Resolving the Housing and Immigration Crises - Simultaneously
Two Birds – One Stone
By Sid Eschenbach / The Rag Blog / March 22, 2009
Arguably the two biggest, most urgent and most complicated problems facing the Obama administration are those related to the general meltdown of the financial structure, and those presented by finding a long term solution to the problem posed by illegal immigration and its relationship to the rebuilding or the destruction of the American middle class. While seemingly unrelated, they both have a very simple, effective, and long term solution: immediately open a citizenship window not only to all those now in the U.S. illegally, but to anyone else on the planet who would purchase a home or other real estate in the normal market (not in a repo auction), including a cash down payment of at least 25% of the value of the property and suitable guarantees for payment of the balance.
If it wasn’t clear before, it is now clearer than ever; the financial problems facing the nation and the world have their roots in the collapse of the U.S. real estate market following the widespread misuse (not to say abuse) of the normal real estate credit markets. That being the case, until a genuine market floor is built under the real estate valuations that are at the bottom of the financial pile, there are no fiscally tenable solutions to the related, highly leveraged and extremely dangerous problems at the top of the pile. If a "bottom of the pile" fix could be pulled off, the health of the balance sheets of the major banks of the world and the threat posed to them by continued mortgage defaults would evaporate as quickly as they appeared.
The Migration Policy Institute estimates that there are an average of 1.8 million people who migrate to the U.S. every year, 500,000 of whom are illegal. Does anyone doubt that if the United States opened a temporary immigration window during which time any person who purchased a home in the U.S. would be granted citizenship, there would not be more than 10,000,000 applicants from all countries of the world in short order? Contrast those numbers against what is estimated to be roughly 2,000,000 surplus housing units at the end of 2008, and add to that the total number of subprime loans outstanding that are in trouble, another 2,000,000, and it’s easy to see that both the housing overhang AND the threatened outstanding sub-prime mortgage markets could be easily, quickly and privately redressed.
The strange thing is that this solution has been before us all along, because as difficult as the situation in the United States may be, it is still far and away the preferred migrant destination. As to the ethics of turning "Give me your tired, your poor," into "Give me your ambitious, your investors," many nations around the world put a price upon citizenship, with a variety of rules allowing immigrants to pay, invest or guarantee spending in the country in exchange for being given the right to live, work and live there lives there.
Just as the British used subsidized voyages like the famous "Ten Pound Passage" to New Zealand in the mid 20th century to solve their own particular settlement problems, citizenship in the United States could be sold to any and all who were able to purchase a home or other property. What better way to demonstrate your desire to become part of a country and a culture than to purchase the right through investment, helping yourself while you help your new home country?
Obviously, regarding the "how," the rules would need to be clear and the politics surrounding the issue would dominate any discussion: are all houses included, or only particular economic sectors; all regions, or only the hardest hit; is there a minimum investment required, or is any property fair game; would those who have lived and worked in the U.S. illegally be at the head, the middle, or the end of the line; should there be quotas by country, or should they be selected by size of potential investment; would there be a minimum time to any resale?
Regarding the "who," there would have to be special security vetting, including normal visa background checks, heightened security reviews, verification of sales, review of the origin of the funds, etc., but neither the administrative nor the political challenges are too difficult to overcome, and it’s certainly nothing that couldn’t be set up quickly and effectively by any number of federal or private agencies.
Most important, using this immigration "trick" to reestablish a balance in supply and demand would also provide the necessary breathing space needed for the creation of new, permanent regulatory measures so clearly lacking in both areas, regulations that would insure that the U.S. doesn’t face these very serious structural problems again.
In sum, there are no reasons -- legal, ethical, structural, administrative, or political -- why this could not be done and done quickly. And I believe that the implementation of this program, starting with it’s mere mention, would stabilize the housing markets and give real hope for the first time in nearly a year, from Wall Street to Main Street, that "normal" life is once again with our grasp. It would also give real hope to millions of "Americans" who currently live in the shadows, allowing them to take a proper and dignified place in the North American sun.
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