Buy a House, Get a Visa

by on February 12, 2009 at 7:10 am in Economics | Permalink

Add Thomas Friedman to Tyler, myself, Lee Ohanian and others suggesting immigration as a way to alleviate the recession:

Leave it to a brainy Indian to come up with the cheapest and surest way to stimulate our economy: immigration.

“All you need to do is grant visas to two million Indians, Chinese and
Koreans,” said Shekhar Gupta, editor of The Indian Express newspaper.
“We will buy up all the subprime homes. We will work 18 hours a day to
pay for them. We will immediately improve your savings rate – no Indian
bank today has more than 2 percent nonperforming loans because not
paying your mortgage is considered shameful here. And we will start new
companies to create our own jobs and jobs for more Americans.”

Note that the multiplier on the “buy a house, get a visa” strategy would be much larger than any possible domestic multiplier since the money would come from outside the economy (and efficiency would improve as well.)
I think there would be considerable support among economists that immigration (buy a house, get a visa), a payroll tax cut and maintaining state and local funding would be reasonably good policies in this recession (albeit not necessarily sufficient) yet these policies seem to be the ones that the political system rejects out of hand.  (See also Matt Yglesias here and here).  Now, I can understand rejecting these policies as compared to doing nothing, ala a precautionary principle, but why these policies are rejected compared to taking a trillion dollar gamble is puzzling even to someone like myself schooled in public choice.

babar February 12, 2009 at 7:48 am

add my voice too.

Bo February 12, 2009 at 8:10 am

A capital idea!

Slocum February 12, 2009 at 8:14 am

That is a stroke of genius. Seriously. You provide genuine support for the housing market by increasing demand, and you get people coming with both money and ambition. I love it. Surely there must be someone in Congress looking for a little good publicity who’s willing to sponsor the bill?

NE1 February 12, 2009 at 8:42 am

Yeah, well sure, this is one of the first ideas Bernanke/Geithner/Paulson/Kashkari came up with. Here’s the problem: by stealing away these hardworking, creative Koreans/Indians/Chinese, we are depriving their host countries of the very resource they need to aid recovery.

Pass this into law and you will see a disastrous opening of borders across the globe as the whole citizenship market unravels.

Slocum February 12, 2009 at 8:53 am

Here’s the problem: by stealing away these hardworking, creative Koreans/Indians/Chinese, we are depriving their host countries of the very resource they need to aid recovery.

No. First of all, other countries (Canada, in particular, have skill/wealth based immigration policies). Second, the success of Indian ex-pats in the U.S. has been a huge boon for Indian development. Many of these people ultimately return or, at least, maintain business contacts with the home country (that’s where India’s IT industry came from).

Floccina February 12, 2009 at 8:59 am

It would also improve our position in those silly international competitions on:

Education
Life expectancy
Infant mortality
Social mobility
Income mobility
Etc.

Anonymous February 12, 2009 at 9:37 am

And we’d certainly see the quality of college students go up when their children finished high school.

See Unfit for a college education

When I was in grad school in the late 1980s, the grad students from India were not only some of the brightest and hardest working, they were certainly the most pleasant people to be around.

Lowrie Glasgow February 12, 2009 at 10:22 am

I am for this idea if we have a positive multiplier . Lets solve two problems and I hope Mr Friedman will be our advocate . We offer to take into the USA 3m Israelis or Palestinians . We will choose the side that first commits to this plan . This will go a long way into moving the chairs at the middle east table.

Mark February 12, 2009 at 10:57 am

Absolutely brilliant. Someone alert the White House. Having worked with a number of Indian immigrants, I can definitely say they’re the kind of Americans we need now.

martian February 12, 2009 at 11:12 am

Actually, even without importing in new people, if only the Indians & Chinese already in the US were given a faster track to EB green cards (these both have to wait the longest, due to country caps), that might be a faster way to
sell more homes ASAP!

