April 25, 2010
Jealousy of Trade?
I have a genuine question regarding Lib Dem immigration proposals. Specifically, that employers can only employ foreign workers who have permits to work in that employer’s particular locality.
Presumably this is to stop legal migrants concentrating their labour in one area. But this seems bizarre: don’t legal migrant workers just go where the jobs are? So isn’t telling them they have to stay in one place going to make labour supply more rigid, and thus the labour market more inefficient? Won’t this counter the economic benefits of migrant workers that Nick Clegg rightly trumpets? Aren’t the Lib Dems being, erm, statist and refusing to let the market do it’s thing – like, y’know, liberals would advocate?
More generally, isn’t this proposal reminiscent of Elizabethan poor laws that effectively forced potential workers to stay in their home parish and not follow the jobs – thus restricting economic growth tremendously? And wasn’t the over-turning of those poor laws a major aim of 18th Century economists like Adam Smith and David Hume? Thinkers who stand at the foundation of modern political and economic liberalism?
Presumably Lib Dem proposals can’t be aimed at illegal immigrants, however. Because by definition you don’t ask for an illegal immigrant’s work permit. So telling employers they must ask for such permits won’t affect the employment of workers here illegaly.
Hence I’m struggling to see why Lib Dem policy is not guilty of being either illiberal and economically counter-productive, or just pointless. And honestly, I’m not being snide: I’m genuinely confused.
And I’m not trying to give support to Labour or the Tories. They are dancing to Nick Griffin’s tune far more enthusiastically than Clegg and Co.
But could this be a modern manifestation of what Hume called ‘Jealousy of Trade’? When economic logic dictates one thing but political demands dictate another…and politics trumps economics. To everyone’s disadvantage?
Answers in comments.
leftoutside said,
April 25, 2010 at 11:02 pm
I certainly agree this is to everyone’s disadvantage.
I can’t find the reference but most migration flows are dictated by economics, not only where within a country but on whether migrants move somewhere or not. When a country’s economy is stagnating there’s relatively little migration even when the absolute difference in wealth between to countries is still
I suppose this policy is a hat tip that no one can afford to look “soft” on immigration these days (thank you William bloody Hague for introducing that phrase to the discourse) while acknowledging that migrants go to where there is work. If they do it right, it might not change migration patterns too much, although the odds of that are nil.
Definitely a case of economics versus politics, well, even of basic foundational moral and economic liberal thought versus politics.
Hibernica said,
April 26, 2010 at 12:19 am
“don’t legal migrant workers just go where the jobs are?”
Nope. In a perfect market, sure they do. In the real and imperfect world, no, they often don’t.
(P.S. Learning about the perfect market is stage one of learning about economics. Stage two is learning about how we don’t have perfect markets, and how even a ‘perfect’ market fails. Unfortunately, many or even most of those who write and speak about economics don’t bother with stage two, and irritatingly give economics itself a bad name.)
(P.P.S. This isn’t to say that I support the Lib Dem measure, but to attack it as ‘it’s not economics, innit’ isn’t fair. As someone who believes in immigration as a net benefit, they are so far ahead of the other main parties that they can have the benefit of the doubt.)
Alex said,
April 26, 2010 at 3:01 am
I pretty much agree with this (though with Hibernica’s qualification).
The train of thought that this piece has given me, has left me wondering how libertarians reconcile their overwhelming devotion to private property, with their support of freedom of movement (to other countries). Maybe there’s no conflict in their philosophy, but you’re studying that sort of thing, so maybe you know if any of their thinkers have tried to address it.
James Doran said,
April 26, 2010 at 5:25 am
Presumably, the only migrants affected will be those who are not from EU member states?
Nick said,
April 26, 2010 at 7:23 am
You’ve got to marvel at the state of political discourse in this country when neither of the other major parties, nor a single newspaper (not even the FT or economist) have managed to make this point.
This is ‘scrutiny’ not the Fail’s smearing of a ‘nazi slur’ from decades ago or the telegraph’s story about declared expenses.
Sadly, I don’t have an answer. I would argue, very tentatively, that it’s an attempt to help the market to prevent immigrants moving to areas of already high unemployment. But it is very much not a liberal policy.
