America has yet to play the demographic card: a few million new immigrants would happily buy up all those bad mortgages

From Facebook:

Mr Tim Cavanaugh’s clear-headed criticism of a principal government economist’s waffle seems to me apt and exactly on target. E.g. he says: “The real purpose here is Panglossian: to convince you that whatever Power does is the right thing to do, and to discredit the idea that government should ever again reduce its presence in the private sector.”

In an article dated Sep 18 2008 titled “October 1929? Not!”, I argued “that the American economy and the world economy are both incomparably larger today in the value of their capital stock, and there has also been enormous technological progress over eight decades. Accordingly, it would take a much vaster event than the present turbulence — say, something like an exchange of multiple nuclear warheads with Russia causing Manhattan and the City of London to be destroyed — before there was a return to something comparable to the 1929 Crash and the Great Depression that followed.” A few weeks later in “America’s divided economists” I said

“Beyond the short run, the US may play the demographic card by inviting in a few million new immigrants (if nativist feelings hostile to the outsider or newcomer can be controlled, especially in employment). Bad mortgages and foreclosures would vanish as people from around the world who long to live in America buy up all those empty houses and apartments, even in the most desolate or dismal locations. If the US’s housing supply curve has moved so far to the right that the equilibrium price has gone to near zero, the surest way to raise the equilibrium price would be by causing a new wave of immigration leading to a new demand curve arising at a higher level. Such proposals seek to address the problem at its source. They might have been expected from the Fed’s economists. Instead, ESSA speaks of massive government purchase and control of bad assets “downriver”, without any attempt to face the problem at its source. This makes it merely wishful to think such assets can be sold for a profit at a later date so taxpayers will eventually gain. It is as likely as not the bad assets remain bad assets.”

Restoring a worldwide idea of an American dream fuelled by mass immigration may be the surest way for the American economy to restore itself. America was at its best when it was open to mass immigration, and America is at its worst when it treats immigrants with racism and worse.

One Response to “America has yet to play the demographic card: a few million new immigrants would happily buy up all those bad mortgages”

  1. drsubrotoroy Says:

    Comment by
    Larry Levine: They wont do that because it is too good of an idea.

    Subroto Roy:
    Large numbers of doctors and nurses and medical support staff from around the world were attracted with Green Cards in earlier decades; the same could be done here, saying, as it were, here’s a Green Card attached with a bad mortgage (perhaps in a dismal location). A generation of pioneers on a new frontier might arise.
    Two birds might be killed with one stone if doctors etc were brought in first, raising the health-care supply curve as well (cartels like the AMA would protest and raise barriers).

    Larry Levine:
    The Unions wouldn’t let it happen.

    Tim Cavanaugh:Thanks for the kind words and the excellent suggestion. Like the MSM-depleted windsock I am, I haven’t been thinking of immigration since the nativists stopped screaming about it. My only problem with your argument is that it’s a utilitarian argument. We shouldn’t be allowing free immigration and emigration to solve our real estate problem. We should be doing it because it’s right, in good times and bad.

    Subroto Roy: Real estate is the most real of real sectors; if that is what has gone bad (due to government policy, another very real factor), all other less real, more nominal/monetary assets go bad with it. And the latter (despite window-dressing) will stay bad as long as real estate stays bad. I cannot see how real-estate can improve except with the help of one or two or five million new immigrants

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