Brexit, borders, smoke and mirrors

It’s a truism, but very probably correct: if voters prioritise jobs, growth and the economy, Remain will win the EU referendum; if they put immigration and borders first, Leave will triumph.

Remain has by far the stronger economic case: the likely effects on economic growth, the public finances and trading relationships are very clear, and Leave hasn’t really even tried to explain them away. Inevitably, they’re starting to major on migration; and depressingly but unsurprisingly, many leading Leavers are doing so in a profoundly unpleasant fashion.

The evidence on migration’s impact is mixed. Economically, most agree it makes for more growth. Immigrants create demand and thus jobs as well as filling vacancies. Most people’s wages seem very marginally affected, if at all. That said, those at the bottom of the income distribution may lose slightly – although the impact is dwarfed by the economic self-harm Brexit represents, or for that matter the Conservatives’ cuts to welfare, any ‘marginal’ loss will undoubtedly affect them far more than their fellow citizens. Undoubtedly, public services have come under real pressure in areas where migration has been most rapid (though immigrants also play a large role in staffing many of those services).

So it’s completely fair to raise immigration as an issue for wages, public services and indeed a source of anxiety about the pace of change. But it’s not OK to peddle promises you can’t or won’t keep in order to score a point: and Leave has been doing exactly that.

Single market membership means free movement

There is one country in the European Economic Area which has membership of the single market without being required to accept free movement (at least for now): Liechtenstein. Liechtenstein has a population of around 37,000 and a very high proportion of people born abroad. Every other country with single market membership has to accept free movement as part of the deal.

The UK is a relatively large European country. Its net migration rate isn’t exceptionally high by the standards of western Europe. And immigrants contribute more to its public purse than they take out. There is no good reason for it to argue that it and Liechtenstein are the only two countries in the EEA who merit special exemption from free movement, and no reason to believe the rest of the EU will see fit to grant it one anyway.

Global free trade? Get in the queue

As a result, the Leave campaign has talked itself into an economic corner, tacitly arguing for leaving the single market outright. The vast majority of economists are clear this would be immensely damaging for the economy, and thus for British jobs and wages. It would hurt the real incomes of the poorest far more than immigration from EU member states ever could.

At the very least, you might expect Leavers to have some semblance of an economic alternative for the UK once it leaves the single market covering 44% of its trade and the trade deals covering more again. So far, the strategy seems to be ‘strike a free trade deal with the EU and a whole host of other countries and then be a hyper-liberal, hyper-open economy afterwards.’

This relies on other states, many either profoundly alienated or utterly bemused by Britain’s presumed decision to walk out on its neighbours, moving the UK to the front of the queue for special trade deals – a willingness which the US, WTO and others have made clear does not exist. Brexiteers often seem to think it also involves torching EU-protected workers’ rights: centre-left Leavers should think hard before lending their names to it.

Open economies have porous borders

How does all this relate to the immigration debate? Let’s look at the 2015 estimated net migration rates per 1,000 of population for the main developed economies (microstates aside) outside the EEA and Switzerland, by comparison with the UK.

UN Population Department CIA World Factbook
Singapore 14.90 14.05
Canada 6.71 5.66
Australia 8.87 5.65
Hong Kong 4.20 1.68
United States 3.17 3.86
United Kingdom 2.83 2.54
Israel 2.24 0.50
South Korea 1.27 0.00
Japan 0.55 0.00
New Zealand 0.33 2.21
Taiwan —– 0.89

Note that the free-market entrepôts (Singapore, Hong Kong) have pretty high migration levels. That’s unsurprising: they’re open to cash from abroad, trade with abroad, investment from abroad – and thus, generally, people from abroad. Multinational companies want to bring people in; relatively open labour markets attract people looking for work, and employers can find it hard to fill gaps; aggressively anti-immigration policy/rhetoric may deter investment. The US, Canada and Australia have notably higher immigration levels than ours (New Zealand’s rate has fluctuated over the years). The exceptions are the East Asian countries, and they all face severe demographic crunches. Japan, in particular, has had sluggish growth for decades and has been trying to tackle its labour market problems without more immigration – without much success.

So is Leave’s plan for Britain to assert itself as a detached, trading nation, dealing with the whole world as openly as possible and pursuing a free trade strategy with the wider world? If so, it’s singing siren songs of pulling the drawbridge up, while its economic ‘strategy’ implies throwing it down. The tenor of its campaign is ‘Stop the world, I want to get off’; the logic of its economics is ‘Ride the world at breakneck speed.’

Perhaps immigration levels would be a bit lower outside the single market; perhaps a somewhat lower share of immigrants would be unskilled workers. But Brexit wouldn’t change the fundamentals: we would still have substantial net immigration, and the ‘tens of thousands’ target would remain a chimera. (People who say Brexit would allow more liberal Commonwealth migration know this perfectly well: net migration from outside the EU is 188,000.) Being ejected from the single market we helped create, helping set off a race to the bottom on workers’ rights, losing security co-operation, undermining a leading actor on climate change and losing influence in the world is a very high price to pay for some tweaks at the margin.

