Rethinking Immigration in the Knowledge Economy

The United States is a unique country in many ways, notably in its collective, pervasive idea of the “immigrant” experience. As everyone learns in Civics class, the majority of Americans immigrated to the U.S. within a relatively compressed time frame in order to gain economic, religious or other freedoms that they did not have at “home.” Moreover, the land was new, with only emerging cultural ideas and structures to impose themselves on the new arrivals. The immigrant experience was pervasive because the number of immigrants compared to the number of U.S.-born citizens was high during the 18th and 19th centuries. The immigration experience was therefore formative in the U.S. culture itself.

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The Emerging Global Labor Market: Pas de Panique!/Don't Panic!

The Emerging Global Labor Market: Don’t Panic! calls out leading research from McKinsey Global Institute on global development of many industries.

When the U.S. saw manufacturing companies move significant operations offshore during the 80s and 90s, most people were unhappy, but many understood that certain industries were maturing, facing global competition and price pressures. Consequently, they were forced to remain competitive through lower labor costs. However, as awareness of IT offshoring spread in the context of the Tech Bust in the early 2000s, it sent a chill of fear up and down the collective spine: “How could the high tech juggernaut be outsourced and offshored? Would this development prevent its recovery?” Noisy gnashing of teeth, protectionist legislation and demonstrations. The longer term question was:

As “the world” graduates many more engineers, MBAs and scientists than does the U.S., will they threaten the employment of U.S. high value professionals?

That’s an excellent (and important) question. The McKinsey Global Institute (MGI)published a significant study in June 2005, The Emerging Global Labor Market, in which they reported results of an in-depth analysis of the supply and demand of offshore outsourcing. In short, they found that:

Offshoring will create a “relatively small” global labor […]

The 3.x Economies

Much of what I write in this space will revolve around the new knowledge economy in which we increasingly find ourselves (no, I’m not talking about the “New Economy” of the 90s ;-). Therefore, I offer these thoughts on the 3.x economies in which we have lived.

The Knowledge Economy

A knowledge economy is fundamentally a new animal because its outputs are increasingly information-intensive services and “products.” Many of these products are infinitely scalable, like CDs, software or Webcasts. Selling additional “copies” of digital (music) is accomplished at virtually zero marginal cost for production and distribution. Of course, a knowledge economy also produces numerous industrial and agrarian goods, but the value of these goods is shifting toward information-intensive services that are related to the goods—away from the underlying goods themselves. Some examples are:

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