Paul Sagar said,
April 26, 2010 at 7:40 am
Hibernica, I’m not saying that the labour market is a perfect one. What I am saying is that a labour market with free movement of labour, ie with a responsive and dynamic supply side, is more ‘perfect’, or rather efficient, than a central state planner. I’m fairly sure that might be economics lesson 3, as you put it.
Lib Dem smackdown watch: Paul Sagar « Left Outside said,
April 26, 2010 at 8:31 am
[...] Excellent. As David Hume’s representative on earth Paul provides further commentary relating this to what Hume called ‘Jealousy of Trade’. [...]
Dan said,
April 26, 2010 at 10:56 am
But could this be a modern manifestation of what Hume called ‘Jealousy of Trade’? When economic logic dictates one thing but political demands dictate another…and politics trumps economics. To everyone’s disadvantage?
Or, interestingly, is it yet another manifestation of what Bryan Caplan calls “anti-market bias” (mixed in with a bit of “anti-foreign bias” for good measure) in The Myth of the Rational Voter (http://en.wikipedia.org/wiki/The_Myth_of_the_Rational_Voter)?
As for Alex wondering “how libertarians reconcile their overwhelming devotion to private property, with their support of freedom of movement (to other countries)”, I’m not sure what the problem is supposed to be – I certainly would say I support both of these things, and I know most libertarians would agree. Why is there a prima facie problem that requires they be reconciled?
Paul Sagar said,
April 26, 2010 at 11:02 am
I’m with Dan. Insofar as there are problems for libertarianism, they are elsewhere.
also, the Lib Dems never pretend to be libertarians, so I’m not really sure why Alex has brought libertarianism into the discussion at all.
Paul Sagar said,
April 26, 2010 at 11:03 am
“Or, interestingly, is it yet another manifestation of what Bryan Caplan calls “anti-market bias””
I don’t think it’s anti-market bias, because quite simply I doubt that most voters even have a working knowledge of basic economics, which would seem (at least to me, and pace Caplan) a pre-requisite for being anti market, or somehow biased against markets. Sadly, I think this is just a straightforward cases of good-’ol-fashioned xenophobia and scape-goating combined with ignorance. For which we can largely thank the right wing press and, I think, the Tory Party.
Richard said,
April 26, 2010 at 11:23 am
I don’t think it’s as uneconomic as you’re implying. Rather than state planning it’s attempting to plug gaps in the market. It’s forcing immigrants to do jobs that locals can’t or wont do. That might mean doing jobs which are both unpleasant and not profitable enough to provide a financial incentive but still profitable for the employer at minimum wage, or it could mean jobs which can only be done in a local area which is an otherwise unpleasant place to live. I think in the majority of cases it’s likely to be less efficient than a free market but not all.
It’s definitely socially illiberal though (it is either slave labour/earned citizenship, depending on which way you look at it) and that’s enough of a reason to dislike it but compared to the alternatives of the other parties it is much better.
Paul Sagar said,
April 26, 2010 at 11:27 am
But Richard, if the immigrants are all concentrated in one area, then there must be jobs for them to do there. Otherwise they’d leave, and go where the jobs are. It’s not like they can claim unemployment benefits, not being UK citizens [or am I wrong about that?]. Telling the immigrants that they have to stay in one place, when there are jobs going in others, looks like madness. Britain is relatively small, and labour tends to follow work fairly efficiently. Certainly, I think the market will be more efficient than the clunking state bureaucracy on this front.
It looks to me like the Lib Dems have done a very good political job – taking the initiative and putting forward what looks like a workable proposal and that can be sold to anti-immigration voters. But it doesn’t look like good economics. Not that I particularly blame the Lib Dems for doing this, by the way – there’s an election on and that dictates what you say and do, and you’re right that Lib Dem policy and attitude towards immigration is generally preferable to that of the other parties, which increasingly looks like bare racism.
Richard said,
April 26, 2010 at 11:37 am
I agree with you, I don’t like the policy at all, but i think it’s the best of a bad lot. I think though there is generally more incentive for immigrants to take menial or low paid work than people who already live here so can claim benefits. The idea then would be that immigrants take the low paid jobs enabling the British to take the more attractive jobs rather than have no job. Obviously it’s no where near as zero-sum as that but could have some benefit.
