The Corner

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Norway, Immigration and some Myths about the Economics of Immigration

There have, essentially, been two ways in which the Nordic democracies have dealt with the rise of the populist ‘right’ (yes, a far from precise label) that has risen usually, but not exclusively, in response to high levels of immigration into the region.   There’s the Swedish way, in which, for a long time, politicians of both left and, strikingly, center-right, denied there was anything to discuss and ostracized anyone who wanted to discuss it. That drove increasingly large numbers of voters into the arms of the Sweden Democrats, a party with distinctly unsavory origins which was, however, prepared to listen to what those discontented voters had to say.

In 2010, the SD, which had cleaned up its  act somewhat, came from (almost) nowhere to gain a foothold in parliament with just under 6% of the votes. They were shunned by the establishment parties in a manner that was in many respects a betrayal both of basic democratic practice and basic common sense. The democratic ideal should be to include dissident voices within the (to use a pompous phrase) conversation and, through that process of inclusion, teach the rules of the democratic game to those who need some lessons in it. The result of this shunning was all too predictable. Voters’ concerns over immigration were ignored, and the SD saw their share of the vote increase to nearly 13% in the 2014 election, a total likely to be boosted in the next (2018) elections by Sweden’s Merkel-style acceptance of even more migrants in 2015. The country has tightened its borders since then, but in recent Sentio and YouGov polls the SD was running second at between 20-21%, behind the Social Democrats but slightly ahead of the feebly-named Moderaterna, the main party of the center-right. For now, it seems, as if the politics of exclusion have failed, but at what cost?

By contrast, parties of the populist right were drawn into the democratic process—and government— in Finland (which proved something of a poisoned chalice), Denmark (where they have tacitly supported a series of center-right governments) and, most successfully, in Norway, where the Progress Party has been part of the governing coalition since 2013.

Fraser Nelson in The Spectator:

When Angela Merkel invited refugees to Germany in 2015, tearing up the rules obliging migrants to seek asylum in the first country they arrive in, the consequences were pretty immediate. Over 160,000 went to Sweden, leading to well-publicised disruption. Next door, things were different. Norway took in just 30,000; this year it has accepted just 2,000 so far. To Sylvi Listhaug, the country’s young immigration minister, this might still be a bit too much.

‘We have a big challenge now to integrate those with permission to stay in Norway to make sure they respect Norwegian values,’ she says. ‘Freedom to speak, to write, to believe or not to believe in a god, how to raise your children.’ Also, she says, what not to do. For example: ‘It is not allowed to beat your children in Norway.’

…While Sweden and others saw the migration of 2015 as a blip caused by conflict in Syria and Iraq, she sees it as part of an irreversible demographic trend. ‘Africa is going to gain almost 500 million more people by 2030,’ she says. ‘Much of the Middle East and Africa is fragile. People have difficult lives but can see via mobile phones that life in the West and in Europe is quite different. So I understand why they would like our life, our kind of standards. But it’s not sustainable to integrate so many.’

Why not? Norway, with its oil–generated trillion-dollar sovereign wealth fund, is one of the world’s richest countries — and hardly beset by integration issues. This, she says, is because they’ve been careful. ‘Many of the jobs here today perhaps will not be here tomorrow. Working in supermarkets for example — those kind of jobs that don’t need higher education. Those who come to Norway without any education — what are they going to do in the future if this continues?’

Good question.

The case for limiting economic migration is clear. But about half of the registered asylum seekers in the EU last year were from countries that were struck by conflict. Can Norway justify taking so few? Ms Listhaug is a practising Christian (albeit sceptical of the ‘thoroughly socialist’ Church of Norway) and says her government’s immigration policy, when combined with its aid policy, is not just a moral response, but the most effective moral response.

‘For me it’s a moral issue as well. You can’t just help the ones you see. You have to think about the millions you don’t see and that have a very difficult life in the world.

