Undercover Economist

When it comes to foreign workers, some ideas aren’t so crazy

Shortly after the Soviet Union collapsed, a Russian bureaucrat travelled to the west to seek advice on how the market system functioned. He asked the economist Paul Seabright to explain who was in charge of the supply of bread to London. He was astonished by the answer: “Nobody.”

Fifteen years later, I had thought that almost everyone had abandoned the notion that a committee could plan its way through the unimaginable complexities of an advanced economy. I was wrong.

Earlier this month, the Migration Advisory Committee presented a list of professions that would qualify migrants for entry, broadly on the grounds of UK skills shortages. They include geologists of all stripes, veterinary surgeons (but not other veterinarians), chefs (but only those paid £8.10 an hour), sheep shearers with a British Wool Marketing Board bronze medal (or equivalent) and ballet dancers (but not choreographers, nor other dancers).

At least the old Russian bureaucrat would have had an answer to the question, “Who is in charge of the supply of sheep shearers to the UK?” It is the Migration Advisory Committee.

Perhaps the previous patchwork of immigration restrictions was even worse. Yet nobody now thinks that a government-appointed committee, no matter how wise or diligent, could plan how many memory chips the UK should import, or how much beef, or how many copies of Jay-Z’s latest album. The exercise is no simpler when the imports are workers.

If anything, the opposite is true. Many products can be ordered, sight unseen, from a description (“512Mb, 184-pin DIMM, DDR PC3200 memory module”). But people are not commodities. Skilled workers are usually hired with the help of referees, a CV and an interview. A committee cannot predict if a particular hiring decision will make or break an enterprise. Nor would a government committee fancy admitting unqualified immigrants, no matter how remarkable – migrant equivalents of a young Richard Branson, Alan Sugar or John Prescott would not have made it in.

This is not an argument about what the limits on foreign workers should be; it is an argument about how laughable it is to rely on a centrally planned list of what sort of work foreigners should be allowed in to do.

Here’s a crazy alternative: the government could restrict immigration simply by auctioning the right to work in the UK. Permits would have various durations (a month, a year, in perpetuity). Citizens would get a free lifetime permit; non-EU residents would have to pay, or persuade their employers to pay. The price of the permits would depend on their scarcity, a decision that might just be within the competence of the state.

As well as allowing employers and migrants to decide for themselves whether they would get enough out of the match to justify the price of admission, the auction system would raise money to help pay for the public services migrants are so often blamed for clogging up.

It would have other advantages, too. Migration hawks would have a constructive way of expressing their xenophobia: they could buy permits and “retire” them, thus demonstrating that they really did value the absence of foreigners more than others valued what the foreigners had to offer. Citizens who wanted to leave could sell their permits on the way out.

Politically impossible, of course, and perhaps impractical, too. But it cannot possibly make less sense than that list. If nothing else, the high price of permits might remind those of us lucky enough to have been born in a wealthy country how fabulously privileged we are.

Also published at ft.com.