality is that in this economic climate, there aren't enough jobs to give to the new immigrants. So the 2 million plus immigrants should stay on welfare? 

 “We will buy up all the subprime homes. We will work 18 hours a day to pay for them. We will immediately improve your savings rate — no Indian bank today has more than 2 percent nonperforming loans because not paying your mortgage is considered shameful here. And we will start new companies to create our own jobs and jobs for more Americans.”

Yes, fresh off the boat, they will buy the properties here. Frieman should really find out about the H1B life cycle. Buying a home is neither a priority nor affordable for a temporary worker. 

I would have loved to have seen the stimulus package include a government-funded venture capital bank to help finance all the start-ups that are clearly not starting up today

Here, again, he is exposing his ignorance on how startups in silicon valley work. Money isn't the major ingredient for the startup to succeed. Often startups are started in tens of millions of dollars and sometimes even less. The passion for innovation coupled with a very tight and prudent management is what makes some of these startups successful - the success ratio even then is really small. If the government manages it, the success ratio will be even far less - I am no fan of Milton Friedman's economic theories, as a matter of fact, in light of the recent events, his ideas would be deemed unfit, but one thing he got right was that if people knew the government was behind certain initiatives, they would shift their behavior. A startup in its very essence gives value to innovation, speed, operational efficiency, and lack of red tape - every single of these is an issue with government managed programs.

The height of stupidity was when he quoted someone saying this.

He also cited a recent study by William R. Kerr of Harvard Business School and William F. Lincoln of the University of Michigan that “found that in periods when H-1B visa numbers went down, so did patent applications filed by immigrants [in the U.S.]. And when H-1B visa numbers went up, patent applications followed suit.”

Yes, when there are more immigrants, the patents filed by immigrants are more. That is genius!

Spending during Recession

What is one supposed to do in an economic downturn like the one we are experiencing now? With the people I speak to, I often seen the wide range of ideas from hiding the real money under the mattress to spend to boost the economy. The truth must be somewhere in the middle.

Today was a gloomy day around where I live. For the last few weeks, the weather was exceptionally warm and it was beginning to look like the winter was behind us, but that changed all of a sudden in typical california style. To get over the gloominess and to get my 4 year old S off my back, we set off to the near-by mall. I am not much of a shopper - my shopping normally revolves around thinking about buying something, rushing to the store, picking it up and never returning it even if it doesn't fit my needs well. So this time around, I had nothing to buy - S and I were just walking around.

With all the recession talk 24/7, I imagined a deserted parking lot, empty cashier lines and a far thinner crowd. But, was I wrong or what? The Macy's still had enough customers, Starbucks had a line that was spilling into the street, the counter bar in the restaurant was still milling with people. This may completely be a coincidence after all, but really the people are not reducing their spending yet? So, I looked around to see what the official statistics on consumer spending was - the consumer spending rose only 3.6% in all of 2008, the worst since 1961. Clearly, the spending habits have changed and I hope what I saw wasn't people spending away their severance payments! Sometimes when the disaster strikes, people's tendency is to pretend like nothing ever happened. Given nobody knows how long this one is going to last, that may not be a sound strategy at all.

Where does $800 billion go?

NYTimes has described the republicans as the milling crowd in front of a building on fire who won't let fire fighters in to fight the fire - this is exactly how I feel about the republicans - the bickering and the nit-picking of these supposedly 'patriotic' folks put the politicians in India look much more sophisticated. But, really, the calm and cool Obama himself has lashed out against these folks on a series of interviews last week.

This stimulus is much needed and most economists are wondering whether this is big enough - would a bunch of construction projects alone save this economy from collapsing? Japan who has been in recession since the 90s spent trillions of dollars in construction projects, every road, and every bridge that was ever dreamed of was built - but it still did not yield the results they expected. Why? Looking back, the economists are saying that the spending focussed too much on construction. There is a lesson to be learnt there. If you take a careful look at the 800 Billion dollar bill, while the republican nut jobs continue the theatrical protests, I am afraid that the part of the spending that republicans are bitching about is exactly what I think is too small. Frankly I don't care about the tax cuts - it hasn't worked in the past, it will not work in the future either - an example of a republican ideal that has been carried over for years with no single example to show for its validity.

Here is the 'wasteful' spending. Judge for yourself - where do you not want to spend?

• 
  
• Educational Investments ($141.6 billion):
• Tax cuts (275 billion)
• Health care investments ($112.1 billion):
• Welfare/unemployment ($102 billion):
• Infrastructure investments ($90 billion):
• Energy investments ($58 billion):
• Telecommunications investments
• • $650 million for Digital TV-to-analog converter box coupons and Digital TV education.
  • $350 million for a broadband data collection effort to allow states to track--and specifically, map--the availability of broadband access
  • $2.85 billion to implement a wireless and broadband deployment grants program, with $1 billion of that set going to wireless.