Immigration: an overlooked benefit

Migrationwatch claims that the economic benefit of immigration - in terms of GDP per native Briton - is "minimal." This omits three things:
1. Immigration reduces inflation by relieving labour shortages. And lower inflation is a good thing, independent of its impact on GDP - because, for example, it means we can economize on using cash and firms don't have to revise prices so often. These benefits are surprisingly large. The Bank of England has estimated that a percentage point of lower inflation generates a gain in welfare equivalent to 0.1% of GDP a year - that's £1.2bn.
2. Lower inflation means lower real interest rates; the gap between the base rate and RPIX inflation, at 1.6%,  is now well below the average for the last 20 years.  Lower real rates should - eventually - mean higher capital formation and hence better jobs for native Brits. Migrationwatch's rather skimpy analysis (pdf) gives us no reason to doubt the direction of this effect.
3. The case for free immigration is not primarily a consequentialist one, but is rather based in liberty: people should be free to live and work where they want and hire whom they want. It's only if these freedoms impose costs upon others that there's (possibly) a case for restricting them. Nothing in Migrationwatch's report suggests there are such costs in economic terms, as Tim points out.
The case against immigration - if it exists at all - is that it decreases social cohesion. It's not about economics.

Comments

[Phil]

S&M, 1/1/07:
"Immigration reduces inflation by relieving labour shortages."

S&M, 11/8/06:
"a policy of restricting immigration - even if it's feasible - will do nothing to raise wages of the unskilled"

S&M, 7/9/05:
"Some of you have objected to my earlier post in favour of free immigration on the grounds that immigration depresses the wages of native workers. As luck would have it, two new reports suggest these objections are wrong."

Which is it? Is free immigration a good thing because it cuts wages (or 'reduces inflation by relieving labour shortages'), or is it a good thing because it doesn't?

[chris]

There's not necessarily an inconsistency.
1. The immigrants have different skills from (most) native workers. A supply of, say, Polish plumbers doesn't depress the wages of, say, bar workers. It might even raise it if the plumbers spend their wages in the pub.
2. It depends what you mean by "cut." If immigrants stop wages rising faster (in say plumbing) than would otherwise be the case, inflation is held down even though immigration doesn't lead to lower wages, relative to what was the case before immigration.
3. The alternative to immigration is higher inflation, which means higher real interest rates and therefore higher unemployment, which isn't good for wages.

[AntiCitizenOne]

Basically you are arguing that "Higher wages are bad"?

I've heard it all now.

[chris]

Higher nominal wages are bad. Higher real wages are not.

[Chris P]

Surely immigration is the overt side of imported deflation? If a task is out- sourced to, say China, then the cost reduction is seen in lower prices. Importing the goods to the UK also imports deflation. Immigrants also reduce inflation as we haven't met any of the Human Capital costs associated with the skill set, or even even more minimally, the nuturing costs. However importing the workers helps to protect home grown workers by maintaining a competitive productivity ratio. Given autarky isn't an option immigration is a preferred option.

[james higham]

...The case for restricting immigration - if it exists at all - is that it decreases social cohesion...

Typo there. You meant INcreases, didn't you? Also - the bird. Stats flagging a little, Chris? Nice though she is.

[chris]

James - thanks, I've corrected that final sentence.
The picture is of Bollywood star Shilpa Shetty, who's entering Celebrity Big Brother tonight - thus being a very topical illustration of another gain from immigration. Unlike some bloggers, I'm not a stats whore - really I'm not.

[David Gillies]

Who's the hotty? It certainly bolsters your pro-immigrant stance.

[Alex Gregory]

"The case for free immigration is not primarily a consequentialist one, but is rather based in liberty"

(I'm being a pinickity philosopher, but..) Consequentialists can quite happily value liberty as another good to be maximised. I think you may have meant that the case for free immigration is not necessarily a /utilitarian/ one.

[Mark Wadsworth]

The point about the net benefit/cost to society of mass immigration is that it is a meaningless figure, as both sides of equation are subject to huge margins of error. Personally, I'm not bothered as long as we only let nice people in and chuck nasty people out again (which of course is not the case). But the gains and losses are - in the short term spread very unevenly, there are pretty clear winners and pretty clear losers. So ultimately I think social cohesion is more important than economics at least in medium term.

[MatGB]

Mark, if we're going to chuck nasty people out, can we start with Andrew Green? I wondered why he was all over the radio last few days, serves me right for switching off from the news for a bit.

[Martin Hinton]

I'm not sure where Alex Gregory studied philosophy, if indeed he did, but he has Utilitarianism and Consequentialism completely the wrong way round. It's Utilitarians who try to maximise 'goods' including freedom, as they lead to greater happiness, or utility. The original post is quite right to say that prior rights do not count for Consequentalists, only er... consequences, obviously.

[John]

"The case for free immigration is not primarily a consequentialist one, but is rather based in liberty: people should be free to live and work where they want..."

