• Immigration: what’s all the fuss? My thoughts… (part 2)

    In the first part, I looked philosophically at the debate. I will now continue by considering my own country, the UK, in terms of the EU and economics, amongst other things. This takes off from the last post which looked at how borders are arbitrary and the luck of birth place is not enough to warrant privilege.

    Britain and the EU and Economics

    Britain is, however, a country, with borders, and is sitting in a complex international situation. We cannot ignore what is in light of what will probably come to pass. Yet from the previous section, I am starting to see that it is hard to maintain an anti-immigration stance from a purely objective position without considering the finer details. Let us first turn to economics, briefly.

    Britain is part of the EU, and as such, is part of the agreement to have free movement of workers:

    Free movement of citizens of Member States, and of labour, within the EU was one of the founding principles set out in the Treaty of Rome (the others were free movement for goods, for capital and of services). This right is often described as the “free movement of workers” – a reference to the language used in Article 48 of the Treaty of Rome. But in fact the Treaty’s provisions always extended to a wider group – with any EU citizen having the right to establish a business or seek work (including on a self-employed basis) in another Member State without having first to obtain the approval of that Member State. Later regulations clarified the rules, particularly in respect of the social security and health care rights of those living in another Member State and extended the right to reside in another Member State to retirees and students…

    As explained above, freedom of movement was one of the basic freedoms enshrined in the 1957 Treaty of Rome. It was intended to make it easier for people of working age to take up employment or self-employment, including founding a business, in another Member State. It is sometimes forgotten within the UK, because we only have one natural land border with another Member State (the Republic of Ireland) and there has been free movement across that border for most of the time since it was created in 1922, that on the European mainland people may live closer to a centre of employment that is in another country than to the nearest such place in their own. Movement across borders to work is therefore a very valuable right and potentially of considerable economic benefit.

    In the thirty or so years after the establishment of the Community the law surrounding free movement was clarified and extended. Qualifications in certain professions were the subject of mutual recognition regulations so that, for example, architects and doctors could work in other Member States from those where they had qualified. The right of retirees and students to live in another Member State was established in 1990. The benefit of visa free travel for EU citizens within the EU was later added to by enabling free access to emergency healthcare on the same terms as residents in the country they are visiting.

    The Meaning of Free Movement

    “Free movement” means in practice that a citizen of an EU Member State can:

    – travel to another Member State using their passport or identity card without needing a visa or other permission to enter;

    – live and work in another Member State without the need for any work permit;

    – set up a new business or seek work self-employed in another Member State;

    – study in another Member State;

    – live in retirement in another Member State;

    – vote in local and European Parliament elections in another Member State where they live.

    EU law does not allow people to move to another Member State and immediately begin claiming social security, healthcare or other benefits that may be available to that country’s citizens as of right. In general – precise rules vary – those taking or seeking work in another Member State must either be in employment or be able to support themselves and in most cases will not be eligible to claim social security, or to access social housing, unless they have been in work for a year. Students and the retired must have “sufficient resources” so that they do not become a burden on the country they are living in and have comprehensive sickness insurance (whether in a public system or privately). In practice, healthcare provision varies but EU workers will at least be entitled to use the European Health Insurance Card to obtain emergency treatment on the same basis as the nationals of the Member State where they are living (which may be on less generous terms than in their country of origin).

    For most EU citizens these rules will be sufficient to enable them to live in another Member State. After five years of living in another Member State they will be eligible for permanent residence if they wish. For those with more complex circumstances, such as being the partner of a third country national or having committed a crime, the details of the 2004 free movement directive are of great importance. [source]

    I thought it would be useful to express that here. What we have is the EU acting almost as a larger state, with its own government, allowing for people to move and work in other regions. One could see this as analagous to people moving between counties (with their own regional councils) in the UK. There is a difference, however, between EU and non-EU migration.immigration_2280507b

    The idea, it would seem, is to use free market and libertarian principles to promote economic benefits. Libertarian politics revolves around the freedom of the individual, and the right to move where one wants is possibly the most fundamental aspect of this. This is why supposedly libertarian parties like UKIP are being incoherent when they seek to restrict immigration, since it is a fundamental libertarian principle.

    We start to see migration being a function of economics. But there are other things to consider: social impact and cohesion, pragmatics of infrastructure, retaining  a given country’s culture and identity and so on. Economically speaking, it can broadly be argued that immigration is beneficial to, for example, the UK. As The Economist points out:

    Concern about the economic impact of immigration has centred on two areas: the effect foreigners have on native workers’ wages and employment; and the extent to which immigrants, in particular those from countries within the European Union who are free to move around at will, take from a system to which they have contributed little. Research by Christian Dustmann of University College London and Tommaso Frattini of the University of Milan focuses on the second.

    By calculating European immigrants’ share of the cost of government spending and their contribution to government revenues, the scholars estimate that between 1995 and 2011 the migrants made a positive contribution of more than £4 billion ($6.4 billion) to Britain, compared with an overall negative contribution of £591 billion for native Britons. Between 2001 and 2011, the net fiscal contribution of recent arrivals from the eastern European countries that have joined the EU since 2004 has amounted to almost £5 billion. Even during the worst years of the financial crisis, in 2007-11, they made a net contribution of almost £2 billion to British public finances. Migrants from other European countries chipped in £8.6 billion.

