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Source link: http://archive.mises.org/6365/illegal-immigrants-and-the-housing-bubble/

Illegal Immigrants and the Housing Bubble

March 12, 2007 by

Why all the recent immigration? I believe that the answer lies to a large degree with the housing bubble in the United States. The normal number of housing starts is about one million per year, but housing starts have exceeded one million every year since the early 1990s. The housing bubble appeared in the wake of the bursting of the technology stock bubble and only began to unravel in 2006. Housing starts have already returned to normal levels, but are soon likely to go below normal levels. What does this have to do with illegal immigration? Immigrants, particularly illegal Mexican immigrants, have largely found jobs in industries associated with the housing bubble. FULL ARTICLE

{ 25 comments }

Nick Bradley March 12, 2007 at 8:45 am

I think the article overemphasizes the housing bubble in the boosted demand for cheap, illegal labor.

Sure, home improvement projects and landscaping are major sources of illegal labor, but what about housekeeping, or hospitality servies such as hotel workers? I’m not so sure on how dependant these industries are on the housing bubble.

Also, agriculture is a larger employer of illegal labor than contruction.

Perhaps we sould be better off to look at the relationship between agricultural subsidies (both state and federal) and rates of illegal immigration.

Illegal immigration is such a problem because government subsidizes both (1) the demand for illegal workers, and (2) the supply of illegals.

Government subisidizes those industries that are most likely to use illegal labor (construction and agriculture) and then subsidize illegals living in the US via welfare payments; not welfare payments in the standard sense of the term (i.e. handouts), but through free education, health care, in-state tuition rates, etc. etc.

If there were no welfare state, neither corporate welfare to subsidize demand nor public welfare to dubsidize supply, there would be no illegal immigration “problem” and no need for a fence.

Confessions of a Right-Wing Libertarian

http://crwl.blogspot.com

Colin March 12, 2007 at 11:11 am

Since about 10,000 years, homo sapiens had to endure governments. The situation is unlikely to change in the near future. Disappropriation of property requires a legitimization. Monarchs derived their legitimization from God, rulers in democratic countries from the majority. Immigration of poorly educated individuals will increase the number of people on welfare. It’s a method to legitimize more taxes. In addition, ethnic tensions provide a justification for government interference in everybody’s life. The thesis that free immigration is helpful is based on the premise of limited government. Currently, such a situation does not exist. Hence, an increase of poorly educated immigrants is likely to lead to an increase of taxes and governmental power. Such an outcome is clearly at variance with libertarian principles.

Colin March 12, 2007 at 11:22 am

“Why all the recent immigration? I believe that the answer lies to a large degree with the housing bubble in the United States.”

Several European countries such a Great Britain, France, Germany and Italy have an increase in immigration from Third World countries without any signs of a housing bubble suggesting that a different mechanism might be at work.

SK Peterson March 12, 2007 at 11:25 am

I do have a morsel of anecdotal evidence to support Dr. Thornton’s hypothesis – in Texas many of the homes have an exterior facade of brick. However, there aren’t many skilled bricklayers who are US citizens still working, so, if you go to new housing developments in Dallas-Fort Worth, Houston, or Austin-San Antonio, you’ll find most if not all of the bricklaying crews are Mexican. However, they might not all be illegal. In the mid-to-late 90′s most of these guys were legal immigrants brought in under the skilled labor provisions of US immigration law similar to how we import other skilled personnel like engineers. They usually only worked seasonally (although construcion season in Texas can be year-round)and then returned to Mexico for several months.

Illegals would likely enter the labor supply as housing construction enters its unsustainable boom phase. The skilled labor supply is limited, so construction managers seek ever-lower (un)skilled bricklayers to produce more and more homes as the boom progesses. When the boom “cracks up” construction will slow and the excess lower-skilled labor will be let go. Some will return to Mexico, and others will stay and move into other industries, while a few others will stay in the trade and gain more professional skills (to my eyes the bricklayers operate like other skilled trades with a master-journeyman-apprentice organization complete with a remarkable division of labor amongst the laying crews).

