New Report: Migration and Development

The best international development policy would be to let in more workers from the third world in to work in Britain, according to a new paper from the Adam Smith Institute. Politicians should stop trying to save entire countries with foreign aid programmes and instead help their inhabitants by letting them move to developed countries, it says. The report Migration and Development argues that doling out billions in foreign aid risks propping up corrupt kleptocratic governments and having little impact on development; letting people move to where they can be most productive is a reform that really works.

The paper, authored by Swedish policy analyst Fredrik Segerfeldt, suggests an immigration target, modelled on the 0.7% of GDP foreign aid target, in order to boost the welfare of the global poor.

Not only would this help the migrants themselves, but it would even help their source countries to develop, Segerfeldt says. Migrants send around three times as much home in remittances as governments send in foreign aid, and this private development aid is far better targeted, going directly to those in need and not through flawed institutions. The money is often used by developing country citizens to educate themselves and raise their human capital, helping to create a virtuous development cycle.

To assuage worries that migrants will empty the state’s coffers as a fiscal burden on the state, Segerfeldt advocates both that migrant work permits be temporary, and that the full suite of benefits would only be available to natives.

To access the full press release, click here.

To download the report for free, click here.

Liberalising Immigration is a Win-Win scenario

Draconian immigration rules represent the largest restriction on liberty in the UK today. They restrict the personal and economic potential of millions of people and achieve little in return. How to roll back these limits on freedom? Think tanks have a difficult dilemma. They want to build a reputation as radical thinkers, but at the same time propose moderate policies. Early drafts of this essay argued that Britain should be more open to this or that group, but the truth is that both hard-headed economics and human decency demand wholesale liberalisation. Immigration restrictions curtail our ability to hire, sell to, befriend and marry the people we want to. People understand this – it's why people view immigration to their local area much more favourably than on the national level. And they have an enormous economic cost.

The ASI's namesake argued that the division of labour is limited by the extent of the market. Everyone accepts the case for free trade, but that leaves markets incomplete, because non-tradable services (like haircuts) can't travel across borders. Freeing people to move where they wish would let people go where their talents would be best used. The productivity of someone with an engineering degree – the amount can achieve with their labour – is many times lower in some areas of the developing world than it is in the UK.

The benefits to migrants are best illustrated by the lengths migrants are willing to go to to cross borders. Smugglers charge thousands for passage from Libya to Europe, and the journey is fraught with risk, but hundreds of thousands make the journey anyway. Migration lets people escape poverty, war and authoritarian regimes.

The Mariel Boatlift is an example of this. In 1980, 125000 Cubans fled Castro's regime, landing in Miami. Their liberation increasing the size of the local labour force by 7% almost overnight. But economists found almost no impact on wages and the labour market.

7% of the UK labour force works out to approximately 2.3m people. The government could auction off permanent residency permits to that many people each year. Such a radical policy would be disruptive. It would have costs, losers as well as winners. But the potential benefits are too colossal to ignore – a Britain where not only workers and jobs but husbands and wives, parents and children, potential pub geezers would not be separated by arbitrary borders.

Theo Clifford is winner of the 18-21 category of the ASI's 'Young Writer on Liberty' competition. You can follow him on @Theo_Clifford, and read his blog at economicsondemand.com.

Economic Nonsense: 41. Immigration is bad for the economy

Many argue that immigration harms the economy.  Some suppose that immigrants are attracted by welfare, and come to live off benefits at the taxpayers' expense.  Others assert the contradictory claim that "they come here to take our jobs."  Schrödinger's immigrant, like his cat, seems to manage two states simultaneously.  Some point to the pressure on services and resources, with immigrant children filling classrooms and their sick taking up hospital beds and lengthening waiting times to see doctors.

The reality is that most immigrants are young and ambitious, coming to better their lives.  They are overwhelmingly fit and looking for work.  Many of the jobs they take up are ones whose low pay and long hours do not appeal to the native population.  Most do not draw benefits or take up hospital space.  In some sectors they help fill skill shortages, and many UK businesses clamour for more educated and talented foreigners to be allowed in.

The work they do adds to our GDP and boosts growth.  The taxes they pay boost our public finances.  Most immigrants have shown some drive in being prepared to move to a new country to improve their lot.  Some have scraped up cash to finance their trip.  Some have taken risks on their journey.  They constitute a huge net plus to the economy, not a minus.  

It is true that in some areas, particularly if they concentrate, they can put pressure on local facilities.  A minority seeks to retain a culture that sits ill alongside the tolerance and liberalism that Britain has developed over its history.  These are indeed problems, but they are ones that can be addressed and dealt with, and some are temporary rather than long-term. 

