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A friend for many years who happens to be chief financial officer for a Silicon Valley startup has this story to tell about his immigration problems at work:

This is the immigration battle that I fight day-in and day-out.  How do we attract the best and brightest to our shores (H1-B visas) so the jobs stay in America instead of transferring overseas?  The technologists that we work with could work anywhere.  We have to make it easy for them to come here and to contribute here and to have bright babies here and to have those babies set higher standards here.  I see very, very few Smiths or Joneses or Johnsons who contribute at the very top of the math and science that is required to succeed in Silicon Valley.  Right now I’m trying to get a Korean and a Chinese and three Spaniards to come to work for us.  The Spaniards will only work in Spain, so we’ll establish a subsidiary there.  It meets our goals, but America just lost three jobs. We’re hiring about 50 people this year – mostly PH.D.’s in electrical engineering with a deep understanding of algorithmic mathematics and modeling.  The best candidates are either overseas or are foreign students at U.S. universities.  We aren’t looking for cheap overseas labor. We’re looking for people who can do the job.  The salaries at entry level are over $100K per year whether they work here or overseas.

That’s the argument for H1-B expansion in a nutshell and it is hard to dispute — unless, of course, you are an engineer who has been hurt by immigration policies applied in ways their writers perhaps did not intend.  I have a friend in just that position, so I ran past him the paragraph above.  His response:

When I was wrapping up my BS engineering degree in 1979, the head of my department asked me to consider going to grad school.  The reason — the fall 1979 master’s program had no male USA citizens enrolled.  This was at PURDUE — the largest engineering program in the country.

So this problem has been around for 30 years.

At the time most engineers left college with BS degrees.  They could advance themselves faster financially going to work immediately.  If they wanted to continue their education, most companies would pay for it.  Most engineers at the time developed their expertise quite fast — and often surpassed what one would learn in graduate school.  (I probably could have earned a PhD for my simulation work).

In 1981 IBM introduced the PC.  By 1984, five years after my graduation, the engineering profession was turned on its ear.  Accountants doing what-if analysis found the company could be more profitable if all R&D was stopped.  By 1989, 10 years after my graduation my entire profession (Industrial Engineering) was wiped out.  Over 90 percent of the jobs were gone.  Around then I moved to IT.

In the 1990′s there was a mass exodus of U.S. manufacturing jobs.  When the factories were moved offshore, so was the need for engineers.  I’d be willing to bet over two-thirds of the engineering positions in the USA have been eliminated in the past 30 years.

Of all my college friends, only one is still working as an Engineer.  He works for NASA.

With a lot fewer jobs in engineering, college students weren’t stupid — then went to IT and other fields.  IT provided a lot of opportunity until the early 2000′s when the flood of H1-B’s hit.  U.S. workers were run out by people willing to take less pay and no benefits.  Students know R&D and manufacturing jobs have been moved off shore.  They think long and hard about going into engineering.  They know their jobs are as vulnerable as IT jobs.

With a job situation like this — is it any surprise our most gifted students are not studying math, science, or engineering?

My third kid is going to college next fall, to study engineering.  He has visited several schools.  When I went to college there were 3-4 jobs per graduate.  Today there is less than one job per graduate!  With the recent economic downturn a lot of kids could not find work and are presently working on their MS degrees.  We talked to the schools, we met the students.  The schools are honest and provide the facts.

I’d love to go back to engineering.  One of the things I used to do is simulate control systems.  I would analyze the behavior of both the system and the system that controls it.  Do you think this talent would be of value to Toyota right now?

In my current job I help with outsourcings.  Every once in a while I get to see a spreadsheet of a customer’s IT department.  Age discrimination — you better believe there is discrimination.  In corporate America there is most definitely a program to get rid of their technical talent when they hit their 40′s.  Look at any company’s hiring statistics — they will hire folks from age 21-35.  Over 45 the hiring rate is zero.  In this country companies are required to provide equal employment opportunities on race and gender.  They make sure they hire according to the population demographics.  Age is a different thing.  If the average age of the USA population is increasing, why isn’t the average age of new employment increasing?  When you hit 50, why is it next to impossible to get a good job?

The USA, both in business and in government regulations have wiped out the market of science and technology jobs for USA citizens.  The reason there is no talent is because the situation has steered those students to other careers.

Point and counter-point.  But we’re not done.  Here’s my buddy the CFO:

My experience with H1-B is that you have to prove that: (1) you’ve searched for qualified Americans in and out of your company but have been unable to fill the slot (there are many, many cross-checks to assure that is true), and; (2) that you’re paying the immigrant at market rates for like experience and education.  If (a company) isn’t doing that, they have some officer who is personally in perjury with the application process.  I’ve administered the process for some 30 years and when I sign the H1-B affidavits, I know that the above two points are true.  I’ve never hired somebody through the H1-B process in order to lower wage costs.

