The 'scrounger' fallacy: why our economy depends on immigration

15 Sep 2018

 

The British Attitudes Survey shows us that less than half of Brits consider immigration to have a positive impact on our economy. This scepticism towards immigration is, I suspect, the product of three key issues.

 

The first is that formal education in economics is still relatively rare. The second is that many proponents of immigration are understandably squeamish about reducing people to numbers, or depicting them as mere means to economic development.

 

The third is the legacy of Thatcherite thinking about the economy. By framing the national economy as a household budget and establishing the myth that there is a finite amount of jobs the stage was set for the more recent ‘scrounger’ or ‘job thief’ rhetoric that so many mainstream politicians have pandered to. That’s without even getting into the deluge of ‘poverty porn’ on Channel 4 and its ilk.

 

It is essential that we confront the misnomers surrounding immigration.  

 

The most fascinating thing about a job, in accordance with the theories of well known post war economist John Maynard Keynes, is that it actually generates more jobs. If someone moves to Britain and gets a job bartending or picking fruit, they then need to spend their earnings. This means they’ll be going to the pub or the supermarket, generating a need for more workers to cater to this additional demand.

 

The caveat to Keynes’ theory is that it requires the newly employed worker spend most or all of their pay, which is far more likely amongst those with relatively low incomes. Generally, this is true of migrant workers.

 

Typically, sceptics will remind us that a significant portion of a migrant’s income leaves the country in the form of remittances. Whilst this may be true, it doesn’t stand as an effective counter-argument to immigration. By enriching the rest of the world, these migrants are potentially helping the future British economy.

 

Over 80% of the annual production in Britain (GDP) is in the form of services (as opposed to physical goods). Specifically, we’re renowned for our financial services and, to a lesser extent, communication services. It’s only through our exporting of services that we can afford to import the foreign goods that we’re so attached to. By stimulating economies abroad, through remittances, immigrants help to generate demand all over the world for one of our primary exports, financial services.

 

 

The second point is that, according to current demographic trends, Britain, as well as much of Europe, is heading towards trouble. In essence, people are living longer and requiring more healthcare. This means that, soon, our tax base will be insufficient to support the healthcare and pensions of the elderly.

 

Worse, we’re not just living longer. People are having fewer children, and having them later in life, meaning that we’re not producing enough workers to pay the taxes needed to support our elderly.

 

Immigration can fill that gap. Not only do migrants tend to be young and happy to work, but often migrants from outside of Europe have cultures that place a strong emphasis on caring for one’s family. This means that they rely less on the state in their old age.

 

Additionally, and as a general rule, anyone willing to travel halfway across the world without a clear idea of what they’ll find is someone willing to work hard.

 

The final argument to be made concerns the stubborn notion that migrants take advantage of our ‘generosity’ by playing the system in some way. Whether or not they do is contested amongst statisticians and economists, primarily because it’s so difficult to measure. They do however agree on three things.

 

The first is that migrants generate economic growth. The second is that their net benefit/drain on our tax revenue is less than 1% of total tax revenue, which certainly doesn’t constitute any kind of scrounging. The third is that the UK born population consistently cost the state more than they generate, to a far greater extent than immigrants do.

 

There we have it. As climate change destroys much of the global south, immigration into Europe through Spain and Italy will become an increasingly unstoppable force. Europe must prepare to accommodate migrants rather than trying to pull up the drawbridge. If not for their sake, then for our own.

 

 

 

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