Mass immigration must become a feature in the debate about inequality
By Paul Ormerod
18 February, 2015
Inequality is now a buzzword in Britain. Scarcely a week goes by without a new publication by an academic or journalist lamenting the levels of poverty facing swathes of the population. And they are bolstered by a complicit metropolitan liberal elite, who shed crocodile tears for the poor, while ruminating on the current situation.
Unfortunately, much of the work coming out of universities can hardly be described as scientific. Rather, it could be described as “advocacy research”. In other words, research that is carried out with the intention of providing evidence and arguments that can be used to support a particular cause or position. And too often, the taxpayer is left financing such activity.
However, a new book on poverty, Breadline Britain, deserves to be taken more seriously. The authors, economist Stewart Lansley and academic Joanna Mack, wrote the first version in 1983 when they were producers at ITV’s current events programme, Weekend World. Over the next three decades, they continued to collaborate on the topic.
Lansley and Mack make the startling claim that one in three households now suffer from poverty. Their method of calculating this figure is intriguing. Instead of wrestling with intricate statistical methods, they simply go out and ask ordinary people what they consider to be the basic necessities for a decent standard of living. On this basis, the percentage of households lacking three or more of the items listed has risen from 14 per cent in 1983 to 30 per cent now.
Of course, like any measure of relative poverty, it is open to the valid criticism that in material terms the poor are far better off than they were. But it does serve as a useful reminder of the different qualities of life that are on offer in the UK today.
A key point in the book is that poverty is far from being confined to those on benefits. A rising proportion of the poor are in work. The authors cite the usual suspects of zero hour contracts and the spread of low pay. But there is one fundamental driver of these changes in labour markets which they do not face up to – namely, mass immigration.
Under New Labour, Britain’s borders were effectively opened completely. At the time, we were invited to believe that this would have no effect on real wages. Equally, we were assured that immigration was vital in combatting the effects of an ageing society. Critics such as Bob Rowthorn, then head of the Cambridge economics faculty, were pilloried for making the obvious point that immigrants themselves get older.
Unsurprisingly, the increased supply of labour has driven down real wage rates at the lower end of the market. And the imperatives of politics means that benefit levels have had to follow suit.
If Lansley and Mack are right about inequality, then we must also acknowledge the part that the liberal elite’s advocacy of mass immigration has played over the past two decades in impoverishing the indigenous working class.
Paul Ormerod is an economist at Volterra Partners LLP, a visiting professor at the UCL Centre for Decision Making Uncertainty, and author of Why Most Things Fail: Evolution, Extinction and Economics
The bulk of people who come here have no assets but expect to share the accumulated public wealth of the country which we and earlier generations have paid for. That must mean either: a) we have to share assets and public services we used to enjoy without overcrowding or b) we have to pay for additional facilities. The newcomers cannot pay.
The people who benefit from unlimited immigration are the well off and big business. Those who suffer, both from wage compression, loss of work opportunities and overcrowding, are the lower paid and the poor, especially the poor non-benefit claimants.
We pay in-work benefits to newcomers out of taxes and NI and other public levies which fall heavily on low wage earners.
One can understand why those who favour unlimited immigration do so from a selfish point of view, but if the political class and big business leaders were to mix with the hoi polloi a bit more they would hear a different aspect.