Great idea: immigration to solve housing/credit crisis.

Alan Greenspan is blamed by some for instigating the current credit crisis. (See the BBC article compiling all of the possible targets of blame.)

Personally, I think blaming the Fed Chairman for a loose money supply is off-target - he helped write the rules (i.e. the monetary policy), but he sure wasn't the primary actor (i.e. making loans, buying more house than you should, etc.)

Anyway, Greenspan - who has a libertarian mindset - has a novel idea to help turn the negative momentum of the housing market: increase the number of H-1B visas granted every year.

(H1-B visas are granted to highly skilled non-immigrants - think Ph.Ds. Currently limited to 65,000 annually, almost everyone agrees on 2 things: 1) there aren't enough of visas authorized, and 2) they make a tremendously positive economic contribution.)

As Greenspan suggests, these highly-skilled workers - in addition to turbocharging the economy - are likely to buy houses. As Greenspans says "A double or tripling (of skilled immigrants) would markedly accelerate the absorption of unsold housing inventory for sale-and hence stabilize prices."

(Also, the skilled immigrants are likely to gravitate towards some of the locations most affected by the housing slump. Wouldn't the Bay Area real estate market improve with 5,000 more software programmers seeking new homes?)

Alas, this is such a good idea, that it stands very little chance of ever happening. Immigration is a topic that neither party wants to address, nor does this idea "sell" well - politicians would much rather suggest solutions that let people think they're getting something for nothing. (Example: Obama's $1,000 energy rebate.)

Reflecting some of the ineffectiveness of political solutions, Greenspan also gave his opinion of the housing bill passed by Congress last month. His verdict on the bill: "Bad."

If you read only 1 article this week... (Legrain on immigration)

Courtesy of the Freakonomics blog is an insightful and broad appeal for open immigration by Philipe Legrain (link above).

It's hard to believe that a nation made great by open immigration now has such restrictive immigration policies - and the potential for even more restrictive policies. As Legrain outlines, though, these policies are in spite of overwhelming economic evidence in support of more open immigration here in the USA, and driven by irrational fear and xenophobia.

Thanks, Philippe, for outlining the benefits of more open immigration, and counterpoints to the typical arguments against easier immigration. (Amazingly, he does this without really relying on the practical argument about today's USA immigrants ("how you gonna send 20M people home?", nor does he really promote the macroeconomic need of the USA for immigrant labor.)


One conclusion that hit me after reading the Legrain article: instead of trying to justify more immigration, the conversation should be turned on it's hear, with the xenophobes compelled to justify why the current restrictive immigration policies make sense. I have a feeling that the xenophobic answer is limited to "Because!" and nothing more.