Immigrants as scapegoats

People who care about things like evidence and prosperity have pointed out that proposals to limit EU immigration after Brexit are bad for the economy. It’s not sufficient, however, merely to point out facts. We must also ask: why – of all the false beliefs it is possible to have about the economy – is the idea that migrants significantly depress wages so widespread and entrenched?

In some cases, of course, it’s simply a rationalization of hostility to migrants. Some people would hate immigrants whoever they were and whatever they did. The claim they do economic damage is a cloak for such feelings.

There are, though, more respectable motives. I don’t think it's unreasonable to feel a little uncomfortable about high migration on the grounds that it might disrupt our sense of home or that diversity might in the long-run undermine social solidarity and hence perhaps (pdf) support (pdf) for redistribution; it’s an awkward fact for leftists that several egalitarian nations (such as the Nordics, Japan and South Korea) tend to be more ethnically homogenous than less egalitarian ones such as the US*.  It’s easy for such people to commit a form of halo effect, and fear that because migration might be bad in some senses it is also bad in others.

Nor must we overlook folk economics. Very many people can tell stories along the lines of “since a lot of Poles arrived my wages have fallen.” And these have a simplistic appeal: increased supply means lower prices, doesn’t it?

To counter these stories we need not just a technocratic appeal to the facts but to point to mechanisms which offset those stories – such as that immigration also increases demand. People are bad at making connections about the economy. They must be shown how to do so, but there are no institutions which do this.  

I’m not sure, though, that these explain the Tories’ urge to blame migrants for stagnant real wages, and they certainly don’t justify Ms May’s refusal to even consider evidence about the matter.

Instead, I suspect something else is going on. The Big Fact about the economy is that we’re now seeing the weakest trend productivity growth since the early days of the industrial revolution; it’s this that is largely responsible for flat real wages. Any non-risible political party must have some sort of analysis of this.

The Tories, however, not only do not but cannot offer such an analysis. Obviously, they cannot blame austerity. Nor can they blame trades unions or red tape, as they did in the 1980s. And nor can they blame capitalist stagnation or managerialism. This leaves immigrants as pretty much the only possible scapegoat.

I’ve said many times that capitalist stagnation fuels hostility to immigration. The Tories exacerbate this because their political and intellectual limitations mean they cannot do anything else but blame immigrants for stagnant real wages. In this sense, curbs on immigration have something in common with Jacob Rees-Mogg (Roderick Spode masquerading as Gussie Fink-Nottle) being considered a half-credible leadership contender: both are signs of a deep intellectual and political malaise in the party.

* My sympathy for open borders – like my anti-managerialism – perhaps owes at least as much to my Hayekian as my Marxian influences.  

Comments

[Patrick Kirk]

I thought you were a Marxist and this has been dealt with by Engels: https://www.marxists.org/archive/marx/works/1845/condition-working-class/ch06.htm

"With such a competitor the English working-man has to struggle, with a competitor upon the lowest plane possible in a civilised country, who for this very reason requires less wages than any other. Nothing else is therefore possible than that, as Carlyle says, the wages of English working-man should be forced down further and further in every branch in which the Irish compete with him."

Both employers and workers believe that their expeirnce shows that increase in labour supply leads to lower labour costs. No narrative or research will ever get past people's belief in their lived experience. Immigration is one of those subjects where we have to accept that vast swatches of the public will never listen to facts or argument about.

BTW, I'm Irish. The Irish economy boomed with Eastern Europena immigration. Also I like to think I added value to the UK economy when I worked here. So perhaps I have my biases based on experience as well :-)

[nick j]

what pisses me off about this whole issue is the combination of guardian articles about farmers being "unable" to recruit workers and right wing blowhards mouthing off about brits being lazy.

no doubt in macroeconomic terms this is a bit niche and of no significance, but I'm glad to see farmers and others who exploit desperate people get pushed into a corner where they have defend the practice of offering piecework in poor conditions plus charging rent to live in a pig sty.

what's happening here is the EU exporting its unemployment, all because EU policy is deflationary. the only way out of this mess is a crisis: with the attendant risk that its resolution may go the wrong way...

[Blissex]

«The Big Fact about the economy is that we’re now seeing the weakest trend productivity growth since the early days of the industrial revolution; it’s this that is largely responsible»

Rather than class war from the property and business rentiers... Because "the markets" accord to each their just deserts according to marginal productivity.

«for flat real wages.»

And that's the Big Salestalk: top wages and economic rents are not flat, they have been booming, and low end wages are not flat, they have been falling. Incomes on average have not been doing that well, but overall there has been significant upward redistribution from low wages to upper-end wages and income from capital. Is that "helped" by immigration? The Bank of England has repeatedly reported that immigration is anti-inflationary, so immigration helps to keep low interest rates for bankers and property speculators.

[Blissex]

«what's happening here is the EU exporting its unemployment»

Well, China, India, S Korea, Taiwan, Japan are all exporting unemployment. But the EU *in the aggregate* is in balance with the rest of the world.

