This is Wall Street Week.

I'm David Weston bringing you stories of capitalism.

President Mela scored a big victory in Argentine elections on Sunday.

What does that mean for his economy and for the US?

Given its support and President Trump's charging one hundred thousand dollars for an H one B visa may put some money into the US treasury, but what does it mean for innovation in a tech industry that depends on highly skilled minds from abroad.

Plus many of those highly skilled minds are focused on developing artificial intelligence models.

We sit down with Nobel Laureate Jeffrey Hinton for an update on his story about where AI is taking us and whether he's as worried about the possibilities as he told us a year ago.

But we start with the big story for the markets this week, the Federal Reserve's latest rate decision.

Our special contributor to Larry Summers of Harvard is here with his take.

Larry, we heard from the Federal Reserve this week and they cut again, second time in a row.

Were you surprised at how far Chair Powell went and saying don't expect it?

In December, I.

Was slightly surprised, but much more importantly, I was glad this was the right thing to do.

Inflation is much further from its reasonable target than unemployment is.

The FED can have much more of a durable impact on inflation than it can on unemployment.

Given deficits, given AI spending, we're probably at or below the neutral rate of interest.

There was no reason to be committed into further rate cutting in this environment.

So share Powell's signaled or return to data depend to agnosticism about what was going to happen next.

That was exactly the right thing to do.

Yes, there are risks of a slowdown, but if we get a slowdown and the FED does a fifty basis point cut six weeks later, that is not going to be important.

But if the FED loses its credibility around inflation at a moment of massive deficits, massive political pressure from the administration, substantial international uncertainties, evidence of higher inflation expectations, and it's been a long time since inflation was near two percent, in the face of all of that, this was really the right thing to do.

The FED maybe data dependent, but it doesn't get the data that it once did out of the federal government.

How much of a disadvantage is that for the FED right now in figuring out where we are, particularly when it comes to inflation.

It's a disadvantage.

But there are now so many indicators, so many real time data sets, things like the million price projects at MIT, all sorts of sensitive indicators that are being followed by people in the markets on an almost weekly basis.

That this is unfortunate and it's not what a serious government country does to have such a long slowdown.

But I don't think it's an immense problem in the grand scheme of things.

It's certainly a much smaller problem than politicization.

It's a much smaller problem than dealing with budget deficits.

This is not the major challenge facing the feed AT Chairpoel in the news conference talked certainly about inflation.

He also talked about the role of tariffs, and at one point he said, look at if you take tariffs, the effect of tariffs out of the numbers, we're actually not that far away from our two percent goal.

If that's right, Which way does that cut?

What do we do with tariffs incorporating that into monetary policy?

Well, we're not that far away from two percent after five years of being above two percent, isn't that great a place to be?

Even if you accept that that's true, you can always take some things out of the numbers and then say we're near normal.

That kind of argument reminds me of what was share Powell's darkest moment and what was what I think has been a really very distinguished term of service, which was the transitory inflation idea in twenty twenty one.

Yes, maybe it's true that if you take out tariffs then numbers will look good.

But because people are spending more money on tariff goods, they're spending less money on other goods whose price is lower, and that should be taken out as well.

So I don't think cherry picking the components that have risen is a particularly good way of doing the analysis.

I also think it's not clear what's going to feed through into people's expectations of inflation.

One thing that was different about this FED decision were the descents.

I mean, we went for a long time with no dissents.

Last meeting we had some saying we should cut more.

This time we had them both ways, don't cut it all and cut more.

Is there a breakdown in the consensus on the FED, or is it just a more confusing picture we're saying.

I think it reflects two things.

It reflects the confusion of the picture.

And I think that the descent from Kansas City in favor of raising rates reflects were or not cutting rates reflects what is the genuine argument among serious economists in this moment.

The dissent from Governor Mirron reflects the bizarre spectacle of a government official, part of an administration that's at war with the FED in its rhetoric putting something on the putting somebody on the FED on a temporary basis while they're on their leave from their other Senate confirmed job.

I think that that's not to be taken seriously as anything but a politically aberrant moment.

