By James A. Bowery and Randall J. Burns
Copyright 2003
The authors grant the right to copy freely without
modification.
ver. 20030901
This diagram shows low ratings of a State's long-term (general obligation) bonds* is largely explained by the presence of foreign-born population in that State -- particularly after present for more than a decade.
Long-term bond ratings are a major measure of the investor perception of the long-term economic health of a State -- similar to the way a credit rating reflects on the finances of an individual. A State with a good long-term bond rating has a markedly greater ability to invest in long-term infrastructure projects using money that is invested on a long-term basis.
Open border advocates at organizations like the Cato Institute have argued that open borders are essential to economic growth. This negative association between immigration and long-term bond ratings indicates that mass immigration is not creating long-term economic advantages in those States in which it is being most heavily used.
By looking at a wide range of other possible correlations with damage to a State's bond quality it becomes apparent that it takes at least 3 years and at most, 13 years for immigration to do substantial damage. The damage to bond ratings for 2003 is less explained by presence of immigrants in 2000 than by presence of immigrants in 1990.
The only stronger association with 2003 State long-term bond ratings, than presence of immigrants in 1990, is the per-capita presence of middle-income families - and their presence is a positive rather than negative influence.
If we divide the presence of immigrants in 2000 by that in 1990, we get a multiplier of foreign born over the decade of the 1990s. We see that immigration during the 1990s has preferentially targeted new areas in which the long-term bond ratings have yet to show the full negative effects of immigration.
This is plausibly an indication that, in the existing regulatory and legal environment, immigrants tend to gravitate to areas with healthy economies -- but that those economies tend to degrade as immigration reaches higher levels.
If our hypothesis is correct, the areas most targeted by immigration during the 1990s are likely to see their bond ratings decline by 2013. The States most vulnerable to this long-term bond degradation in 2013 appear to be North Carolina, Nevada, Tennessee and Minnesota.
Credits: James Bowery and Randall Burns performed this analysis. Bowery wrote the statistical software with support from the Burns family. Bowery had read Pat Buchanan's article "Who Killed California?" as indicating an association between poor bond ratings and so-called "diversity" and pointed this out to Burns. Burns then suggested the use of Bowery's statistical software to analyze publicly available bond ratings by State to show the predicted negative association.
It did, and decidedly so. It is our hope this simple analysis will spur more serious investigation into this area.
*The conversion from bond ratings to numeric index was accomplished by the translation of each of the coding systems of Moody's, Standard and Poor's and Fitch into a numeric index from 0 to 1, and then summing the numeric ratings for each State to yield that State's composite rating, from 0 to 3. Bond ratings were obtained from State of California's Treasurer as of July 21, 2003.