Mass immigration is leading to economic and social catastrophe, say leading economists

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By Andrew Hunt.

Flawed thinking and wilful blindness by leading economists and treasury advisors has made the UK’s vested interests addicted to mass migration.

This has and is doing enormous economic, social and environmental damage to our quality of life. The economic costs far exceed the economic benefits:  

  • Most migrants consume far more in public and voluntary services than they contribute in taxes; thus diluting access to vital services for those who need them.  
  • In some cases migrant workers or student migrants and their families consume over £1m of services, while contributing less than a tenth of that!
  • It is no wonder migrants work for low wages and British businesses love cheap migrant workers. They are receiving subsidies of over one million pounds paid by British tax payers!
  • When counting the costs of migrants, economists wilfully exclude many major expenses such as: dependents, housing pressures, resulting shortages (water, gas, electricity etc.), integration costs, settlement costs and overpopulation costs (e.g. pollution, mental health, environmental degradation, congestion, net zero compliance and infrastructure burdens). 
  • By consuming vast amounts of public and charitable services, exacerbating housing shortages and suppressing wages, mass migration has hit the poorest hardest.
  • Mass migration has cost working class households a minimum of £300 a week, every week.
  • Mass migration has distorted the labour market, suppressing wages and choking business investment. This has directly led to excessively loose fiscal and monetary policy that has left the country grossly indebted and financially vulnerable.
  • Jeremy Hunt and the Treasury Orthodoxy are just wrong, wrong, wrong! Trying to solve the debt crisis with more migrants is like trying to pay off your mortgage by buying £1 coins for £2 each. It is no coincidence that since mass migration began, government debt is up sevenfold. 
  • Mass migration is NOT free trade or free markets. The vast majority of migrants receive taxpayer subsidies that dwarf their economic contribution. 
  • Mass migration is an enormous taxpayer-funded subsidy for big business, low-wage employers, universities and foreign nationals at the expense of the British people. 
  • A true free trade migration system would charge each and every migrant tens of thousands of pounds a year to be here. That would mean all migrants would pay in at least what they get back. Doing so would increase the quality of migrants, decrease the quantity and raise £30-50bn for the Exchequer – solving the deficit instantly without burdening British voters.

In short, and entirely contrary to the hubristic delusions of the ‘Davos Set’, mass immigration has made every single one of the UK’s economic problems worse. 

What Economics Gets Wrong: the Tale of Bill, Bob & Ben

Imagine three hypothetical men arrive in the UK. Bill brings a bag of gravel with him, Bob brings a dollar bill and Ben brings nothing. 

On arrival, Bill commits a crime and gets sent to jail. Bob spends his dollar and then signs on to claim benefits. Ben takes a job, but gets injured after an hour and spends the rest of his life in NHS care. 

According to classical economics, Bill, Bob and Ben have all grown the economy, because they have all contributed labour or capital. Ever since Bill Clinton famously uttered, ‘It’s the economy stupid,’ neoliberal economists have become obsessed with growing the economy, regardless of the human or financial costs.

It is the mantra of ‘Grow now, regardless of the costs’ that has led The West to become fixated with financial speculation, debt, real estate development and immigration. All of these produce a sugar rush of growth on day one, while the costs are borne down the line. As the global financial crisis illustrated, the economic costs – let alone the human costs – far exceed the value of such growth.   

What the tale of Bill, Bob and Ben illustrates is that growing the economy is not worth it when it costs your citizens more than the growth is worth. The economics of mass migration needs to take account of ALL the costs.

Where Free Market Economics Went Wrong: People are not Goods 

Free Market Economics takes Adam Smith’s The Wealth of Nations and the Theory of Comparative Advantage as its starting point. For example, if Nicaragua is efficient at producing bananas and the UK is great at producing aircraft engines, then the UK should focus on the latter and import its bananas. What the UK should not do is try and produce bananas inefficiently. If every country allows free trade in goods and focuses only on the things they are most efficient at producing, then wealth is maximised. 

Neoliberal economists surmised that if it works for goods it should work for people. Why not allow people to move and work where they wish? 

Unfortunately, the argument falls down. Because goods have to be paid for, free trade of goods is reciprocal – i.e. there must be trade both ways. This is not the same with people. If people can move freely, they will keep moving from the worst places to the best places until the best places get ruined. Thus, there is no incentive to look after or improve nice places, and no incentive to improve horrid places. Unlike goods, prosperity is destroyed by free movement of people: it keeps the bad places bad and makes the best places worse.