Having said that I’m not even sure that immigrants would necessarily take less attractive jobs as they would have in the past with the recent drop in sterling so I’m probably speaking bollocks.
freethinkingeconomist said,
April 26, 2010 at 11:37 am
I must admit to being slightly uneasy with the statist implications of this policy – but it is more intelligent than a straight cap (obviously). A pure liberal view would be: the market sends signals about what it wants, it doesn’t need a planner working out where people are needed or not.
I think this is real politik and liberalism reaching a compromise.
Paul Sagar said,
April 26, 2010 at 11:40 am
“but it is more intelligent than a straight cap (obviously).”
Yes, though it was hilarious in the leader’s debate when NC kept asking D-Cam “how many? what are the numbers?” and clearly there was no answer.
“I think this is real politik and liberalism reaching a compromise.”
Aye. Elections are rubbish, aren’t they?
Nigel Stanley said,
April 26, 2010 at 11:47 am
To simplify a little:
At present someone who applies from outside the EU for a work permit requires a sponsoring employer. Once here they cannot leave that employer.
The employer also needs to demonstrate that they cannot fill the vacancy from people already here with a right to work.
The Lib Dem proposal seems to add a vague regional test to this, but I suspect that it is more about appearing tough than making much of a difference in practice.
But they won’t be the first to have done this.
And it certainly won’t lead to border posts on the M62 as migrant workers on work permits cannot change their employer at the moment, though they are still allowed to travel at weekends.
This is obviously a recipe for exploitation. If a worker cannot change their employer, then the employer needs to do far less to retain their staff.
That’s good economics for the employer, less so for the worker.
Mark said,
April 26, 2010 at 2:25 pm
“At present someone who applies from outside the EU for a work permit requires a sponsoring employer. Once here they cannot leave that employer.”
Good lord, that`s terrible.
Why does the visa have to be tied to the employer? Surely tying it to an industry would achieve the same thing without the danger of making people into slaves thing.
Dan said,
April 26, 2010 at 7:23 pm
I don’t think it’s anti-market bias, because quite simply I doubt that most voters even have a working knowledge of basic economics, which would seem (at least to me, and pace Caplan) a pre-requisite for being anti market, or somehow biased against markets. Sadly, I think this is just a straightforward cases of good-’ol-fashioned xenophobia and scape-goating combined with ignorance. For which we can largely thank the right wing press and, I think, the Tory Party.
Well, Caplan describes anti-market bias as a “tendency to underestimate the benefits of the market mechanism”, and I think in those terms it’s pretty much undebatable that it exists. I’m also not sure the right wing press is able to take much of the blame or credit – I am reasonably persuaded that there are pretty good evolutionary psychology reasons for both xenophobia and anti-market bias, and so I think the press are merely tapping into already existing (or, at least, latent) attitudes. If you think that the population is so easily swayed by the right wing press, does that not make you reconsider the role democracy should play? If I thought that people were so easily swayed, I sure as hell wouldn’t be a democrat.
Paul Sagar said,
April 26, 2010 at 7:30 pm
Evolutionary psychology? Are you taking the piss? Come on man I thought you were a pretty smart guy – a crazy libertian, sure, but I didn’t expect you to go in for that kind of idiocy.
Also, nice to see your customary paucity of understanding regarding the complexity and values of democracy coming out to play again.
Dan said,
April 26, 2010 at 7:59 pm
So you’re a science denier?
Alex said,
April 26, 2010 at 8:26 pm
“also, the Lib Dems never pretend to be libertarians, so I’m not really sure why Alex has brought libertarianism into the discussion at all.”
I’m not saying the Lib Dems are libertarians. As I said, me wondering “how libertarians reconcile their overwhelming devotion to private property, with their support of freedom of movement (to other countries)” was just the result of a thought process started by this post.
Anyway, I did some searching and found a libertarian discussing something similar to what I meant:
http://mises.org/daily/3794
He tries to reconcile the conflict by becoming less libertarian.
I agree though, that there are probably greater problems for libertarianism.
Alex said,
April 26, 2010 at 8:39 pm
Dan, start here:
http://en.wikipedia.org/wiki/Evolutionary_psychology_controversy
Evolutionary psychology is very much pick ‘n’ mix.
