With or Without the U.S., The Future of Tech is Globalism
With or Without the U.S., The Future of Tech is Globalism
In this article, Erik Dietrich gives his take on what a Trump presidency will mean for the future of technology in the U.S.
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I spent most of August, September, and October on the road for work. I then capped that with a celebratory vacation week in Panama exploring cities, beaches, and jungles. As luck would have it, this also allowed me to miss the acrimony and chaos of the national U.S. elections.
I returned to a country in which Donald Trump had pulled off a surprising upset, causing the world to scramble to adjust its mental model of the coming four years. The night of the election alone, markets plummeted and then subsequently rallied. In the time since, people all over the world have furiously tried to make sense of what the development means for them.
I personally find partisan politics (at least in the U.S. — I can’t speak as well for other countries) to resemble rooting for sports teams. Americans decide, usually based on their parents’ loyalties, to root for The Republicans or The Democrats, and they get pretty upset when their team loses and the other team wins, ala fans of the Boston Red Sox and the New York Yankees. Think of partisan U.S. politics as like baseball, except the winner of the World Series gets to declare wars and approve federal budgets.
As an entrepreneur and someone with a readership of unknowable team loyalty distribution, it behooves me not to choose sides, notwithstanding my own political beliefs (though, for the record, I don’t view politics as a spectator sport and so I genuinely have no home team loyalty). I try to remain publicly, politically neutral. I will do my best to do so in this post, even as I talk about a theme heavily informed by U.S. politics.
The Beginning of a Tech Dispersion
Specifically, I want to talk today about what this election means for the future of tech. As a free agent and entrepreneur, I monitor relevant events more closely than most, looking for opportunities and warning signs. And I think this unexpected outcome of the U.S. election presents both opportunities and warning signs for software developers and technologists.
I believe the U.S. has charted a course away from its status as a global technology leader and that the next decade will reveal opportunities for other countries to fill any resultant void. The world constantly looks for “the next Silicon Valley.” It should start looking for this in other countries.
I’m going to lay out in this post why I think this, and I’m going to do it without value judgment editorializing (or try my best, anyway). Then, I’m going to talk about what I think this means for people that earn a living writing software or making technology. How do you prepare for and capitalize on a less U.S.-centric techie world?
So, first up, the why. Why do I say that the U.S. role in global technology will become de-emphasized during a Trump presidency? Caveat emptor. I could be totally wrong about all of this, but the plays I suggest are ones I plan to make, so I will put my money where my mouth is.
Skilled Immigrants and The H-1B Visa Restriction
If you live in the U.S. and write software, you know people here on H-1B visas. Trust me, you do, even if you don’t realize it. The H-1B visa allows companies to “sponsor” educated foreign workers to come to the U.S. and work.
Historically, this has more or less created a win for all parties. The U.S. has more demand for programming jobs than it can fill with citizens, and outsourcing software work has a pretty spotty history. Companies can thus fill empty positions with H-1B employees or through contract staffing firms that employ the H-1B folks directly. It provides employers, particularly those with a limited budget or limited attractiveness to software developers, with a nice onshore option.
Trump has taken somewhat of a blurry position on this matter, but his general protectionist (more on this later) stances make me think he’ll propose significant additional costs to the program. Multiple sources, including the Wall Street Journal, seem to think this likely.
I will end forever the use of the H-1B as a cheap labor program, and institute an absolute requirement to hire American workers first for every visa and immigration program. No exception.
– Donald Trump, March 2016
If we were talking here about a blue collar type of job, the rationale would seem sound. Restrict inbound workers and watch as domestic wages increased and the U.S. unemployment rate dipped. But we’re talking about programming. Even with H-1B visa workers in the U.S., desperate companies and recruiters try to lure programmers all day every day because the unemployment rate of non-entry level programmers is basically 0.