«all because EU policy is deflationary.»

Hardly, given how wild the ECB has been.

It is more like that english policy has been neither inflationary not deflationary, which in today's economies are misleading terms: it has been redistributive, upwards, with simultaneous "Barber" and "Lawson" debt booms and inflation of asset prices, rents, and top salaries to benefit property and business owners and in particular the financial sector (what C Crouch called "privatized keynesianism"), and hard pressure to push down social insurance and wages thanks to a large amount of imports of stuff and presumably also of labour.

The usual very forthright quite from G Osborne:

“A credible fiscal plan allows you to have a looser monetary policy than would otherwise be the case. My approach is to be fiscally conservative but monetarily active.”

and from a Fed Board member, about central banks targeting ever bigger asset prices:

“What the Fed did, and I was part of that group, we frontloaded a tremendous market rally starting in march of 2009. [ ... ] Once again, we frontloaded, at the federal reserve, an enormous rally in order to accomplish a wealth effect.”

Deflation of wages, inflation of rents, is neither inflationary nor deflationary: it is redistributive. It is a domestic policy, little to do with the EU.

[Blissex]

«The Irish economy boomed with Eastern Europena immigration.»

Rather viceversa: as a rule migrations target areas that have growing exports (as that creates demand for labour).
It is very suspicious when hugely importing countries have large inflows of labour -- how can that make aggregate sense?

«Also I like to think I added value to the UK economy when I worked here.»

As an european citizen, where you add value within the EU is beside the point: moving for work from Cork to Stuttgart or from Dudley to Bristol is just internal relocation.

Now that the eastern european EU expansion omelette is made, despite the enormous lack of "convergence" between the EU15 and the eastern european economies, we have to deal with it, and dealing with it by leaving the EU in a huff is not really such a good choice.

As many have pointed out that expansion was designed by the english government to make trouble in the rest of the EU, but it has ended up nearly unravelling the UK instead. Well deserved payback, but it would have been best avoided.

[nick j]

bang on cue, this: https://www.theguardian.com/uk-news/2017/sep/09/hard-brexit-implications-government-leaked-document

a load of businesses smiting their foreheads saying we'll go out of business if we have to offer decent terms and conditions. exactly the same arguments were used about the minimum wage.

I'm in favour of FOM, i used it to be an immigrant labourer in the mid eighties. I'm quite happy having people talking languages other than English, but don't start pretending that everything's hunky dory when some ts & cs for some people are being eroded and they're getting bad mouthed as lazy into the bargain. if you're alright jack, well good for you, some people (not me, I'm nicely set up thanks) are having a hard time.

[Peter K.]

Again I completely agree with Dillow about capitalist stagnation and scapegoats.

This should be an important argument against centrist politics and incrementalist policies that don't deliver.

Stagnation doesn't just mean the unlucky suffer while the centrist meritocrats continue to do well. It's makes politics worse for everyone.

[Blissex]

«don't start pretending that everything's hunky dory when some ts & cs for some people are being eroded»

My suspicion is that some people look at the "greater good": while some english workers exposed to a much increased labour supply from cheaper workers are not doing as well as they could, the lot of those cheaper workers improves enormously.
In the balance between let's say low wage english workers getting £8/h instead of £12/h and low wage romanian workers getting £8/h instead of £2/h, from a "greater good" perspective the gain of the low wage romanians vastly outweighs the loss of the low wage english workers.
If the fall of the wage level for some jobs from £12/h to £8/h also boosts the wages of higher paid "complementary" workers and the profits and rents of "complementary" property and business owners, the utilitarian calculus even improves.
Because then the claim is that a bigger labour supply and a bigger labour/capital ratio don't impact negatively the growth of incomes.
And that "greater good" calculus may seem well worth some clever salestalk.

[Bonnemort]

"why – of all the false beliefs it is possible to have about the economy – is the idea that migrants significantly depress wages so widespread and entrenched?"

Something to do with supply and demand perhaps?

[Bonnemort]

Real (inflation-adjusted) median male wages a/c/t the ONS are lower now than in 1997. What's caused them to fall then?

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours#timeseries

[Blissex]

«median male wages a/c/t the ONS are lower now than in 1997»

That median, below median is rather worse.

However that "male" opens up a different subject: the immigration of a very large number of english women into the english labour force, which has had a far greater long term effect, both on male wages, and on house prices, than immigration from non-EU (or EU) countries. But that is not a very politically-correct topic either. Bernay's USA campaign of "torches of freedom" was meant merely to increase cigarette sales among women, but corporate interests soon realized the benefits of a large surge in labour supply from women, especially during WW2. There had been precedents (quoted in from D Landes, "The wealth and poverty of nations"):

«The mule spinners", said one mill superintendent to me, "are a tough crowd to deal with. A few years ago they were giving trouble at this mill, so one Saturday afternoon, after they had gone home, we started right in and smashed up a room-full of mules with sledge hammers. When the men came back on Monday morning, they were astonished to find that there was no work for them. That room is now full of ring frames run by girls.»

