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By Philippe Legrain 13 COMMENTS

The House of Lords’ report on the economic impact of immigration to the UK concludes that it has "little or no impact" on the economic wellbeing of Britons, and backs the Conservatives’ demand for a cap on immigration. But their findings and recommendations are deeply flawed – which is perhaps not surprising considering the committee is chaired by Tory has-been John Wakeham and also includes two Conservative ex-Chancellors, Black Wednesday Lamont and boom-and-bust Lawson.

Since the old duffers can’t work it out, here is a quick and easy guide to the economic benefits to Britain of allowing in foreign workers.

First, it makes the economy more flexible and adaptable. Job shortages can quickly be met by foreign workers, who tend to be more willing, once arrived, to more to where the jobs are, and to change jobs as conditions change. How else would the massive increase in doctors and nurses over the past decade have been achieved? How else will preparations for the 2012 Olympics be finished on time?

I’m sure the Lords would agree that it is a good thing for people to move from Liverpool to London if there are jobs that need filling there. The same applies to people moving from Warsaw or Manila.

Second, because migration makes the economy more flexible, it can grow faster for longer without running in to inflationary bottlenecks. That means higher living standards for British people and lower mortgage rates. The opening of borders to Poland and the other new EU member states is a big reason why the economy is enjoying its longest-ever period of growth. Over the past five years, GDP per person – a good measure of average living standards – has risen by 2.2% a year, faster than in any of the other G7 rich countries.

Third, immigration makes the economy more dynamic and competitive. Hard-working foreigners stimulate greater productivity gains by native workers: British builders and plumbers have to up their game because there are now Polish alternatives.

Fourth, like international trade, international migration permits greater specialisation and a finer division of labour. All the high-skilled professionals whom the government – and the Tories – are so keen on depend on a whole host of other less-skilled workers: office cleaners, minicab drivers, au pairs, waiters, and so on. Without them, the professionals wouldn’t be able to work (as much). So, contrary to the conventional wisdom that skilled migrants are a boon but that poor low-skilled ones are a drain on society, Polish labourers and Chinese cleaners actually make a huge contribution to the British economy.

What’s more, as the population ages – the UN forecasts that the share of over-80s in the population is set to double to 8.7% by 2050 – the need for care-workers will soar. Care for the elderly is already among the fastest-growing areas of employment. Yet retirement homes cannot find suitable British staff – even Brits with few qualification would prefer to work in a shop – so without migration, your granny will have to make do with less care.

Fifth, migration creates economies of scale and scope from a larger population and clusters of certain types of worker and industry. London would be a local financial centre, not a global one, if it wasn’t open to bankers from around the world; Silicon Fen around Cambridge, the closest Britain has to Silicon Valley, would be much less successful without foreign talent.

Sixth, migrant workers’ efforts are often complementary to those of British ones: a foreign childminder can enable a British nurse to go back to work where her productivity is enhanced by hard-working foreign doctors and cleaners;

Seventh, migration creates gains to owners of capital – which includes every Briton who contributes to a pension fund – from complementarities with migrant labour.

Eighth, migration makes consumers better off through lower prices and greater choice. Polish builders have allowed many less well-off people to afford home improvements they would otherwise have had to do without; British fruit would go unpicked, or would be prohibitively expensive, without immigration; ethnic restaurants – from curry houses to sushi bars – are already suffering from shortages of chefs because of the government’s efforts to curb immigration from outside the EU.

Ninth, and most important in the long term, migration stimulates innovation and enterprise, and thus faster long-term productivity growth. Without new ideas, new technologies and new businesses, our living standards would stagnate. But where do these new ideas come from? The exceptional individuals who come up with brilliant new ideas often happen to be immigrants. Instead of following the conventional wisdom, they tend to see things differently, and as outsiders they are more determined to succeed. Twenty-one of Britain’s Nobel-prize winners arrived in the country as refugees.

Migrants’ contribution is vast – but inherently unpredictable. Nobody could have guessed, when he arrived as a refugee from the Soviet Union aged six, that Sergey Brin would go on to co-found Google. Had he been denied entry, and Google not been founded, America and the world would never have realised the opportunity that had been missed. The British government will doubtless turn away many potential Brins with its misconceived new points system for vetting migrants – not to mention deterring ambitious types from trying to come in the first place.

