Book extract: International migration: the great trade-off

Hautahi Kingi

© Reprinted with permission from Fair Borders? Migration Policy in the 21st Century, edited by David Hall (Bridget Williams Books, Wellington, 2017)

We were wanderers from the beginning. . . For 99.9% of the time since our species came to be, we were hunters and foragers, wanderers on the savannahs and the steppes. There were no border guards then, no customs officials. The frontier was everywhere. We were bounded only by the Earth and the ocean and the sky. – Carl Sagan

Our world differs in many ways from that of our ancient ancestors. Yet migration remains central to the human experience. Even in today’s relatively sedentary societies, ‘the open road still softly calls, like a nearly forgotten song of childhood.’ A full consideration of migration policy therefore ought to go beyond economic issues to encompass questions of identity, culture, values and ethics. In a world where 95% of humanity remain in the country of their birth, immigration policies have the potential to transform not just our economies, but the structure of our societies and institutions.

By definition, international migration is a global issue. I therefore begin by taking a worldwide perspective on migration policy. This view presents strong evidence that migration represents perhaps the most effective tool for improving the wellbeing of humankind. I then turn to the more traditional consideration of the potential domestic costs inherent in this position. Although we know surprisingly little about the domestic economic consequences of immigration, globalisation has shown that policies designed to enhance global welfare can significantly damage those who miss out. Furthermore, unlike the flows of goods and capital, the movement of people entails the movement of culture and norms. Migration therefore not only affects what we do, but who we are. We should therefore take concerns about the domestic impacts of immigration very seriously. Finally, I discuss the trade-off between the global and domestic perspectives, one which can raise uncomfortable moral challenges.

The global perspective
The major argument for open migration is an economic one. To understand why, consider the long-recognised economic inefficiencies of trade barriers. A desire to remove them has driven many inter-governmental relationships since the establishment of the General Agreement on Tariffs and Trade in 1948, during which time more than 500 bilateral and multilateral trade agreements were signed into effect. The enormous amounts of financial and political capital that continue to be spent on such agreements suggest that the economic consequences of trade restrictions remain very costly.

However, these costs are insignificant in comparison to those created by migration restrictions. From the perspective of the efficient allocation of labour, the arrangements for where people live are far more inefficient than the allocation of goods across countries. While international price differences for identical goods are rarely larger than 74%, it is common for cross-country wage disparities to exceed 1000%. For this reason, the economic models used to justify free trade predict that the costs of migration barriers amount to around 100% of world GDP per year.

The explanation behind this jaw-droppingly large number is simple. When people relocate to a place where their labour can produce more, the total amount of production increases. Given the massive numbers of people who would likely migrate in search of better opportunities if given the choice, this reasoning (coupled with assumptions regarding worker displacement and productivity effects) yields estimates that open migration would approximately double the world economy. In a world where champagne corks pop at the hint of 4% growth, governments leave ‘trillion dollar bills on the sidewalk’ by seemingly ignoring such a policy. While there exist counter-arguments against the income effects of open migration, such as the short-term strain on infrastructure, they are dwarfed by the magnitude of the potential gains. From a global income perspective, no other policy offers anything remotely as appealing.

Likewise, international migration also represents the best tool for reducing global poverty. Income gains from the most effective foreign aid programmes, which are funded by substantial financial and organisational resources, raise the per-capita consumption of the world’s poorest by just US$54 per year. A migrant to one of the OECD countries from a typical poor country could expect to earn this consumption gain in just two days.

It turns out that New Zealand is a poster child, albeit an imperfect one, for how wealthy countries might embrace this poverty-relieving possibility. In 2007, New Zealand launched the Recognised Seasonal Employer (RSE) initiative targeted at workers from Vanuatu, Samoa, Tonga, Fiji, Tuvalu and Kiribati. This temporary work programme is unique because one of its explicit goals was to act as a form of international aid, as demonstrated by the administrative involvement of NZAID – New Zealand’s official foreign development organisation.

The RSE significantly increases the incomes of migrant workers and their families, which are spent at home on house improvements, goods such as gas or electric ovens, solar energy panels and school fees, which, particularly in Tonga, help to increase child schooling. A common concern about guest worker programmes is the potentially negative effect on households that miss out on migration opportunities. Indeed, the RSE has not improved the incomes of ‘control group’ families – those who are not part of the programme – at all. However, researchers have assessed the broader subjective wellbeing of these families through carefully designed survey questions, and have not detected any negative impact of missing out on these gains. This may be due in part to the fact that RSE migrants also contribute US$80–$130 more on average to community projects such as maintaining village water supplies.

