Let the Mediterranean refugees come to work in Britain

There probably is no solution to the current Mediterranean refugee crisis, but letting more refugees come to Europe as economic migrants may be a viable way of at least making some people better off.

Last week at the European Students for Liberty Conference in Berlin I listened to Martin Xuereb, Director of the Migrant Offshore Aid Station, describe the situation. He emphasised that ‘push’ factors beyond our control, like civil wars in Syria, Libya and Somalia, and poverty in general were far more important in driving people to come across the sea than ‘pull’ factors like rescue boats.

These people are desperate, he said, and the possibility that they might be found by a search-and-rescue team if their boat sinks isn’t likely the main thing on their minds. Though no doubt that is a factor.

Given that these push factors are so strong, I suspect there isn’t anything humane we could do to stop the boats. It’s unclear how strong a pull factor the search-and-rescue boats are, but I’d weigh the certainty of stopping at least some people from drowning very highly against the indeterminate number of people incentivised to come because of them.

As Left Outside says, many of these people partially economic migrants as well as being straightforward refugees. Most of the evidence says that economic migration is positive overall and does little or no harm to the wellbeing of even low-skilled native workers. But refugees may be different – since they are mostly being ‘pushed’, they may go to countries where there are no jobs. (Economists would call this an ‘exogenous’ shock, because it’s being driven by factors beyond labour market supply and demand.)

I’ve looked at two papers that study the impact of refugees, rather than normal economic migrants, on native wages and employment.

The first, by David Card, looks at the impact of a very large number of Cuban refugees to Miami after the Mariel Boatlift in 1980 – around 125,000, which led to a 20% increase in the number of Cuban workers in Miami and boosted the city’s workforce by 7%. Card notes that the data available here is extremely comprehensive and detailed, making this a very good case study to look at.

Most refugees stayed in Miami, and comparing Miami to other Floridian cities over the same period after the boatlift Card finds no effect on the wages or employment prospects of native low-skilled workers, including black or other Cuban workers.

To be fair, Miami may be an exceptional case, because it was used to a steady stream of Cuban immigration, though at a much smaller rate, and so had a significant amount of industry that could absorb new low-skilled labour, and language problems may have been less of an issue (though language difficulties might not be such a problem, at least for men).

The second study might get around some of those problems. Mette Foged and Giovanni Peri looked at refugee influxes from Yugoslavia, Somalia, Iraq and Afghanistan to Denmark between 1985 and 1998.

These refugees were distributed evenly across the country’s municipalities without any regard to labour market conditions. This counts as an ‘exogenous shock’, like the Miami case and like an new influx of refugees to the UK would.

Forty to fifty percent of these immigrants had only secondary school education or lower and “were in large part concentrated in manual-intensive occupations”. By allowing for a deeper division of labour, the “refugee-country immigrants spurred significant occupational mobility and increased specialisation into complex jobs, using more intensively analytical and communication skills and less intensively manual skills.” That meant that native workers who might otherwise have done low-skilled jobs were able to move into more specialised, productive, highly-paid work.

As with the Miami study, Denmark may have some factors that make it special. Its labour market is very flexible and competitive, so it is easier for workers to move between industries and easier in general for people to find jobs. But that’s generally true of the UK too.

In both of these studies, the result is clear that quite large influxes of refugees driven by ‘push’ factors still did not have negative effects on natives, and in Denmark’s case had significantly positive effects.

Clearly this is not comprehensive and clearly there are other factors to consider (such as crime and, at least in the Syrian case, terrorism). But it does suggest that allowing more refugees into Britain should not be harmful to native Britons’ job prospects or wages, and may be beneficial to them.

Creating something like a guest worker programme for Syrian or Somali refugees would not stop the boats, but letting more come legally and safely would free at least some people from the nightmarish civil wars that they are now risking their lives to escape.

Well, that’s markets for you

Not only is this markets for you it’s rather the point of markets for you:

The Co-operative Group has told its members that it cannot make an enhanced commitment to stock Fairtrade products because of tough competition among supermarkets and its shift towards convenience stores.

The UK’s largest mutual made the remarks in response to a motion tabled ahead of the upcoming annual general meeting asking for the commitment to Fairtrade – for which the group has prided its link in the past – to be reiterated and also retain the long-term strategic objective that that if a “Co-operative product can be Fairtrade, it will be Fairtrade”.

Saying it could not back all elements of the motion, the board blamed the current financial position of the group and “the austere market climate we continue to face and the strategic direction of the business into convenience shops which naturally increases pressure on space and range”.

There are some out there who desire to purchase Fairtrade products. We don’t share that view, thinking them to be counterproductive at best, but we absolutely defend the more basic idea. If your worldview means that you either desire to, or desire not to, purchase products made in a particular manner, or place, of by a certain group of people or not, then that’s rather the point of having a market economy. So that you may do so. If enough people share those values of yours then you might even be lucky enough to find that supply arises to meet your desires. This is true of bread without alum, of meat that isn’t rotten, of food prepared to certain religious standards and, yes, to things made by poor people in poor countries. It’s wonderful, it’s glorious in fact.