I think that your friend has some very valid points.  “Engineering,” of course, isn’t one amorphous profession.  The industrial engineers did dissipate.  IT became a new field.  Software became an even newer field based much more on math and less on physics than previous categories.  All engineers in all fields needed to be taught (but most were not) that the half-life of their education was – maybe – 10 years, often five.  Those who understood that went into marketing (if they had half a personality) or management (if they could supervise people and processes) or even into journalism (?).  The “half-life” thing is still alive for all engineers, whether domestic or foreign.  I’m not sure what each individual is supposed to do when he becomes obsolete.

So it is change or die.  Forget about doing the same job for 40 years then getting a pension.  Heck, forget about the pension.

Here we have two completely different views of education, professional development, and the role of immigrants in business today.  Both are correct.  Engineering is in a transition that will put many out to pasture.  Our incentives to study engineering have declined dramatically leaving mainly foreigners in our best engineering programs.  H1-B — when used as it was intended — is a good program that probably should be expanded as industry requests.  Except that not all companies are as scrupulous in their attention to regulations as is my friend the CFO.

The H1-B program can be a tool or a weapon depending on whether you are being employed or replaced by it.  Wholesale replacement of American workers was never in the intentions of those who created H1-B, but then some weasels in HR figured-out how to game the system and so here we are.

This is a complex problem that can’t be handled with a single policy change, but I can suggest a place to start.  Most tech companies want unlimited H1-B visas.  I say give it to them in the form of a new law that mandates third-party compliance audits, hefty fines (with a piece of that fine going to the auditor), and jail time for those found to be skirting or abusing the law.

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Note there is additional new material at the end of this column — Bob

I am old — so old that when I was a college freshman there were dormitories filled with men and others filled with women but no dormitories at all filled with both men and women, at least not where I went to school.  The women had it so bad that there was literally a time clock for signing-in and -out under the stern gaze of an old biddy tending the front desk — a desk she was determined that I, in particular, would NEVER get past.

And yet I did.

There was a public room for meeting visitors at the entrance of the women’s dorm, there was the front desk, and behind it the hated time clock with about a hundred paper cards — one for each resident — for punching in and out.  Women had to be in their dorms (I am not making this up) by 10PM, after which the front desk closed and anyone coming-in later than that presumably went straight to jail — or to Hell — it was never made clear which.

Then one night I stole all the time cards.  The biddy was gone from her post for just a moment, I vaulted the swinging gate, gathered-up all the time cards, and ran outside with my haul, which I later burned.

The cards were never replaced.

Sometimes change requires a catalyst and 39 years ago at a little college in Ohio I was that catalyst.  Social mores were changing, even in Amish country, and it was only a matter of time before these same-sex barriers would fall.  But still something has to happen to MAKE them fall.

I sense something similar coming for higher education in America, but this time it is likely to be the embrace of virtuality and what will go away could be the school, itself.

MIT has all its lectures available for viewing for free over the Internet.  Why hasn’t some entrepreneur yet leveraged this amazing act of generosity?  Some little school could outsource its entire physics department, for example, using MIT lectures and a single professor in-house.  My physics department had only 2.5 professors (the .5 was the department chair who drove a cab on the side) and we didn’t have the benefit of MIT video.

There is enough good material available for free online right now that it would be easy to create a virtual university (WikiVersity?) with the only thing missing being the granting of degrees.  It’s that whole “degree from MIT” thing that allows that school not to worry about sharing its lecture bounty, because in the education system lectures are viewed as worthless unless they lead to a degree.

Why is that?

My friend Richard Miller (he designed the Atari Jaguar video game console eons ago) is one of the smartest engineers I’ve ever met yet he doesn’t have a degree in engineering.  Apple II designer Steve Wozniak got his degree from UC Berkeley only after leaving Apple in the early 1980s.  In both cases their employers couldn’t have cared less.

What drives the education industry is producing degrees while what drives the computer industry is producing products and services.

When was the last time any employer asked to see your academic transcript?  Have they ever?

What’s missing here is the higher education equivalent of a GED.  Someone will come up with one, or they should, because all the other parts of the system are ready to go.

Cushing Academy, a tony prep school in western Massachusetts, is right now replacing its 20,000-volume library with a “learning center” containing 18 eBook readers, three giant TV screens, and a $12,000 espresso machine.  I wonder why they need a building or even a room at all; wouldn’t it be cheaper just to give each kid an eBook reader and a Starbuck’s gift card?

We’re on the cusp of a new era where the marginal cost of insight is low enough to create new kinds of virtual education institutions.  The important concept here is insight, which means more than fact, more than knowledge.  It is the link between facts and knowledge, a true act of understanding that enables thinking people to create something completely new.  Without insight you don’t know jack. But insight generally comes through personal connections — connections that to this point we’ve typically had to create campuses and pay $50,000 per year to enjoy.

