Immigrants should be as welcome as oil or gold

Most of the available evidence suggests that immigration brings net economic benefits


Japan allows virtually no immigration at all. The single most effective growth-boosting strategy would be to open up to more immigration. AP Photo/Katsumi Kasahara/AP Photo


First published: Fri, Jan 10, 2014, 01:00

If demography is destiny, we pay far too little attention to it. There are so many other fun things to look at, stuff that makes headlines and has, supposedly, a much more dramatic and immediate impact on our daily lives. But some of the mega trends involving shifts in the composition of populations are likely to prove far more important than whether or not the European Central Bank finally indulges in quantitative easing.

The US is becoming a truly multi-racial society, one that involves the beginning of the end of the numerical dominance of white Europeans. And with that shift will come cultural and political changes. And these will have economic consequences.

Make no mistake, whites still dominate politics: at the most recent presidential election they comprised 73.7 per cent of eligible voters. But that is down from 79.2 per cent in only eight years.

And it will fall further before the next election (and beyond): over 40 per cent of current 15- to 18-year-old Americans are non-white. One small example of the gradual shift away from European roots can be seen in the recent appointment of America’s first ethnically Hmong judge, Paul Lo; he replaced Hugh Flanagan.

It is not just Tea Party extremism that is driving (some) people away from the Republican Party. Some analysts think that we are about to witness a long slow demise of a party that is struggling to get to grips with the changing ethnic composition of the electorate. The core of the “Grand Old Party” is, on this analysis at least, becoming ever more reactionary, stuck with white, western European values and cultural norms that are slowly dying.

Just as earlier immigration, mostly from Europe, transformed America, so are the flows of people from Asia and Latin America radically reshaping the US today. It is chaotic, unpredictable in its consequences and scares some of the incumbents to death. Hence the ongoing battles over immigration reform.

Most of the available evidence suggests that immigration brings net economic benefits. But there are winners and losers – with the latter always shouting the loudest. Population increase brings growth, simply by arithmetic. It is often more than that: immigrants typically come to work, not claim benefits. New workers can be unskilled and do jobs others don’t want. The arguments are usually about worker displacement: immigrants taking the place of others at much lower wages. The evidence is that this does happen but on a much smaller scale than is often claimed.

Immigrants are often highly skilled and entrepreneurial. They help to raise productivity growth and create jobs. US corporations regularly complain that not enough visas for these kinds of people are being issued.

Britain is undergoing a similar transformation. London now has a minority of white, UK-born citizens. The modern debate over UK immigration dates back to Enoch Powell’s infamous “Rivers of Blood” speech in 1968. Powell said many contentious things but was right on at least one of them: continued immigration would produce wrenching change. It is surprising how few people are prepared to say the changes have been mostly for the better.

Japan, by contrast, allows virtually no immigration at all. Current macroeconomic policies are displaying some signs of rationality but the single most effective growth-boosting strategy (as opposed to tactic) would be to open up to more immigration. China faces its own demographic challenges, hence the recent change to its one-child policy. Without increased immigration, Germany’s population is set for decline. Other countries are in a similar position. Debt-laden nations need growing, not shrinking populations.

A good barometer of how well we are doing, how attractive we are, is how many people from around the world want to join us. People, particularly skilled ones, are becoming scarce. We should be as welcoming to immigrants as we would be to a discovery of oil or gold.