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.

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.

Just send money!

In an extremely rude thank you letter, Horrid Henry tells his Aunt Ruby that her (admittedly terrible) birthday present is rubbish and she should, next time, send him cash. Beneficiaries of anti-poverty programmes could be forgiven for saying the same thing to welfare authorities. Their schemes are expensive to administer, involve grand ideas, social theories and detailed plans, and yet their results are substantially worse than letting people live where they want to, or just sending them cash to alleviate their bad circumstances. A new paper from the Institute for Fiscal Studies, by authors Laura Abramovsky, Orazio Attanasio, Kai Barron, Pedro Carneiro and George Stoye and entitled "Challenges to Promoting Social Inclusion of the Extreme Poor: Evidence from a Large Scale Experiment in Colombia" only adds to this literature. We can only be glad that the Colombian authorities thought to do a randomized and controlled pilot study, although perhaps they should have waited for its results to come in before rolling it out generally!

We evaluate the large scale pilot of an innovative and major welfare intervention in Colombia, which combines homes visits by trained social workers to households in extreme poverty with preferential access to social programs. We use a randomized control trial and a very rich dataset collected as part of the evaluation to identify program impacts on the knowledge and take-up of social programs and the labor supply of targeted households.

We find no consistent impact of the program on these outcomes, possibly because the way the pilot was implemented resulted in very light treatment in terms of home visits. Importantly, administrative data indicates that the program has been rolled out nationally in a very similar fashion, suggesting that this major national program is likely to fail in making a significant contribution to reducing extreme poverty. We suggest that the program should undergo substantial reforms, which in turn should be evaluated.

Really we ought already to have known this. Anti-poverty schemes seem smart but rarely or never report successes in randomised controlled trials unless they are cash handouts or removals of restrictions that were stopping people from generating wealth themselves (e.g. immigration liberalisation). But, as slow as academic progress works, it does seem like every extra contribution helps push the debate in the correct direction.

Would being more like Qatar be a good way of fighting poverty?

Eric Posner and Glen Weyl have a provocative essay in the New Republic this month arguing that massive guest worker schemes could help facilitate large numbers of immigrants from poor countries to come and work in the developed world. Their model is the Gulf States, which have enormous numbers of workers—85% of the population of the United Arab Emirates, for instance, are guest workers:

If the OECD countries copied the migration policies of the GCC countries, they would reduce global inequality by much more than their welfare systems do within their borders. For example, if OECD countries welcomed migrants in proportion to their GDP at the same rate and from the same poor nations as Qatar does, this would reduce global inequality by about twice the amount that eliminating all internal inequality in the OECD countries would—and by twice the rate that taxes and transfers in these countries reduce global inequality. If they  adopted the same per-citizen rate at which the UAE takes migrants, they could accomplish much more. By taking in the 60 percent of the global population who make less than the bottom five percent in the United States and paying them $5,000 per year, the U.S. and Europe would reduce global inequality by roughly a third.

We citizens of OECD countries take pride in our political and civil rights, and our generous welfare systems. Yet we maintain our high standard of living by giving no rights and trivial money to people who live outside our arbitrary borders. While we fuss over whether we should raise or lower our marginal tax rates, we ignore the plight of the most desperate people in the world. And yet we are surprised that leaders of China and the GCC accuse us of hypocrisy when we criticize their records on human rights.

It's a controversial idea. These schemes seem to address most of the intractable problems that people have with immigration—these guest workers cannot vote, their children do not become citizens of the states they are born into, and they have to return home after a certain period of time, so they can't have the negative lasting impact on culture that some people say immigration will lead to.

But, as I and many other visitors to the Gulf have noted, the system feels almost like slavery. Indeed in cases where workers' passports are confiscated it essentially is slavery. Posner and Weyl are not suggesting this, but their plan would bring the reality of global poverty right up to our doorsteps—provided they know what their lives will be like, we can assume they would be made better off by this, but many people would find actually seeing this kind of deprivation on a daily basis to be unacceptable. But whether we could tolerate this and whether we should tolerate it are two very different questions.

The deep web, drug deals and distributed markets.