I know for sure there are at least 100,000 people who’re just waiting for their green cards to take the plunge of buying their first homes.

hibikir February 12, 2009 at 11:39 am

It’s not just the indians that are waiting for many years now… have you seen the processing times for Adjustment of status? Many offices are still dealing with cases that were current in 07. This step used to take 6 months at the most, and I’d not be surprised if cases filed in October 07 don’t get looked at until 2010.

Still, if the logistics were in place to actually give people their visas, who wouldn’t be all for this? I’m sure It’d regularize a lot of illegal immigrants too.

Jim February 12, 2009 at 12:17 pm

Not paying your mortgage is considered shameful? Hmmm, wasn’t this just reported here on MR:
Abandoned Cars in Dubai
Guess the apology note on the dash board accounts for the shame. If the jobs dry up, they are gone like mice from a sinking ship. Since there don’t seem to be jobs here at the moment to attract them, how would this help?

twinkle February 12, 2009 at 12:39 pm

we donot need revolving money! we need money thats gona come from foreign countries and stay here. Giving visa to foreign workers is gona drain out quite a lot of money from the country. Pay for the house in full(from ur home country)… be qualified to significantly invest in the economy and progress of the country…

AC February 12, 2009 at 12:49 pm
Piper February 12, 2009 at 1:01 pm

“not paying your mortgage is considered shameful here [Asia]“

Phooey on that. This is now my third (though largest by far) housing-price/ high-tech-jobs recession in California as a high-tech worker with lots of Asian immigrant co-workers. I know from observation, not mere theory, that immigrants are even more likely than natives to “not pay their mortgages” (and credit cards, etc.) in the USA when their wallets are squeezed, because– as they say– “it won’t matter if I go home.”

All the “high tech” immigrants learn upon arrival, if not earlier, that the consequences of welshing on debt in California are trivial. Most home mortgages are non-recourse. Credit-card issuers are (or at least have been) eager to give new cards to people with big debts– then after the final, swollen default, the USA has no debtors prison, no recourse against relatives, and offers “secured” credit cards so that deadbeats can still get plastic to use in restaurants and airports. Immigrants often default without filing bankruptcy; if their personal credit is bad they use strawman tactics to get loans when they want them.

The majority of Asian high-tech immigrants are much more concerned about paying down mortgages on their family’s property “in the old country” than paying anything in America. They routinely kite their credit cards here to maintain the level of remittances they send overseas. (A few even justify defaulting by demonizing Americans. Those few say stuff like “my employer cheats me on my wages, racist clerks and salesmen disrespect* and cheat me, and America is run by thugs. America owes me more than I owe America, so there’s no reason for me to pay off these debts.”)

Finally, immigrants often display the “strange money is not quite real” syndrome, the same syndrome which affects many Americans travelling to other countries, where a wad of rupees or rubles just doesn’t seem like “real money” somehow even if you’re smart enough to calculate the conversion value in your head– so you might as well blow it all in the downtown clubs. New immigrants often regard debts in dollars as much less serious than debts in their home-country currency. This is a universal psychological phenomenon, not a slam against Asians.

*Many Asian immigrants, accustomed to obsequious retail clerks in their home countries, don’t understand that clerks in America treat everyone with disrespect– the clueless immigrants think they are victims of racism because they assume good treatment is the norm and suppose that natives must receive it.

spencer February 12, 2009 at 1:33 pm

Before trying this approach maybe we ought to ask a few questions, like?

1. Are the bulk of the Indians already here fully employed?
2. Are the bulk b the Indians already here buying homes?
3. Are the high tech firms now using the bulk of their already allocated visas, or or some of them being unused?

Sounds like a good idea, but it also sounds like a version of Says law that supply creates its own demand.

Could you use the same reasoning to argue that we should let in a bunch of Latino construction workers to build more homes?

Slocum February 12, 2009 at 2:38 pm

For immigrants to work 18 hours a day, first we need to create jobs.

No, we don’t. We’re talking about the kind of people who will tend to create their own jobs (and maybe some for others as well).