Secondly, Goods do not have the same needs as people. Goods do not consume public services. Goods do not require healthcare and education. Goods do not grow old or sick, and require pensions and benefits. Goods do not compete for housing. Goods do not use infrastructure. Goods do not pollute and destroy the environment. Goods do not have problems integrating. Goods do not commit crimes. Goods do not bring dependents.

Thus, the free movement of goods analogy does not apply to people. They are fundamentally different.

The Average Contributor is not the Average Recipient: Over half of people get more from the state than they put in

Well over 50% of the UK’s population receives more back than they put in

This is possible because a large portion of public spending is funded by corporate taxation, government borrowing and high-net-worth individuals. For example, the top 1% of earners pay 29% of all income tax receipts and the top 10% pay 60%. In other words, most of the population get more back than they put in. Being average is not enough to be a net contributor.

This applies to migrants as well. Unless migrants are earning a lot and paying a lot, they will receive more than they get back. UK public spending per capita is roughly £14k. Allowing for £4k of ancillary taxes (e.g. VAT, council tax etc), to be a net contributor of a further £10k, a migrant worker would need to earn over £43k – Well above the median wage of £33k.

If a worker has, say, two dependents, they would need to contribute £42k to pay their fair share. Assuming £8k of ancillary taxes, the worker would need to be earning £101k – over three times the national average! 

This is not just about direct benefits (e.g. healthcare, welfare and education) but whether migrants are paying their fair share of background public services; such as policing, infrastructure and defence, as well as contributing their fair share to looking after Britain’s vulnerable.  

While much of the research claims that migrants are net contributors; that research always contains the same three flaws:

  1. It ignores the lifetime costs of a migrant. Studies invariably focus on migrants in the first few years of their arrival. This ignores costs that accumulate into the future: such as dependents, accumulated access to benefits (citizenship, healthcare etc), and the costs of ageing and infirmity as the migrant gets older. 
  2.  A net contribution is not the same as a fair contribution. Just because a migrant pays more in tax than they get in direct benefits does not mean they are contributing their share. For example, if a migrant pays £4000 in tax and collects £3900 in benefits and services, the £100 excess is not a sufficient per capita contribution to cover the migrant’s share of pensions, social services, infrastructure, central government, defence, and so on. 
  3. Direct contribution analysis avoids the intangible costs that migrants place on society: such as integration, social cohesion, environmental degradation, overcrowding, infrastructure pressures, congestion, pollution, and shortages of basic necessities such as of water, gas and housing. These cannot be ignored. They are very real costs felt by real people. 

The Myth of the Low Cost Migrant: Worked Example

Barry arrives in the UK with his two children and wife. He takes a £30k a year job in London where he works diligently for five years.

Barry is keen on the UK. He and his family use local services to improve their English and his kids get extra help at school. When they are not sure about something, Barry goes to his local Citizens Advice Bureau to make sure he understands. This is not unusual: around half of CAB visits are by foreign nationals.

It can be tough living in London on so little money. Barry gets help from a local housing association, and occasionally relies on his local food-bank. This is not unusual, in some London boroughs, as many as 80% of those receiving help from housing associations were born outside the UK.

After five years of hard work and good behaviour, Barry and his family apply for British citizenship. 

Barry is by all accounts an exemplary migrant. 

But what does Barry contribute and what does he get back?

What Barry’s Family Pay InWhat Barry’s family get back
Tax & National Insurance: 5 years on salary of £30k = 5 years x £5740 = £28,700Comprehensive NHS healthcare for entire family: UK per capita health spending = £3840 per person. By comparison US family health insurance costs c. $22,000 or £18k. Thus, assume annual value of £16.5k per annum for the family x 5 years = £82500
Other taxes (VAT, Council Tax, etc.)~4k per annum x 5 years = £20,000Primary school education x 2 = £10k per annumExtra help with English = £1k per annum = £11k for 5 years = £55000
 Voluntary sector support: 5 years at £5k per annum = £25k
 Background public services that make the UK a nice place to live (police, defence, courts, infrastructure, etc.). Family of 4 @ £3k each per annum = £12k for 5 years = £60k
Citizenship Processing Fees: 2 adults @ £1330 each and 2 children at £1012 each =  £46844 x British Citizenship @ market value: ~ £1m
Total Contribution: £53,384Total Received: £1,222,500

In just five years, Barry and his family have received over £1.2 million worth of public and social services.

