Friday, 7 August 2015

Terms of Trade

The recent scenes at Calais, of queues of goods lorries and desperate migrants, remind us that migration and trade are intimately linked, but this is a truth that we spend a lot of time glossing. Even those sympathetic to migration on humanitarian grounds can be delicate about the economic realities. For example, FlipChartRick has pointed out that Theresa May's proposal to "help African countries to develop economic and social opportunities so that people want to stay" will actually stimulate greater migrant flows because, as incomes converge, more Africans will have the wherewithal to pay for transport across the Mediterranean. This is right but incomplete. The relative cost of getting to Europe for an African migrant is a factor both of her wealth and the price of transport (whether an airline seat or a cramped bench in an open boat). Trade lowers transport costs, both because of economies of scale and the impetus to productivity improvements. In other words, the dynamic is equal parts push and pull.

Rick is essentially employing the "rising expectations" theory of social change, which dates back to Alexis de Tocqueville's L'Ancien Régime et la Révolution of 1856. As people's expectations rise (represented here by disposable income), so they become restless and ambitious. There is a similarly antique flavour to much of the other material that Rick quotes in his post. For example, a Wall Street Journal article on rural Senegal: "Flat screen TVs and, increasingly, cars—mostly purchased with money wired home by villagers working in Europe—have reshaped what was once a settlement of mud huts. The wealth has plugged this isolated landscape of peanut farms and baobab trees into the global economy and won respect for the men who sent it". Mutatis mutandis, a similar article could have been written about Sicily in 1900 (feel the respect) or Ireland in 1960. This is a trope in which labour is exchanged internationally for commodities, thereby introducing the market economy into hitherto backward areas (mud huts, no less). It's the cousin of the gift of civilisation trope, in which the intrepid explorer takes a gramophone into the jungle to introduce the benighted natives to Caruso.

Another quote from South Africa's Mail & Guardian has a similar sense of the bleedin' obvious being rediscovered: "One of the more intriguing nuggets about the Africa emigration story is that far from fleeing poverty, migrants out of the continent are likely to be relatively well off, and are rarely from the most destitute families". Migrants tend to be younger, fitter, better-educated and more qualified than the norm in their home country. Twas ever thus. This applies both to economic migrants and refugees, with the latter tending to be relatively better off but persecuted groups rather than the poorest segments of society or marginalised minorities. For example, there are more urban Christian refugees (often middle-class) than rural Yazidis fleeing Syria. The chief difference between economic migrants and refugees is that the former tend to be more optimistic, essentially because they are leaving of their own free will. They literally have the "get up and go" spirit that Norman Tebbit so admired. It is this optimism that in turn fuels their willingness to take risks, jumping trains or trying to walk the length of the Channel tunnel.

My favourite quote in Rick's post comes from a Nairobi-based NGO: "Modern mobility is also empowered and inspired by unprecedented levels of connectivity – particularly through email and social media – and the virtual proximity of a seemingly obtainable better life. Immeasurable though it may be, we cannot underestimate the force of aspirations, dreams and adventurism of many young people stuck in what they regard as politically restrictive, socioeconomic backwaters". If you substituted "the postal service and cinema" for the contemporary wonders of technology you'd find yourself with boilerplate that could have been used at any point over the last one hundred years. You'd also be able to use it in the context of intra-national migration: "stuck in what they regard as politically restrictive, socioeconomic backwaters" could have come from the synopsis of most provincial UK novels published in the 50s and 60s (think Keith Waterhouse, Stan Barstow et al).

Where once we blamed racy novels and Hollywood for filling our young peoples' heads with dreams, now we blame satellite TV and Facebook. To assume that "unprecedented levels of connectivity" have produced a sudden awakening of aspiration and therefore a boost to migration is ahistorical. I had a childhood friend who emigrated to Canada in the late-60s, who was equally excited by Jack London's White Fang and Walt Disney's True-Life Adventures. His family returned after a couple of years, having failed to settle (his souvenirs included a genuine parka and a 6" Bowie knife). The point is that they could afford to do so, the cost of transport having fallen over time, so emigration was no longer a one-way ticket. The 70s saw the end of assisted migration schemes like the Australian Ten Pound Poms programme, and also the increase in repatriation by migrant pensioners, notably to the West Indies and Ireland. All of this was driven by falling transport costs which were in turn a reflection of the early stages of globalisation.

