Flushing out the brain drain myth

Highly skilled emigrants seeking better opportunities overseas certainly benefit themselves – by an average of $US40-70,000 a year – according to new research by Professor John Gibson, of the University of Waikato, and his World Bank colleague David McKenzie.

They surveyed 12,000 people, living in 45 countries, who had emigrated from New Zealand and four other places (Ghana, Micronesia, Papua New Guinea and Tonga) that in the popular parlance experience “brain drain.” They traced the migration histories of top academic achievers in high school each year from 1976 and 2004.

“Because this is such an enormous benefit to these individuals, we would need very large spillover effects for high-skilled migration to have a net negative impact on development in their home countries,” Dr McKenzie says. “Instead, we estimate the likely value of these externalities to be at most $US1000 per year – that’s only 2% of the private gains.”

Other benefits from high-skilled migration include remittances, trade and investment. The study found remittances amounted to around $US5000 per year for each individual, while the net effect of trade and investment was much smaller – around $US500-1000 per migrant in Ghana, and even smaller in Micronesia and Tonga.

“Our study indicates that governments should be less concerned about high rates of skilled emigration, and focus instead on the basics of providing the policy environment needed to foster growth and innovation at home,” Dr McKenzie says.

As an aside, a readers may recall a former prime minister, Sir Robert Muldoon, rejected the “brain drain” notion on the grounds that between New Zealand and Australia it lifted the IQ of each country.

Let them in – at a price
As a country with high migrations flows – both in and out – New Zealand is an ideal country to study the benefits, both to individuals and the country.

Yet economics is a long way behind the social thinking that drives immigration policy. One idea that hasn’t been tested may be the best yet. It comes from Nobel Prize winner Professor Gary Becker, well known for his application of economics to social policy.

In a recent article, published in summary form as a pdf in the Business Roundtable’s Perspectives series, Professor Becker raises the obvious potential of selling immigration rights, thus bypassing the cumbersome bureaucracies that have emerged to encourage – or prevent – it.

Professor Becker cuts to the chase and says the US, as the world’s most desirable destination for migrants, could set a price of $US50,000.

Based on the figures for the Gibson-McKenzie paper, this would be a doddle. In fact, many would pay this off within a year from their extra earnings.

For example, if skilled individuals could earn $US10 an hour in a country such as India or China, and $US40 an hour in the US, by moving they would gain $US60,000 a year before taxes. The higher earnings from immigrating would cover a fee of $US50,000 in about a year, Prof Becker suggests.

Of course, the US could also earn an easy $US50 billion to pay down its deficit, if it had a million applicants with their $US50K entry fee. New Zealand would have to pitch its cost of entry a little lower – but anything would be better than being landed with $9 billion in student loans liabilities, much of it having no chance of being paid back.

Who will stop MMP?
No one seems to be willing to pick up the anti-MMP banner and run with it heading into the referendum. So this column may be the only place to read about it.

The arguments for and against proportional representation are being rehearsed in the UK, where the junior Coalition partner, the Liberal Democrats, have achieved their aim of putting AV (alternative voting) to a public poll, The Lib-Dems' leader, Deputy Prime Minister Nick Clegg, has argued the benefits in the Daily Telegraph:

“I believe there is a direct link between our electoral system and the expenses scandal,” he said. “Why? Not because a new system like AV will turn all politicians into angels — but because the old first-past-the-post system gives hundreds of MPs safe seats: jobs for life, no questions asked.”

Any New Zealand could dismiss that argument: MMP has created even more "jobs for life" MPs, who are entrenched on the List, while "safe" electoral seats are in the minority.

Telegraph readers were also offered a sceptic's view  of outcomes from the Australia’s preferential system, which many prefer as the best alternative to MMP.

Meanwhile, the voters of Finland are likely to wait until the middle of June to see what shape their government might have (Belgium has just entered the Guinness Book of Records for going a year without one, something that may be worth trying as well).

Like Canada, Finland is afflicted by having more than two political parties that each attract about a fifth of the voting public.

In the latest election, a new party of the right, True Finns, surged to 19% of the vote with nationalistic, Euro-sceptic policies that strongly oppose bailouts of Greece, Ireland, et al.

The next government will try to combine the True Finns with two other water-and-oil parties: the conservative but globalist National Coalition (20.4%) and the Social Democrats. (19.1%).

The best of British
One of the pleasures of having a Kindle is being able to read hot-off-the-press columnists in The Spectator.

Otherwise, you have to wait a week or two to read online the likes of freshish voices such as James Delingpole and Toby Young, not to mention long-timers Taki, Matthew Parris and Peter Jones; and like many other of the magazine’s fans, I am not enamoured by the Australian edition.

Another favourite is Rod Liddle, who recently praised Local Government Minister Eric Pickles for highlighting the meaningless jobs created by councils, such as family lifestyles officer, gypsy romany liaison officer, workplace travel co-ordinator and healthy walks co-ordinator. Trouble is, Liddle writes:

The press, in picking up on his comments and (presumably briefed by his department) highlighted particularly egregious spending on stupid jobs in seven district or county councils. And not one of them was a Labour council, or had any Labour involvement in its running. In fact every single one was Conservative-controlled or had the Conservative party as the largest single group, with the exception of the Conservative-Liberal coalition in Teignbridge.

I also enjoyed Delingpole’s review of a recent BBC programme, My Brother, the Islamist, which no doubt won’t be turning up any time soon on a local channel.