Argument

Insourcing

America's real outsourcing crisis isn't the one Obama and Romney are arguing about. It's the talented immigrants who are prevented from setting up shop in America.

The U.S. presidential election quickly seems to be turning into a battle of "who-outsources-least." President Barack Obama has taken to referring to Republican candidate Mitt Romney as an "outsourcing pioneer" during his tenure at private equity firm Bain Capital. The Republican National Committee has countered with a new website accusing Obama of enriching foreign firms and workers with U.S. stimulus money.

The concern over outsourcing certainly hits a political nerve among the electorate -- and it makes sense during a time of high unemployment. But if the campaigns want to really focus on what accounts for America's sluggish economy, they should spend less time focusing on who is sending jobs overseas and more on who can actually bring skilled workers into the United States -- or keep them there. America's real outsourcing crisis is not firms moving manufacturing to other countries, but the thousands of potential entrepreneurs and job creators who are prevented from setting up shop in America because of immigration laws.

After years of stalemate, recent weeks have seen a number of developments give hope to advocates of U.S. immigration reform. First, Obama stirred the pot with an executive order on June 15 calling on federal law enforcement to stop prosecuting the offspring of illegal immigrants -- children who likely would have qualified for the perennially politically challenged DREAM Act, which would establish a path to citizenship for upstanding people brought into the country by illegal-immigrant parents. Obama's order at least ensures that these young people can remain in the United States and work without fear of deportation.

Then, the U.S. Supreme Court struck down key parts of Arizona's SB 1070, a draconian piece of legislation that turned the entire state into a "stop-and-frisk" zone for anyone unlucky enough to possess nonwhite ethnic facial features. The law also forced the hand of law enforcement agencies, essentially mandating arrest for anyone who failed to produce the precisely required papers. (In fact, a similar law in Alabama snared Japanese and German automotive executives tending their stateside factories. It made for a funny news story, but incredibly shortsighted economic policy.)

However, the most important reason to revisit immigration reform has largely remained off the political radar: namely, that high-skilled immigrants could provide a tremendous boost to the U.S. economy in a very short period at virtually no cost to taxpayers. It's taken as a truism in American politics that start-ups and small companies drive the majority of the country's new economic growth and job growth. The pundit class has repeated ad nauseam that the economy and unemployment numbers will likely make or break Obama's reelection campaign. But frozen by fears of a nativist backlash, both Obama and Romney have refused to discuss immigration as an economic issue.

Maybe they should. Research indicates that immigrant entrepreneurs have achieved astonishing inroads in launching technology start-ups in the United States. Foreign-born immigrants dominate the ranks of technology entrepreneurs in Silicon Valley. In U.S. postgraduate programs in hard sciences, foreign-born students comprise more than 50 percent of classes focused on science, technology, engineering, and mathematics (STEM). And these students want to remain and build businesses in America -- if the country lets them. So it seems like a no-brainer. Let in more high-skilled immigrants to stoke the U.S. economy and pander to a fast-growing political base. In fact, the only constituencies that arguably would not benefit from America's allowing in more skilled workers would be countries like China, India, and Brazil, which are currently benefiting the most from the legions of U.S.-educated and U.S.-trained workers who are returning home and boosting innovation and entrepreneurship there.

A simple set of changes to existing immigration policies would go a long way toward driving immediate entrepreneurial growth. The United States should make it easier for the more than 500,000 highly skilled foreign workers who are in the country on work visas and who are trapped in "immigration limbo" to start companies and stay permanently. It should also make it easier for foreign entrepreneurs in high-growth sectors (technology, biotech) to relocate to the United States from abroad. And the U.S. government should make it easier for advanced-degree holders in science- and technology-related disciplines to secure the right to work in the United States.

