The Long View 2007-06-10: Extreme Immigration Measures; Wishful Thinking on Real Estate
This collection of hollow reassurances from 2007 that there wasn’t a real estate bubble are quite a gem.
1. The Sky isn't falling. The real estate market always fluctuates....
[Barometric pressure fluctuates, too. That's one of the ways to tell that a hurricane is coming.]
2. Real estate is unique. There's a reason that homes and real estate aren't traded like commodities on the Chicago Mercantile...
[Mortgages are traded like sows' bellies.]
3. There is no bubble. The value of real estate isn't driven by speculation; it's driven by its utility.
[One of the uses of real estate is as a vehicle for speculation.]
4.Value is a complicated cocktail.
[The whole substance of price is the folly of the greater fool.]
5. There is always a baseline of demand.
[There is a baseline universal temperature of about 3-degrees Kelvin left over from the Big Bang. That is uncomfortably nippy.]
6. There is always a baseline of mortgage defaults.
[The persistence of sea level is no comfort if you are about to fly into a mountain.]
7. There is no risk.
[Surely the Earth endures forever. This is not true of the interest rate in an Adjustable Rate Mortgage.]
8. Real estate is a great way to build wealth.
Extreme Immigration Measures; Wishful Thinking on Real Estate
Open Borders is the American analogue to the European Constitution: both are measures that the political classes of the western and eastern halves of Western Civilization are determined to implement without regard to the views of their electorates. It's hard to believe that the immigration bill that was withdrawn in the US Senate last week might actually be revived this summer, but that's what its sponsors propose, and stupider things have been done in Congress; just lately. The key to the popular reaction to the bill can be found in this comment that the New York Times was acute enough to quote:
"Every state is now a border state," said Susan Tully, the national field director for the Federation for American Immigration Reform, which has long supported a crackdown on illegal immigration. The bill's opponents also objected to how it was handled, with the huge measure negotiated behind closed doors between White House and Senate lawmakers, without any hearings or other public input.
"Every state is now a border state": that is why the issue cannot be spun. The problem is not the ordinary difficulties that follow from any injection of strangers into a settled society. The arrival of Cuban emigres in the 1960s caused some tensions in New Jersey and Florida, for instance, but the problems were familiar and were dealt with in due course. Today, Americans know from their own experience that this is quite different from a situation in which the influx does not end and a new equilibrium is never achieved. Invocations of Ellis Island and accusations of xenophobia will not persuade them otherwise.
There is an argument that America was built with the kind of low-skill, low-wage labor that characterized the mass immigration of around 1900. There is something to that, just as there is something to the argument that large sections of the American economy were created with slave labor. No one has yet suggested that this precedent means that slavery needs to be a permanent part of the economic mix, but maybe that is just a matter of time.
Here is the penny that has yet to drop in the political debate about immigration: The issue is not illegal immigration; the issue is immigration.
* * *
These recent years are not the first time there has been wilfully lackadaisical enforcement of the southern border. In prior episodes, the causes were the same: borderland agribusiness used their political connections to get state and federal authorities to turn a blind eye. Neither is reimposition of effective border policing unprecedented. The Christian Science Monitor gives us this example:
Fifty-three years ago, when newly elected Dwight Eisenhower moved into the White House, America's southern frontier was as porous as a spaghetti sieve. As many as 3 million illegal migrants had walked and waded northward over a period of several years for jobs in California, Arizona, Texas, and points beyond....
During the 1950s, however, this "Good Old Boy" system changed under Eisenhower - if only for about 10 years.
In 1954, Ike appointed retired Gen. Joseph "Jumpin' Joe" Swing, a former West Point classmate and veteran of the 101st Airborne, as the new INS commissioner.
Influential politicians, including Sen. Lyndon B. Johnson (D) of Texas and Sen. Pat McCarran (D) of Nevada, favored open borders, and were dead set against strong border enforcement, Brownell said. But General Swing's close connections to the president shielded him - and the Border Patrol - from meddling by powerful political and corporate interests.
One of Swing's first decisive acts was to transfer certain entrenched immigration officials out of the border area to other regions of the country where their political connections with people such as Senator Johnson would have no effect.
Then on June 17, 1954, what was called "Operation Wetback" began. Because political resistance was lower in California and Arizona, the roundup of aliens began there. Some 750 agents swept northward through agricultural areas with a goal of 1,000 apprehensions a day. By the end of July, over 50,000 aliens were caught in the two states. Another 488,000, fearing arrest, had fled the country.
By mid-July, the crackdown extended northward into Utah, Nevada, and Idaho, and eastward to Texas.
By September, 80,000 had been taken into custody in Texas, and an estimated 500,000 to 700,000 illegals had left the Lone Star State voluntarily.
Unlike today, Mexicans caught in the roundup were not simply released at the border, where they could easily reenter the US. To discourage their return, Swing arranged for buses and trains to take many aliens deep within Mexico before being set free.
Tens of thousands more were put aboard two hired ships, the Emancipation and the Mercurio. The ships ferried the aliens from Port Isabel, Texas, to Vera Cruz, Mexico, more than 500 miles south.
This could not and probably should not be done today. The civil liberties environment has changed. More important, so have the demographics of much of the country, and not just the Southwest. There would be genuine uprisings if Homeland Security attempted something of this sort. There is no alternative to border security, plus attrition. Even so, we can expect IEDs to be used to hamper enforcement when it begins to be effective again.
* * *
Nothing is so terrifying as an unpersuasive reassurance, like this one that I recently encountered about the real-estate market. The author gave us eight reasons not to worry. I here repeat those reasons, with my own comments in brackets:
1. The Sky isn't falling. The real estate market always fluctuates....
[Barometric pressure fluctuates, too. That's one of the ways to tell that a hurricane is coming.]
2. Real estate is unique. There's a reason that homes and real estate aren't traded like commodities on the Chicago Mercantile...
[Mortgages are traded like sows' bellies.]
3. There is no bubble. The value of real estate isn't driven by speculation; it's driven by its utility.
[One of the uses of real estate is as a vehicle for speculation.]
4.Value is a complicated cocktail.
[The whole substance of price is the folly of the greater fool.]
5. There is always a baseline of demand.
[There is a baseline universal temperature of about 3-degrees Kelvin left over from the Big Bang. That is uncomfortably nippy.]
6. There is always a baseline of mortgage defaults.
[The persistence of sea level is no comfort if you are about to fly into a mountain.]
7. There is no risk.
[Surely the Earth endures forever. This is not true of the interest rate in an Adjustable Rate Mortgage.]
8. Real estate is a great way to build wealth.
[Was there ever an earthshaking bankruptcy that did not have a large real-estate component?]
Despite these misgivings, I have no reason to doubt that everything will be fine. Just don't try to reassure me.
Copyright © 2007 by John J. Reilly
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