The FED also said that as of December one, they'd stopped the roll off of the balance sheet.

Is that reflecting a real concern about liquidity?

Did you expect them to keep the balance sheet this large?

They signaled that this kind of thing was going to happen.

I don't think, for twoarticularly that the precise size of the FED balance sheet in an era where we're paying interest on reserves is really that important a variable.

In an earlier era, when the other side of the balance sheet was money that paid zero interest, the era of monitorism, you could get very excited but by the size of the FED balance sheet.

But I don't find it that exciting a variable to worry about its precise size.

I do think it's important for the country as a whole to be turning out its debt more than we have, and from that point of view, the FED reducing the size of its balance sheet is probably a good thing because it means a little less short term obligation of the federal government and a little more long term.

Oblim Shortly after we had the FED meeting, we also had President Trump meet with President Jushen Ping of China over in South Korea, and there were a lot of things announced.

President Trump said had done a scale of one to ten.

Was the twelve.

But there was seemed to be a consensus that what we've done is basically just go back to where we were before, and this is gonna be an ongoing period of negotiation.

How significant in terms of the economy is what happened over in South Korea.

Look, I think the most important thing is what didn't happen.

This situation didn't spiral out of control into massive confrontation and economic conflict, and it was managed in a way that avoided what potentially could have been very unfortunate and destabilizing outcomes.

And that's the good news, and I think it genuinely is good news.

I am glad for farmers that they are going to sell more soybeans in China.

But ultimately, when one judges the prosperity of the United States in this period, or the wisdom of economic policy in this period, it is not going to be about the level of soybean sales to China.

So we're going to have to see what happens.

The really big issues involve technology, involve competition in artificial intelligence, and it doesn't look to me like on the read we have so far that those have evolved a lot.

But give credit where credit is due.

I think there's a good chance that we elicited some real cooperation on fentanyl, which is not so much an economic issue, but it is a hugely profound social issue, And give credit where credit is due.

We're managing the situation towards the avoidance of what could otherwise be very substantial turbulence.

But this is a book that's got many chapters, and we are still in the early chapters.

Let me talk about that technology issue that you mentioned, and particularly when it comes to AI, one of the things that apparently was not discussed with some of the advanced microchips from Nvidia.

I mean, you are both a macroeconomist and also sat on the board of Opening Eye, so you have a vantage point on this.

How do you see the issue about export controls in respective advanced microchips between the United States and China.

On the one hand, there are national defense issues.

On the other hand, we do want to have sort of a development of this new technology.

It's a very difficult set of issues, and I don't know what the right answers are.

I'm pretty sure that the right thing to do is to make judgments based on what will protect and national security now and in the future.

And so the approach that President Trump took a couple months ago of saying he would relax the export controls but only if the company involved would share some of the revenue with the federal government did not strike me as consistent with our traditions.

It struck me as more pointing towards a kind of deals capitalism that is more characteristic frankly, of lesser nations than ours, rather than a more rules based capitalism.

Coming up a victory for President Mille of Argentina and for President Trump in the United States, what lies ahead for both.

President Melea's historic victory on Sunday in Argentine elections means he has a stronger position in his Congress and another opportunity to administer his medicine seeking economic health for a country that has been struggling for a long time.

Hans Hume's CEO of Greylac Capital, is a long time investor in Argentina.

I think the entire country understands what has held them back for decades now, and they're willing to take a certain amount of personal pain.

Now.

We have to see how this transition goes and what the new messaging will come if Paranism is able to prevail in October.

But in the end, Paranism the populist legacy of Juan Peron did not prevail, at least not last Sundays argentinoo.

Comes.

I think right now we've made a lot of money based on that election, because the bonds have gone out the all debt rating has gone up.

You know that election made a lot of money for the United States.

What does Melae's latest victory mean for the country and for investors like Humes.

This is how Humes saw the issues brought on by Melai's reforms before the midterm elections.

In general, at the beginning of a pro market president, you're going to have a lot of enthusiasm.

