patrick.net

All I can say is WAAAA, WAAAAAAA.

I agree that the Fed should stop, not pause, ...
... blowing bubbles!

SFWoman,

Given that Joe spent a part of his life trying to help immigrant Chinese and married the daughter of immigrants, I don't think he belongs that xenophobic group. Sadly, American history, esp. 1920s to 50s, was full of xenophobia and fear of the "wrong" kind of immigrants, whether Italian anarchists, Europeans Socialists, or Mexican day laborers.

SFWoman,

Given that Joe spent a part of his life trying to help immigrant Chinese and married the daughter of immigrants, I don’t think he belongs that xenophobic group. Sadly, American history, esp. 1920s to 50s, was full of xenophobia and fear of the “wrong” kind of immigrants, whether Italian anarchists, Europeans Communists, or Mexican day laborers.

The US currently allows only 25,000 Mexican nationals to immigrate legally to the US per year. This number is ridiculously small given our proximity to Mexico, our seemingly insatiable demand for unskilled labor and Mexico’s surplus of unskilled labor. If the number were more realistic, then we might have some hope of actually processing people through the normal system, collecting taxes (and social security) from them, and assuring that they are not abused or mistreated by black market employers, instead of creating an entire class of people who are unable to work within the system.

Glen,

I can buy this argument up to a point --particularly the point about immigrants with legal status being much more beneficial to ordinary working American citizens. Legal immigrants pay taxes, SS, etc. Legal immigrants cannot be so easily abused, intimidated, underpaid or discarded and have recourse to the law. This is obviously good for you and me. This is, of course, precisely why corporate Amerika does not want more legal immigration. Above all else, they want to maintain the status quo. Failing that, they'll settle for a liberal guest worker program (like that being debated right now) which still keeps low-skill immigrants in a quasi-legal limbo, although they will have to withhold taxes & SS.

Where I take issue with you is the part about "our seemingly insatiable demand for unskilled labor". I have to wonder exactly why there is now so much demand for low-pay/unskilled jobs vs. 50 years ago? And why these jobs cannot be filled by Americans who managed to fill them in the past and probably would fill them again today (for a living wage)? Could it be that a giant pool of dirt-poor unskilled labor has in effect created it's own demand and displaced higher skilled labor?

Let me pose another question: How is it that low-immigration countries (Aus, NZ, most of Europe, Japan, etc.) with far more restrictive policies manage to grow food, build housing, staff hotels & restaurants and maintain gardens/lawns? Could it be that they AUTOMATE a lot more of these functions (as in mechanical harvesting machines, factory-produced pre-fab housing, etc.)? Could it be that many of the unskilled low-pay jobs that cannot be automated are transformed into skilled higher-paying jobs? Just a thought.

The solution to Mexicans unable to live comfortably in Mexico is not for them to break the law of the United States.

Has it occurred to you that maybe it is silly to have a law prohibiting someone from working as a nanny or a gardener in the US? Are these jobs really off limits to poor Americans? Or do poor Americans just decide that such work is "beneath" them? Do you really think the average homeowner would pay union scale wages and benefits to have their yardwork done by a poor American if all the illegal immigrants were suddenly deported? I doubt it. We should allow for the *legal* hiring of immigrant workers in a well-regulated way.

Access to low cost labor contributes to the American quality of life. Not just because of the often-cited cheap lettuce and grapes. It also makes it possible for more professional couples to maintain two careers (since housework, yardwork and childcare can be outsourced)--thus higher productivity. The cost of a variety of household goods and services (and probably houses themselves) would inflate if immigration laws were more strictly enforced (as if house prices weren't high enough already).

And in spite of what you may think, the public benefits provided to immigrants are meager, at best. Most immigrants don't go to the hospital until they are on death's door. A well-functioning system of expanded legal immigration would do a lot to rectify this problem.

Could it be that many of the unskilled low-pay jobs that cannot be automated are transformed into skilled higher-paying jobs? Just a thought.

Excellent point.

Marcie sounds like she wants a free market, but she wants someone to protect the value of her investment. Maybe she bought during the bubble?

She wants her Greenspan Put back.

From The end of the article: Would smashed housing markets be preferable to higher prices?

Umm... Yes?

Why do you care more about the plight of poor Americans than that of poor people in other countries?

Hmmm... let's see... maybe because I'm an AMERICAN? Maybe because as a U.S. citizen I cannot (and should not) have any say in how another country manages its affairs or citizens, while I have an obligation (and duty) to care about my own?

tannenbaum Says:

All I can say is WAAAA, WAAAAAAA.

