State of Innovation

Patents and Innovation Economics

Phil the Expatriate: How the U.S. is Driving Technical Talent Away

I met Phil in a restaurant in Belize.  Phil spent the first seven years of his life in Belize, but then moved to California.  He got a degree(s) in biochemistry and worked in a number of medical diagnostic startups in California until about eleven years ago.  He moved back to Belize because of some health issues with his parents.  Phil now teaches yoga, owns a fitness center, and plays in a band.  He is happy in Belize and appears to do nothing with his background in biochemistry.

It is often said that the U.S. needs to increase the number of H-1B visas in order to increase our innovation.  An H-1B visa allows employers to bring in foreigners with special talents that they cannot otherwise fill.  However, Phil’s example shows that the economic environment is driving away highly skilled technical workers already in the U.S.  While I am sure that Phil genuinely is enjoying his new life in Belize, it is also likely that he became a yoga instructor because the cost, stress, and return for working as scientist or engineer in the U.S. no longer felt like a good return on his efforts.

Phil’s example is not unique.  I know of many technology entrepreneurs who have left the field.  For instance, I know one successful serial entrepreneur who has taken pseudo government jobs since around 2001.  I know that he would have jumped into another startup if he had seen good prospects for startups.  I know another successful serial entrepreneur who recently decided to hang it up and get a regular programming job with a military contractor.  The risk reward ratio did not make sense to him anymore.  These are not isolated examples.  Both my own experience and the macroeconomic data show that there are fewer startups and most technology startups are focused on creating evolutionary technologies in a small business and selling out to a larger company or running it as a cash flow business.  What we need is startups focused on revolutionary or disruptive technologies that will create large business and go public.  The U.S. economy is stagnating (or worse) without these sort of startups.

The reasons for our. economic and technological stagnation are clear.  We have weakened the most important property rights, patents, which are the foundation for companies creating emerging technologies.  The America Invents (not) Act, (H.R. 1249 & S. 23) will further weaken our patent system.  Sarbanes Oxley and now Dodd Frank make it almost impossible to go public in the U.S.  This makes it very difficult to fund technology startup companies.  It is easier for someone to gamble in Vegas than to invest in a technology startup company today.  This is INSANITY.  Do we want people gambling or do we want them to invest in companies that create jobs and raise everyone’s standard of living????

 

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July 8, 2011 - Posted by | Innovation | , ,

9 Comments »

  1. Dale,

    What is really even more insane is listening to some of our politicians speechifying away today (including President Obama) in view of the new jobs report (showing a disappointing increase in unemployment, supposedly to 9.2%; but personally I would double that number).

    I had to slap myself silly a couple of times to make sure I was awake when I heard them say that the new Patent “Reform” legislation will “streamline” the process for inventors/job-creators and thus get our economy going once again.

    What is happening to this country?

    Did all these politicians flunk readin’ and writin’ 101 in grade school?

    Or did they instead get an A+ in Orwellian Double Speak in grad school?

    One does not have to be a rocket scientist to see that the tons of new and complex additions made by the America Invents (No more) Act of 2011 is not a “streamlining” of the patent process.

    It is more like a wallet-lining for some treason-committing politicians who have sold off our country to the highest bidders. I never thought I’d see the day.

    Comment by step back | July 8, 2011 | Reply

  2. Step back,

    Is it possible that flunkin out of readin and writin is the same thing as getting A+ in Double Speak?

    Be careful, you are beginning to sound like Atlas Shrugged character!!!

    Comment by dbhalling | July 8, 2011 | Reply

  3. I feel more like that character from Orwell’s “1984”

    The Ministry of Truth is already re-speechifying what Obama said:

    Patent reform. On June 23, the House passed a patent-reform bill authored by the chairmen of the House and Senate Judiciary Committees, Rep. Lamar Smith (R-Texas) and Sen. Patrick Leahy (D-Vt.). The Senate has yet to vote on the House’s version. “Right now we could give our entrepreneurs the chance to let their job-creating ideas move to market faster by strengthening our patent process,” Obama said. “That’s pending before Congress right now. That should pass.”

    source is here

    Except he didn’t say “strengthening”.
    He said “streamlining”.

    I’m not the only one who heard him say it: “Streamlining our patent process? Yes, that was one of the remedies President Obama offered Friday in response to news the unemployment reached 9.2 percent in June”

    Comment by step back | July 9, 2011 | Reply

  4. I’m sure your point about patent reform and government regulations are relevant but I think it doesn’t help to give them god like status of being a singular cause of our problems, or correcting them a singular solution to our problems. If the claims are not believable or supportable by evidence the argument will not gain enough support. If it doesn’t pass the test of living up to the large promise, support based on this promise will be lost.

    I don’t see it is the case that we can say if we just fix these two things everything will be alright. I say because correcting these two things will not make everything alright makes it even more important that that they be corrected.