Steve Sailer February 12, 2009 at 2:47 pm

About half the mortgage dollars defaulted in the US are in California, the state with by far the most immigrants. So, how’s this policy of Tom Friedman’s and Tyler Cowen’s working out for us so far?

Steve Sailer February 12, 2009 at 2:50 pm

I can’t imagine a better policy than re-inflating the California housing bubble. It worked so well last time!

Mike McNamara February 12, 2009 at 3:49 pm

I love this idea. But the racism and xenophobia of too many of my fellow Americans would never allow this idea to pass. The forgetfulness of this country of (mostly) immigrants is shocking to me.

Staash February 12, 2009 at 3:57 pm

“Because most Black, White and Mexican Americans do not want 2 million more Indians, Chinese and Koreans in this country.”

Bingo. No way that those voting blocs would want their relative political power diminished, especially at the local levels. You’re guaranteed to attract accusations of racism by even suggesting that Asian minorities are more desirable than other minorities.

Also, 2 million is a lot of people. The vast majority of them will not be as bright or hard-working as their ethnic predecessors.

One more thing: if these people are so great, why can’t they make it in their home country?

el chief February 12, 2009 at 3:59 pm

Why would you want to sustain unrealistic housing prices?

Why lower everyone’s wages (increase supply)?

Do Indians have money for downpayments?

It is a good idea for economy if the workers are better than the average american worker, but they already let those immigrants in, so who would we get?

jdavenport February 12, 2009 at 4:08 pm

Bad idea. A good portion of current overbuilding was because huge institutional lenders were encouraging illegal immigration and home buying.

You reward a behavior, you get more of it.

Jon Rowe February 12, 2009 at 4:12 pm

I’m not accusing anyone of anything but let the record show that I came up with this buy a house get a visa idea on Oct. 3.

http://www.positiveliberty.com/2008/10/innovative-market-solutions.html

Sometimes folks get to the same point coincidentially. Though I am interested if someone thought of the idea before I did.

Also, I recently came up with a similar policy proposal: Sell excess unused land the federal government owns to nations like China that hold much of our debt and currency. And in turn permit them the right to emmigrate so many of their citizens per acre they buy with the rights and expectation to build up and develop that land into new cities and suburbs.

Bill Alden February 12, 2009 at 4:20 pm

If the goal is to raise the average IQ (and the average credit-worthiness) of folks in America then where has MR been on the mass illegal immigration of the last 20+ years.

Oh, that’s right: pro-illegal. In MR’s view, apparently, there is no non-American who isn’t better than an American.

There is a flip side way to inrease the average IQ, education, wealth, savings rate and credit-worthiness of this nation: deport the 15 million people here illegally now. Sure, it won’t make home prices rise – but it will reduce social welfare costs to the taxpayer, burdens on infrastructure, numbers of unemployed, and so on. And illegals aren’t creating their own jobs.

It’s not just more people that makes for more wealth. It is having smarter people on average. That’s why Ireland and Finland are richer than Indonesia and Turkey.

Let’s stop with the cheap and easy games to create wealth and get down to doing the hard work. Those games got us where we are today.

tompain February 12, 2009 at 4:26 pm

I proposed this a couple of months ago in a comment on the blog Naked Capitalism. I was immediately and roundly shouted down by people who said there are not enough jobs as it is, why add a bunch of Indians to the supply, I must be an anti-labor worm who wants to beat down wages of computer programmers and the like.

tompain February 12, 2009 at 4:32 pm
Chris Roberts February 12, 2009 at 4:58 pm

Call his bluff. Why limit it to Indian, Koreans and Chinese? Let 2 million people move here. Require they buy homes. Favor those with bachelor’s degrees or higher.

But: add one more requirement as a tie breaker: favor those groups with the lowest rates of remittances, both per capita and as a proportion of income.

Guess which group would win and you know why that “racist” version of the plan would never pass.

Steve Sailer February 12, 2009 at 6:00 pm

California has by far the most immigrants of any state in the country and by far the biggest losses on mortgage defaults.

