The government's immigration cap is economic illiteracy



There’s an old joke: How do you know when a politician is lying? His lips are moving. So it is with this government’s supposed commitment to economic growth, and the ludicrous immigration cap that it intends to implement. The idea is so economically illiterate, so wilfully illogical, that it makes me wonder if the people proposing it understand that their policies will actually have an effect on people’s lives, or if they simply don’t care. As policies go, it’s less a case of cutting off your nose to spite your face, and more like cutting off your left arm so your right arm doesn’t have to compete with it.

On top of the immigration cap that the government has already proposed, the immigration minister Damian Green has said that only a “tightly controlled minority” of the 100,000 allowed in will be able to stay for longer than five years. So, the immigration cap keeps numbers down, and the “no settling down” rule reduces the quality of the people who can come in by putting off anybody who wants to integrate or settle down.

Immigration is good for the economy. Increasing the complexity and size of the workforce allows greater specialization and efficiency, and living in a relatively stable and free society can unlock the potential of innovative immigrants who would otherwise be wasted at home. To deny this is to deny the benefits of free trade – an example of faith-based economics that has no basis in fact or theory, and should have no place in contemporary politics. Some worry about the burden on the welfare state – a worry that ignores the fact that immigrants are net contributors to the state – but this could be addressed by limiting the welfare services available to new immigrants. The social arguments against of immigration amount to a form of coercive social engineering: you may own your property but you cannot rent or sell it to this person, because he's from a different country.

Capping immigration will hurt the economy no less than putting up protectionist barriers to trade or banning firms from hiring more than a certain number of staff would. Today’s idea is similar – not just anti-growth, but anti-economics. It is a rejection of the use of reason in policymaking in favour of kneejerk populism. I’ve always suspected the government’s commitment to economic growth to be empty. If this excuse for a policy makes it into law, I’ll be certain of it.