Another broader concern about guest worker programmes is the potential for exploitation of migrants in the country they visit for work. The RSE has garnered some negative publicity recently for employer abuses such as poor housing conditions and undocumented work hours. Despite these serious issues, the United Nations has endorsed New Zealand’s approach by commenting that ‘the RSE scheme . . . could service [serve] as a model for other destination countries.' Because the RSE has also provided New Zealand employers with access to a sought-after, reliable workforce, it has received praise for achieving the ‘elusive triple wins for development’ of benefiting migrants, their countries of origin and the destination countries. Indeed, its pioneering success has motivated several ‘Visas as Aid’ pilot programmes around the world.

Drastic improvements in the global economy, extreme poverty and world inequality present an incredibly strong argument for open migration – perhaps the strongest economic case for any policy proposal. To be truly convinced by the argument, however, one must be willing to consider migrants as fellow human beings, many of whom were dealt an unlucky draw in the economic lottery of birth. This requires a departure from how many people evaluate migration policies, which is to consider only the domestic impacts of migration, while ignoring the prosperity of immigrants and relegating them to mere inputs into our national production process. Although John Rawls’ veil of ignorance is supposed to blind us to our own interests when guiding policy, in practice it seems to be ‘made from a flag bandana that reveals to its wearer her national allegiance and nothing else’.

Although there are legitimate disagreements over our moral obligation toward fellow humans overseas, our commitment to other causes indicates that we do value their wellbeing to some degree. For example, the NZ$600 million per year that New Zealand spends on foreign aid demonstrates our appreciation that those who are less fortunate deserve our help regardless of their nationality. The evidence in favour of migration as a form of aid suggests that this money may be better spent on a robust immigration scheme.

This is not a casual dismissal of the significant achievements of traditional foreign aid, but rather an acknowledgement of the extraordinarily powerful effect of restoring humanity’s ability to wander our planet. Working abroad can be a fundamentally life-changing experience. For the most vulnerable, it represents the best opportunity to escape from miserable poverty and to build a better life for their families. The potential income gains are more than mere dollar figures. They represent the opportunity to access the basic goods – health, education, housing – that make life worth living.

The domestic cultural perspective
Most discussions about the domestic consequences of immigration focus on economic impacts. However, migrants bring with them more than just their labour and desire to consume. As Swiss novelist Max Frisch famously quipped ‘we wanted workers, but we got people instead’. When people cross borders, so do their cultures and norms, and we are almost always richer and stronger for it. Experiencing the diversity of humankind helps our understanding of the world and ourselves, and contributes to a truly fulfilling life.

High levels of immigration, however, tend to both create new, and reveal existing, divisions along those very cultural lines. For example, anti-immigrant sentiment closely tracks changes in the national origin of immigrants and the gap between native and foreign-born language and culture. More diverse societies also tend to reduce the provision of public goods and erode support for the welfare state. Furthermore, immigrants welcomed by a large compatriot community are understandably less likely to acquire the cultural skills that allow more social and economic exchanges with the mainstream population, thereby encouraging ethnic enclaves. These divisions can severely undermine the social institutions sustaining an economy because, despite the assurances of modern legal systems, ‘virtually every commercial transaction has within itself an element of trust’. The level of trust within a society therefore fundamentally underpins economic growth. For example, it is estimated that France would experience an 11% increase in GDP per capita were it to inherit the societal trust of a homogeneous state like Sweden.

The impact of immigration on a country’s social fabric can be an uncomfortable issue to discuss because it forces us to acknowledge and confront lamentable tribal aspects of human frailty. Furthermore, such concerns are often expressed with an underlying tone of racism that has certainly coloured some immigration policies. The United States Immigrant and Nationality Acts of 1924 established quotas favouring white Europeans. The New Zealand Asiatic Restriction Bill of 1896 asserted that ‘it is expedient to safeguard the race-purity of the people of New Zealand by preventing the influx into the colony of persons of alien race’. The titles of other New Zealand legislation such as the Chinese Immigrants Amendment Act 1907 and the Undesirable Immigrants Exclusion Act 1919 speak for themselves.

