How Immigration Can Help Fix the Economy

The present economic mess that the United States finds itself in demands novel solutions. On one hand, the surplus of vacant homes, whether newly built, foreclosed upon, or simply for sale, will continue to cause downward pressure on home prices. This spells bad news for home owners, financial institutions, and ultimately the entire economy for the foreseeable future. On the other hand, we are beginning to see the flaws in the economist mantra that a service-oriented economy is preferable to one based on industrial output.

In hindsight, it is somewhat obvious that exporting services is naturally hamstrung by factors such as distance and language. If we are to believe Adam Smith, the wealth of a nation will ultimately depend on its trade surplus. Roughly 40% of our GDP is currently based on services. A few minutes of investigation via a Google search will demonstrate that services form a disproportionately small portion of the United States' exports (less than 4% of the GDP). It's no wonder we're averaging a trade-deficit of more than 700 billion dollars a year.

The real wealth is seeping out of our country at an alarming rate and if it weren't for the market distortion of currency manipulation we would see a commensurate drop in our standard of living. So-called 'doom-and-gloomers' such as Peter Schiff have been warning us about this state of affairs for years but his thesis is simply a reiteration of the economic laws proven again and again through the ages. A prolonged trade deficit will ultimately impoverish our nation.

So what are we to do? As Americans with no inclination to move to either Bangalore or Shanghai, our fate is inextricably tied to that of the United States. Therefore we have no choice but to roll up our sleeves and offer solutions on how we work ourselves out of the present circumstance. This is one idea humbly suggested by the author, an electrical engineer by trade, on how we can kill several birds with one stone.

To begin with, one of America's greatest assets is its reputation. Regardless of where I've traveled or the current faux-pas of the United States government, the view of America and Americans in general, is overwhelmingly positive abroad. A visit to your local university will bear out the fact that parents of every country are willing to sacrifice to send their children here to receive an education in the hopes of ultimately immigrating. Since it costs these individuals so much to be here they often make the most of their opportunity (a-la Milton Friedman) and are amongst the most productive Americans.

So here's the idea: we offer a one-time green card give-away to one million foreign nationals meeting the following criteria:

1. They must prove they have savings within a US bank to sustain themselves and their family for one year (e.g. $40,000).
2. They have a bachelors/advanced degree in a field advantageous to technological future of the United States (i.e. engineering, science, mathematics, medicine, etc.)

The benefits of this 'surgical' immigration injection would be to:

1. Offset the glut of vacant homes with new families supported by foreign capital. Regardless of whether the individuals rent or buy homes, their presence would offer substantial support to the US housing market at no cost to the US treasury.
2. Recapitalize the American financial institutions by shifting savings from foreign banks to native ones (i.e. $40,000 x 1 million = $40 billion).
3. Refresh the technological reserves of the United States with the world's most qualified individuals while simultaneously depriving their native countries of their services (i.e. 'brain-drain' the competition).

This has a multiplicative economic advantage. The opportunity presented by a targeted green-card give-away is a win-win situation. We leverage the reputation of the United States in exchange for foreign capital and brain power. In doing so, we would simultaneously support the housing market and provide a booster shot in the arm for America's emerging technological economy. Immigration has served America well in the past; these days are no different.

Comments

[Vienna:]

It seems to be a general attitude to fix all problems with growth. Debt will be solved with more debt, GM will fix itsself by purchasing Crysler and growing, the housing problem will be solved by growth of population.

This is where I see the problem in general. We are so much used to the growth curve, that we cannot maintain a status quo, it will either be growth or decline.

Endless growth can not be the solution: USA needs to find a solution that is not based on growth. This must start NOW.

e.g. strengthen the rules on building houses, only use existing building sites, and tear down old buildings.
Invest heavy in alternate energy (not 30 years from now ...), but just start now and reduce oil imports by some percent year to year.

Jan 11 10:26 AM

[phantom704:]

I will have to agree with 'ramarao'- I own a house, have masters degree in engineering from US university, have been working in this country for last 9 yrs (i.e, paying taxes including social security tax).

