Art Carden  

Looking Out the Window: Costs and Benefits of Immigrants, Yard Sale Edition

Nudge and Abortion Followup... Richard Parker on John Kenneth...

We got together with some neighbors last month and held a yard sale. A good number of our customers were Spanish-speaking immigrants. Co-blogger Bryan Caplan discusses research suggesting that more immigrants make for higher real estate values in the Cato Journal. They don't only raise demand for real estate, they also raise demand for the flotsam and jetsam of day-to-day living like toys, books, clothes, cooking utensils, furniture and other stuff. I learn two lessons from this:

First, if we're going to have a robust accounting for the costs and benefits of immigrants, we have to account for the increase in the value of our assets because of immigration.

Second (and related), Mike Munger asks a very important question in this EconTalk Podcast, this featured article, and this issue of Cato Unbound: is it garbage, or is it a resource? If you have to pay people to haul it to a dump, it's garbage. In my experience, there are a lot of things in American houses that are right on the margin between being garbage and being resources. More immigration will, I expect, turn a lot of garbage into new resources.

This carries with it another prediction: we would see more recycling if we let in a lot more immigrants. If you wake up early enough in the morning on garbage day, you probably see people driving around in trucks looking for stuff on curbs that can be reused or recycled. Usable wood furniture, for example, it's going to stay on the curb long enough for the garbage truck to get to it. With more low-skill immigrants, I expect that would eventually come to be true about a lot of other things that are relatively easy to recycle or repair and re-use but that get passed over by American recyclers today.

COMMENTS (8 to date)
NZ writes:

[Immigrants] ... raise demand for real estate

Does this apply to home renters as well as home buyers? Most immigrants, I'd think, are not in a position to buy homes. Unless of course we lower our lending standards to accommodate them...but that didn't work out so well last time.

Or did you mean that when immigrants move into communities en masse, the demand for real estate among the natives goes up as they scramble to relocate?

we would see more recycling if we let in a lot more immigrants.

To what extent is this offset by the apparent popularity among many immigrants of big and/or old gas guzzlers, the suburban "sprawl" lifestyle, and habitual littering and eyesore-creation?

If you wake up early enough in the morning on garbage day, you probably see people driving around in trucks looking for stuff on curbs that can be reused or recycled.

There's something bitter sweet about that, though. On one hand, it's nice to know that things are being recycled rather than tossed in land fills. On the other hand, there are grizzled-looking strangers in beat-up trucks driving around your neighborhood early in the morning.

Do any significant number of them moonlight as burglars, or casers for burglars? You can tell a lot about what people have in their houses by what they leave on the curb. (What do national crime maps show--are burglaries more prevalent in immigrant-heavy areas?)

Even if you quickly dismiss these suspicions as statistically improbable and therefore silly, there is an emotional cost to having suspicions creep up in the first place. Do you expect people to just "get over it", or to just discount the cost? Why?

Ghost of Christmas Past writes:

I'm surprised to see you endorse one of Bryan Caplan's most perverse arguments in favor of immigration: that it will force up housing prices! (Especially given America's severe supply restrictions (rent controls, zoning, "anti-sprawl" laws...).)

When not blinded by predjudices or narrow self-interest, modern (post Adam Smith) economists agree that the goal and benefit of economic growth and increasing division of labor is falling prices for popular goods, not rising prices!

Of course, one who possesses a stock of some commodity may be pleased when its value rises for some reason, but his joy is the woe of everyone else, consumers of said commodity.

If immigrants drive up housing prices, that is bad for everyone except, briefly, a few current homeowners. Even they may not gain in the long run, since the only way they may convert their new housing-commodity wealth to non-housing consumption or investment is by reducing their consumption of housing-- all right for retirees, but cold comfort for homeowners who just want to relocate while maintaining a similar housing comfort level. The latter cannot extract any wealth from higher prices since they cannot buy a new house for any less than they sell their old one.

Worse, due to society's economic structures, rising housing prices automatically harm non-housing consumption and savings. Current law taxes housing wealth regardless of its connection to cash income. Rising home prices force owners and renters to spend more of their cash income on housing consumption (via tax payments on same, or rents) even though they do not consume more housing. (As already mentioned, the rising "investment" value of owned housing is unavailable to most supposed beneficiaries, particularly since housing investments for most people are extremely "lumpy".) Increased real-estate sales commissions and so forth act similarly to taxes-- though merely customary, they are resistant to change.

More-costly housing is not more productive. Forcing people to divert more of their incomes into unproductive housing investments (theirs' or their landlords') and parasitic costs (taxes, commisions) means they invest less in more productive uses of capital as well as simply consuming fewer non-housing goods and services. This greatly reduces most people's utility, since they merely maintain housing consumption while reducing other consumption (remember, housing is very lumpy). It's bad for economic growth to replace industrial investments with unproductive investments in housing, so to the extent immigration forces up housing prices it impoverishes everyone over time.

If immigration drives up housing prices that is a reaon to exclude would-be immigrants, not to welcome them.

(Sociobiological analysis for lagniappe: Competition for land is zero-sum, so nothing could be more rational than for citizens to elect a government ("form a cartel") to keep out invaders (competitors) to reserve land for the citizens' own offspring.)

(I have not forgotten that immigration advocates persistently argue that immigration will boost natives' wealth by driving labor prices (wages) down. It seems hard to square that argument with the claim that driving the price of some other commodity (housing) up will also benefit natives. Of course, if you're a plutocrat who just wants cheap gardeners to maintain your ever more valuable mansion and estate, a combination of falling wages and rising housing prices will sound good to you! But what if you're merely a laborer who dreams of having his own little house someday?)

Tom West writes:

You're absolutely correct in your assertions about our "junk" being good enough for somebody else. But I think for a substantial proportion of the population, that's likely to make them feel *less* positive about immigrants.

The idea that there are people so miserably poor living nearby that your castoffs are combed for bits of value makes quite a number of people uncomfortable. It's just another thing preventing them from enjoying their wealth guilt-free. Even worse, these garbage-combers are environmentally correct, so then you get to feel guilty about feeling guilty!

Far better for sensibilities for refuse to be taken in nice neat bins to be recycled into other nice neat products. (Or perhaps sent overseas, where their poverty doesn't count.)

S. Michael writes:

[Comment removed pending confirmation of email address. Email the to request restoring this comment. A valid email address is required to post comments on EconLog and EconTalk.--Econlib Ed.]

This is a very strong argument but I'm still pro-immigration. (Increasing housing costs is a bug, not a feature.)

nzgsw writes:

This is being taken to another level in my neighborhood, where several homeowners have established pop-up thrift stores that they run out of their garages every weekend.

Good for them, good for the poor immigrants in the area, good for the landfills, but terrible for traffic accidents, as many people like to slam on their brakes to get a look at the goods before they pass by, even though the street is narrow, and heavily traveled. Sometimes they simply park in the middle of the street.

The underground economy is huge here in Los Angeles.

Ben Bachrach writes:

Trying to make an economic argument for or against immigration is foolish. As the comments above indicate - a feature for one person is a concern for another.

Freedom of travel/immigration is a human right. All peaceful and honest people should be able to move anywhere in the universe they can afford to go.

You might be able to make a case that if all land was privately held, then owners could keep out trespassers.

Jack Poole writes:

Usable wood furniture, for example, it's going to stay on the curb long enough for the garbage truck to get to it.

Did you mean to say, "it's NOT going to stay on the curb long enough for the garbage truck to get to it"?

Comments for this entry have been closed
Return to top