Immigrants’ collective diversity is also vital. Most innovation comes from groups of talented people sparking off each other – and foreigners with different ideas, perspectives and experiences add something extra to the mix. If there are ten people trying to come up with a solution to a problem and they all think alike, those ten heads are no better than one. But if they all think differently, then by bouncing ideas off each other they can solve problems better and faster, as a growing volume of research shows. 

Just look at Silicon Valley: Google, Yahoo! and eBay were all co-founded by immigrants who arrived not as graduates, but as children. Nearly half of America’s venture-capital-funded start-ups have immigrant co-founders.  The value of diversity does not apply only in high-tech: an ever-increasing share of our prosperity comes from solving problems – such as developing new medicines, computer games and environmentally friendly technologies, designing innovative products and policies, providing original management advice.

The economic benefits of opening our borders are vast. Just look at cosmopolitan London, the richest place not just in the UK, but in Europe, The social and cultural benefits are huge too, as anyone with a foreign-born parent, partner or friend can testify. Ultimately, migration is about creating an open, dynamic and progressive society, rather than a closed, stagnant and reactionary one.

Britain urgently needs a heavyweight, economically rigorous report into the economics of migration, along the lines of the Stern report on the economics of climate change. The House of Lords report is certainly not it.

Posted 01 Apr 2008 in Blog
  1. Hoover says:

    Put some figures on your claims and they might be believed. At the moment, they’re just assertions.

  2. General Zhukov says:

    Philippe, it’s not very sensible to dismiss the House of Lords report through personal insults. When two former chancellors, Professor Robert Skidelsky, Professor Richard Layard and a former Bank of England governor write a report over a period of eight months they will have thought long and hard about the evidence and the implications of any statements they make, including:
    “We have found no evidence for the argument, made by the Government,
    business and many others, that net immigration—immigration minus emigration— generates significant economic benefits for the existing UK population.”
    It just makes you look like a slightly loony fringe liberal blogging ideologue – rather like when you denounced Martin Wolf, a far brighter and more sophisticated man than you.

  3. David says:

    I think the best way to make your case would be to refute the two main arguments of the House report, which are:
    1.Immigration doesn’t increase the economic benefits (measured in DGP) for the existing UK population.
    2.In redistributing whealth, immigration slightly hurt UK’s low-skilled workers.
    Your arguments, as good and numerous as they are, still leave those two above unchallenged. Are there any studies that could contradict the House report’s numbers?
    BTW, I greatly enjoyed your book on globalization.

  4. David says:

    I meant GDP, of course. Sorry for the typo.

  5. Stan Ogden says:

    The Select Committee’s report is 84 pages long, and is supported by hundreds of pages of expert witness testimony, as well as tens of hours of oral cross examination of the witnesses.
    Far from being merely a bunch of “old duffers”, the Committee included two ex-Chancellors, an ex-MD of British Telecom and past president of the CBI, as well as a number of noted economists. Reading the report in toto, as well as much of the supporting material (which it seems Philippe has apparently not got round to reading yet) gives the impression of an extremely thorough investigation in which contributions from the leading experts in the field were rigourously analysed.
    In comparison, I’m afraid that Philippe’s efforts at rebuttal in the form of a ‘quick and easy guide to the economic benefits to Britain of allowing in foreign workers’ appear rather lame, and more a recitation of deeply-held Articles of Faith than a properly reasoned response.