Nick Bradley March 12, 2007 at 2:10 pm

Colin,

European property prices have been rising faster than those in the United States. France and Spain have has annual median appreciation rates of over 15% in recent years and the UK reached 20% in 2004.

There is a global real estate bubble, evident in every industrialized nation except for Japan and Germany; Japan is a decade and a half ahead of everybody else in their real estate bubble deflation and germany avoided a bubble by requiring high down payments (around 40%).

Matt March 12, 2007 at 5:09 pm

Mr. Thornton,
I believe you hit the nail on the head, the booming housing industry definitely is attracting much of the Illegal labor, however you fail to mention the shoddy workmanship as a result.
Illegal immigrants on the whole are not craftsmen but work wherever labor is in short supply.

So we have housing that is way overpriced,
(thanks to abnormal low interest rates)
and workmanship that is subpar.

averros March 12, 2007 at 8:09 pm

…and of course the response to the perceived threat of illegal immigration by the Guvermint is to make life as miserable as possible to those who wish to immigrate legally – and earn their own living.

And because these people are wholly dependent on the whims of the immigration bureaucrats, they are forced to put up with interminable delays, incredible rudeness, and outrageously arbitrary demands of the federal office slime. If anyone wants to taste what full-blown socialism feels like without leaving US, I’d advise him to marry a foreighner.

Colin March 13, 2007 at 5:08 pm

Nick,

“There is a global real estate bubble, evident in every industrialized nation except for Japan and Germany; … germany avoided a bubble by requiring high down payments (around 40%).

Fine. But the fact that immigration to Germany is not substantially lower compared to other industrialized countries with a housing bubble disproves the theory, doesn’t it.

Lisa Casanova March 13, 2007 at 6:55 pm

Colin,
Big fences across the border, an expanded surveillance state, national ID cards, and other measures taken by the government to control illegal immigration are also very much “at variance with libertarian principles.”

Colin March 14, 2007 at 4:57 am

Lisa,

“Fences” around your house don’t enfringe on anybody’s property rights but in contrary protect your property. The same logic applies for the property owned by a group, e.g. the citizens of a nation.

On the other hand, an “expanded surveillance state, national ID cards, and other” coercive measures infringe upon your rights. Immigration is only used as justification for such measures.

The principle of libertarianism is freedom from aggression not freedom for aggressors. And individuals who enter the property of others (be it your home or your country) without the consent of the owners commit a violation of property rights. The situation doesn’t get better by the fact that the owners are forced at gunpoint by the IRS to also pay for the healthcare and education of the violators of your property rights and their families. That’s putting libertarian principles upside down.

Jesse March 14, 2007 at 9:44 am

Colin: “The same logic applies for the property owned by a group, e.g. the citizens of a nation.”

Loosely stated, the “rights” of a group are equivalent to the rights of the group’s members. (The group cannot exist or act independent of its members and thus has no independent rights, and at the same time the rights of its members are not inhibited by their membership in the group.)

However, it does not follow (a) that all land within the group’s “country” is owned by member of the group; or (b) that the majority members of the group have the right to regulate immigration into or out of the the land owned by the minority opposed to said immigration policies. Each member of the group has the right to limit access only to their own property, not to the property of other members of the group or to unowned land, regardless of whether that property or land falls within some arbitrary political boundary.

Ben March 14, 2007 at 12:51 pm

What you say makes sense, except for this:

“We need to return to the sound monetary policy of the gold standard and an America where education and assistance to the needy are in the hands of the private sector, not government bureaucrats.”

Do you really want your children educated by General Electric? or Nabisco providing your health care? The market will demand the cheapest possible solution with the greatest return on investment, which translates into cheap education and healthcare at high consumer cost.

Regarding the gold standard, you should read Friedman and Schwartz on how adhering to it prolonged and exacerbated the great depression. There’s nothing magical about the gold standard.