Marcie Geffner's inane "commentary" sounds like it was written for a high school Social Studies report. More to the point, her arguments hold no water. She finishes her book report with the dramatic rhetorical question, "Would smashed housing markets be preferable to higher prices?"

Actually Marcie, the answer is resoundingly yes. Inflation out of control will wreak more havoc than you can imagine through your little brain. "Smashed" housing markets would merely be bringing prices back to historical norms.

Boy, boy, boy,

Only the oppressed complain about poor immigrants taking their jobs, competing for their jobs, blah blah blah. But you forget that many sons of the poor immigrants go to join the army and die for you.

If you are afraid of dealing with working-class immigrants, because they are unclean or dangerous or illiterate, you will NEVER make it to the top. At best, you will become a rich upper middle, but still wondering why with so much money you still have no power in this society.

On a late night dinner run in Chinatown, I walked past by two black drug dealers. I actually made a point to talk to them. They were just OK fellows.

The only people I've had real problems with, barring criminals, are the middle and upper-middle class A(sshole) students.

At grad school, a white guy (taller and bigger than I) from Chicago suburb assaulted me, under the pretense of play, because he was jealous of my success and easy way of attracting women. I counter-attacked, floored him on the ground, and nearly broke his ankle.

There were other incidents. All problems came from freaking people from middle class background feeling insecure and trying to act out. In all cases, I smashed them down.

I've never found poor working-class people to be a threat, nor folks from established families.

And in spite of what you may think, the public benefits provided to immigrants are meager, at best.

You could not be more wrong about this. Consider a day laborer, landscaper, or factory worker who earns $25,000 per year, and pays approximatley 25% of his income in state, local, and FICA taxes (we won't count the EIC.), or $6,250. Let's be incredibly generous and assume that he pays half as much again in sales and use taxes, taxes for phone service, etc. This person is generating a total of @$9,500 in tax revenue for the state and federal governments.

He has three kids. LAUSD spends about $11,000 per pupil per year. The state is already spending more than it receives to educate just ONE of his kids.

Let's assume that our alien never makes a trip to the emergency room or gets an infected tooth; he never sets foot inside a hospital or sees a doctor. His kids are required to get checkups and vaccinations for school, and these things are paid for by the state. His wife got prenatal care, again at the state's expense.

Then there's the cost of public transportation, additional police and fire protection, etc., etc. -- the illegals are unquestionably a big drain on public finances.

We can absorb some illegals, and I hope that we continue to do so, sinc they are good people and we are a rich country. But it's got to stop. They really will bankrupt us if they all come here.

N.F.,

It was like this in this country 100 years ago. Now you know that it is not your government but some other rich men's. Your government will not let this happen.

Industrialization does have its tolls. You can't have everything.

HARM said:
Let me pose another question: How is it that low-immigration countries (Aus, NZ, most of Europe, Japan, etc.) with far more restrictive policies manage to grow food, build housing, staff hotels & restaurants and maintain gardens/lawns? Could it be that they AUTOMATE a lot more of these functions (as in mechanical harvesting machines, factory-produced pre-fab housing, etc.)? Could it be that many of the unskilled low-pay jobs that cannot be automated are transformed into skilled higher-paying jobs? Just a thought.

According to the CIA factbook, the net migration rate is 3.18/1000 in the US, 3.63/1000 in New Zealand and 3.85/1000 in Australia. So NZ and Aus have *more* immigrants than the US. But they regulate the flow better than we do. As for Europe and Japan--declining populations, stagnant economies, unsustainable welfare states, etc...no thanks.

The big picture is that we need more immigrants (skilled and unskilled), not less. If we didn't need their labor, they wouldn't be coming here. People tend to migrate to the place where their labor is most highly valued. In order to have an efficient market, labor (like capital) should be mobile.

Let’s be incredibly generous and assume that he pays half as much again in sales and use taxes, taxes for phone service, etc. This person is generating a total of @$9,500 in tax revenue for the state and federal governments.

And illegal immigrants have figured out a way to avoid use-taxes? I'd be interested to know how. Then again, my mother in Ohio insists that Mexicans are issued special tax-exemption cards which they can show at 7-11 to avoid paying sales taxes on cigarettes and slim jims.

My biggest worry about immigration, echoing sentiments in some earlier posts, is that massive immigration will permanently alter the culture in this country. Not there is a splendid culture here: At grad school, my American co-advisor told me bluntly, "There is only money and movies in this country." But there is still the celebration of rugged individualism -- that almost borders barbaric -- which seems to be a cardinal virtue (and feature) of the Northern European races.