Unfortunately, you know, depending on how this one goes, people might start sensing a pattern that's after the burst of enthusiasm and the rally in markets, that something happens where they run into some social resistance or whatever.

The feedback I got from sort of my lower middle class friends who are Argentine was many of their friends who are really enthusiastic for change started looking at this and saying, oh, this is the same thing we normally have to do.

Either give up or they start turning away from a lay and they put up with a lot of pain runaway.

Inflation has been a burden for businesses as well, businesses like the textile manufacturer that David Kim runs in Buenos Aires.

Inflation is a game we really know how to deal with because inflation in Argentina started in I think nineteen seventy or something like that, and we've had inflation, double digit inflation for many years.

It is very difficult because you need to calculate the costs every month, and sometimes you have to when inflation is very, very high, you have to increase the prices maybe once or there has been some times when they have to make increases more than one time a month.

Everyone that comes to Argentina and we explain all these crises and what happens politically and economically on the taxis and the new regulations, they say, we are crazy to stay here.

Where is to this.

We will be here working in the tech side business for many, many years.

I think that the business owners in Argentina deserva a medal because it's a very it's a very challenging country.

It wasn't just President Mila who had a lot at stake in the Argentine elections.

Last weekend, President Trump had his Secretary of the Treasury, Scott Bessant, established a twenty billion dollar swap line for the country and spend something over one billion dollars in the currency markets to support the Paeso.

Fabio Natalucci became CEO of the Anderson Institute for Finance and Economics after serving at the IMF as Deputy Director of the Monetary and Capital Markets Department.

At this point, there are three plans that have been discussed.

One has been a swap line or about twenty billion dollar established by the Treasury with the Argentina Central Bank.

There's been purports in the press of effects intervention, so outright purchases of pesos and sales of dollars.

And then there is a discussion of another about twenty billion dollars that Treasury seems to be working on with the private sector, presumably to provide some more longer term funding.

This is what's that's what's in the press at this point.

How does the start swap line work.

You can use the FED as an example here during the financial crisis they established or during COVID they established swap line with other center bank.

The way it works is the father reserve vis a v central bank of another country.

They swap say dollars for the exchange the currency of the other central bank at a specify exchange rate of some date, and those swap lines can go from one day to say three months maturity and then a maturity, they went back the FED received dollars and provide back the exchange the foreign currency at the same exchange rate.

The only report I've seen in the press has been outright purchases.

Outright purchases by tragedy.

That's a different exercise.

Essentially, they go in the market, they sell dollars, they buy Argentinian pesos.

In this case, then at this point you own the Argentina pesols, so you are completely facing the risk of the evaluation of the pesos in terms of investment.

Traditionally those there are a few examples in the past where some of this intervention has been done traditionally with advanced economies.

So, for example, in nineteen ninety eight there were purchases of yen by the US authorities y YEA, the federers or Bank of New York Traditionally in two thousand September two thousand there was a coordinated effort by the Federal Reserve and a few other Advanced economy center bank to purchase euros.

And then lastly in two thousand, in eleven March twenty eleven during hertwak in Japan, when the US authorities they saw yen.

Those are all Advanced Economies center bank, and in the case of the euro thos was a coordinated effort among different center bank to intervene in the market.

President Trump did say that he thinks, perhaps you has made a lot of money.

I guess it is conceivable it could have made a fair amount of money depending on when it got in and when it got out.

Yes, so if they, for example, got in and purchased on right before the election, and then let's say that the appreciation of the pacil post election was like eight eight and a half percent.

Again, if you apply to the one billion, that would be eighty million dollars that you made.

You made right there now.

And again that required those to crystallize those gains, which means you go back into the market and sales the paceels.

If you'll dawn those spaces for two days where you are this morning.

That was a paper game because the exchange is back to where it was essentially pre election.

So if you bought pesels and you hold onto them, you went from gains to back to essentially flat at this point.

This is on the outright exchange rate purchases the swap line.

Again, because the exchanger is fixed, there is no gain or loss.

Whether the United States made money or didn't.

That was not apparently the purpose for the swap line or the currency excition.

It was rather to support President Mela and the government Argentina.

