Immigration caps: irrational & unimaginative

Think of all the policies that could improve the condition of the working class: a reform of education to break the link between parental income and school quality; more redistributive taxation; a citizens’ basic income; democratization of the police force and removal of illiberal laws (such as those against drugs) that impose disproportionately upon the poor; an assault upon the causes of inequalities in life expectancy; nationalization of mortgage lending or utilities; use of government procurement policies to promote the growth of worker co-ops; encouraging “democratic finance” so people can insure themselves against risks to their industries or occupations.
The list is long. So how unimaginative do you have to be to think that restrictions upon immigration should be ahead of all these?
But what’s going on here is not just a failure of imagination. There’s also an ignorance of hard facts too. Most research shows that the impact of immigration upon wages is minute - and insofar as there is an adverse effect at all, it falls upon previous immigrants more than native workers.
But let’s ignore all this. Let‘s grant that immigration does reduce the wages of less skilled workers - and there is some evidence for this, albeit a small (pdf) temporary effect (pdf). 
Does it follow that restrictions upon migrants would then improve wages of unskilled workers?
No. To see why, think about Wiki, who sews knickers in Underworld. What would happen if she went back to her native Poland?
The immediate effect is that Carla Connor would replace her with a British worker. So it looks as if restricting immigration is good for British workers.
But what would Wiki do back in Poland? She might well make knickers there, at a lower wage than she did in Underworld. These knickers would therefore be cheaper than those made in Underworld. Buyers of Underworld’s knickers would therefore switch to buying Polish knickers. Faced with this fall in  demand, Carla would have to cut production and lay off a worker.
So British workers wouldn’t be any better off. Wiki’s taking a British job whether she works in Wetherfield or Warsaw. This is factor price equalization.
So, let’s be clear. Restrictions on immigration do not significantly improve wages or job prospects for British workers. If you really want to make life better for workers, there are countless better ways of doing so.
The fact that demands for immigration restrictions are so high on the political agenda, - ahead of much better policies - is a sign of just how politics panders to brutish irrationality.

Comments

[passer by]

How about Immigration tariffs?

[Pete]

I'm basically in agreement with the idea that blaming immigrants is a pretty cheap substitute for a decent social policy agenda, but I think you need a stronger peg than price factor equalization to hang your argument on.

That might work for textile manufacturing and agricultural jobs, but construction and services all employ a lot of migrant labour that can only be done in situ.

[Chigady]

Taking heed of what you've posted and perhaps playing devil's advocate somewhat, I was wondering how well you thought your arguement held up when talking about care or contruction workers.

[Bob B]

For an alternative analysis, readers may be interested to know of this assessment of the potential economic consequences of continuing large-scale immigration by Professor Robert Rowthorn, professor of economics at Cambridge:
http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2006/07/02/do0202.xml&sSheet=/opinion/2006/07/02/ixop.html

"The injection of large numbers of unskilled workers into the economy does not benefit the bulk of the population to any great extent. It benefits the nanny-and housecleaner-using classes; it benefits employers who want to pay low wages; but it does not benefit indigenous, unskilled Britons, who have to compete with immigrants willing to work hard for very low wages in unpleasant working conditions."

A longer study of the subject is at:
http://www.civitas.org.uk/pdf/Rowthorn_Immigration.pdf

Professor Rowthorn is author of several books, including: Capitalism, Conflict and Inflation (Lawrence Wishart, 1980). He is not widely regarded as being "right-wing", rather the opposite, in fact.

[Braindrained]

Bollix. Last time I tried to work in the UK in IT the wages had hit rock-bottom and I had to scour the country for work.At the same time the pollies were yelping about "shortages" and bringing in foreigners by the truck-load. Was eventually kicked out of a contract to move the work to E. Europe - not the same as bringing them here but it had the same effect. One year of this and I p*ssed off again, feeling sorry for the folks trapped by mortgages, elderly parents and kids. Maybe I'll come back one day for a holiday, but trying to live in the UK is a waste of time, unless you are a middle-class academic or a dole bludger (same thing really).