On Thursday a conglomeration of law enforcement agencies including the FBI, Homeland Security and Europol seized the deep web drug marketplace Silk Road 2.0, just over a year after the takedown of the original Silk Road site. San Franciscan Blake Benthall was arrested as site's alleged operator (under the alias ‘Defcon’), and charged with narcotics trafficking as well as conspiracy charges related to money laundering, computer hacking, and trafficking fraudulent documents. The authorities allege that Silk Road 2.0 had sales of $8million each month, around 150,000 active users, and had facilitated the distribution of hundreds of kilos of illegal drugs across the globe. The bust formed part of ‘Operation Onymous’, a ‘scorched-earth purge of the internet underground’ which led to the arrest of 17 people, the seizure of 414 hidden ‘.onion’ domains, and the shutdown of a number of other deep web markets. Law enforcement unsurprisingly refuse to reveal how they managed such a raid, leaving to some worry that they have been able to bypass the protections of the anonymizing software Tor, which is used to access deep web sites and to obscure users' identities and location.

Despite the success of Operation Onymous, many deep web markets remain online. Activists liken the shutdown of hidden marketplaces to a hydra: every time a site is taken down others spring up in their place, and thrive from the media publicity of busts. Indeed, the number of drug listings on hidden marketplaces has grown significantly following the takedown of the original Silk Road. Regardless, law enforcement is determined to stamp out the sites, with a representative from Europol warning  “we’re a well-oiled machine. It won’t be risk-free to run services [like these] anymore’.

But what if there was no-one responsible for running such services? Sites like the Silk Roads met their demise because they have a centralized point of failure — get to the server and you can seize the site. Allegedly, cryptographic chunks of Silk Road 2.0’s source code had been pre-emptively distributed to 500 locations across the globe, to enable the site’s relaunch in the case of a takedown. Given the far-reaching impact of Operation Onymous, whether this happens or not remains to be seen.

To be truly immune to government takedown, a marketplace would have to have a decentralized, distributed structure, much like torrent networks and the bitcoin protocol. Enter OpenBazaar, which uses peer-to-peer technology to bring 'secure, decentralized  markets to the masses.' In running the OpenBazaar program, each computer becomes a node in a distributed network where users can communicate directly with one another. A reputation system will allow even pseudonymous users to build up trust in their identity, and naturally, all transactions are done in bitcoin.

The biggest issues plaguing hidden marketplaces are those of trust and enforcement; if goods or payment fail to materialize, you can hardly just contact the authorities. Some sites get around this problem by offering an escrow service, with the money being centrally held until a buyer confirms their goods have arrived. The problem with this approach is that it leaves customer's money vulnerable to scams, hacks, and state seizure. With a decentralized system like OpenBazaar, no such central escrow system is possible. Instead, buyer and seller nominate a third party 'arbiter' (who could be another buyer, seller, or a professional arbiter for the site) to preside over the transaction. Payment is initially sent to a multi-signature bitcoin wallet, jointly controlled by the buyer, seller and arbiter. Funds can only be released from this account to the seller when 2 of the 3 signatories agree to it, allowing the arbiter to adjudicate any dispute.

In such a distributed system, there’s no central body to authorize posts and transactions. There’s also no central server to target. Law enforcement would have to go after all buyers, sellers and computers running the OpenBazaar software to bring the system down.

OpenBazaar is still in beta mode, with a full release expected in early 2015. Teething problems are likely and the design could prove problematic; even within highly decentralized systems there’s a tendency towards the concentration of power, and whilst robust, decentralized networks are often inefficient and expensive to maintain. There's no doubt the authorities are watching, though, and it will be interesting to see their reaction should OpenBazaar succeed.

The software is a re-work of the edgier DarkMarket concept developed at a Toronto hackathon earlier this year, and its developers are keen to highlight its use for selling things like outlawed books and unpasteurized milk over drugs and guns. Certainly, there's value in any global bitcoin marketplace which avoids punitive exchange rates and transfer fees, and like the Lex Mercatoria, can be relied on to provide a level of transactional security when state institutions can not. However, whatever its legitimate uses no state will be comfortable with the idea of a censorship-proof site. The problem for them is that they might just have to get used to it.

