Indentured Servitude: A Silicon Valley Innovation

Mei 07, 2013

“…economic forces determined outcomes with relatively little constraint from political considerations; such was the case, for example, in the original innovation of indentured servitude, in the substitution of slaves for servants…“ -- Galenson, 1984

The Sunday New York Times is reporting that technology firms are supporting, lobbying, advertising and heavily influencing the immigration reform bill now before Congress. When you think about the large Silicon Valley corporations and the 0.0001% that run these firms, progressive images usually come to mind, based on public statements, writings and less frequently, charitable acts of these magnates. Think again. Under the guise of promoting a humane and yet pragmatic solution to the general immigration problem in the U.S. which has almost nothing to do with technology companies, the leaders and investors of high tech corporations are attempting to strengthen and expand an institution that benefits their corporations (and personal wealth), regardless of its effects on the American people and human rights in general. In between “Secure the Border” and “Pathway to Citizenship”, lays a completely unrelated proposal to increase the allowance for “guest worker” visas, mostly used by high tech companies to import cheap labor from less developed countries.

The “innovation of indentured servitude” was introduced around 1609 by the Virginia Company in an attempt to increase labor mobility from England to the colonies. With some exceptions, the indenture system was simply a credit mechanism by which willing and able workers could purchase the costly passage to the New World and its endless opportunity, in return for several years of labor for a colonial master, at the end of which they became free to buy land and most likely their own fresh indentured servants. This labor management innovation worked well for upwards of three centuries, and when the costs of temporary indentured labor were judged to be too high by employers, the innovation of indentured servitude for life, a.k.a. slavery, was added to the labor market mix.

We’ve come a long way since, and after going to war with ourselves we decided that slavery, as practiced by plantation owners in the south of the country, is unacceptable within a nation built on freedom and liberty for all people. Indentured servitude though, survived into the early 20th century when the unskilled labor of desperate people was no longer a rare commodity in America. Over the years we enacted reams of legislation to protect wage workers from abuse and in the process built a “middle class” free to pursue a dream of happiness and better futures for its children. And for a brief moment in time it looked like the American experiment was going to succeed. But the insatiable need of corporations for cheap labor was not to be denied.

Fortunately, modern transportation and advances in technology rendered the corporation itself portable, and freed it to go where labor markets where not hampered by the regulations put in place by free people to protect and benefit themselves. So the corporations relocated production plants to places where governments where more understanding of the timeless business imperative to exploit cheap labor without bothersome regulations. This worked well, and it still does today, for unskilled manufacturing jobs. The suspicious and well protected workers in the free world were appeased by the availability of ever cheaper imported products and the temporary replacement of minimum-wage sweat-shop jobs with better paying skilled technology jobs. Temporary, because technology jobs are even more portable than manufacturing jobs, and as soon as cheap semi-skilled technology labor pools became available in various developing countries, corporations were quick to migrate their activities from their home countries to the greener pastures of unregulated labor conditions.

But the captains of these new global corporations have no desire to relocate themselves and their families to where sewers flow through the streets, and as portable as high tech may be, there is still a preference to have workers in close proximity to their masters. Allowing laborers to freely immigrate from one country to the next (as in the 19th century wave of European immigration to America), did not work very well for corporations, because those free laborers quickly organized and integrated themselves into the political system to obtain higher wages and better working conditions. Hence the renewed interest in the 17th century innovation of importing indentured servants into rich countries. Since outright slavery and explicit bondage are illegal nowadays in most countries, a different terminology had to be created and some operational adjustments had to be made.

Building on the mid-19th century model of labor importation from India and China to South America, where the indentured servant received wages and benefits (return passage fees) directly from his employer, was bound for a specific number of years (usually four or five) to one employer, and subject to strict performance measures, a politically acceptable system of “guest workers” was created and perfected in 20th century America. The United States laws regarding the importation of labor underwent many changes during the last half of the 20th century, alternating restrictions with relaxation as the country changed its social stance and as the economy fluctuated. In its current form, the skilled workers importation program for employers came into existence with the Immigration Reform and Control Act of 1990, and set a limit of 65,000 so called H1-B visas per year, and smaller numbers of other visas and permits for exceedingly high-skilled workers. Just like the 17th and 18th century indentured servitude contracts, the modern H1-B visas, allow workers to switch employers (easier than in earlier centuries) and provide a path to citizenship at the conclusion of the bondage years (much more difficult in the modern era).

In October of 2000, high tech corporations trying to weather the dot-com disaster, needed to find ways to lower costs of operations. While most Americans were distracted by the Bush-Gore spectacle, Congress was able to oblige its benefactors and temporarily increased the importation levels of cheap skilled labor for technology companies, as a surrealistically honest Senator told the San Francisco Chronicle:"Once it's clear (the visa bill) is going to get through, everybody signs up so nobody can be in the position of being accused of being against high tech," said Sen. Robert Bennett, R-Utah, after the vote. “There were, in fact, a whole lot of folks against it, but because they are tapping the high-tech community for campaign contributions, they don't want to admit that in public."” Silicon Valley and its largest technology firms, lobbying in favor of the bill argued that in spite of the collapse of multiple Internet companies, there were “critical worker shortages” in high tech. Personally, I don’t recall actual shortages of labor in 2000, but I do recall spiking labor prices right before everything went crashing down in flames.

So here we are a decade later, mired in a pernicious recession where the stock market is skyrocketing, alongside widespread unemployment and raising poverty, and the billionaires of Silicon Valley are whistling the same old tune. Never mind that there is no indication of shortage of labor in technology markets, where wages have been stagnant since the dot-com crash, and never mind that over one third of Americans who graduate with a technology degree either can’t find a high tech job or are able to find a better paying job in a different sector. Flooding the American high tech market with large numbers of young people, some talented and skilled and some not so much so, bound to a mighty employer by onerous bureaucratic processes, under penalty of being shipped back where they came from if they speak up or complain in any way, is necessary for one reason, and one reason only: lowering the price of labor, both native labor and “guest worker” labor.

So when Silicon Valley moguls, and the politicians they hire, speak of a global economy in which “we” must learn to compete, they mean that corporations must be given the ability to enact legislation to freely move equipment, wealth and labor assets (a.k.a. people) from one continent to another, in order to optimize production costs and maximize profit across their global operations. The Silicon Valley promotional website states that we need to “attract the world’s best and the brightest workers”. Leaving aside the moral dilemma of poaching the human capital of poor countries, is indentured servitude to corporate billionaires the best instrument we can think of for attracting the truly best and brightest to our shores? How about an exclusive invitation to come to America as free men and women?

What does this have to do with health care? If you use health IT, work in health IT or are looking for work in health IT (perhaps a "proud" holder of an ONC health IT certificate), then you know exactly how this is pertinent to you....

Disclosure: I am an engineer by education. From the time my children were old enough to think about what they will be when they grow up, I made sure that engineering will not be something they would consider, and although all of them have exceptional math and science abilities, not one of them is pursuing a career in engineering or technology. I consider this a resounding success.

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