That no longer makes sense.

Education, which — along with health care — seems to exist in an alternate economic universe, ought to be subject to the same economic realities as anything else.  We should have a marketplace for insight.  Take a variety of experts (both professors and lay specialists) and make them available over the Internet by video conference.  Each expert charges by the minute with those charges adjusting over time until a real market value is reached.  The whole setup would run like iTunes and sessions would be recorded for later review.

Remember, all lectures are also available online for free. What costs is the personal touch.

Say a particularly good professor wants to make $200,000 per year by working no more than 20 hours per week or about 1000 hours per year.  That gives them a billing rate of $200 per hour.

Now look back at your university career.  How much one-on-one time did you actually get with the professors who really influenced your life?  I did the calculation and came up with about two hours per week, max.  Imagine a four-year undergraduate career running 30 weeks per year — 120 total weeks of school — times two hours of insight per week for a total of 240 hours.  At $200 per hour the cost comes to $48,000 or $12,000 per year.

That’s a huge savings compared to the $200,000+ an MIT-level education would cost today (remember the MIT online degree — there is one — costs the same as if you were attending in Cambridge).  And ideally the pool of insightful experts would be far greater than any one university could ever employ.  And that’s the point of this exercise; it can’t be an emulation of a traditional university, because that would inevitably disappoint — it has to be in at least one way clearly, obviously, stupendously BETTER than what’s available now.

This could happen tomorrow, the pieces are all there ready to be put together.  Ironically it leverages one of the great red herrings of the Internet era — micropayments.  So much could happen, we’ve all said, if only we could build a micropayment system that would actually work.  Well we can, and what makes it work is that the payments at $200 per hour aren’t so micro.  But they are micro enough.

It’s time to vault the gate and burn those cards… again.

Here’s an update as of Sunday night, September 6th — Bob

A number of readers have cited a feature story from Washington Monthly about an online university they see as very similar to the one I proposed above, charging only $99 per month.  The story is here and the school in question is called Straighterline and I found something of a critique of the program here in the Chronicle of Higher Education, which may have an axe of its own to grind.

Straighterline is interesting and cost-effective, but it isn’t exactly what I proposed.  Straighterline is more like online junior college with mainly introductory courses.  this is not to say that it couldn’t become more in time and I hope it does.  But to do so the company will have to take a somewhat different approach.

Straighterline has a problem with accreditation — they can’t get it.  So they cut deals with no-name schools to effectively launder their credits, passing them on to third-party schools.  I see nothing wrong with this but in time Straighterline or schools like it will have to take a more direct approach to the problem of gaining acceptance.  The University of Phoenix did that through the simple expedient of offering real classes all over the place AND charging a lot more than $99 per month for all-you-can-learn.  Exciting as that price is, it is precisely what scares the crap out of many established colleges.

If I were running Straighterline, then, I’d get ready to file a big restraint of trade lawsuit against some big vulnerable school caught up in, say, an NCAA athletic recruiting scandal.  ”Pick your targets carefully,” Pa Cringely always said.

The other thing I would strongly recommend is that Straighterline put some big bucks into recruiting its own stellar faculty.  Spend whatever it takes to get the top people in some discipline to start.  Hire academics if you can and lay practitioners if you can’t.  Most academic contracts don’t prohibit teaching part-time elsewhere and if they do try to stop the practice, well that’s just a further example of restraint of trade.

As for the traditional schools with their red brick overhead, they remind me of a crowd I spoke to years ago in Minneapolis when I tried to explain the Internet to the people who run America’s many state lotteries.

Lotteries, it turns out, are actually run by folks who used to be at the Department of Motor Vehicles.  They have a monopoly in their states on gambling and are determined to pursue it as a form of sin tax.  The idea that I presented in 1998 that Internet gambling could eventually hurt them was laughable: didn’t those Internet folks know the lotteries had a monopoly in their states?

Yeah, right.

My recommendation was to take their games to the Internet and appeal to potential customers outside of Illinois or Iowa, maybe grab some of that easy money from Abu Dhabi.  They looked at me like I had two heads, but history has shown I was correct.

And it will be the same way with my proposed online university or with Straighterline Pro, if that ever comes to be.  Education is a talent business and anyone who can gather the best talent will offer the best service and have the greatest success.  This doesn’t mean that Stanford and MIT will die, far from it.  But it means that some lesser institutions WILL die, while hybrid operations that are entirely new and different may well thrive.

Imagine the various higher education equivalents of drivers schools for people working-off their traffic tickets (remember Comedy Traffic School?).  With a solid curriculum available online to any institution, one point of differentiation can become location (Hawaii, California, France, on ship, etc.) or ambiance (health spa, sports, luxury, religious, etc.).  The classes are identical, but where do you want to drink beer, and with whom?

Maybe this seems silly, but it is also one likely future of higher education.