  6. citizen of the world says:

    The The Select Committee’s report is a prime example of what Albert Meltzer meant when he pointed out that:
    “The large scale employer looking at greater profitability or the way to cut costs has several options open, the easiest and laziest being to cut wages. If the workers are well-organised they can resist this so there are two options open to the major capitalist. Either take the factories to where the cheap labour is or take the cheap labour to where the factories are. The first option entails great pollution, as a rule — not that they ever care about that — and in some cases they have to go into areas of political instability. It is cheaper to move the cheap labour.
    Having thus encouraged immigration, wearing the financial hat as it were, the capitalist in the capacity of a right-wing politician, dons the political hat and denounces immigration. This has the advantage of setting worker against worker, fuelled by religious and/or racial antipathies which can persist for generations, and have the added bonus of inducing the worker to support the right wing electorally. It does the capitalist no harm to have a work force hated by those who surround them, or in fear of deportation if they step out of line. Nor does it harm the capitalist, in a political context, to have issues such as immigration replace the basic issue of the wage and monetary system. It only becomes harmful from that point of view when a fascist force such as Hitler’s gains such armed might that it can ignore the wishes of the capitalists which gave them that power and strives for its own superiority.”
    Albert Meltzer
    encouraging us to have endless ‘debates’ about immigration is the favourite divide and rule tactic of the super-rich and powerful (less than 10 per cent of the population) who own over 80% of Britain’s wealth. However, if we take immigration out of the equation all together, people would still complain about the lack of decent jobs, affordable housing and poor health care etc. There is enough of everything to go around — we just have to force the super-rich tax avoiders, as Johann Hari explains, “to pay their fair share for the privilege of living and working in a stable democratic society.”