Yet Barry has only paid in about £50k – barely 4% of what he and his family have received!

Note that Barry and family are exemplary migrants who work hard, behave well and integrate. Less agreeable migrants would cost far more.  

It is no wonder low wage wonder migrants pour in to the UK: then can get over a million pounds of tax-payer funded work perks! And they don’t even have to pay tax on them! 

It is no wonder businesses love migrant workers and create millions of low wage jobs. It is no wonder low-wage and low-skill businesses love the UK.  Migrant workers and their employers enjoy a massive government subsidy – in many cases over a million pounds per worker!! That is why migrant workers are willing to work for a low wage.  What business could resist subsidies like these?!

Subsidies on this scale have grossly distorted the UK’s labour market at enormous expense to voters and taxpayers.

The Myth of the Contributing Foreign Student

Foreign students have been one of the fastest growing categories of migrant. They are generally seen as a good thing. But what do they contribute and what do they put in?

Bertha comes to the UK as a student migrant. She brings her husband and child. It is increasingly common for foreign students to bring large families. 

Bertha attends a top Russell Group University for a three year undergraduate degree. It costs her £22k  per annum in fees, offset by a scholarship of £5000 per annum. There are many scholarships for foreign nationals studying in the UK.

After her degree, Bertha and family stay on for two years under the graduate visa scheme and Bertha works for another two years, earning £30k per annum. 

Then the family apply to become British citizens. 

What Bertha’s Family Pay InWhat Bertha’s family get back
5 years of immigration health surcharge @ £470 per person per annum = 5 years x 3 people =  £7050Comprehensive NHS healthcare for entire family: UK per capita health spending = £3840 per person. By comparison US family health insurance costs c. $22,000 or £18k. Thus, assume annual value of £15k per annum for family of 3 for 5 years = £75000
1 x student visa (£363) + 2 x family visa (2x £490) + 1 x graduate visa (£715) = £2058Primary school education x 1 = £5k per annumExtra help with English = £1k per annum = £6k for 5 years = £30000
 Background public services that make the UK a nice place to live (police, defence, courts, infrastructure, etc.). Family of 3 @ £3k each per annum = 9k for 5 years = £45,000
3 years tuition fees of £22k per annum less £5k per annum of scholarships = £51,000 Lifetime value of Russell Group Undergraduate Degree is £200,000 in terms of extra earning power.
Tax & National Insurance: 2 years on salary of £30k = 2 x £5740 = £11,480 Other taxes (VAT, Council Tax, etc.)~£3k per annum x 5 years = £15,000 
Citizenship Processing Fees: 2 adults @ £1330 each and 1 child at £1012 each =  £36723 x British Citizenship @ market value: ~£750,000
Total Contribution: £90,260Total Received: £1,100,000

Bertha and her family have received over twelve times what they have contributed.

Tragically, giving away top university places on the cheap also deprives British nationals of those places. This is in spite of the fact that universities have been funded and built up over the centuries by British nationals and British taxpayers. This is like selling off the contents of our museums and galleries to foreign nationals for 8% of their true value!

Furthermore, by depriving British nationals of those places, we also deprive ourselves of the extra tax revenue from their increased earning power in the future. 

While the government has been in a desperate drive to get 600,000 foreign students to the UK, this is the worst industry the government could have chosen to grow! 

For a start, universities are charities. That means student places are already subsidised by government (e.g. Gift Aid) and via endowments. Thus, you are selling a product way below its cost rather than at a profit.

Further, universities do not pay VAT, corporation tax or even local business rates. Students themselves do not pay council tax and are unlikely to earn enough to pay income tax. 

Thus, the government is spending a fortune seducing foreign students to the UK – in some cases at a cost of over a million pounds per student! But it is getting back almost nothing in tax. 

These vast subsidies for foreign students become even more untenable when one considers the growing opposition to non-doms. If non-dom status were abolished, non-doms could still bring themselves and their families to the UK, sign up to a course, pay even less than the £30k per annum they currently pay, and enjoy a raft of free services and discounted healthcare!   

