It is an aphorism among both free market economists and many of the social democrat variety — into which latter camp “The Economist” surely now falls — that heavy immigration is economically beneficial. Yet when examined more closely, the benefits are suspect at best, and may well on balance prove to be negative.
There is no question that in both Britain and the United States, we enjoyed in the late 1990s a “destruction test” of free immigration policies, while Japan appears at first glance to present an awful counterexample of a society that restricts immigration, and has in the last decade enjoyed only minimal economic growth. Since September 2001, of course, immigration into the U.S. has slowed somewhat from peak levels, but anecdotal and other evidence indicates that in Britain, the flow remains at full volume.
The Economist, Aug. 9, led its British edition with a bellow of triumph for the extreme pro-immigration case, particularly in London: “Can you imagine the blandness of the place without them … the best thing for Britons to do about immigration is to embrace it.”
Work permits granted in Britain have increased from 30,000 per annum to 137,500 since the middle 1990s, and by 2001 net migration to Britain had increased to 172,000 per annum, with 120,000 bound for London and the south-east. According to the Economist, 67 percent of new immigrants to Britain come from high income countries — but of course, those statistics, and the totals given apply only to legal immigrants.
Illegal immigrants, in Britain as in the United States, are an increasing factor in the equation. As just one example Mhill Sokoli, convicted Tuesday in Belgium, was said to have smuggled more than 10,000 illegal immigrants from Albania into Britain in the last 2 years, and to have made close to $20 million by doing so. He was sentenced to a slap-on-the wrist eight years (nominally) in jail — it wasn’t Belgium, after all, that had been the recipient of his unwanted bounty!
Illegal immigration exists in an unholy synergy with abuse of the asylum system. Under the European Convention on Human Rights, to which Britain is now a signatory, anyone from a country with a reasonable fear of persecution can claim political asylum in Britain. This has resulted in a huge upsurge in asylum claims, justified and unjustified, many of them from countries nominally democratic but merely impoverished. Morally, ones heart goes out to the asylum claimers, but no country, certainly not one as small and over-crowded as Britain, can afford to take all the world’s problems on its shoulders, and the worst sufferers from Third World oppression are generally those who cannot afford to emigrate.
More dangerous even than unjustified asylum claims themselves is the inefficient handling of them by the over-stretched immigration authorities; too often, asylum claimants are allowed to “go to ground” in Britain for a period of years while their claim is considered.
The result, overall, has been a movement from a near equilibrium between immigration and emigration in the 1970s and 1980s to a position in which there is a steady and increasing flow of immigrants, mostly impoverished although with a relatively high proportion of Western Europeans fleeing penal EU tax levels to the more benign tax climate of Britain.
Culturally, you can either approve of this (as does the Economist — no, gentlemen, London was NOT impossibly bland in the days before heavy immigration) or disapprove of it, as does a huge majority of the British people when asked in an un-slanted poll. More interesting is the economic effect: are the economists right when they rhapsodize over the greater efficiencies that immigrants bring, or are there countervailing effects, missed by the simplistic linear brains of the economics profession, which reduce or eliminate the benefits?
There are clearly winners from high immigration. Start with left-of-center governments. Such immigration both increases the need for social services and increases the tax base with which to pay for them; it also produces a class of voters for whom the government that provides the benefits is seen as benign and helpful (which it may well be, by the standards of the governments the immigrants left.) The National Health Service, in particular, is notoriously popular among the immigrant community.
For these reasons, and because of the attraction of traditionalist right of center parties to anti-immigration zealots (which may, as in Belgium and France, close their door against them, thus splitting the rightist vote) high immigration is immensely beneficial to the left, in both Europe and the U.S. While center-right parties need to be as receptive as possible to immigrant members, if only to avoid offending the moderate vote, attempts to outbid the left in welcoming immigration are not only doomed to short term electoral failure, but may also constitute long term electoral suicide.
Real estate agents, also, are big winners from high immigration, particularly at the upper end of the scale. London house prices at the middle and upper end are now, because of market pressure from high income immigrants, approximately double the level at which their traditional local inhabitants can afford them. This has resulted in a flood of the English middle classes to the countryside, as they find employment, income and lifestyle compromises that do not involve expensive London real estate or impossible commutes on the notorious London suburban transport system. It has also been an enormous boon for estate agents — not only has each sale doubled in value, but there are more sales, because high income immigrants are more likely to move, either within London or back home. It is of course a situation that is highly unstable and likely to lead to a price collapse in the medium term.
