I was going to spend the afternoon watching the cricket but….it seems less bad with my back to it.
The New Zealand Initiative describes itself as
The New Zealand Initiative is a business group with a difference. We are a think tank that is a membership organisation; we are an association of business leaders that is also a research institute
According to a recent interview with the chairman
Currently we have 37 full fee-paying members, including ANZ Bank, ASB Bank, Air New Zealand, Chorus, Contact Energy, Deloitte, Deutsche Craigs, EY, First NZ Capital, Fletcher Building, Fonterra, Foodstuffs, Forsyth Barr, Freightways, Google, Heartland Bank, KiwiBank, Microsoft, PwC, SkyCity, Todd Corporation, Vero, Vodafone and Westpac.
The Initiative has produced some interesting material since they were formed a few years ago, and I often find what they write stimulating even when I don’t agree with them.
Like many, I’m signed up to receive the weekly newsletter. It usually has two or three brief pieces from staff on something or other that has been in the news that week, often overlapping with work the Initiative has been doing.
This week’s newsletter was a bit different. It has a piece from Roger Partridge, the chair of the Initiative, which can really only be described as a bit of a rant. Under the heading Immigration Grows the Pie he gets underway wanting to close down debate
Sadly, our island state is not enough to stop a vocal minority chanting their own exaggerated anti-immigration claims. In recent times, calls to halt immigration have focused on Auckland’s overheated housing market. But, as economic conditions softened last year, back came the protectionist clichés about immigrants stealing Kiwi jobs.
As it happens, we do agree on one thing. Partridge is responding to suggestions that immigration “takes away jobs”, and as I’ve argued for years, the demand effects of immigration typically exceed the supply effects in the short-run. In the short-term, if anything, immigration lowers unemployment, all else equal (also consistent with previous Reserve Bank research). In the longer term, immigration probably doesn’t make much difference to unemployment rates – labour market regulation, the welfare system etc determine that. So I agree with Partridge that
In a market economy, the number of jobs is not static. More migrants create more jobs. They mean more teachers, more retail staff, more factory workers, and more managers. In fact, more of almost everything.
But that isn’t the real question – it is one about whether New Zealanders, as a whole, benefit, in the form of higher incomes than they would otherwise earn.
Partridge then gets rather carried away with his enthusiasm
And that is not the end to the good news. Countless international studies have shown that increases in immigration not only tend to increase jobs, but also to increase the prosperity of the host nation. We benefit from their productive endeavours, their ingenuity and their diversity. And the more skilled the migrants, the greater the benefits.
That there are gains from immigration has received cross-party support in New Zealand since at least the 4th Labour Government. Let us hope the anti-immigration demagoguery falls on deaf ears. Going down that path we all lose.
The challenge is not keeping out the migrants; it is keeping out the bad ideas. Luckily, that does not need a wall, just clear thinking.
Well, we can debate the “countless international studies”. As I’ve pointed previously, plenty of studies actually show that in the last great age of globalization, immigration actually narrowed income differentials – incomes in the countries people were leaving rose relative to incomes in the countries they were coming to. Economic success – resulting from combination of better institutions, productivity shocks, or resources – enabled countries to support immigrants at no undue cost to themselves, and relieved (just a bit) a burden on the source countries (Ireland, Sweden, Italy, UK etc).
But, actually, my reading of the literature and international experience on immigration is really an “it depends”. Has immigration to Uruguay, Chile and Argentina benefited either side? Most immigrants came from Spain and Italy, and the destination countries have Spanish-shaped institutions etc. But income per head in all three Latin American settler countries is well below that in Italy and Spain – two of the less successful Western European countries. With hindsight, those immigrants probably should have stayed at home.
But our interest is surely New Zealand. Can Partridge produce a single study – let alone “countless” ones – that demonstrate that high rates of immigration have benefited New Zealand, whether in the post-war decades, or since the new National-Labour consensus developed at the end of the 1980s and early 1990s?
I’ve read pretty widely in the New Zealand literature and I’m not aware of any such studies. MBIE and Treasury, in their advice to ministers on immigration can’t point to such studies. Mai Chen’s recent taxpayer-supported “superdiversity” report couldn’t. There is a single paper around – a modelling exercise from 2009 – which purports to show such gains, but in fact it doesn’t. It can’t in fact – it is the sort of model that produces the answers you set it up to produce (something the authors recognize if not all the users).
There are simply no empirical studies demonstrating that one of the highest rates of immigration in the advanced world has actually produced any gains for New Zealanders as a whole (of course some gain, but many others lose, from (eg) the interaction of a distorted housing market and immigration policy, or the transfer between New Zealand diary workers and foreign ones). Our productivity is lousy (total factor productivity included), and the tradables sector struggles to produce a much per capita as it was doing 10-15 years ago. Our own people keep leaving. There is no simply evidence of any overall benefits for New Zealanders. I’d be inclined to agree with Partridge that skilled (and innovative) immigrants would be better than the alternative, but as I’ve illustrated previously (and here) most of the immigrants we get aren’t particularly skilled at all.
Partridge is, of course, quite correct that
That there are gains from immigration has received cross-party support in New Zealand since at least the 4th Labour Government
The political and bureaucratic elites have been at one on that. But there is simply no actual evidence, about specific developments in New Zealand in these few decades, that actually supports their belief about what our immigration policy would do for New Zealanders. Perhaps it was a reasonable policy to adopt 25 years ago – there was a lot of belief that New Zealand was about to flourish, and perhaps there would be plenty of gains to share around. But we haven’t flourished. We’ve languished, and it increasingly looks as though the migration policy was a misguided and perhaps quite damaging choice in our specific circumstances.
What New Zealand needs is some rigorous debate on the issues and evidence, not rather desperate attempts to simply rule any debate on immigration issues out of court.