Thursday, June 20, 2013

IQs, H-1B Visas & the Tech Industry

In October of 2005, Rich Karlgaard, publisher of Forbes magazine, wrote a piece called Talent Wars. In it he recalls flying on a Delta Shuttle flight with Bill Gates when he had asked him, “What Microsoft competitor worries you most?”

Gates replied, “Goldman Sachs. Software is an IQ business. Microsoft must win the IQ war or we won’t have a future. I don’t worry about Lotus or IBM, because the smartest guys would rather come to work for Microsoft. Our competitors for IQ are investment banks such as Goldman Sachs and Morgan Stanley.”

That conversation to place back in 1993. Earlier this month Bruce Barlett at the New York Times wrote an interesting piece called Financialization as a Cause of Economic Malaise: "The financial sector leeches growth from other sectors by attracting a rising share of the nation’s best and brightest workers, depriving other sectors like manufacturing of their skills."

Rich Karlgaard said that during that trip, "I must have heard Mr. Gates mention ‘IQ’ a hundred times. The obsession with smarts is embedded deep in Mr. Gates's thinking and long ago was institutionalized at Microsoft. Apply for a job and you’ll face an oral grilling that probes for IQ. It is oral and informal because of Griggs v. Duke Power, the 1971 Supreme Court ruling that banished written IQ tests and ‘tests of an abstract nature’ from job applications. But Microsoft knows what it wants. It wants IQ. And Microsoft always has been savvy at getting what it wants."

But just as Karlgaard says, gone are the days when you could join Microsoft, work 80 hours a week for five years and get rich with stock options. Since then, Google had become the new place to get rich. For Microsoft, the longer-term challenge is the one that keeps Bill Gates up at night: the IQ war. The best and brightest aren't just satisfied defending a legacy (such as Bill Gates and Microsoft), they want to change the world.

Then three years ago in another piece Karlgaard wrote, "A new class called the Scary Smart has inherited the world. The surest way to become a billionaire today is to be born with a 150-plus IQ and have math SAT skills at the 800 level. This would describe Bill Gates, Google founders Sergey Brin and Larry Page, Facebook’s Mark Zuckerberg and most of the whizbangs in Internet, biotechnology and algorithmic finance." (Notice, again, finance is mentioned).

Microsoft co-founders Bill Gates and Paul Allen are both alleged to have an IQ of 160. As it's been said, it's not what you know, it's what you do with it --- and certainly we can all agree that Bill Gates has done and accomplished a lot --- and has the bank account to prove it. He is currently rated by Forbes as the richest American and the 2nd most richest person in the entire world (maybe in the entire Universe), having a net worth of $67 billion (give or take a billion in any given month).

On February 27, 2005 Randall Parker, a professor of economics, wrote a piece regarding Bill Gates, the Bell Curve and IQs: "Bill Gates said that you gotta have high IQ engineers to make it in the technological big leagues. Where his own business is concerned, Bill Gates is super realistic --- and we all know how well that realism has worked for him. But if he wants to help our country, he ought to try being realistic about the entire American population."

Gates has always had a huge bias for IQ. When he ran Microsoft he openly talked about IQ in employees the way a football coach talks about 40-yard-dash speed in players. It never seemed to occur to Gates, then or now, that IQ has become a rather politically dangerous topic. Remember the book The Bell Curve? The NPR will remind you: Put Away The Bell Curve: Most Of Us Aren't 'Average'

Measuring IQ is an NOT an exact science, which is why the Guinness Book of World Records eliminated the Highest IQ category in 1990.

Heritage Foundation scholar Jason Richwine, coauthor of a hotly disputed new study on the fiscal costs of comprehensive immigration reform, resigned his position in a hail of controversy over his 2009 Harvard PhD dissertation in which he had argued, among other things, that American Hispanics are less intelligent than native-born whites as evidenced by their lower average scores on IQ tests. Richwine then attributed Hispanics' alleged intellectual inferiority at least partly to genetic factors.

Carlos Slim Helu is from Mexico and he is the richest man in the world with a net worth of $73 billion --- although his IQ is unknown. Terence Chi-Shen Tao is an Australian mathematics professor and is the "smartest" person in the world with a verified IQ of 230 (an average person's IQ is between 85 and 110). He is not ranked by Forbes for his net worth

The current debate about immigration and H-1B visas has been dragging on for years. On February 12, 2006, one Los Angeles Times headline read U.S. Tech Firms Citing Brain Drain, Push to Hire More Skilled Foreigners: "Silicon Valley companies are among the most vocal advocates of H-1B reform. For decades, these companies attracted engineers, computer programmers and other professionals from around the globe. Now they say they are experiencing a reverse brain drain as skilled workers flock to the booming economies of China and India."

Just like President Obama does now, George W. Bush had also called for more visas for skilled foreign workers, agreeing that it was a way for U.S. technology firms to fill key positions that they say were "struggling to fill". The president of 3M had said it was a "mistake not to encourage more really bright folks who can fill the jobs that are having trouble being filled here in America." He called on Congress to be "realistic" and "reasonable" and expand the quota of H-1B visas.

