business current affairs politics

Missing the point on immigration

This week I’m reading Martin Whitlock’s book Human Politics, Human Value, which is turning out to be a good one. He has a take on migration that I thought was worth sharing, given the high profile of the topic at the moment.

On the one hand, the political parties are competing to see who look the toughest on immigration, mainly in response to UKIP. On the other hand, the Confederation of British Business were keen to stress the importance of migrants in the UK economy last week. Politicians are saying one thing, and business is saying another.

For Whitlock, the focus on immigration misses the point, as it is a symptom of a bigger issue:

“What damages the economic life of a society is not immigration itself, but the way in which low wages exclude local workers, banishing them to a life on state benefits while impoverished migrants are attracted in their place.”

In an economy that prioritises profits and shareholder gain, labour is a cost, and a successful business pares its costs as best it can. That implies that employing as few people as possible and paying them as little as possible is a legitimate aim for a business. We live in a globalised world, which means that dynamic works on an international scale and businesses will want to locate production where labour is cheapest.

Whitlock’s argument is that by relying on cheap imports from poorer countries, low-skilled labour in Britain is devalued. Wages have become so low in certain sectors, catering or agriculture for example, that it’s not really possible to make a living from it. The only people who can are those for whom those low wages aren’t low – people from poorer countries. Whitlock calls this “importing poverty.”

Migrant workers can pick up low paid jobs because it’s still more money than they could earn otherwise, and they can save or send money home, where it will go further. They are often in the country short term, and are prepared to work hard for short periods of time, putting up with poverty conditions that wouldn’t be acceptable as a permanent way of life.

Since UK residents aren’t able to sustain a decent quality of life on those wages, they end up dependent on the state.

This form of immigration is a “failure at both ends of the migrant’s journey” says Whitlock. The sending country has failed to provide decent opportunities, and the receiving country “only wants them because they will accept wages that are equally unable to sustain family life in its wealthier economy.”

This isn’t a perspective that features much in our current debate, but it suggests that all the talk around quotas and border guards is a waste of time. There are deeper economic issues to deal with, and not ones that are easily solved. The solutions would have to be much bigger in scope, looking at how we value work and how the benefits of growth are shared. It forces us to look again at the corporate structure and the idea of shareholder value, and even the profit motive itself.

22 comments

  1. The aim of any sensible economy is to produce the maximum consumption of goods and services for the lowest level of inputs. Consumption is the ultimate aim of any economy. The higher the cost of something the less that can be produced.

    Excluding immigrants to push up local wages will push up prices, meaning those wages won’t go as far.

    The solution is to grow the economy of the countries these immigrants come from so they don’t feel the need. Globalisation has been very good at doing that. Profit has been driving it. Quite why profit is such a bad thing I don’t know. I guess some prejudices can’t be eliminated.

          1. A standard of living in entirely made up of consumption. You consume food, housing, entertainment, clean air and hair cuts. You don’t have to have a physical thing to consume it. We don’t live to work, we work to consume ( in the broad economics term).

          2. It’s a matter of perspective. Some people only work to consume, others genuinely enjoy their work. I do agree consumption is necessary for a good standard of living, but I would argue, only up to a point. And it’s not an end in itself.

        1. That’s a highly reductionist view of the economy, and don’t pretend you’re being faithful to the traditional view of economics. If you’re talking about the classical understanding of it, then it’s more to do with stewardship of resources. At the very least it is about the production and consumption. Ignoring the first half of that equation is a sure-fire way to end up with an unbalanced and hollow economy – just like the one we have today, in fact.

          And standard of living is not about consumption alone. It’s also in the quality of our relationships, in satisfying work, in the appreciation of nature and participation in culture. These things are not ‘consumed’. Even physical things aren’t necessarily consumed, when they are shared.

          You know this. I’m pretty sure you’re just out for an argument.

          1. What is the point of production if you aren’t going to consume what you produce?

            You do consume culture, someone produces it and you enjoy it. That enjoyment is consumption.

