IMMIGRATION AND EMIGRATION
- the economic costs and benefits
THE BACKGROUND
MORI has a long-running series which polls on a regular basis what issues most concern the British electorate. In 1997 immigration was listed by three per cent of the electorate, a great decline from the 1970’s but, in recent years, it has increased steadily and is now registering about 40 per cent and is now consistently the top issue, or next to top, followed by crime, defence and the NHS.
Many argue that the effects of membership of the EU and of immigration are the key issues of the day, and are different in nature from other political questions both because they underlie most other political matters and because they have fundamental and possibly irreversible effects.
Immigration is a factor, for example, in growing income inequality, crime, terrorism, apathy of the electorate, transport congestion, housing, poor wages, etc. as well as the distrust of government and parliament.
Britain’s EU membership also has substantial financial costs, especially for poorer people. Its main effect is, however, the degradation of democracy with most laws now being essentially transmitted from Brussels on long-term ‘work programmes’ without any democratic mandate and the electorate being disenfranchised.
There have been a number of partial and disconnected studies of various costs/benefits aspects of immigration but most political comment has been unreasoned and of a dogmatic nature. It, therefore, seems necessary for proper costs/benefits studies to be attempted on the immigration issue so parliamentary and public debate and government action can be properly based. In the same way, the failure of mainstream politicians even to conduct proper costs/benefits’ analysis of EU membership simply makes most political debate on this issue both unreasoned and sterile.
PETER LILLEY
Peter Lilley’s splendid study ‘Too much of a good thing’, published by CPS in 2005, is a good political study of immigration. It addresses and comprehensively debunks most of the most extreme pro-immigration arguments in a rational way and puts a reasoned case for some immigration. It concludes with excellent recommendations as to political action which, with certain modifications, would be acceptable.
Nevertheless, because of its immediate political stance, it misses out several important areas. It is somewhat lacking in structure and in laying out the basic economic principles of migration economics. It accepts the EU effect on migration as a given. It does not treat emigration and population change. It does not address the short-term and long-term cultural costs of immigration. It was written before the Islamist bombings in London. It can also be said to be too defensive.
THE NEW AMERICANS
What is needed is a more comprehensive study, of the sort that the National Research Council produced in the USA in 1997 called The New Americans, without so much fiscal detail. Despite being produced ten years ago, this is cited daily in contemporary debate. This is not to say that debaters agree with all its conclusions or that it is comprehensive but what it does produce is intellectually coherent. This study was financed by the US Congress.
However, we are one stage away from this. We have to first set out exactly what are the areas the costs/benefits analysis should cover. These should be more wide-ranging than the NRC study as they should cover the effects on wealth, emigration and cultural costs – areas not studied in depth by the NRC.
The purpose of this paper is to do precisely that – to list and make brief analysis of the main heads to consider – and also to set them in relief by considering at each stage the costs/benefits of emigration to the remaining British people.
EMIGRATION
This is no small matter. If there is one issue which is likely to grow in importance in 10/20 years’ time it will be emigration. At present this does not register on the political map. All the factors are now present for this to become a big issue. Emigration specialists report a big rise in enquiries on emigration in recent times. Net emigration of British citizens was running at an average of 40,000 per annum between 1993 and 2001, but has increased to over 100,000 per annum in 2004-6. Moreover those who are emigrating are not the underclass, which is kept out of the recipient countries by their visa requirements, nor is it pensioners as immigrants are generally not accepted for settlement over 45, but the young, skilled professionals and tradesmen.
In short, what is required is a study which forms the foundations of population policy as a whole in its economic, cultural and political aspects.
THE OUTLINE
In order to carry out such a study it is necessary to consider the effects of migration under various heads.
ECONOMIC EFFECTS
The first head is to consider the basic economic effects of immigration. In this context, the first analysis is the effects on income. Economic theory shows that immigration makes a tiny addition to the overall national income of natives but there are severe distribution effects away from competing labour.
Closely connected and more important is the effects on capital and wealth. This problem can be summed up in two questions – how does the immigrant accumulate the pre-existing capital and wealth which the native population has accumulated over generations and centuries? How is wealth dilution of natives to be avoided?
FISCAL EFFECTS
Then, one can introduce fiscal costs and benefits. One can recall Milton Friedman’s remark, ‘It’s just obvious you can’t have free immigration and a welfare state.”’