-Illigeal immigration can be stopped not by building fences and walls but by making employers accountable (requires political will).

Jan 11 10:36 AM

[phantom704:]

Illigeal immigration can be stopped not by building walls and fenses but by making employers accountable (requires political will). with expanding latino population this will become harder as days goes by.

Jan 11 10:49 AM

[Tom Armistead:]

The US also has a demographic problem, the aging baby boomers will not be buying cars as fast as they used to and may want to downsize from the current McMansion to something a little less imposing.

I agree with the author that immigration is a solution but would question the desire to limit it to persons who are already wealthy, either in money or talent or both.

A great many illegal immigrants are thrifty and industrious, gladly doing work US citizen turn their noese up at. It would help matters all around to make them citizens and permit them to create and participate in a new wave of prosperity.

Jan 11 02:35 PM

[User 143167:]

Among the 1 million the author suggested, there will be 95% Asian. maybe 50% from China, another 40% from India.
Americans are incompetitive to internationals on the subjects of the technological future. That is the big problem. Therefore Americans have to end up with a fat consumer overwhelmed by indebtness. The system can still hang on there cause those internationals are working for GC.
The worst case scenario is now that economy sucks, much less GC or H1B will be offered and these internationals have no option but have to be back to their own country, building their own industries to compete against America. See? Depriving international student domestic job opportunity is not a smart plan in the end.
Obama is about to cut international student-based H1B or GC this year, I see it as a self-destructive move of America. China and India will get their engineers, doctors and scientists back, then will be much stronger than before.

Jan 11 03:09 PM

[tajitj:]

Looks like some kind of effort to get Peter Schiff to take on Chris Dodd for his Senate seat in 2010.

www.schiff2010.com/

Jan 11 03:18 PM

[Homer II:]

If we are going to allow immigration, it should be done wisely, with forethought. We now have too many Americans who "WILL DO THESE JOBS", contrary to the pervasive lie.

So, what kind of skill sets should we be focusing our immigration policies upon? Not unskilled labor from Latin America! But rather, the "cream of the foreign crop" who come here to get advanced degrees in math, physics, and engineering. Yes, many will return to their countries of origin; but many others will choose to stay and become productive hard-working Americans. Whereas, the Latinos who come here bring: limited learning skills, no desire to learn English, no desire to become assimilated into our culture, no desire to become loyal Americans, and they send much of their earnings back home. Tell me, how do any of those tendencies make them better immigrants to welcome than Asians, Europeans?

Jan 11 04:10 PM

[Tom E.:]

Adding to the labor supply when wages are shrinking is just stupid.
It would be like increasing your inventory when business is declining.

We need to tighten up the labor supply until wages start growing again or you are going to have a revolution in this country. Instead of a Boston tea party, you are going to have people dumping unloaded ship containers into the harbor.

Jan 11 11:47 PM

[Al-USA:]

Why is it that it is good for a business to have a "wide moat" or some edge which limits competition into their area of business, either through laws, technology, or whatever, but when it comes to labor, lets throw the "barn doors" open, you don't deserve no edge. Nope, if you work for a living, you get no protection at all from competition, only capital is worthy of special consideration.

Get a clue "joe sixpack", there are enough smart people among the 300 million in the USA. Letting in even more smart people will just put you "joe sixpack" and your children at a "competitive" disadvantage for the better jobs. Or even the menial jobs with the less educated masses coming in from Latin America.

In any event, it is widely known that the "financial crisis" did not result from a lack of talented labor, but rather, a lack of investment opportunities due to the collapse in the velocity of money due to the obscene concentration of wealth among the capitalist elites. In other words, "joe sixpack" has not seen an increase in wage, after inflation, for the last 30 years... That friends, is the CRISIS in capitalist America.