If the U.S. under the Trump administration were to reduce the H-1B visa count, raise the salary restrictions, or generally impose disincentives, we might see a short-term bump in already-high programmer salaries as recruiters redoubled their desperate pitching. A downside exists. Imagine we have bronze, silver and gold plans for some product, and we discontinue the silver plan. Sure, some will sigh and upgrade to gold, but others will angrily switch to bronze. Look out for that. Restricting H-1B visas will likely create an uptick in offshoring.
The plot further thickens. Currently, the U.S. (wisely) incentivizes the most skilled and talented foreign programmers to come here. U.S. universities attract top talent from around the world, and that talent stays and works for U.S. companies because the wage situation is more attractive. If the U.S. cuts off that pipeline, the most talented people in other nations will stay home.
What do you suppose they will do at home? Well, first of all, they’ll make the prospect of offshoring even more attractive to our erstwhile silver customers. In the years following, they will set up boot camps and even universities in their home countries that begin to rival those in the U.S.
It is not out of the question to imagine a reversal in the coming decade — a situation where talent in the U.S. starts to leave to attend universities in India, China, Eastern Europe, etc. And, once they’re setup there, why not stay? That would doubly apply if they take advantage of the remote work capabilities in our industry to work for U.S. firms paying U.S. wages while they have relatively lower cost of living.
Over the long haul, encouraging skilled techies to set up shop in other countries will result in, well, them setting up shop in other countries. It also might result in U.S.-born workers doing the same. After all, if they’re going to start setting up universities, boot camps, and offshore centers, they’ll certainly be looking for experienced people to lead, train, and staff those workers.
Trump Administration vs. Techies
While we’re on the subject of educated foreign techies, let’s stop for a moment to acknowledge how this demographic regards Donald Trump’s candidacy and presidency. I don’t think that I’d be reaching to suggest that foreign nationals have an overwhelmingly negative view of the Trump administration.
In fact, according to this Economist article, he was viewed most favorably in Thailand, where they preferred Hillary Clinton at a 2 to 1 clip. It just gets worse for him from there. So even without constriction of the H-1B Visa program, a Trump presidency is likely to have a depressing effect on the desire of overseas programmers to relocate to and base in the United States.
Within the U.S. and among U.S. citizens, things become murkier. U.S. programmers seem to break young, white, educated and Libertarian-ish, so I won’t speculate as to Trump’s approval rating among that demographic. But we do know that Silicon Valley overwhelmingly opposes his presidency. In fact, some folks, following the election, called quixotically for a “Calexit” in which California secedes from the United States.
In his debate performances, Trump’s regard for technology was clumsy and lambasted. He referred to something along the lines of “doing better at cyber” and profiled the average hacker as a 400 pound loser living in a basement. I don’t know that he’s particularly unique as a baby boomer politician in being out of touch with technology, but this didn’t likely win him supporters.
If you throw in heavy mutual opposition stances to both Apple and Amazon, you can see a “Trump Administration vs Tech” narrative emerge fairly easily. The markets support this point of view as well, with large tech stocks taking a beating even as the U.S. market as a whole has done well this past week.
If I made domestic fiscal policy in some other country (particularly a warm one), I’d be scrambling to create tech-friendly incentives for foreign techies to launch startups on my shores. “Don’t like the Trump administration — found a startup in Guatemala, where we’ll give you a 1 year visa and you’ll pay no taxes for the first three years.” Or whatever.
In the case of “Trump Administration vs wealthy California techies,” the administration finds itself at odds with an affluent segment of the population that values globalism, can work from anywhere, and is most likely to vote with its feet. How long do you think before “Calexit” switches from “let’s secede” to “let’s get out of here?”
Protectionism and the Implied Manufacturing Promise
So far, we’ve got Trump’s administration potentially stemming the inbound tide of foreign techies, discouraging others from coming, and causing some local ones to leave. You can perhaps count on some of this dynamic even before he takes office. It will accelerate, should the H-1B visa thing materialize.
