Left Outside

Migrants: Fast-track to the future

The Government’s migration policy seems set to fail to achieve its policy of reducing migration to the tens of thousands a year. Of course there is always a non-negligible chance of the Tories tanking the economy, in which case they might just do it.

Laban Tall comments and makes the obvious point that – of course! – capitalists want cheap labour. A Tory Government dominated by its big business interests would therefore make only token movements towards reducing the numbers of migrants. He even quotes Marx, just to annoy the pro-migrant left:

Karl Marx, 1847 :

“The main purpose of the bourgeois in relation to the worker is, of course, to have the commodity labour as cheaply as possible, which is only possible when the supply of this commodity is as large as possible in relation to the demand for it”

I say quotes… possibly misquotes is a better description. Implying capitalists do nothing but seek cheap labour does them a great disservice. Junkers in Prussia sought cheap peasant labour, Boyars in Russia sought to reduce the cost of labour by creating serfs, they were leaches on society.

Capitalists have a more progressive role:

Karl Marx, 1848 :

“The bourgeoisie, historically, has played a most revolutionary part… The bourgeoisie cannot exist without constantly revolutionising the instruments of production, and thereby the relations of production, and with them the whole relations of society… All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify.”

Now Laban knows this, he used to be a bit of a radical, so he knows his Marx. But he does love winding up Lefties, which is as admirable a hobby as mine, of riling rightists.

The point of capitalists in Marx’s theory, or a vulgar version of Marx’s theory, is to get us to the future. Capitalists create the means of production which produce the plenty which a transition to a classless society requires. Think Soviets plus electrification plus fordism plus computers plus-just-in-time-production (minus fordism?) plus the internet etc.

Laban’s vision of the future no doubt includes a great deal less migration. You could go the Japanese route as suggested by some, and severely restrict migration. Doing this would involve moving the UK from 20 miles off the coast of Europe to 100 miles, and diverting a vast quantity of air and sea traffic…perhaps that isn’t as practical as it sounds at first blush.

Alternatively, you could make less people want to move less. The main thing which drives migration is differences in productivity, and therefore income, between people living in rich countries and people living in poor countries. Migration raises the productivity of those that migrate and the wages of those that stay behind. Both reduce global inequality and the urge to migrate.

In a world of developed countries, which is where the world is heading, the urge to migrate will be much weaker. There are those who hate the country and culture they grow up, but most don’t really want to move. Eliminating the massive inequalities of wealth the world sees is the only sure way of reducing migration. Another thought, it is a little odd that the most rabidly anti-migrant are also the most rabidly anti-foreign aid.

So, rather than fight migration, those that don’t like it should, like old Marxists, welcome the forces which push us towards the future. More Marxists that means advancing capitalist development, for anti-migrants that means more migrants and more aid. Neither group likes this, but both groups must honestly accept the logic of their position.

So Laban, does that rile the rightist as intended?

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Filed under: Blogging, Economics, Foreign Affairs, History, Migration, Society

9 Responses - Comments are closed.

  1. vimothy says:

    Left Outside,

    From the comments at LC:

    “The division of labour is limited by the extent of the market” is one of my favourite sentences in economics, actually.

    The market and the population are not quite the same thing, though they do overlap. But anyway, what you’re saying is basically that economies with larger populations are more productive on a per capita basis than economies with smaller populations, which is a testable proposition. I don’t have the time at the moment, but you could do it—just regress PC GDP or some measure of productivity on population size and whatever other factors you want to control for and see what the relationship is.

    A cursory glance at this http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita

    Doesn’t bode well for your theory. The top ten:

    1 Qatar 88,559
    2 Luxembourg 81,383
    3 Singapore 56,522
    4 Norway 52,013
    5 Brunei 48,892
    6 United Arab Emirates 48,821
    7 United States 47,284
    — Hong Kong 45,736
    8 Switzerland 41,663
    9 Netherlands 40,765
    10 Australia 39,699

    Hmm, curiouser and curiouser. It’s almost like there *is* a relationship—and it’s negative!

    And if it were positive, it would imply that the countries migrants left were made worse off, which would be a strange thing for progressives to be arguing for.

    Either way, I’d be interested in seeing you flesh out how we go from new immigrants to more productivity. What is the value of the marginal Polish bartender? Do they really raise everybody else’s productivity as well? Without new immigrants, we’d all have to quit our fancy jobs as City analysts and go and back to work in the local hotel? Why doesn’t more workers + same amount of capital = lower productivity of labour?

    “Also migration increases per capita income because migrants are capita.”

    Not quite. Immigration increases “capita”. Whether it increases per capita income is what we’re debating. (Per capita income is GDP divided by population). Why would it increase per capita GDP is my question to you. Why? Are we importing people who are generally more productive than the average British worker? Do they emit TFP? I mean—what?

    • Left Outside says:

      “Not quite. Immigration increases “capita”. Whether it increases per capita income is what we’re debating. (Per capita income is GDP divided by population). Why would it increase per capita GDP is my question to you. Why? Are we importing people who are generally more productive than the average British worker? Do they emit TFP? I mean—what?”

