The racist pseudo-left

I don't normally indulge in Toynbee-bashing, as others do it so well. But since I've been invited, here goes.
Polly claims that migrant workers "hold down the pay rate for all other low-paid workers" and says:

Bercow and Labour hotly assert that migrants don't take jobs from British workers nor depress wages. But there is no evidence for this assertion. It is impossible to know what level wages might be at or how many unemployed might have been tugged into jobs at higher pay rates had Britain kept its doors shut to new EU citizens until their countries had caught up economically.

What she doesn't do here is cite this report (pdf):

The UK has half a million job vacancies, and at the same time is dealing with worker shortages. Therefore, migrant workers [from the new EU countries] took up 'hard to fill' jobs. The International Property and Construction Organization reports that Polish and Czech electricians, plasterers, bricklayers or carpenters made up for the lack of skilled local workers in Britain.

Nor does she cite this (pdf):

Our estimates...show a positive relationship [between immigration and wages]...This is true for all skill groups and although these estimates never do better than approach the margin of individual statistical significance, their consistency across groups is impressive...The perception that immigrants take away jobs from the existing population, thus contributing to large increases in unemployment, or that immigrants depress wages of existing workers, do not find confirmation in the analysis of data.

Or she could have cited this (pdf). It did find, for the US, a negative effect of immigration upon wages of low-skilled workers - although it is statistically insignificant. Its authors say that immigration, on net, raises wages because native and foreign workers are nor perfectly substitutable.
But how can this happen? It lies in what Polly doesn't mention here:

Migrants do bring GDP growth, but remember the Gate Gourmet workers fired to make way for cheaper newly arrived workers. Migrants add to the profits of the company and thus to GDP. They keep down the cost of flying for people wealthy enough to fly.

And what happens to these higher profits and to the money that wealthy people save? It gets spent elsewhere, thus creating jobs and driving up wages.
But let's assume that everything I've said is wrong, and that Polly is right to say that immigration depresses the wages of the low-skilled. Even then, her call to "forbid importation of semi-skilled workers unless employers have done everything imaginable to recruit and train locally" is the wrong one.
Tim gives us the strongest reason why she's wrong:

Are not those immigrants also our fellow humans, who deserve to share in the wealth and riches available? Should we not be concerned with international inequality as well?

There is, though, a second error in Polly's call. As she's recognized, immigration is a potential Pareto improvement:  "Migrants do bring GDP growth." And the way to convert potential Pareto improvements into actual ones is not to meddle with the market forces that produce the improvement, but to redistribute the gains more equitably.
Any decent leftist who shared Polly's (wrong) analysis would call for more redistributive taxation, not for immigration controls. Polly is just combining racism with economic illiteracy. And this contemptible rubbish passes for leftism.

Comments

[rjw]

I agree with much of that, except for the rather bizarre statement that:

"And what happens to these higher profits and to the money that wealthy people save? It gets spent elsewhere, thus creating jobs and driving up wages"

Sorry - but are you really saying that paying lower wages creates net jobs because the well off spend their gains and thus boost demand? That's nonsense. The additional benefits of having more people being employed do not come from the fact that this suppresses wages and allows rich people to be a bit richer and spend more money 'creating jobs'. The macroeconomic benefit comes from the fact there are more people employed. Period.

Under the right conditions this macro benefit could come about without any significant reduction in wages at the lower end of the market - if the new workers take hard to fill jobs rather than competing down wages in the lower segments of the labour market (as you note). The responsiveness of wages to the rise in labour supply determine the distribution of this additional output and income.

If (equilibrium) wages did not fall much with the rise in labour supply, then instead of the relatively rich spending more and "creating jobs" because their real incomes were rising, it would be the relatively poor doing the spending out of their additional income and they would be the ones "creating jobs" (in accounting terms).

Where PT has half a point is to say that a rise in labour supply could conceivably lower wages at the bottom end of the market, and this may be an issue of genuine concern. Where she seems to be wrong is on not checking whether this has or not happened, or is terribly likely - and how one should react.

[Paddy Carter]

It's hard to shake the notion that if you are a nurse, for instance, then you life is made more difficult by an influx of nurses from overseas who are prepared to work for much lower wages. And macro arguments about lower costs to the consumer are of little comfort.

Is it possible to differentiate between jobs that are filled by immigrant workers because the vacancy was too hard to fill with a domestic worker, and jobs that are filled by immigrant workers because they are prepared to take a lower wage?

[Adam]

I get bothered by the sentiment that wealthy countries should keep immigrants out in order to protect job access. That attitude combines a weird notion that there are jobs (positions given to workers by employers) that rightfully BELONG to the workers. When this attitude is adopted by "not-too-bright" folk, we have a proto-fascism. Essentially, it is the idea that all economic enterprises are the property of the nation as a whole.

This is just some of the weird behavior that occurs when one person is dependent upon another person for his survival.

[Innocent Abroad]

There is also the point that the Philippines or wherever have trained the nurse or whoever and so free movement of peoples discourages investment in human resources by nations...

Within a national economy, industries have overcome this "poaching" problem by (shock horror) training cartels.

[dearieme]

All reminiscent of the Tory MP who said, during the Thatcher years, "I'll believe in unemployment when I see an English waiter".

[Curious]

Yes Chris, I agree completely agree with your explanation. As regards Polly's stance, I am glad that you have put it out there like it is;

"Polly is just combining racism with economic illiteracy."

I have personally come across economic illiterate and morally questionable articles in "the economist" that my colleagues and I have often wondered about.

Even the FT, every now and again, wrongfully interprets economic data and misleads the unwitting readership.

Seeing as it has comfortably become a trend for non-economists or pseudo-economists to discuss economics like experts simply because they can identify basic economics, like supply and demand, I have resigned myself to accepting that the pseudo-economists are here to stay. For them, they look more intelligent to those who know less and in their jobs if they are seen to cover a broad range of issues. The irony, of course, being that it is the lack thereof (causality).

See a few cited examples from the Economist here:
http://culturefusion.blogspot.com/2005/10/economist-magazine-blunders.html

[Paddy Carter]

http://www.cgdev.org/content/publications/detail/4415

looks like a highly relevant book

[come on CD, enable those html commands! I have just remembered how to href and was raring to go there]

[EU Serf]

I love the idea that we keep hearing about how third world countries should own those they trained. In most of these countries, politicians are corrupt fat cats whilst doctors earn less than street sellers.

[Neil Harding]

Polly is certainly not a racist. I think all Polly was saying was we should ask ourselves; why when we have the people to fill these skilled vacancies are we letting them rot on the dole rather than training them? Why is our education and training failing to equip these people to fill these skilled vacancies we need filling?

If companies had a responsibility to train workers themselves rather than poaching them from countries that can ill afford it, maybe they would pay better wages as well. The money that is being saved by paying low wages is not benefiting the poor of this country. To cite the BNP/Nazis etc in response to Polly's argument is in poor taste and completely wrong.

Also importing skilled workers from poorer countries does them no favours.

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