Owen Jones is entirely right here: refugees’ lives matter too

It’s not often that we write with unreserved praise for Owen Jones but his piece today deserves it:

As the news of up to 200 dead refugees, drowned off the coast of Libya, filters fleetingly into news coverage, the only guarantee is that more will drown. And with news of more than 70 refugees found dead in a truck in Austria – to try to imagine their last living moments triggers a horrible feeling in the pit of the stomach – we know that more bodies will be found in more trucks. Those of us who want more sympathetic treatment of people fleeing desperate situations have failed to win over public opinion, and the cost of that is death.

For those who believe that hostility to human beings from other countries who lost the lottery of life is somehow hardwired into us, there is evidence to the contrary. Germany takes in around four times as many refugees as Britain does; and for every Syrian asylum seeker received by Britain, Germany gets 27. And despite German generosity comparing starkly with our own, half of Germans polled support letting in even more refugees.

Like Alex Tabarrok, I am not aware of any mainstream moral theory that does not tell us that all humans matter, not just the ones who look like us or were born near us. I often wonder how different our approach to trade and immigration policies would be if we took it as axiomatic we don’t just care about people lucky enough to be born in Britain. This is the ‘big assumption’ I ask people to make when I talk to them about liberalising immigration – and if we made it, the debate about immigration’s impact on natives’ incomes would be a mere sideshow.

There are valid questions about the most humane policy towards the asylum seekers trying to cross the Mediterranean or English Channel. And I am much more optimistic than Owen about the potential for migration to reduce global poverty. But, as he rightly says, the baseline for all of these debates must change. When people are dying from drowning and suffocation, we have to accept that we are not the only ones who matter.

If you hate sweatshops, you should love immigration

Last week I argued that sweatshops are good for workers in poor countries. They usually pay more than the alternatives their workers have near them, they seem to reduce child marriage and pregnancy rates for girls who live near them, and when you actually ask workers in poor countries, they tell you that sweatshops are the best options going.

But that isn’t sufficient, because compared to even very bad jobs in Western countries, sweatshop jobs are still exhausting, poorly paid, and dangerous. Garment workers in England are typically paid far, far more than garment workers doing almost the same job in Bangladesh.

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Branko Milanovic argues that location is the main determinant of income, not class – you’re better off being near the bottom in a rich country than being near the top in a poor country:

All people born in rich countries thus receive a location premium or a location rent; all those born in poor countries get a location penalty. [In a world of low international migration] most of one’s lifetime income will be determined at birth. [Chart above from here.]

Why might this be? Different skill levels are certainly a part of the difference, but a worker who moves from Bangladesh to England can still expect to significantly increase their earning power. There is a network effect whereby working with people with better skills boosts your own productivity. Christian Benteke is likely to score more goals at Liverpool than he did at the lower-quality Aston Villa, and Uber drivers in New York City make more than Uber drivers in Mexico City.

Capital differences are crucial, of course. Infrastructure and factory equipment are usually better in richer countries. And one big reason for this is institutional quality – the risks of capital investment are much lower in the developed world.

Things like the rule of law and decent, stable governance make it easier to invest with confidence, and seem to be some of the hardest things for poor countries to develop themselves. The cost of running a factory is lower in places where you know that factory won’t be seized by the state. I am not quite convinced that institutions are the most important driver of economic growth but they clearly matter a lot to maintaining a decent level of development.

All of which strikes me as a good reason to try to allow would-be sweatshop workers in the developing world to come to the richer world to work. Letting them work here effectively allows us to stretch our institutions over them, boosting their incomes productivity and incomes.

Given political constraints, this might be best done in the form of a new ‘guest worker’ visa that allows firms to bring people guaranteed a job from poor countries to the UK to work. The firm could be required to post a bond equal to the cost of that immigrant returning home, so nobody is stuck here against their will, and so that we don’t have to worry about immigrants sponging off the state (not that that happens much anyway).

If we targeted this guest worker scheme at people from the poorest countries in the world, we would be able to reduce poverty dramatically. We might see the emergence of industry built specifically for those low-paid workers, who nonetheless would be earning far in excess of what they would earn at home. There is evidence from New Zealand’s guest worker programme that this has large positive effects in the long-run for migrants’ families as well:

We find that the RSE has indeed had largely positive development impacts. It has increased income and consumption of households, allowed households to purchase more durable goods, increased subjective standard of living, and had additional benefits at the community level. It also increased child schooling in Tonga. This should rank it among the most effective development policies evaluated to date

The Gulf States’ guest worker policies, on the other hand, are ugly and brutal in many ways, but people still keep coming because their alternatives are worse. Sweatshops are ugly and brutal in many ways, but people want to work there because their alternatives are worse. How good it would be if for once we could give poor people a better alternative – just by letting them come here to work.

Finally, an idea on international aid we can get behind

Should we clothe the naked, feed the starving and succour the ill favoured in our world? Yes, no doubt we should. Emergency aid isn’t one of those things that really causes much controversy. There might be arguments about how it is done, should we ship food or ship money to buy food locally, for example? (The answer is the second). But that’s not what international aid is these days: it’s rather more about paying the EU to teach people to take trapeeze lessons.So, we entirely welcome this suggestion:

First, the language of investment better reflects the reality of modern aid. The charity paradigm has long been considered patronising by most poor countries, and is increasingly considered old-fashioned even in many “donor” agencies. The reality that strategic and economic interests have always been at play in aid-giving is recognised by most DAC, or developed country, donors somewhat cautiously, but is explicitly promoted by the “emerging” contributors of development cooperation in the global south.

