Philippe Legrain

The US and others seem to believe that China’s currency is the biggest obstacle to the global recovery.

That is highly debatable, as I argued on VoxEU.

In any case, the Chinese renminbi is up 3.1% against the dollar over the past 12 months.

And since inflation is 4.4% in China and only 1.1% in the US, in real terms it is up 6.4%.

Would a faster appreciation really do more good than harm?

Economies cannot adjust painlessly overnight.

Check out my new article on VoxEU.org.

Ed West says he took time to reply to my earlier post because his “Chinese maid, Yen or Wen or whatever her name is, took ages to clean up my study” – delightful, isn’t he?

He then deliberately misinterpreted my response – or perhaps he’s just stupid? I said it was nonsense to claim that in Immigrants: Your Country Needs Them, I tried to shut down debate by calling opponents of immigration racists. I quoted at length from the book to show that this wasn’t the case. He conveniently ignored this. How can you trust anything that someone so slippery with the truth writes?

His basic argument is that large-scale immigration would transform Europe into Lebanon:

the demographic nature of their country makes it unstable; which makes long-lasting peace and prosperity, the sort we in relatively homogenous and stable countries take for granted, impossible.

This has echoes of Enoch Powell’s “rivers of blood” speech.

Perhaps West should get out more: Britain is not ethnically homogenous – and nor is it at war.

If Britain became more diverse, it would look a bit more like London – which is hardly a hellhole.

A weaker version of this argument is that diversity undermines social solidarity. But while research by the political scientist Robert Putnam suggests that in the United States increased diversity correlates with diminished feelings of trust within a community, there is no evidence that this is the case in Europe. In fact, a comprehensive study of 21 countries concludes [see footnote]:

Despite several such findings for US society, in Europe it was not confirmed that rising ethnic diversity or even the rate of influx of foreign citizens had any significant detrimental effects on social cohesion.

West says “the immigration debate is about our vision of society, not economics.” In my view, it is about both – and much else besides.

It is about the choice between a closed, stagnant and reactionary society, and an open, dynamic and progressive one. And in economic terms, it can also bring big benefits.

West claims that these are trifling, and quotes the House of Lords economic affairs committee report to substantiate his argument.

But that report ignores the main economic benefits of immigration, which I discuss at length here.

Briefly, they are three:

1. Gains from trade. Migration is a form of trade. If you go to France for an operation, it is classified as trade; if a French surgeon comes here, it is migration. If free trade is such a good thing, surely so is free migration.
2. Greater flexibility. By moving to where the jobs are, migrants make economies more flexible, allowing them to grow faster for longer without sparking inflation. If it is a good thing for people to move from Liverpool to London if their labour is in demand there, surely the same is true of people moving from Lisbon or Lithuania.
3. Faster productivity growth. As outsiders with a burning drive to succeed, newcomers tend to be more hard-working and entrepreneurial than most. Newcomers of all cultural backgrounds are twice as likely to start a new business as people born in Britain. Both individually and thanks to the increased diversity they bring, they boost innovation and improve problem-solving. Google, Yahoo!, eBay, and many others were all co-founded by immigrants who arrived in the US as children. People with diverse skills, attributes, perspectives and experiences bring something extra to the mix and by interacting with people born in Britain, this generates new ideas and businesses, and hence economic growth that makes us all richer.

Anyone who doubts the economic benefits of migration should ask themselves this: Would London be half as vibrant and successful without a constant influx of hard-working and enterprising people from around the country and around the world?

Last but not least, migration is about freedom, justice and human rights.

West takes issue with the fact that that I have called the current system of immigration controls a form of global apartheid. Yet how is it right that  one class of people – the rich and the educated – can move increasingly freely while the rest are expected to stay put?

Anyone who doesn’t think that this is deeply unjust should put themselves in the shoes of someone less fortunate than themselves. How would you feel if you weren’t able to move freely to seek a better life for yourself and your children?

That is hardly an ignoble aspiration: it is what has driven millions of Britons to settle across the world – in Australia, America, New Zealand, Spain and many other places.

