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Migration and the economy Samuel Brittan: Smith Institute 16/03/05 Value Judgments I start from the basis that the free movement of people, like goods and capital, is desirable and the onus is on those who want to impose restrictions. Indeed from the point of view of personal freedom the ability to move to another country, permanently or temporarily, is much more important than the freedom to buy a foreign car or to raise finance overseas. The onus is on those who oppose immigration to make the case. Economic Effects It is also highly likely that voluntary migration will increase the prosperity of the sender countries and the host countries combined. For it means that labour, like capital, will move from sectors of low return to ones of higher return. Many migrant groups have made an important contribution to British life ranging from the businessmen who established concerns like Marks & Spencer and Montague Burton to the scientists, artists and philosophers who have enriched our cultural life. But the clearest, most recent winners are unskilled workers from poorer countries. The relative losers could be unskilled workers in the host countries who are suffering from more competition in the labour market. But although this tendency may eventually emerge, it takes a very long time. A recent Home Office study showed that immigrants were not as yet having this effect. Even if they did, the issue would be one of income distribution. Immigration is only one of many influences tending to reduce the value of unskilled labour relative to the skilled. If we want to avoid a deterioration of the relative position of the poor the issue is one of redistributing incomes, not to soak the rich, but to help the poor. This, to be fair, is a matter that has much preoccupied Gordon Brown’s Treasury and on which the Smith Institute ought to be able to give advice. The other big category of immigration is in menial jobs in the private sector, ranging from cleaners and kitchen hands to the fruit pickers and cockle gatherers of whom we have heard so much. If immigration was stopped it might be possible to recruit some British replacements at higher pay. But probably many activities, such as cheap labour farming, would disappear altogether and migrate to poorer countries, just as parts of manufacturing has done; and there would be fewer and more expensive hotels, restaurants and curry bars. Demographics It is sometimes alleged that the country is "full up", or less politely, is being "swamped" by immigrants. Who would believe, after recent heated debates, that emigration from the UK reached 360,000 in 2003, compared with a gross inflow of 510,000 - leaving net immigration of 150,000 or a quarter of a percent of the population? I know that people are suspicious of the official figures. Indeed I am myself. We all suspect that there has been quite a lot of illegal immigration. We will not know the true numbers until the shadow of criminality is removed. Migration restrictions, like drugs penalties, provide the incentive to a huge crime industry. Large pickings can be had by operators who take the risk of flouting the rules and bringing in either drugs or foreign workers. I am sure that popular fears are exaggerated. But we will never know for sure and be able the calm the public unless we have a period of free entry when it will be easier to count the numbers. Low fertility ratios indicate that the population of most western European countries is due to decline. More important: the dependency ratio of old people relative to the working population is set to soar. Immigrants tend to be young, active and of working age - a few gypsies to the contrary notwithstanding. Although in my view the main solution to the pension problem is to index the retirement age in line with longevity, immigration can also help by raising the number of working people relative to the older ones. The official policy of the British and many other governments of providing points for occupations where workers are "needed" is absurd. All workers are scarce if they are not paid enough and are in surplus supply if paid too much. The government attitude is an example of "economics without price". Of course we would have more than enough British nurses if we paid them more. Immigration does keep down the cost of baby minders to the middle class and nurses to the National Health Service. This is an argument for an already quite affluent sectional interest which I would not care to use, especially in this gathering. There is however a second best argument. The wisest course might be to pay market clearing wages to all these categories of people. For we will then now what the real cost is of different public services and could have a more rational debate on how far they should be expanded. But if so called political realities dictate that - having abandoned pay policies for most of the economy - the government sticks to centrally administered prices and wages for the public sector, then relying on immigrants is better than bad and inadequately staffed services. Not enough is said about emigration. Some highly qualified professionals are indeed leaving this country. But judging from the anecdotal evidence of what they say it is not because of the changing UK ethnic composition, but because of complaints about taxes and over regulation, which may be partially justified. If the "Daily Mail" wishes to attack the government it should shift from the anti-immigrant part of its agenda to the anti-government intervention part - admittedly requiring a slight move towards sophistication. But miracles occasionally happen. It is quite true that the ethnic composition of emigrants and immigrants differ a great deal. The emigrants are, to be blunt, white Anglo-Saxons. The immigrants are a highly diverse bunch but there is a large proportion from Africa and Asia and some from parts of eastern Europe whose native language is obviously not English. But then is no such thing as pure English people. We are all mongrels ranging from the Welsh - the nearest approximation to original inhabitants - right through to Anglo-Saxons (in fact Germans) Danes, French Huguenots, eastern European Jews and of course more recently immigrants from the Caribbean and Asian sub-continent. I have some sympathy for those who say that the cultural composition can change too quickly. But it does not survive the knowledge that gross immigration is less than 1 per cent of the total population. Asylum Seekers It is odd that the public debate centres on asylum seekers. Less than 50,000 or one tenth of all incomers applied for asylum in 2003 and only 28,000 were granted it. As Irwin Stelzer explains in his contribution to the new Smith volume (Perspectives on Migration) the dividing line between economic immigrants and refugees is a hazy one, as I can illustrate from my own family. My parents came to England before the Nazis came to power anywhere in Europe. Of course they hoped to do better financially, although they were not in the least money-minded by today’s standards. But they also felt quite rightly that there was no future for Jews in eastern Europe. Were they economic immigrants or refugees ahead of their time? The issue is further complicated by the foreign policy dimension. There are many countries with which western governments want to maintain friendly relations and which are put into the "safe" category, but to which very few people in this room would like to return if they had left for political reasons. Proposal My previous inclination had been simply to push for as liberal an immigration policy as the political situation would allow. But the very fact, so frequently cited by the anti immigrant lobby, that so few refugees were actually sent away - 13,000 in 2003 - has changed my mind. This is an enormous effort for little result, even from the point of view of those who do not like refugees. I now favour a five year experiment in free immigration of the kind that the United States and Britain had for a much longer period in the 19th century. During this experimental period there would be free entry with exclusions limited to those justified in the interests of crime prevention and fighting terrorism. There would also be no distinction between refugees and economic immigrants. At the end of this five years we could look again. This course may be regarded as politically impossible. But so were a great many other reforms ranging from ending the death penalty, to an independent Bank of England, in-work benefits for the working poor and many others. We should not stop trying.
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