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March 10, 2008



So you admit that immigration contributed to the housing bubble in the first place, but your solution is more hair-of-the-dog that bit us?

Modern libertarianism has fallen a long way from it's roots in Hayek. It's become rigid and ideological rather than practical and empirical. In many respects it's mindset is eerily similar to that of the communists, in it's internationalism, disdain for religion and tradition, goal of the withering away of the state, and insistence on the application of it's theory without regard to any feedback as to what is resulting in the real world.

Mind you, many of the founders of modern libertarianism were themselves former communists. They carried over most of their outlook with them when they changed labels.


Another accurate shot from James: Tom and I are always fighting Nathan's disdain for religion and tradition, and he's constantly writing posts excoriating both.

I'm also curious about James' asseveration that Nathan "admit[s] that immigration contributed to the housing bubble in the first place." Whence came that conviction?

Nathan Smith

Oh, well, yes, immigration probably has helped push up housing prices. To the extent that housing prices rose because immigrants increase demand, housing prices are *not* a "bubble," since, by definition, a bubble is a price rise that is not based on fundamentals. How bubbles do emerge is somewhat mysterious, and I won't deny that immigration might have contributed indirectly, somehow, to the bubble. Who knows?

My point is, that, given where we are, with millions of people owing mortgages on houses that are now worth less than what they paid for him, thus creating a nasty hangover of bad debts that may be a drag on the economy for some time, it would be nice if we could change the fundamentals so that prices can keep their high levels without that level being a bubble. The homebuyer visa could help to *justify* the high price level that has emerged, and thus serve as a means to macroeconomic stabilization.

That said, I'll gladly admit that I would advocate a more rational and open immigration policy under almost any circumstances, both for moral reasons and as a boon to the economy. Giving life-shaping decisions to bureaucrats rather than private individuals almost always leads to absurd inefficiencies, and if you're shooting yourself in the foot it's never a bad time to stop. The precise design of the policy might vary with economic circumstances, but the basic direction is the same.

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