Monday, 6 March 2017

Free Movement Of People Does Not Equal A Level Playing Field

In the air at the moment are grave concerns about EU citizens in the UK and UK citizens in the EU, and whether both groups will get to securely live where they want to. To me, the problem smacks of politicians having too much interference in people's liberties. With increased liberty comes a reduction in problems concerning free movement of people.

A policy that enforces compulsory free movement of people also mandates an open borders policy, which most certainly does not necessarily mean freedom if the policy impinges on the freedoms of the indigenous population, particularly if it affects their economic infrastructure.

As with everything, a market approach to border control and movement of people has to factor in all the costs as well as benefits, and to all groups too. I'm going to assume that readers will have already worked out the various permutations of who benefits and who has costs imposed upon them.

For that reason, I'll assume you can see the obvious corollary, which is that there would be far fewer problems attached to freedom of movement if so much of a nation's infrastructure was not tied up in politics and taxpayer-funded state spending. A nation that has schools, hospitals, social care and welfare paid for by taxpayers cannot very easily endorse a politically-mandated complete free movement of people, because of the burden it can place on those taxpayer funded services (not to mention problems surrounding social and cultural integration).

That is to say, even a market approach to movement of people has to, for the time being, be consistent with a level of border control, and the protection of its citizens against those that damage cultures by not contributing to its economy, or make the society more divisive, fractionated and vulnerable (with immigration from Islamic countries being the obvious case in point).

The best way to protect the liberties of the people contributing to a nation's economy while also protecting the liberties of people wishing to work wherever they wish is to have free movement of labour but not have complete free movement of people (note: I am not talking here about situations involving refugees and asylum seekers - that is a subject beyond the scope of my intention here).

As long as people are free to work (and retire, of course) in any country they wish, nations avoid almost all of the costs of migration and enjoy almost all of the benefits. They have less chance of suffering from labour shortages, and wage inflation, and inflexible labour markets - and they enjoy the numerous additional benefits, which I documented quite comprehensively here.

The problem with having complete free movement of people disconnected from their ability to work is that in a bloc like the EU with severe wage differentials there is a strong pressure for labour migration that has a knock-on negative effect of the citizens of the wealthiest countries. If all countries in the EU were of a similar economic standard in terms of wealth and jobs there wouldn't be so much of a problem.

But a quick Google search tells me that a Hungarian worker migrating to the UK could earn in one year here what would take him about four years in Hungary. For perfectly understandable reasons, the economic incentives for people in Eastern Europe to seek employment in countries such as the UK, Germany and France is far greater than the other way around. Consequently, then, unless everyone who migrates is guaranteed a job, there will be a disproportionate migration strain on countries like the UK, Germany and France.

Because of this, a more prudent solution would be to tie labour to free movement rights. Rather than having border controls based on a woolly perception of what the nations possibly wants, it would be better if they were based on what the nation definitely needs. I was reading in Forbes that in late 2013, an estimated 13.5% of points-tested immigrants who had arrived in Australia earlier that year were unemployed, whereas just 1% of immigrants who arrived by being sponsored by a company were unemployed.
Clearly, businesses could be much better than politicians at overseeing a successful migration policy. And as for the matter of the security of EU citizens already working here, the government would be absolutely mad to jeopardise their status, and they jolly well know it.