Totting Up the True Costs of Immigration

  • Health & Education: Migrants and their dependents require health and education, like everyone else.
  • Background Public Services. A migrant walking down the street is not costless. The reason they can walk down a pleasant street safely is thanks to things like police, defence, infrastructure, transport and planning rules. 
  • Welfare & Pensions: Another reason the UK is a pleasant country to live in is welfare and pensions. If we did not provide welfare for the vulnerable, that migrant walking down the street would face being robbed, harassed or having to climb over the bodies of the sick. It is therefore imperative that we ask every migrant to pay a full and fair contribution to welfare.
  • Charity and Voluntary Services: The UK charitable sector has an income of £56bn a year, and spends £46bn of that on its charitable objectives. As a percentage of GDP, it is the 4th biggest in the world.  As residents of the UK, we all benefit from the charitable sector and can access its services. That includes new arrivals. However new arrivals have not contributed to building the sector over decades. Further, they dilute services for the existing vulnerable population. As the UK charitable sector is roughly 1% of GDP, an annual charge equivalent to 1% of per capita GDP should be levelled on all migrants, with the money distributed across the sector.
  • Settlement Rights: There already is a global citizenship market, with passports typically costing $100k to $1m. Citizenship or indefinite leave to remain generally places an enormous lifetime burden on the host country. It is a national scandal that we give away citizenship for anywhere between nothing and £1300. The market value of a UK passport is at least $0.5m. So our current approach is like selling off NHS ambulances (worth £250k) for 500 quid each. It is a horrific deal for British tax payers. If the country were to charge the market value for settlement and the number of applications halved, the scheme would raise over £30bn in tax annually, while reducing demographic pressures and creating a more flexible labour market. 
  • Integration costs: Mass migration creates a large range of integration costs on the UK. These include schooling and language issues, loss of social cohesion, ethnic tensions, terrorism, new diseases and crime. Integration issues are difficult and costly to resolve; often requiring initiatives lasting decades.    
  • Overpopulation:  The UK is one of the world’s most densely populated countries. As a result it is also one of the most environmentally depleted. For all that we complain about developing countries exploiting resources and chopping down forests, their efforts pale into comparison to the UK’s loss of green space and biodiversity. The problem of a growing population means that while we are throwing more and more money at the environment and climate change, the problems are getting worse. Issues like species diversity and water quality are running away from us faster than we fix them.  

Infrastructure is also problematic. When infrastructure is built, it has a margin of safety built in. Unfortunately rapid population growth means the margin of safety has been used up. That is why we face mass congestion, energy and water shortages. It is also why our waterways are in the worst state on record, as sewerage infrastructure cannot cope. If we are going to take more migrants, there is no capacity to just plug them into existing utilities. We will need to build completely new ones. It is only fair that the migrants (or their employers) pay for that.      

Overpopulation is also making pollution worse. The UK ranks near the bottom of all developed countries on air quality. We are only beginning to discover the physical and mental health costs of this. Even the government admits that Air Pollution kills 26000-38000 people per year in England. While scans of Inner city children are finding pollution related damage to lungs and brains on children as young as six! 

Further, green space and biodiversity are increasingly linked to mental health. Access to more natural space has been found to be far more effective at treating mental illness than clinical drugs. As mass migration forces us to destroy more and more of our green space, it is exacerbating the mental health pandemic, which is already costing the economy £118bn per annum. 

Immigration is now responsible for around 80% of population growth and this will eventually be over 100%. It therefore seems reasonable to ask immigrants to compensate for all the costs of managing overpopulation. The resulting problems can all be costed, accounted for and compensated for. Many countries already do this. For example, Alaska and Canada compensate local populations for developments in their areas; while New Zealand adds an environmental levy on to visas. 

  • Housing: The UK has some of the largest housing shortages in the world with 3.8m (amounting to 1.6m households) in need of social housing. Migrants have created a triple headwind for the housing crisis: they drive up demand, drive up housing costs and suppress wages and interest rates. That means UK housing costs (to rent or purchase) have soared far faster than wages. This is an enormous financial hit to the quality of life of British voters. With overpopulation driving the cost of a house from three times income to seven times income, even if you could argue Immigration does add 0.1% or 0.2% to GDP; that is dwarfed by the earnings loss from housing shortages. 

Furthermore, planning and house-building has become a political hot-button issue, especially in the South East. Communities must now fight to defend their environment, quality of life and social cohesion. My interviews and report on the feelings of local communities facing this onslaught of unwanted developments uncovered a real sense of anger:

Every two to three years, big house builders and wealthy individuals apply for planning permission. There are objections. The community objections are ignored and the reply is always the same: “Sorry we’ve let in another 2million people. We know you didn’t want us to, but we have. Now you need to accept more housing.”