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Footnote: Marc Hooge, Tim Reeskens, Dietlind Stolle, and Ann Trappers, Ethnic Diversity, Trust and Ethnocentrism and Europe: A Multilevel Analysis of 21 European Countries, paper presented at the 102^nd Annual Meeting of the American Political Science Association, Philadelphia, 31 August-3 September 2006.

MigrationWatch have posted a pitifully weak response to my criticisms of their education “report”.

1) They defend their use of cumulative figures. They say it is legitimate because the “sole objective” of the study was to calculate “pupil place requirements stemming from net migration since 1998″.

Really? If the sole aim was to calculate the impact on pupil places, they wouldn’t need to calculate cumulative costs at all.

More likely, the use of cumulative costs out of context is to generate shock headlines in tabloid newspapers, which are then reproduced by the BBC and elsewhere, to create the impression that immigrants are a huge burden on British society.

If they weren’t aiming to scare people with figures taken out of context, why didn’t their report indicate projected education spending over that period as a reference point? Why didn’t it mention the taxes and other contributions migrants make to society?

2) They defend their decision to include children with one British parent and one foreign one in their calculations. They say this approach was “implicitly endorsed by the Economic Affairs Committee of the House of Lords”.

As I’ve written loads of times, for instance here,  that report was biased and flawed – not surprisingly since it was chaired (and its conclusions spun) by John Wakeham, a former Tory cabinet minister, who used the report to advance the Conservatives’ anti-immigration position.

In this case, there is no need to go into technical details. MW’s assumption fails the common-sense test. Stop people in the street and ask them whether the deputy prime minister’s kids should be counted as part of the costs of immigration.

3) They quibble with the studies that show that migrants pay more in tax than they receive in benefits and public services.

Again, they refer to the biased and flawed Lords report.

Academic studies that try to estimate the net fiscal contribution that migrants make agree on one thing: if a country with a huge public debt admits migrant workers, native taxpayers benefit. Why? Because the newcomers help pay off the debts accumulated before they arrived. That is precisely the situation Britain is in now.

Even if one assumes that the taxes migrants pay only just cover the benefits and public services they receive, the net cost of educating migrants’ children over 10 or 25 years is not £100bn or £195bn, it is zero, nil, nada, zilch.

Does anyone want to chip in to send Andrew Green back to school?

In a typically delightful post about Sally Bercow and the MigrationWatch libel threat, Ed West of the Daily Telegraph describes me as Philippe Legrain, author of How to Turn Europe into the Lebanon in Just One Ill-thought Out Step.

Unlike Andrew Green of MigrationWatch, I don’t believe in trying to silence debate, so I’ll let this pass.

West later claims that in Immigrants: Your Country Needs Them I try to shut down debate by calling opponents of immigration racists:

Legrain… wrote in his book that “the argument that tough immigration controls are needed for ‘good race relations’ is a quasi-racist canard”.

No proof was ever given for this assertion, but then who needs evidence for thoughtcrime?

This is nonsense.

In fact, I wrote:

Let me start by saying that I don’t think that it is necessarily racist to support immigration controls. Greens may support immigration controls because they believe that an extra influx of people would put a strain on the environment. Trade unionists may worry about the impact on the jobs of their members, black and white. People may worry that immigration undermines the financial basis for traditional welfare systems, which grant free or subsidised benefits and services to people primarily on the basis of residency rather than financial contributions. The people who believe these things may or may not be racists; but it is not intrinsically racist to believe what they do.

Nor is it racist to worry that immigration might undermine social solidarity for reasons other than foreigners’ foreignness. It is not racist to point out that if immigrants happen to be a bunch of thieves and villains, they might cause all sorts of problems – it is only racist to assume that foreigners tend to be thieves and villains. It is not racist to argue that if immigrants happen to have very different tastes and characteristics that clash with those of natives, they might also undermine solidarity. If millions of white American libertarians were to pitch up in social-democratic Sweden, support for its cradle-to-grave welfare system might fall. A non-racist might also observe that immigration could undermine social solidarity if natives themselves are racist, even if he or she isn’t – although this is slippery ground because it can allow racists to support racist positions on the basis of others’ purported racism while pretending not to be racist themselves: hence the common claim by British politicians, some of them doubtless racist, that immigration controls are needed for “good race relations”.