Jan 12 02:05 AM

[41justice:]

Most of my wife's siblings, nieces, nephews and cousins are immigrants. Virtually all are college educated as engineers, architects, nurses, etc. They still find discrimination in the work force and some have changed their names to be more American because they won't even get an interview using their own given names.
Some have invested in motel partnerships. It is high risk, requires astute planning and hard work.
Their impression of many native Americans is laziness, deliberate ingorance, willing to live on the dole rather then exert themselves, etc. How is it that someone who had limited access to education, speaks English as a 2nd or 3rd langage and is often discriminated against have superior sucess when compared with native Americans.
While I belive illegal immigrants should be sent home along with childeren of illegal immigrants who should not be considered citizens because their parents were illegally in the United States, I also recognize that many work harder than natives and do spend a good portion of their money here. However, they bring other family members here illegally, take benefit of every charity, use our hospital without payment, etc., even when they do have money in their pockets. There are many organizations and informal groups that help them game the system.
This is enough for now. Nothing will be done so long as Democrats and leftist solialist control so much of our government nationally and locally.

Jan 12 08:59 AM

[andyn:]

The US should seriously think about its "LEGAL" immigration, rather than focusing on illegals.
Most people who have advanced degrees are here on legal basis, but since the backlog is so long in the US, they are either moving back to their home countries or going to Canada / Australia / UK.
The reason for that is those countries have a points system wherein people with advanced degrees / work experience get priority over others.
Hence they rather than the US are siphoning off the creamy layer.
The US needs to compete with them by creating a similar points system immediately which will also help the US economy like the author says.

Jan 12 10:09 AM

[a. palmer jr.:]

I have a better idea...how about hunting down all the illegal immigrants and visa overstayers and send them back. That will lower costs of hospitals, free up some law enforcement because crime will be down, school systems won't have to pay for their education, books, lunches, etc. A guarded fence will definitely help keep them from sneaking back in for more free goodies. Legal immigration should, only be not encouraged, but limited to about 1/4 of what the current amount is. This will ease the wearing out of our infrastructure, less crowding on highways, towns, etc. By the USA playing nursemaid to the rest of the world we have put ourselves in a world of debt. Foreign aid and foreign travel by every congressman who needs a vacation should be nearly abolished. This will take care of about 30 percent of our wasteful spending; we can work on the rest at our leisure.

Jan 12 12:15 PM

[bobbobwhite:]

Your mind is still in the 50's when we still had control over this country. Your "ideas" would never work now in an out of control society that we now have. And, bring more immigrants to an already overpopulated situation? You must be writing this goofy article for real good sell-out money.

Try this first, get rid of illegals and not allow any other of "your" other immigrants in until all the illegals are sent packing. Then watch the country really improve as we regain some of that lost control.

Jan 12 01:01 PM

[jackooo:]

Get on a California freeway anytime of day in the L.A. area and then tell me immigration is good.
It's fools that push this agenda! I rather pay more fees to blockade the entrance to this country with land mines then to have to suffer the abuse of dial one for English or pay their hospital bills or watch their demonstrations in L.A. or give then income tax write offs because they are producing more children.
When are the senators Boxer & Feinstein going to do anything about this problem? They too are a total waste of momey!

Jan 12 01:11 PM

[Popeye1250:]

Gee, some common sense for a change!
And I'd venture to guess that 90% of the American People agree with you!
Obama had better "change" things!
We broke the senate phone system and we can show up at our senator's and congressmen's offices with pitchforks and torches!
Our immigration laws haven't been enforced for the last 16 years under Bush and Clinton!
Since when did enforcing our immigration laws become "optional" to those idiots in Washington


On Jan 12 12:15 PM a. palmer jr. wrote:

> I have a better idea...how about hunting down all the illegal immigrants
> and visa overstayers and send them back. That will lower costs of
> hospitals, free up some law enforcement because crime will be down,
> school systems won't have to pay for their education, books, lunches,
> etc. A guarded fence will definitely help keep them from sneaking
> back in for more free goodies. Legal immigration should, only be
> not encouraged, but limited to about 1/4 of what the current amount
> is. This will ease the wearing out of our infrastructure, less crowding
> on highways, towns, etc. By the USA playing nursemaid to the rest
> of the world we have put ourselves in a world of debt. Foreign aid
> and foreign travel by every congressman who needs a vacation should
> be nearly abolished. This will take care of about 30 percent of our
> wasteful spending; we can work on the rest at our leisure.