Once a new front is opened, they keep coming back. Allow them to build on the corner of a wood, and soon the whole forest is gone. Give them the escarpment next to the park, and the park will be next. Give them the road up to the hill, and soon the whole hill will be covered. It is never ‘just’ twenty houses. It has been going on for two decades now. That is why locals must fight every development; because it is never just one.

What all residents want is the same thing: a once-and-for-all settlement. 

We cannot get a housing settlement without ending mass migration.

For immigration to be worthwhile, economically viable and to improve quality of life, all of the above have to be, at a minimum, compensated for by each and every migrant. This is how to make the case for immigration. 

Is there an IP benefit to Immigration? 

One long-running economic argument supporting significant immigration is that it is needed to introduce new ideas and new cultures to countries. 

Typical examples include the arrival of educated European Jews in America, who helped spearhead the USA’s technological and scientific leadership; and the diverse cuisine available across the UK as the result of successive waves of global immigration. 

However, when it comes to cutting edge science, only very small numbers of such immigrants are available. For example, while the UK government issued a record 1.1 million long-stay visas last year. Of these, just 2678 were Global Talent Visas (the flagship visa scheme for top tier workers).By contrast over 40000 people have crossed the channel illegally in the past year.

Thus, capturing the world’s best minds does not require mass migration. Instead it requires a focused immigration system open to a tiny number of world class individuals.   

Furthermore, today’s most innovative countries no longer rely on long-term immigration to capture new IP. South Korea – which consistently ranks as the world’s most innovative country – has very low levels of immigration. Similarly, China – the country that has made the fastest progress to become an innovation powerhouse – also has low levels of immigration. 

Instead countries like these rely on the digital technology, short-term migration and the global higher education system to capture cutting edge thinking. For example, it is very common for Korean and Chinese nationals to study abroad. Similarly, Chinese and Korean companies will often partner with Western businesses, with one of the conditions being stints abroad for their employees.

Like many cities, my home town of Edinburgh has seen an explosion in Scandinavian Cuisine. Curiously, not one of the top-ranked Scandi/Nordic restaurants according to Tripadvisor, is run by a Scandinavian. In the modern world, chefs can travel easily and learn abroad. And there are endless online videos and sites devoted to Scandinavian cooking. We did not need to grant citizenship to a million Swedes to get first class Scandinavian cooking. Similarly, Edinburgh’s most awarded ‘Italian’ ice cream shop, Mary’s Milk Bar, is run by a Yorkshire girl who learnt ice cream making at Carpigiani Gelato University in Italy!

Thanks to technology, global travel, global supply chains and education, economies no longer need long-term migration (with all the problems and costs it brings) to capture new ideas.  

Mass Migration Costs Low Income British Households £300 per week, Every Week

While wealthy employers may benefit from exploiting subsidised immigration, the burden is borne by low income households.

That burden includes suppressed wages, diluted access to public and charitable services, sky-high housing costs, and infrastructure pressures, including pollution and congestion.    

If we add these up, 20 years of mass migration has cost the UK’s poorest households on average, over £300 per week. For low income families, that is the difference between a comfortable quality of life, and a highly stressful and unpleasant existence. No wonder child poverty, mental health problems and deaths of despair are soaring. 

And that is before we even begin to consider more intangible costs, such as social problems around integration, environmental degradation and loss of green space. 

Why Free Market Liberals are Wrong: Free Immigration is NOT Free Trade

As should be clear, open borders is not the same as free trade: it is the exact opposite

Mass migration amounts to an enormous subsidy to foreign nationals, universities and big employers at the expense of British taxpayers. The per-migrant scale of those subsidies is routinely in the hundreds of thousands, and occasionally millions, of pounds. That is terrible for government finances.   

It is also grossly hypocritical: the UK routinely criticises and litigates against developing countries for industrial subsidies, such as steel or textile production. But these subsidies are nothing compared to the scale of our migrant subsidies.   

These vast hidden subsidies are why employers of low wage workers and universities love open borders. Their business models receive colossal handouts funded by taxpayers, who must bear the exorbitant financial and social costs. Unsurprisingly, this phenomenon of business taking from rather than contributing to society is destroying faith in capitalism. A growing majority of people now believe capitalism does more harm than good.  If we cannot stop trends such as mass migration, the foundations of society are likely to be upended in favour of socialism, anarchy or something worse.  Business needs to appreciate that its addiction to cheap, subsidised labour will ultimately destroy the political system it relies upon. 