Is it likely it could have supported I've seen, for example speculation it relieves some pressure for a possible devaluation of the peso.

Right, So I mean maybe you can take a step back and trying to start from where the garment or Gente was trying to achieve.

So soon as President Malay went into power, that went into this shock therapy of cutting fiscals, spending quite aggressively, and then a large devaluation of the nominal exchange rate.

And then after that they essentially establish a band, the Crowling band, as it said.

So the depreciation of the peseos was very control and very slow if you want what they Of course, in last year the economy went into a recession, Inflation was very high double note of two at least quoting IMF numbers that were just released the October annual meetings.

Then the forecas was for this year to the economy to sharply rebound in in positive growth territory and inflation to come down.

The challenge with this intervention in the spot mark and the outright purchases is unless you managed to address the fundamental forces they are driving the exchangerrate, those tends will be very short relief and historically that's how they have been and so historically the people often talk about it tablida in cheering Argentina, and those were exchange rate basedabilization plan the evaluation then slow the evaluation of the currents in try to bring inflation down, and the central bank ats and point historically has run out of foreign currency.

That was the driving and fundamental forces behind that and what may have pushed the US to intervene because the central bank, presumably Center Bank of Argentina was running out of dollars.

Now, the issue, the question that people have been asked is like why the US intervened.

Our systemic is Argentina.

From a financial stability perspective, Argentina.

The US imports trade with Argentina, It's a relatively small number, and so from a trade perspective, there are other countries in Latin America there are much larger trade partners.

The other aspect that makes this different than previous rescue package that was a loan from the US Treasury was not outright effects intervention that we were discussing today, but also was combined with IMF, World Bank and other multilateral developm banks intervention package.

So the twenty billion dollar of the US plus what was coming from the multi development banks went north to forty billion dollars.

So it was not just one country, not just the US for obvious interests to intervene.

Was the broader financial community that intervened that, and that was a very successful package.

Mexico managed to repay very quickly already in nineteen ninety seven, so two years after that was able to start repaying and also having access back to Cavier market.

So the crucial question here is going to be whether the intervention in the forms were discussed by the US authorities will be enough to reverse some of these fundamental forces.

They were pushing the exchange rate of Argentiani paesils to depreciate.

And again from what we see this morning, the changer it seems to be almost back to where he was a pre election day.

At least for now, it looks like President Melee will have the opportunity to continue his economic policies, policies that businessman like David Kim hope will bring both stable prices and growth.

I think the president is doing a great job with inflation.

Inflation has come down from maybe one hundred and fifty percent a year to forty percent.

That's very good for everyone.

But there are other issues that maybe you don't know about, maybe like the interest rates of banks.

It's much higher than inflation.

I hope there is a change here.

I hope the politicians take into account that everyone is facing a difficult situation right now.

The lowering of the inflation is great, but I think we need much more than that, not only for textiles, but for every kind of industrial company.

Up next.

A year after we first talked with him, we returned to professor Jeffrey Hinton to see whether his experience is a Nobel laureate has given him a different perspective on the risk that the artificial intelligence he helped create will destroy us all.

In the end, this is a story about preparing for the worst, maybe the worst thing any of us can imagine.

A year ago, we talked with computer scientists Jeffrey Hinton, just days after he won the Nobel Prize for his work in machine learning.

The so called Godfather of AI has been busy since then, not developing artificial intelligence, but warning people about it.

He says, we've all become more aware of the risks, but knowing about them isn't enough.

We need to act.

Suppose that some telescope has seen an alien invasion fleet that was going to get here in about ten years.

We will be scared and we were doing stuff about it.

Well, that's what we have.

We constructing these aliens.

But they're going to get here in about ten years, and they're going to be smarter than us.

We should be thinking very very hard, how are we going to coexist with these things?

Coexistence and control two things that Jeffrey Hinton himself has been thinking very hard about.

As one of the computer scientists who help make modern AI possible, is uniquely well suited to consider its future and who, if anyone, can shape it.

Are there companies who are doing real work on safety?

I mean we hear about Anthropic, we hear about Deep Mind.

