Polly the racist?

Unlike bloggers like, say, Tim Worstall, more often than not I find myself in broad agreement with lefty Guardian columnist Polly Toynbee. But at times her arguments give me pause. A case in point is Tuesday's piece, Of course the wealthy want an immigration free-for-all, where she states:

Bercow and Labour hotly assert that migrants don't take jobs from British workers nor depress wages. But there is no evidence for this assertion. It is impossible to know what level wages might be at or how many unemployed might have been tugged into jobs at higher pay rates had Britain kept its doors shut to new EU citizens until their countries had caught up economically.

Blair and Brown embrace the inevitability of globalisation, but make a deliberately class-blind analysis. Migrants do bring GDP growth, but... They also hold down the pay rate for all other low-paid workers, keeping wage inflation remarkably low and the Bank of England very happy.

That sounds dangerously myopic to me. While some have accused Toynbee of being racist, Tim Worstall makes a different point - that hers is a selfish, 'Little Englander' perspective:

Put very simply, why does the concern about inequality seem to stop at the water’s edge? Why this insistence that we should only be looking at the effects within the nation? Are not those immigrants also our fellow humans, who deserve to share in the wealth and riches available? Should we not be concerned with international inequality as well?

Others are less kind. Talk Politics draws parallels between Toynbee's views and the policies of the BNP and the Nazis:

Ein Volk. Ein Reich. Eh, Polly?

A nice line in rhetoric, though it seems way over the top. In any event, as an economist I'm more concerned about the evidence. It appears that Polly has fallen foul of the so-called lump of labour fallacy - the notion that there are a fixed number of jobs, and that if an immigrant gets a job it must therefore be at the expense of a local worker. It's an argument often made, but it assumes, for example, that the immigrant workers are a good susbtitute for British workers. Yet we know that often immgrants take up jobs locals don't want (particularly when the labour market is tight, as now). It also ignores the positive growth impact of migrant consumption and investment activity.

Most of the recent economic evidence is against Polly. For example, Chris at Stumbling and Mumbling cites several pieces of UK and US research which suggest that migrant workers do not cost jobs, and indeed are positive for the economy. So too does Owen Barder. (I recommend readers have a look at both posts and the papers they cite).

However the evidence is not all one way. My previous post, In praise of foreign workers, cited similar studies to Chris and Owen, but also a recent DWP working paper on the impact of workers from Central and Eastern Europe. Among its findings was that:

At a sectoral level, by far the most significant observed changes have been in the agriculture and fishing sector. Here, employment appears to have grown sharply as a result of accession-worker migration, while there is some mixed evidence that growth in nominal wages has been reduced relative to the rest of the economy.

Interestingly, both Chris and Own conclude with much the same argument. Here's what Owen writes:

Even if, despite the evidence to the contrary, the wages of some workers were depressed by migration, it would not follow that we should close our borders. The proper response would be to redistribute the overall benefits so that everyone shares in the rising prosperity that results. Ms Toynbee also ignores the huge benefits to the migrants themselves, and the transformative impact remittances can have on their families at home.

While Chris puts it this way:

As she's recognized, immigration is a potential Pareto improvement:  "Migrants do bring GDP growth." And the way to convert potential Pareto improvements into actual ones is not to meddle with the market forces that produce the improvement, but to redistribute the gains more equitably. Any decent leftist who shared Polly's (wrong) analysis would call for more redistributive taxation, not for immigration controls. Polly is just combining racism with economic illiteracy. And this contemptible rubbish passes for leftism.

I agree Polly can be economically illiterate, and this is one such occasion. Though I very much doubt she is a racist, her arguments might well be used by those who are. But as to the case for supporting migration and redistribution of the benefits, I am in complete agreement.

Comments

[Edward Hugh]

"They also hold down the pay rate for all other low-paid workers"

This is the argument of an economist like George Borjas in the US, who has consistently argued that Afro Americans are the main group disadvantaged by immigration.

http://ksghome.harvard.edu/~GBorjas/Papers/JEL94.pdf

and

http://ksghome.harvard.edu/~GBorjas/Papers/cis504.pdf

Center for Immigration Studies
Increasing the Supply of Labor Through Immigration Measuring the Impact on Native-born Workers
By George J. Borjas
May 2004

President Bush and some members of Congress have proposed legalizing illegal aliens and substantially increasing legal immigration. Economic theory predicts that increasing the supply of labor in this way will reduce earnings for natives in competition with immigrants. This study examines the economic impact of increases in the number of immigrant workers by their education level and experience in the work force, using Census data from 1960 through 2000. Statistical analysis shows that when immigration increases the supply of workers in a skill category, the earnings of native-born workers in that same category fall. The negative effect will occur regardless of whether the immigrant workers are legal or illegal, temporary or permanent. Any sizable increase in the number of immigrants will inevitably lower wages for some American workers. Conversely, reducing the supply of labor by strict immigration enforcement and reduced legal immigration would increase the earnings of native workers.

(Me again Edward) The argument is more complicated than it seems. Immigration - like anything else - is not a 'pure good', there are pluses and minuses and winners and losers. Of course I (notoriously I hope) am completly with you, but the argument isn't as simple as it sometimes seems.

The UK 'national' left has long existed. In the 60s it was joining the common market which was going to disadvantage the lower paid British worker with competition from all that cheap European labour. And perhaps intellectuals with a bit more clout than PT - like Cambridge economist Bob Rowthorn - have voiced opinions against immigration. I don't think they're racist, any more than, say, José Bove is, I just think they are nationalistic, and this cramps their vision. As you point out, at the end of the day there are also compelling economic arguments why they are wrong, including the lump of GDP fallacy.

"Tim Worstall makes a different point - that hers is a selfish, 'Little Englander' perspective"

I absolutely agree with him, but Tim needs to be just a little bit careful here since his preferred UK party - the conservatives (the English, not the British party as I like to say) - could surely often be accused of exactly this. Lesson: not everything breaks down nicely into left and right, and today less than ever.