Has Alex ever cited a single quantitative fact in all his opinionizing about immigration?

oh, please February 12, 2009 at 6:14 pm

I hate to break it to Mr. Gupta, but cheating is a way of life in India. It is an extremely corrupt society. My American-born Indian friends joke about their parents all the time: they never do something just because it is the rule or the law. So don’t tell me that everyone pays what they owe in India because they would be ashamed to do otherwise. I am so sick of this: everyone is more honorable than Americans crap. Leave that rhetoric to Obama and his wife.

Sufee February 12, 2009 at 6:58 pm

And if the immigrants work 18 hours a day to pay off the home, then how is the money coming from “outside the economy”?

So someone like me would work 18 hours a day to pay off the home I could not afford, yet save like crazy, and then find time to start a business and employ other people? I am all for whacky ideas, that have some sense. This is one is plain nuts.

Nadya February 12, 2009 at 8:08 pm

There is such a thing as EB-5 visa. It’s a visa for investors. You need to invest $500K and show that you created 10 jobs. Maybe in these dire economic times, they could change to no need to create jobs, just invest $500K.

Jon Rowe February 12, 2009 at 8:19 pm

Keep in mind how much debt & US currency China has. India doesn’t have as much; but if they keep growing and producing stuff for us like China does they may accumulate China like proportions one day soon.

If we ever get to the point where the US’s massive debt threatens the federal government with bankruptcy, one solution might be to sell China, India (or whoever has the US currency to buy it) undeveloped land the federal government owns and permit them to emmigrate certain amount of their citizens per acre of land they buy who will be “responsible” for that land, to build it up, develop it into “livable” areas.

That’s what I proposed here:

http://www.positiveliberty.com/2009/02/the-land-standard.html

We’ve got to think long term here. 2100 is going to be as different from 2000 as 2000 was from 1900. I think it we could add say 100 million productive Chinese, Indians and immigrants from other nations over the next 50 years or so that would solve a lot of our problems. The rub here is nations have to PAY (more than the nominal fees they currently do) to send their immigrants over, but something significant. And China has an abundance of two things: PEOPLE and US Currency/holder of debt. They’d be the ones primarily to take advantage of this plan.

gwen February 12, 2009 at 9:28 pm

She assumes that people actually want to live in the States. Shanghai runs rings around any place in America and its people are infinitely more tolerant, pleasant, and thin. Get over yourself America.

Dr Zen February 12, 2009 at 10:07 pm

You will have more than enough unemployed people soon enough without importing more. The single most retarded suggestion I’ve seen for ending this crisis and there have been plenty of bad ones. Well done!

BacktoReality February 13, 2009 at 6:24 am

How about just letting the market adjust prices, instead of another stupid idea to manipulate the market? Artificially inflated home prices are the problem, not the solution. Mortgage loans that are in default with no realistic hope of a successful workout – and these almost certainly include most defaulted loans originated within the last three years – need to be in foreclosure, being sold for whatever price they will bring in a market that isn’t distorted by some idiotic plan that disregards the likelihood of unintended consequences. The imprudent lenders will take a big hit, and deservedly so, and the defaulting mortgagors will end up in housing they can afford. Our economy will never be healthy as long as we persist in the delusion that the value of a commodity so plentiful that almost everyone has one magically appreciates every year to “create” wealth.

Mitchell Young February 13, 2009 at 7:11 am

“Won’t this create another housing bubble?”

No, the demand will come from those who want to live in their house and can afford to live in it, not speculators. That’s not a bubble.

In fact, it will present the bubble from deflating fully. And to say that Chinese don’t speculate in real estate is just ignorant. Chinese individuals and syndicates have been buying up San Francisco for decades — turning what were one family units into two-three-four family conversions.

Really people, lets gets some facts out there.

Bill Alden February 13, 2009 at 8:24 am

No, the demand will come from those who want to live in their house and can afford to live in it, not speculators. That’s not a bubble. In fact, it will present the bubble from deflating fully.

