Immigrants as scapegoats

Several observers believe that insofar as the government’s points-based immigration system reduces immigration (which as Jonathan says is “far from certain”), it will do real economic harm. Ian Dunt says it “is a bitterly stupid and small-hearted thing to do.” And Anthony Painter writes:

The scale of the change and its suddenness risk very significant negative impacts. Businesses and public services could struggle to fill vacancies, seasonal businesses could especially suffer, and costs could escalate impacting business and public service viability.

These harms arise because, to the extent that the new policy is based upon economics at all, it rests upon a fallacy – the idea that, as Iain Duncan Smith told The World at One (20’58” in), immigration has a “very negative effect on earnings.”

This is plain false. The nearest thing we have to evidence for it is a paper by Stephen Nickell and Jumana Saleheen which estimates (pdf) that a “10 percentage point rise in the proportion of immigrants is associated with a 2 percent reduction in pay.” A 10 percentage point rise is, however, a humungous number; it’s equivalent to over three million workers across the whole economy. In reality, their estimate implies only a tiny actual effect on the earnings of the low-skilled. As Jonathan says, it suggests that:

the impact of migration on the wages of the UK-born in this sector since 2004 has been about 1 per cent, over a period of 8 years. With average wages in this sector of about £8 an hour, that amounts to a reduction in annual pay rises of about a penny an hour.

This tallies with the general consensus, that migration has little impact on the wages of natives. A survey by the Migration Advisory Committee concluded (pdf):

Migrants have no or little impact on the overall employment and unemployment outcomes of the UK-born workforce…Migration is not a major determinate of the wages of UK-born workers. We found some evidence suggesting that lower-skilled workers face a negative impact while higher-skilled workers benefit, however the magnitude of the impacts are generally small.

This is consistent with my chart. It shows that the share of wages in GDP is higher now than it was in the mid-90s – despite a near-trebling in the number of foreign-born workers during this time.

It's not just in the UK that migrants don’t depress wages much. Studies of big waves of immigrants in other countries have found a similar thing. For example, the mass migration of Europeans to the US in the 1920s (pdf) “had a positive and significant effect on natives’ employment and occupational standing, as well as on economic activity.” And a study (pdf) of Russians’ migration to Israel after the collapse of the USSR found that it “did not have an adverse impact on native Israeli labour market outcomes.”

The evidence then, seem clear.

But it is also counter-intuitive. Surely, if you increase the supply of something, its price will fall.

No. There’s a lot more going on than just increased supply. In some ways, migrants can boost wages.

First, they don’t just add to the supply of workers. They also add to demand. When the Polish builder spends his wages in Wetherspoons, he is adding to demand for bar staff.

Secondly, migrants are not always substitutes for native workers. They can also be complements, helping them earn more. If there’s a shortage of roofers, plasterers and electricians won’t be able to work on new houses. Importing roofers solves this problem, allowing plasterers and electricians to earn more. And if women can use cheap immigrant childcare they can go out and work longer hours.

Thirdly, migrants give natives more opportunities for management jobs. If we import a lot of fruit-pickers, who is going to oversee them? As Giovanni Peri says in a study (pdf) of Danish immigration:

An increase in the supply of refugee-country immigrants pushed less educated native workers (especially the young and low-tenured ones) to pursue less manual-intensive occupations. As a result immigration had positive effects on native unskilled wages, employment and occupational mobility.

Now, you might think these mechanisms limit the impact on natives’ wages but don’t stop it entirely. If this is the case, however, some other mechanisms operate.

One, say Banerjee and Duflo in Good Economics for Hard Times is that the reduction in wages “makes it less attractive to adopt labour-saving technologies”, which helps sustain demand for native-born workers.

Another is that lower wages mean lower prices. That raises real incomes and hence demand for labour.

Even if all these mechanisms don’t operate, though, another would. The Bank of England would respond to lower wage inflation by cutting interest rates. And this would raise labour demand and hence wages.

And remember: locking people out of the UK will not stop them depressing wages. If migrants were to stay at home manufacturing goods on low wages, the import of these would cut natives’ wages. The factor price equalization theorem tells us that trade can reduce wages even if there isn’t a single immigrant.

Evidence and theory therefore tell us the same thing – that migrants do not significantly depress wages. There is, therefore, no economic justification for immigration controls.

So, why do people think otherwise? There is perhaps an analogy here with the MMR scare. Some people found it easy to believe that the MMR vaccine caused autism because there were so many stories of children having the vaccine and then being diagnosed with autism. Similarly, there are stories of migrants arriving and natives then suffering worse wages and job opportunities. In both cases, though, a simple fallacy is at work - the "after it, therefore because of it" fallacy. 