            “Neoclassical (mainstream) economists generally consider consumption to be the final purpose of economic activity” – Encyclopedia Britannica.

            You have focused on your consumption bad default with looking at what I’m saying. We want the things we consume to cost the least in resources and labour so we can have the most for a given amount. That would be even more important in a world you claim is running out of stuff. Raising prices just cuts living standards.

          2. How are you going to consume if you haven’t got a job?

            I know economists use ‘consumption’ as shorthand, but it’s a generalisation that leaves us with gaping blind spots if we take it too far. That’s more or less what this post is about – immigration has become a political problem in large part because we’ve focused entirely on maximising consumption. We’ve let production capacity erode and wages stagnate, and depended on debt and immigration to keep us ticking along.

          3. Hi Devonchap,

            I think your point about “We want the things we consume to cost the least in resources and labour so we can have the most for a given amount.” highlights the main problem with our economy. As most of the population rushes to catch up with the first world and consume as much as we do, the resources available to us will start to diminish at a greater rate. Regardless of how we define ‘consumption’, whether it is an oil based product or the Amazon rainforest the ‘product’ will either be diminishing in availability of will be under pressure of some sort.

            Our lifestyle if it continues as it is, will not be sustainable if the whole world wants the same.

          4. “How are you going to consume if you haven’t got a job?”
            Well, since you seem to want to cut employment through higher wages unlinked to their effect on employment rather the pot call the sauce pan black. Not to mention that higher wages mean higher prices so those on limited incomes have less.
            That is an important point missed in this article.

          5. You’re not answering my question. How are people going to consume if they haven’t got a job?

            I specifically don’t call for a higher minimum wage in the post, if that’s what you’re referring to. Read it again if you have to. While I’m pointing out false accusations, I don’t have a ‘consumption bad default’ either – how could it consumption be bad if we have to consume things to live? It’s about balance, not good or bad. Nor do I think the world is ‘running out of stuff’, and I regularly point out that resource depletion and peak oil are not and never have been about ‘running out’. You do need to pay more attention to what I actually say if you want me to take your arguments seriously.

          6. You support the Living Wage, maybe not in this post but previous ones. That would cost a lot of jobs.

            I want people off benefits into jobs but many people currently on benefits wouldn’t be very valuable to employers so there need to be lower wages jobs for them. We should top those wages up through benefits or not taxing then. We could restrict those benefits to UK citizens if we want to discourage immigrants.

            But for people on benefits or in low wages jobs they can consume more if prices are lower. Raising labour costs will be passed onto the poor via higher prices.

  2. You are quiet right in your analysis. The Swedish welfare state is, however, so extreme that I strongly believe that people going from destitute poverty to decent welfare will not be as motivated as they would be in the U.S.A. or anywhere else for that matter.

    The brain behind the right in Sweden is well aware of the truism you just mentioned. That is precisely why our former P.M. Reinfeldt came to an agreement with the extreme-left to open our borders. It is a way to crush the welfare-state and push down wages.

    I do not, personally, approve of the welfare state but I consider it immoral to appeal to the citizens emotions to do so. They deserve to be given the facts on what will happen if Sweden continually leaves its borders wide open.

    The useful idiots on the left believe they can retain the welfare system and mass-immigration. They believe they are generous and kind but are unfortunately mistaken. Placing “refugees” and “welfare-seekers” in one of Swedens no-go-zones will further irritate the tensions looming beneath our multicultural surface.

    The wise men on the left know that a new class struggle will emerge once the welfare-state has been demolished. The hundreds of thousands who are currently on the streets will rise once they no longer have food on the table.

    That is my take on the current situation at least. You are quiet right regarding profit and the fundamentals of economics but let us not forget the realpolitik that plays its, very real, part.

    1. I know very little about the Swedish context specifically, but the immigration debate seems to be playing out across Europe at the moment. And you’re right, it is very easy for politicians to play politics with immigration, rather than work at the underlying problems.

