Counterparties: The immigration stimulus

November 9, 2012

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As Wonkblog and others noted today, conservatives like John Boehner, Sean Hannity and Charles Krauthhammer are signaling that immigration reform may finally be coming. While it’s a politically and racially loaded issue, immigration is economically simple: letting more people come to America would help the economy.

A 2010 study by the San Francisco Fed found that U.S. immigration is associated with higher productivity, an increase in average hours for workers, and has “positive, long-run effects” on incomes for non-immigrant Americans. The Kauffman Foundation has produced reams of research on how immigration boosts entrepreneurship, and recently estimated that companies with immigrant founders produced $63 billion in sales over the last 6 years. Gordon Hanson of the Cato Institute — which dedicated an entire issue of its journal to the subject earlier this year — finds that immigration is valuable whether it’s high-skilled PhDs or low-skilled laborers.

There are, of course, non-economic benefits to bringing more immigrants to the US. Noah Smith last month suggested that drawing the increasingly rich Asian population to the US would help relations with the region. Matt Yglesias suggested we can address the problems of “global poverty and misgovernment” by opening our borders to the world.

In light of the election’s demographic lessons, it’s also worth nothing that immigration is already having a powerful effect of America. The WSJ today examines how the “Latino diaspora” is revitalizing towns like Ottumwa, Iowa and much of the Midwest:

Between 2000 and 2010, the Hispanic population in the Midwest swelled 49%, more
than 12 times the 4% overall population growth there, according to the census.

The number of Latinos climbed 82% in Iowa during that decade and now represents 5% of the state’s population, the census found. The Hispanic population grew 82% in Indiana, 77% in Nebraska and 74.5% in Minnesota.

An Ottumwa bank officer put it this way: “Hispanics are pulling this town out of a long recession”. – Ryan McCarthy

And on to today’s links:

Occupy’s next move: Buy your debt from banks and forgive it – David Rees

How to solve the fiscal cliff: “The Obamaney Plan” – Greg Ip
Let’s not make a deal — Paul Krugman

Public Works
How NYC managed to get its subway back so quickly – NYT

Yes, companies are harvesting — and selling — your Facebook profile – ProPublica

HSBC’s “wink/nod” business model in allegedly running money for drug dealers and gun runners — Telegraph

“Congratulations, you’ve become a Goldman Sachs Partner” – Guardian
Ex-Goldman trader charged with defrauding the bank of $118 million – Reuters

Bionic hand helps amputeee feel human again – Guardian

Official Statements
Bain Capital to investors: We’re still non-partisan. Really. — Dan Primack

Apple’s stock is at its lowest P/E ratio since 2001 – Quartz


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Yikes. Immigration creates winners and losers. So does capitalism. Just because it’s long-run net beneficial doesn’t mean it’s economically simple, unless you think fairness has no place in economics. What a horrible premise.

Posted by absinthe | Report as abusive

Relying on immigration for prosperity is a ponzi approach that can’t go on forever.

Posted by logicus | Report as abusive

Thomas Friedman is the best on immigration policy. The only people it makes any sense to let in are those who bring great education or capital. Give the young people at elite schools permanent residency upon graduation.

Unskilled laborers simply cannot pay for their retirement entitlements even if they work continuously from 18 to 67. It’s not a racial issue at all.

There are no fewer than 1,000,000,000 people who would move to Europe and the US given the chance. The disparity of lifestyles and opportunities are simply too great to pass up.

Posted by y2kurtus | Report as abusive

Mass immigration only increases the size of the numbers as it drives down the standard of living for all but the exploitive employers. The employers whine and cry about wanting a free market but they insist on being allowed to manipulate the supply of labor in order to drive down wages and destroy benefits for all workers. In order to achieve this, they hire the propaganda mills like Cato to find what they want found.

Posted by wigglwagon | Report as abusive

What do people think of the debt forgiveness thing? An OWS affiliate/descendant is proposing to buy distressed housing or whatever other debt … and cancel it. Not sure how effective this will be, as people could discharge their debt in bankruptcy. Are debt securities still going for way under par?

Posted by weiwentg | Report as abusive

If I’m reading it right, OWS is buying “defaulted loans”, particularly medical and educational loans. These loans are typically sold to debt collectors — and because they aren’t collateralized, they are quite cheap once they are in default.

Yes, debts can be discharged in bankruptcy, but this gives the beneficiaries an opportunity to avoid bankruptcy.

Distressed housing would be much more costly.

Posted by TFF | Report as abusive

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