In my research I have found that, between 1995 and 2005, over 50 percent of technology companies started in Silicon Valley included at least one co-founder who was foreign-born. Nationwide, 25 percent of technology companies founded in this period had a foreign-born co-founder. An even higher percentage, in both cases, had a foreign-born person as a member of senior management. The largest percentage of these co-founders came from India and China (both mainland and Taiwan). These immigrant-founded companies generated $52 billion in revenues and created 450,000 jobs over this 10-year span. They likely paid billions of dollars into U.S. government tax coffers as well.

Less than 2 percent of these entrepreneurs came to the United States specifically to start a company. Most came for work or family reasons. And already there are more than 1 million skilled immigrants and their families currently residing in the United States on temporary work visas. They are already acclimated to American culture and, with immigration reform, could be freed to start companies. But present laws don't even allow them to work for start-ups that they found.

Students are increasingly seeing greener pastures abroad and are returning to their home countries after they graduate. This is largely because it has become harder and harder for them to secure work in the United States after they get their degree. In effect, the country is training students -- often with government subsidies and grants -- and then telling them to go to other countries to generate economic value or start a company. The United States has a pool of skilled workers who would be the envy of countries the world over and is telling them they can't stay. New York Mayor Michael Bloomberg wasn't exaggerating when he described the U.S. immigration policy as "national suicide."

It's worth examining how the system works in other countries. If a tech start-up wants to launch in Chile, the government rolls out the red carpet. Entrepreneurs get $40,000 grants, free office space, and expedited visa clearance. There are no strings attached -- provided the entrepreneur relocates to Chile and spends at least six months launching his or her idea. Australia, Britain, Canada, Germany, and Singapore all offer variations on this theme as part of aggressive efforts to recruit entrepreneurs. For its part, the Chinese government has pursued a particularly aggressive effort that includes awarding coveted city residency passes, free ownership of apartments, prestigious university posts, and outright cash grants to highly skilled returnees. Contrast this with Silicon Valley, where many foreign-born entrepreneurs spend a considerable amount of time, energy, and money worrying about their immigration status and the whims of the Department of Homeland Security (which has subsumed the immigration enforcement functions of the U.S. government).

The net effect is simple. Entrepreneurs may still prefer to locate in the United States due to the tremendous pools of accomplished workers and intellectual capital. But more than ever before, they are considering relocating their operations to, or founding their company in, other countries, which have made it clear there are real options beyond the erstwhile Land of Opportunity.

Poster children for this trend are emerging. Facebook co-founder Eduardo Saverin may have garnered notoriety as a tax dodger when he renounced U.S. citizenship prior to the company's initial public offering. But Saverin, who has lived in Singapore for some time, countered that Singapore is actually an environment more conducive to launching Internet companies focused on Asia. He's absolutely right.

The United States can begin to stop the bleeding by making it easier for skilled immigrants who are already in the country to stay -- let's think of it as a kind of white-collar DREAM Act. The fastest path to economic development is with the existing class of resident immigrants. And smoothing the road (without subsidies) for technology start-ups and their foreign-born founders or workers exerts minimal societal cost. Putting these reforms in place could go a tremendous way toward boosting the U.S. economy. In fact, we'll see the impact within just a few years. You wouldn't think that making these smart choices requires a visionary leader -- but today it does.

In an ideal world, the campaign debate would not be about how to keep immigrants out and jobs in, but how to bring in the people who can create jobs in America.

China Photos/Getty Images

Democracy Lab

Dereliction of Duty

A new U.N. report has highlighted Rwanda's responsibility for continuing conflict in the Congo. Washington's inaction is an outrage.

Observers of African affairs are accustomed to disappointments. But surely one of the bitterest of late has been the Obama administration's scandalous failure to address the situation in the mineral-rich, eastern border provinces of the Democratic Republic of the Congo. There, for sixteen years, a conflict has dragged on that rivals or exceeds the Holocaust in lethality. Five to six million people have perished. (New York Times columnist Nicholas Kristof credibly estimates the total at 6.9 million.) American policy toward the region, which is still essentially a reaction to the 1994 genocide in the Congo's neighbor, Rwanda, predates President Obama's arrival in the White House. Yet Obama could help staunch the continuing flow of blood in the region even now with a minimal commitment.