[Bob B]

In fact, most academics are badly paid in Britain relative to other occupations. Try this to find academic pay points a couple of years back:
http://www2.warwick.ac.uk/services/humanresources/payroll/oldsalcosts/salary_costs/academic/

Government ministers have admitted that probably a million of the c. 2.6 million recipients of Incapacity Benefit in Britain really should be working but even so the rate for long-term basic Incapacity Benefit of £84-50 a week is hardly enough to support a luxury lifestyle:
http://www.direct.gov.uk/en/DisabledPeople/FinancialSupport/IncapacityBenefit/DG_10016082

For comparison, where I live in London, bus companies regularly advertise jobs for bus drivers at between £10 and £11 an hour or about £500+ a week with overtime pay. And there's a shortage of bus drivers.

[Laban]

What if the cost of transporting the knickers to the UK is greater than the price differential at the factory gate ?

What if the shared rooms of a lot of Wikis raises UK rents ?

What if Wiki's sending UK Child benefit back home ? Or is the sprogs are at UK nurseries/schools, does the tax she pays balance out the Sure Start cash, teachers pay and the maternity nurses (I can tell you that a lot of young Polish girls are sprogging. Catholic primary heads are rubbing their hands and printing the prospectus in Polish) ?

What UK benefits is she getting due to her low income ?

Don't get me wrong. I'm as big a fan of the lovely Anna from Stettin as anyone - or I was till she left the Lidl till to have a baby. But given our benefits structure, low-income immigration looks to me like a taxpayer subsidy for low-wage employers.

[Bob B]

Around where I live, bus drivers come in all shapes, genders, colours and ethnicities. Even so, they have to sometimes drop buses out of the schedules because there aren't enough drivers to serve the routes.

According to this report on BBC2 Newsnight, 40% of London residents were born abroad:
http://news.bbc.co.uk/1/hi/uk/7368326.stm

Some London boroughs are among the poorest districts in Britain but on Eurostat's reckoning, at PPP exchange rates, inner London is the most affluent sub-region in Europe by a margin, which perhaps explains why so many folks want to come to live here and why Londoner's like that old pantomime: Dick Whittington.

[Bob B]

Try this for the truish story of Dick Whittington:
http://www.museumoflondon.org.uk/English/Learning/Learningonline/features/viking/viking_1.htm

[asquith]

Are you going to participate in the discussion on Liberal Denocrat Voice? You have been namechecked, & your articles are being mentioned, so you might as well add your own contribution :)

In the analogy you supply, if Wiki were sent home, it might well be that Carla couldn't replace her as there is no one on the street to whom she could realistically offer a job. Would you employ people like Tina or David? I for one would not.

The vacancy would go unfilled, as many vacancies were before the recent waves of immigration.

That raises issues of why Britons are unemployable, & the answer is doubtless related to the education system. I recall an article a while back in the Spectator, from an anti-immigration point of view, saying that Brown uses immigration to hide the real weaknesses in our education system & the lack of decent employment opportunities.

The days of mass unskilled labour are coming to an end: such jobs have been declining for a long time & will be totally obsolete ere long. We had better ready ourselves...

[Bob B]

The unemployability of so many Britons may owe more to traditional British cultural factors than to current failings in our education system. Consider the implications of these news reports:

"Government figures show only 15% of white working class boys in England got five good GCSEs including maths and English last year. . . Poorer pupils from Indian and Chinese backgrounds fared much better - with 36% and 52% making that grade respectively."
http://news.bbc.co.uk/1/hi/education/7220683.stm

"Last year [2004], a report from the Organisation for Economic Cooperation and Development (OECD) revealed that Britain came seventh from bottom in a league table of staying-on rates [in education and training] for 19 countries. Only Mexico and Turkey had significantly lower rates of participation for this age group. Italy, New Zealand, Portugal and Slovakia have marginally lower rates."
http://education.guardian.co.uk/gcses/story/0,16086,1555547,00.html

"Up to 18% of 16 and 17-year-olds are Neets, neither in employment, education or training, a study [by the LSE] suggests."
BBC website 19 July 2008

Whatever, there is nothing especially novel about poor provision for schooling in Britain:

