Desis Can Save Us… Part II

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A few months ago, I mentioned a unique proposal from Alan Greenspan for addressing our housing-led recession – basically, import desis to shore up the buyer side of the market –

Here We Come to Save the Day… Again.

“The most effective initiative, though politically difficult, would be a major expansion in quotas for skilled immigrants,” he said. The only sustainable way to increase demand for vacant houses is to spur the formation of new households. Admitting more skilled immigrants, who tend to earn enough to buy homes, would accomplish that while paying other dividends to the U.S. economy.

He estimates the number of new households in the U.S. currently is increasing at an annual rate of about 800,000, of whom about one third are immigrants. “Perhaps 150,000 of those are loosely classified as skilled,” he said. “A double or tripling of this number would markedly accelerate the absorption of unsold housing inventory for sale — and hence help stabilize prices.”

In the meantime, several other pundits have come forth with similar proposals including Thomas Friedman –

Leave it to a brainy Indian to come up with the cheapest and surest way to stimulate our economy: immigration.

“We will buy up all the subprime homes. We will work 18 hours a day to pay for them. We will immediately improve your savings rate — no Indian bank today has more than 2 percent nonperforming loans because not paying your mortgage is considered shameful here.”“All you need to do is grant visas to two million Indians, Chinese and Koreans,” said Shekhar Gupta, editor of The Indian Express newspaper. “We will buy up all the subprime homes. We will work 18 hours a day to pay for them. We will immediately improve your savings rate — no Indian bank today has more than 2 percent nonperforming loans because not paying your mortgage is considered shameful here. And we will start new companies to create our own jobs and jobs for more Americans.”

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p>And most recently the idea gains some support from the WSJ’s OpEd page –

The Obama administration should seriously consider granting resident status to foreigners who buy surplus houses in this country. This makes more sense than the president’s $275 billion housing bailout plan, which Americans greeted with a Bronx cheer.

The federal bailout forces taxpayers to subsidize overextended homeowners who bet on ever-rising house prices and used their abodes as ATMs, and it doesn’t get to the basic problem — the huge inventory of excess houses. We estimate that 2.4 million houses over and above normal working inventories are left over from the 1996-2005 housing bubble. That’s a lot, considering the long-term average annual construction of 1.5 million single- and multi-family units.

…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.

Alas, in our current political climate, 85K/yr legal, skilled H1B immigrants generate uprorar while 500K/yr illegal, unskilled immigrants are softly supported. Unfortunately, pointing out the absurdity of this just ain’t very PC.

61 thoughts on “Desis Can Save Us… Part II”

  1. umber desi

    Buying from builders on plan or ready to occupy is a lot different from buying into an established co-op society in Mumbai. A lot of really high end houses are not even sold as property but as a company to avoid stamp duty on property. The flat is the asset of a private company which is occupied by its director and it is not the flat but the company that is sold, the stamp duty for transfer of shares is far less than that of flats. The new owners now become the directors of this company. The substance of the transaction was the sale of a flat the form was sale of a private company. This market has a lot of black money involved. House Prices Rs 5 crores plus have sophisticated (in the financial sense) owners with advisors that come up with such schemes.

    http://india-real-estate-news.com/

    Land transactions in India have a high degree of “cash payments” as people try to avoid paying the high stamp duty rates charges in many states that can go as high as 15-18% and therefore understate the value of the property on the sale agreement. This practice results in your having to pay a higher capital gain tax at a future date at the time of sale. An innovative method to reduce stamp duty incidence is to buy the property inside a company and sell the property through the transfer of the company’s shares. This reduces the stamp duty incidence to just 0.5% any where in India.

  2. I am not an economist and I have not read the papers on the relationship between native employment v. high skilled/low skilled immigration. Shown sufficient empirical evidence, I am easily persuadable. The powers will however have to prepare the American masses before they move on to the new amnesty scheme for the illegals or significantly expand H-1bs or some new scheme involving immigration. I am concerned that there is a populist backlash building up in this country which will destroy everything in its path including Obama. The American worker is being shafted and he is tired. Last week, JP Morgan Chase annouced that they are discontinuing their 401(k) contributions. On Monday we find out that they are spending $160 million on Jets. The bonuses for the top few hundred executives doled out at JP Morgan Chase last month are probably in hundreds of millions if not billions. The ratio of CEO Pay to Average Pay is around 20:1 in most industrialized nations. In the US it is close to 500:1. Also where are the benefits of outsourcing/offshoring to the American consumer or worker? Maybe somebody more enlightened can explain on how the American worker or the consumer has benefitted from outsourcing/offhsoring.

  3. The American worker is being shafted and he is tired. Last week, JP Morgan Chase annouced that they are discontinuing their 401(k) contributions. On Monday we find out that they are spending $160 million on Jets. The bonuses for the top few hundred executives doled out at JP Morgan Chase last month are probably in hundreds of millions if not billions.

