TW: Friedman mashes up concepts: immigration, protectionism with a little housing thrown in. While I doubt pulling in 2 million folks to buy up depressed housing is viable or desirable it is indicative a path available to the U.S. One of the things that will keep the U.S. relatively strong amidst the worldwide economic carnage is open door policy with immigrants combined with rational trade policy.
Obama and the Dems are headed in the right path on immigration but have been sending out troubling signals on protectionism. The buy American clause of the original stimulus package received far more coverage overseas than here and sent a very bad signal. If there is one thing that could turn the Great Recession into a depression it is poor trade policy (will have more soon on the topic).
From Tom Friedman at Int'l Herald Tribune:
"All you need to do is grant visas to 2 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 - no Indian bank today has more than 2 percent nonperforming loans, because not paying your mortgage is considered shameful here. And we will start new companies to create our own jobs and jobs for more Americans."
"Dear America, please remember how you got to be the wealthiest country in history. It wasn't through protectionism, or state-owned banks or fearing free trade. No, the formula was very simple: Build this really flexible, really open economy, tolerate creative destruction so dead capital is quickly redeployed to better ideas and companies, pour into it the most diverse, smart and energetic immigrants from every corner of the world and then stir and repeat, stir and repeat, stir and repeat, stir and repeat."
While I think President Barack Obama has been doing his best to keep the worst protectionist impulses in Congress out of his stimulus plan, the U.S. Senate unfortunately voted on Feb. 6 to restrict banks and other financial institutions that receive taxpayer bailout money from hiring high-skilled immigrants on temporary work permits known as H-1B visas.
Bad signal. In an age when attracting the first-round intellectual draft choices from around the world is the most important competitive advantage that a knowledge economy can have, why would we add barriers against such brainpower - anywhere? That's called "Old Europe." That's spelled: S-T-U-P-I-D.
...If there is one thing we know for absolute certain, it's this: Protectionism did not cause the Great Depression, but it sure helped to make it "Great." From 1929 to 1934, world trade plunged by more than 60 percent - and we were all worse off.
We live in a technological age where every study shows that the more knowledge you have as a worker and the more knowledge workers you have as an economy, the faster your incomes will rise. Therefore, the centerpiece of our stimulus, the core driving principle, should be to stimulate everything that makes us smarter and attracts more smart people to our shores. That is the best way to create good jobs."
http://www.iht.com/articles/2009/02/11/opinion/edfriedman.php
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