      You’re thinking about it wrong.

      Migration doesn’t increase capita, it moves capita from one place to another. However, migration definitely increases productivity.

      Do you see where I’m going?

      If the mirant is included in both calculations, premigration and postmigration then per capita gdp will almost certainly go up.

      1 Qatar 88,559

      OIL!

      2 Luxembourg 81,383

      RICH FOREIGNERS!

      3 Singapore 56,522

      Enormous hinterland, full of migrants

      4 Norway 52,013

      OIL!

      5 Brunei 48,892

      OIL!

      6 United Arab Emirates 48,821

      OIL!

      7 United States 47,284

      MASSIVE!

      — Hong Kong 45,736

      Enormous hinterland, full of migrants

      8 Switzerland 41,663

      TAX HAVEN!

      9 Netherlands 40,765

      QUITE BIG

      10 Australia 39,699

      QUITE BIG

      Sorry for shouty capitals.

      That lists proves little else except that Oil and banking makes you rich, and that Hong Kong and Singapore are outliers in almost everything. Although their massive hinterlands and connections to international migration make them kinda supportive of my position more than yours.

      • vimothy says:

        Damn, replied at LC. Here it is again just in case:

        “You’re thinking about it wrong.”

        I’m pretty sure that I understand what “GDP per capita” means. It means national aggregate economic output (“GDP”) divided by head of population (“per capita”). Immigration increases the number of heads in a country, so if GDP stays the same, GDP per capita falls (because the denominator has increased).

        “Do you see where I’m going?”

        No. Your claim is that migration increases productivity. You can’t prove that claim merely by repeating it. Which is what you seem to be doing. Sorry if I’m missing the point.

        “If the mirant is included in both calculations, premigration and postmigration then per capita gdp will almost certainly go up.”

        Both what calculations?

        If what you say is true then that list should be dominated by oil rich countries with big populations. Unless there is some relationship between population size and the probability of having a natural resource endowment. I’m working on the assumption that they are probabilistically independent events. (I’m not a poli sci student though and would be happy to see data/research that suggests otherwise).

        For example, you write:

        “OIL!”

        For several countries

        But so what? Saudi Arabia also has oil, and a larger population. Why doesn’t it top the chart? If you were to restrict the list to countries with oil, then Qatar would still be at the top, because Qatar has the highest PC GDP in the world full stop.

        You also write

        “Enormous hinterland, full of migrants”

        This is irrelevant, since your argument is that productivity is increasing in population size.

        For the US,

        “MASSIVE!”

        Yes, well done. One country that has a large population and high PC GDP.

        “TAX HAVEN!”

        So what? China has a 5th of the world’s population. By your argument it should be the most productive economy in the world. Why isn’t it on the list?

        “QUITE BIG”

        That describes NL and Australia. The Netherlands is the 61 in population rankings and 9 in PPP PCGDP. It makes no sense if productivity is an increasing function of population.

        Australia is #50 in terms of population, and #10 in PPP PCGDP. Australia has some pretty sweet natural resources, but then, so does Libya.

  2. Left Outside says:

    Okay, I’m not expressing myself.

    There are traditionally two calculations for per capita GDP.

    1) The initial population divided by its gross domestic product.

    2) The initial population (plus one migrant) divided by its gross domestic product.

    My argument is that the first calculation arbitrarily ignores the migrant until he enters the borders of the state.

    GDP per capita increases because the migrant’s income goes up. Most studies show no negative aggregate (or some small negative effects for unskilled workers), and some small positive effects. Therefore global GDP per capita undoubtedly goes up. The national figures are distorted by completely discounting the migrant’s product before he moved.

    Utilitarianism is meant to be cosmopolitian, its not consistent to ignore the migrant at T1 when you do at T2.

    With respect to TFP. Yep, migrants do kind of exude it.

    Using the large variation in the inflow of immigrants across US states we analyze the impact of immigration on state employment, average hours worked, physical capital accumulation and, most importantly, total factor productivity and its skill bias. We use the location of a state relative to the Mexican border and to the main ports of entry, as well as the existence of communities of immigrants before 1960, as instruments. We find no evidence that immigrants crowded-out employment and hours worked by natives. At the same time we find robust evidence that they increased total factor productivity, on the one hand, while they decreased capital intensity and the skill-bias of production technologies, on the other. These results are robust to controlling for several other determinants of productivity that may vary with geography such as R&D spending, computer adoption, international competition in the form of exports and sector composition. Our results suggest that immigrants promoted efficient task specialization, thus increasing TFP and, at the same time, promoted the adoption of unskilled-biased technology as the theory of directed technological change would predict. Combining these effects, an increase in employment in a US state of 1% due to immigrants produced an increase in income per worker of 0.5% in that state.

    http://www.econ.ucdavis.edu/faculty/gperi/Papers/peri_accounting_sept_09.pdf

    The main determinant of productivity is the economy into which you are born.

    If I lived in Thailand even with all my human capital retained my productivity would be lower. Less capital, worse financial system, less clearly defined property rights, a lower level of technology.

