Bryan Caplan  

Let Immigration Be My Hammer

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I'm a big fan of immigration, and an old saying warns us that, "If your only tool is a hammer, everything looks like a nail." So you might be inclined to chuckle if I promoted immigration as a cure for U.S. real estate markets. Fortunately, Alan Greenspan is happy to take the heat for me:

"The most effective initiative, though politically difficult, would be a major expansion in quotas for skilled immigrants," he said. The only sustainable way to increase demand for vacant houses is to spur the formation of new households. Admitting more skilled immigrants, who tend to earn enough to buy homes, would accomplish that while paying other dividends to the U.S. economy.

He estimates the number of new households in the U.S. currently is increasing at an annual rate of about 800,000, of whom about one third are immigrants. "Perhaps 150,000 of those are loosely classified as skilled," he said. "A double or tripling of this number would markedly accelerate the absorption of unsold housing inventory for sale -- and hence help stabilize prices."

HT: Mankiw


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COMMENTS (11 to date)
Matt writes:

Perhaps rationing supply rather than importing demand?

Steve Sailer writes:

During Greenspan's era, we let in all those unskilled immigrants to build the houses in the exurbs that are now sitting vacant. So _now_ he's telling us to let in skilled immigrants?

Mark Seecof writes:

Okay, I'll bite. Do you agree with Greenspan that the peak prices of the housing bubble, which were only achieved by "lending" money to people who could never pay it back, are a price floor which must be maintained by government intervention? Really? We should frantically import foreigners hoping they'll boost demand enough to keep houses priced higher than even well- above- median- income families can afford? (Assuming legitimate mortgage lending; you know, where the customer must make a down payment and have income sufficient to pay back the loan...)

Since even top-earning immigrants could not afford houses at 2006 prices, that proposal is impractical as well as undesirable for other reasons.

Also, I thought you believed it was generally a good thing when prices of "consumer goods" fell relative to incomes so that people could enjoy more comfortable lives. Why do you want to prop up housing prices? Except during the bubble, when bad government policy promoted crazy uneconomic "lending," people usually can't enjoy more housing than they can afford. If you really cared about people (citizens or immigrants) you would want them to enjoy cheap access to housing. Endorsing a scheme to drive up housing prices is perverse.

Mr. Econotarian writes:

You are right on the money!

It is funny to see how in 2007 my Homeowners' Association was concerned about "Crowded Houses" of multiple immigrant families.

They passed a rule that you could not park on the street, thus limiting the amount of vehicles to those you could fit in your driveway.

One of the house in our neighborhood, full of several unrelated families of recent immigrants who worked in the construction industry, went ahead and expanded their driveway themselves to fit all eight cars...

But now the HOA is more concerned about "Empty Houses" after foreclosures.

Turns out maybe "Crowded Houses" was a better problem to have!

My Great Uncle talked about growing up in a tenement building in Brooklyn around the turn of the century with eight people per room an no indoor plumbing. He ended up being a PhD research doctor...

Sorge L. Diaz writes:

Ah, but Mr. Greenspan is speaking about skilled immigrants.

Skilled immigrants tend to share a number of characteristics:

1. Skill: Duh. They have the ability to earn more through their acquired skills.

2. Intelligence: Even if they need to move onto other professions, they have the ability to do so.

3. Habits: They have a track record of good habits; you don't become "skilled" by being a bum.

4. Culture: Skilled immigrants tend to come disproportionally from cultures that promote achievement. (Say, overseas Chinese or Indian Sikhs.) Their transplanted cultures are a net benefit to them and the nation.

In short, embracing skilled immigration is definitely not the same as embracing unskilled immigration. Not the same thing at all.

karl writes:

The above is exactly right. If we want to let in skilled immigrants, that is a very different thing that letting in unskilled workers.

It could be the case that the unskilled will become skilled in a couple of generations, but why take the chance when we don't need to? Has the US done such an amazing job of solving all our social and economic problems that we need to import new ones?

jurisnaturalist writes:

Great, then we could make purchasing a house a condition for immigrating...

PaulJC writes:

A good number of those I talk to, laymen and not-so-laymen, tend to agree or come around easily to the idea of welcoming skilled immigrants--few are afraid of Dr.Immigrant becoming a public charge. The plural of anecdote isn't data though, so I wonder if there's any polling data on this element of immigration in general.

superdestroyer writes:

I always find it odd that academic who live in areas where all of the blue collar jobs are perform by immigrants are the ones who want open borders and unlimited immigration.

I guess when you live in an area where every white you see works in a white collar job and all of the dirty jobs are performed by brown immigration, it is easy to support turing the U.S. into Brazil. Of course, want ever money you make off of your home will be spent on insurance, security, and private schools.

shecky writes:

The skilled immigrant I need is one skilled in gardening. I don't care if he's a physicist back home. He'll still need a place to lay his head and call home.

Of course, unskilled immigrants are part of the equation. As the US becomes more prosperous, demand for all skill levels grows. For some reason, "we" seem to be determined to believe governmental immigration policy can divine market demands for labor better than the actual market.

gary writes:

If we allow more immigrants to enter the country
where will the new jobs come from? We are already battling unemployment in this country.

In addition as more immigrants enter the country this tends to lower salaries and wages for existing citizens who are already finding it difficult to survive with increased energy costs. Increased energy cost is raising the cost of living in the United States.

With the promotion of free trade manufacturing jobs are decreasing more each year. We import more agricultural products than ever before. So where are the jobs to support more immigrants and the housing industry.

We never see the problems we can or will create.

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