    History shows us that every technology boom is actually about 70 years in the making. It takes that long for various advancements to be made and then combined to create a large disruption in the economy that we call a boom.

    Lately we have had several technology booms and some of them have been back to back. Someone who doesn’t know the history of technology booms can get the wrong idea that boom economics are normal and not having them is not normal.

    We had the chemical boom in the 70’s. A PC boom in the 90’s followed closely by the internet boom. The biggest and fastest technology/economic boom in all of history is the mobile phone industry boom going on right now. All of these technology booms require a lot of evolutionary achievements before something that ties them together comes along allowing us to call it revolutionary.

    Because it takes so long and because we don’t yet know what the key innovations of the next technology boom will be, it is very important that we keep pace with the rest of the world at every step along the way. If we don’t we will find that all or most of the critical patents of the next technology boom will be under foreign control.

    Because is takes 70 years to make one, we can’t depend on a boom that is created here to save our economy. We have to remain competitive every step along the way. The mobile phone boom is the largest and fastest boom in all of human history. Larger than the PC and Internet industry combined. But it still isn’t enough to turn our economy around. In fact, USA companies pay patent fees to foreign companies.

    It doesn’t make any sense to make individual USA inventors less competitive. It’s ludicrous to think that our invention engine, our patent engine is better off in the hands of a few large corporations who have to answer to shareholders. They will be the first one’s to cut their R&D budgets in order to please the profit expectations of share holders. And when they do that, they take the advantage that patent reform gives them and hand it over to foreign countries.

    They won’t be like Bill Gates and Michael Dell who drop out of college and bet it all. They won’t be like the Wright Brothers who shut down their business for extended periods of time in order to invent the air plane. They won’t be like Thomas Edison who while struggling to make ends meet and support his wife and children still poured what little resources he had into his experiments and invented broad band.

    Currently we have people like Venture Capitalist John Doerr who has been number one on the Midas Touch List more than once and others, telling Congress and the President that we need more Federal funding for research in universities. These same Venture Capitalists have also been telling us that they have taken their investment funds to China because of the greater amounts of research being done in China and the higher number of graduating scientists and engineers.

    Years before the America Invents Act was this close to being passed it has been repeatedly reported that we are losing our competitive edge to the many researchers coming online in China. This being the case makes it delusional to consider putting the responsibility and the ability to invent our future in the hands of people who are most likely to cut research budgets.

    Necessity is the mother of invention. The necessity will never be greater than it is with individuals and small companies. All patent laws should be favorable to those in our society with the greatest necessity because that will give us the greatest number of USA innovations which in turn gives us the greatest economy.

    Comment by Matthew Artero | July 10, 2011 | Reply

  5. Stepback,

    Absolutely Orwellian.

    Comment by dbhalling | July 11, 2011 | Reply

  6. Matthew,

    The K-Wave theory of economics and technology booms, which I discuss in my book, does not fit the empirical evidence well at all. It does not explain why the Industrial revolution started in England spread to the US but not France, China, etc.

    There are many ways to screw up the economy. However, they all revolve around slowing down or reversing our level of technology. Patents and financing in the US are much more critical to economic growth than any other area. Standard capital formation issues in less developed countries is more important – however this is still about upgrading the countries level of technology.

    The cell phone boom is a small technology boom, not even close to that of the internet. Cellular technology will be surpassed by WiFi and other internet technologies that are much less expensive – if we had not screwed up our patent laws and screwed up the ability to get financing it might of happened already

    Comment by dbhalling | July 11, 2011 | Reply

  7. Correcting the record:
    The White House record of the President’s remarks at least gets it right. He said “streamlining”

    “Right now, we can give our entrepreneurs the chance to let their job-creating ideas move to market faster by streamlining our patent process. That’s pending before Congress right now. That should pass.”

    source=
    http://www.whitehouse.gov/the-press-office/2011/07/08/remarks-president-monthly-jobs-report

    Comment by step back | July 14, 2011 | Reply

  8. […] about becoming expats from the United States.  I have written about this issue before, see Phil the Expat.  Yesterday I spoke with a man who is moving to Argentina.  He is a web designer and marketing […]

    Pingback by Exodus from the United States | Blog of Dale B. Halling, LLC - Intellectual Property Law Firm - Patent Attorney - Patents, Trademarks, Copyrights | September 14, 2011 | Reply

  9. […] is suffering a brain drain.  I have reported on this phenomena several times including my post Phil the Expat, which discusses a highly skilled scientist moving to Belize and Exodus From the US, which […]

    Pingback by US Brain Drain | Blog of Dale B. Halling, LLC - Intellectual Property & Patent Innovation, Attorney - Powered by Clvr.Tv | November 29, 2011 | Reply


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