Many immigrants come from cultures that celebrate closeness and togetherness: India, Communist China, Latin countries, South America, etc.. My former Indian colleague -- I've since distanced myself from him after discovering him to be a blatant liar -- once commented that if I were in India they would break down my barrier of cold aloofness. I hope US won't turn into another Latin country.

And illegal immigrants have figured out a way to avoid use-taxes?

There are many "cash" businesses around.

This is why I use credit cards whenever possible, even if they may give incentives for paying cash.

Joe Schmoe said:
He has three kids. LAUSD spends about $11,000 per pupil per year. The state is already spending more than it receives to educate just ONE of his kids.

In this sense, I suppose all poor people with kids are a drain on society. But we don't generally deny education to poor kids. Maybe we should be exploring ways of paring down our ridiculously bloated government expenditures. $11,000 per pupil is unconscionable. But it is not the immigrants' fault that we engage in such largesse. I'm sure they would continue sending their kids to public school even if we spent 1/2 or 1/3 as much. The public school system is an inefficient, wasteful, monopolistic anachronism. But that is an off-topic subject for another day...

But there is still the celebration of rugged individualism

It is completely a pluto-in-leo thing.

Glen,

We already have a guest worker program for skilled workers, HB-1s have been around and been fully exploited by big companies. (And the ex-HB-1 complain of employer abuse even though they are legal and highly educated)

As for Europe and Japan, firstly, they're not that badly off. Secondly, how does the immigration situation affect those conditions you've cited?

It's really pretty simple: net cost of unskilled laborers > net benefit of unskilled foreign laborers. Just because much of the costs are hidden does not mean they're not there.

Randy,

Huh? I thought Joe added the use taxes to the mix.

So NZ and Aus have *more* immigrants than the US. But they regulate the flow better than we do.

It probably helps that they're both surrounded by water.

I am not worried that the illegals will change the culture of this country. Not at all. They all become Americanized. Our culture is like a virus that infects all who come here, there really is no cure. The first generation or two may retain some vestigal immunity from the homeland, but eventually everyone succumbs. And heck, our culture is already invading other nations. People in other nations are becoming more American with each passing day without ever setting foot on our shores.

The thing that worries me is the short-term econimic pain caused by the illegals.

Glen,

Any society has some poor people and for their sake and ours (so they don't rob me at gun point), society tries help them. That's no reason to add more poor people to this society.

If you don't like government, then you can move Somalia or Haiti, they're very light on governments, and I heard immigration is easy so long as you bribe the customs.

Joe,

The mass culture you referred to is indeed contagious and dangerous. But is it really the essence of Americanism? I thought the quintessential (and old) Americanism is the way of the WASP. No judgement here.

Has it occurred to you that maybe it is silly to have a law prohibiting someone from working as a nanny or a gardener in the US? Are these jobs really off limits to poor Americans? Or do poor Americans just decide that such work is “beneath” them? Do you really think the average homeowner would pay union scale wages and benefits to have their yardwork done by a poor American if all the illegal immigrants were suddenly deported? I doubt it. We should allow for the *legal* hiring of immigrant workers in a well-regulated way.

There's the old "Americans won't do the jobs that our Mexican slaves immigrants will do" argument again. Poppycock. Americans used to do such jobs, Europeans, Aussie, Japanese manage to do these jobs now, and so would Americans --if they paid a LIVING WAGE.

Access to low cost labor contributes to the American quality of life. Not just because of the often-cited cheap lettuce and grapes. It also makes it possible for more professional couples to maintain two careers (since housework, yardwork and childcare can be outsourced)–thus higher productivity. The cost of a variety of household goods and services (and probably houses themselves) would inflate if immigration laws were more strictly enforced (as if house prices weren’t high enough already).

The two-income trap in which most Americans now find themselves is nothing to celebrate. What's more, economics 101 tells us that neither the cost of goods nor labor is a constant. Both can and do adjust in response to changes in aggregate supply and demand. If low-skill illegal immigration were drastically curbed, we would see wages for those jobs begin to rise. We would also see much more automation in previously labor-intensive jobs, which itself creates more demand for high-skill occupations (robotics, automation, SW, manufacturing, etc.). A virtuous cycle --in contrast to the vicous cycle/race to the bottom we now have.

I did add use taxes to the mix.

Also, I will confess that I am nostalgic for the days when the US was whiter. I would much rather raise my kids in Iowa, whcih is probably 97% white, than in Los Angeles, which is mostly nonwhite. I am willing to raise them here, but that is becuase I have the means (I hope) to recreate a basically white, generic American environment. But the enviornment I create, while beneficial, will be artificial. I may take the kids to the monster truck rally, encourage them to join the Boy Scouts, and teach them to shoot, but these experiences are not the norm for most kids here. And I think that's sad.