Or, perhaps not. I mean, it’s possible that everyone settles down a bit, that the Trump administration punts on H-1B, and that the allure of dollars still outweighs concerns of foreign nationals about domestic U.S. policies. I doubt it, but you never know.
What about going forward? As a Trump presidency takes shape, what role will tech play and how will the population view it? For instance, both George W. Bush and Barack Obama embraced NASA, which runs on the output and intellectual property of engineers. How do Trump’s administration and its core constituency tend to view technology? I would argue that today, they probably view it mildly unfavorably and that in four to eight years, they will view it highly unfavorably.
Trump campaigned on a variety of themes, but they all tended to coalesce around a revival of post-WWII demographic and labor dynamics. During that time, blue collar Americans, armed only with a high school diploma, could head to the local factory at age 18 and expect a middle to upper-middle class job that lasted a lifetime.
However, the world has changed, and left those people without prospects that they once had. This article provides an extremely compelling and somewhat sympathetic take on the fate of these people, if you’re interested in diving deeper. Middle class wages stagnated in the U.S. over the last 40 years and national politicians pandered incessantly (or ignored) affected people while doing nothing to help. Except for Trump. He paid attention to their plight.
Trump gave outlet to this frustration and offered culprits: "Life would be different if not for a giant influx of laboring immigrants. Life would be different if jobs hadn’t been sent overseas. Life would be different if corrupt politicians hadn’t sold us out to a global hegemony and put foreign jobs over those of Americans with so-called trade agreements. Vote for me, and we’ll right those wrongs and restore your way of life."
This dynamic is what I generically call protectionism. The Trump administration offers to create legislation that restricts or removes competition in a market, to the benefit of those inside the protective bubble. To vote for such a thing is a form of rent-seeking behavior — lobbying for laws that benefit you financially without changing what you offer to anyone in exchange for compensation. I mention this not to criticize, but to set the stage for what will happen when imposing tariffs and deporting immigrants fails to restore the jobs of yesteryear.
And it will fail. It will fail because no employer will, in the face of altered laws, say, “gosh, I was paying $3 per hour for this to be done in Central America, but I can’t do that anymore, so I guess I’ll just pay some U.S. citizen $30 per hour to do it instead.” Rather, they’ll do what fast food restaurants do in the face of massive minimum wage hikes — start building robots to do it for even less (after recouping an initial investment in the tech).
Most people think of automation as somewhat binary, but it’s not. Jobs start out being specialized and skilled and then slide toward automation in fits and starts as the organization becomes more efficient. First the job requires heavy skill and training, but then optimizations and tools make it easier to plug progressively less skilled people in to do it. Eventually, it gets to the point where one not even need speak the language with those around him to perform the job. After that, it gets automated entirely out of existence. For a rough charting of this course, consider the once-ubiquitous job of “secretary.”
Thus, when corporations find themselves faced with no off-the-books manual labor and disincentives to outsource, they’re evaluating positions already way, way down the automation continuum. Hiring less skilled people, hiring people that don’t speak the country’s language, and then shipping the job somewhere else were not temporary, correctable steps. Rather, they were fundamental alterations to the nature of the work itself. Employers will do what Trump, the businessman, would have done. They’ll just eliminate the jobs completely in favor of automation, since most of that groundwork is laid.
Now imagine in four years, when the Trump administration has failed to restore the economic climate of 1973 to the USA. Do you imagine that Trump, the reelection candidate, will shrug and say, “oh well, guess I was wrong about delivering those textile manufacturing jobs to you after all?” Or do you imagine that a new, more robotic culprit will start to emerge in his rhetoric and in popular sentiment.
I mentioned rent-seeking behavior before because of its role in doomed-but-escalating attempts to pass more and more laws to achieve an outcome. When you try to effect an outcome without properly aligning incentives, efforts must become more and more draconian as loopholes are discovered and exploited. Consider how centrally planned (communist) economies start with high-minded intentions and end with oppressive micromanagement of all facets of life. Or consider the Sisyphean struggle against hackers that couldn’t truly be addressed without somehow making people not want to hack in the first place. It’s much harder to stop a determined, intelligent adversary by getting in its way than it is to persuade it to change course.