It's Monday so it must be sneer at Will Hutton day

My own antipathy to the European Union is, I think, reasonably well known. But I do acknowledge that there are people who like the institution, the ideas and ideals behind it and that at least some of those people are also being both realistic and also expressing their real views. But I can't help but feel that Will Hutton might be able to manage a better defence than this:

Yet Europe’s peoples are shaped by its Christian past, however secular we have now become, and by the Enlightenment, with its commitment to rationality, rule of law and democracy. Industrialisation and urbanisation in Europe forged a powerful commitment to social solidarity. Common underlying values bind us.

Rationality? When monetary policy in the eurozone is resolutely following exactly the mistakes of the Federal Reserve in plunging the US into the Great Depression? As everyone from Milton Friedman though Ben Bernanke to Scott Sumner, with our own Eddie George and Mark Carney in the middle, has been telling us? Rationality when even the creation of the euro was pointed out to be a non-optimal currency area before it was even formed?

Rule of law when the Commission insists that the UK must include prostitution in the measurement of GDP and then charges the country £1.7 billion for having done so? Or the way that the agreed upon rules and laws concerning referenda rather suddenly got changed when people voted the "wrong way" as several countries have done?

And as for democracy I do hope that someone, somewhere, can point to the elections that we've just had for that new European Commission.

There might even be valid defences for the EU but a supporter and protector of rationality, the rule of law and democracy doesn't really seem to fit. Many of us might be rather more favourably disposed to it if it were.

UK politicians' ignorance towards immigration gives Juncker credit he probably doesn't deserve

It’s a tough day when you have to agree with Jean-Claude Juncker. After all, I tend not to see eye-to-eye with those who think the European Commission needs “to be an even more political body.” But today, Juncker came out strong against Cameron’s proposed cap on EU migration to the UK; which is good, important even:

From The Telegraph:

Mr Juncker said: "I am not prepared to change [freedom of movement]. If we are destroying the freedom of movement other freedoms will fall. I am not willing to compromise."

He said that any attempts to address the issue of the amount of benefits being claimed by foreigners would have to be in line with current EU treaties.

“Member states are free to take the initiatives they want as long as these initiatives are line with the treaties," Mr Juncker said.

Here's the problem - I don't think I do agree with Juncker; in fact, I have a sneaking suspicion he and I hold the opinion that free movement in the EU should remain uncapped for fundamentally different reasons. I, for one, don’t think migration is complimented by mandates to ensure a universal ‘minimum social wage’ throughout the EU.

Rather, I see free movement as an integral and necessary component of UK economic prosperity, not to mention a huge benefit for communities that both migrants and natives come in inhabit.

Yet on this particular topic, Mr Juncker and I have the same end goal. And his commitment to protecting free movement—rejecting Cameron’s migration negotiations—has taken us another step towards a full-blown referendum in 2017. Such a referendum, described in the most positive light, would be an opportunity for Britons to discuss and debate the implications EU regulations have on the UK (the specifics of trade agreements and vacuum cleaner bans are two topics that immediately spring to mind…). But there is a deep worry on the part of pro-immigration advocates such as myself that many will use the referendum to lock migrants out of the UK as best they can.

The majority of Juncker’s policies fall short of promoting freedom and prosperity—but on migration, at least his end goals are right. And until UK politicians (all of them really, Conservatives and Labour across the board) stop trying to halt the overwhelming benefits migrants bring to the UK, I find myself in unfamiliar waters, with Mr Juncker as my ally.

Yes, of course we're being lied to, why do you ask?

We're all wearily familiar with the ritual incantations that it's those nasty multinationals that dodge taxes in developing countries and that therefore little babies die. This is not, despite the frequency of those incantations, actually true. The extremely impressive researcher, Maya Forstater, has rather more of the truth for us here:

Nevertheless if current estimates are best we have to go on, they should at least be communicated clearly. One thing that becomes clear once you take away all the showmanship of the killer facts is that the estimates commonly used are simply not that much money. Global numbers in billions are hard to comprehend, but we can make honest and clear efforts to make sense of them on a country-by-country basis. According to the data that ONE sent me (which uses PWC data on national tax rates to estimate the tax revenue losses associated with GFI illicit flows estimates) it looks like most countries where aid contributes a significant proportion of government budgets have estimated trade related tax losses in the region of 15% or less of aid receipts. Not nothing, but not the grand problem-solving amounts we are led to believe.