  7. Plato says:

    Comparing the Daily Telegraph, The Guardian and The Independent
    By Matthew Randall
    Introduction: Distorted Agendas
    As a rule, UK parliamentary debate on asylum and immigration is both selective and power serving. While the actual demographic and economic effects of immigration on the UK are rarely discussed, the causes of immigration – global inequality, conflict and human rights abuses – are ignored.
    Irrespective of party, leading politicians repeatedly highlight issues of exclusion – fears of ‘invasion’, alleged ‘threats’ and actual prejudices – ensuring a very negative image of immigrants despite their statistically small impact on society (see below). Concerns over crime, disease, terrorism, detention and surveillance are consistently pushed well to the fore.
    This lack of balance can be attributed to a number of factors, including the existence of a covert racist ideology and the political expediency of ‘the race card’ – factors that repeatedly compromise the welfare of refugees and immigrants.
    Honest consideration of asylum and immigration issues should involve a far more diverse range of topics, reflecting the complexity of contemporary national and global relations. These include issues of nationalism, sovereignty, racism, demography, human rights, arms sales, war, refugee health, economic policy and moral responsibility.
    Liberal Media Balance?
    A truly independent and honest ‘quality’ press would include debate on these marginalised issues, providing readers with a balance to the distorted focus of party politics. But does this happen? What +do+ we actually read in broadsheet newspapers on asylum and immigration? Which themes are consistently emphasised? And who speaks to us through these articles – who sets the agenda for discussion?
    Is appropriate coverage given, for example, to the fact that in 2001 the UK had only 169,370 officially recognized refugees living within its borders compared to Germany’s 988,500, Iran’s 1.9 million or Pakistan’s 2.2 million? Are we made sufficiently aware that during the same year the UK received 71,365 applicants for asylum, granting this status to just 11,180 individuals – 0.02% of the UK population? Or that Pakistan received a single influx of 199,900 Afghan refugees? Or that the ten largest refugee movements in 2001 were, with the exception of Yugoslavia, all made between countries in the Third World?
    How many of us learn from our press that UK population growth is slowing down to the extent that it has actually become a cause for concern? How many are aware that a 2002 UN report recommended “replacement immigration” as a solution to this problem, or that the recommendation was rejected by the European Commission on the grounds that the impact of immigration on population was insignificant?
    What do the media have to say about the fact that the UK has recently sold arms to all five countries of origin topping the UK list of asylum applicants in 2001? This, despite the fact that, in each case, violent military conflict remains the dominant root cause of refugee flight. More generally, what emphasis is placed on adverse conditions in countries of origin – poverty, human rights abuses, global income disparity, conflict and torture – in articles concerned with asylum and immigration?
    A Case Study: Immigration, The Propaganda Model, and Three UK Newspapers
    With these and other questions in mind, the following case study was carried out to compare articles from the Daily Telegraph, the Guardian and the Independent. The methodology was not complex. Using an archive search at each of the newspaper’s websites, the first thirty articles in 2003 with titles displaying any of a set of keywords: ‘asylum’, ‘asylum seeker(s)’, ‘immigration’, ‘refugee(s)’ were located and used as a representative sample. These ninety articles were then analysed to record the themes/topics discussed. An article merely had to refer once to a certain topic to be counted as having mentioned it, even if this reference consisted of one sentence.
    The secondary element of the case study involved identifying the ‘voice’ of the articles, reflecting the opinions or perspectives consulted and who was being directly quoted. All opinions and perspectives referred to in an article were included in the initial count irrespective of whether these were later criticised either by the journalist or by any other group.
    The hypothesis being tested proposed that the three newspapers chosen would all, despite perceived differing political leanings, discuss topics and themes in line with the interests of elite power, as predicted by Herman and Chomsky’s propaganda model of media control. More specifically it was predicted that macro themes – particularly those reflecting badly on Western state-corporate power and those providing a more global perspective on asylum and immigration – would be marginalised, reflecting the preferred focus of dominant elites.
    It was also hypothesised that micro issues, such as asylum accommodation and welfare payments, would be discussed at great length and would form the dominant theme of this sample, with topics involving negative portrayals of immigration – illegality, terrorism, crime and disease – also pushed well to the fore.
    A further prediction was that the opinions consulted would heavily favour powerful interests, as predicted by the propaganda model’s third filter (the sourcing of mass media news). In this way it was anticipated that high-ranking politicians would form the major ‘voice’ of the articles, with the people most affected by the issues discussed, i.e. asylum seekers/immigrants, being heard less often, if at all.
    Same Difference – Media Themes
    One of the immediately striking results of the case study is the consistent unity of themes across the different newspapers. The three most popular themes are the same for all papers, consisting of exclusion policies aimed at ‘bogus’ asylum applicants (mentioned in 73% of the Guardian articles / Independent: 80% / Telegraph: 73%), crime/terrorism perpetrated by asylum seekers (Guardian: 56% / Independent: 60% / Telegraph: 66%) and the accommodation/detention of applicants awaiting decisions (Guardian: 60% / Independent: 26% / Telegraph: 36%).
    At the other end of the scale, five major themes fail to attract even one sentence in all ninety articles. These are: effects of immigration on UK population figures, poverty/ income disparity in sending countries, effects of the arms trade, effects of Western economic policies in sending countries, and comparisons of UK refugee intake with Third World countries.
    According to the study, the leading topics for press debate on asylum and immigration are clearly micro issues, irrespective of a newspaper’s political ideology. The two most dominant themes both reflect negatively on the subject of discussion: the criminal/terrorist activities of asylum seekers/ immigrants, and policies to exclude ‘bogus’/illegal individuals from the UK.
    The opinions conveyed on these matters vary between journalists and newspapers. The fact remains, however, that when a reader opened these newspapers and read an article mentioning asylum, refugee or immigration in the title, 56% of the articles mentioned crime or terrorism and at least 73% discussed policies designed to exclude fraudulent applications.
    It is interesting to compare coverage afforded to crime committed by asylum seekers/immigrants with coverage afforded to crime committed +against+ them by other groups. The Telegraph, for example, discusses the former in exactly two thirds of the case study, while failing to make one reference to the latter. The other two newspapers also follow this trend, albeit to a slightly lesser degree. Overall, in the ninety articles, 61% refer to immigrant criminal activities, with just 8.8% mentioning crimes against immigrants.
    These figures tell us much about the degree to which these articles discuss issues that promote fear and prejudice in the UK population, a choice that is closely aligned with the agenda of political elites. The issue of asylum and immigration is reported in terms of a ‘threat’ and ‘invasion’ despite a lack of statistical evidence supporting such dramatic claims. Thus, as can be seen from the above example, the huge number of crimes committed against immigrants – ranging from torture, forced eviction and illegal detention in their countries of origin to property abuse and physical violence in the UK – is given far less attention than the much smaller proportion of crimes committed by immigrants themselves.
