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July 31, 2006

EU Immigration

Another leaked document on the "immigration crisis".

The arrival of hundreds of thousands from abroad is already forcing down wages for low-paid workers with “serious implications” for social discord, the report insists. A “step change” in the level of immigration when Romania and Bulgaria join the EU next year could make things worse, it says.

The document, by the junior Home Officer minister Joan Ryan and entitled Migration From Eastern Europe: Impact on Public Services and Community Cohesion, reveals that every government department has been ordered to draw up contingency plans to deal with the extra pressure on schools, housing and health.

The report says that schools will be under pressure, with thousands of children arriving here unable to speak English.

It insists that hospitals will struggle to cope with Eastern European patients who “block” hospital beds because they are ineligible for social care and benefits if they leave.

Two things. Yes, immigration of low skilled workers should indeed place downward pressure upon wages for the low skilled. That very same low skilled labour should also be consuming products and services made with said low skilled labour, thus raising the demand for it and its price. Research in the US (where immigration is comparable in size to the population level) seems to show a net effect on low skilled labour of between nothing and minus 8% in the wage level.

Which would seem to argue against such immigration. Except that when we calculate the pros and cons we need to include one more thing. The effect upon the immigrants themselves. This is clearly massively positive making the whole exercise a net positive gain in wealth, utility and dare I say it, human happiness.

One other point. Open immigration, to go along with the free movement of goods, capital and services is one of the cornerstones of the European Union. It’s about the only good thing I have to say for the beast. So if you want to stop this you do have to argue that we should leave the EU (which I do as well, but for other reasons). But the point about these immigrants not gaining access to the welfare state: at least somebody in Government has read a little Milton Friedman here. You simply cannot have open immigration and also the Welfare State. You cannot have both. Which is the reason those immigrants are denied access to the welfare system.

Update: Jackie Ashley also manages to miss the point about the benefits to the immigrants.

July 31, 2006 in Economics | Permalink


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Who made us Santa Claus?

It's not our job to suffer increased congestion, increased crime and increased expenditure because of putative benfits to citizens of foreign countries based on ideologically extreme interpretations of economic theory - not fact, but theory.

Posted by: Martin | Jul 31, 2006 1:12:13 PM

"You simply cannot have open immigration and also the Welfare State."

generally on libertarian(ish) blogs people normally take this to be an argument against open immigration. People sigh and lament what a pity it is, but they should side with immigration not welfare in the battle between the two! I see it as a practical way to tackle the advance of the welfare state. Take a principled stand on immigration, then as welfare takes strain it will become necessary to reform it.

Posted by: stuart | Jul 31, 2006 1:15:03 PM

The only reason that they're denied access at the moment is the time lag it takes for human rights cases to come to court.

Posted by: Martin Adamson | Jul 31, 2006 2:00:50 PM

"You simply cannot have open immigration and also the Welfare State."

Sure you can, it just means the welfare state will cost more. And that's the only way you're going to get open immigration because if it comes at the cost of the welfare state it ain't going to happen.

Tim adds: Not quite. We do have open immigration from EU countries: but from the newset 10 they do not have access to the welfare state. Itis possible to distinguish such things.

Posted by: Jim | Jul 31, 2006 3:12:00 PM

"Sure you can, it just means the welfare state will cost more"

don't you think that this will have an effect on people's attitudes towards the welfare state? There are features of free societies, like free speech that are not voted on. If, like free speech, open immigration came with the package then the welfare state would become more expensive. As it becomes more expensive resistance to it would grow. In reality the resistance is to immigrants not the welfare state.

Of course you can deny welfare to immigrants, it's better than restricting immigration. It also helps make clear that welfare programs are not a matter of human rights, because the human down the road has no right to the things that I do. My right to welfare is arbitrary.

Posted by: stuart | Jul 31, 2006 5:15:01 PM

I take the point about niceness.

However a non-profit orientated argument against is the cultural cost. people aren't interchangeable pegs - we all come with our own cultural baggage & most of us enjoy living in Britain not North India. With the best will in the world peoples on both sides tend to have their own cultural loyalties & "cultural traditions" (as Mohammed Srwar MP called it when he was found handing over a large envelope of tenners for a political favour). In particular it is likely that in those failed states where democracy has failed to take hold it is, at least partly, because the locals have a tribal or Islamic rather than democratic culture. If so transplanting them here does not strenghten what we laughingly call our democracy.

A corolary of this is if we are not going to allow people to emigrate to where the wealth is we should minimise trade & exchange barriers so that wealth can migrate to where workers are.

Posted by: Neil Craig | Jul 31, 2006 5:15:51 PM

Tim adds: Not quite. We do have open immigration from EU countries: but from the newset 10 they do not have access to the welfare state. Itis possible to distinguish such things.

Blimey! That explains why I can refer homeless people to a specialist unit *execpt* if they come from Eastern Europe.

I always wondered about that...

Posted by: Tom Reynolds | Jul 31, 2006 8:26:18 PM

i'd say ban all european immigration and open the doors fully to indians only - we are both skilled and cheap! also, we are not attracted to the local english women, so thats a big +!

Posted by: patel | Jul 19, 2007 4:57:38 PM