A few questions:
1. Regarding the above quote, this is a most admirable sentiment, but can it be policy? Is there no limit to who and how many get in?
2. How many of us actually live and work where we want?
3. Would you feel the same way if your country shared a 3000 km border with an underdeveloped country with 90 million folks, most of them eager to "assimilate" yours?
4. Are you ready to double the population of your country practically over night?
5. I hate to suggest it, but shouldn't immigration be managed?

[Praguetory]

Your post is cloud-cuckoo land, but unfortunately pretty much the received wisdom underlying government (lack of) policy on immigration/population. I like the idea of temporary workers paying tax and having a small call on the state. The rest is a luxury we can't afford.

[young man]

Immigration is the one area we disagree on.

Unskilled imgration has very little economic benefit.

Any immigrant earning below the mean wage is reducing productivity and is probably consuming more welfare and common infrastructure (roads, parks, good air, space, sense of community) than he is contributing in the form of taxes etc.In addition he is competing for the commodity jobs of the low paid and is widening the already large income gap.

As a part owner of a pretty good country (eg Britain) why would you want to share that with somone with very little to offer in return?

[Alex Gregory]

Wikipedia:
"Utilitarianism is the ethical doctrine that the moral worth of an action is solely determined by its contribution to overall utility."

"on a consequentialist account, a morally right action is an action which produces good consequences"

Oxford Companion to Philosophy (2nd Ed.):
"Utilitarianism [...] treats pleasure or desire satisfaction as the sole-element in human good and that regards the morality of actions as entirely dependent on consequences or results for human [...] well-being"
(that's actually quite a convoluted sentence, more concisely: morality is welfare satisfaction, and welfare consists in pleasure or desire satisfaction)

"Consequentialism determines the rightness or wrongness of an act [...] by comparing the act's consequences with the consequences of alternative acts"

---

Utilitarians are consequentialists who see the good solely as pleasure or desire satisfaction, and so do not value liberty in any fundamental sense, only instrumentally. On the other hand, consequentialists may define "good consequences" more or less however they please, including by allowing freedom or liberty as another good to be maximised.

I'd also appreciate it if you refrained from insulting me.

[Alex]

Anyway, surely the clincher here is that so long as the net benefit to society is non-negative, what right do we have to deny the far greater benefits of immigration to its principal beneficiaries, the immigrants?

[james C]

You do love to bang on about complete irrelevancies, while missing the main point.

Migrationwatch's numbers are ludicrous. An immigrant earning, say £6 per hour, will contribute at least a couple of pounds an hour to the UK economy in the form of tax to the government and profit to his employer.

How this can result in zero net contribution escapes me.

[Martin Hinton]

Terribly sorry Mr. Gregory to have unwittingly insulted you. Anyone who quotes Wikipedia as an authority is obviously a font of erudition and wisdom. Your definitions only serve to prove that you were wrong initially so I'm not sure why you've given them. The original point was that free immigration is not good simply because of the consequences but also because of the principle. You tell us that utilitarianism is a type of consequentialism but you don't give any indication why you think the writer was originally referring to that type specifically when its pretty obvious he's talking about consequentialism in a very general sense.

[Alex Gregory]

I don't normally reply to trolls, and we've hijacked this thread enough. I'll therefore make two points, and will reply no more.

You'll note that I quoted the Oxford companion to philosophy in addition to wikipedia to make clear that I was not simply reiterating some wikipedian error.

The original point was that immigration should be allowed because it increases liberty as well as economic benefit, measured in terms of utility. My point, as the quotes above illustrate, was that consequentialists can allow a broader definition of "good consequences" than mere utility, and therefore could include increases in liberty if that seems to have value.

Hope you find things clearer,
Alex

[Martin Hinton]

I've no idea what you mean by a troll. Is that blog-speak for someone who points out your errors? Let me make this really simple for you since it seems to be necessary:

The article contains three points, the first two deal with the consequences, specifically the economic consequences, of immigration. The third one does not. That's why the writer uses the word consequentialist to contrast the last argument with the previous ones. There are no arguments from Utility so it would be odd to juxtapose the third point with non-existant Utilitarian ones. Are you beginning to understand?

Apologies to those interested in immigration not pedantry.

[Guessedworker]

The case against immigration - if it exists at all - is that it decreases social cohesion. It's not about economics.

Half right. We are more than economic actors.

The case against immigration is that it destroys the natural rights and the cultural and genetic integrity of indigenous peoples.

"Social cohesion", incidentally, is a leftist-assimilationist term that already grants the right of aliens to aggress against indigenes. At any other time in our history the native peoples of Britain would have been represented by a political and cultural elite that, like them, insisted upon the native right of self-defence. Those of you here who merely toe the liberal line are captives of your age, not free men at all.

[Katherine]

Who exactly are the "native peoples" of Britain?

[john b]

The Welsh, of course. But only the West Welsh - the South Welsh are English really, and the North Coast lot are all Scousers.

[Hay Group]

You say immigration is benefit because it relieves a stressed labor situation by adding workers. At the same time couldn't it overflow an already existing labor excess? This could result in increased unemployment and lower wages. Companies need to set up proper reward programs using this great information from the Hay Group to make sure they have workers in the right area getting paid the right amount.