Opinion: 'Hire American' is a slogan that doesn't help America

Source: MercuryNews
At the G-20 meeting in London, President Barack Obama showed how to act diplomatically and be collaborative and cooperative with other leading world figures. It's a shame his efforts are thrown into jeopardy by "hire American" provisions in the U.S. stimulus bill in Congress.

Make no mistake, "hire American" is no less protectionist than "buy American," which is also part of the stimulus plan. Protectionism tarnishes our soft power with which to engage.

The G-20's work becomes more imperative now that it's clear that the United States and Europe alone cannot lead us out of the economic mess we're in. Whereas the United States and Europe are in deep trouble, countries like China, India and Brazil are experiencing positive, though slower, growth. China targets 8 percent gross domestic product growth in 2009. For India, that number is 6 percent; for Brazil, 4 percent.

That the G-20 is working on a $1.1 trillion stimulus package to bring the global economy back on track transcends ideology. We — as Obama showed — must rely on our soft power to engage and collaborate with nations of different social and economic systems. Protectionism erodes this capacity because it creates an inward-looking attitude that diminishes our persuasiveness to enroll others in the free market. It calls into question our fundamental values of democracy and freedom.

America will pay a heavy price for promoting activities such as "hire American." If the United States, commanding 21 percent of the world GDP, limits trade and talent flows, and the world follows suit, our own overseas investments will suffer.

A lot is at stake. Our foreign direct investments, amounting to $2.1 trillion, will be hurt. Our multinational corporations, whose parent companies in the U.S. account for a quarter of our private sector output, will also be hurt. And finally, U.S.-owned foreign assets abroad, amounting to more than $18 trillion, will be hurt.

Protectionism is rising around the world. Only last month, a World Bank survey found that 17 of the G-20 countries have imposed some kind of protectionist policy since the beginning of this year. A bad example set by the United States will trigger a round of much more serious nationalistic acts worldwide.

With history as a guide, we know how disastrous high-intensity protectionism can be. The infamous Smoot-Hawley Tariff Act in 1930 triggered widespread international retaliation and exacerbated the Great Depression. With the World Trade Organization forecasting global trade shrinking by 9 percent this year, we can't afford measures that will lead to further slippage.

This month foreign workers are entering H-1B visa applications into a lottery, which was put in place to handle submissions far exceeding the 85,000 cap for visas. For years, America has been turning away skilled foreigners. These intellectuals are not feeling the love.

A recent study conducted by Harvard and Duke universities shows an increasing number of foreign students in American institutions plan to return to their home countries after we have helped to educate them. "Very few would like to stay in the U.S. permanently — only 6 percent of Indian, 10 percent of Chinese, and 15 percent of European students," according to the report.

The situation will only worsen as the stimulus package discourages bailed-out financial services firms from hiring H-1B visa holders.
We simply won't have enough labor down the road. The U.S. Labor Department predicts a net drop of 3.1 million in labor supply comparing the period of 2006-2016 to the prior decade. What all this means is that "hire American" will only harm America.

John Chen is chairman, CEO and president of Sybase Inc. He wrote this article for the Mercury News.