Are they helping on the safety front?

Yes.

I think both Dariomodi and Demesis Arbis, and also Jeff Dean, they all take safety fairly seriously.

Obviously they're involved in a big commercial competition too, so it's difficult.

But they all understand the existential threat that when AI gets super intelligent, it might just replace us, so they worry about it a bit.

I think that some companies are less responsible than others.

So, for example, I think Meta isn't particularly responsible.

Open Ai was founded to be responsible about this, but it gets less responsible every day, and their best safety research is or leaving will have left.

Yeah.

I think Anthropic and Google are somewhat concerned with safety and the other companies less.

So As I talk to some of the people at some of the companies you're talking about and raise the question of safety, I often am told, don't worry your pretty littlehead about it.

We have great computer scientists who are on top ofthiss.

We're far off from any real danger, and our computer scientists will know soon enough.

So we're much more concerned at the race to become dominant.

Yes, that's the problem.

They are much more concerned about the race.

They should be much more concerned about whether humanity will survive it, also whether society will survive it if you get massive unemployment.

There's one piece of good news, which is all the different countries are aligned in not wanting ANI to take over from people.

They're anti aligned for things like cyber attacks or autonomous weapons.

There's somewhat aligned for creating viruses.

None of them really wants other countries to create viruses on taking over.

They will collaborate because nobody wants that.

The Chinese Communist Party doesn't want I ACT to take over.

Trump doesn't want I ACT to take over.

They can collaborate on that.

That leaves the question of how do we prevent it taking over?

Even if all the countries collaborate, what do you do?

And I think at present all the big companies and governments have the wrong model.

So their basic model is I'm the CEO and this super intelligent AI is the extremely smart executive assistant.

I'm the boss.

I can find the executive assistant if she doesn't do what I want, and I just sort of say make it so, a bit like Star Trek and the super intelligent AAI makes it so, and I get the credit.

Great, it's not going to be like that when it's smarter than us and more powerful than us.

That's just the wrong model.

I believe we need to look around and say, is there any model where intelligent thing controls a more intelligent thing.

And we have one model of that, and it's a model we all know, which is a baby controlling a mother.

Evolution put lots of work into allowing the baby to control the mother, and the mother is actually often more concerned about the baby than about herself.

It doesn't work like that with rabbits, but it does work like that with people.

That seems a much more plausible model of how to coexist with the superintelligence.

But we have to accept that were the babies and they're the mothers.

But you can't imagine these tech bros accepting that model.

They just don't think of the world like that.

Is the United States behind China in developing generalbi right now?

Not yet.

The United States is still a little bit ahead, but not as far ahead as they thought.

And in China you've got a very large number of very competitive, very smart people, very well educated in science and engineering and math.

They're educating far more people than the US in those areas.

The US is basically relied on immigrants to be smart at those things.

China may well overtake the US.

And if there's one thing you wanted you would do if you were Chinese.

To ensure that China overtakes the US is you would stop the funding of basic research in the US, and you would attack the good research universities.

Trump looks like he works for Putin, but actually in attacking the universities and attacking the funding of basic science, he's acting as if he's working for g.

How deep is that damage?

By the way, it's the immigrants you talked about as well, It's not just the direct funding for the research, it's also the brain power coming in from overseas.

How deep is that damage?

And how immediate may we feel it?

The point about attacking basic research is you don't really feel it for ten, fifteen, twenty years, because what you do is you ensure that the really big conceptual breakthroughs were happening here, and then you later on the Chinese will be where I had.

Regardless of who becomes the front runner in the AI race, Hinton says, the risks to everyone have gone up over the past year, particularly for workers, as we saw just this week when Amazon announced it would be cutting four percent of its workforce, perhaps made both possible and necessary by unprecedented levels of AI investment.

There's been an enormous amount of money put into AI since you and I spoke a year ago, I mean a month that I could not have conceived of that.

I mean of the order of a trillion if you added up over all the companies.

So what is that money going for and will it ultimately redound to anyone's benefit?