Immigrants do one more positive thing for the economy.  Most countries in Europe face declining and ageing populations, and will encounter difficulties if there are not enough young people in work and paying taxes to support the elderly with appropriate services.  The UK population is not declining, and it is immigration that is making the difference.  Far from constituting a problem, it is in this case a solution.  

They must be mad, literally mad: to be lucky in one's opponents

It is easy to take the view that we British defenders of immigration have never had a tougher time being heard over the omnipresent calls for restrictions, policy changes, and–most frequently–an “open and honest debate” on the subject. Issues of immigration and race relations have indeed increased in salience, but I remain bemused by (and somewhat thankful for) the sterility of the debate as it exists today. Opponents have got to the absurd point of having to pretend that it isn't immigration that they care about, but migration. To this end, they speak about net migration rather than immigration statistics, and give their pressure groups names like Migration Watch. In my view, this is quite transparently a PR move and nothing else. Migration Watch claim that their goal is ‘balanced migration’, though I doubt they would be delighted if tens of millions of Brits were replaced with immigrants each year. I am entirely willing to be convinced otherwise when the soi-disant migration sceptics urge the government to do everything it can to reduce net migration – including using state power to increase emigration (perhaps subsidies for yet more Brits to move to sunnier climes).

When one's opponents have to contort themselves in this way, resorting to the specious economics of the so-called lump of labour fallacy (which most good evidence seems to refute), one should be grateful. They are hobbled by their partial adherence to ideas of acceptable discourse set out by those who would see them silenced. They are less likely to be accused of racism while talking about pressure on wages or queues at the GP surgery than about the merits of multiculturalism.

Various arguments against immigration are unheard beneath this cacophony of mistaken economics. Speaking to the sense of insecurity–alienation, even–that some feel in response to the changing character of their communities, these points can be troubling when made with passion. Enoch Powell wasn't citing the fluctuation of net migration statistics in his Rivers of Blood speech. Neither was Robert Putnam (though not an opponent of immigration per se) in Bowling Alone when he reflected that the more diverse the community

…the less people vote, the less they volunteer, and the less they give to charity and work on community projects. In the most diverse communities, neighbors trust one another about half as much as they do in the most homogenous settings.

The observation that these arguments aren’t being made is less cause for optimism and more for wariness. For the moment, while our opponents for the most part refrain from basing their arguments on normative claims about the cultural effects of immigration, and focus on claims about economics, we can rebut, present evidence and, I hope, convince some people that they are mistaken. Indeed, when surveyed, people report that they are most concerned about immigrants’ effects on jobs, public services, and wages, rather than culture, so it might follow that they can be convinced otherwise by contradictory evidence.

However, if the point comes when those opposed to liberal immigration policy realise they are abiding by standards which restrict their side and weaken their argument, and stop doing so, those of us who want immigration (and lots of it) should be worried. The other day, Nigel Farage spoke about protecting our ‘Judeo-Christian’ culture, and yesterday of the moral cowardice of Europe: a taste of what we've avoided, or of something yet to come?

Farage, ‘improper’ English and his inimical proposal

Attacking people who “cannot speak English properly” with suggestions of unemployment is just the tip of the iceberg of inimical and inhumane anti-foreign and anti-immigrant policies that threaten to lead Britain into socioeconomic retrogression. Farage also claims that “middle management” would be his target in making cuts in the NHS and, though this aspect is justified and welcome, the fact that it’s accompanied by the aforementioned divisive rhetoric reveals the discriminatory sentiment and true roots of his policy suggestions. Of course, this proposal would only affect the NHS but the danger is that when such sentiments are formally empowered in elections, it will inevitably lead to similar regulations being extended to other spheres and, therefore, also inhibit the private sector’s ability to recruit talented individuals. The Entrepreneurs Network released a report showing how we are already failing international graduate students and, therefore, British businesses: “Although nearly half, 42%, of international students intend to start up their own business following graduation, only 33% of these students, or 14% of the total, want to do so in the UK” – current immigration policy is already unfavourable toward beneficial, legal migration.

Mukand (2012) found that “the globalization of labour could dwarf those from foreign aid or even the liberalization of trade and capital flows. For example, a decision by developed countries to liberalize immigration restrictions by a mere 3% could result in an estimated output gain of more than $150 billion”; simply put, the proposed policy road UKIP is signalling with its anti-immigrant, anti-multicultural and xenophobic rhetoric is poor Economics that will, undoubtedly, make Britain poorer.

