Saturday, January 10, 2009

Richard Nadler now silent on immigration and the wealth of states?

Last week, the WSJ ran a feature article on the relationship between Hispanics, many of them illegal immigrants, and the housing bubble, which led to what Steve Sailer has aptly labelled the Diversity Recession. This paragraph captures the essence of the home construction craze, essentially a Ponzi scheme:

Regions of the country where the housing bubble grew biggest, such as California, Nevada and Florida, are heavily populated by Latinos, many of whom worked in the construction industry during the housing boom. When these markets began to weaken, bad loans depressed the value of neighboring properties, creating a downward spiral. Neighborhoods are now dotted with vacant homes.

As more immigrants flooded into the "sand states", a nexus of politicians from both parties (although primarily from the Democratic side), the GSEs Freddie Mac and Fannie Mae, and various Hispanic activist groups pushed for ways to give them loans without down payments, irrespective of the reality that the profligate loans could not conceivably ever be paid back. This uptick in the demand for houses led to more homes being constructed, which created a need for more construction workers--a need that was met by the immigrants who were in large part pushing the increase in demand for more housing starts in the first place.

More houses needed to be built, so more Hispanic immigrants came to build the houses. These new arrivals needed a place to live, too, so more houses had to be built to accomodate them. As long as the creation of all of this 'wealth' buoyed everyone else's home values in the process, whatever could go wrong? Unfortunately, houses do not create wealth, and as Steve Sailer has pointed out, there was no rational reason to assume that an increase in real wealth was going to come from the second lowest quartile of the population in terms of wealth (roughly the portion of the population that was to push the US home ownership rate from 64% up to 70%).

I rehash this to tie it into a bit of a back-and-forth I had with America Majority Foundation's Richard Nadler, a proponent of Republican support for open borders, last October. After talking to him in person for about 15 minutes, I wrote to him in hopes of continuing our debate. He agreed to engage me, but asked that we hold off until after November 4th, as he was understandably busy until then. Following the election, I resent the letter, chased by a couple of quick email exchanges of little substance, none of which contained a response to my challenges. To date, I have not heard from him again.

I suspect his silence stems from the nature of his primary argument in favor of open borders--that states experiencing the greatest growth in their immigrant populations from 1999 to 2006 were the same states that tended to experience the greatest economic growth over the same period of time, put forward in an AMF report entitled "Immigration and the Wealth of States". Page 21 shows states like Nevada, Arizona, California, and Florida near the top in terms of increases in gross state product. What else is unique about those states? Half of all home foreclosures in the country over the last year have occured in them, even though they collectively only represent one-fifth of the nation's population. The country has benefitted little from the faux wealth in these states that has vanished even more quickly than it arrived, while the very real $15-$25 billion in remittances annually sent beyond our borders are not going to similarly come full circle.

Further, to the extent that population growth and economic growth are related, it is the high-IQ, well-educated and innovative types who create wealth. Patent applications provide a reasonable measurement proxy for that wealth creation, and immigrants from Mexico are virtually absent from the list (in line with their poor performance relative to other immigrant groups in the US on a host of other social measures). Unskilled workers tend instead to follow the wealth and fill the more routine jobs that new wealth creates.

His secondary argument is a familiar political one: The GOP should support open borders as a way of reaching out to Hispanics, who are natural Republicans that agree with conservatives on most things, just not immigration restriction.

The '08 Presidential election shows that to be fallacious. Hispanics, who supported Hillary Clinton in the Democratic primaries by a margin of 2 to 1, voted for her opponent in the general election even more overwhelmingly than they had voted for Kerry in '04. It does not make sense that Hispanics would reject McCain if their only disagreement with the Republican party came over immigration. Were that actually the case, they should have strongly supported McCain as a way of validating the assertion of men like Nadler that GOP support for open borders is a political winner that will forever put Hispanics in the Republican's camp.

To reject someone like McCain, who they putatively agree with on, well, just about everything, does not compute. It would be comparable to me agreeing with the Democratic party on all of its platform positions except for military interventionism in the Middle East--specifically my wanting the US to stay the course in Iraq, say--and then voting against Joe Lieberman after he was nominated for the Presidency by the DNC as my way of sticking it to the Democratic Party for its dovishness on Iraq!

In reality, a group that is poorer, less educated, more likely to use welfare programs, more likely to engage in criminal activity, more likely to give birth to illegitimate children, less likely to own a home or be able to afford to do so, and much more suspicious of Jews and Israel than the nation at large, in addition to being affirmative action 'eligible', is simply not a natural Republican constituency, given what the GOP putatively stands for today. Shelving sovereignty is not going to change that. It will only increase the size of a group that votes against the GOP.


Anonymous said...

Maybe he has some shame. Doubtful, but one can hope...

Millionaire Maker said...

This is excellent post, it’s amazing. Thanks for writing this topic, with so many details

Chixulub said...

Rich passed away Saturday. He was a great guy and a great intellect.

green card visa said...

Immigrants may cause state economies to improve in the short term, because in all fairness, hispanic immigrants, illegal or not, are willing to work to improve their situations. However, the they cannot be entirely to blame for the housing bubble, as wall street firms were well aware of what they were getting themselves into. Both are to blame for our current situation. The immigrant whose concern can never be the US economy, and the wall street agencies who put personal gain before prudently working towards a steady US economy.

Neither of these issues deal with the issue of issuing a a green card visa to the right hispanic immigrant families willing to invest in the American economy.

Audacious Epigone said...

Green card,

The level of ire I have for illegal immigrants who flaunt feebly enforced US immigration law is pretty low. I suspect if I were an uneducated, unskilled Amerindian from southern Mexico, I'd take my chances north of the border, too. But I'm a US citizen and citizenist. Bringing more of Mexico and South America into the US is going to make the US more like Mexico and South America. I don't want that.

Green Card Visa said...

Nobody can blame you for not wanting that to become the reality, but I do think that there should be some ire aimed at these illegal immigrants. I just feel that you should not be able to violate the laws of a nation and then, almost simultaneously seek protection under that nations policies. It seems inherently wrong to me.