Do these projects generate jobs?

Peter Yates

The US government has had a simple program in place for many years which allows foreigners to obtain EB-5 visas if the applicant invests $1,000,000 in a business that generates 10 jobs over two years. ($500,000 if the business is in a high unemployment area) Not a bad policy and a source of many jobs, mostly from wealthy Chinese fleeing Hong Kong. No surprise this program started in 1990 right after Hong Kong's British lease ran out.

But recently, the hotel industry has figured out that it can finance new hotels cheaper by allowing foreigners looking for a visa to buy a share for returns of about 4%. This is less than what banks are charging and no major risk for the Chinese who are more motivated by the visa than the return. See more details in this
NY Times article.

Sounds like a win-win-win project right? The hotels get cheap financing, the Chinese get visas and the unemployment rate drops.

But I'm skeptical. It seems to me that the hotel industry is a zero-sum game. There are only so many jobs  in the hotel industry and the number depends on the amount of traveling people are doing, not the number of hotel rooms available. So while a new hotel will open in Seattle, providing a couple of hundred jobs, other nearby hotels must close or downsize, losing a similar number of jobs. The only additional temporary jobs are those generated while building the hotel.

So I think it's time to close this loophole and return the program to its intention: Adding to the total number of jobs in the United States.

What do you think?