However, it is worth noting that perhaps not everyone shares your particular worldview. As here: the Co Op finds that while there’s enough people who care about Fairtrade to make it worthwhile not enough people care about it to make it compulsory. And that’s where we’d slightly argue with the description of it being “competition” that causes this. Because yes, OK, the supermarkets are in competition to sate our desires. And some of us do desire to pay higher prices to provide that outdoor relief for the dimmer children of the upper bourgeoisie that is the real result of Fairtrade. But not all of us: and therefore it’s not really the competition between the supermarkets being the problem here, it’s that not enough of us Britons share the initial worldview.

Which is, again, one of the great glories of this free market idea. You get to maximise your utility by purchasing things made in the manner you approve of and so do I, we, them and they. According to our different estimations of our own utility.

New ASI briefing paper: The Ties that Bind

The ASI has a new short briefing paper, The Ties that Bind: Analysing the relationship between social cohesion, diversity, and immigration by James Dobson.

Its key findings:

  • Social cohesion is the strength of interactions between members of society. These interactions are characterised by a number of norms that include trust, a sense of belonging, and a willingness to participate.
  • Measures of social cohesion include generalised trust, interpersonal trust, civic participation and volunteering.
  • Evidence from the US suggests a strong relationship between rising diversity and lower levels of generalised trust. There is much less evidence for a relationship between diversity and other measures of social cohesion in the US.
  • There are some cultural reasons to suspect that American evidence might not fully apply to Europe and the UK.
  • European evidence at a national level does not suggest a negative relationship between diversity and trust or other social cohesion indicators.
  • Evidence from the UK is mixed. There is some evidence to suggest an association between higher diversity and lower generalised trust – yet there is also conflicting evidence which finds no such association.
  • There is little evidence to suggest a negative relationship between diversity and other measures of social cohesion such as: civic participation, trust in authority, or voluntary work in the UK.

Read the whole paper here.

Immigrants and institutions

It’s becoming increasingly difficult to be opposed to significant immigration for economic reasons. One of the more sophisticated arguments for restricting migration–proponents include Paul Collier, in Exodus: Immigration and Multiculturalism in the 21st Century, and George J. Borjas in Immigration Economics–concerns the socio-political baggage that immigrants bring with them; institutions, characteristics, and social norms which might even have had some bearing on the poverty of their countries of origin.

There’s a substantial literature to support the claim that institutions like secure property rights and the rule of law are by far the most important guarantors of long term prosperity and growth. If it were true that high levels of immigration could serve to undermine these institutions, (as Borjas hypothesises) significantly mitigating the vast welfare gains some predict immigration will bring, those who support very high levels of immigration might well reevaluate their position.

The newly updated version of a Cato Institute working paper, soon to be published in Public Choice, goes some way to looking at these claims empirically. They use data from the Economic Freedom of the World Annual Report to examine the effects of migration on the institutions such as property rights. The main finding of their analysis is that countries with a larger percentage of immigrants in their population in 1990 had a higher level of economic freedom in 2011.

Indeed, Clark et al. conclude:

Regardless of the immigration measure used or the precise regression specification, we have not found a single instance in which immigration is associated with less economic freedom. It does not appear that immigrants are bringing the poor economic freedom records of their home countries abroad with them.

and

Overall, we find some evidence that larger immigrant population shares (or inflows) yield positive impacts on institutional quality. At a minimum, our results indicate that no negative impact on economic freedom is associated with more immigration.

As the evidence around the economic case against immigration is weakened (I could have also blogged today about a recent CReAM discussion paper which concludes that low-skilled immigration to Denmark pushed up native wages, employment, and occupational mobility), we might wonder whether people have other reasons for opposing it.

It’s always the same with these bureaucratic cash targets

The thing that is the same being that hitting the bureaucratic cash target becomes the priority, not actually spending the money in a reasonable or value adding manner:

More than two thirds of Britain’s aid budget is being given to organisations such as the EU and the World Bank to help meet official targets, despite billions of it going unspent for years, an investigation has concluded.

MPs found that £6.3 billion of Britain’s aid budget is being handed to major agencies to help hit the Government’s target of spending 0.7 per cent of the nation’s income on overseas aid.

Their report found that a growing proportion of the money is set aside for future spending, which means it goes unspent for an average of two years.

The amount committed to major organisations that has yet to be spent has increased from £1.5 billion in March 2010 to £3.7 billion in March 2014.

It was never sensible to adopt the target in the first place. And as we’re now borrowing that money to immediately hand it off into the bank account of the international bureaucracy we really shouldn’t be trying to achieve it now.