Jan 12 01:17 PM

[bcainw:]

In 2008 2.6 Million American jobs were lost during which time we allowed over 2 million Visa holders to enter the Untied States. What we are witnessing is the colonialization of the United States by foriegn elites.

I have a mush better idea the goes by the name "The New Agenda for America." If Obama does not implement this he is probably going to have a revolution on his hands by the end of 2009.

NEW AGENDA FOR AMERICA: Preliminary Planks
======================...
[Video: www.newagecitizen.com/...]

(1) Universal Health Care for All American Citizens
(2) A 20-year moratorium on all immigration into the United States
(3) Legal Marijuana for all Adults and Medical Patients
(4) An immediate reversal to the Offshoring and Inshoring of American Jobs
(5) A strict enforcement on issues of Separation of Church and State
(6) An immediate move from so-called Free Trade Agreements to Bilateral Trade agreements
(7) A major R&D project to bring energy independence to the United States and the World through recycling, reuse, ending hyper-consumerism and investing in the development of sustainable energy sources (e.g., solar, photovoltaic, wind, geothermal)
(8) No further ownership of US Assets (businesses, homes, ports, stock exchanges) by foreign governments or individuals!
(9) Replace the Federal Reserve with a People's Reserve which allows public oversight
(10) Absolute support for Net Neutrality
======================...

Jan 12 02:17 PM

[jobber:]

the author makes the same mistake as others before on this topic, by failing to look at ALL costs and benefits, tangible and intangible, of such a proposal. his is fuzzy logic, leading to the wrong conclusion.

as an aside, we don't need comprehensive immigration reform, as others have proposed recently, we need our lawmakers to use a rigorous, formal, and comprehensive ANALYSIS FRAMEWORK to guide us to the optimum solutions for our nation. time and again, the sloppiness and bias of washington analysis leads us in the WRONG direction.

Jan 12 04:00 PM

[Bob Schwartz:]

The author's proposal has merit. Admitting more young professional workers will increase demand for housing when we need it, increase contributions to Social Security and Medicare when we need them, and increase the overall competitiveness of our workforce. They will also spend money here on services provided by others already living here, supporting our economy instead of a foreign one.

Nobody seems to dispute these advantages, but they bring up objections:

1) "Too many doctors, motel owners, etc. are foreign born." I don't see the problem. My doctor is of Indian ancestry, and she's great. Entrepreneurs running small businesses are great, wherever their parents were born.

2) "Growth is not the solution." I grew up in Pittsburgh; (moderate) growth is definitely better than no growth or decline.

3) "Letting in more smart people will put you at a competitive disadvantage." But they will be competing with you wherever they live! If they are working overseas, their wages will be even cheaper compared to yours. So we might as well welcome them and build a high-quality workforce for the long term right here.

4) "Immigrants cost money in schools, hospitals, etc." The author's proposal targets professionals who would not be a burden on social services.

Bottom line: There are going to be more smart, skilled workers on the planet, regardless of whether we encourage them to live here or not. The more of them that live here, the better for the country as a whole, both short and long term.

We should cut INS red tape, set up a points system, and encourage smart people to come here and stay. I lift my lamp beside the golden door (if you have a Masters degree)!

Jan 12 06:43 PM

[a. palmer jr.:]

I can't see where legalizing marijuana is going to help things. The rest of the list above sounds pretty good though.

Jan 13 12:37 AM

[Larry J:]

Dave, my friend:

I like your idea. But: I think the number of individuals seeking employment so far outstrips the demand that your solution would not work. There are tens-of-thousands of Ph.D.s, M.E.s, M.S.s, and MBAs who are currently seeking employment and unable to find it. If we had jobs that we could not fill for lack of experienced candidates that would be one thing--but, that is not our situation.

Mar 05 01:35 PM