One of the more persistent fallacies in economics is “Lump Theory": that there is only so much to go around and the question is how it is share it.

The most common example of this is the Lump Theory of Labour, where new entrants to the job market are alleged to take away work from existing workers. This is usually used to bash immigrants, though it has in the past been used to argue for the Closed Shop and for restricting labour-market participation on grounds of gender, age and race.

Another example is what we might call the Lump Theory of Wealth, the Mercantilist belief that money leaving the country means less wealth for citizens. This ignores the rather simple fact that pounds are pieces of paper whereas the stuff they buy is usually far more useful: are we really poorer if we give a Chinaman twenty five pieces of paper, each of which says “Ten Pounds" on it, and he gives us a television? It also ignores the fact that pounds can only be spent in the UK, so eventually they must make their way back here either to buy our exports or as loans to government, business or citizens.

Monday’s Daily Mail had a textbook example of this in the article 'Immigrants send home £4.9m a day'. According to the Mail, “The economy is losing £4.9million every day because of the huge sums immigrants send home to their relatives..." Migrationwatch, the anti-immigration lobby group, suggested that this is enough to build two new aircraft carriers and argued that “claims that there are only positive economic benefits from mass immigration are clearly untrue."

All exchanges in a free society are voluntary; both parties benefit. If companies are paying foreign workers £4.9m a day (for the sake of argument let us ignore the difference between wages and remittances), it must be because companies (and therefore Britain) must be getting something that in the companies’ judgement is worth more than £4.9m. For example, if those foreigners were employed in ship yards, they would get £4.9m a day and we would get (say) Andrew Green’s two aircraft carriers. Thus the labour that these migrants are selling to the UK is beneficial to us.

What is more, those £4.9m cannot be spent abroad: the pound is not legal tender there. At some point the pound must return to the UK, either stimulating exports or providing much-needed credit to UK industry or government. Thus, having gained from the labour of the migrant, UK businesses then gain from the desire of his family to import goods or lend money for profit.

Sadly, this simple economic logic is beyond the lumpen intellect of Migrationwatch and the Daily Mail. To them, as to the Mercantilists against whom Adam Smith railed 233 years ago, the wealth of nations is a zero-sum game expressed by the flow of money.