How 20 years of Mass Migration Collapsed Prosperity and Growth

Mass migration to the UK began roughly 25 years ago. During that period, UK public debt has risen sevenfold and household debt is up fourfold. But in spite of this huge credit stimulus, productivity has stagnated. Consequently, real wages have flat-lined, child poverty has risen and the UK has experienced its slowest ever period of economic growth outside of wartime.

This proves that mass migration is not helping the economy as economists have claimed. It is making it much worse. 

To understand why, consider the aftermath of the Bubonic Plague. The ‘Black Death’ wiped out roughly half of Europe’s peasant population. This created an enormous shortage of peasant labour. As wages and bargaining power rocketed, there was a wave of mechanisation that led to the scientific revolution. Furthermore, with higher wages and labour productivity, inequality narrowed and social mobility rocketed. As peasants enjoyed their newfound disposable incomes, there was a surge in consumerism, the emergence of new leisure activities, a flourishing of culture, and a wave of new social, political and religious movements. It was the plague and labour shortages that set Europe on its path to global dominance. In short, labour constrictions were good for everyone – especially the poor and the innovative. Everyone that is, except for feudalist lords. 

This was not a one-off: the same phenomenon occurred in Russia and the Middle East after similar plagues. More recently we have seen it with post-war booms; such as those after the American Civil War and the World Wars. War invariable wipes out an economy’s most productive labourers (young healthy men), forcing it to embrace productivity-enhancing innovation and entrepreneurism. Further, social revolutions such as the suffragette movement, female and minority workers rights, and the NHS are all a direct consequence of post-war labour shortages. If there is a shortage of labour, government and business has no option but to encourage new workers and to look after them better.   

This Way to Utopia: How Labour Shortages lead to Peace, Prosperity and Progress

Now contrast this with the past two decades. Wealthy Employers (today’s feudalist lords) have enjoyed a bottomless supply of migrant workers. Thanks to this supply there has been no investment in productivity, leading to a stagnant economy and stagnant wages. Low wage workers are treated as disposable commodities. Those who experience problems are simply thrown onto the benefits scrapheap (5.3m and counting) rather than helped. Those who do work have seen the purchasing power of their incomes steadily eroded. Rising taxes and housing costs have exacerbated the fall in disposable incomes. Without disposable incomes, the working class cannot afford culture, leisure or pleasure. Hence sport, music, unions and clubs have given way to addiction, anger, dependency and toxic politics.

Of all employers, the most culpable has been the NHS. In spite of demand, the number of doctors in the UK has been falling for six consecutive years. The quit rate for nurses is at a record high. Rather than look after its staff or train more, the NHS is simply working its way down the global development ladder. Like one of those industrial fishing fleets, it is scooping millions of healthcare workers from poorer and poorer countries, while throwing its existing staff overboard.   

There is a growing realisation now that this loss of social capital is in itself bad for our economy, triggering a vicious cycle. Trust, strong communities and national identity are essential to drive investment and entrepreneurism. However, we can only rebuild social capitalism if our working population enjoy a sense of self-esteem, meaningful work and rising disposable incomes. It takes money, confidence and optimism to get off the sofa and start a business, charity or cub-scout gang.   

Historic Labour Shortages21st Century Britain
Rising income for working and middle-class as bargaining power and labour productivity rises.Falling real wages and rising poverty.
High social mobility and falling wealth inequality.Extreme wealth inequality and lowest ever recorded social mobility.
Hard work, innovation, science and engineering are most rewarded. Financial speculation, real estate speculation and investments in addiction (opioids, social media, junk food) are most rewarded. 
The rise of new workers groups and social movements (unions, gilds, suffragettes, etc), as workers become valued by employers.Disposable Workforce treated with contempt: face increasingly high taxes to fund growing benefits and pensions for those who do not work.
Expansion of leisure and cultural pursuits (new music genres, the arts, working men’s clubs).Disappearance of working class culture replaced by anger and despair. 
Technological and Scientific revolution. Employers invest in technology and mechanisation to improve labour force productivity.UK falling far behind in automation and technological investment; becoming ever more dependent on serf labourers.  

How 20 years of Mass Migration Left Us Drowning in Debt

A further problem with immigration is that it distorts fiscal and monetary policy. 

Governments and central banks use fiscal and monetary policy to keep unemployment to a minimum. High unemployment leads to widespread social problems and is expensive, draining the government of resources. 

