Stimulate the Economy: Import Immigrants!
Two articles I came across today while skimming stuff for a sports blog post (I try to add some extra links when putting up short notes, but I digress) from the Wall Street Journal and Friedman from the New York Times suggest that bringing in immigrants with the ability to buy houses might just be the ticket to recovery. They come from slightly different angles, but both start from how the Senate voted in February to restrict financial institutions from hiring highly skilled immigrants to come in temporarily on H1-B visas.
Friedman's take in the New York Times is that an open, flexible society - where new people and new ideas are brought in - will enhance our nation's intellectual creativity and increase the knowledge economy. This will, in turn, better deploy smarts and ideas to profitable products and services, build a competitive advantage in the number (and I assume, interaction between) the bright bulbs out there, which will raise incomes and create jobs. In his words:
We live in a technological age where every study shows that the more knowledge you have as a worker and the more knowledge workers you have as an economy, the faster your incomes will rise. Therefore, the centerpiece of our stimulus, the core driving principle, should be to stimulate everything that makes us smarter and attracts more smart people to our shores. That is the best way to create good jobs.
According to research by Vivek Wadhwa, a senior research associate at the Labor and Worklife Program at Harvard Law School, more than half of Silicon Valley start-ups were founded by immigrants over the last decade. These immigrant-founded tech companies employed 450,000 workers and had sales of $52 billion in 2005, said Wadhwa in an essay published this week on BusinessWeek.com.
He also cited a recent study by William R. Kerr of Harvard Business School and William F. Lincoln of the University of Michigan that “found that in periods when H-1B visa numbers went down, so did patent applications filed by immigrants [in the U.S.]. And when H-1B visa numbers went up, patent applications followed suit.”
We don’t want to come out of this crisis with just inflation, a mountain of debt and more shovel-ready jobs. We want to - we have to - come out of it with a new Intel, Google, Microsoft and Apple. I would have loved to have seen the stimulus package include a government-funded venture capital bank to help finance all the start-ups that are clearly not starting up today - in the clean-energy space they’re dying like flies - because of a lack of liquidity from traditional lending sources.
The Wall Street Journal, meanwhile, has an Op-Ed from Richard LeFrak (like Lefrak City?), a real estate developer and A. Gary Shilling, an economic consultant. They speak specifically to having foreigners with money buy housing stock to take it off the market, protecting housing value by eliminating the huge surplus of useable - but unsaleable - housing. Those immigrants would then be a part of the jobs recovery by adding knowledge and investing in companies/ new ventures. Part of their take is below, read the article for more:
As consumers retrench, production is cut, payrolls are slashed, and consumer confidence, incomes and spending are savaged in a self-feeding downward economic spiral. But if the government buys surplus houses and sells them at low market-clearing prices, other house prices will drop, destroying more home equity and driving many more mortgages under water. Bulldozing excess houses would be an inefficient end for perfectly habitable structures.
A better idea is to offer permanent residence status to the many foreigners who are clamoring to get into the U.S. -- if they buy houses of minimal values (not shacks). They wouldn't need to live in those houses, but in order to remove the unit from the total housing market, they couldn't rent them. Their temporary resident status granted upon purchase would become permanent after, perhaps, five years, if they still owned the houses and maintained clean records. The mere announcement of this program might well stop the ongoing collapse in house prices, especially in cities such as Las Vegas, Miami, Phoenix and San Francisco, where prices are down 40% -- but where many foreigners like to live.
Each year, 85,000 H-1B visas are granted for foreigners with advanced skills and education, and last year, 163,000 petitions were filed in the first five days after applications were accepted. The Ewing Marion Kauffman Foundation estimates that as of Sept. 30, 2006, 500,040 residents of the U.S. and 59,915 individuals living abroad were waiting for employment-based visas. Many would buy homes if their immigration conditions were settled.
These people tend to be highly productive. In 2006, foreign nationals residing in the U.S. were listed as inventors on 25.6% of the patent applications filed in the U.S., up from 7.6% in 1998. A Council of Graduate Schools survey found that in the fall of 2007, 241,095 non-U.S. citizens were enrolled in graduate programs. Some 55% were in engineering and the biological and physical sciences, compared with only 16% of U.S. citizens. In 2007, more people on temporary visas received doctorates in physical sciences and engineering than U.S. citizens.
Now, this all bothered me a little at first - I don't know where the capital for these supposed new ventures would be; I don't think every immigrant is going to roll up with the Brinks truck of cash required to get a venture off the ground, let alone with the expertise to plop down and start doing business in the US business culture - but perhaps I am overstating that barrier.
I don't know how US Citizens would react to an influx of immigrants - as new financial overlords?
How long would this process take to establish?
How would less-desired immigrants react (like Mexicans who might wish to leave drug violence, for example)?