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Immigration, political honesty and the limits of the possible

Despite being a leftist, I’m going to be fair-minded and make some kinder comments about David Cameron’s speech on immigration (initially).  Firstly, he is of course entering into a legitimate debate about migration.  While the question of asylum is separate, economic migration is a debatable good: it’s perfectly fair to ask how much migration is desirable and what the overall pros and cons are for Britain.  Furthermore, Cameron was explicit that migrants can create jobs as well as filling them, taking on the idea that there’s some sort of lump sum of labour in an economy.  And he did attempt to draw some key distinctions (e.g. about the speed of change, rather than necessarily the principle): this was not on a par with Michael Howard’s 2005 campaign.

The fact remains, though, that there are lots of straw men lurking in the speech.  Anyone who’s listened to Jack StrawDavid Blunkett or Phil Woolas will be a bit surprised to hear that the last Labour government gave the impression that it was racist to talk about immigration, for instance.  Nor is it particularly helpful to claim that the government which brought in a points system promoted the view that any attempt to control immigration was madness.  And was there really a ‘mass relativism’ about sham marriages?  This isn’t on the scale of 2005, but there are still nasty undertones here – in the run-up to elections, at a time when the economy is in a grim state and voters are angry.  Politicians who declaim loudly about how ‘we aren’t allowed to say anything about immigration’ are playing a dangerous game.

Cameron was also making dubious use of statistics at best.  For a start, while looking at EU migration, he got his figures wrong.  Long-term net EU immigration ran at 57,000 from June 2009 to June 2010, not 27,000 – if I’d written this earlier, I’d have been able to show that I’d noticed this before it came out on the news!  The choice of year was also misleading at best, at a time when there has been partial unwind of the post-2004 migration from eastern Europe.  Note, I’m not complaining about that migration: but in this instance, Cameron is underplaying it in order to argue that his proposed cap will be effective when, in recent years, it would have usually had little effect.  And by the way, if you’re worried about destabilisation and impacts on local services, net long-term migration is not the only possible concern: the ‘churn’ of migration, causing rapid fluctuations for councils, can also cause problems – not to mention internal migration within the UK.

The statistical details matter because the misuse of figures contributes to a wider argument: that we can meaningfully control immigration, in the sense of reliably determining a net total migration figure for the UK.  For the purposes of this post, I’m going to sidestep my views on preferred migration levels (fluctuating depending on economic circumstances, but probably on the liberal end of the spectrum, if you’re interested).  As a simple matter of fact, irrespective of what we’d like to do, it is not the case that we can control immigration.  We can, perhaps, manage migration, in the sense of knowing (broadly) who’s coming in and making sure the system works better.  But EU migration is a very large part of the whole, and we can’t restrict that (transitional controls on new members are just that – transitional).  Free movement of labour is, rightly, central to the EU Single Market – and we can’t have one without the other.  So economically, we haven’t got much alternative in terms of EU migration.

Furthermore, our borders are always going to be fairly porous: how could it be otherwise in a country with quite so many visa waiver agreements, for example?  (And one of the biggest categories of overstayers is from those countries, by the way.)  The fact that we have something like 400,000 illegal residents in the UK says something about the difficulty of enforcing border controls.  I’m sure we can do a fair bit to make them more effective, but I also suspect that there is a direct relationship between how restrictive our overall policy is and how much illegal migration we end up with.

Ultimately, Britain is a small island near a bigger continent in a world of mass travel.  We are lying to our voters if we pretend that immigration can be fundamentally controlled: or at least, controlled without unacceptable consequences in terms of civil liberties and day-to-day life.  We can affect levels at the margins, we can monitor what’s happening, we can try and affect the drivers of demand for migration – beefing up HMRC’s minimum wage compliance would be a start.  But if we’re being honest, that’s about it.

That is a very unpopular statement, but it’s also true – and an honest conversation about immigration will, at some point, have to include an admission of that basic fact.  How do we go about admitting that migration is, in this sense, ‘out of control’ and unavoidably so?  And where should immigration policy go from that admission?  I don’t have anything like a full answer.  I suspect we probably have to talk about pull factors in the UK: has immigration been encouraged by low wages at the bottom of the labour market, making it more difficult for UK citizens to leave the benefit trap?  Would a living wage mean more British citizens could fill jobs in Britain?  Would greater regulation of the labour market – in at least some areas, some of the time – play a role?  And should we be thinking about ways of harnessing some revenue from immigration (work permit fees, in particular) and investing it in training British citizens?  (The Liberal Democrats had a policy along these lines at one point.)

I’m sure there are other, better suggestions to be discussed: these are mainly starters for ten.  But sometime, somehow, we need to have a more honest conversation about this – and stop pretending either that the establishment is conspiring to shut us all up or that we could buck the trend if we wanted to, if only we were a bit more competent.  Because if we carry on arguing that migration levels can be reliably determined as a matter of political choice, and keep failing to deliver a given level of migration, more and more people will reasonably ask why we’re not delivering.  And those answers could produce some ugly results.