And so, as protectionist policies and deportations fail to deliver the results sought by those seeking a return to the manufacturing economy, the next barrier will enter the crosshairs: automation. If only someone would pass a law saying that you can’t just give a good, American job to a machine, my life would be a lot better.
Now as this dynamic takes shape, imagine the reaction of other countries — particularly those without a heyday of semi-affluent life for laborers. That never existed in China and India, for instance. Those countries will see a nostalgic U.S. and more or less say, “hey, if you want to manufacture widgets and textiles instead of us, have at it — we’ll be happy to take over building and using robots and self-driving cars.” And, with top tech talent staying in those countries and with Silicon Valley players potentially heading there, they’ll certainly be in a position to deliver on that.
What I Plan to Do: Stay Focused on Globalism
This has turned into a long post, even for me. I suppose that’s because I’ve really labored to build a case here while walking the tightrope of partisan politics. Who you voted for or preferred is none of my business, and you’re welcome to your preferences, as far as I’m concerned, without judgment from me. What I’m really trying to do here is sort out what it means for me and for you, as technologists.
A best I can tell, it doesn’t mean a ton in the short term (unless you’re in the U.S. on H1-B visa) for our careers. However, I sincerely believe that this signals a coming shift in the U.S.’s relationship with technology. It may be subtle or major, and it may be temporary or permanent, but I’m pretty confident it’s coming. Here’s what I’d advise U.S. technologists to do in order to hedge against what might come:
- Move toward becoming a remote worker. If you already work remotely all or some of the time, great. If not, see if your employer will let you start. This is both to secure the role, but also to practice, since it’s really a different beast. Get comfortable working this way to maximize your geographic flexibility.
- For your next job, consider working for a company with offices in and outside of the USA. This applies to any of the tech titans (assuming you’re willing to suffer through their groan-inducing interview processes), of course, but it might apply randomly to medium sized or even tiny companies.
- Consider working (remotely or otherwise) for a foreign company. You can do this remotely or you can temporarily or permanently relocate. I offer this in the vein of “if it hurts, do it more.” If the winds favor foreign work 10 years from now, you’ll have a lot easier of a time adapting if you’ve already done the drill once, when younger.
- If you’re a consultant or at a small consultancy, cultivate overseas clients.
- Build personal networking relationships with employees from offshore, nearshore, foreign, etc. vendors the same way you would with people at local meetups. Expand the geographic sphere of people you think would make a hiring recommendation.
- Gain as much experience as possible training, educating, and mentoring newer developers. If an explosion of overseas operations is coming, there will be opportunities for competent leaders and trainers to help get them off the ground.
- If you’re here on an H-1B visa, you should probably start making contingency plans. I hate to say it, for fear of sounding alarmist, but if I were you, I’d be monitoring this legislation like a hawk and playing the mental game of “what would I do if X were enacted tomorrow?”
- Don’t over-correct or panic. I want to conclude with this piece of advice because it’s easy to do when things look most uncertain. By all means, plan and even take action, but make sure it’s strategic and calculated. Don’t go quitting your job or booking flights because you have a vague idea that something might happen. Lay out a plan to position yourself well, and execute it.
I’ll conclude by restating that I could be completely off base here. Sticking with the political theme of this post, consider that it seemed every news outfit and polling agency in the world got the recent election totally wrong, so I see first hand the peril of prediction. I offer you not panicked advice on dramatic action, but rather a sequence of steps you can take with little to no downside. Seeking to expand your affiliations more globally takes relatively little effort, and I anticipate it paying big dividends. And, hey, it’s fun. It may not seem like this right now, but the world is a big, interesting place, filled with awesome, interesting people. Worst case scenario is that you get to see a few more of those places and meet a few more of those people.
Published at DZone with permission of Erik Dietrich , DZone MVB. See the original article here.
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