    The authors point out that the cost of some government services—in particular “pure public goods” such as defence spending—remains the same no matter what the population, so the overall cost of providing them to immigrants is zero. Calculate the amount per person, and the price for Britons goes down as the number of immigrants rises, since the cost is shared between a larger number of individuals.

    Immigrants’ overall positive contribution is explained in part by the fact that they are less likely than natives to claim benefits or to live in social housing. Between 1998 and 2011 as many as 37% of natives were receiving some kind of state benefit or tax credit; European immigrants were nearly eight percentage points less likely to collect them. Those from Europe were also three percentage points less likely to live in social housing than Britons.

    On the first point mentioned above, we have movement of people affecting wages. Of course, this is supply and demand economics. This is the free market. So I do wonder why it is people like the Conservatives and UKIP, driven by free market principles, who seem most opposed to the idea of wages decreasing as a result of market forces. it seems that because these forces are foreign they are somehow invalidated. They appear to want to legislate against this! I, as a mixed economy fan, would agree with appropriate legislation to mitigate against such problems, and a living wage, which is lawfully enacted and held to, should work as a good starter. As the Guardian states:

    The research by two leading migration economists at University College also reveals that Britain is uniquely successful, even more than Germany, in attracting the most highly skilled and highly educated migrants in Europe.

    The study, the Fiscal Impact of Immigration to the UK, published in the Economic Journal, reveals that more than 60% of new migrants from western and southern Europe are now university graduates. The educational levels of east Europeans who come to Britain are also improving with 25% of recent arrivals having completed a degree compared with 24% of the UK-born workforce.

    Economically speaking, immigration appears to be beneficial, and thus I cannot see much of an argument from an economic perspective as being mounted effectively. Having said this, the statistics are far from entirely clear because it depends when you slice the cake and which migrants you look at. For  detailed analysis, look here at The Migration Observatory.

    However, this is all from the destination country’s point of view. Any benefit to, say, the UK from immigration is a loss, arguably, to the home country, whether in terms of brain drain or economics.

    As an old friend added to my last post:

    Again I think borders are an abstraction when considering this. Over 70% of Londoners were not born in London. The effect of brain drain on the UK regions must be considered as much as brain drain in other countries as London hoovers up the best and brightest.

    Of course, the regions must seek to mitigate this. It can still be an internal problem to the UK in the same way in which a brain drain can be problematic for regions of Europe. As Bulgarian Ivan Krastev states in the Guardian:

    Mass emigration of people mostly aged between 25 and 50 has dramatically hurt the Bulgarian economy and its political system. Businesses complain about a shortage of qualified labour. Bulgaria’s health system is deprived of well-trained nurses who can earn several times more by taking care of a family in London than working at a low-paid local hospital. Most of our best graduates do not apply to study at Bulgarian universities, thus depriving them of talent: after the Chinese, Bulgarians are now the second biggest foreign student community in Germany. And although most of those who leave plan to come back, completing that plan often proves more difficult. People who leave their home country early in their lives are less likely to have social networks that would lure them back home again. And if they do come back, they often find their welcome to be less enthusiastic than expected: out of sight is out of mind. In Bulgaria, returning home is still often associated with failure to make it big in the wider world.

    It depends from which angle you look at these things. If you are a libertarian free marketeer (as many Tories and UKIPpers purport to be) then this is simple free market economics. The market will arbitrate – don’t worry! From a civil liberties point of view, these people should have the right to move and work where they want. As Renee Luthra reports at Conversation.com:

    Since 2001, however, migration policy for non-EU immigrants has gradually become much more economically driven, increasingly selecting non-dependent migrants with high levels of education and English language ability. Meanwhile, the EU migrants that cause such fear and ire are more highly educated, on average, than the UK born population – despite the fact that they often end up toiling in jobs for which they are overqualified.

    According to the UK Census, the proportion of immigrants who arrived from 2006-2011 are much more skilled than the average native Briton. Only 10% report no qualifications, in contrast to 23% of those born in the UK; more than a third have a degree or above, as compared to only a quarter of UK born. This is due in part because immigrants tend to be younger, and younger people generally have more education worldwide. But some of it is because immigrants generally are better educated than those who remain at home.

    This also helps explain why Britons abroad are more skilled on average than Britons who remain at home. But it also true that immigrants to the UK are more skilled than those who remain behind – nearly universally so, across all origins. So to argue, as The Telegraph and The Economist have done, that educated Britons are currently being replaced by low skilled migrants is inaccurate and unhelpful in the immigration debate.

    To deal with this we need to make the EU a more balanced and fair place, redistributing wealth and support appropriately. That’s a difficult sell, especially to British euro-sceptics who would be happier for the UK to be benefiting from a brain rain across the EU.

    These things are very complex and one cannot expect the average voter, or perhaps any voter, to have a truly robust understanding of the issues. Without going into too much detail, I would like to put the economic argument, in its simple form, to bed in order to concentrate on other things.

    What is apparent is that there is an odd reversal of expectations. The more politically laissez-faire parties endorse more regulation and stricter control of immigration whilst the big government parties on the left appear to want less regulation of immigration, comparatively.

    I will leave it here for now, but will return in a following part to the ideas which many people taking an anti-immigration stance favour. The cultural, socially-cohesive, identity-laden ideas which affect the subject.


    Category: EconomicsPolitics


    Article by: Jonathan MS Pearce