    Continuing this trend, all three newspapers produce more articles referencing the health risks from immigrants (an unsubstantiated concern dismissed as early as 1903 by the Royal Commission on Aliens), than those mentioning the health of asylum seekers who often arrive recovering from trauma, torture, malnutrition and physical violence.
    Macro Themes – Minor Coverage
    As predicted, macro themes are very poorly represented in this case study. Comparative analyses of immigration and asylum worldwide are barely referenced at all. When this does briefly emerge, the issue in all cases involves a positive commentary on the strict exclusion policies of other European countries, and not, as might be expected, any analysis of the UK’s comparatively low intake. Discussion of the number of refugees and migrants entering and living in non-western countries is completely absent from all ninety articles – a major omission given the huge statistical discrepancies existing between these two groups and the clear relevance this would have for UK policy.
    Other macro themes focusing on important root causes of immigration and refugee flight, such as war, torture, poverty and oppression, are referred to fleetingly, if at all. The effects of poverty and inequality in sending countries are deemed unworthy of mention in any newspaper despite extensive coverage detailing politicians’ condemnations of ‘bogus’ and ‘illegal’ ‘economic immigration’.
    Analysis of the economic conditions that might lie behind these ‘illegal’ attempts to enter the UK is therefore absent. War and violent conflict are mentioned in just eight of ninety articles in all three newspapers, a very low figure when compared with the thirty-seven articles discussing the relatively minor issue of asylum seeker accommodation. That these articles were published during the intensive build-up to the US/UK invasion of Iraq did not appear to have any affect on this figure, despite the fact that a large proportion of UK asylum applicants arrive from Iraq.
    Only one article in the Guardian discusses the potential effect of the invasion on refugee numbers. This minimal coverage reflects a general failure to discuss the situation in sending countries. In each newspaper this theme warrants a reference in just two articles, 6% of the material studied.
    The fundamental macro issue of demography – indicating both the insignificant effects of immigration on population growth and its potentially positive effects on the UK’s aging population – is not mentioned throughout the case study.
    Macro issues that might embarrass powerful state-corporate interests are also ignored or neglected. Two major examples include the impacts of the arms trade and economic trade liberalisation. The former receives no mention at all, while the latter is hinted at (indirectly) in one piece in the Guardian. This consists of a brief sentence by a Catholic Bishop, stating that asylum seekers were a symptom of “a tragically disordered world; victims of unjust social, economic and political structures.”
    The one ‘awkward’ theme for elites that appears to receive a proportionate share of coverage is that of human rights. This issue is referenced in nineteen of the ninety articles, a total of 21%. However this exception becomes less outstanding when the nature of the references becomes clear: sixteen of these nineteen references relate to the same story – initiated by comments from both government and opposition politicians – that the UK might be forced to withdraw from the European Convention of Human Rights in order to continue its justified exclusion of certain asylum seekers.
    Although this is a human rights issue, it is placed in the context of exclusion policies and ‘bogus’ asylum applicants. This limits to just three articles any mention of human rights abuses in the country of origin – abuses that might have caused the original application to be made, and which cast a far less negative light on the subject of asylum and immigration.
    An interesting, perhaps ironic, footnote to the thematic results involves the eight references made to media coverage. Both the Guardian and the Independent provide a number of articles denouncing what they describe as the essentially racist coverage of tabloid and right-wing newspapers, including the third news outlet in this case study, the Daily Telegraph. The latter does not follow this theme and has no articles mentioning media coverage.
    However, as this case study shows, although opinions expressed on immigration themes certainly illustrate ideological differences between ‘right-wing’ newspapers such as the Telegraph and the more ‘liberal’ Independent/Guardian, there is clear conformity when it comes to deciding +which+ themes to discuss – a fundamental conformity which closely follows the predictions of the propaganda model. Comment on this aspect of coverage does not feature in the Guardian/ Independent articles criticising media performance.
    Opinion Groups
    As predicted, the major opinion groups consulted by all three newspapers were either government or opposition politicians. Overall the opinions of politicians are referenced in seventy-two of the ninety articles, or 80% of the material studied. By contrast, the major subjects of discussion, i.e. immigrants, refugees and asylum seekers, express their views in five articles, 6% of the case study.
    In the Daily Telegraph, politicians are quoted in twenty-three of the thirty articles whereas only one asylum seeker is afforded an equivalent forum. Even this one exception consists of only two short sentences. In the Independent statements by politicians are referenced in 76% of its articles while the opinions of asylum seekers and refugees can be heard in only 3% of the sample.
    The second major group represented in the articles are non-governmental (NGO) spokespeople who have their opinions recorded in just under a third of the case study. This would seem to suggest a certain level of balance afforded to people outside elite political circles. However a closer analysis shows that politicians remain overwhelmingly the agenda-setters in these articles with NGO representatives very seldom initiating the subject of the news item. Their role is very much confined to reaction and comment. Of the fifteen Guardian articles that give NGO opinions, ten are in specific reply to a government initiative or statement.
    This essentially passive role in defining which events are newsworthy, results in a clear lack of themes that one would expect to be highlighted by organisations working directly with refugees and asylum seekers. Only two Guardian articles provide exceptions to this trend, with one warning of a refugee crisis and the other highlighting the racist violence visited on immigrants.
    Despite the substantial body of academic research devoted to the subject of immigration and asylum, the opinions of independent academics are effectively absent from the case study. Only one article of the ninety references an academic source. Even this one exception does not quote a scientific study, choosing instead to mention an anecdotal account of a Cambridge professor.
    The huge dominance of party political opinion in the case study lends particular credence to the propaganda model’s third filter. Analysis of media sourcing demonstrates that UK newsgathering has a strong symbiotic relationship with political elites ensuring that a substantial number of articles are formed around government press releases and statements of policy. Groups without recourse to large public relations resources – such as asylum seekers, refugees and the predominantly small NGOs that represent them – tend not to set the agenda for issues under discussion.
    The results of this case study indicate a consistent tendency amongst ideologically distinct newspapers to focus on aspects of immigration and asylum that concur with the priorities of the political elite. These are aspects, moreover, that represent an extremely narrow range of information and opinion.
    The argument is not that individual journalists necessarily support the agenda of political elites – many articles argue fiercely against government policy. However, indirect support of this agenda occurs through the significant avoidance and omission of important themes and issues that should form regular and central points of reference.
    Matthew Randall lives, works and studies in Berlin, Germany, where he recently completed a postgraduate Masters Degree in Intercultural Work and Conflict Management.