    Moving humans close to good institutions and more capital will increase productivity.

    Moving onto population versus wealth.

    Obviously population is only one variable. I would also argue it is a minor one. But all else equal, more people means more innovation. All else is never equal but I don’t think that a controversial point.

    • vimothy says:

      Okay. GDP is a flow variable defined for a specific geographical location over a specific time period. There are a variety of ways to calculate GDP, but the easiest to grasp intuitively is the following: take the sum of all final sales of goods and services at current market prices within, say, the UK during 2010. That gives you UK nominal GDP for 2010. Real GDP is NGDP adjusted for constant prices. This gives us a measure of a country’s (real and nominal) income in a given period.

      GDP per capita is average income—specifically, mean income. To find PC GDP we take current GDP and divide by the population. Per capita GDP provides a measure of living standards in a country. For example, consider China. At purchasing power parity its current GDP is about $10 trillion. Compare this to Qatar, whose current GDP (again, at PPP) is about $150 billion. So China’s national income is about 4 or 5 orders of magnitude greater.

      Pretty neat, huh. What with all those people, China’s aggregate income is huge. Unfortunately (for all those people—because of all those people), its living standards are pretty miserable compared to the vastly poorer (on an aggregate basis) Qatar. Humble Qatar has an average income of about $90k, whereas in China that figure is around $7.5k. In other words, the average income in Qatar is over an order of magnitude greater than in China.

      Most peculiar!

      This is the problem of straight comparisons of GDP. Because they don’t take population size into account, while they may give you some idea about the power of a state in an international context, they don’t tell you much about the living standards of people within that state. It is, as we’ve just seen, perfectly possible for GDP to be very high and per capita GDP to be quite low.

      In your reply you discuss per capita GDP in rather strange terms, and I’m struggling to understand what you mean. You write that there are “traditionally two calculations for per capita GDP… initial population divided by its gross domestic product… initial population (plus one migrant) divided by its gross domestic product…. My argument is that the first calculation arbitrarily ignores the migrant until he enters the borders of the state.”

      I think you may be getting a bit confused here (or, of course, it could be me). Firstly, it’s GDP over population, not population over GDP. More importantly, the calculation of GDP per capita arbitrarily ignores everyone within the borders of the state—that’s what GDP per capita is. Otherwise, you have a different measure entirely, and not one that makes a lot of sense, as far as I can see. F’rinstance, surely the correct answer to the question, what’s UK GDP divided by global population, is who the fsck cares?

      When migrant moves to a new country the initial effect must by definition be to reduce per capita GDP, unless you think that the economy instantaneously and magically expands to accommodate the new individual and provide him with the level of income that currently obtains in his new home. If it were really this simple, we wouldn’t ever need govt intervention in the economy.

      Think of the economy as comprising a supply side consisting of firms, and a demand side consisting of consumers who also supply factor services to the firms. When a new migrant enters the country, he may add to the supply of factor services (labour, mostly), and he may add to demand in product markets, but he does not as general rule, bring a successful firm with him. At the margin, for the firms in the medium term, labour may have gotten a little bit cheaper, and they may substitute away from capital towards it, and demand might shift a little bit to the right, but how does the whole economy get more productive? I am not asking how it can be the case that GDP is higher, the fact that GDP is increasing in population size is not a very interesting fact. I want to know how the economy does more with the same amount of inputs, after the migrant arrives.

      I did mention total factor productivity, but that was supposed to be a joke! TFP is a residual (i.e., what can’t be explained by physical inputs). It’s not an explanation of the putative mechanism by which immigration makes the economy more productive on a per capita basis.

      Here’s what I thought when I read the abstract of the paper you posted. Is there anything special about migrants, or will this work for anyone? Let’s say that there’s a birthrate explosion and the US starts to resemble Ramallah in terms of population density. Is this likely to coincide with an explosion in productivity? If not, why not? I.e. is it just about the sheer number of bodies in your view or is there something else going on?

      Let’s say we take a bunch of unemployed people from Detroit or Michigan, and move them down to Texas. Explosion in TFP? Or does that only work if there’s a border with Mexico involved? If it works with anyone, I have a brilliant scheme to return the US to its glory days of economic growth: Everyone has to move state at least once a year. Ta-da!

      Finally, if immigrants increase per capita income here, what do they do to per capita income there when they leave? Interested to hear your views. Cheers.

      • vimothy says:

        Doh!

        Should read,

        “More importantly, the calculation of GDP per capita arbitrarily ignores everyone not within the borders of the state—that’s what GDP per capita is.”

  3. Tom Welsh says:

    “The point of capitalists in Marx’s theory, or a vulgar version of Marx’s theory, is to get us to the future”.

    Wow! Is that a job you can get paid for? I would think it takes care of itself, mostly. Just hop into your hammock, sip your wine, munch your grapes, listen to a little Bach, and watch the future arrive all by itself. As I have noticed it tends to.

  4. [...] owe posts to Vimothy and @BellaGerens Vimothy on Migration: Okay. GDP is a flow variable defined for a specific geographical location over a specific time [...]

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