LOSING CONTROL (23 page)

Third, workers in emerging nations can emigrate to developed nations, thereby swelling the ranks of the employed in relation to the retired.

Throughout human history, people have migrated across lands and countries, whether because of coercion, conflict or the search for a better way of life.
After all, US superpower status did not come about by accident.
It depended, instead, on both coercive and voluntary immigration.
Before the 1820s, over three-quarters of the 11.3 million migrants who went to the Americas were slaves from Africa.
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Thereafter, however, there was a huge increase in voluntary immigration.
Initially immigrants came mostly from the UK (including, at that time, Ireland) and Germany.
As the nineteenth century progressed, Scandinavians joined the exodus from Europe.
With the twentieth century looming ever larger, southern and eastern Europeans joined in too.

Visitors to the Tenement Museum in New York can get a real sense of these waves of immigration.
Located on Orchard Street, the Tenement Museum is tiny – it’s a collection of little apartments – but it provides a fascinating insight into the changing ethnic mix of the Lower East Side in the late nineteenth century.
In the 1860s, the most common voices were German.
Through the 1880s and 1890s, with the onset of the pogroms in Russia against the Jews, Yiddish accents became commonplace.
For a while, Italians also made the Lower East Side their home.
Many immigrants came directly to the Lower East Side from Ellis Island, the first stopping point for those hoping to embrace the American Dream.
More recently, the area has taken on a Chinese and Latin American tone.

Hostility towards immigrants began to rise in the late nineteenth century.
Tuberculosis became known as ‘the Jewish disease’, even though it was hardly the Jews’ fault that they had to live in such cramped and unsanitary conditions.
Chinese immigrants were banned with the introduction of the Chinese Exclusion Act of 1882.
Suspicions about Asians more generally were incorporated fully into
Congressional legislation with the Immigration Act of 1917, otherwise known as the Asiatic Barred Zone Act, which also introduced a literacy test (had this been in operation in the nineteenth century, I suspect many would-be immigrants to the US would have been sent back home).
Quotas on immigrants were toughened up throughout the 1920s.

The US wasn’t the only nation beginning to worry about immigration.
The UK government, which had previously been happy to issue passports to people of any nationality (the idea was to provide the holder with a British government guarantee of safe passage across borders), decided in 1858 to restrict passport issuance to UK nationals alone (ironically, over the previous eighty-six years, British passports had been written in French).
In 1914, the government of the day passed the British Nationality and Status Aliens Act which marked the beginnings of border controls around the world, using methods recognizable today.

It is just about possible to argue that the imposition of immigration controls reflected changing economic realities.
The argument runs as follows.
In the early to mid-nineteenth century, travelling across oceans was both hideously expensive and not for the faint-hearted.
The spreading Industrial Revolution, however, both lowered transportation costs and increased the spending power of those who, previously, didn’t have the money to fund a move to a foreign land.
When transport costs were high and wages low, potential migrants had to jump over a particularly high hurdle to arrive in the Promised Land.
Only the economically most resilient or most promising were likely to make the journey.
In the nineteenth century, that generally meant young male workers who had the confidence to believe they could make something of the new opportunities presented to them.

At the beginning of the twenty-first century, immigration doesn’t necessarily follow the same pattern.
Transportation costs are considerably lower, so lower-productivity migrants can more easily travel
across borders.
Social-security systems in the developed world are much more generous, attracting migrants who perhaps have little economic benefit to add to their new nation.
Immigration controls have, therefore, merely recreated the hurdle previously imposed by high transportation costs.

Certainly, patterns of immigration have changed as a result of the imposition and lifting of controls.
From the 1920s through to the early 1960s, immigration into the US slowed from a flood to a trickle.
Then, in 1965, the Immigration and Naturalization Act was passed, creating a huge new wave of immigrants.
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These people came from Mexico, the Philippines, Korea, the Dominican Republic, India, Cuba and Vietnam, in some cases reflecting a desire to escape the shackles of communism.
If Europe was the source of migrants in the nineteenth century, the late twentieth century saw a shift to Asia and Latin America.

In 1960, US immigrant males earned slightly more than native-born males but, by 1990s, were earning much less.
Meanwhile, although there was a gradual improvement in the educational attainment of immigrant workers, the improvement was dwarfed by the progress made by domestic workers.

Some have used this evidence to suggest that, with lower hurdle rates, immigration is no longer providing the economic benefits it did in the nineteenth century.
I find this remarkably difficult to believe.
In the late nineteenth century, many immigrants from southern, Central and Eastern Europe would have had only modest educational attainments and certainly their command of English was often poor, to say the least.
Meanwhile, immigrants’ motives varied hugely.
Some, of course, made the journey in the expectation of better economic opportunity which, in turn, may have contributed to a ‘positive selection’ effect.
Others made the journey in order to escape repression and violence at home.
Ukrainian Jews arrived on Ellis Island not in search of economic opportunity but because, otherwise, they’d have
been slaughtered in the late nineteenth-century Russian pogroms.
Yet they, and their families, made a huge contribution to the US economy in the twentieth century.