  8. JohnSF says:

    You state “migration is about creating an open, dynamic and progressive society”.
    But what if the majority of the people, perhaps regrettably, would prefer “a closed, stagnant and reactionary one”?
    If so, are you, or me, entitled to impose our will upon them?
    On what grounds?
    Ones self-evident moral, cultural, and intellectual superiority, perhaps?

  9. Lip says:

    JohnSF, Labour power is like any other commodity… Thus we should be able to sell it wherever we and to whoever we like without any restrictions. On what grounds can you appose this?

  10. JohnSF says:

    I don’t oppose it.
    But others do.
    Are you entitled to impose your preferences upon them, if they believe that the effects upon their economic or social circumstances are adverse, or if quite simply they don’t like change and wish to minimise it.
    One libertarian view might be that liberty trumps democratic preference; a view that is philosophically arguable, but politically problematic.
    For instance, assume 1 billion Chinese turn up in Dover 9am tomorrow morning to sell their labour. I foresee a problem or two.

  11. Bob D says:

    Its a pity that the government parrots the rather iffy £6billion figure of economic benefits rather than making a case for migrant workers in terms of a more flexible and dynamic workforce.

  12. Stan Ogden says:

    Bob D said:
    “Its a pity that the government parrots the rather iffy £6billion figure of economic benefits rather than making a case for migrant workers in terms of a more flexible and dynamic workforce.”
    Well it’s not hard to see why that’s the preferred strategy. After all, while the £6 billion may be pifflingly irrelevant, at least it’s tangibly demonstrable that it really exists. On the other hand, the benefits of a ‘more flexible and dynamic workforce’ may have potentially greater sex-appeal, but how on earth do you prove that they really exist?

  13. PNTaylor says:

    Presumably you are in favour of free immigration into Estonia from Russia, and naturally other EU states?
    Isn’t that what Estonia fought its independence for – not to have its culture be swamped by immigrants?

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