These are big companies run by serious people, and presumably they wouldn't be putting all that money in unless they thought they could get a return on it.

The samigo involved, they want to be the ones to do it first, even if it's going to kill us all.

So there's ego involved, but presumably they think there's returns to be made.

My worry is that the obvious way to make money out of it, apart from charging fees to use the chatbots, is by replacing jobs.

The way you make a company more profitable is replace the workers with something cheaper, and I think that's a big part of what's driving it.

Is it a winner take all in the end?

I mean in terms of I don't.

Know, I don't know.

I mean, one thing I should say is that this is sort of uncharted territory.

We've never had things almost as smart as us, which we have now, or things smarter than us, which we will have soon.

We've never been there.

We've had things in the industrial evolution that got more powerful than us, but we were always in charge of them.

You know, a steam engine is just a lot more powerful than a horse, but we control the steam engine.

This isn't like that.

Also, if you got unemployed because you used to do ditches, now you have to do something else.

You could get a job in a call center, but now those jobs are all going to go.

It's not clear where those people go.

Some economists say these big changes always create new jobs.

It's not clear to me that this will.

And I think the big companies are betting on it causing massive job replacement by AI because that's where the big money is going to be.

As you say, some economists say, we go back in history and new technology destroys some jobs or creates other jobs.

Net you have as many or more jobs.

You're saying this time is different.

Can the investment, the trillion dollars or more investment, can it pay off without destroying jobs?

I believe that it can't.

I believe that to make money you're going to have to replace human labor.

Given the dire warnings about AI's risks to workers, economies, and humanity as a whole.

One wonders whether Jeffrey Hinton has any regrets about his pivotal role in giving it life.

We ask chat GPT how it would describe its relation to the man many people call its godfather.

Its answer, if I'm the mature rainforest.

Hinton is one of the people who planted the first seeds and figured out how to water them.

Still, the question of whether it was worth it is the one that gave him pause to ask an unfair question.

You were sort of there at the birth.

If you had it within your power, understanding it's not going to happen, would you stop AI altogether given the risk.

I don't know, because there's also you have to remember it's not like nuclear weapons, which are only good for bad things.

It's a difficult decision because it can do tremendous good to in healthcare and education.

It will be tremendous good, and in fact, if you think about increasing productivity in many many industries, that should be good.

The reason it's bad is because of the way society is organized, so that musk will get richer and a lot of people get unemployed and must won't care.

I'm using Muscu as a sort of standing.

That's not on AI, that's on how we organize society.

I wonder if over the last year the economy and the markets haven't worked against you in this sense.

So much of the growth in the stock market, so much in the driving economy is investment in AI.

Right now, even if the public work more concerned than they are about some of the risk you described, they're going to say, wait a second, that's what's driving our economy.

We don't want to give that up.

We don't want to go into a recession.

Some people say that our best hope is to have AI try to take over and fail.

We need something to really scare the out of us, something like Chernobyl for AI.

I'm not sure I agree with that, but that's certainly a possibility.

Or the Cuban missile crisis or the cub nuclear because one of the questions I had was, even if the governments sort of agree in general we should do this, is there a sense of urgency.

I think the Cuban missile crisis probably gave a sense of urgency on nuclear disarmament.

Yes, we need something to make people pay more attention to put more resources.

So at present, the big companies aren't going to put like a third of their resources into figuring out how to make it safe.

But if it tried to take over and only just failed, maybe they would.

Coming up looking for a better way of bringing highly skilled talent to the United States.

Is charging one hundred thousand dollars per visa really the way to go?

What to Elon musk Satya Nadella, Indra Nui, and Sundar Pichai all have in common.

They all at some point were in the United States and an H one B visa.

This is a story about putting a price on opportunity, like one hundred thousand dollars price.

Last month, President Trump responded to years of complaints about how the much sought after H one B visa for admission to the US gets awarded.

The country would rather not have to pay one hundred thousand dollars.

How do you do that?

You hire America?

One hundred thousand dollar fee is a huge, huge increase on that.

This is very significant for these organizations.

