- Create a new category of immigrants -- wealthy entrepreneurs/professionals -- who would receive visas and work-permits conditional on bringing in significant assets and placing them in US financial institutions. This would bring capital-starved US banks some new sources of funds on their balance sheets.
- These individuals would then be required to use that capital towards buying some of the excess supply of houses (the government can "require" them to buy only sub-prime properties if they buy properties) and/or creating new businesses on US soil (and thus jobs for American workers).
- These wealthy entrepreneurs should be allowed a 2 year initial stay after which time they would have to demonstrate that they are adding value. These visas would then be renewed for 10 years once its clear that they are contributing.
Obama could use his unique oratory skills to help educate people about the merits of this approach. He could even give local communities the authority to oversee the activities of the new immigrants and ensure that they do not "take away" American jobs. So much is possible if this idea could only be given a chance!
I understand all the political reasons that make this impossible, but just think how effective it could be....
6 comments:
Hi Shareen,
I'm rewriting my comment now that i'm not on my phone and can think more coherently and edit a little more easily.
There are certain underlying assumptions in your blogpost that you should address and possibly validate. One of the assumptions being, that there are lots and lots of such wealthy successful entrepreneurs who are unable to move to US and become citizens. I doubt that assumption. If you are already wealthy and successful outside of the US, what would be the motivation for such people to move to the US and be forced into buying properties (which are not subprime in themselves, just the creditworthiness of their current owners is subprime) which having falling/fallen market values, create jobs for Americans (only). Add to that the watchful and suspicious glare of the general community at large, the proposition does not look that great. Further, the sword hanging on the head that you may yet be thrown out if you are not successful at the end of a short 2 year period makes it a non-starter. If you defy the odds (stacked heavily against the entrepreneur) and are actually able to succeed, you are to be further reviewed after a period of 10 years (and then be thrown out cos you are not successful anymore) makes me wonder what you are smoking these days :))))) The kind of people you want to give access to the US to are not the people who want that access. Either they already have access to US or they don't need it.
HOWEVER, if you say that these new immigrant business owners would get a blanket tax holiday for that period, i'll take my words back and reconsider everything.
Look, i might be wrong about this, but most western countries already have a way for rich wealthy investors to get in with the only rider being that you need to invest and possibly restricted access to social security.
I think the problem is fundamentally economic and there are probably no 'easy' solutions. At the risk of preaching to the preacher, dont free economies go thru cyclic heating and cooling and perhaps now it needs to cool down so people can innovate their way out of the mess? What is at the core of the economic mess? Is it subprime mortgage? if yes, then financial prudence needs to be learnt from the east. If the core problem is trade deficit, then perhaps the overarching idea is to merge the manufacturing and consuming economies into a single political system. Globalization took birth in the west and now the parents are facing teenage angst. In time it will mature and it will prove be the good son. All we need to do is not to abandon the good idea, i think. Free markets have ensured that people in richer societies need to upskill to keep affording the lifestyle they so desire. It has also ensured that people in poorer countries need to compete and build better goods. Sure there is some collateral damage on either side but there the divider to U-Turn on the freeway is a fair way away or not even there. Maybe now i'm sliding off topic, so i'll stop.
I don't mean to disappoint you, but this is not an absolutely new idea. You CAN immigrate to the US through investment.
If you invest a certain amount of money here, let's say 500 thousand dollars, you get a green card. There are rules on how to invest, where to invest, etc, but the possibility is there. Little has been said about it, because it just didn't attract a crowd of wealthy well-intentioned good-hearted entrepreneurs, eager to invest their money and improve the national economy.
It is not popular for several reasons, which were well explained by the previous comment above. Wealthy groups around the world have plenty of options and opportunities to settle wherever they please and sometimes stay in other places besides US is more convenient for their lavish lifestyle (often that is less convenient for the community around them, though, once their activity and high income just make things more expensive for everybody else - easy to notice that in developing countries with high levels of poverty and inequality).
There are certainly other problems to address when it comes to the origins of this economic crisis and they have to do with a certain lifestyle encouraged in America, where credit is easily available and anybody can spend beyond their means. The problems have also to do with greed, which is not something exclusively made in USA. However these are topics for another discussion.
take care :)
Heya, Shareen!
As others have commented, this exists. If it didn't exist as an aspect of immigration law, it would still exist in another fashion - wealthy immigrants can afford the machinations that are necessary in order to secure work visas and even citizenship. They patriate assets to the US. Admittedly, these assets first funnel through a law firm, but in they come.
I honestly do not believe that banks are capital poor. I believe they are gun-shy, as are debtors. The essential problem is not that there is not enough money, it is that there is not enough confidence - in other words, observable risk is higher, so people are rationally avoiding risky behaviors (such as borrowing and lending).
One way to artificially reduce risk (and simultaneously free up market capital) would be to forgive debt. For instance, the government could forgive federal student loan debt, and assume private debt that is federally insured. That would free up resources from the cohort of people who are most likely to purchase and be intentional about doing so.
There already is a visa for such an investor category, and it is one of the few visa categories that have consistently been under utilized. Its the EB-5 category, and has an annual cap of 10,000 visas with qualifications varying between investments of $500,000 and $1 million. The visa is always underutilized, as the maximum number of visas in any given year was 1,300. I guess there aren't that many millionaires around, or if they have such a good life elsewhere, why come here?
Cool idea. Singapore has something similar with EntrePass to encourage entrepreneurs to move in to Singapore, and Malaysia has a neat My Second Home program that seems sort of relevant to what you're talking about...
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