The attraction for many Europeans to come here, instead of elsewhere, is to learn English; the best way to learn a foreign language is to speak it and live where it is spoken. A major reason why India has been particularly successful in exporting services is the workforce’s inherent, multilingual capabilities. The only way Britain will be able to compete effectively, develop and exporting more is to have more multilingual people and this will inevitably require native speakers of foreign languages. A hostile environment toward bilingual and multilingual peoples will exacerbate the pre-existing shortage in both the private and public sector (the military, for example, is facing a particularly acute shortage). Furthermore, if people are discouraged from coming to Britain in the first place, it will significantly diminish our cultural capital.

Finally, don’t make the mistake of thinking that the upcoming UK elections are only really relevant for Britain. Just because our economy and our armed forces make up a far smaller proportion of world output and military strength than they did previously does not change the fact that this election’s outcome will have profound, global implications. The whole world is watching closely, as was the case with Scotland’s independence referendum.

Though both Britain and the USA are doing comparatively well (growth, unemployment and all that), Britain has the added attraction of having a welfare state that Europeans (amongst others) love and, therefore, this means that many look here. The increase in migration (both perceived and actual) reflects Britain having fared better (probably also contributed to it having done better) and, thus, people the world over look to British public policy; hence, as the voting public, we have essentially been called upon to be global leaders and good leaders lead by example.

Farage has carefully exploited anti-foreigner rhetoric and UKIP is our (albeit more civilised and less extremist) version of the extremist parties that have gained popularity during these hard times. When we vote anti-foreign, it will encourage those who look to us to reciprocate. Subsequently, trade restrictions and currency wars will intensify alongside a myriad of other protectionist policies and international hostilities (all of which happened in the run-up to WWII).  We need to think carefully about the examples we set and the rhetoric we reward and, what's equally as important, the rhetoric we keep quiet about.

Free movement and discrimination: the case of football

The more you open markets up, the less discrimination you get on grounds of 'taste' (racism). The stuff left over is usually 'statistical' (i.e. where certain groups are different in their average levels of job-relevant criteria). There was already a great paper showing this for the Fantasy Premier League (which I play avidly), but now there's also one for the real Premiership! Pierre Deschamps and José de Sousa look at the impact of the 1995 Bosman Ruling on the gap between black and white footballer wages in the English league. They find that when only 20 clubs competed for their skills, black players were underpaid relative to white ones, indicating that owners were able to indulge their preference against non-whites (or indulge their fans' preferences).

But once the whole of Europe were effectively on an equal footing, blacks became highly mobile and garnered equal pay for their efforts:

This paper assesses the impact of labor mobility on racial discrimination. We present an equilibrium search model that reveals an inverted U-shaped relationship between labor mobility and race-based wage differentials. We explore this relationship empirically with an exogenous mobility shock on the European soccer labor market. The Bosman ruling by the European Court of Justice in 1995 lifted restrictions on soccer player mobility.

Using a panel of all clubs in the English first division from 1981 to 2008, we compare the pre- and post-Bosman ruling market to identify the causal effect of intensified mobility on race-based wage differentials. Consistent with a taste-based explanation, we find evidence that increasing labor market mobility decreases racial discrimination.

The figure below shows how the 'turnover' (i.e. churn between clubs) of black English players jumped when European markets opened up. Market freedoms; exit; a sort of 'voting with their feet', outperformed voice in bringing equality. And we know from ASI research that this did not harm the English national team.

This is in line with a lot of what we have been saying recently—markets are a good way to bring about justice!

Our visa system is failing international graduate entrepreneurs

The Entrepreneurs Network has just released a new report. Based on a survey of 1,599 international students, Made in the UK: Unlocking the Door to International Entrepreneurs reveals how the UK’s visa system is failing international graduate entrepreneurs who want to start a business in the UK. Undertaken with support from the Adam Smith Institute and in partnership with the National Union of Students (NUS), we find that a significant proportion of international students – that is students coming from outside the EU – have entrepreneurial ambitions. In fact, 42% of international students intend to start their own business following graduation. However, only 33% of these students, or 14% of the total, want to do so in the UK. Clearly we are doing something wrong.

The Tier 1 (Graduate Entrepreneur) visa was set up in 2012 to encourage international graduates to start their businesses when post-study routes were taken away. However, uptake has been woeful and the results of the survey suggest this isn’t likely to change any time soon:

• Just 2% of respondents intending to start a business following graduation applied for the UK Tier 1 (Graduate Entrepreneur) visa, with almost two thirds, 62%, saying they didn’t even consider it.
• Nearly half, 43%, of respondents think their institution is certified to endorse them for a Tier 1 (Graduate Entrepreneur) visa.
• Only 18% think that the UK has better post-study processes in place for international students than other countries; 32% think it is worse than other countries.

