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While we need to redouble our efforts to build the muscles of each individual
American; we have to continue to import muscles from abroad as well。 Most of the Indian;
Chinese; Russian; Japanese; Korean; Iranian; Arab; and Israeli engineers; physicists;
and scientists who come to work or study in the United States make great citizens。
They are family…oriented; educated; and hardworking; and most would jump at the chance
to become an American。 They are exactly the type of people this country needs; and
we cannot let the FBI; CIA; and Homeland Security; in their zeal to keep out the next
Mohammed Atta; also keep out the next Sergey Brin; one of the cofounders of Google;
who was born in Russia。 As a computer architect friend of mine says; 〃If a foreign…born
person is one day going to take my job; I'd prefer they be American citizens helping
pay for my retirement benefits。〃
I would favor an immigration policy that gives a five…year work visa to
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any foreign student who completes a Ph。D。 at an accredited American university in
any subject。 I don't care if it is Greek mythology or mathematics。 If we can cream
off the first…round intellectual draft choices from around the world; it will always
end up a net plus for America。 If the flat world is about connecting all the knowledge
pools together; we want our knowledge pool to be the biggest。 Said Bill Brody; the
president of Johns Hopkins; 〃We are in a global talent search; so anything we can
do in America to get those top draft choices we should do; because one of them is
going to be Babe Ruth; and why should we let him or her go somewhere else?〃
Good Fat Cushions Worth Keeping
While many of the old corporate and government safety nets will vanish under global
competition in the flat world; some fat still needs to be maintained; and even added。
As everyone who worries about his or her health knows; there is 〃good fat〃 and 〃bad
fat〃…but everybody needs some fat。 That is also true of every country in the flat
world。 Social Security is good fat。 We need to keep it。 A welfare system that
discourages people from working is bad fat。 The sort of good fat that actually needs
to be added for a flat world is wage insurance。
According to a study by Lori Kletzer; an economist at the University of California;
Santa Cruz;in the 1980s and '90s; two…thirds ofworkers who lost jobsin manufacturing
industries hit by overseas competition earned less on their next job。 A quarter of
workers who lost their jobs and were reemployed saw their income fall 30 percent or
more。 Losing a job for any reason is a trauma…for the worker and his or her family…but
particularly for older workers who are less able to adapt to new production techniques
or lack the education to move up into more skilled service jobs。
This idea of wage insurance was first proposed in 1986 by Harvard's Robert Lawrence
and Robert E。 Litan of the Brookings Institution; in a
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book called Saving Free Trade。 The idea languished for a while until it started to
catch fire again with an updated analysis by Kletzer and Litan in 2001。 It got further
political clout from the bipartisan U。S。 Trade Deficit Commission in 2001。 This
commission couldn't agree on anything… including the causes of or what to do about
the trade deficit… other than the wisdom of wage insurance。
〃Trade creates winners and losers; and what we were thinking about were mechanisms
by which the winners could compensate the losers; and particularly losers who were
enjoying high wages in a particular job and suddenly found their new employment at
much lower wages;〃 said Lawrence。 The way to think about this; he explained; is that
every worker has 〃general skills and specific skills〃 for which they are paid; and
when you switch jobs you quickly discover which is which。 So you might have a college
and CPA degree; or you might have a high school degree and the ability to operate
a lathe。 Both skills were reflected in your wages。 But suppose one day your lathe
job gets moved to China or your basic accounting work is outsourced to India and you
have to go out and find a new job。 Your new employer will not likely compensate you
much for your specific skills; because your knowledge as a machine tool operator or
a general accountant is probably of less use to him or her。 You will be paid largely
for your general skills; your high school education or college degree。 Wage insurance
would compensate you for your old specific skills; for a set period of time; while
you take a new job and learn new specific skills。
The standard state…run unemployment insurance program eases some of this pain for
workers; but it does not address their bigger concerns of declining wages in a new
job and the inability to pay for health insurance while they are unemployed and
searching。 To qualify for wage insurance; workers seeking compensation for job loss
would have to meet three criteria。 First; they would have to have lost their job
through some form of displacement…offshoring; outsourcing; downsizing; or factory
closure。 Second; they would have to have held the job for at least two years。 And
third; the wage insurance would not be paid until the workers found new jobs; which
would provide a strong incentive to look
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for work quickly and increase the chances that they would get on…the…job retraining。
On…the…job training is always the best way to learn new skills…instead of having to
sign up for some general government training program; with no promise of a job at
the other end; and go through that while remaining unemployed。
Workers who met those three conditions would then receive payments for two years;
covering half the drop in their income from their previous job (capped at 10;000
a year)。 Kletzer and Litan also proposed that the government pay half the health
insurance premiums for all 〃displaced〃 workers for up to six months。 Wage insurance
seems to me a much better idea than relying only on the traditional unemployment
insurance offered by states; which usually covers only about 50 percent of most
workers' previous wages; is limited to six months; anddoes not help workers who suffer
a loss of earnings after they take a new job。
Moreover; as Kletzer and Litan noted; although all laid…off workers now have the right
to purchase unsubsidized health insurance from their former employer if health
coverage was offered when they were employed; many jobless workers do not have the
money to take advantage of this guarantee。 Also; while unemployed workers can earn
an additional fifty…two weeks of unemployment insurance if they enroll in an approved
retraining program; workers have no guarantee that when they finish such a program
they will have a job。
For all these reasons; the Kletzer…Litan proposal makes a lot of sense to me as the
right benefit for cushioning workers in a flat world。 Moreover; such a program would
be eminently affordable。 Litan estimated that at an unemployment rate of 5 percent;
the wage insurance and health…care subsidy today would cost around 8 billion a year;
which is peanuts compared to the positiv