In truth, though, there are other reasons for flat-lining real wages - the many failures of British capitalism which have been amplified by bad economic policy. 

And herein lies the reason why Duncan Smith is so keen to claim that migrants depress wages a lot. He's simply using them as a scapegoat to deflect blame from the bigger causes of low pay. 

And it is scandalously easy for him to get away with this, because the media prefers to give a platform to racists* than to educate people about economics.

* I’ll not link to that now-notorious Question Time tweet; we shouldn’t satisfy the BBC’s lust for clickbait.  

Comments

[Stephen Lindsey]

Given that, it seems, most people want at least some control, what is better economically, 100000 degree laden young people from the east or 100000 apple pickers.

I would take the Indians.

[Ivo Huber]

Stephen, and the degree laden British would pick the apples?

[Staberinde]

My experience is that few people argue that migrants depress wages; more believe they compete for housing in short supply and stress public services - both through numbers and language challenges.

I'd agree. But the argument can be flipped: we want more housing and better funded public services. We want them irrespective of the quantity and quality of migration.

The best way to kill the migration issue is to advocate and deliver better public services. This shoots the 'migrant as competitor' fox and exposes the racism of those who hide behind it.

"There's too many of them! Coming over here, taking council houses, you can't see a GP these days, the class sizes are so big..."

"You're right. We must invest in public services urgently. Let's hire more police, more GPs, more teachers and build more houses. If we all want a better standard of living, halting migration won't help. Improving our public services will make life better for everyone."

[Jonathan da Silva]

I do find it amazing for all the brute things done for headlines (deportations of long term residents etc) from Woolas May Rudd to Patel everyone pretends they want to cut immigration but no evidence they do or reason given. Pandering is de rigueur. They make use of minimal NHS costs and tropes and like good neo live try to charge more but it's a con.

That said there seems no concrete reason to restrict it more and a points system is obfuscation arguably for an unchanged policy. Expensive big Govt even. Indeed it's possibly not even gonna be used as key shortages force govt hands.

[Scratch]

"So, why do people think otherwise? There is perhaps an analogy here with the MMR scare."

The China shock might be a better example. For a couple of decades the figures were clear, the science was settled and the naysayers were beyond the pale - things were getting better for everyone thanks to China's accession to the WTO. Them suddenly it turned out they actually weren't and never had been.

Not that I think anti-immigration sentiment is about economics per se anyway - I think the fundamental fear is about having to put up with an explicitly oppositional class fraction tended and maintained as such by the bourgeois.

[Dipper]

1. So, we should just take absolutely every one we can. Full stop. There is no limit. The additional income they deliver will pay for the infrastructure.

2. At what rate? If immigrants at current minimum wage are net economically positive, that imples we could lower the minimum wage and attract more immigrants. Is there a gaffer curve for minimum wage?

It seems to me that economists are incapable or unwilling to follow the logic of their own position.

My serious considered view, as a physicist, is that you ask if a theory works at zero, and infinity. Immigration of zero doesn't work, and infinity doesn't work either. But some level of migration does work. How do we know what that number is? What factors are there that mean that increasing, or reducing migration from a particular number will be a positive or negative?

I've never seen any economist addressing these issues. As though simply mentioning that any number may be too much is career suicide. I view posts like this as signalling to fellow economists that you are still in the club. To the rest of us. you just look like idiot incapable of following your own logic.

This is the Buzz Lightyear model of immigration. To Infinity. And Beyond!

[Dipper]

"And remember: locking people out of the UK will not stop them depressing wages".

maybe, but it stops them pushing up accommodation costs.

The European Commission projects a UK population of around 75 million by mid-century. That's building a nation the size of Belgium, or Sweden. Where? How? By whom? With what benefit?

[Dipper]

... and why are wages now going up?

Are you prepared to forecast future wage growth?

[Haohao]

Since we can only work one job full-time, if immigration bids down the wages at the pub you work at then it doesn't matter if more people turn up to drink, because the benefits will go to the owners. If anything it makes your shift more stressful due to more people to serve.

If we import a lot of fruit-pickers then it seems rather weird to assume that the management would be done by 'natives'. Rather, it would more likely be done by people who have some experience of fruit-picking, i.e. the migrants.

It's rather astonishing to celebrate immigration for suppressing productivity enhancements.