Whether or not the hurdle rate for immigration to the US is too high or too low, the 1965 Act certainly made a big difference in terms of the volume of immigration in the US.
Moreover, because the fertility rate of immigrants to the US in the late twentieth and early twenty-first centuries was higher than that of the indigenous population, the balance between young and old has been favourably shifted, at least compared with other developed nations.
Japan’s demographic profile is poor in part because Japanese society has been unwilling to tolerate a significant influx of immigrants from elsewhere in the world.
Europe’s is also poor although, with the collapse of the Berlin Wall in 1989, for a while there seemed to be an opportunity for change.
Workers in Central and Eastern Europe who, under Soviet communism, had been denied the economic opportunities available to their close neighbours, could now head west.

There are, though, two limitations.
First, populations in Eastern Europe and in former Soviet states are already very old.
Low fertility rates mean that, in years to come, these populations will rapidly shrink in size.
In the fifty years to 2050, the populations of Belarus, Georgia, the Russian Federation and Ukraine, for example, will fall by between 21 and 31 per cent, according to UN projections.
Second, European Union governments and their people are, at best, ambivalent about the potential benefits of immigration.

In principle, citizens of the European Union can happily cross the border between one EU nation and another.
Workers, in particular, should be able to work anywhere they wish.
Yet, while the UK happily welcomed with open arms workers from the first tranche of EU Accession States in 2004 (Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia), workers from the second tranche in 2007 (Bulgaria and Romania)
were treated less favourably as a result of new Home Office regulations.
According to the EU, ‘at the heart of the new regulations is the restriction of low-skilled [Bulgarian and Romanian] workers to existing quota schemes in the agricultural and food processing sectors’.
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In effect, this means that any increase in the numbers of low-skilled Bulgarians and Romanians coming into the UK will have to be offset by a reduction in the numbers of non-EU low-skilled workers.

In a sly announcement on 8 April 2009, the UK government declared, first, that ‘Strict working restrictions for Eastern Europeans will not be scrapped’ and, second, that ‘the Government is delivering on its promise to be tougher on European criminals and remove those that cause harm to our communities.
From today the deportation referral threshold for European criminals will be cut from twenty-four months imprisonment to twelve months for drugs, violent and sexual offences.
This means these offenders will be automatically considered for deportation.’
Perhaps the intention was not to be xenophobic, but the juxtaposition of these two statements is, at best, unfortunate.
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Meanwhile, it’s all too easy for people of influence to warn against migration through the pursuit of cheap xenophobic laughs.
A few years ago, I spoke at a conference in Germany on demographics and, in particular, the economic consequences of population ageing.
I argued in favour of immigration as a useful mechanism to deal with rising dependency ratios.
The speaker who followed me – an academic advisor to the government of Gerhard Schröder in Berlin – asked the audience of predominantly white middle-aged men why Germany should go down this route.
Following reunification, he observed, the nation was already awash with prostitutes from East Germany.
What possible benefit might there be from bringing in additional prostitutes from Bulgaria?
The audience laughed heartily.
It would have been better had they walked out.

A World Bank paper, published in April 2009,
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goes some way to undermining the views of those who believe that immigrants arrive to take advantage of a generous tax and benefits system.
Immigrants, whether from elsewhere in the EU or from outside the EU altogether, tend to find themselves at either end of the receiving nation’s indigenous educational spectrum: a disproportionate share is either relatively poorly or relatively well educated.
Immigrant households, though, are largely ‘young’ and, therefore, have low dependency ratios: while immigrants tend to have more children than indigenous households, the elderly have a low representation in immigrant households.
All in all, the authors concluded that immigrant households typically pay more taxes, and receive fewer benefits, than the indigenous population, hardly a surprising result given their relative youth and, hence, the absence of any need for pension benefits.

Academic papers, though, do not provide a full flavour of the extent to which nations are, slowly, becoming dependent on their immigrant populations.
On 22 June 2009, Halmstad in Sweden hosted an Under-21 soccer match between England and Germany.
The German team had its fair share of Neuers, Schmelzers and Eberts, but it also had its Castros, Ben-Hatiras, Özils and Dejagahs.
Some of these players were born in Germany but all come from immigrant families, hailing from Spain, Tunisia, Turkey and Iran.
National sports teams have become increasingly international in flavour.
Perhaps unsurprisingly, in his talk, the aforementioned German academic advisor chose not to focus on this aspect of the immigration story.
I wonder whether he still supports his national team.

In the absence of a stunning acceleration in productivity growth, ageing populations create awkward dilemmas.
Domestically, the
solution lies in arithmetic terms with an increase in the hours worked by the population of working age in relation to retirees.
That can be achieved through an increase in the retirement age, a reduction in the structural rate of unemployment, an increase in the average hours worked per day, more flexible working hours to include, for example, those who might otherwise stay away from work to look after their children, and, for currently antediluvian societies, an increase in female labour-market participation.

Domestic policies, however, do little to change the reality of global demographic shifts.
People in the developed world will become increasingly dependent on people from the emerging and most impoverished nations in the world.
This can happen in one of two ways.
Either the developed world opens its borders, allows people in and thus adopts the approach used by the German Under-21 soccer team.
Or, alternatively, the developed world invests abroad in the hope that, by doing so, workers in poorer parts of the world will happily work all hours of the day to ensure the comfort of retirees in the developed world.