Immigration quotas are bonkers

by Simon Murdoch

The UK’s immigration quotas are bonkers. Maybe the Syrian refugee crisis will shine a light on this stupid way of thinking about immigration.

Firstly immigration isn’t a bad thing – though it’s usually been portrayed that way in the press until very recently. Many countries including the UK benefit enormously from immigration. This summer a set of tube posters by MAX Movement tried to defuse the negative reaction that many people have to the whole concept of immigration itself by focussing on individual stories that our minds can take in. Good for them. (Interesting fact: the tube poster campaign was crowdfunded)

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Why are immigration quotas bonkers?

The first reason is that as part of the European Union, we have laws which enable free movement of people from one EU country to another. So in practice the government can’t control how many citizens of EU countries decide to move here – that makes the whole idea of setting a quota totally bonkers. Why on earth would anyone want to set a target and be held accountable for hitting that target when in fact you have no control over the factors which lead to a result. Plain stupid.

In fact, what happens instead is that at an individual level, European citizens work out for themselves whether they can afford to make a cross-border move, and whether they can afford to stay put once they have moved to another country. For example, a Polish friend of ours came to the UK for 18 months. All was fine while in the job he came here for. But after a while he left the job and tried to build a start up business. Before long he couldn’t earn enough to pay for his rent, so went back to Poland for a more sustainable affordable life.

Secondly immigrants and emigrants (the leavers) are not all equal. Each put different strains and give different benefits to an economy and a fixed quota of net migration is meaningless and pretty much impossible to manage especially in the face of a situation like the Syrian crisis and the public opinion now in play.

I think of marketing budgets as being a good analogy for how to think about immigration. Imagine you are running a b2c early stage business driven by marketing – a business like Carwow or Simply Cook for example.

Yes your company should have a marketing budget for each month but it should not be fixed in stone. You have a number of marketing methods – some are hard to measure like SEO investment, or PR. Others are wonderfully measurable like Google Adwords. For every pound you spend, you can measure how many new customers you sign up. Within a few months, you can find out the lifetime value of the cohorts of new customers and work exactly whether each specific Adwords campaign is cost effective and even the cashflow dynamics of the campaign – i.e. how quickly does the investment in marketing get repaid.

Once you find a tactic/campaign/cohort that pays for itself sufficiently with cashflow dynamics you can afford, you don’t want your marketing budget to be fixed, you want to grow the investment in that marketing method fast – but not crazy fast because in time you will find there’s a law of diminishing returns so at some volume it will stop being so profitable and with enough growth or over time will become simply breakeven.

How is that related to immigration?

Well some immigrants are more beneficial for a country than others even though it is no doubt politically incorrect to say so. Many will be unskilled and so collectively may put more downward pressure on the pay rates of unskilled workers which have hardly moved for many years in the UK – up about 10% in real terms over 14 years:

UK AWE growth

Others though will be highly skilled workers able to attract highly paid jobs paying plenty of tax to the government, and benefiting our economy in our competitiveness around the world. We should especially welcome skilled workers with open arms. Like Adwords marketing, government should find ways to measure the net benefit of an incoming worker and allow in large numbers of those who are beneficial for our economy.

But, just like with the marketing budget with highly measurable results, we should not grow too fast because there will be a law of diminishing returns somewhere – maybe on harder to measure effects such as strain on infrastructure, house prices / rents and so on.

So what is too fast? Nobody knows but the government aims for less than 100,000 net immigration per year. I have no idea how many Syrians and other refugees we should take in the current crisis – this post is not about that – but I do strongly believe it would be a travesty if public opinion forced the government to take many and they held the quota for net migration at 100,000 per year. Then our sorely needed software engineers, entrepreneurs and skilled health workers would be much less able to enter the country badly affecting the economy.

Overall, there needs to be a whole new approach to how to think about immigration and the public debate about it. Let’s start by chucking out the net migration quotas.

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