It's also rather astonishing your interest rate argument fails to acknowledge that interest rates have been about zero for a decade now. How could it respond to immigration? (And if it did, why should immigration rates be a determining factor?)

Oh and as regards factor price equalisation, that's a major reason why almost all states are in practice protectionist to a degree. It's not an excuse to hand-wave away concerns with an It's Inevitable Anyway. Almost nothing is inevitable.

If these are your best arguments for explaining why supply does not affect price much then...

[Jim]

Funny then that those much loved (by the Left anyway) national leaders Justin Trudeau and Jacinda Arden both lead countries that operate points based immigration systems. Haven't noticed you excoriating them much on their economic fallacies.

Which rapper is going to be the first one to call Justin Trudeau a racist? Or Jacinda 'I love a symbol of female oppression' Arden? Or is it only racist when a Tory introduces and operates such a system?

[aragon]

Vox Populi, Vox Dei

https://en.wikipedia.org/wiki/Vox_Populi,_Vox_Dei

Facts are not enough...especially when they are disputed.

1.3 Million Poles in the UK, a race? racism?

[Dipper]

wanting to reduce immigration is not using immigrants as scapegoats. Referring to a wish to reduce immigrants as 'scapegoating immigrants' is to use immigrants as hostages for your opinions. very undemocratic

[aragon]

I don't often agree with Tony Blair but...

https://www.theguardian.com/politics/2020/feb/20/tony-blair-only-a-complete-renewal-of-labour-will-do

“You’ve got to distinguish between that and launching yourself politically into a kind of culture war with the right. If you go, ‘Transgender rights is our big thing’, and the right goes, ‘Immigration control is our big thing’, you’re going to lose that war.”

https://www.spiked-online.com/2020/01/13/labour-is-on-the-verge-of-total-irrelevance/

"Brexit should have been a wake-up call for Labour. But the opportunity to reconnect with neglected communities across the UK was well and truly squandered by a party that was far more interested in talking than listening. This led to it developing a policy agenda guided by identity politics instead of the bread-and-butter concerns of the wider British public."

https://unherd.com/2020/02/populism-isnt-about-class/?tl_inbound=1&tl_groups[0]=18743&tl_period_type=3

"What unites the wealthy Trump voter in New York with the left behind worker in Kentucky is not middle-class elitism but a set of values that make them suspicious of social liberalism, opposed to mass immigration, desiring of stability and order and respectful of the traditional family and traditional values."

p.s.
And a fatalism about economics, also about which (economics) Blair is wrong, as is Chris above. IMHO.

[aragon]

https://www.thetimes.co.uk/edition/comment/ministers-want-more-jobs-for-low-skilled-brits-enter-corbyn-and-miliband-wlh7m7v8r

"Sir Keir Starmer, the slowly drying magnolia one-coat candidate"

ROFL

[Ander Broadman]

Blimey, this piece has attracted an above average share of poorly thought through mental gymnastics- it seems that immigration can have that effect.

And, as Ian Dunt https://www.politics.co.uk/blogs/2020/02/19/the-end-of-free-movement-this-is-a-nation-dismantling-itself points out, this immigration system was what it was all about- those dog whistle posted of asylum seekers, take back control, IDSs scapegoating for his own ideologies failures, and it’s... it’s a bit lacklustre isn’t it?

[Dipper]

@ Ander Broadman "Blimey, this piece has attracted an above average share of poorly thought through mental gymnastics- it seems that immigration can have that effect."

I would say the 'poorly thought through mental gymnastics' comes primarily from the pro mass immigration side. I note that you make a statement and then completely fail to give an example, and deal in insult rather than argument.

So, let be specific, Ander Broadman, do you see any economic reason for there being an upper limit for migration? If not, would you be happy with a billion people coming to the UK? Do you think that would cause any problems?

[Dipper]

Why, given recent performance, would I give any credence to anything an economist says?

Economists are the embarrassing younger siblings of the scientific world, engaged in cargo-cult activities. 'Me me, I'm clever too. Look, I have theories, I write papers!' Yes but all your predictions are rubbish. None of them work out.

[jim]

What is the UK government's strategy? does it even have one? Well, Boris and Dommy are not likely to tell us so perhaps we can work out the likely direction.

Plainly the immigrant thing is pure politics, to silence the gammons for a while. Immigration controls are easily manipulated and changed to suit emerging circumstances. Once the price of strawberries at Wimbledon is seen, plans will change. Then EU negotiations are at a very early stage, we look to be playing a game of 'no-way ping pong (or wiff-waff)' that will last until the autumn. Then Boris will roll over and accept whatever it takes to keep lorries moving at Dover. So far, so childish, but where next.