Astrid,

I'm just pointing out that all use-taxes are irrelevant to the discussion. That is, unless one proposes eliminating all forms of income, payroll and property taxation and instead all taxes are derived from use-taxation. In such a regime then all tax-related arguments about illegals and gov't services would be rendered moot.

It is completely a pluto-in-leo thing.

Please explain in plain English.

Joe,

Part of being American is the American dream, which is supported by a large middle class. If the middle class gets decimated here, we may find that we as a society lost the American dream even as it continues elsewhere.

That is, unless one proposes eliminating all forms of income, payroll and property taxation and instead all taxes are derived from use-taxation.

That is a good idea. Difficult to implement though.

It is completely a pluto-in-leo thing.

Please explain in plain English.

It is a boomer thing.

GC,

That's funny, I have always thought that American culture was white trash culture. The John Kerrys of the world have often tried to portray themselves as our cultural arbitrers, but I think Jim Bob Jones, white trash dude from Wisconsin or West Virginia, is the true driving force.

And I think that is what makes American culture so powerful. We don't export Phillip Roth novels, old episodes of Masterpiece Theatre, or Andy Warhol paintings -- nope, we export rap music, the NBA, and Dallas and CSI. American culuture is the culture of the commons, and that is why it is so attractive to common people around the world.

To lighten things up:

I went to a showroom for the upcoming "faux brick" row houses in downtown Bellevue. The salesman quoted me $500/sqft. I was completely shocked. 3-4 years ago, the per square foot price in the same area was around $250. The RE prices in the greater Seattle area is becoming very crazy. I wonder if the BA flippers have migrated to our area.

Joe Schmoe says:

You could not be more wrong about this. Consider a day laborer, landscaper, or factory worker who earns $25,000 per year, and pays approximatley 25% of his income in state, local, and FICA taxes (we won’t count the EIC.), or $6,250. Let’s be incredibly generous and assume that he pays half as much again in sales and use taxes, taxes for phone service, etc. This person is generating a total of @$9,500 in tax revenue for the state and federal governments.

Thanks, Joe. Beat me to it.

Randy,

Huh? But even in a user tax only world (assuming that it can work relatively effectively), the unskilled migrant workers would pay less in taxes than they get out in usage of government services.

Glen and Peter P speaks as if though the American poor are permanently unable or unwilling to participate in the workforce. I think that's patently false. Most of the underemployed poor can work if they have the incentive to work (less welfare, more support for working poor, living wages).

Current rent is about $1-$1.5/sqft. At the $500/sqft RE price and $1.5/sqft rental price, the price/rent ratio is roughly 27.8. This is scary.

What is a good price/rent ratio at which one can enter the RE market?

tannebaum,

Thanks for the article. The last sentence captures it all.

The rates are still low. Economy is doing kind of OK. Real inflationary pressure s are still there. And even then, everyone is shouting from their roof top to stop the rate hikes. "We still need cheap money". And this is just the beginning.

Till now, the long term rates went up only because the Fed hiked the short term rates. Once Fed pauses/stops, we will see the long term rates remaining steady for a while. Then it all depends on, for how long the world remains washed in liquidity. China, Bank of Japan and foreign investors etc will determine the future of long term rates. I will use Gold prices as my clue to understand how much respect for US$ people have.

I think after the imminent Fed pause, it's going to be very interesting.

And thanks to astrid --didn't refresh before I saw your last posts. Tons of good points about labor supply & demand and the two-income trap.

Joe,

Another point I failed to mention--I am not sure it is fair to attribute the cost of education to the parents. Public education is an investment. Even if it does cost $11k/year for 12 years of compulsory public education (assuming the kid graduates), at least some (if not all) of this $132K investment will be recaptured over the kid's working life.

astrid,

Huh? But even in a user tax only world (assuming that it can work relatively effectively), the unskilled migrant workers would pay less in taxes than they get out in usage of government services.

If your goal is to create a pay-as-you-go system, then no system existent, past, or proposed will do that. There will always be those who get more than they pay in. Midwestern farmers in this utopian homogeneous land others speak of, from which I herald, receive immensely more in farm subsidies than they ever pay in taxes. I propose a pay-as-you-go system for them too. Let's see how that flies with all wise middle america.

My point is merely that use-tax is the only method of a fair taxation policy. That is, if you define fair as all taxes are elastic and discretionary--if you don't want to pay candy-bar tax, then don't buy candy bars. Illegals of any ilk would be irrelevant because everyone pays every tax on every consumption/use. The only worry would be tax-cheats, but we have those in this system, just ask any Bermuda-based hedge fund accounting manager.