    Well, between the two parties governing and all the conflict of interest between Congressman, Senators, Big Business, the administration, etc. it’s really mocking the taxpayer. I don’t know what the future holds, but those sitting in the power positions are taking people for granted and pushing people hard. I liked what Umair Haque had to say about this:

    The New Cold War is a battle between economic democracy and economic feudalism. In a democracy, you pay taxes, and elected administrators allocate those financial resources for the common good. In feudalism, taxes are appropriated from you, and allocated by private hands that the public cannot influence, for the private good. In Feudalism 2.0, hedge fund managers are essentially lords to whom people are vassals. You have the right to benefit from your financial assets — but fund managers are who determine their value. In the Geithnerconomy, the salaryman is the new slumdog.

    And this is coming from a strong supporter of Barack Obama.

    As a young brown American, I couldn’t be more deeply or powerfully inspired by the “defining moment” of an Obama presidency. Yet, the seeds of a new challenge have been planted by that victory: for us to harness the lessons of his quiet revolution – our quiet revolution – to seed many, many more.

  4. I fully support any initiative to bring more succulent subcontinental babes to our shores!!

  5. 40 · razib said

    unless you were born in the US, when the economy goes south or your company starts downsizing we all have to come face ot face with the fence. what do you mean? those with greencards or naturalized are in the same boat as those with birthright citizenship (though i think greencard holders don’t get some welfare benefits).

    They also face deportations and mandatory immigration detention if they are convicted of a whole swathe of crimes. Things like tax fraud, posesssion of enough drugs, etc. If the allegedly liberal immigration bill had passed a few years ago, drunk driving would also have become a deportable offense for green card holders. I’m not sure, but they may technically be required to report changes of address to immigration within ten days, like people in lower immigration categories.

    Yuck.

  6. I take your let-the-market-give-rich-Asians-the-homes proposal and up it by let-the-government-of-China-pay-for-the-homes-instead-of-buying-T-Bills-and-give-them-to-displaced-Chinese-peasants-and-low-wage-workers proposal. My proposal, however, has the benefit of only generating a race x citizenship status x English-medium war in the U.S., rather than a race x citizenship status x class war, as Thomas Freenspan’s would.

  7. 52 · Pagal_Aadmi_for_debauchery said

    Also where are the benefits of outsourcing/offshoring to the American consumer or worker? Maybe somebody more enlightened can explain on how the American worker or the consumer has benefitted from outsourcing/offhsoring.

    Before the crisis the middle class may have broken even through lower prices (at, eg. Wal-Mart) due to the fact that it was people in China and Bangladesh and Mexico and… manufacturing their goods rather than people in the American South. This may have made up for the lack of increases in their wages, leading to stagnation in middle class wages (rumour has it). And also there were the imaginary sums that were being accumulated in their monthly IRA statements which have now evaporated. The working class and the poor probably lost money, if they were not jailed, made homeless, or otherwise screwed.

    However, everyone did gain the satisfaction of seeing already rich people get trillions more in money while the social safety net and the right to unionize was destroyed, which I’m sure must have people feeling really happy right now. Things like this post are, I’m sure, helping matters. 😉

  8. I’m not sure, but they may technically be required to report changes of address to immigration within ten days

    Yes for green card holders, no for naturalized citizens. In addition, for maintaining resident status, those with green cards have to be careful about duration and frequency of overseas travels.

  10. I am concerned that there is a populist backlash building up in this country which will destroy everything in its path including Obama.

    You’re concerned? I’m looking forward to it!

    This is how I see it: Remember in horror movies, just when you thought the killer is dead and the movie is over, the killer makes one last (and futile) grab ending in the hero dealing the fatal blow. Well, just when you thought all forms of collectivism(communism, unionisation, trade barriers, socialism, populism etc) are discredited, they’re coming back for one last futile grab. It will last another decade or two, accompanied by severe hardship for the middle class in developed countries (the poor will be finished and the rich will wall themselves off). Eventually, the hero (individualsm/free markets) will deal the final blow. Then the world will see a new begining that will bring back prosperity for a very long time.

    M. Nam

  11. I’ve never really “gotten” neolibs like Tommy Friedman and Alan Greenspan putting up the Superdesi signal like that. (And IIRC, Tommy-boy got pretty roundly panned for it). I mean, last I checked- Desis here in the States were getting hit by the credit crunch as nasty as anyone else (if not nastier, since all the small-biz loans have gone bone-dry on us). It’s like these guys think that, in the midst of a financial crisis caused by them and the accumulated weight of generations of incompetent and profligate US government leadership in both parties, that we can just emit our magic Desi-ooze and solve the problem overnight. A little bit patronizing and just dumb in general. Besides, my magic Desi-ooze is reserved for special circumstances, like winning company-wide March Madness betting pools. (I’m just #5 this time though, my Desi-ooze just isn’t what it used to be.)