Mitchell you miss the point: we should WANT the bubble to deflate, and fully. That’s the problem: Americans today can’t afford their homes. That’s the primary reason they’re defaulting. What this plan would do would benefit homebuilders and banks by propping up prices, but hurt Americans who can’t afford to buy homes because they were going up 20-30% annually for several years.

Youc an’t solve the economic mess by trying to be clever.

David February 13, 2009 at 10:50 am

Wow! Someone who has finally put in print what I have been sending to my Congressmen for months now. I would make it a bit more strenuous. Bring 250k in equity, buy a home, we give a work visa and after 2 years a permenant one. Limit to 1 million applicant families. That would thrown in 250 billion to help slow and hopefully stop the downward housing spiral. Keep pushing this…those idiots in Washington have zero imagination.

Mitchell Young February 13, 2009 at 3:27 pm

Bill Alden, I wrote an unclear comment. I understand that what Friedman, Tabarok et al want to do is keep the housing bubble from deflating fully, this time by importing vast amounts of ‘high tech coolie’ labor. Well, we’ve had a couple of decades of high tech coolie labor, its partially to blame for the situation we are in (I wonder what the default rate on mortgages is in, say, San Jose) What we need is a sustainable American economy for … Americans.

Nick February 14, 2009 at 1:00 am

This is the stupidest idea ever been published. This would destroy what is left of the economy. Fuck people, why don’t we just give up now and nuke the U.S. if this is the type of thought the people think is a good idea. Anyone who thinks this is smart should have failed the 7th grade.
The answer to a weak economy and no infrastructure is to give more fake money to new citizens? Jesus Christ. You all need to be ashamed.

Mitchell Young February 14, 2009 at 7:27 am

MikeP, I am familiar with Northern California, I know plenty of high tech coolies live in San Jose or surrounding suburbs. BTW the term ‘high tech coolie’ is commonly used by an Asian activists. see for example, http://www.modelminority.com/article96.html

jagorev February 15, 2009 at 1:07 pm

Thank you, Alex, for this post. It has been tremendously depressing to see the vile rhetoric being spewed against foreign workers recently – understandable in a recession when Americans are insecure about their own jobs, but sad nonetheless. The fact that Sen. Grassley’s anti-H1b amendment succeeded has just about made me lose faith in this country’s future. A country that closes itself off to immigration by skilled foreigners is a country on the verge of decline.

Jarrett Frazier February 17, 2009 at 11:54 pm

Out of the numerous ideas and concepts I have heard about stimulating the currently dead economy, this seems to be a reasonable option. I find it ironic that someone would think outside of the box like this after the recent immigration controversies that took place.
Based on the determinants of demand, the number of consumers (especially if there was an increase of two million individuals) would lead to a demand for goods in America. If the individuals do indeed work at lower wages, suppliers will be able to shift their resource prices and spendings. Therefore I have no doubt believing that an increase of two million individuals, who make their payments and pay their bills, will stimulate the economy into a boost.

Rajat March 22, 2009 at 10:24 pm

So let me get this argument:

You are suggesting that we grant 2 million Indians and Chinese an immediate green card and they will come to the US and immediately start buying a house?

Where are these 2 million people? How will they pay for a house? If you are assuming that people in India and China are sitting with surplus money and they would love to buy a house in the US, you are surely mistaken. At best you may find 10000 or so such people and in that case the political cost far outweighs the economic benefit.

If you expect these people will come over here and find a job, then they can only do so at the cost of displacing others from jobs – not a great situation either.

Surely you don’t expect these people to come to the US and in the very next month start creating jobs (even if that’s 1 or 2) which is good enough for them to pay off their mortgages.. Not easy to happen.

So in the theoretical realm this sounds like a good argument but is it practically even feasible?

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Mike C. September 25, 2009 at 10:48 pm

The H1-B process is basically not meeting quotas because there are no jobs or the first time in forever. I suppose granting homebuyers visas would allieviate this issue somewhat? I wonder though about the need for more skilled workers in this economy…

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