Tim Worstall

Soviet Bloc Immigration.

A report out stating that the level of immigration from the 8 ex-Soviet Bloc and now EU countries as been some 15 times what the Home Office expected. It’s also saying that the influx seems to have:

”Our results suggest that the primary impact has been to increase
output and total employment, with minimal impact on native workers,”
the study added. ”Overall, the economic impact of accession … appears
to have been modest, but broadly positive, reflecting the flexibility
and speed of adjustment of the UK labour market.”

Can’t remember where I saw this explanation but it sounds good to me. We now live in an economy where human capital is the most important thing, vastly more so than financial or physical. Immigration of people who are of working age and who have been raised and trained at the expense of somewhere else’s taxpayers is an import of human capital. We would therefore expect our economy to benefit from it.

In

12 responses

  1. JohnM Avatar
    JohnM

    Immigration of people who are of working age and who have been raised and trained at the expense of somewhere else’s taxpayers is an import of human capital.
    Yes, provided they work and they don’t displace native workers.
    I would agree that for the majority of workers from Eastern Europe this is undoubtably the case. Ditto for doctors and nurses from Africa.
    I’n not so sure about low skilled workers from say Pakistan, who enter economies like Bradford where unemployment already is very high.

    Reply
  2. EU Serf Avatar
    EU Serf

    Its a problem though Tim, if the planning laws are so bad that no new houses get built, and if the country is so centralised that they all end up in the same place.

    Reply
  3. Chris harper Avatar
    Chris harper

    JohnM, who cares if they are low skilled, as long as they earn their keep. Their kids will be doctors, nursers, accountants. Besides, the bloke knocking on your door offering to wash your car today will be running a national chain of car detailing franchises in twenty years. Good on him.
    The killer is when incomers get paid not to earn their keep.
    Welfare, glorious welfare.

    Reply
  4. JohnM Avatar
    JohnM

    JohnM, who cares if they are low skilled, as long as they earn their keep. Their kids will be doctors, nursers, accountants.
    Like I said, I’m less sure about the low skilled.
    In the melting pot of the US, reality played out pretty much like your scenario. This has largely failed to materialise with the children of immigrants who came to Britain in the 1960s and 1970s. Whether the blame lies with the inherent racism of the English, the decline of manufacturing, multiculturalism/victim politics, or the welfare state is open to debate.
    However, the mantra that is often invoked is that we need low skilled people to perform the “jobs that we don’t want to do”. The assumption being that these jobs are too unpleasant and/or low paid to attract indigenous people. Leaving aside the possibly racist assumption that whilst a job may be so unpleasant that British people shouldn’t be forced to do it is nevertheless okay to let a foreigner do it, we are forced to recognise that many of these reluctant low skilled British are in fact second or third generation immigrants themselves. The logical expectation is that children of the current generation of low skilled immigrant workers will in turn refuse such jobs themselves.
    It is no certainty that 2nd generation immigrants will climb the ladder of success. The fault may lie in an under achieving education system or in a society that encourages people to think of their failures as being not their fault. The events of July show the dangers of a resentful class of non-integrated immigrant children. What this adds up to is that whilst the economic case for immigration might be strong, there is also the consideration of long-term social cohesion.
    I’m inclined to agree with your point that welfare reform might be part of the solution to this. Playing Devil’s advocate, let’s suppose that non-citizens should not be eligible for welfare support. Moreover, citizens (except in exceptional circumstances) would only get welfare for a limited period (eg Clinton welfare reforms).
    In those circumstances, low skilled jobs would tend to be filled from the UK community and if they were filled from abroad, they obviously would be a net gain. However, I don’t think such welfare reform is likely in the medium term.
    So I think we broadly agree.

    Reply
  5. 1Skeptic Avatar
    1Skeptic

    JohnM, “Low skilled workers from Pakistan who enter Bradford..” You do know you are talking about something happened three to four decades ago, at a time of rising employment? Or, is this still happening in significant numbers? Btw I agree with your actual points, its just that I found this example jarring.
    Probably the local employers at that time moaned about a skills shortage as well.
    Tim, you’ve said “we therefore expect our economy to benefit”, yes I can see that for the part of the economy that employs human capital. The native wage earners themselves, the people who have paid university fees (supplemented by UK taxpayers) and invested in their own human capital, would their income go up as a result of skilled immigration? Is this not a perpetual disincentive to learning any new skill that is in demand – by the time you get good at it to start getting a decent wage – say enough to house, feed and clothe a family without going into debt -the government will have undercut you by migration.
    I would be skeptical about the ability of any bureaucrat to decide what skills the UK economy needs at any point in time, which is how the process works in practice. Perhaps if all UK jobs above minimum wage were put to global tender, there would be economic efficiency.
    I am also thinking of the factors that cannot be measured in £ terms alone. e.g. land+ built up housing per person or household, work/ family time ratio, quality of insurance. Yourself and other people can probably think of plenty more.
    If you are talking of immigration creating new jobs, all that is needed is capital mobility. There is no way to judge what entrepreneurship skills any immigrant has in advance, if there was then it is unlikely that the secret will be revealed to HM Immigration. Successful foreign entrepreneurs will have raised enough capital by their success, to hire managers and so bypass the need for their own continued presence in the UK. Murdoch did not need to emigrate to create BskyB. Nor do the owners of Tata, Wipro or Infosys.
    A possible solution may be an auction of a fixed number of economic immigration licenses.
    Tim adds: The Poles etc have a right to be here. They are not on licences or visas. So the limitation is how many of them want to come.
    For extra EU immigrants, I agree, something along a points system like Canada or Australia.