Colin March 14, 2007 at 1:50 pm

Jesse

“unowned land”?

I assume you are talking about the US. Where is unowned land in the US available for immigration?

I shall tell my Chinese, Indian and African friends to make it public in their countries that a few hundred millions may immigrate to the US to obtain unowned land.

Are you going to pay your share of the expenses for the additional healthcare, housing and educational costs?

And what when the new majority – uninfluenced by utopian ideas – decides that they need your property? You say that has never happened before. Well, the 10,000 years old history of human civilizations is an endless stream of such struggles. Ask the native population of the Americas what they think about unowned land and free immigration.

Contra March 14, 2007 at 2:25 pm

I’ve never understood libertarians obsession with open borders as a practical matter. In theory they are correct, but in fact the welfare state and cultural doctrines like multiculturalism virtually guarantee the marginalization of libertarian thought. I definitely would not have preferred a nation with closed borders, but given the social and political trends within the U.S., it is very likely a viable Libertarian party would currently exist in the place of the Democratic Party had the 1965 immigration laws not been passed.

I suppose this is the difference between liberals and conservatives (in the dictionary sense), like in Italy when everyone agreed that there should be univeral suffrage, but the conservatives worried that voters would think the treasury their pocketbook and destroy true Liberalism. Reforms that are impossible to undo, like suffrage or immigration, should be very carefully considered.

Kevin B. March 14, 2007 at 3:40 pm

Ben,

“Do you really want your children educated by General Electric? or Nabisco providing your health care? The market will demand the cheapest possible solution with the greatest return on investment, which translates into cheap education and healthcare at high consumer cost.”

Reread what you wrote. The market (that’s YOU!) will demand the cheapest (for YOU!!) possible solution with the greatest return (read: efficiency) on investment.

Kevin B. March 14, 2007 at 3:48 pm

Colin,

Fine. According to you, there is no unowned land.

Well, unless you own ALL the land defined as the United States, then you do not have the right to put a fence around it.

You and all the protectionists can put fences around YOUR property and even refuse services to whomever you want. Leave the rest of us alone, you pompous tyrants.

Colin March 14, 2007 at 5:17 pm

Kevin,

“unless you own ALL the land defined as the United States, then you do not have the right to put a fence around it.”

Great idea to allow everybody to immigrate into your bank account via the welfare state. Very noble, indeed.

“Leave the rest of us alone, you pompous tyrants.”

Accidentely, you also give the permission to withdraw from everybody else’s bank account without their consent. Isn’t that what tyrants do?

Kevin B. March 14, 2007 at 5:52 pm

Colin,

“Great idea to allow everybody to immigrate into your bank account via the welfare state. Very noble, indeed.”

Why don’t you focus your energy on eliminating the welfare state rather than eliminating the freedom to move?

Perhaps then you would be setting a better example for our new neighbors.

“you also give the permission to withdraw from everybody else’s bank account without their consent.”

Liar. I never did any such thing. Other people are doing the stealing while I tell them to stop. I am telling both groups, yours and theirs, to stop stealing.

“Tu ne cede malis, sed contra audentior ito.” Right?

Francisco Torres March 14, 2007 at 5:57 pm

I’ve never understood libertarians obsession with open borders as a practical matter.

There is no obsession nor is it a matter of pragmatism. Freedom to migrate stems from the self-ownership principle and the freedom of movement. It is a matter of principle.

Reforms that are impossible to undo, like suffrage or immigration, should be very carefully considered.

Actually, it is the immigration policies that encourage people to stay – by making it more difficult to enter, they make it imperative NOT to leave! Most immigrants would rather prefer to come and leave as they please, working in the States but keeping their families (and their paychecks) in their countries. Since the FedGov makes it difficult for a person to do this, most workers are more encouraged to stay and try to bring their families, even at the risk of being caught.

So, the problem is perpetuated thanks (once again…) to government intervention.