Despite this sordid history, it is unfair to dismiss cultural concerns about immigration as necessarily bigoted. One can embrace multiculturalism as a cherished part of progressive society while still being concerned for the potentially corrosive effect of mass migration on that society. Indeed, I suggest that we are duty-bound to be concerned given that modern Aotearoa was founded on the principle that tangata whenua have rights to their culture that should not be overridden by settlers. At the heart of the critique against colonialism is a concern for the enforced erosion of culture. To completely deny cultural impacts for fear of being associated with unsavoury views is to do ourselves a disservice. By refusing to discuss this issue honestly and reasonably, we leave a vacuum for bigots to discuss it unreasonably, which has arguably contributed to the success of intolerance as a political tool in recent times.

The global vs domestic trade-off: a moral dilemma?
Western democracies deal with a difficult trade-off between the undeniable global gains from more open migration and the potential domestic costs – both economic and cultural – by restricting the entry of foreigners. In doing so, we effectively accept the substantial inequality outside our borders in order to protect the veneer of equality within them.

Are we Westerners able to feel morally superior simply because the suffering of the poor is kept comfortably out of sight beyond our own borders? Do these concerns provide a justification for why New Zealand, for example, might want to limit voting rights for temporary migrants or restrict access to health care and superannuation if it means we could accommodate more migrant workers? There is certainly evidence that relatively mild forms of discrimination against migrants, such as higher taxes, would be sufficient to satisfy the objections of many. Given the enormous potential income gains, migrants may be willing to bear costs such as this.

Similarly, need we insist upon integrating a foreign worker completely within a society if she is simply looking for better work? Should the arbitrary impediment of national borders necessarily define labour markets? These are all extremely difficult questions that have troubling moral implications.

Long summers, mild winters, rich harvests, plentiful game – none of them lasts forever. Your own life, or your band’s, or even your species’ might be owed to a restless few – drawn . . . to undiscovered lands and new worlds. – Carl Sagan

Migration is, and always has been, the best tool for reducing suffering in our world. By liberating a significant fraction of humanity from the burden of survival, more lenient migration policies could allow millions of children to look forward to a long life, free of hunger and disease, and to pursue their love of culture, of leisure, of science.

While international migration represents a life-changing opportunity for many, it also threatens the livelihood of others and strikes to the core of our societies by changing their structure, their jobs, their culture, their appearance. This can force us to reconsider our intuitive notions of basic ethics in a way that confronts our human frailties. Given its immense human importance, we shouldn’t expect anything else.

Hautahi Kingi is an economist based in Washington, DC. He holds degrees in mathematics and economics from Victoria University and a PhD in economics from Cornell University
Notes and references have been excluded from this edited extract.

© Reprinted with permission from Fair Borders? Migration Policy in the 21st Century, edited by David Hall (Bridget Williams Books, Wellington, 2017)


Got a question about this story? Leave it in Comments & Questions below.

This article is tagged with the following keywords. Find out more about MyNBR Tags

Comments & Questions

Commenter icon key: Subscriber Verified

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

NZ Market Snapshot

Forex

Sym Price Change
USD 0.7286 -0.0011 -0.15%
AUD 0.9197 -0.0007 -0.08%
EUR 0.6104 -0.0007 -0.11%
GBP 0.5370 -0.0004 -0.07%
HKD 5.6865 -0.0086 -0.15%
JPY 81.9910 -0.0600 -0.07%

Commods

Commodity Price Change Time
Gold Index 1290.6 -9.820 2017-09-21T00:
Oil Brent 56.1 0.160 2017-09-21T00:
Oil Nymex 50.5 -0.130 2017-09-21T00:
Silver Index 16.9 -0.384 2017-09-21T00:

Indices

Symbol Open High Last %
NZX 50 7795.4 7795.4 7795.4 -0.17%
NASDAQ 6448.6 6448.6 6456.0 -0.52%
DAX 12602.0 12621.3 12569.2 0.25%
DJI 22414.0 22419.5 22412.6 -0.24%
FTSE 7271.9 7289.2 7271.9 -0.11%
HKSE 28091.2 28184.4 28127.8 -0.06%
NI225 20413.6 20417.1 20347.5 0.20%
ASX 5655.4 5688.2 5655.4 0.34%