"We have noted a substantial body of original research . . . which found that stagnant or declining literacy underlay the 'revolution' of the late eighteenth and early nineteenth centuries. . . Britain in 1850 was the wealthiest country in the world but only in the second rank as regards literacy levels. [Nick] Crafts has shown that in 1870 when Britain was world economic leader, its school enrolment ratio was only 0.168 compared with the European norm of 0.514 and 'Britain persistently had a relatively low rate of accumulation of human capital'."
Sanderson: Education, economic change and society in 1780-1870 (Cambridge UP, 1995) p.61

In the mid 1970s, half the adult population in Britain had no educational qualifications. By the mid 1990s, that had shrunk to a quarter. Even so:

"Up to 12 million working UK adults have the literacy skills expected of a primary school child, the Public Accounts Committee says. . . The report says there are up 12 million people holding down jobs with literacy skills and up to 16 million with numeracy skills at the level expected of children leaving primary school."
BBC website 24 January 2006

[Mark Brinkley]

I don't think the primary argument about controlling immigration has much to do with economics. It's more to do with maintaining a local identity and also environmental sustainability. If Wiki can sew knickers in Warsaw more efficiently than she can in England, why does she have to move to England in the first place? Whilst our population is set to rise by 15%, Poland's is set to fall by a similar amount (according to Eurostat 2060 pedictions). What is the sense in that?

[MJW]

The first issue you've dodged:

- Unchecked mass immigration places strain on public services in the areas where the immigrants settle, and the net gain to the economy from immigration is dubious. Some migrants undoubtedly do make a positive net contribution to the economy, but some don't. The young, single Polish plumber is more likely to make a positive net contribution than the older Polish plumber who brings a not working spouse and two kids with him.

The second issue is the one of competition for labour:

- Immigrants doing low skilled jobs do not do them because there are no local workers capable of doing them, they often do them because the local lumpenproletariat make the perfectly rational judgement that they don't consider the marginal increase in net income from working such jobs is high enough above what the state pays them for doing nothing. An example: in my home town in the North West of England there is no shortage of low skilled unemployed lumpenproletariat, there is also a growing, thriving Eastern European community who have migrated there to work in relatively low skilled factory jobs (paying well above minimum wage) because the local lumpenproletariat refuse to work those jobs.

[Bob B]

Without comment:

"Research conducted by the Organisation for Economic Co-operation and Development confirms that that the UK and Germany have the greatest numbers of highly skilled emigrants - 1.1m and 860,000 - leaving annually for other OECD countries. But in the case of the UK, this is more than compensated for by large inflows of skilled workers from non-EU economies, particularly from Asia, it says." http://www.ft.com/cms/s/0/f8cdd820-69a2-11dd-91bd-0000779fd18c.html

"Competition between employers for the shrinking pool of migrant workers - widely seen as more hardworking than their British counterparts - is hotting up."
http://www.guardian.co.uk/business/2008/aug/24/migrantworkers

[Bruce]

Something that may temper the UK recession is the fact that many of the wave of migrants from Eastern Europe will (are anecdotally, are are already) return home if jobs here dry up. And it's the fact that they are free to come and go (and come back again if things pick up) that creates this useful safety value. It is because of restrictions on labour movement that means that once here, migrants (such as those from outside the EU) feel unable to leave in case they are unable to return.

[Agree With Laban]

One of the big problems with unskilled immigration is that the immigrants take up so much of the available low-cost housing. Another is that while the first-generation of immigrants may be very hard working and grateful for the opportunity to better themselves, they very often have academically underachieving children who are too proud to do the low-status jobs that their parents did. The parents tend to be consumers of services, while also contributing their labor to the economy. But the children and grandchildren are simply burdens on the state, and often criminals as well. All of the western countries accepting immigrants should be subjecting them to IQ tests. If they have an IQ in the 80s or lower, how realistic is it that they and their progeny will be net assets to the receiving country? And if they couldn't be bothered to learn a word of English BEFORE they arrived, is there any real reason to believe that they will ever be able to operate independently in their new country (without state-paid translators/interpreters, etc.)