[Bonnemort]

Blissex - I appreciate your point that women are less likely to rock an employers boat (cue Grunwick, Ford machinists, match-girls), but I'm not sure female workforce participation has increased that much since the end of the Thatcher/Major era - and it's a moot question of how much increased female participation is ann artefact of 'liberation' and how much an artefact of affordable family formation i.e. the near-impossibility of home ownership (or in may areas even renting) without two wages.

[Guano]

"Why – of all the false beliefs it is possible to have about the economy – is the idea that migrants significantly depress wages so widespread and entrenched?"

This raises a more general question - do Brexiteers really believe what they are saying? Do the people who comment below Alex Massie or Nick Cohen articles in the Speccie really believe that the UK was being destroyed by being in the EU, and that the economic disruption of leaving the Single Market is a price worth paying for getting away from the horrible Europeans?

Isn't it more likely that a critical mass of bullshit has been reached and there is no going back. Too much has been invested in attacking the EU and blaming immigration(especially by some mass-circulation newspapers) - there's no going back. If one reason is shown to be fallacious, another one has to be found or the initial reason has to be restated with more vehemence.

[Blissex]

«do Brexiteers really believe what they are saying?»

"Brexiteers" is generic, they are united by their conclusion, but the rationale are different and so are the arguments.
I reckon that there are two main categories:

* "economic Leavers" think that EU integration is a tool their bosses use to cut their wages and raise their rents when they emigrate to the south-east.

* "nationalist Leavers" feel that EU membership is a national humiliation.

As to the "economic Leavers" I think that their arguments are both believed and plausible, even if on balance I think there are better arguments.

As to "nationalist Leavers" I reckon that most don't care whether they believe the arguments they use; those arguments simply serve the purpose of expressing their rejection of the feeling of national humiliation that burns them.
Do they really believe that the "EUSSR" is an instrument of communist plans to destroy Thatcher's legacy by smothering english industry in senseless regulations? Do they really believe that the "Fourth Reich" is a plan to strip England of its sovereign independence little by little sneakily when the V2s could not intimidate the english to surrender their freedoms?
I reckon most of them do, even if that belief is the expression of a sense of national humiliation, *rather than viceversa*.

My favourite example is the pre-referendum "Leave" advocacy by N Tebbit in the Daily Telegraph:

“It is time that the Brexit campaign seized its chance and set the scene for the debate: it's time for the British to get off our knees. .... Freedom beckons. Will a generation of politicians who have never fought for it betray the many thousands who died for it?”

[Blissex]

«not sure female workforce participation has increased that much since the end of the Thatcher/Major era»

There was a really significant surge in the 60s-70s, and "obviously" it did not have an immediate effect.

«the near-impossibility of home ownership (or in may areas even renting) without two wages»

As to that I reckon that is viceversa: two-wage families have been a major factor behind the enormous rise in house prices (the other being exceptionally loose credit) and rents.
It used to be that house prices were reckoned as a multiple of a personal income, now they are reckoned as a multiple of a couple's income.

[Hamdi]

@bonnemort Using supply and demand theory to explain the labour market in 2017 is like bringing a knife to a nuclear warhead fight.

[Guano]

Blissex - the problem is that most discussions about Brexit start with a bit of to-and-for about the costs and benefits on the economic level and then someone will come in with a nationalistic argument. Someone will start saying we just have to leave (sotto voce - whatever the cost) because the EU hates us or bullies us or is a federalist plot. This has happened here and happened this afternoon on CiF. Maybe these are different people saying these things, but you get the feeling that the nationalistic arguments kick in when the going gets tough with the economic ones.

[Bonnemort]

Blissex - the problem with emphasising women in the workforce as the major determinant of lowered male wages (and argument which takes supply and demand as a given) is that many of the jobs which have seen the biggest wage falls are effectively male-only - building jobs, warehousing jobs, labouring jobs, agricultural jobs. There hasn't been a mass influx of women into building labour - and a good thing too considering the damaged hands you'll have after 20 years - but there has been a mass influx of males from Eastern Europe.

@hamdi - do you have any arguments to back your assertions?

[Tynnie Todgers]

"why (..) is the idea that migrants significantly depress wages so widespread and entrenched?"

Because it's the lived experience of too many people. Not that "since a lot of Poles arrived my wages have fallen." Rather, "I've stopped demanding wage increases since I became so easy to replace." IOW positing a counterfactual higher wage which doesn't show in the metrics claiming no significant impact on wages. Not due to the arrival of "Poles" but the fact of open borders putting them in the same labour market whether or not they actually arrive.

[Hamdi]

@Bonnemort My example was outrageous but Noah Smith explains this better than I ever will.

http://noahpinionblog.blogspot.co.uk/2017/04/why-101-model-doesnt-work-for-labor.html