> If engineers are fungible, and there are many other people on the market who can do the same thing, then why have a guest worker program like H1B?

If you think it through, one reason is pretty obvious: jobs can also go to those people in wherever they happen to be born, in many cases. Letting them come to your country makes things better for everyone. Remember, the labor market is not a zero-sum game, a "lump of labor": http://en.wikipedia.org/wiki/Lump_of_labour_fallacy

To keep down wages, why else? If you have the choice between an American, who can leave for a better-paid opportunity whenever he likes, and a foreigner, who is chained to his job because of the green card process, who would you hire?

There is the additional twist that an immigrant foreigner who got their degree abroad won't nearly be as encumbered by student loans as someone with a domestic degree and won't negotiate quite as hard for a higher salary.