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L1 Visas and US Deficits

 
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http://www.rediff.com/money/2004/may/12visa.htm


The United States has made a Faustian bargain with Asia. We allow the
Asians to finance our huge deficit as long as we allow L-1 visa holders
into this country. If we don't comply they will put the squeeze on our
financial system.

One reason for the US to take a moderate approach
to this issue is China and other Asian nations,
including India, hold their reserves largely in US
Government securities, it said.

"If the Asians stopped buying or began unloading these,
the dollar would fall even faster and bond yields
would rise, the report noted.
 
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IMHO, visas are yesterday's issue. They may cut into the market value of a few scarce IT specialties, but anyone living in the US needs a reasonable salary.

On the other hand, there are many countries where you can live very well on less than the US minimum wage, where nontechnical job opportunities for the bright but unconnected are scarce, and where there are so many people that millions of students are in the top 1% of their class. Offshoring makes economic sense and gives third world countries and people a bigger stake in peace and stability. Unfortunately, it is also making Ross Perot's "giant sucking sound" with US IT jobs.

As for cashing in Asian national reserves of US treasuries, remember that treasuries are payable in dollars. Driving down the dollar drives down the value of the national reserves, a much bigger issue than visas. Also, rising interest rates will automatically reduce the value of treasuries they hold now.

And they can't cash in everything at once. Treasuries are not payable on demand and dumping a ton of treasuries on the market at once would cost the sellers many billions.
[ May 19, 2004: Message edited by: Mike Gershman ]
 
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Originally posted by Natalie Kopple:

The United States has made a Faustian bargain with Asia. We allow the
Asians to finance our huge deficit as long as we allow L-1 visa holders
into this country. If we don't comply they will put the squeeze on our
financial system.



Highly debatable. We have enough other ways to damage our financial system without foreign help. Like shopping at the People's Republic of Wal-Mart.

What's scarier is that AFAIK, L1's are exempt from US minimum wage laws. I'm told that one local business is paying a $1K/month per-diem to L1's. That is addition to their home-country salaries, which are insufficient to meet the cost of living here.

Then again, $1K/month isn't exactly going to let a foreign software developer live in the same style of housing as locals. The implication was that they're having to cram together migrant-labor style.

If that's true, I'd be very nervous about the software these people are producing. We've had grocery employees sabotage food products with less inequity than that as a source of resentment.
 
Mike Gershman
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The standard programmer salary in India is about 12K/year. With another 1k/month per diem for US living costs, that's 24k/year. That's a decent working class salary and well over the minimum wage of $5.15/hour or about 10.3k/year.
 
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Originally posted by Mike Gershman:
With another 1k/month per diem for US living costs



Yup slightly more than that. That does'nt include apartment and health insurance though. Company takes care of that. So yes around 60-70$ / day only for food and other expenses.
 
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