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It’s happening: Lou Dobbs’ dream come true and Silicon Valley’s worst nightmare. We’re already seeing the reverse brain drain as smart immigrants take their US educations and experience building companies and creating technology back to their home countries.  But now, xenophobia and the lack of any sensible H-1B visa policy is keeping the world’s brightest minds from coming to the U.S. in the first place.

U.S. grad school admissions for would-be international students plummeted this year, according to the Council of Graduate Schools—the first decline in five years.  The decline was 3% on average, thanks to increases from China and the Middle East, but some countries saw double-digit declines in interest in a U.S. education. Applicants from India and South Korea fell 12% and 9% respectively—with students turning their sights on schools in Asia and Europe instead.

This shouldn’t be a surprise. Much of the world’s economic growth—hence, jobs—is in emerging markets, the schools are far cheaper and in many cases competitive academically, and then there’s the H-1B issue. If America won’t allow a PhD just trained in our top schools to work here and contribute to the economy—why come here and take on the student loans to begin with?

Make no mistake: This is a huge blow for the United States, and particularly Silicon Valley. It’s killing diversity in graduate schools at a time future business leaders most need to understand other countries, especially Asian ones. Xenophobic, anonymous cowards may leave as much bile in the comments as they want: The reality is one out of every four tech companies is started by an immigrant. In the tech industry, immigrants have created more high paying jobs than they’ve “stolen.”

And nearly every CEO will tell you how much added cost and hassle there is in hiring a foreign-born worker—they do it because they physically can not find enough appropriately skilled workers in the U.S. (Below is an interview I did with LinkedIn’s Reid Hoffman about this very subject a few months ago, and he wrote a guest post on TechCrunch discussing the issue as well.)

Indeed, a recent study by the Bay Area Council, the Campaign for College Opportunity and IHELP showed that we’d need a 90% upswing in people graduating with degrees in science, technology, math or engineering to keep up with all the new jobs being created in that discipline.  What created Silicon Valley was a culture of openness and there is no future to Silicon Valley without it.

You know that American dream and American spirit of innovation we always talk about? Turns out, the bulk of it was built by people who came to America from somewhere else, not people born American. We have no birthright or natural lock on these things. Money and talent are fungible assets that flowed to the U.S.—and specifically the Valley—because that is where they were supported and rewarded.

Some people have blithely dismissed growth in markets like China and India saying Silicon Valley will always be the hub for tech; that everyone will come to us. Wake up: Because the numbers are showing money and talent is increasingly going elsewhere.

(Flickr image by Stephen Pierzchala)

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