And just to sort of highlight how big this changes that the fees for an H one B visa They've never been cheap, right, so they have ranged from thread to ten thousand dollars, which is not minor.

That one hundred thousand dollars price tag is sure to hit the highly skilled people coming to the US each year, people like VJ.

Ravi.

I actually did my bachelors in India.

Then after that, I decided that, you know, I really wanted to do more in life and have more opportunities.

So that's when I decided, Okay, let me go to the United States.

Rabie lived in the US for six years on an H one B visa.

He came from India, the country that uses the visa more than any other, and earned his master's degree in data science at the University of Texas at Dallas.

I got my first job in Miami.

It was a great achievement for me.

It was my first real job, and I was really lucky because my H one B got picked in the first attempt itself.

I was so excited that, you know, my stay in US was actually solid, It's like settled.

Then I got another job in New York City, was for an advertising company, and the HEAH one B transfer process also was very smooth.

But then things changed.

I did around like three years of that company and I was laid off.

Unfortunately, I must have applied for around thousand, two thousand jobs in like three months.

I actually got a lot of interviews actually, but in the end, in the final round, on the second round, they're like, oh, we cannot sponsor the H one B after two months, and this is just going to get worse.

Ravi's H one B visa was part of a program that began in nineteen ninety designed to let highly skilled workers into the country from abroad.

They've been around since the Immigration Act of nineteen ninety and actually, you know, there's been almost no change to them since then.

Britzid Glennon is an assistant professor at Penn's Wharton School of Business who has studied the effects of the H one B visa program on business and the economy.

They're a skilled immigrant visa, so they're primarily used for those who have at least a bachelor's degree, if not, you know, masters or PhD.

They're really the primary skilled employment visa for immigrants.

They are tied to a firm, right, So something that's sort of important to recognize is that you actually cannot get an H one B visa without an employer sponsoring you, and the employer actually they're the ones who submit the application, not not the individual.

The US limits h one B visas to sixty five thousand each year, with twenty thousand additional visas for those getting graduate degrees from US institutions, but several times that number apply, which has led the US to create a lottery to pick visa winners and to criticism about the overall approach.

It's pretty clear that we need more than eighty five thousand, and just the fact that demand is so much higher than supply every single year I think exemplifies that.

I mean, when it was first formed, demand was below the cap.

They ended up raising the cap in the late nineties because demand started growing as you had kind of the Internet boom, right and Silicon Valley became much more significant and then not expired in two thousand and four, and basically since then, supply and demand have been on completely different trajectories.

The big mismatch between supply and demand has created large business opportunities for companies not looking for skilled employees themselves, but to getting visas for workers they can provide to the companies needing them.

In twenty twenty three, nearly half of the H one b's went to outsourcing or staffing companies.

Todd Shulty is the president of FWD dot US, a company that focuses on reforming the US immigration and criminal justice systems.

So there's been over the year's efforts by companies, I don't say a lot of bad actors to basically kind of game any particular system here, really the function of Congress's failed update operation system in a lot of ways here.

Uri Leskovic is a computer science professor at Stanford, but he's also the founder of AI tech startup Kumo dot Ai, the sort of company that the H one B visa was supposed to help.

Lottery I think doesn't make sense right.

Lottery.

Maybe large organizations who are able to sponsor many visas and kind of play the numbers game, they can deal with that.

But if you think of a small garage startup with three employees who want to sponsor one or two visas and the probability of them getting that visa is maybe ten twenty percent, it puts a huge risk this startup being able to grow, being able to hire, and bring able to move fast.

As many problems as there may be with the old H one B system.

It's far from clear that imposing a one hundred thousand dollars fee will make things better.

The problem with this is that it may have unintended consequences because small organizations, small startups won't be able to afford that larger of a price.

Is going to Maybe in the short term we won't see the negative effect of this, but in the long term, you know, the most innovative companies of the drivers of today's economy started as a small garage startups.

And if we are killing these most innovative companies that are kind of just being able to be born and kind of slowing their progress, that is going to have tremendous effect on our economy.

How do you set up a recruitment process where you're picking and choosing on the front and who you think is worthy of an addition one hundred thousand dollars?