If anyone is trying to shut down debate, it is people like Ed West and Andrew Green.

The truth is that while it is not necessarily racist to oppose immigration, many people who oppose immigration do so for racist or xenophobic reasons. To pretend otherwise is frankly disingenuous.

Another day, another twisted use of statistics by MigrationWatch.

Their shock report suggests the cost of schooling migrants’ children is astrononomical.

They do this:

1) By using cumulative figures. If you add up spending on anything over a long period of time, it looks much bigger than it really is. Using a single year’s statistics, 2009, and MW’s deeply flawed methodology, the cost of schooling the children of migrants who have arrived since 1998 is £4.6 billion, out of an education budget of £88 billion.

2) By counting children who have one parent who was born abroad as half due to migration. Since Nick Clegg has a Spanish wife, they include half the cost of educating their kids as being due to migration. Excluding that dodogy use of statistics, the cost in 2009 falls to £3.6bn.

3) By ignoring the taxes that migrants pay. Research by the Home Office, IPPR, Christian Dustmann at UCL and others show that migrants pay more in taxes than they take out in benefits and public services. Allowing for that, it is not UK-born taxpayers who are paying to educate migrants’ children, it is migrants who are subsidising the education of the children of people born in the UK.

4) There are probably lots more flaws in the stats. Those are just the ones I spotted in 5 minutes after getting back from a trip to Helsinki.

Yet again, #MigWatchFail

The notion that university students should pay for their education through a graduate tax is generally seen as a left-wing idea.

Yet it isn’t a million miles away from Milton Friedman’s suggestion that people finance investment in their human capital (ie, their studies)  by selling shares in themselves (ie, in their future income).

In the case of the graduate tax, the shareholder would be the government.

This blog post also appears on the Battle of Ideas blog on the Independent’s website. I will be speaking about mobility about the Battle of Ideas in London on Saturday 30 October. I hope to see some of you there.

Further, faster, cheaper, better – ever since the invention of the wheel, human progress can be measured by increases in the speed, affordability and ease of mobility. Before railways, cities clustered along coastlines and navigable rivers that facilitated transport and trade. Cars have given us more freedom to go where we want when we want, a wider choice of jobs to which we can commute and a bigger range of shops we can reach. Planes have opened up the mind-broadening delights of foreign travel, the enriching opportunities of global business and now the possibility of international commuting. And in the age of Ryanair and the £1,000 Tata Nano car, mobility has been democratised: what was once a privilege of the rich few is increasingly accessible to nearly everyone in rich countries and many people in poorer places too. It offers liberation from the tyranny of geography, whereby where you were born determines what you can achieve. What’s not to like?

Plenty, apparently. Start with hostility to change, season with environmentalism (both ideological and affected), add a smattering of protectionism and xenophobia, throw on a big dollop of austerity (both fashionable and state-imposed) and you have a toxic backlash against modern mobility. Thus Conservatives, who once championed driving and flying, now want to curb these forms of transport. Boris Johnson wants to turn the clock back to 1904, when 20 per cent of trips in London were made by bike. David Cameron took his summer holiday in the UK and urges others to do likewise. The Lib-Con government has axed plans for a third runway at Heathrow and won’t allow London’s other overcrowded airports to expand either. Its plans for eventually linking London and the North by fast trains could yet be halted by ‘nimbyist’ protesters and their Conservative MPs. And in this era of swingeing budget cuts, investment in transport looks set to be slashed.

Don’t expect much opposition from Labour and others on the left. Whereas Harold Wilson was all for harnessing the white heat of technology, Ed Miliband is more likely to fret about its carbon footprint. Anti-poverty campaigners decry the fact that people in China, India and other poorer countries aspire to the lifestyles that Westerners enjoy – how dare the Chinese want to drive or see the world! Hardline green George Monbiot even opposes high-speed rail, waxing lyrical about Britain’s dismally slow trains. Go slow, stay put, limit yourself to local – the eco-romantic vision of the good life would appear to be ditching the global village for a medieval one.