Why would foreigners invest in the US if the banking system is seriously under duress, capital is hard to come by, and the US' time as a driver for some innovation is dependent on people from other countries? What if China suddenly became a more efficient place to create innovation?
What do you think?
Friedman's take in the New York Times is that an open, flexible society - where new people and new ideas are brought in - will enhance our nation's intellectual creativity and increase the knowledge economy. This will, in turn, better deploy smarts and ideas to profitable products and services, build a competitive advantage in the number (and I assume, interaction between) the bright bulbs out there, which will raise incomes and create jobs. In his words:
We live in a technological age where every study shows that the more knowledge you have as a worker and the more knowledge workers you have as an economy, the faster your incomes will rise. Therefore, the centerpiece of our stimulus, the core driving principle, should be to stimulate everything that makes us smarter and attracts more smart people to our shores. That is the best way to create good jobs.
According to research by Vivek Wadhwa, a senior research associate at the Labor and Worklife Program at Harvard Law School, more than half of Silicon Valley start-ups were founded by immigrants over the last decade. These immigrant-founded tech companies employed 450,000 workers and had sales of $52 billion in 2005, said Wadhwa in an essay published this week on BusinessWeek.com.
He also cited a recent study by William R. Kerr of Harvard Business School and William F. Lincoln of the University of Michigan that “found that in periods when H-1B visa numbers went down, so did patent applications filed by immigrants [in the U.S.]. And when H-1B visa numbers went up, patent applications followed suit.”
We don’t want to come out of this crisis with just inflation, a mountain of debt and more shovel-ready jobs. We want to - we have to - come out of it with a new Intel, Google, Microsoft and Apple. I would have loved to have seen the stimulus package include a government-funded venture capital bank to help finance all the start-ups that are clearly not starting up today - in the clean-energy space they’re dying like flies - because of a lack of liquidity from traditional lending sources.
The Wall Street Journal, meanwhile, has an Op-Ed from Richard LeFrak (like Lefrak City?), a real estate developer and A. Gary Shilling, an economic consultant. They speak specifically to having foreigners with money buy housing stock to take it off the market, protecting housing value by eliminating the huge surplus of useable - but unsaleable - housing. Those immigrants would then be a part of the jobs recovery by adding knowledge and investing in companies/ new ventures. Part of their take is below, read the article for more:
As consumers retrench, production is cut, payrolls are slashed, and consumer confidence, incomes and spending are savaged in a self-feeding downward economic spiral. But if the government buys surplus houses and sells them at low market-clearing prices, other house prices will drop, destroying more home equity and driving many more mortgages under water. Bulldozing excess houses would be an inefficient end for perfectly habitable structures.
A better idea is to offer permanent residence status to the many foreigners who are clamoring to get into the U.S. -- if they buy houses of minimal values (not shacks). They wouldn't need to live in those houses, but in order to remove the unit from the total housing market, they couldn't rent them. Their temporary resident status granted upon purchase would become permanent after, perhaps, five years, if they still owned the houses and maintained clean records. The mere announcement of this program might well stop the ongoing collapse in house prices, especially in cities such as Las Vegas, Miami, Phoenix and San Francisco, where prices are down 40% -- but where many foreigners like to live.
Each year, 85,000 H-1B visas are granted for foreigners with advanced skills and education, and last year, 163,000 petitions were filed in the first five days after applications were accepted. The Ewing Marion Kauffman Foundation estimates that as of Sept. 30, 2006, 500,040 residents of the U.S. and 59,915 individuals living abroad were waiting for employment-based visas. Many would buy homes if their immigration conditions were settled.
These people tend to be highly productive. In 2006, foreign nationals residing in the U.S. were listed as inventors on 25.6% of the patent applications filed in the U.S., up from 7.6% in 1998. A Council of Graduate Schools survey found that in the fall of 2007, 241,095 non-U.S. citizens were enrolled in graduate programs. Some 55% were in engineering and the biological and physical sciences, compared with only 16% of U.S. citizens. In 2007, more people on temporary visas received doctorates in physical sciences and engineering than U.S. citizens.
Now, this all bothered me a little at first - I don't know where the capital for these supposed new ventures would be; I don't think every immigrant is going to roll up with the Brinks truck of cash required to get a venture off the ground, let alone with the expertise to plop down and start doing business in the US business culture - but perhaps I am overstating that barrier.
I don't know how US Citizens would react to an influx of immigrants - as new financial overlords?
How long would this process take to establish?
How would less-desired immigrants react (like Mexicans who might wish to leave drug violence, for example)?
Why would foreigners invest in the US if the banking system is seriously under duress, capital is hard to come by, and the US' time as a driver for some innovation is dependent on people from other countries? What if China suddenly became a more efficient place to create innovation?
What do you think?