Today's Top News Stories • Report: In U.S., record numbers are plunged into poverty - • VP's plane has minor electrical problem - • Israeli troops raid West Bank city - • Severe storms injure 27 in Arkansas - • Va. lawmakers pass slavery apology - • Add USATODAY.com RSS feeds

Reverse brain drain threatens U.S. economy By Alan M. Webber Until recently, if Americans heard the words "brain drain," they knew clearly what that meant: Bright, talented scientists, engineers and other techies from all over the world were migrating to the United States. They were drawn here by the world's best universities, the most dynamic companies, the freest economic and social environment and the highest standard of living. Today, while many of these conditions still apply, Americans are starting to hear a new term: "reverse brain drain." What it suggests is the United States is pursuing government and private-sector policies that, over the long run, could lead to a significant shift in the world's balance of brainpower. Recently, President Bush's chief economic adviser, Gregory Mankiw, touted the advantages for U.S. firms of outsourcing jobs overseas. But that trend, if left unattended, could have serious implications for this country's economic competitiveness. For its part, the federal government seems intent on letting "controversial" scientists — for example, those dealing with research that touches on the issue of abortion — go to other countries and keeping foreign talent out. U.S. companies are happy to outsource knowledge work while, at the same time, buying out the contracts of their most experienced workers — all in the name of reducing costs. And the one sure way to grow new brains — a high-quality educational system — has failed to produce enough homegrown talent. As the economy globalizes, and as first-class creative minds go abroad, stay abroad or are produced abroad, other nations may challenge the United States' role as the leader in innovation and creativity. The prospect of that challenge tomorrow — more than the loss of jobs today — is what the debate over America's economic future ought to be about. First, recent government policies are sending talented U.S.-based researchers overseas and clamping down on the arrival of new researchers to this country. A recent article by Carnegie Mellon professor Richard Florida in The Washington Monthly magazine makes a persuasive case that the Bush administration's policies are shooting this country's economy in the, well, the brain. Florida's book, The Rise of the Creative Class, demonstrates that the most competitive communities are those that have the highest concentration of talented individuals, a high degree of technological innovation and a high level of tolerance for diverse lifestyles. But, Florida says, the United States is losing its edge in these categories. He cites the case of Roger Pederson, one of the leaders in stem-cell research, who left his job at the University of California to pursue research in the United Kingdom. Why? The British government recruited him at the same time the Bush administration was clamping down on stem-cell research. Losses such as Pederson's aren't being filled by enough new arrivals. Talented foreigners aren't coming here, sometimes because we aren't letting them in. A National Science Board study found that U.S. visas for immigrants to work in science and technology dropped by 55% from 2001 to 2002, largely because of the post-9/11 clampdown. Second, American firms are contributing aggressively to the reverse brain drain. For decades, they shifted blue-collar manufacturing jobs to parts of the world with low labor costs and acceptable quality standards. Now, they are outsourcing knowledge work — engineering, software, product design and development — to such countries as China, India and Russia. Intel CEO Craig Barrett has warned that Russia, China and India already have as many as 250 million to 500 million knowledge workers — the kind of highly educated, technologically skilled employees who can write computer code, design sophisticated products and manage high-end production processes. Companies that contract with these foreign workers are, in effect, outsourcing their brains. In the short term, they may save money and boost profits. In the longer run, they outsource creativity and, gradually, erode their capacity to generate new products and services. At the same time, U.S. companies are offering early retirement or attractive buyout opportunities to their most experienced, most knowledgeable and most expensive workers, in the name of economic savings. The U.S. Bureau of Labor Statistics reports that the percentage of Americans ages 55-64 who are gainfully employed continues to drop from mid-1960s highs. The thinking behind this strategy is the same as for sending knowledge work overseas: find newer, often younger, replacement workers at lower cost. It's a fool's bargain. Foreign or younger workers cannot replace what the older workers contribute in the way of institutional memory, long-term relationships and applied creativity. The company loses both the knowledge capital and social capital that come with long-term, smart, high-performing workers. Finally, the problem of a reverse brain drain is exacerbated by the continuing crisis in American education. A recent column by Nicholas Kristof in The New York Times makes the point that U.S. education simply is doing a lousy job in math and science. The most recent international ranking of eighth-graders from around the world in math and science put the United States 19th, just after Latvia. India and China were not included in that trends survey — but it's a safe bet that if they had been, the U.S. would have slid to 21st. Why does this matter? Consider Federal Reserve Chairman Alan Greenspan's testimony this month before the Senate Banking Committee. When asked about outsourcing and the rising U.S. trade deficit, Greenspan sagely commented that education, not trade or outsourcing, would determine the fate of U.S. workers. No one disputes the fact that, when it comes to economic dynamism, the United States still ranks at the top. But the combination of these "reverse brain drain" policies presents a clear danger to America's future competitiveness. The long-term trends in the world economy are clear: We are shifting inexorably toward a knowledge economy, where productive, well-paid work is based on ideas, information and adaptive thinking. Work involves more intangibles (brains) and fewer tangibles (muscles). The country and the companies with the best brains will win. The only way for the United States to out-think, outsmart and out-innovate the competition, is to look hard at government policies that either send our best brains overseas or discourage more brains from coming here; to question business practices that increase reliance on foreign brains while "buying out" our own; and to demand more from our education system. It's not too late to stanch the reverse brain drain. But first we have to put our own brains to work on the problem. Alan M. Webber is founding editor of the business magazine Fast Company and a member of USA TODAY's board of contributors.