Sailer`s Next Big Idea: Immigration Brings “Diversity Deduction”—Not A “Diversity Dividend”

At least since

, I`ve been pounding the table in about the most
overlooked cause of the Crash of 2008: President Bush`s
2002-2004 crusade to

raise minority homeownership by 5.5 million households

through easy credit (for example, eliminating down payments)
in order to bribe minorities into becoming


Needless to say, our ruling class hasn`t
much paid attention to me. Republicans didn`t want to hear
about Bush messing up

didn`t want to think
about the role
played in the disaster.

The causal connection, though, is so
obvious that the establishment press is starting to echo my

For example, the long
New York Times

White House Philosophy Stoked Mortgage Bonfire
Jo Becker, Sheryl Gay Stolberg, and Stephen Labaton,
December 21, 2008 appears to have been drawn in part from my columns, such as my September 28, 2008 essay

Rove—Architect of the Minority Mortgage Meltdown

And on Sunday, the
Washington Post
pointed out in Karl Vick`s

Silver Lining of Subprime Slips Away in Calif. Suburb

[December 28, 2008] about a Central Valley town that blacks
flocked to from violent Oakland:

"And if Stockton [CA]
today is the
foreclosure capital of the nation—as several surveys show it
to be—it also showcases a little-known upside of the
`subprime crisis`: the elevation nationwide of hundreds of
thousands of

African Americans
into homeownership."

Vick goes on to quote a black activist:

"For every $1 of net worth in a household headed by a white person, a
household headed by a minority has 13 cents. Earlier this
decade it was 6 cents … It is all because of homeownership
that we`ve at least moved up to 13 cents."

Sadly, not for long.

Additionally, in Saturday`s
New York Times,
Peter S. Goodman and
Gretchen Morgenson profile
one of the

most egregious subprime lenders
, Washington Mutual
["WaMu"]. (By
Saying Yes, WaMu Built Empire on Shaky Loans
, December 27, 2008). Their anecdotes about
"stated income"

mortgage fraud
give a sense of

the ethnic angle:

"Yet even by WaMu`s relaxed standards, one mortgage
four years ago raised eyebrows. The borrower was claiming a
six-figure income and an unusual profession:

singer. Mr. Parsons could not verify the
singer`s income, so he had him photographed in front of his
home dressed in his mariachi outfit. The photo went into a
WaMu file. Approved. …

"On one loan application in 2005, a borrower
identified himself as a
and listed his monthly income at $12,000, Ms. Zaback
recalled. She

could not verify
his business license, so she took the
file to her boss, Mr. Parsons. He used the mariachi singer
as inspiration: a photo of the borrower`s truck emblazoned
with the name of his

landscaping business
went into the file. Approved."

In short, my Big Idea—that there`s been a

Minority Mortgage Meltdown
, precipitating a

Diversity Recession
—is now well on its way from
scurrilous, racist calumny to part of the Mainstream Media`s
[MSM] Conventional Wisdom [CW].

Isn`t it great that

Pulitzer Prizes

now be awarded to webzine writers?

So now let me suggest another even less
welcome Big Idea for the rest of the media to get around to
in the next several months:

The Crash is telling us that this
readjustment can no longer be papered over or postponed.

There are three kinds of financial
crashes—in order of severity:

  1. A
    liquidity crisis, in which lending drops because lenders worry that
    some people and institutions are too

    broke to repay

  2. A
    solvency crisis, in which lending drops because lenders

    many people and

    are too broke to repay.

  3. A
    wealth crisis, in which lending drops because

    nobody is as wealthy
    as they had thought they were.

Unfortunately, we appear to be at Level
Three. Much of the wealth we thought we had two years ago
didn`t really exist.

Why not?

One reason is that there was supposed to
be what we should call an immigration-driven
"Diversity Dividend".
But of course it turned out to be politically-correct hot

Notice that a large majority of
defaulted mortgage dollars are in just four states:

California, Nevada, Arizona, and Florida.
Each has a
long history of

massive Hispanic immigration.

Now if you assume, as you are constantly
assured, that every ethnic group is equal in productive
capacity per capita, a huge influx from south of the border
would have to make
land prices go up.

So, naturally, the

Housing Bubble
would be concentrated in the four
Hispanic-impacted states.

Essentially, the Bubble was a
speculative bet that Hispanicization of the population was
"good for the economy."

If you had been lectured for your entire
life on the virtues of multiculturalism, as

most young Wall Streeters have been
, that assumption
made perfect sense. Or, to be precise, its converse—that

diversity is not strength but weakness
—is nowadays
literally almost unthinkable to well-socialized younger

strength was its diversity, right? So,
of course, Californians could pay off all those half million dollar
zero down payment mortgages.

But in fact, as we`ve since seen, there
is no “Diversity
. The law of financial gravity wasn`t suspended
in California.

The real—and quite
frightening—question: is there a
"Diversity Deduction"?

There`s no doubt that, say, Mexicans tend
to be more economically productive in America
than in
, due to the superiority of American institutions
and American managers. But how much more productive?

The conventional wisdom in

is that the simple act of immigration makes immigrants
equally, if not more,
productive, than the average American. When you point out
that there`s no statistical evidence for this widespread
belief, then you are told that their children will no doubt
rise up to complete equality. When you point out that Latino
sociologists have

this question out to the

fourth and fifth generations
after immigration and
concluded that convergence just doesn`t eventuate—well,
typically the conversation ends.

From 1970 to 2007, the minority share of
the U.S. population doubled,

from 17 percent to 34 percent
. The

Census Bureau
predicts that minorities will exceed 50
percent by
a third of a century from now.

Hispanics and blacks tend to average
somewhere around two-thirds of the income of non-Hispanic
whites. That suggests that the increase in minority share of
the population over the last 37 years lowered the national
income by about five percent, compared to what it would have
been if the increase had been in proportion to the

racial balance in 1970.

However, the disparity in net worth
between whites and non-Asian minorities (NAMs) is much
greater than the income gap, running about an

order of magnitude

This suggests that the per capita
wealth shortfall caused by demographic change is more like
15 percent.

And, it`s only going to get
worse—unless immigration policy is changed.


With the Immigration Act of 1965, which
unleashed mass immigration again after a forty-year pause,
our ruling class in effect decided that the U.S. would not
evolve into a

, but instead into a

This doesn`t just mean intensified
racial division and social stratification—a

land of gated communities

It also means

systematically poorer economic performance

Sailer (
him) is

movie critic


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