We have services, what of them. They seem fairly adaptable, legal entities can be set up anywhere useful, the UK can be used as a back office or as a front office depending on circumstances. By the time you have created an offshore bank or insurer or advertising company you might as well go the whole hog and leave your home base entirely.

A balanced economy needs some manufacturing. China's troubles may encourage the formation of Europe based plants, but where? The UK is not too well situated geographically, better to place any new plant in say Slovakia. Perhaps we can sell Norfolk to the Chinese and operate a free port there. But tariff barriers might make that unattractive.

So far I have failed to come up with any sort of long term strategy. I think Boris and Dommy have the same problem. They do have 5 to 10 years to think about it.

[Ralph Musgrave]

The first two paragraphs of the above article are badly flawed. Contrary to the suggestion that “Businesses and public services could struggle to fill vacancies”, they will not “struggle” in that (as the first para rightly says) the immigration system will be “points based”: i.e skilled labour will be allowed in.

As for UNSKILLED labour, letting in that sort of labour (plus associated skilled labour) simply leads to an increase in the population which has NO EFFECT AT ALL on unfilled vacancies as a proportion of the workforce: witness the fact that the US has been importing a million people a year for two hundred years, yet (surprise surprise) unfilled vacancies as a proportion of the workforce stays the same year after year and decade after decade.

[Jeremy Harrison]

"So, why do people think otherwise?"

I think the reason is that people just extrapolate from the micro-sample to the whole. In the micro-sample - of a few people working (or not) for a company - if that company takes on an immigrant (at whatever level), that position is not occupied by a non-immigrant - so the total/average pay of the non-immigrants is reduced (as part of the total is going to an immigrant).

The fallacy is of course that - in the whole - the overall total pay is increased by the presence of immigrants: but this is not apparent in the micro-sample of people's experience.

[Laurence]

The graph would be even better if it also indicated the Government at the time:

Between March 1980 and 1997 the Tories were in government and the share of GDP in wages fell from almost 54% to just over 44%; between 1997 and 2010 Labour were in government and the share rose from just over 44% to nearly 52%; from 2010 the Tories were in government again and the share fell again.

Conclusion: immmigration is not the problem, it is Tory governments.

[Scurra]

@Dipper: So, let be specific, Ander Broadman, do you see any economic reason for there being an upper limit for migration? If not, would you be happy with a billion people coming to the UK? Do you think that would cause any problems? I am not Ander Broadman, but my answer is no, obviously not and probably. The difficulty with absurd hypotheticals is the degree to which one is prepared to engage with the absurdity rather than the hypothetical.
So, in response: consider that the entire population of the EU could have come to the UK if they had so wished. Or, in reverse, the entire population of the UK could have moved to, say, Belgium.
Remind me when this actually happened?
We have handled mass migration perfectly easily and could continue to do so because we are an advanced economy with complex structures (even if one might think that those structures are badly broken.) But the word "mass" here is clearly a misnomer since it's not "mass" in any helpful way as something that is <1% of the population in any given year could not possibly be that.
We've never had to handle 5m people arriving overnight (and that's still <10%). I'm not sure that any country of any size ever has outside of World Wars and even then the situation was not wholly comparable. (But there are scenarios in which countries have taken a vast proportion of refugees; we haven't had to do that here, probably ever.)
But I am also pretty sure that, should there be a circumstance in which we were asked to take in 5m people overnight, those circumstances would probably be sufficient to ensure that we would. Let's posit that "the Low Countries" were suddenly and instantaneously flooded and ~25m people needed a new home tomorrow. I'm pretty certain that the UK in general would be perfectly happy to take 5m people or more and not bat an eyelid.
It's just that 15-20% of the population would probably not be happy. Maybe they are the ones with the problem, not the migrants?

[aragon]

https://www.telegraph.co.uk/news/2020/02/21/europe-uneasy-migration-wont-say/

"The problem with the domineering, “liberal” response to this issue is that it involves ignoring some quite large facts. The biggest is that Europe is undergoing a profound shift in population. In the last 30 years, western European countries have seen enormous growth in the proportion of their population that was born abroad. In the UK it went from 6 per cent in the mid-1990s to 14 per cent in 2018. In Spain, it has grown from 3 per cent to 14 per cent, in Germany from 11 per cent to 16 per cent and in France from 7 per cent in the late-1990s (earliest comparable OECD data) to 12 per cent."

