Benefits of immigration

[Anathema]

The House of Lords has run an inquiry and concluded that, despite the UK government's claims, the net benefit of immigration is at best extremely small.

http://www.guardian.co.uk/commentisfree/2008/apr/01/immigrationpolicy.immigrationandpublicservices

Personally I'm not surprised.

[nemafakei]

"In many cases, higher wages - never popular with employers - could solve the "shortage"."

I note that "Lords points out that higher basic wages are the solution to employment market" doesn't appear anywhere near any of the headlines.

But yeah, in objective terms, it largely doesn't matter where people are. Flawed as GDP/capita is as a measure, it happens to get it right this time.

[Tatar Khan]

"The government also claims lots of migrants are needed to fill vacancies created by Britain's booming economy over the past 15 years. This is beguilingly simple, but badly flawed. Once migrants fill some vacancies they spend some of their earnings. This increases demand for goods and services, which leads companies to produce more. But to increase production, companies need more staff, creating more vacancies and so defeating the objective of reducing vacancies. The total number of vacancies has remained at about 600,000 since 2001 despite high net immigration."

Shows that there is growth in economy, so why is that bad again?

"Surely immigration is needed for jobs Britons refuse to do, the government argues. But they refuse to do these jobs only at current pay rates. In many cases, higher wages - never popular with employers - could solve the "shortage". In other cases increased mechanisation could bypass the need for migrant labour. Many employers today rely on the skills and hard work of migrants. But in the longer run, when wages can be increased and production methods changed, there is no valid argument for continued high net immigration."

That is right why make something cheap way lets make it using the expensive way that makes a lot of sense.

"Housing is something else the government has not addressed. It is projected that if net immigration were zero, house prices would be 10% lower in 20 years' time - an important issue for those struggling to get on the property ladder."

"Related to this is the effect on wages. While immigration was found to deliver a small gain in the wages of the highly paid, it has a slightly negative effect on the wages of the lowest paid, as many migrants compete for relatively low-skilled jobs. Any negative effect for people earning little more than the minimum wage must be taken seriously."

Finally the two points that point out the losses for Britain in terms of immigration.

"While the government has overstated the economic benefits, it is important to stress that we did not find large losses, and we recognise the valuable contribution migrants make."

Article tries to be politically correct.

[nemafakei]

"That is right why make something cheap way lets make it using the expensive way that makes a lot of sense."

Um, it's saying you pay people more, not make it using a more expensive method. The former is simply trying to get closer to optimal wealth distribution, the latter is wasting money - creating work that doesn't actually benefit society.

[Tatar Khan]

And where do the money to pay people more should come from?

[Caid Ivik]

I would be interested what kind of ideology is behind the inquiry. Is it an argument to tighten the rules of immigration, or just a criticism of methods of their naturalization? Why else should one address so general class of the society?

[nemafakei]

"And where do the money to pay people more should come from?"

A reduction in the surplus value extracted.

[Tatar Khan]

Assuming surplus value extracted is profits

Reduce the profits, and you would make the owner reconsider why he is in business at all. Opportunity cost of producing would be higher than the profit and so he would shut down the operation and would do something else - all workers fired. This is simple economic analysis.

Simple financial analysis. Reduction of profits makes investors unsteady as the risk-return ratio is breaking down. Investors will withdraw money because they can get a better return for the risk they are taking. They withdraw their money and company starts to lose financing as it unable to attract new investors. Company growth slows down, loans become more expensive due to the same risk-return ratio. Competition outstrips the company slowly and takes over its market share through the economy of scales. Final result all workers fired.

[nemafakei]

Except that assumes perfect market conditions which don't exist. Your financial analysis is oversimple. Sure, unco-ordinated wage increases will mean selected investments will be wound up. But that's not what's being talked about.

After all, by your logic alone, there's no reason for investors to pay more than the basic cost of sustaining workers on the poverty line.

[Dunenewt]

I just think we cannot support the current amount of immigration due to the strain it is putting on the country.  Now the state has to pay for all these translators, and more services for all these new people, which means, at the end of the day, the British taxpayer is the one to lose out.

[Tatar Khan]

Except that assumes perfect market conditions which don't exist.

Opportunity cost exist whether there is perfect market conditions or not. When the person is starting a firm, he has to choose whether to start it or to put his money elsewhere. So if wages go up the the elsewhere option becomes attractive.

Your financial analysis is oversimple. Sure, unco-ordinated wage increases will mean selected investments will be wound up. But that's not what's being talked about.

Even coordinated increase in wages will mean investments would be wound up. Raising the production costs and decreasing profits will mean that investors will invest more in the markets outside the country. Firms will move their operations there. Foreign competitors that are unconstrained by the wage rise will be able to seize more of the market and push domestic firms out.

After all, by your logic alone, there's no reason for investors to pay more than the basic cost of sustaining workers on the poverty line.

If the marginal product of the employee's labour is how much he will get paid. So a specialist will earn more than unqualified worker.

[nemafakei]

"I just think we cannot support the current amount of immigration due to the strain it is putting on the country."

The translators point I note, though even so, you're prepared to take the Lords Report up on their assessment that disagrees?

Tatar, you've just made the same argument using a bigger model for only half the system. Repeat until we get to the edges of the earth.

[Tatar Khan]

Tatar, you've just made the same argument using a bigger model for only half the system. Repeat until we get to the edges of the earth.

[nemafakei]

Setting aside my objections to the model itself...

I question your assumption that the optimal mix of labour and capital is being used.

Furthermore, how does this take into account positive feedback on what is, by your initial definition, K, from an increase in w?

[Tatar Khan]

Setting aside my objections to the model itself...

Any objections to the model could be sorted out just look at the papers on it by Paul Dougls and Charles Cobb.

I question your assumption that the optimal mix of labour and capital is being used.

Well if the optimal mix of labour and capital is not being used than the firms are under producing and are missing out at the possible profits.

Furthermore, how does this take into account positive feedback on what is, by your initial definition, K, from an increase in w?

Well as I said to increase K we need start printing money (not necessarily printing money, reduction in deposit ratios, reduction of the governmental interest rates) since already all the money is used and new money is needed. This will cause inflation as the model clearly shows that increase in K would not produce proportional increase in Q but rather smaller increase. However w will increase costs directly (possibly pushing some firms out since they can't compete) and increasing also directly the overal income which will cause higher demand for the products. Thus putting upward pressure on prices and causing a rise in them, with the final result of inflation.

[nemafakei]

... ok, got it. I agree that increasing all wages by a fixed percentage is a purely arbitrary thing that has no effect. I accept this is consistent with your initial statement, which I had interpreted as something else.

There're so many other things to be argued with, but on the grounds of RL time, I'm going to avoid those debates for now.