“Are you cashing in on this?”

So asked the subject line of an email my brother sent me in early 2003. “This” was what was described in an attached news story from a trade journal — I forget which one — as a “huge” and “desperate” shortage of information technology professionals, particularly software developers.

That certainly came as a big surprise to me. I’m an independent software developer and had worked only sporadically in the field the past couple of years. Many of my former clients had outsourced most or all of their information technology operations — often to “body shops” that imported Indian software engineers under the H-1B and L-1 visa programs and then set up shop right on the companies’ premises. Most other software and engineering professionals I knew were either unemployed or underemployed. One was trying to sell real estate. Another had to move to another city and saw his job outsourced a second time. (Fortunately, he was outsourced with it; the “body shop” hired him to continue doing his old job.) Some had given up and had decided to retire.

I then noticed that the source of this information was a “study” performed or commissioned by the Information Technology Association of America (ITAA). The article included dire warnings from ITAA president Harris Miller that the United States was in serious danger of losing its leadership in technology if something wasn’t done. I knew that the annual cap on new H-1B visas, which Congress had voted to raise to 195,000 in 2000, was due to revert to its original level of 65,000 before the end of that year (2003), so it wasn’t too difficult to guess what that “something” was.

I emailed back, telling my brother that I saw no evidence of a “shortage” — quite the opposite — and that I found the timing of this “study” to be highly suspicious. I also typed “ITAA” and “Harris Miller” into the Google search window to see what came up.

What came up, with surprising frequency, was: Cato Institute.

Cato Institute “is a libertarian think tank headquartered in Washington, D.C.”, according to its Wikipedia entry. It has figured prominently in the recent Ron Paul newsletter controversy because two of its leaders, David Boaz and Tom Palmer, have had some pretty nasty things to say about Dr. Paul and those associated with him. Outside the ITAA, Cato has been the number one cheerleader for eliminating H-1B visa caps.

Now, I know what you’re probably thinking. Cato is a libertarian think tank, and libertarians favor unrestricted immigration, so what’s wrong with trying to eliminate a cap on it?

Well, for one thing, the H-1B program has little to do with immigration. The H-1B is a non-immigrant work visa, good for up to six years, that is granted when an American citizen or resident alien can’t be found for a job requiring a very high skill level or a high level of education. That’s what it’s supposed to be. In reality, it is nothing of the sort.

The H-1B program is, in fact, a form of indentured servitude. The H-1B worker is bound to her sponsoring employer, just as an indentured servant in colonial times was bound to his master. An H-1B worker who is fired must find another sponsoring employer or leave the country within 10 days. Most H-1B workers are hoping to qualify for a green card — a process that can take up to six years. This also requires employer sponsorship, and if an H-1B worker changes employers, he must begin the entire process anew.

Needless to say, an H-1B worker has essentially zero bargaining power with a sponsoring employer. (She certainly doesn’t want to make her boss angry by telling him to go shove it when he insists she work 14 hours a day for eight hours’ pay, now, does she?) And if the H-1B worker has no bargaining power, neither does anyone competing with her for the same job.

And this — and the desire of employers for “cheap, compliant labor” — is what drives the demand for H-1B visas, or so says Norman Matloff, professor of computer science at the University of California, Davis. For the past decade or more Prof. Matloff has been virtually a one-man truth squad against the disinformation campaign being waged by the information technology industry and its think tank allies.

Cato Institute jumped into the forefront of this campaign with a 1998 op-ed by Daniel Griswold, the institute’s director of trade policy studies, and two years later Cato published a lengthy trade briefing paper by immigration lawyers Suzette Brooks Masters and Ted Ruthizer. Both essays repeated ITAA claims of a large shortage of software professionals, citing a 1998 study by ITAA and Virginia Polytechnic Institute that reported 346,000 unfilled IT positions. The methodology of that study was severely criticized by the General Accounting Office and others for its data-collection strategy — interviewing only IT executives — and its definitions — e.g. counting as “vacant” a position currently being filled by a contractor (using contractors or temps to fill positions is a common practice in IT).