Based on these and further findings, the report puts forward nine recommendations for government, including:

• Removing the Tier 4 ban on self-employment for those working within an institutional programme (curricular or co-curricular) or other accelerator.
• Allowing UKTI-approved accelerators to endorse international students in their programmes under the Tier 1 (Graduate Entrepreneur) scheme.
• De-coupling the risk for educational institutions in endorsing international graduates for Tier 1 (Graduate Entrepreneur) visas from institutions’ Tier 4 license. This should be made explicit in the official Home Office guidance and in the way the Home Office applies its audit procedures for institutions.
• Reinstating a post-study work visa, de-coupled from the sponsor system, to allow international students to explore markets and industry before finalising their business idea for the Tier 1 (Graduate Entrepreneur) application. In fact, 81% of the respondents considering starting their own business are interested in the possibility of permanent residency under the Tier 1 (Graduate Entrepreneur) visa.

Our visa system isn’t supporting the entrepreneurial ambitions of international graduates. As things stand, we are training some of the world’s best and brightest young people at our world-class universities only to push them to set up their businesses overseas.

Philip Salter is director of The Entrepreneurs Network.

The point about visa systems is that they are reciprocal

We don't do party political partisanship around here so allow us to tip toe very gently through this latest proposal from the Labour Party over visas, tourist taxes and waivers. There's a significant problem with what is being suggested: the end result will be a tax on British people who decide to go to other countries. The proposal is the following:

Labour will seek to beef up its pitch to voters on immigration with a pledge to pay for 1,000 extra border guards by imposing a charge on visitors from the US and 55 other countries.

Yvette Cooper, shadow home secretary, will criticise other parties for engaging in an “arms race of rhetoric” on the issue, which has been thrust to the centre of political debate by the rise of Ukip.

But she will accept that the opposition “needs to talk more” about public concerns and will say action to restore public confidence that illegal entrants are being caught and dealt with is “vital for a progressive approach”.

Under the proposals, nationals in countries enjoying a “visa waiver” system of fast-track permission to enter the UK will be hit with a charge of around £10 per visit, which the party said would more than cover the £45m cost of the additional staff.

Leave aside what the Tories say about it (roughly speaking, "Yah! Boo! Sucks!" as far as we can see) and leave aside the silliness of such hypothecating of taxes (the amount that we should or desire to spend on one particular thing has absolutely nothing at all, whatsoever, to do with how much we can raise in taxation from either that or any other specific thing. All taxation should be flowing into one pot to be distributed. Think, for a moment, if such a visa tax reduced the number of people arriving legally. Would that reduce our need for more immigration officers to deal with people arriving illegally? Not obviously, but under a hypothecated tax system it would reduce the budget for them).

And consider simply the fact that all visa arrangements are reciprocal. If we demand a visa from the citizens of Dystopia then Dystopia will demand visas from Brits. If we offer a visa waiver scheme for visitors from Utopia then Utopia will offer a visa waiver scheme for Brits going there (Utopia, obviously, being that mythical place where the NHS works).

If we impose a charge on people from 55 countries for a visa waiver then those 55 countries will impose a charge on Brits going to those 55 places. And one more thing: we think we're right in stating that more Brits go to other places than people from other places come to Britain.

So, the net effect will be a transfer of money from Brits to foreign governments. As more of us will be paying to go to 55 countries than citizens of those 55 countries will be paying to come here.

Making foreign governments richer is a very odd indeed method of increasing revenues to pay for services in the UK.

As at the top there this isn't party political partisanship. It is instead a call for all politicians to understand Chesterton's Fence. If you see a fence somewhere you shouldn't pull it down until you've worked out why someone built it in the first place. Only when you've understood the original reasons, then ensured that they no longer apply, should you proceed with destruction.

Why do we have visa waiver schemes with no charges? Because visa systems are always reciprocal. We charge them and they will charge us, not obviously to our benefit.

This isn't about the Labour Party this is about a politician not bothering to think.

Banning Blanc from Britain stifles free speech

Sky sources have learned the so-called pick-up artist Julien Blanc will not be allowed to enter the UK.

The decision to deny Julien Blanc's entrance into the UK has set the precedent that freedoms of speech and expression can be criminalised, if and when enough people sign a petition.

Blanc's comments are socially reprehensible and offensive to both men and women, but if we do not respect the rights of the offensive, we start risking the safety of any minority viewpoint.

Those upset by Blanc's remarks have the opportunity to push back in cultural and social spheres; they do not need to call on the government to ban things they find socially disturbing. Private event businesses can take after EventBrite and deny him platforms, people can boycott his events, and viewers can turn their televisions off when he is on-air voicing his opinions.