Don’t get me wrong: environmental costs are real. Plane noise, car pollution and traffic jams all harm people’s quality of life – and climate change could do so in future. But since mobility is hugely beneficial, the sensible way forward is not to limit it but to minimise its costs. So let’s build new runways and also develop quieter planes fuelled by algae. Let people drive where they please in new cars powered by cleaner engines or electric batteries. Cycle if you want to, but also invest in faster trains, extra Tube lines, more buses and new bridges, flyovers and tunnels to whisk people around. We don’t have to choose between growth and greenery: let’s develop new technologies and tap the limitless energy of the sun, the wind and the atom instead.

On Tuesday, two Russian-born scientists at the University of Manchester won this year’s Nobel physics prize.

The new immigration cap could have prevented them coming to Britain.

Today, they and six other Nobel laureates warn that the immigration cap threatens the UK’s position as a centre of scientific excellence.

It would “damage our ability to recruit the brightest young talent as well as distinguished scientists into our universities and industries”.

George Osborne’s decision to axe child benefit for the richest 10% is clever politics.

Does Labour want to defend welfare for the rich? At the expense of the poor?

Geert Wilders is a nasty piece of work. The far-right politician has compared the Koran to Mein Kampf and called Islam fascist.

But why, oh why, are the authorities in the Netherlands playing into his hands by putting him on trial for saying the vile things he says?

They will only succeed in making him a martyr to free speech, and boost his electoral popularity.

The right way to tackle him is by confronting his arguments, not trying to silence him.

Why the EU shouldn’t be spending nearly half its budget supporting agribusiness and landowners. Read my new e-brief for the Lisbon Council

Michael Gove points out the benefits of coalition government:

What helps is having two parties, different cultures, overlapping perspectives, coming from different positions, challenging each other.

True. Different cultures and perspectives challenging each other are also among the biggest benefits of immigration: they leads to innovation and better decision-making.

Martin Wolf writes in the FT:

Some argue that we have no right to bequeath higher debt to future generations. But why would it be wise to bequeath a smaller economy to posterity, instead?

Spain and Germany both subsidise coal mining as well as solar energy. Schizophrenia?

Why do governments make it so difficult for people to migrate temporarily?

Most don’t want to move permanently, yet in practice they are forced to choose between staying or leaving for good, as this article by a Nigerian health worker in the UK highlights

Please can we kill, once and for all, the lie that Barclays survived without government aid.

It benefited from government guarantees, the bailout of its counterparties and deposit insurance.

1. No wonder France is deporting the Roma. How could a country of 60 million people possibly cope with 15,000 Roma migrants?

Interesting article in the New York Times on how the Roma are testing the EU’s open borders policy.

2. Vince Cable says the UK government’s immigration cap is costing jobs and harming the fragile recovery. His honesty is welcome, but now it’s time to do something about it. Otherwise, what’s the point of being in government?

3. The Guardian claims the coalition is to review right-to-buy policy for council homes. Sounds like pre-LibDem conference spin to me.

4. Indonesia defaulted on its debts just over a decade ago yet it can borrow more cheaply than Spain. An emerging market bubble?

5.  Why emerging economies should follow Taiwan’s example and use capital controls to stem hot money flows 

Highlights:

Oh! No! Not another book about the global financial crisis. But Aftershock (ambitiously subtitled ‘Reshaping the world economy after the crisis’) is one of the best. Philippe Legrain is that rare combination of a fine journalist with a decent grasp of economics, or perhaps that should be a first class economist who can actually write. Either way, this is a good read.

First, it is intelligently researched and packed with interesting detail. (It has a really good index to help the more casual reader too.) Legrain has pretty much toured the world in search of local colour.

Second, Legrain is good on the bigger picture, including the social and environmental dimensions of the economic and financial crisis and its potential solutions – something typically missing from most analysis coming from the City.

Above all, the book is well-written. Some of the reportage is breathless and comes across as a bit naive (gushing descriptions of the buzz in Shanghai). But that is forgivable enthusiasm. This is an easy read for a train or plane journey and it ends on a refreshingly upbeat note.

Read the review in full here.