Even more significant, ITAA president Harris Miller became a frequent speaker at Cato-sponsored conferences and briefings. Miller is a statist liberal and a professional lobbyist who has made a career of trying to persuade the Federal government to use its muscle for the benefit of his rent-seeking clients — just the sort of character Cato is supposed to be in the business of opposing. Yet here they are climbing into bed with him.

The entire case for raising the H-1B cap — actually, Cato and ITAA would like to eliminate it entirely — has been built on a tissue of lies. It has not been used for recruiting the “best and brightest” foreign scientific and technical talent, as has been claimed, but for supplying American corporations with cheap, compliant labor for performing routine programming tasks. There has never been a shortage of qualified Americans to perform these tasks — in fact, high unemployment rates among older programmers and other IT professionals have been well-documented.

Curiously, the various Cato commentaries and briefings have all aped the ITAA in describing an enormous “shortage” of IT professionals. I say curiously, because the word “shortage” is not even supposed to be part of the free-market vocabulary. The only way a shortage can occur for any good or service is if its price is kept artificially low.

I could go on and on about the H-1B visa program, but I’d probably be beating a dead horse because at this point it does not appear likely that the annual cap will be raised above its present level of 65,000 new visas (plus 20,000 additional for graduates of U. S. colleges and universities). Anyone wanting more information should check out Prof. Matloff’s H-1B and Offshoring Web Page or some of the syndicated columns of Paul Craig Roberts. The question, though, is why Cato Institute has become such a willing whore for the IT industry.

One answer that suggests itself is the fact that Sun Microsystems CEO Scott McNealy has been a major financial supporter of Cato. Sun has been in the front lines of the fight to lift H-1B visa caps — and has also been one of the major abusers of the program. The more general answer is that, to the inside-the-Beltway gang of politicians, lobbyists and think tanks, Silicon Valley is a cash cow to be milked for all it’s worth.

That serving the corporate interests of Redmond and Silicon Valley, and not the cause of free immigration and trade, is Cato’s primary motivation became evident back in 2000, just before Congress upped the annual H-1B cap to 195,000. The Institute of Electronics and Electrical Engineers (USA) and a handful of industry leaders — including Linus Torvalds, creator of the Linux operating system and one of those talented immigrants the Catoites are so fond of citing as an example of the contributions immigrants have made to the U.S. economy — signed an open letter to Congress proposing that, instead of a temporary work visa, skilled guest workers be granted a conditional green card. This would give them “all the same employment rights as a permanent resident, which includes the ability to switch jobs, work part-time, or start a business.” It would also free them from the control of their employers and level the playing field vis a vis both their employers and Americans competing for the same jobs.

Although the IEEE-USA proposal was a far more market-friendly solution to the alleged IT worker shortage than raising the H-1B cap, Cato’s Daniel Griswold, echoing the dominant industry view, dismissed it as “a political move to defuse the support for raising the H-1B caps”. After all, what company would want free men and women working for it when it can have indentured servants? So much for Cato’s commitment to free markets.

To be sure, there are others who have disappointed on the H-1B issue. Ron Paul voted to raise the annual cap to 115,000 in 1998 (but did not vote to raise it to 195,000 in 2000). In interviews last year with Lou Dobbs and Peter Brimelow, Dr. Paul gave answers that indicate that he thinks the problems are mostly with abuses of the program and not with the program itself. The H-1B issue is a complex one, and perhaps he just hasn’t looked into it that deeply. This seems to be the case with some other libertarians, as well. At least his answers are honest and don’t simply regurgitate industry claptrap about programmer “shortages” and “the best and the brightest”.

Cato is not so innocent. In fact, Cato is not innocent at all. By serving as a mouthpiece for the rent-seeking IT industry, Cato has attached the libertarian label to a decidedly un-libertarian program that has put tens of thousands of American software professionals out of work. In doing so, Cato has done incalculable harm to the image of libertarianism — which, in the eyes of many in the mainstream media, is represented by Cato Institute.

Among software professionals, there is no individual who is more despised than former ITAA president Harris Miller. And next to the ITAA itself, there is no organization that is more despised than Cato Institute.

Maybe we should be grateful that the Catoites don’t like Ron Paul.

From Nolan Chart.