The market has ways of listening to the moral needs of its customers, and while it is not a perfect system, it can serve to bankrupt those who are morally reprehensible without criminalising them for non-criminal behaviour.

Surely, we must recognise that there is a fundamental difference between the private sphere taking away one man's platform to be noticed, and the state taking away every person's platform to speak freely without threat of punishment or criminalisation.

This ruling should not just be a wake-up call to public hysteria, but also a reminder of how flawed the UK immigration system is. The Home Office can legally deny anyone entrance to the country if their character or opinions are not deemed conducive to the ‘public good'.

This is Big Brother at its worst - 'protecting' the people from speech criminals, who are a danger to the moral good; let any who speak out be at the mercy of mob rule, and the Home Office.

Are immigrants dangerous criminals?

Sometimes supporters of strict migration controls criticise my focus on the economics of immigration. They more or less accept that free movement leads to productivity gains, innovation gains, entrepreneurial gains and fiscal gains for the receiving countries, ‘brain gains’ for the migrants’ home countries, and even that it leads to massive welfare gains for the immigrants themselves, but suggest that the non-economic costs of immigration are very large too, and we basically ignore them. 

They have in mind costs like increased crime, reductions in social trust, a decline in democratic support for important institutions like the rule of law and free speech, and the dilution of the native culture. To some extent I believe all of these things are costs of certain kinds of immigration, and may justify certain controls on immigration, but none are reasons to support the immigration controls that we currently have.

In this post I’ll consider how much impact immigrants have on the crime rate. I’ll come back to some of the other points in future posts.

So: crime. Crime only seems to rise in line with certain kinds of immigration, and does so for basically economic reasons. A 2013 study looked at two different waves of immigration to the UK – asylum seekers in the 1990s and early 2000s (mostly from places like Afghanistan, Iraq and Somalia); and immigration from the “A8” countries (Poland, Czech Republic and the six other Eastern European states that joined the EU in 2004). 

The paper looked at crime rates according to areas where these waves of immigrants settled. It found that neither of these waves had any statistically significant impact on the overall rate of violent crime. A8 immigration actually had a small negative impact on crime rates, driven by a reduction in property crime rates. 

On the other hand, asylum seekers did cause a statistically significant rise in property crime, but still a small one. This  equivalent to an increase of 0.7% in property crime rates per 1% percentage point share of the local adult that was asylum seekers. Note that this is a percentage increase to the existing crime rate – if crime rates were already 10% and a new wave of asylum seekers suddenly accounted for 1% of the population, crime rates would rise to 10.07%, not 10.7%.

According to the report’s authors,

“Across all England and Wales [asylum seekers] averaged 0.1% of the local adult population, so the average property crime rate might be 0.07% higher as a result – only around 2% of the average property crime rate of around 2.7%. Of course, some authorities had appreciably more asylum seekers located in the area, though shares larger than 1% of the local population were extremely rare.”

What explains this? There might be because of some inherent difference between, say, Polish and Iraqi people, but violent crime levels were not significantly different (in fact, A8 migrants were slightly worse here than asylum seekers). What may explain the difference is that A8 immigrants were free to work however they wished, whereas asylum seekers are not allowed to seek legal employment. The authors of the 2013 report suggest that this explains why only property crime was higher for asylum seekers.

This data is not broken down by nationality, so it is rather blunt. According to another 2013 paper, arrest rates (which are broken down by nationality) were significantly higher for immigrants than non-immigrants – 2.8 arrests per 1000 for UK nationals and 3.5 arrests per 1000 for non-nationals (excluding immigration-related arrests). However, controlling for age this difference disappears. Having more young people seems to lead to more arrests; in and of itself having more immigrants does not.

Finally, there is the issue of second- and third-generation immigrant groups who cause disproportionately more crime. According to the Metropolitan Police, the majority of men held by police for gun crimes (67%), robberies (59%) and street crimes (54%) in London in 2009-10 were black, even though only 10.6% of London’s population is black. There is no easy explanation for this, and it may be due to a combination of factors that we cannot control – or, indeed, easily change.

The ultimate lesson of all this may be that immigration in general does not have a big impact on crime, but certain immigrant groups might if they do not assimilate culturally. Then again, Eastern Europeans don’t seem to be a problem at all, and they seem to be the ones we’re most concerned about right now. 

My friend Ed West has a point when he says that there is no such thing as an ‘immigrant’ – only an American, a Pole, a Somali, and so on. In the course of my posts on the non-economic impacts of immigration, I will suggest that a compromise position between my libertarian preference for very free movement and Ed’s conservative preference for restrictions. We may yet be able to square the circle of immigration policy.