That same year Randall Parker wrote, "In a Los Angeles Times article about the on-going H-1B visa quota and the desire of American businesses to hire smart people more cheaply abroad, a Microsoft executive argues that we should let in more smart people to improve national competitiveness."

He cites Marland Buckner, a senior federal affairs manager for Microsoft Corp., who said the company has had "several thousand core technology positions" go unfilled in recent years because of a limited ability to hire qualified foreign workers. "We certainly think it's in the best interests of Microsoft and, we believe, in the best interest of national competitiveness from an innovation standpoint to bring as many smart people to the U.S. as possible," Buckner said. As Microsoft Chairman, Bill Gates had called for a total elimination of the H-1B cap on quotas.

Rich Karlgaard at Forbes magazine says, "Today everyone’s job and career is on the line, when a global economy increasingly favors the Scary Smart and ruthlessly culls winners and losers, the workplace intelligence becomes the next trillion dollar industry."

The problem is, the larger the human population grows, the average human IQ seems to drop. A new study from researchers in Europe claims that the average IQ in Western nations dropped by a staggering 14.1 points over the past century. If the future job market is going to rely primarily on people with high IQs, then with a constantly growing population, most of us will be just plain screwed. Menial jobs that require low-to-average skills (performed by people with low-to-average IQs and human labor) will eventfully become obsolete with automation and robotics. What will the masses do to earn a living?

Besides Bill Gates, some other "smart" Americans would include: Jacob Barnett, who is 14-years-old with a verified IQ of 170; Stephen W. Hawking, who is a theoretical physicist and cosmologist and alleged to have an IQ of 160; and James Woods, the TV actor and movie star, who is alleged to have an IQ of 180. John Sununu, the former Governor of New Hampshire (and former White House Chief of Staff under President George H. W. Bush) is also alleged to have an IQ of 180.

Besides Bill Gates, here is a list of the next richest Americans (but not necessarily the smartest Americans). They are listed by their global ranking for net worth by Forbes. For example, Warren Buffett is the 4th richest person on Earth.

#4 Warren Buffet (USA) Net worth: $53.5 billion / Berkshire Hathaway
#5 Larry Ellison (USA) Net worth: $43 billion / Oracle
#6 Charles Koch (USA) Net worth: $34 billion / Right-wing industrialist
#7 David Koch (USA) Net worth: $34 billion / Right-wing industrialist
#11 Christy Walton (USA) Net worth: $28.2 billion / Wal-Mart
#13 Michael Bloomberg (USA) Net worth: $27 billion /NYC Mayor
#14 Jim Walton (USA) Net worth: $26.7 billion / Wal-Mart
#15 Sheldon Adelson (USA) Net worth: $26.5 billion / Sands Casinos
#16 Alice Walton (USA) Net worth: $26.3 billion / Wal-Mart
#17 S. Robson Walton (USA) Net worth: $26.1 billion / Wal-Mart
#19 Jeff Bezos (USA) Net worth: $25.2 billion / Amazon
#20 Larry Page (USA) Net worth: $23 billion / Google
#21 Sergey Brin (USA) Net worth: $22.8 billion Google
#26 Carl Icahn (USA) Net worth: $20 billion / corporate raider
#30 George Soros (USA) Net worth: $19.2 billion /hedge fund manager
#36 Forrest Mars, Jr. (USA) Net worth: $17 billion / Mars bars
#36 Jacqueline Mars (USA) Net worth: $17 billion / Mars bars
#36 John Mars (USA) Net worth: $17 billion / Mars bars
#49 Michael Dell (USA) Net worth: $15.3 billion / Dell computers
#49 Paul Allen (USA) Net worth: $15 billion / Microsoft

Many of today’s thriving high-tech firms began as partnerships. The companies cited below have a value approaching a trillion dollars and are infamous for in-sourcing jobs with H-1B visas (for smart people) and offshoring jobs to places like India and China (for dumber people.)

Bill Hewlett and David Packard teamed up in the 1930s (Hewlett-Packard). Bob Noyce and Gordon Moore founded Intel in 1968. During the 1970s Bill Gates and Paul Allen started Microsoft; Steve Jobs and Steve Wozniak founded Apple; Larry Ellison and Bob Miner, Oracle; Roger Marino and Dick Egan, EMC; and Jim Goodnight and John Sall, SAS Institute. During the 1980s John Warnock and Charles Geschke left the Xerox Palo Alto Research Center to found Adobe Systems. Len Bosack and Sandy Lerner, a husband-and-wife team working at Stanford University, hatched Cisco. And Scott Cook and Tom Proulx founded Intuit. The 1990s gave us Yahoo founders David Filo and Jerry Yang and Google founders Sergey Brin and Larry Page. This decade has seen Skype, founded by Niklas Zennström and Janus Friis.

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