How do you scale that the answers You can't.

So there may be ways that they may be able to try to find ways to get some of these people to come here, but there's no consistency to that.

It's not about getting for big companies one or two people it's about how do you get the right number of people each year?

What about small companies?

I mean, if you're a six person startup and two people need one hundred thousand dollars, ate will be VISI fee.

Well, okay, like what if you only have one hundred thousand dollars?

Are you picking and choosing?

The answer is, we're going to hurt small companies, We're going to hurt big companies.

And then for research universities, there's no university in the United States, no matter how wealthy, who can sit around and say, we're going to pick and choose on the front end each year who's worthy of an additional one hundred thousand dollars fee.

So that means scientific innovation is going to happen, but it's going to happen in other countries.

We're going to have less innovation.

We're going to be a sicker country.

And the things that we've talked about doing, bringing manufacturing back, creating jobs for everybody here just isn't going to happen.

It appears that the Trump administration's new one hundred thousand dollars visa fee may already be having a chilling effect.

Walmart, the largest h one B retail user has announced that it will no longer sponsor applicants.

On the other hand, on Vida CEO Jensen Wong praised the announcement, and just last week the DHS clarified that college graduates on student visas and certain foreign workers already living in the US will not have to pay the hefty fee.

There's been some confusion, I think, so when it was first announced, it sounded like all h one B visas would have to have a one hundred thousand dollars fee, maybe annually.

It's still not clear whether it's annual, whether it's one time, whether it applies to new whether it applies to continuing, whether it applies to for profits as well as nonprofits and universities.

An arbitrary lottery.

We're charging one hundred thousand dollars.

Aren't the only two ways of allowing highly skilled workers into the United States.

Several countries limit those admitted not by the numbers but by the skills they bring with them.

Countries like Canada, Australia, and New Zealand.

To some degree, the UK i'll use a points based system where they basically say we're going to allocate points for different qualifications.

So we're going to say, you know, if you have a PhD, you get certain number of points.

If you speak English, you get a certain number of points.

If you're in a high demand field, you get a certain number of points.

So their view is clearly that you know, you just allow in sort of as many high skilled immigrants as possible.

Having employers bid in an auction for highly skilled workers is another possibility.

A market driven mechanism would be something like an auction where firms could actually bid on H one B visas, and then it would really be you know, the firms and the market determining the right price one hundred thousand dollars that's arbitrarily chosen by the government.

This is absolutely not a market mechanism.

There may be no perfect way to put a price on opportunity for highly skilled workers wanting to come to the United States, but getting it wrong could lead the workers we need to look for opportunity elsewhere.

One way to think about it is, if you make this like so expensive here, one, it's going to stop people from getting this way, but two it's going to push back here and now you as universities aren't nearly as attractive right, So if these coming out that are going to cost you next one hundred thousand dollars, trying really hard to make it so that you know, the University of Texas and Austin as the top years university's just a lawless appealing if he can't stay in the United States.

So we're like pushing backwards in harmful ways and we're pushing forward in harmful ways.

Here are you limited in your growth at your startup company by an insufficient supply of highly skilled people coming from abroad?

Definitely.

You know, just a few years ago, about sixty percent of AI talent was based was based in the United States.

Now that number has dropped to forty percent.

And I think having access to the to the top talent, being able to hire quickly, and being able to grow and scale is the only way how US is going to remain competitive in this environment.

Which takes us back to the H one B recipient VJ.

Ravi, who came to the US to get his graduate degree and become a part of the American workforce, but ran into stiff resistance and is now pursuing his opportunity is Native India.

You can live a really, really good life in the United States, but with the current administration, I don't recommend them to come to the United States right now, and I myself wouldn't think of coming to the United States because right now, I feel like I have a very good lifestyle.

I have a good work life balance.

I get to travel and I get to work at the same time.

And trading that for the immigration stress I get in the United States, like I can't even think about it, like it's too much for me to handle.

That does it for us Here at Wall Street Week, I'm David Weston.

See you next week for more stories of capitalism.