As put by Robert Rector of the Heritage Institute, when discussing the US situation, ‘The grant of citizenship is a transfer of political power. Access to the US ballot box also provides access to the US taxpayers’ bank account. This is particularly problematic with regard to low skill immigrants.’
Professor Borjas, the highly esteemed economist, stated in his blog in June 2007:
"There has been a lot of fake fog thrown into the question of whether immigrants pay their way in the welfare state. It’s time for some sanity in this matter as well. The welfare state is specifically designed to transfer resources from higher-income to lower-income persons. Immigrants fall disproportionately into the bottom half of the income distribution. It is downright ridiculous to claim that low-skill immigrants somehow end up being net contributors into the public treasury."
To the basic economic costs and benefits one must, therefore, add the costs and benefits in the fiscal sphere. These will vary from country to country but, typically, include the effects of tax, welfare and publicly funded health and education. As Borjas says, fiscal costs must be an addition to economic costs.
As the effects of state welfare and tax are designed to support the least well off in society as well, in some cases, to positively redistribute income, the differential effects of these activities on migrants and natives produce different costs and benefits. It is, therefore, necessary to analyse the difference between immigrants and natives as regards skills, age, acquisition of capital, etc.
The distribution of immigrants among age groups almost certainly produces the one undoubted benefit of immigration, the host country’s receipt of nurtured adults whose bringing up costs are borne by the sending country. However, this must be carefully analysed since the age structure of migrants over time resembles natives and the boost should be carefully quantified as a short-term advantage only.
THE ENVIRONMENT
Another area to consider is the environment. That is not precisely the old argument of the benefits of a larger population in reducing costs and widening markets versus the argument about the costs of congestion. It goes beyond this, recognizing that the environment is fundamentally limited and no man-made expenditure can make up for its limited nature.
OTHER COSTS
Another cost of immigration is foreign remittances which are, of course, a transfer of purchasing power from the host country.
Finally, the transitional costs of immigration are usually grossly underestimated. Migrants simply do not get off a plane and start work at average native wages the next day. There is a costly settling-in process which can last for years.
CULTURAL COSTS
Up to this point, the arguments have considered migrants who are indistinguishable in cultural background from natives.
Where migrants are culturally different from natives there are both short-term and long-term national identity costs.
Short-term costs include health problems such as TB, AIDS, diabetes, etc. More important are difference in skills, lack of language skills, attitudes to public order, etc. These costs are not only the quantifiable costs, such as the costs of the Race Relations Board, diversity advisers, special school costs, etc., but also hidden costs, such as the effects of poor language skills in devaluing the education on offer to natives.
Long-term national identity costs have been thrown into sharp relief by the threat of Islamist terrorism. Once again, there are quantifiable costs, such as the doubling of security service spending, prison costs, court costs as well as the hidden costs imposed on natives, such as airport queuing. More important long-term costs which are hard to quantify are the increasing social fractures, unwillingness to contribute to social benefits which are perceived to be given to hostile outsiders, long-term attachment by migrants to the sending countries, etc., evidence of long-term non-assimilation and segregation.
EMIGRATION
When considering the costs and benefits of immigration it is also useful to reflect on the costs and benefits of emigration to natives in the sending countries, here considering the UK as a sending country. In fact, pro-immigration enthusiasts in the government and other political parties show no desire to keep British people in Britain which would be the logical conclusion of their arguments that an extra supply of labour by immigrants increases GDP, wages, contributions to the Treasury, etc. Most pro-immigration arguments imply that emigration also must be harmful to the sending country but, in practise, there has been no government or parliamentary interest in the costs/benefits of emigration at all.
The cost/benefit effect of the increase in emigration of native Britons depends, like the increase in immigration, both on basic economic analysis as well as the costs/benefits in the fiscal sphere.
The National Identity costs/benefits of emigration are not usually material in themselves but are important in that the population is gradually changing under the impact of emigration and immigration. This is changing British society from one which is monocultural to one which is multicultural. Parts of Britain are getting into a position where there are few natives for immigrants to integrate with at all. The analysis of the effects of emigration is particularly important in Britain because of its relatively high and growing rates compared with countries such as the USA which means that the composition of the population of Britain is changing faster than the USA. It also raises the question of whether there may be an accelerating trend. Is it not time to consider incentives to keep young natives in Britain?