Dan said,
April 26, 2010 at 8:53 pm
Alex, what makes you think that I need to read the wikipedia page on the topic? I’m perfectly well acquainted with Gould, Lewontin, Rose, etc. As it happens, I’m also well acquainted with what real biologists think of their arguments (hint: not a lot). It’s funny to watch (because I don’t really have a dog in either fight) the same people who are exceedingly quick to defer judgement to professional scientists when it comes to climate change all of a sudden become experts on evolutionary theory when the conclusions appear to threaten their closely held beliefs.
Also, that article you posted doesn’t really have anything to do with immigration – I’m still curious as to where you think the conflict between libertarianism and open borders comes in.
PT said,
April 26, 2010 at 9:52 pm
Does the invisible hand of the market freely transfer resources of immigrant labour to those areas that need it. A further question, from your experience are immigrant communities assimilated into society or segregated into various pocket communities. It is indeed possible that culture and community factors can drive settlement rather than availability of work
The BBC did something on immigrant movement a while ago on this (link below)
http://news.bbc.co.uk/1/shared/spl/hi/uk/05/born_abroad/html/overview.stm
One would note that it points to city areas and especially london as immigration hotspots, based on a free market view one would expect for these areas to have little unemployment, hence attracting the freely mobile workforce as labour is needed to fill the jobs. However, National statistics point to tower hamlets and birmingham as unemployment hotspots! (Given paul that you know Tower Hamlets better than i you could support or refute this also annecdotally)
http://www.statistics.gov.uk/cci/nugget.asp?id=1606
Suppose therefore that immigration is inefficient in its deployment of resources, then you have to agree that there is a role for the visible hand of government to see which areas need this mobile workforce and therefore guidance into certain areas would correct this market inefficiency.
As always statistics may not paint the full picture though, there are always those lies, damn lies, and statistics, but this shows the other side of the coin to what you are arguing, that the intervention is to prevent the market inefficiency rather than cause it
Paul Sagar said,
April 26, 2010 at 10:17 pm
Dan, it’s pathetic and ridiculous to claim that I’m a “science denier” because I think evolutionary psychology is untenable. Have you not considered that I might think evolutionary psychology is just really bad science?
Look, I can’t be arsed repeating all the arguments for why EP is blatantly silly and fails on its own terms. Simon Blackburn does a wonderful little 20pg demolition job in his book Lust. As a man with clear philosophical ability, I find it astounding that you don’t see straight through the silliness of EP. Seriously, give the Blackburn book a try.
Dan said,
April 26, 2010 at 10:51 pm
I’m not sure why thinking EP is just really bad science is supposed to preclude your being a science denier, to be honest. I mean, for a lot of people, believing that climate change science is just really bad science doesn’t preclude their being called science deniers too. Personally, I think it is more ridiculous for someone to write-off a whole scientific discipline with dozens of journals as “bad science” based on philosophical objections. I’m half tempted to quote David Lewis’ list of philosophy’s other successes at you (“Will you boast of philosophy’s other great discoveries: that motion is impossible, that a Being than which no greater can be conceived cannot be conceived not to exist, that it is unthinkable that anything exists outside the mind, that time is unreal, that no theory has ever been made at all probable by evidence, that it is a wide-open scientific question whether anyone has ever believed anything, and so on, and on, ad nauseum?”)
At any rate, I think the parallel between climate change and EP is at least interesting to note. Why do you think “scepticism” w.r.t. one or the other is so concentrated towards one side of the political spectrum? Does it not at least give you pause? Or are you so sure that your political tribe has got it right on everything that when they do it, it’s science denial, but when you do it, it’s “just really bad science”?
Bad Conscience said,
April 29, 2010 at 3:12 pm
[...] politicians refuse to be drawn if they can help it and offer tough-sounding incoherence if they can’t. The perverse result is that the same right-wing media making sensible discussion of immigration [...]
Why I’m voting for the Lib Dems and David Rendel in Newbury « Left Outside said,
May 4, 2010 at 8:01 am
[...] of the good immigrants do before explaining what to do about them. Regardless of their bizarre, illiberal, probably unworkable and economically illiterate policy to force immigrants to stay where they think jobs are (rather than let them go where jobs actually are) this is an [...]