      1. Well do not fear for I shall enlighten you on my blogg if you so wish.

        The European situation is utterly complex. I shall write about our former PM, the man who created the unsustainable for Sweden, next.

        Fredrik “the Imam” Reinfeldt

        His nickname is to me not derogatory with regards to muslims but rather used to denote the fact that he was a form of prayer leader for multicultural Sweden, just as an Imam is a prayer leader for a Mosque.

        Which is not to say that I wont draw some broader brushes with regards to the European situation as a whole.

        With kind regards
        //Swedish Surveyor

  3. I honestly struggle to see what all of the problems are with immigration, but in my opinion it is a mix of things, however at its crux immigration is down to one thing. Immigration happens because the conditions in their home country are not as good as the destination country. These conditions are usually financial but can also be due to political stability, way of life, weather. I personally know quite a few ‘immigrants’, most of them born here and left for other countries, ie Australia, USA, Spain etc, I also know quite a few people who came to this country from the likes of Poland etc. In pretty much every case the people had a reason why they wanted to move, finances in the main for people coming to us and way of life/weather for people leaving.

    I know that when people are talking about the immigration problem it is where people are coming to the UK, There are only two ways to stop this (and I’m not sure we need to stop it), first by physically preventing them from coming and increasing the consequences of employing illegal immigrants. The second way, and I feel that this is more of a responsibility on our part, is too help improve the conditions in their home country, helping to make it into a place where people would prefer to stay and not come to the UK.

    The whole issue about low wages and quality of life in the UK is a different issue and is a result of the free market. If people want to pay less for a product or service the provider has to compete for that business, and most times the easiest way to do that is to pay less for your raw materials (ie import from abroad, buy from a cheaper supplier etc) and/or pay less for your labour costs. Most employers are paying low wages to compete with other companies, not to increase profits.

    Jim

    1. Yes, I’m not convinced that we have a national immigration problem, although there clearly are local problems where population is growing faster than services can be provided.

      Of course, if we want to stop it, improving conditions in other countries sounds like a noble aim. But if we did that, where would the cheap labour come from that keeps our economy going?

      1. Yes, I’d agree that improving conditions in other countries sounds like a noble aim, but in reality it has a selfish side to it as well. If other countries have a standard of living similar to our own it will pretty much eliminate immigration due to financial reasons. It would hopefully also promote a more stable political framework, again reducing immigration. Personally I don’t think it is a case of if there is parity between the 1st, 2nd, and 3rd worlds, it is a question of when.

        The trick to it will be trying to stop our economy from falling apart because of the increase in prices due to the loss of cheap labour, that will be a challenge, hopefully it will also see a big reduction in unemployment.

        I should mention that none of the immigrants I know are in very low paid jobs, they are in decent jobs and all at minimum wage or above. Without exception they all speak English, the worst English speaker can still hold a conversation even if his accent is a bit tough. Of all the UK nationals I know none of them can speak Polish, or Chinese, or Indian, maybe a bit of French or Spanish, save for a couple who are fluent in French.

        Jim

        1. That’s a good point on immigrants in high paid jobs, and a slightly different dynamic. I don’t think UKIP and their friends have any idea how dependent the NHS is on doctors and nurses from overseas. That has complications too, especially for the country that invested in those people only to see them leave.

  4. Agree with much of what has been said in response to your note on Martin Whitlock’s book, however and of course there has to be an ‘However’, and that is not those in European countries that come to the UK trying to better themselves, the real problem and most serious is of those people arriving in Europe/UK from Middle Eastern/African countries who follow the teachings of Islam. Their culture is completely foreign to the northern Christian societies and as is currently being shown here in Britain. Intergration is not something these people whish to indulge in. Their Religious ideology has been the cause of repulsive actions by many of their followers and still is going on. This is the area of immigration that is the cause of most concern. Appreciate that Politicians and Government authorities would rather not consider this problem in isolation to the general consideration of immigration, nevertheless it is a problem that needs to be attended to before it gets out of control.

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