These “emerging donors” eschew the term aid because of its simplistic connotations, preferring the language of “mutual benefit”. They want to imply “horizontal” relationships between equals, fundamentally similar to business transactions. Investment, not charity.

Yes, we’re all for this. Firstly, doing it as investment means that at least some attention will be paid to how effective it is. That is, what is the return? It’s not necessary for this return to be appropriable by the investors, but just the calculation of whether there will in fact be one or not would have a bracing effect upon decision making.

But there’s another point to be made here as well. We don’t, domestically, think that governments are very good at investment. So, there’s no reason at all for us to think that they will be very good at foreign investment either. Thus, if we are to move over to an investment paradigm, as we agree we should, then it’s not going to be government that does the investing. Thus the end of Overseas Development Aid altogether, and the replacement with proper commercial investment.

As of course should happen anyway in our view. As has in fact been happening. ODA is of the order of $100 billion a year these days, Foreign Direct Investment, FDI, is of the order of trillions a year globally. The ODA is only a remnant rump of the process making the poor of the world richer anyway. So, no problems if it gives way to the more efficient and effective investment, is there?

Britain should leave the United Nations

Much talk these days is made of Britain leaving the EU. But what of other bodies that violate Parliamentary Sovereignty? What about, for example, the United Nations?

The EU, is made of 28 member states, most of whom could broadly be described as liberal democracies . The UN is made of 167 non-micro states, 88 of whom The Economist would describe as “Hybrid regimes” or “Authoritarian regimes”. Only 25 are full democracies. When dictatorships have a say on the policy of Great Britain, one should not be surprised when the results are bad. Britain, if serious about Parliamentary Sovereignty and democracy, should leave the UN.

To be clear, such a move would likely mean the entire UN would disband. Unless there were major consequences imposed upon our country, the world would remember that membership of the UN is voluntary and thus nations are free to leave at any point in time. And what would the world really lose? Peace has been maintained primarily by two forces over the last 70 years:

1) Democracy- Democracies are less likely to go to war than Autocracies.
2) Free Trade- Building trade relations between countries means going to war with other countries is extremely expensive in terms of lost trade.

The UN facilitates neither and discourages both. By passing numerous binding resolutions- often against democratically elected governments such as Israel, it violates the principle that National Parliaments are sovereign and furthers the neoconservative delusion that imperfect countries can be perfected through the “General will” of other countries, many of whom are far less democratic than Israel.

The UN also implements trade sanctions. The UN claims that this is peaceful, but aside from economic damage- we should also learn from Otto Mallery (Not Bastiat) who said “When goods do not cross borders, armies will”. Iraq makes a good example. On August 6th 1990 the UN approved trade sanctions against Iraq which lasted until 2003.

These sanctions resulted in the deaths of over 576,000 children, and agitated Iraq further into isolation and radicalism. Mallery‘s lesson was proven when the US and UK invaded Iraq in 2003. This was not only an example of the UN failing to secure peace- it was an example of the UN actively discouraging it.

Membership of this organization is at best useless and at worst malign- it is time Britain set an example and left.

Theo Cox Dodgson is winner of the Under-18 category of the ASI’s ‘Young Writer on Liberty’ competition. You can follow him on Twitter @theoretical23.                             

Liberalising Immigration is a Win-Win scenario

Draconian immigration rules represent the largest restriction on liberty in the UK today. They restrict the personal and economic potential of millions of people and achieve little in return. How to roll back these limits on freedom? Think tanks have a difficult dilemma. They want to build a reputation as radical thinkers, but at the same time propose moderate policies. Early drafts of this essay argued that Britain should be more open to this or that group, but the truth is that both hard-headed economics and human decency demand wholesale liberalisation.

Immigration restrictions curtail our ability to hire, sell to, befriend and marry the people we want to. People understand this – it’s why people view immigration to their local area much more favourably than on the national level. And they have an enormous economic cost.

The ASI’s namesake argued that the division of labour is limited by the extent of the market. Everyone accepts the case for free trade, but that leaves markets incomplete, because non-tradable services (like haircuts) can’t travel across borders. Freeing people to move where they wish would let people go where their talents would be best used. The productivity of someone with an engineering degree – the amount can achieve with their labour – is many times lower in some areas of the developing world than it is in the UK.

The benefits to migrants are best illustrated by the lengths migrants are willing to go to to cross borders. Smugglers charge thousands for passage from Libya to Europe, and the journey is fraught with risk, but hundreds of thousands make the journey anyway. Migration lets people escape poverty, war and authoritarian regimes.

The Mariel Boatlift is an example of this. In 1980, 125000 Cubans fled Castro’s regime, landing in Miami. Their liberation increasing the size of the local labour force by 7% almost overnight. But economists found almost no impact on wages and the labour market.

7% of the UK labour force works out to approximately 2.3m people. The government could auction off permanent residency permits to that many people each year. Such a radical policy would be disruptive. It would have costs, losers as well as winners. But the potential benefits are too colossal to ignore – a Britain where not only workers and jobs but husbands and wives, parents and children, potential pub geezers would not be separated by arbitrary borders.

Theo Clifford is winner of the 18-21 category of the ASI’s ‘Young Writer on Liberty’ competition. You can follow him on @Theo_Clifford, and read his blog at economicsondemand.com.