If you look at what this amounts to on a per capita basis (based on the ONE data and my calculations), Bangladesh could raise $2.77 extra tax for each of its citizens, Ethiopia $6.81, India $9.31and China $4.14. That is dollars; single dollars. Per person. Per year.

We thoroughly recommend reading her whole piece in full. Maya's forte is to take these various reports from the various usual suspects and then drill down into the actual numbers and assumptions that they are making and test the veracity of them. An earlier success of hers was pointing out that estimates that Zambia had been diddled out of $10 billion in copper revenues was based on the pricing structure of 2 tonnes (yes, just two tonnes) of samples that had been sent out. Thus over-estimating the correct copper revenues by a factor of five (the very boring technical detail which I was able to help with subsequent to that article is that samples cost more than production lots. Largely because customs data on pricing (which is where the prices came from) includes the cost of transport in said customs pricing. So if you send someone 20 kg of copper as a sample through DHL the customs price for that 20 kg includes the DHL package costs. Which is, as we all know, rather higher per kg than the transport costs of 10,000 tonnes of copper on a ship).

It's important for us to recognise all of this: and Forstater's major point here is that these numbers we're being fed about the impact of tax losses on developing countries simply are not true.

Unsurprising: Migrants give back to new communities (often more so than natives)

Migrants in high-income economies are more inclined to give to charity than native-born citizens, this Gallup poll finds.

[High-income economies are referred to as "the North"/ middle- to low-income economies are referred to as "the South".]

From 2009-2011, 51% of migrants who moved to developed countries from other developed countries said they donated money to charity, whereas only 44% of native-born citizens claimed to donate. Even long-term immigrants (who had been in their country of residence for over five years) gave more money to charity than natives–an estimated 49%.

Even 34% of migrants moving from low-income countries to high-income countries said they gave money to charity in their new community – a lower percentage than long-term migrants and native-born citizens, but still a significant turn-out, given that most of these migrants will not have an immediate opportunity to earn large, disposable incomes. The poll also found that once migrants get settled, their giving only goes up.

Migrants seem to donate their time and money less when moving from one low-income country to another; though as Gallup points out, the traditional definitions of ‘charity’ cannot always be applied to developing countries, where aid and volunteerism often take place outside formal structures and appear as informal arrangements within communities instead.

It’s no surprise either that the Gallup concludes this:

Migrants' proclivity toward giving back to their communities can benefit their adopted communities. Policymakers would be wise to find out ways to maintain this inclination to give as long as migrants remain in the country.

This is yet another piece of evidence that illustrates the benefits of immigration for society as a whole. (It also highlights the insanity of Cameron's recent proposal to curb the number of Eurozone migrants coming to the UK). Not only does the UK need more immigrants “to avoid a massive debt crisis by 2050,” but apparently it needs them for a community morale boost as well.

Seumas Milne's dodgy statistics on African poverty

Seumas Milne's column last week blamed globalisation for migrant deaths in the Mediterranean. The column isn't that important, but this bit jumped out at me:

As the catechism of “free market” deregulation has been imposed across the world under “free trade” and “partnership” agreements and the destructive discipline of the IMF, World Bank and WTO, capital and resources have been sucked out of the developing world and tens of millions of people have been driven into urban poverty by corporate land grabs.

That is why the number living on less than $2 a day in sub-Saharan Africa has doubled since 1981 under the sway of rich world globalisation. Africa’s boom has been in resource exploitation, not in most people’s living standards. So it is hardly surprising that migration from the global south to high and middle-income countries has more or less tripled over the past half century.

Actually, the percentage of people living on less than $2 a day in sub-Saharan African has fallen from 72.2 percent to 69.2 percent since 1981. The total number of people on $2 a day has doubled because sub-Saharan Africa’s population has doubled (p. 96). "Free market deregulation" has nothing to do with it, except for the fact that infant mortality has fallen substantially.

I know this because it is in the same paper that Mr Milne's figure comes from, on the same page, in the same table. It's a pity that he did not think to mention the data that directly disproves his claim.

I wrote a letter to the Guardian pointing this out but they didn't print it. It's also worth pointing out that African poverty fell by 38% between 1990 and 2011. (h/t Anonymous Mugwump.)