Rick could also have pointed out that as a nation develops, more of its workers will have tradable skills, a fact that the NHS is relying on over the coming decades. The dependence of the health service on migrant labour is often deployed by pro-immigration advocates as if the pro-social nature of the job should make a difference (it's the forgivable counterpoint to media tales of "foreign criminal gangs"), though it strikes me as a risky strategy because this reminds people of infection. The fear of migrants is not just simple xenophobia but a rational appreciation, based on solid history, that you cannot trade without the risk of spreading disease, hence our continuing fascination with flu outbreaks and spiders in bananas. But we over-estimate the probability of infection, and the prevalence of social ills, partly because we project our ambivalence about trade (exploitation, food-miles, the loss of domestic jobs) onto migrants. While it is certainly wrong-headed to see migrants as economic competitors in aggregate, the bigger cognitive failure is to imagine that we can have the benefits of global free trade, from kiwi fruit to Spotify, without an increase in international labour mobility.

This gets to the nub of the issue, which is that nations with complex economies are inevitably driven to greater trade in order to maximise their absolute and comparative advantages (a fact recognised since the days of Adam Smith and David Ricardo), hence the secular trend towards larger free trade areas like the EU and multilateral treaties such as TTIP. This applies to factors of production as well as products and services, something which the EU's "four freedoms" (goods, services, capital and labour) explicitly acknowledge. The era of globalisation is the era of migration, from the Mediterranean to the Rio Grande, from the Baltic to South Africa. In the UK, successive governments have struggled with the contradiction of a neoliberal commitment to free trade and a conservative prejudice against incomers, producing a variety of faux-pas from Gordon Brown's "bigot" to David Cameron's "swarm". This reaches a pitch of inanity in the UKIP claim that "Outside of the EU we could control our borders whilst ensuring that free trade continues without free movement of people".

It is no coincidence that the UK's pre-eminence as a trading nation coincided with its openness to migrants, famously including Karl Marx among the many undesirables, nor that it started to introduce immigration controls (the Aliens Act of 1905) at a time when it was facing growing market challenges from the US and Germany and consequently attracted to protectionism (the Tariff Reform League was founded in 1903). The last large-scale attempt to expand trade while minimising migration was the clumsy arrangements negotiated between the European Community and Comecon in the late-80s, which were little more than disguised aid. What advocates like Nigel Farage are really after is free trade for the City and an impossible blend of pro-SME import substitution and favoured multinational brands for the rest of the country. In contrast, Donald Trump's plan to slap tariffs on Chinese imports to the US and build a wall to keep out Mexican migrants is a model of internal consistency.


  1. What suggests to me that we are dealing with xenophobia in its literal sense is the fact that internal migration is utterly ignored. Nobody bats an eyelid about the fact that people from the North-East and other areas of the UK flock to London and the South-East, or that cities like Detroit or Frankfurt-an-der-Oder lose half of their population, and the socio-economic and human consequences of these demographic shifts must be much greater than the arrival of migrants from overseas. I myself have had to migrate from the Yorkshire coast to Leeds to find work, but fortunately the locals don't want to send me back!


  2. Maybe Plus ca change in terms of the motivation for transhumance. My own greatgrandfather 'ran the tunnel' at 15, thinking he was going to America and ending up in the south Wales global energy hub.

    But people are not scarce, as once they were. surplus labour is everywhere. How can we absorb people without bringing productively relentlessly down? How do we justify taking the most skilled and ambitious people away from poorer countries?

  3. Herbie Causes Extinction11 August 2015 at 14:38

    I think something very very ugly is happening in this country at the moment, I believe we have a fascistic government in power. I also think Blair's wars have given justification for this dangerous turn of events.

    I don't know why i am surprised but the liberals seem rather silent on the sadistic, cruel and backward nature of the current government. The trip to authoritarianism is gong to be less bumpy than I had imagined unless Jezmania can become a reality.

    1. I have had my doubts about Jez until yesterday. I then heard Alastair Campbell having selflessly broken into his holiday to deliver his Anyone But Corbyn rant on the PM programme on Radio4. I started laughing when Campbell stated he too had principles and I'm still chuckling. I am now fully behind Corbyn. Somewhere in my wardrobe under a pile of flared trousers is a donkey jacket, time to dig it out.