    Reply
  6. 1skeptic Avatar
    1skeptic

    More on low skills and welfare.
    AFAIK,there is no legal low skills migration to anywhere in the EU, except for seasonal agricultural workers.
    Any person with low skills would have got in either by asylum or marriage, both of which are the subject of more political than economic decisions.
    JohnM, you say “This has largely failed to materialise with the children of immigrants who came to Britain in the 1960s and 1970s.”
    and
    “we are forced to recognise that many of these reluctant low skilled British are in fact second or third generation immigrants themselves”
    Have you got any data to prove these points i.e. that the children of ’60s and ’70s immigrants are economically performing below average, and are overrepresented in the reluctant lowskilled British. For example, all the data I have seems to point the other way for Indian immigrants (including those who came via Kenya). Perhaps it is a subculture rather than immigration status that is of concern here.
    Welfare in the context of immigration seems to be more of an emotive subject. Possibly because it seems self evidently unfair that those who haven’t contributed yet are eligible for the benefit straight away.
    Excluding asylum and marriage, there is no legal benefit available to any migrant before they attain permanent residency, which takes four years. So once again this is more a political rather than economic decision. As I mentioned, there is no legal low wage immigration to the UK. So at the point of eligibility, all current economic migrants will have paid four years tax and ni on atleast 30k per annum,.
    But look where it ends once it starts….no welfare for immigrants somehow leads to limited welfare for citizens. Because it is a disincentive to the lowskilled people taking up undesirable jobs. What is wrong with just paying people more to take up these undesirable jobs? There must be a market clearing price at which they will be taken. And pay everyone a citizens basic income, without some jumped about bureaucrat deciding who is worthy or not of welfare payments, who is really depressed and who is just workshy.

    Reply
  7. 1skeptic Avatar
    1skeptic

    I agree that the Poles have a right to be here, though this is not the same a UK citizens right to be here. I don’t quite agree on the points system, as the weighting is still decided by the Government. I was proposing an auction in its place as a more efficient mechanism, to get the people who (a) want to be here- put their money where their mouth is and (b) can contribute – evident by their ability to pay. Any company or institution wanting “world class” talent could also bid for these on behalf of their prospective employees.

    Reply
  8. auntymarianne Avatar
    auntymarianne

    Welcome, boys and girls. I look forward to you paying my pension.

    Reply
  9. Laban Avatar
    Laban

    It’s good for employers, and good for ‘the economy’ – but ‘the economy’ is also intimately linked with the place where we Brits live (Tim excepted). There’s more to a country than ‘the economy’, or we’d have asked Albert Speer to run it for us in 1939.
    The Eastern influx is pretty much wiping out the farm jobs of the natives, and every farm round my way has a couple of caravans full of Poles.
    They’re nice chaps and hard-working. But so are the Northern Italians – and I would rather not have 5 million guys from Lombardy moving over here, nice though they be.

    Reply
  10. JohnM Avatar
    JohnM

    1skeptic
    You ask Have you got any data to prove these points i.e. that the children of ’60s and ’70s immigrants are economically performing below average and cite that Indian immigrants (including those who came via Kenya) … seems to point the other way.
    I see you pointedly select Indians as a group to refute the general point. I would agree that for some groups such as Hindus and Sikhs the facts are as you state. [As far as Kenyan Asians go, I attended a Comprehensive school several and I would have said the first generation were already middle class.]
    However, that second generation success does not seem to have materialised as far as most Pakistanis, Bangladeshis and West Indians are concerned. The statistics I would cite to support the case are twofold: the high levels of unemployment and the low educational achievements within those subgroups. I don’t imagine you argue that high black unemployment is accompanied by high skills. Why is it that Sikhs outperform both white kids and Pakistanis? Why is it that West Africans outperform whites and West Indians? The answer must be cultural.
    I regret picking Bradford as an example of low skill immigration, because it risks this thread to be diverted into a discussion of race. I picked it because it still receives many first generation immigrants albeit thru marriage.
    My original point was that whilst the economic case for immigration of those with high skills may be unanswerable, this becomes much less obvious as the skill level drops. My second point was that we ought to give some forethought to the issue social integration. If the latter fails then there won’t be a welfare state, or a pension.

    Reply
  11. New Economist Avatar
    New Economist

    In praise of foreign workers

    Anyone in the UK visiting their local supermarket or coffee chain in the past year or two will have dealt with migrant workers from the new EU member states. Most are young, helpful and enthusiastic. And there are plenty of them. According to the lates…

    Reply
  12. edward Avatar
    edward

    “My original point was that whilst the economic case for immigration of those with high skills may be unanswerable, this becomes much less obvious as the skill level drops.”
    Not sure I agree about this John, someone has to do the unpopular low-skilled work, and if the labour market gets too tight at the bottom, this distrorts things all the way up. However I think Borjas in the US argues more or less what you are saying, eg that afro americans have been disadvantaged by the newer wave of hispanic migrants competing for the same unskilled work.
    “My second point was that we ought to give some forethought to the issue social integration. If the latter fails then there won’t be a welfare state, or a pension.”
    Yes, but if you don’t get the young migrants in sufficient quantities there won’t be one either. Watch out Japan.

    Reply

Leave a Reply

Discover more from Tim Worstall

Subscribe now to keep reading and get access to the full archive.

Continue reading