Undercover Economist

The real benefits of migration

‘The supposed costs or benefits of immigration always omit one crucial group: the migrants themselves’

Woman with the guts to tell the truth over migrants,” applauded the Daily Mail. “All the compassion of stage 4 bone cancer,” sneered a columnist in The Guardian. It’s no surprise that when UK home secretary Theresa May gave a speech about migration that was designed to polarise opinion, she succeeded.

Among policy wonks and fact-checkers, one statement in the speech found the spotlight: “The evidence . . . shows that while there are benefits of selective and controlled immigration, at best the net economic and fiscal effect of high immigration is close to zero.” (Translation: immigration costs us nothing but we want to reduce it anyway.)

Is May’s summary of the evidence correct? Probably not, although there is room for reasonable people to disagree. What is clear is that the recent large and uncontrolled rush of working-age immigrants from the European Union has undoubtedly been positive for the public finances, unlike British natives, who have been a huge drain on the public finances for some time.

But there was a far bigger lacuna in May’s speech, and most commentators have missed it: the fact that these supposed costs or benefits always omit one crucial group. That group is the migrants themselves. They prosper hugely from being allowed to migrate yet that prosperity hardly ever figures in debates about immigration.

This is odd. I would not expect schools to fare well on a cost-benefit analysis if we ignored any gains to the under-18s. Nor would hospitals look like a good investment if we counted only the advantages to non-patients. Yet it seems that migration may still be mildly beneficial even after disqualifying any benefit to the people most likely to gain — the migrants. That is remarkable.

Of course, one might make the case that because migrants are foreign nationals, we are entitled to make their welfare a lower priority. My colleague Martin Wolf is one of the few commentators to bother asserting this openly; most simply seem to assume that foreigners count for nothing. In a world where we rightly abhor racial and sexual discrimination, discriminating against people because of their nationality is widely accepted. It is also a legal obligation for UK employers.

The assumption that foreigners don’t count is hard to square with the UK’s foreign aid budget of around £12bn. And as I hinted in last week’s column, being open to migration from poor countries is perhaps the best anti-poverty programme that rich countries can offer. Several economists have estimated the economic impact of radically liberalising immigration rules and allowing anyone to move anywhere — a typical estimate is that the world economy would roughly double in size.

Whether foreigners should count as sentient beings in a British cost-benefit analysis is something I’ll leave to the philosophers. Let’s accept for a moment that they do count, and thus that more open borders would greatly reduce global poverty. Yet an objection immediately arises: the “brain drain”, where the concern is not about migrants arriving in rich countries but about migrants leaving poor ones and denuding them of their skills.

Concerns about a brain drain are not new. In 1972, the Indian economist Jagdish Bhagwati argued for an extra income tax on skilled immigrants in rich countries, levied under the auspices of the UN to compensate the poor countries they had left. Nelson Mandela, the British Medical Association and the Royal College of Nursing have all worried about a brain drain since.

But how real a problem is this brain drain? Michael Clemens of the Center for Global Development argues that there are so many other factors at work in determining a country’s pool of skilled workers that the brain drain hardly comes into it.

“The most important reason that there are few physicians and scientists in Niger and Laos,” writes Clemens, “is that those countries have few physicians and scientists anywhere.” The idea that there is some vast pool of highly-trained Laotian expatriates working in the United States or Europe is, unfortunately, a myth.

Where developing countries do train large numbers of skilled workers — as with the Philippines, a world centre for nursing and midwifery — they also manage to keep a reasonable number of them at home. And those who leave may still be helping their home countries. Migrant remittances to developing countries total almost half a trillion dollars — that is three times as much as is sent in official development assistance. Migrant networks can help make trade flow smoothly too.

Then there is the simple matter of respecting individual liberties. We would not dream of telling young people from Hull that they couldn’t move to London because Hull needs them more. Nor would we insist that the UK’s National Health Service should refrain from recruiting British nurses because those nurses might do more good if they went to work in India. It is unfair to insist that foreigners should obey moral rules that we would find absurd to apply to ourselves.

If we have gained anything from the harrowing images of desperate refugees, it is an appreciation that they are human. Economic migrants are human too. They are not pheasants to poach; nor brains to drain.

Written for and first published at ft.com.