The theory is that during economic shocks, governments should borrow heavily and central banks slash interest rates. The extra spending creates jobs and puts upward pressure on wages, leading to a recovery.

As the recovery takes hold, governments reduce debt and the central bank raises interest rates to prevent the economy overheating and to control inflation. Thus, things are supposed to move in a relatively smooth cycle. 

Over the past two decades, this cycle has been broken. Government debt has only gone up, accompanied by massive growth in private sector debt. Meanwhile interest rates have gone down and down to near zero.

There are many negative consequences to this. Including excessive debt, rising inequality, misallocation of capital, government waste, moral hazard and asset price bubbles. In a damning report, The House of Lords Economic Affairs Committee has called this ‘A Dangerous Addiction’ that is doing far more harm than good.  All these problems are not only hurting the economy and our quality of life, but setting us up for more financial crises in the years to come. 

In other words, it would be far better if the traditional cycle of expanding and contracting fiscal and momentary policy were reactivated.

A key reason the traditional cycle has been broken is immigration. This is wholly underappreciated but theoretically sound.

When governments and central banks turn on the taps to stimulate demand, the aim is to drive up employment and wages. However, if you have an economy that is open to mass immigration, immigrants also come in, taking many of the newly created jobs and putting downward pressure on wages. The result is to undermine the intended effects of stimulus. It is like trying to heat a room with all the windows open. 

Thus, central banks and governments have to spend far more to achieve their aims, creating jobs for millions of foreign nationals as well as their own citizens. Meanwhile the downward pressure on wages from mass migration means that inflation does not rise as it should. Thus, there is no signal to begin raising rates and tightening monetary policy. The result of this prolonged stimulus and low rates is excessive debt, even after a recovery takes hold. 

Proof of this phenomenon are these graphs showing UK net migration and the explosion in UK public sector debt. Both of them began to take off at the same time – around 2001.

It is no coincidence. Imagine a hypothetical mature economy where everyone earns a wage and spends it, but with no debt. Money simply circulates round and there is no excess demand for labour. However, if you introduce growing debt into the equation, you create an excess demand. This is what the UK is doing. It borrows more money each year, creating excess demand, which creates the illusion that we ‘need’ more labour. The labour itself suppresses employment and wages, leading to excessively loose fiscal and monetary policy, and yet more debt. Mass immigration hides the economic signal (inflation) that should tell us when to stop binging on debt. 

Thus we are caught in a dangerous self-reinforcing cycle of excess immigration driving excess borrowing and vice-versa: 

 

Why Huntonomics is Wrong

A longstanding argument, espoused by Chancellor Jeremy Hunt, has been that we need more migrants to counter the growth in debt. However, in practice, it is British citizens and taxpayers who bear the costs, while only large employers reap the benefits. For most migrants, their costs far exceed their economic benefits. Hence, since mass migration took off in the early 2000’s, public sector debt is up sevenfold and household debt has quadrupled. Trying to reduce government debt with mass migration is like trying to pay off your mortgage through buying £1 coins for £2 each! 

Further, providing employers with access to a limitless supply of cheap labour discourages investment in productivity improvements, leading to the economic stagnation of the past two decades. That only makes the debt trap even worse.

Huntonomics will only work if every migrant worker (or their employer) bears the full lifetime costs (including all externalities) for themselves and all their dependents.  

Uniting the Right

Those on the right and centre-right have long been divided over immigration. Libertarians have supported high immigration on economic grounds, while social conservatives have opposed it due to the social problems it creates.

The same split can be seen amongst Conservative voters, with lower income and red wall voters more opposed to immigration than their wealthier counterparts in the South. It is the lower income voters who have been deserting the party in droves, having felt betrayed over the issue. 

But by charging a market price for all the costs migrants impose on the UK, we can at last ‘Unite the Right’ on immigration.  Free market liberals can get behind these policies because they represent a market-based solution; while social conservatives can support them because they drastically reduce immigration while raising quality. 