Colin March 15, 2007 at 2:13 pm

Kevin,

Thanks for the interesting discussion.

“Other people are doing the stealing while I tell them to stop.”

Yes, you probably do. Unfortunately, they don’t listen to you and continue as long as they are able to convince the population that it is necessary for social justice.

How comforting to claim the moral high ground and others are forced to pay the bill for realizing your ideals.

Libertarianism is a movement to reduce the coercive power of the state. To my knowledge, there is not a single country in the world where large scale multiethnicity hasn’t led to more coercion by the state. Affirmative actions, redistribution of wealth etc. in India, Europe, the USA, Malaysia and so on (see, Thomas Sowell: Affirmative action around the world: an empirical study – New Haven, Conn.: Yale Univ. Press, 2004)

Don’t you wonder why the rulers want more immigration?

There are several reasons but the main problem of any ruler is to control the population in order to prevent and reduce resistance against ever higher taxes. And the best strategy is known for thousands of years: Divide et impera!

In other words, rule by dividing the population. Formerly, alleged class differences served this purpose. Now, they are using ethnic differences.

“I am telling both groups, yours and theirs, to stop stealing.”

You are telling MY group? Obviously, tribialism comes natural to the human mind. I didn’t know that I belong to any group except to those people who are trying to understand reality. But it is good to know that you already have a ready-made classification available for me.

And I am curious to know what my and Hans Hoppe’s group is in your view because the latter wrote in “THE CASE FOR FREE TRADE AND RESTRICTED IMMIGRATION”:

“It is frequently maintained that free trade belongs to free immigration as protectionism does to restricted immigration…I will argue
that this thesis and its implicit claim are fundamentally mistaken. In particular, I will demonstrate that free trade and restricted
immigration are not only perfectly consistent but even mutually reinforcing policies. That is, it is not the advocates of free trade and restricted immigration who are wrong, but rather the proponents of free trade and free immigration.”

Contra March 15, 2007 at 3:06 pm

Francisco,

I don’t disagree with you, but if lots of immigrants simply wanted to work here and go home, there would be less complaint from citizens (although those who do not understand economics will always oppose foreigners and foreign trade). It is true that without the welfare state, only those who were successful or truly loved America would want to stay. My point is that this is not the case. I don’t have a problem with libertarians arguing on principle (in principle I agree), but when it comes to policy, it fails totally. It is putting the cart before the horse. The libertarian party remains more like a think tank than a viable political alternative because it always makes the perfect the enemy of the good.

Mark Chasse June 15, 2007 at 9:07 am

If you don’t think that immigration – illegal or other wise isn’t a population & environmental issue affecting your grand kids and mine then watch this video which give the facts concerning this issue:
http://video.google.com/videoplay?docid=5871651411393887069&q=illegal+immigration&total=3409&start=0&num=10&so=0&type=search&plindex=0

Thanks.

Alex MacMillan June 15, 2007 at 10:37 am

By fluke of birth, one person is born on a particular part of the globe. This person wants to move to another part of the globe. what is the moral justification for the use of violence to prevent this person’s movement?

Carlos Norberto Mugrabi April 17, 2008 at 3:56 pm

The illegal are citizens who give jobs to those who lack the necessary documentation for work. The legal status of the latter should be another topic.

Lewis W.O. Clark March 10, 2009 at 12:19 pm

With a planet so finite in it’s ability to sustain any life forms, which are all connected whether anyone wants to admit that fact, leaves us with only diminishing growing regions around the globe, the best being situated in the U.S. The demand that all immigration puts on our land’s ability to provide sustenance is eroding fast. Controlling population begins with personal responsibility and saying no to immigration and the likes of “octo-moms” everywhere. It’s not my personal responsibility to support your children, only to educate a reasonable number of them so they become good taxpaying stakeholders in America. It serves no purpose to our failing economy for any immigrants to send half their pay back to third world countries when America needs to sustain itself.

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