He would not have to dispatch American troops. A key culprit in the DRC's hostilities, according to a United Nations Group of Experts report released on 21 June, is Rwanda, the main U.S. ally in that part of Africa. Rwanda receives $500 million a year in foreign aid, most of it from the United States or international aid organizations in which the United States wields critical influence. By threatening to withhold assistance or cutting it off entirely (see below), President Obama can induce Rwandan President Paul Kagame to halt support for rebels in eastern Congo and help bring about peace.

President Obama is uniquely obligated to take action on the matter owing to Public Law 109-456, of which he served as chief sponsor during his term in the U.S. Senate -- the first bill he crafted that was signed into law. Senator Hillary Clinton co-sponsored the legislation. Also known as the "Democratic Republic of the Congo Relief, Security, and Democracy Promotion Act of 2006," Public Law 109-456 calls upon the United States to "engage with governments working to promote peace and security throughout the Democratic Republic of the Congo and hold accountable individuals, entities, and countries working to destabilize the country." It also authorizes the Secretary of State to "withhold assistance made available under the Foreign Assistance Act of 1961 [...] if the Secretary determines that the government of the foreign country is taking actions to destabilize the Democratic Republic of the Congo."

In drafting Public Law 109-456, Obama and Clinton were targeting Rwanda and Uganda, both of which were known to be arming and otherwise supporting militias operating in the Congo on the pretext of combating rebels hostile to them, with the result that the mineral-rich eastern DRC had become a battleground on which civilians, and especially women and children, were the primary victims. In reality, both countries profited -- and still do -- from the mayhem, which allows their proxies to extract Congolese gold, diamonds, tin ore, and coltan without regard for Congolese sovereignty. The conflict began in 1996, with Rwandan-backed Laurent Kabila's ultimately successful uprising against dictator Mobutu Sese Seko of Zaire (as the DRC was formerly called). But the strife stems in part from the Rwandan genocide two years earlier, which saw the murder of eight hundred thousand people (and which the troops of Paul Kagame helped end). The law states that "the Governments of Uganda, Rwanda" -- both, it should be noted, U.S. allies -- "and Burundi continue to serve as a major source of regional instability and an apparent pretext for continued interference in the Democratic Republic of the Congo by its neighbors." The law aimed to complement a UN arms embargo already in place against the DRC -- an embargo that Rwanda in particular was violating with brazen impunity.

Human Rights Watch has consistently backed up claims of Rwandan involvement in the DRC's troubles. In any case, in 2008 a United Nations report had already established a direct connection between Kagame's office and rebel groups in the DRC. But damning and more extensive confirmation of Rwanda's guilt came to light with the United Nations Group of Experts' report, which the United States tried to block. Only petitioning by Human Rights Watch, the Open Society Foundations in Africa, and the Congolese government won its release. Among other things, the report accuses Rwanda of financing, arming, training, and supplying recruits for the so-called M23 mutiny begun in March and led by renegade Congolese General Bosco "the Terminator" Ntaganda. (The image above shows an M23 soldier in a Congolese town near the Ugandan border earlier this month.) Ntaganda now faces an ICC arrest warrant for war crimes (including deployment of child soldiers, sexual slavery, and rape). According to previous UN reports, he is also a kingpin smuggler of the DRC's "conflict minerals." (One of the routes of the latter to international markets leads through Kigali, the Rwandan capital.) The UN Group of Experts directly implicates Rwandan Minister of Defense James Kabarebe, the chief of the army Charles Kayonga, and other senior officials of Kagame's government.