FUTURUS/21 September 2007
MORI has a long-running series which polls on a regular basis what issues most concern the British electorate. In 1997 immigration was listed by three per cent of the electorate, a great decline from the 1970’s but, in recent years, it has increased steadily and is now registering about 40 per cent and is now consistently the top issue, or next to top, followed by crime, defence and the NHS.
Many argue that the effects of membership of the EU and of immigration are the key issues of the day, and are different in nature from other political questions both because they underlie most other political matters and because they have fundamental and possibly irreversible effects.
Immigration is a factor, for example, in growing income inequality, crime, terrorism, apathy of the electorate, transport congestion, housing, poor wages, etc. as well as the distrust of government and parliament.
Britain’s EU membership also has substantial financial costs, especially for poorer people. Its main effect is, however, the degradation of democracy with most laws now being essentially transmitted from Brussels on long-term ‘work programmes’ without any democratic mandate and the electorate being disenfranchised.
There have been a number of partial and disconnected studies of various costs/benefits aspects of immigration but most political comment has been unreasoned and of a dogmatic nature. It, therefore, seems necessary for proper costs/benefits studies to be attempted on the immigration issue so parliamentary and public debate and government action can be properly based. In the same way, the failure of mainstream politicians even to conduct proper costs/benefits’ analysis of EU membership simply makes most political debate on this issue both unreasoned and sterile.
PETER LILLEY
Peter Lilley’s splendid study ‘Too much of a good thing’, published by CPS in 2005, is a good political study of immigration. It addresses and comprehensively debunks most of the most extreme pro-immigration arguments in a rational way and puts a reasoned case for some immigration. It concludes with excellent recommendations as to political action which, with certain modifications, would be acceptable.
Nevertheless, because of its immediate political stance, it misses out several important areas. It is somewhat lacking in structure and in laying out the basic economic principles of migration economics. It accepts the EU effect on migration as a given. It does not treat emigration and population change. It does not address the short-term and long-term cultural costs of immigration. It was written before the Islamist bombings in London. It can also be said to be too defensive.
THE NEW AMERICANS
What is needed is a more comprehensive study, of the sort that the National Research Council produced in the USA in 1997 called The New Americans, without so much fiscal detail. Despite being produced ten years ago, this is cited daily in contemporary debate. This is not to say that debaters agree with all its conclusions or that it is comprehensive but what it does produce is intellectually coherent. This study was financed by the US Congress.
However, we are one stage away from this. We have to first set out exactly what are the areas the costs/benefits analysis should cover. These should be more wide-ranging than the NRC study as they should cover the effects on wealth, emigration and cultural costs – areas not studied in depth by the NRC.
The purpose of this paper is to do precisely that – to list and make brief analysis of the main heads to consider – and also to set them in relief by considering at each stage the costs/benefits of emigration to the remaining British people.
EMIGRATION
This is no small matter. If there is one issue which is likely to grow in importance in 10/20 years’ time it will be emigration. At present this does not register on the political map. All the factors are now present for this to become a big issue. Emigration specialists report a big rise in enquiries on emigration in recent times. Net emigration of British citizens was running at an average of 40,000 per annum between 1993 and 2001, but has increased to over 100,000 per annum in 2004-6. Moreover those who are emigrating are not the underclass, which is kept out of the recipient countries by their visa requirements, nor is it pensioners as immigrants are generally not accepted for settlement over 45, but the young, skilled professionals and tradesmen.
In short, what is required is a study which forms the foundations of population policy as a whole in its economic, cultural and political aspects.
THE OUTLINE
In order to carry out such a study it is necessary to consider the effects of migration under various heads.
ECONOMIC EFFECTS
The first head is to consider the basic economic effects of immigration. In this context, the first analysis is the effects on income. Economic theory shows that immigration makes a tiny addition to the overall national income of natives but there are severe distribution effects away from competing labour.
Closely connected and more important is the effects on capital and wealth. This problem can be summed up in two questions – how does the immigrant accumulate the pre-existing capital and wealth which the native population has accumulated over generations and centuries? How is wealth dilution of natives to be avoided?
FISCAL EFFECTS
Then, one can introduce fiscal costs and benefits. One can recall Milton Friedman’s remark, ‘It’s just obvious you can’t have free immigration and a welfare state.”’