Free Market Migration: Charging the Full Market Value

A market-based solution involves every single migrant paying the full market value for what they receive over their entire stay, and compensating for any costs they impose. That would include:

  • Every employee should pay a minimum tax equal to UK per capita public spending of roughly £14k. If their salary does not cover this, an employer top-up should be required.  
  • Similarly, every dependent should also pay the equivalent of UK per capita public spending of £14k, plus top-ups for special needs categories.
  • Alternatively, dependents (or the employer) would be required to pay for their own private health insurance and private education, plus a flat fee to cover other government services (police, transport, environment, infrastructure etc), and a contribution to the benefits system.  Either way, migrants would pay their fair share, plus a fair contribution to look after Britain’s vulnerable. 
  • Every migrant should pay a (per diem, per capita) standing charge to compensate Britons for the resulting pressures of overpopulation and its effects on housing, pollution, congestion, infrastructure, public health and the environment.
  • Every migrant should pay a (per diem, per capita) standing charge to support the charitable and voluntary sectors. These have been built up over centuries and provide extensive support for both migrants and UK nationals.    
  • Citizenship or settlement beyond a visa period of, say, five years should be charged at market value of £200k-500k per person. This could be structured as a citizenship mortgage paid over 30 years. The right structure would keep those new citizens economically active and law abiding, while preventing sham and abusivemarriages.
  • Lastly, all applications – whether for Visas, citizenship, asylum or extensions – should be made and completed offshore. This would ensure the market system is not abused by migrants simply arriving illegally, staying put or refusing to accept the verdict. 

A market-based system like this refutes any allegations of racism or prejudice against migrants or British nationals. Rather than personal prejudice, we are letting the market do the talking.

A Truly Free Market Means Net Zero Migration

A truly free market system of immigration would result in roughly zero net migration.

This is because there would be no economic benefit for any migrant. Imagine a migrant is considering moving from a country with no public healthcare provision to the UK. For many migrants, there is a huge economic benefit in moving, especially if they are sick or have dependents. However, if they have to pay the full market value for their healthcare in the UK, the economic benefit disappears. They might as well stay where they are and pay the market value for treatment privately. Without any economic incentive to migrate, any migration becomes largely incidental, and is likely to be roughly equal both ways.

It is important to appreciate that Net Zero immigration does not mean no immigration at all. In practice, it would mean about 300-400k immigrants per annum, balanced by the same number of emigrants.

Net Zero immigration itself solves many problems. It relieves pressure on housing, the environment, infrastructure and public services. It makes long-term planning much easier. Crucially we could at last reach a settlement on the politically toxic issue of housing and planning. Politically, we cannot get a settlement on housing without fixing immigration first

Furthermore, net zero immigration would allow a healthy degree of multiculturalism to flourish, but without overwhelming our national identity and creating industrial-scale social problems. Net Zero is immigration in harmony.

Ushering In the Age of the Super-Migrant

Charging the full market value to migrants, their dependents and their employers is not a novel idea. It has been successfully employed for years by wealthy economies; including Singapore, the UAE and Saudi Arabia. What this model delivers is a ready supply of ‘Super-migrants.’ These are highly skilled and highly paid workers. They are generally young and ambitious. They work hard and play hard, and stay only for a few years. They pay a fair share of tax, and consume little in social services, with employers responsible for healthcare and dependents’ needs. 

Because these economies cycle through migrants rather than retain them, they enjoy a flexible and cutting edge labour force. For example, Qatar was able to attract the construction workers it needed for the World Cup and Saudi can get all the engineers it requires during an oil boom. But neither is left with the social problems of unemployment and integration when the boom winds down. 

From Battery Farm Economics to Free Range Economics

Mass migration is just one example of today’s flawed economic thinking. Economists and political leaders have looked at the UK in the way a battery farmer looks at a barn. Stuffing ever more chickens into the barn will drive ‘growth.’ 

However, this battery farm approach ignores the welfare of the chickens. The whole point of democratic politics is to improve our welfare. As the paradox of the battery farmer illustrates, the economic thinking that more ‘growth’ and more productivity will inevitably improve our welfare is profoundly flawed. 

Thus, politics has split on immigration. On the one side you have the battery farmers: the Davos elite, senior economists, the Treasury orthodoxy and big business. They just want ever more eggs.

On the other side are the voters and the tax payers who have to live with the consequences. 

The orthodoxy’s perspective is wrong: Mass migration is making us all poorer and collapsing economic productivity.

The Chickens have come home to roost. 

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Author Andrew Hunt graduated from Cambridge with a Law degree in 2003. He worked in TV production before moving into finance. It was here that he became fascinated by how personal investors and small companies could turn negligible resources into enormous fortunes. Applying the same mindset and principles, Hunt was able to retire in his thirties. He now invests in interesting projects which aim to make the world a better place and runs a radical centre-right environmental think tank. He is also the author of Better Value Investing.

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