Dr. Norm Matloff: Business Channel Doesn't Understand The Concept Of Price
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Dr. Norm Matloff writes:

A reader brought to my attention today's panel discussion on the Power Lunch program on CNBC, viewable here.

The discussion concerned Sen. Grassley's request to Microsoft that the firm give American workers retention priority over H-1Bs in layoff decisions, as well as the recent enactment of the Grassley/Sanders restrictions on hiring of H-1Bs by TARP recipients.

All six discussants took it for granted that employers hire H-1Bs because they are of superior quality. Even though one of the six seemed to be supportive of Grassley, as the discussant's techie brother had been laid off, even this one did not question the notion that the H-1Bs "must" be better ("five times more productive," one said) than the Americans.

It did not occur to a single one of these discussants, nor to host Bill Griffeth, that price might be a factor, i.e. that employers hire the H-1Bs simply because they are cheaper. It boggles the mind that a major business channel, CNBC, could show ignorance of such a fundamental principle. Griffeth in fact has run news items on H-1B as cheap labor in the past, so he at least knows that there are people who assert that H-1B is about cheap labor. Odd that he didn't speak up.

My colleague, UCD economics professor Giovanni Peri, actually showed the same ignorance. He's a great guy, and will be quite successful I believe, but it's even odder to see such an attitude from him than from a bunch of business journalists.  See here.

Clearly, ideology can be blinding.


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