[Dipper]

@ Scurra

firstly, thanks for the reply.

Having a long memory I remember when FOM was introduced by Blair, and he said only a few thousand would come over and reports of more were scaremongering. Several million later and people claiming we cannot function without them, my conclusion is no-one can predict it, and once it has happened you cannot undo it. Parts of Greece, Rumania, Poland pretty much have cleared out.

You appear to be neutral on the subject of whether we should have mass immigration. The issue is that with so many economists claiming that mass immigration at minimum wage is a benefit than surely you cannot be neutral. If it is such a boon we should be encouraging absolutely enormous amount of it.

[georgesdelatour]

“[immigrants] don’t just add to the supply of workers. They also add to demand.”

I think the the growth in aggregate domestic demand is the main economic boost from mass immigration. The rest is mostly noise.

Industrial society came into existence in the late 18th century on the back of a population explosion. This ensured a positive feedback loop of ever rising demand for the products of industrial society. The demographic transition is starting to bring this era to an end, and our elites haven’t got a plan for how to run an economy in which aggregate demand stagnates or even falls. Hence mass immigration.

Imagine you’re the boss of a major supermarket chain like Tesco or Walmart. You’ll want immigration mainly because it increases the number of customers you can sell to. Yes, you can employ some of them in your depots and stores, but if you couldn’t employ them for some reason, you’d get around it with more robots and automated checkouts instead. For a business, a shortage of staff is a lesser problem than a shortage of customers.

Daron Acemoglu has studied the two main low-immigration, low-fertility societies of East Asia: Japan and South Korea. They’re doing better than us on productivity, and they’re mostly avoiding labour shortages by investing heavily in robots. Japan’s population decline even has some quality-of-life benefits. In Tokyo, the amount of floorspace per resident is actually going up, for instance. But the big macroeconomic problem remains: stagnant domestic demand.

But unless we envisage population rising forever, we’ll have to confront this issue eventually.

[Jim]

"But unless we envisage population rising forever, we’ll have to confront this issue eventually."

Exactly. The Western social democratic model is a Ponzi scheme based on there being enough young people working to pay for all the old (and sick etc) who aren't. Thats why the Western response to falling birth rates and problems finding people to do the 'skiv' jobs has always been 'lets import some poor foreigners to do those jobs, and get the tax take up'. It can't work forever, rather like the other Western response to economic trouble - lets borrow our way out of a recession, each time taking on more debt than the last. At some point the can kicking hits the end of the road.

[Dipper]

Before we massively expanded our population, we didn't seem to have too many problems at the low wage end. For much of the latter quarter of the 20th century the problem was an oversupply of workers, not an undersupply.

The absolutely critical thing about this immigration policy is that if needs be, we can change it. There is a world of managing things where rather than trying to find a universal solution for all needs and all time, you implement a best guess, and then tweak it if you need to. So if we end up with a specific problem with, say, harvesting parsnips, then we can have a discussion on ways to solve the parsnip-picking labour supply problem. And without wanting to appear to pre-empt those discussions, I bet the solution "lets give 500 million people an automatic right of residence in the hope that some of them fancy picking parsnips" won't make the short list.

[Dipper]

... and whatever happened to supply and demand? Since when has any serious economist proposed that employers have an automatic right to an infinite supply of workers at a government-specified rate?

[Charlie Aerö]

@Vox Populi, Vox Dei

As Alcuin of York wrote:

"Nec audiendi qui solent dicere, Vox populi, vox Dei, quum tumultuositas vulgi semper insaniae proxima sit."

"And do not listen to those who keep saying, 'The voice of the people is the voice of God.' because the tumult of the crowd is always close to madness."

[aragon]

@Charlie Aerö

Democracy is inconvenient :)

[Fran in Glasgow]

‘And if women can use cheap immigrant childcare they can go out and work longer hours.’
How to undervalue childcare workers,children and mothers all in one club sentence !

[Dipper]

just to bang on about this, in the aftermath of BBC journalist/presenter Sheila Fogerty saying in the aftermath of "that now-notorious Question Time tweet" that the reason for poor public services was austerity not immigration, perhaps some very clever economist can explain to stupid-old-me that if the mass immigration we have seen is good for our economy, and that our public services are currently stretched, then how is it that government expenditure as a percentage of GDP is at a multi-decade high? Where is your evidence that immigration increases tax receipts faster than the demand for public services, given that the ONS figures would seem to imply the exact opposite?