She’s referring to the refugee camps in Jordan, where both Norway and the UK send aid to help those displaced by war. Norway gave £23 million to its Jordanian mission last year, almost twice as much, per capita, as Britain. The cost of helping refugees at home is taken from its foreign aid budget, so as its influx subsides and costs fall, all savings are used to help refugees abroad. Some £370 million has been transferred so far, with more expected next year.

So to Ms Listhaug, it’s not a question of whether to help refugees, but how best to do so…

She sees this as a modern way to help asylum seekers — and more practical than the 1951 UN Refugee Convention, which obliges signatories to accommodate anyone with a ‘well-founded fear of persecution’.

‘It was an agreement for its time,’ she says. ‘But when people travel through 20 countries to come to a safe haven, I think people can see that this is not right. You could have a safe haven in your neighbouring country, so why go so far?’

…[S]he  does not mind using Sweden as a case study in what not to do. ‘A lot of countries in Europe are thinking more like us: like Denmark and Austria. Germany, as well… France has big problems right now with integration, as does Belgium. A lot of countries in Europe see that we need to have this under control.’

The Norwegian model, she says, is very different and very clear. “If you are an economic migrant, you are declined in Norway,” she says. “We send people back to Afghanistan if they are not in need of protection; we send them back to Somalia if they are not in need of protection.” Isn’t this a rather expensive process? “Yes, but it’s well worth it.”…

Listhaug …thinks her approach is right, and the consensus is wrong. And, as she says, an increasing number of other countries think the same. A new consensus might well be in the making.

That’s probably too optimistic, but the economic foundations of the old consensus are, shall we say, looking a little shaky.

Writing for Project Syndicate, here’s Robert Skidelsky, a prominent British academic of decidedly maverick political views, who has  been on the left, the center, and the right and has, more recently, shown some sympathy for some of Jeremy Corbyn’s economic ideas (my emphasis added):

Standard economic theory tells us that net inward migration, like free trade, benefits the native population only after a lag. The argument here is that if you increase the quantity of labor, its price (wages) falls. This will increase profits. The increase in profits leads to more investment, which will increase demand for labor, thereby reversing the initial fall in wages. Immigration thus enables a larger population to enjoy the same standard of living as the smaller population did before – a clear improvement in total welfare.

A recent study by Cambridge University economist Robert Rowthorn, however, has shown that this argument is full of holes. The so-called temporary effects in terms of displaced native workers and lower wages may last five or ten years, while the beneficial effects assume an absence of recession. And, even with no recession, if there is a continuing inflow of migrants, rather than a one-off increase in the size of the labor force, demand for labor may constantly lag behind growth in supply. The “claim that immigrants take jobs from local workers and push down their wages,” Rowthorn argues, “may be exaggerated, but it is not always false.”

A second economic argument is that immigration will rejuvenate the labor force and stabilize public finances, because young, imported workers will generate the taxes required to support a rising number of pensioners. The UK population is projected to surpass 70 million before the end of the next decade, an increase of 3.6 million, or 5.5%, owing to net immigration and a surplus of births over deaths among the newcomers.

Rowthorn dismisses this argument. “Rejuvenation through immigration is an endless treadmill,” he says. “To maintain a once-and-for-all reduction in the dependency ratio requires a never-ending stream of immigrants. Once the inflow stops, the age structure will revert to its original trajectory.” A lower inflow and a higher retirement age would be a much better solution to population aging.

This, I suspect, is something that the Japanese understand very well. 

There is also something else, hinted at in those few words from Sylvi Listhaug:

Many of the jobs here today perhaps will not be here tomorrow.

Indeed they will not. The Jeb!’s of this world, stuck in the industrial certainties of the last century, have yet to explain what immigrants, their children, and, for that matter, the rest of the working population are going to do for work as automation scythes its way through the job market.

Tomorrow’s problem is going to be a labor surplus, not a labor shortage and tomorrow’s unemployed are not going to be able to pay for tomorrow’s pensioners. Under the circumstances, it’s hard to see how more immigration is going to help. 

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