As put by Robert Rector of the Heritage Institute, when discussing the US situation, ‘The grant of citizenship is a transfer of political power. Access to the US ballot box also provides access to the US taxpayers’ bank account. This is particularly problematic with regard to low skill immigrants.’
Professor Borjas, the highly esteemed economist, stated in his blog in June 2007:
"There has been a lot of fake fog thrown into the question of whether immigrants pay their way in the welfare state. It’s time for some sanity in this matter as well. The welfare state is specifically designed to transfer resources from higher-income to lower-income persons. Immigrants fall disproportionately into the bottom half of the income distribution. It is downright ridiculous to claim that low-skill immigrants somehow end up being net contributors into the public treasury."
To the basic economic costs and benefits one must, therefore, add the costs and benefits in the fiscal sphere. These will vary from country to country but, typically, include the effects of tax, welfare and publicly funded health and education. As Borjas says, fiscal costs must be an addition to economic costs.
As the effects of state welfare and tax are designed to support the least well off in society as well, in some cases, to positively redistribute income, the differential effects of these activities on migrants and natives produce different costs and benefits. It is, therefore, necessary to analyse the difference between immigrants and natives as regards skills, age, acquisition of capital, etc.
The distribution of immigrants among age groups almost certainly produces the one undoubted benefit of immigration, the host country’s receipt of nurtured adults whose bringing up costs are borne by the sending country. However, this must be carefully analysed since the age structure of migrants over time resembles natives and the boost should be carefully quantified as a short-term advantage only.
THE ENVIRONMENT
Another area to consider is the environment. That is not precisely the old argument of the benefits of a larger population in reducing costs and widening markets versus the argument about the costs of congestion. It goes beyond this, recognizing that the environment is fundamentally limited and no man-made expenditure can make up for its limited nature.
OTHER COSTS
Another cost of immigration is foreign remittances which are, of course, a transfer of purchasing power from the host country.
Finally, the transitional costs of immigration are usually grossly underestimated. Migrants simply do not get off a plane and start work at average native wages the next day. There is a costly settling-in process which can last for years.
CULTURAL COSTS
Up to this point, the arguments have considered migrants who are indistinguishable in cultural background from natives.
Where migrants are culturally different from natives there are both short-term and long-term national identity costs.
Short-term costs include health problems such as TB, AIDS, diabetes, etc. More important are difference in skills, lack of language skills, attitudes to public order, etc. These costs are not only the quantifiable costs, such as the costs of the Race Relations Board, diversity advisers, special school costs, etc., but also hidden costs, such as the effects of poor language skills in devaluing the education on offer to natives.
Long-term national identity costs have been thrown into sharp relief by the threat of Islamist terrorism. Once again, there are quantifiable costs, such as the doubling of security service spending, prison costs, court costs as well as the hidden costs imposed on natives, such as airport queuing. More important long-term costs which are hard to quantify are the increasing social fractures, unwillingness to contribute to social benefits which are perceived to be given to hostile outsiders, long-term attachment by migrants to the sending countries, etc., evidence of long-term non-assimilation and segregation.
EMIGRATION
When considering the costs and benefits of immigration it is also useful to reflect on the costs and benefits of emigration to natives in the sending countries, here considering the UK as a sending country. In fact, pro-immigration enthusiasts in the government and other political parties show no desire to keep British people in Britain which would be the logical conclusion of their arguments that an extra supply of labour by immigrants increases GDP, wages, contributions to the Treasury, etc. Most pro-immigration arguments imply that emigration also must be harmful to the sending country but, in practise, there has been no government or parliamentary interest in the costs/benefits of emigration at all.
The cost/benefit effect of the increase in emigration of native Britons depends, like the increase in immigration, both on basic economic analysis as well as the costs/benefits in the fiscal sphere.
The National Identity costs/benefits of emigration are not usually material in themselves but are important in that the population is gradually changing under the impact of emigration and immigration. This is changing British society from one which is monocultural to one which is multicultural. Parts of Britain are getting into a position where there are few natives for immigrants to integrate with at all. The analysis of the effects of emigration is particularly important in Britain because of its relatively high and growing rates compared with countries such as the USA which means that the composition of the population of Britain is changing faster than the USA. It also raises the question of whether there may be an accelerating trend. Is it not time to consider incentives to keep young natives in Britain?
FUTURUS/21 September 2007