"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..."
Every now and then, you run into something that is such a brilliant and absolutely good idea, which has such an infinitesimal chance of being implemented, that it makes you feel like crying.
Personally, I feel like our government is dead set on implementing only the stupidest possible ideas that have pretty much proven not to work. I've seen tons of ideas that at least ought to be considered before bailouts #5 and #6, considering how well 1-4 worked, but apparently haphazard bailouts are the Only Option.
Power and responsibility are divorced in our political system. The quality "is supported by concentrated and active interest groups" is far more important to a bill's success than "benefits society as a whole".
This is an old problem. Democracy has always been non-rational.
Checks and balances help, but I don't think they are a cure-all. Mancur Olson's observations about democracy's bias in favor of laws that serve a concentrated interest but have diffuse costs is valid even with more robust checks.
It's obviously a hard problem and I don't have any good solutions. I am interested in Moldbug's Neocameralism and Friedman's Dynamic Geography at the moment.
The problem is that the subprime mortgages are just a symptom of the problem, which is the complexity of the economic system. You have written about this on overcomingbias as well! Even if such a band-aid solution were implemented, it would be like sitting around and waiting for the next economic shock to wipe the economy out.
Another huge flaw: balkanization. Bring in millions of indians and chinese in one shot and they will probably cluster and form their own communities. This doesn't usually work very well.
1 million skilled new americans (modulo an assimilation schedule)? Sounds good.
Giving a small chunk of america to 1 million indians and 1 million chinese? Not sure I like this idea.
People living next to other people they like to live next to is called freedom. Throughout the history of the United States, immigrants have had some tendency to settle near other immigrants who speak the same language or who have other commonalities. (My maternal grandmother's parents apparently came over from newly reunified Germany as part of a "colony" of a large part of one Bavarian town who moved to Colorado together. She was born in the United States, but her entire formal school was conducted in the German language.) But people in the United States live in one place or another for many reasons of convenience that tend to mix together people of different ethnic backgrounds. It is an unusual American who doesn't have ancestors from more than one country of origin, and each new local cluster of immigrants finds plenty of sons and daughters forming families with people who don't share the same ethnic heritage.
Moreover, the worry about monoethnic communities isn't really responsive to the fine submitted article, in which the proposal was to have immigration from multiple countries (three were named) dotted among all the places where there are houses in default.
People have the right to live where they want, it's true. I don't advocate changing this. Taking into account their probable choices and the social results of those choices is just good policy.
As for history, you should read up on it. We made concerted efforts to assimilate new immigrants. Assimilation happened because we pushed it.
We don't do this any more.
As for monoethnic communities, it's my understanding that the defaulted houses tend to be strongly clustered together. Combine this with the natural desire to cluster, and we get insular communities with strong foreign allegiances. I'm just not sure that that's a good thing.
Umm, America has been through that process ever since colonization. German and Irish Boroughs in NY, Cubans in Miami, Chinese in SanFran, Mexicans in the Southwest.
America will be fine, we're an immigrant nation. Sure, a large influx is a terrible idea, but to shut off immigrants is protectionism and hurts in the long run.
I don't recall advocating protectionism or shutting off immigration. I favor it, and I said so in my previous comment. I just think we need to actively manage it to avoid unpleasant side effects.
we have been losing jobs for the last several months, unemployment is higher than it has been in recent history, how will adding 2 million job seekers to the pot help things?
I rarely drive from San Francisco to San Jose, or along the coast from Los Angeles to San Diego, and think: what this place really needs is another two million people and higher housing prices.
Would it be such a bad thing for housing prices to take a dip? Even after this bust, the last thing San Francisco is experiencing is a shortage of well heeled people trying to buy houses.
Six months ago, I completely agreed with you. Now, I want housing to stay relatively constant, while my own earning power increases. This is the win-win situation that could/should be the outcome of a well-executed economic plan.
Every now and then, you run into something that is such a brilliant and absolutely good idea, which has such an infinitesimal chance of being implemented, that it makes you feel like crying.