IBM: The cost difference is too great for business not to look for H1B workers

That's a very complex question. If you're talking about importing people then there is one set of answers, and if you're talking about outsourcing there's another.

Personally I think we should be more worried about the outsourcing. At least the people who come to the country in question and live there have similar costs, similar employment law and become part of the local economy. Where outsourcing happens there's no chance of competition at all because there's no such thing as health and safety in a lot of places.

As I understand it, both of those require you to be paid at least the 'prevailing wage', and before the job is offered to you:

"This Form ETA-9035 needs to be posted in “two conspicuous locations” at the work site for 10 consecutive days where the H-1B (or H-1B1, or E-3) nonimmigrant will be employed. You must post the entire LCA, including the instructions and the portion containing information on the prevailing and offered wages."

http://www.jackson-hertogs.com/jh/faq/10509.pdf

ie, your employer has to post the fact that they're going to employ someone at a certain wage within the office.

That leads to fun times when your visa is up for renewal and the company is obliged to tell everyone what your wage is.

In my case I believe I was being paid more than some of my roughly-equivalent colleagues and there was some concern that the posting might ruffle some feathers. When I decided i'd had enough of the US and that it was time to move on I was told to pick anywhere in the world and my employer would pay to move me there and set me up so I could keep working for them. I was the complete opposite of an exploited foreign worker.

I agree, this is a good question, but I do think that you can answer "no" while still disagreeing with the premise of the H1B program. Another way to frame this would be.

"Should the 'artificial' supply limitations created by national boundaries be enforced evenly across all sectors of the workforce?"

I'm actually ok with a "no" to this answer, though my answer would be "no, but proceed with caution."

I support a points program to emphasize skilled immigration, so clearly I am willing to bend on the "even enforcement" to favor certain types of workers. However, like I said, do this with caution. I think that as the magnitude increases and the target narrows, you increase the possibility of a bad market distortion. To some extent, I do think we've done this in the US - we have created a situation that deters young Americans from entering this field.

I think that the most innovative countries will succeed because they have both managed to attract the top talent from around the world while maintaining a strong pipeline of talent from their own population. If you lock out top talent from overseas, you're doomed. If your entire strategy depends on convincing talent from overseas to stay, you're doomed.

1. The US pushed free-market + lower tariffs for imports of products into other countries. This lead to lower production in those countries, replaced by imports from the US. Leading to lower employment in many cases. [Today that's replaced with imports from China]

2. Other countries export 'services' to the US, in the form of BPOs/KPOs, or H1Bs. This leads to lower production of services in the US, resulting in lower employment in the US.

On the face of it, both are similar. Except one affects workers in the US and the other affects workers in the third-world.

So to balance free-trade, why not free-labor?

I would appreciate thoughtful replies on why free-trade and free-labor are not two sides of the same coin.

Not at all. We perceive it because that's been the reality. If businesses only relied on their perceptions (and not accountants) I am sure more businesses would fail.