[Stephen Lindsey]

Good stuff Dipper

[Paul]

"then how is it that government expenditure as a percentage of GDP is at a multi-decade high? Where is your evidence that immigration increases tax receipts faster than the demand for public services" Dipper.

But since 2010 Gov expenditure as a proportion of GDP has fallen year after year. From 46% to 39% over the last decade. (Trading Economics)

The evidence on net fiscal impact of immigration is mixed but overall quite small. According to Migration Observatory at Oxford. It's more positive though for more recent migrants:
"There is no single ‘correct’ estimate of migrants’ fiscal impact. Different studies make different assumptions and not everyone will agree on what the best choices to make are (see ‘Understanding the Evidence,’ above). Studies examining the fiscal impact of migrants have produced different results, although in all cases, the impacts have been estimated at less than +/- 1% of GDP." The Migration Observatory. 2019.

Clearly we know per capita spending on NHS has fallen in real terms. Ditto in education, per pupil spend. Housing policy has been a clusterf*k for far longer so in short it does appear to me at least that the first order economic/fiscal impacts of immigration do not impinge on gov spending on health,education and housing.
Which rather lays the blame for shortages in those areas in the political realm.
ie: NOT THE MIGRANTS!

[PeteW]

@Dipper

"...how is it that government expenditure as a percentage of GDP is at a multi-decade high?"

It isn't. According to the OBR it's at about the average for the past 50 years.

https://tradingeconomics.com/united-kingdom/government-spending-to-gdp

[Dipper]

my mistake. I said government expenditure when I meant tax burden, which is the highest since Wilson.

https://www.taxpayersalliance.com/analysing_the_record_high_tax_burden

And for clarity, blaming the government for immigration policy is not the same as blaming individual migrants. Everyone understands that migrants move in search of the best for themselves and their families. It is down to government to manage this process.

[Soreko]

I would agree that the causes of income and regional inequalities are not primarily driven by immigration. But I think there is more going on, in a subtle way than pro-mass immigration advocates make out. THe liberalisation of international labour flows -mass (economic) immigration - I am not talking about refugees - Britain admits miserably few numbers of refugees compared with the (old) EU countries- is another part of recent uber economic globalisation - the other being that of trade and capital.

We also need analysis independent of Portes and his neo-classical advisers (Dustman et al). Portes' has to justify the huge increase in migration to the UK because he was basically behind it.

Putting all this aside, whether you think the sudden increase in immigration from the 200s has been good or bad, it was politically and unnecessarily risky. Put bluntly, the consequence was Brexit. The EU got mixed up in the immigration debate as a result of rapid eastward expansion and without any safeguards - ie transitional controls - something Portes was very much behind.

I agree that Britain is not a nice place for immigrants at the moment. And I am one of many people who are suffering the consequences of loosing my rights in the EU and directly impacted by it.

But we need a more nuanced discussion of immigration that is socially and historically well-informed if we are really going to understand immigration concerns and take on the far right. This must include unqualifiable but verifiable evidence. Ie more anthropology and sociology. In terms of policy, immigration must be directed towards refugees.

[Soreko]

Sorry, I meant unquantifiable, but verifiable. And 2000s, not 200s.

[Soreko]

"Parts of Greece, Rumania, Poland pretty much have cleared out."

This is an important point, particularly for the self-described 'internationalists". Moldova is completely dysfunctional. It has lost all its skilled labour. Reason: Romania, to cover its own mass losses offers Moldovans EU passports.

It's absolutely tragic. What do you think are the consequences of Britain taking doctors and young people such as teachers from places where resources are even more scare? People need to get beyond the statistics and start doing some field work:

https://www.youtube.com/watch?v=SKzMShLaB6w

[Soreko]

Perhaps some very clever economist can explain to stupid-old-me that if the mass immigration we have seen is good for our economy, and that our public services are currently stretched, then how is it that government expenditure as a percentage of GDP is at a multi-decade high?

Their answer is that lower growth through austerity lowers the denominator (of GE/GDP).

But I agree with you. We are paying the consequences of the economic profession's advocation of uber-globalisation 1980 - 2010 - which included deregulation of capital and goods flows as well as labour flows (economic migration). This is based on neo-classical theory (eg comparative advantage) and micro economic notions that winners can compensate losers through lump sum fiscal transfers.

I agree with Chris, immigration is not the cause of problems in Britain's capitalism. But there is more going on than the current figures that dominate the immigration analysis in the economic profession in Britain acknowledge. David Card in the US is someone who is I think looking at the issue in the right way. We also need less econometrics with its homogeneity, more field work.