The 137-page report could not be more detailed, or, in places, graphic. But President Kagame responded with flat-out denials and a counter-accusation against the government in Kinshasa: "And you Congolese, don't run away from your responsibilities and start claiming that this is our problem." Surely he believes he has little to fear, with President Obama still firmly in his camp.

The United States has showered the Kagame government, despite its tarnished human rights record, with all manner of financial and military largesse, quadrupling aid to Rwanda since Obama took office. It has even tried to provide legal cover. In 2011 the State Department recommended immunity for Kagame in a civil case arising from the 1994 genocide and the conflict in the DRC.

Perhaps most significantly, the U.S. and the UN rely on Rwandan troops and police officers for peacekeeping operations across Africa and as far afield as Haiti. Kagame, known for dictatorial policies at home, has carved out a role for his military abroad that few other countries on the continent would or could assume, and may be slated for a seat on the UN Security Council in 2013.

Nevertheless, all evidence in the UN Group of Experts' report indicates that the current rebellion in the Congo is Kagame's problem -- and, consequently, that of the United States, his principle backer. The State Department, predictably, said it "welcomed" the report it had tried to squelch, and issued a response in boilerplate language: "We are deeply concerned about the report's findings that Rwanda is implicated in the provision of support to Congolese rebel groups" -- as if this were the first time they had heard anything about it. The U.S. government, the statement continued, "has asked Rwanda to halt and prevent the provision of such support from its territory." Clinton herself has not addressed the issue, though she recently congratulated Rwandans on their independence day (1 July), adding, "know that the government and people of the United States stand with you."

Will just "asking" Kagame to cease arming Congolese mutineers work? Doubtful, especially given how profitable the chaos in the DRC is for mineral smugglers. Tougher measures are needed, and are in fact mandated by Public Law 109-456. For Obama and Clinton, failure to act will possibly be illegal -- both are duty-bound to uphold U.S. law. Inaction is certainly morally reprehensible, indicative of the rankest political cynicism: Obama and Clinton, both ostensibly liberals, exploited the suffering of the Congolese to burnish their credentials and pass a humanitarian bill when they were both in the Senate, but now that they are in a position to help end the misery they choose to do nothing for fear of inconveniencing their Rwandan ally. This failure to act amounts to de facto complicity with foreign-orchestrated slaughter in the Congo -- hardly what the world expects from the first African-American president, the same man who boasted to the Ghanaian Parliament in 2009 that, "I have the blood of Africa within me" and announced that "African doesn't need strongmen, it needs strong institutions."

The United States has, moreover, a special historic responsibility to the Congolese. After all, in 1885 it was the first country to recognize the Congo as Belgian King Leopold's personal estate (cruelly misnamed the "Congo Free State") which he exploited viciously to extract rubber, committing ghastly acts of carnage that gave Joseph Conrad material for his 1902 novel Heart of Darkness. That carnage incited Mark Twain to accuse King Leopold, in 1905, of "devastation, robberies and massacres of the natives," and warn that "when [Americans] find out the infamies that are being perpetrated in the Congo" they will realize that "our whole nation has a personal interest in the matter and is under written engagement to look after it." The human rights movement -- the first in modern times -- launched by Twain helped eventually to wrench the "Congo Free State" from the sovereign's grip.

But further indifference has followed. Adam Hochschild, in his 1998 bestseller King Leopold's Ghost, expressed his shock upon discovering that between five million and eight million Congolese had died during the Belgian king's misrule, and asks a question we should update and pose to ourselves now: "Why were these deaths not mentioned in the standard litany of our century's horrors?" He had a point. And why, today, do the millions of deaths, to say nothing of the rapes, torture, and displacements in the DRC, so rarely make the headlines -- or even the back pages -- of national newspapers? If they did, some sort of countrywide campaign might arise to compel President Obama and Secretary Clinton to do their duty and comply with the law they brought into being. That would give the Congolese something they have never really had: A chance to recover and build a functioning state.

MICHELE SIBILONI/AFP/GettyImages