Entries from February 2009 ↓

Immigration as a solution to the housing crisis

February 3rd, 2009 — economy, investing, real estate, usa

WASHINGTON - NOVEMBER 10: U.S. President Geo...

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So home ownership has fallen to 2002 levels, and at last count there were 2.2 million vacant homes for sale in the U.S.

Lets set aside the critical question of whether a perpetually appreciating housing market should be a goal of economic policy, and assume that home price appreciation is a necessary (but not sufficient) condition for the U.S. economy to improve.

The Bush administration tried to prop up home prices by promoting a higher home ownership rate - with disastrous consequences (to put it mildly).

But there is a direct and self-evidently obvious way of reducing housing inventory, increasing business competitiveness and jump-starting the U.S. consumer base - much more immigration.

The Obama administration needs to look seriously at a completely fresh approach to immigration. To make any new immigration policy both fair and popular, any increases in immigration has to have the following elements:

  1. Incentives for financially sound immigrants to move and invest in the U.S. - it is not unthinkable to impose a requirement that immigration seekers within the new system must own a minimum of (say) $250,000 US based property within a year of being granted US residency.
  2. Strong disincentives for welfare-seeking immigrants - the last thing the economy needs now is an increase in the number of economically unproductive people.
  3. Safeguards to ensure that the system does not evolve into the Dubai model - which places foreigners (and even their Dubai-born children) into a permanently lower class with no hope of citizenship.

The Obama administration should not be afraid of short-sighted union objections to increasing immigration - if it is serious in ending this economic depression, there should be no sacred cows.

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