A further winner, according to the Economist, has been the user of services, whose quality in Britain is alleged to have improved as immigrant labor has put pressure on the domestic variety. Here, I am not so sure; apart from the inevitable frictional costs of the immigrants learning to ply their trade in a new country, there would appear upon brief inspection to have been a leveling down rather than leveling up in quality, with immigrant labor happily accepting the shoddy local norm, albeit probably providing it for very many more hours per week than did their local predecessors.
This brings one on to the principal loser from immigration, the local labor force. At the top end, I have discussed in several past articles how the City of London, like accountancy and other complex service businesses, worked very much better on the basis of an informal “club” whose rules were enforced by the other club members, and by which fraud and malpractice were greatly reduced from a “law of the jungle” free market. High immigration in the financial services business, together with misguided legislation and regulation in the 1980s, broke up London’s financial club and have rendered the City of London a financial center that is neither distinctive, nor locally owned, nor in the long run likely to survive as a major international entrepot.
At the bottom of the job market, immigration’s effect is equally clear. Low-skilled local young people, particularly in Britain where the education system has been deteriorating for several decades, are especially threatened by an influx of low-skilled, poorly educated foreigners, from countries with wage levels far below those of comfortable traditional working class Britain. It is these people, not well-fed well-credentialed petit-bourgeois journalists, who are at the sharp end of competition from mass immigration, and it is little wonder that their frustration often manifests itself in extreme politics, violence and crime.
As is incessantly claimed by the extreme right, immigration causes crime. One need only examine the crime trends in Western Europe since 1975, and compare them with those in Japan over the same period, to see that there is a very strong prima facie case for this assertion. It is not however fair to blame the immigrants themselves for this.
Much of the crime is committed by the lower socioeconomic strata of the local population, whose life chances have been blighted by high immigration, and whose integration into adult society is hugely disrupted by persistent unemployment and by social and cultural change in the neighborhoods in which they live. The truth seems to be that, apart from a good, well integrated police force, low crime depends on two factors: cultural homogeneity (so that there are no petty tensions and misunderstood “signals” between different groups) and socioeconomic stability, so that steady jobs and integration into adulthood provide a more attractive — and attainable — objective for the poorer classes rather than the quick profits of petty crime.
Finally, the pro-immigration forces fall back on the “demographic deficit” argument, that British and West European populations are aging so fast that their social security payments will be unfinancable for future generations, unless a stream of younger immigrants is imported to finance the deficit.
In some countries, such as Italy, this solution is arithmetically impossible — more than half the population would have to be working-age immigrants by 2050 in order to pay the pensions promised to the current Italian workforce.
In other countries, such as Britain, the argument is subtler. The older generation (born 1910-45) by and large created the social security system, based on the actuarial assumptions of their young adulthood, and have benefited enormously from it. The baby boom generation, born 1945-65, cannot benefit to the same extent, whatever happens, because the actuarial assumptions on which the system was based are now simply wrong — we live too long.
Politicians wishing to avoid telling baby boomers the truth about their benefits postulate a future in which working age immigrants will pay more than their share into the system, subsidizing retired local people. Of course, it is very unlikely indeed that the immigrants, having votes, will permit this to happen — why should they? Such politicians are thus simply storing up conflict for the future; much better to tell the truth now, and allow baby boomers to make the choices they need to make — between lower benefits, later retirement or — ugh — higher taxes.
The economic arguments for high immigration thus appear highly specious, and the cultural and social arguments against it remain strong. It is a Biblical principle to hate the sin and love the sinner. While horribly abused in modern penal reform, this works well in immigration policy; society becomes more civilized, crime lower, and social tensions less if we welcome the immigrants among us, and assist them to integrate fully into our society while retaining the best parts of their original cultural identity.
High immigration itself, however, is a sin, morally wrong (because undemocratically imposed by the elite on a vehemently protesting electorate) and economically damaging, and should be resisted with the utmost vigor.
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(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)
This article originally appeared on United Press International.