New Zealand Initiative on immigration: Part 9 The case for open arms

I’m getting a little tired of writing about the New Zealand Initiative’s immigration report, and readers may be getting a little tired of reading about it.   But when the best-funded pro-immigration advocacy group in New Zealand –  Treasury and MBIE aside –  produces a major report on the subject, then as a sceptic of New Zealand’s modern immigration programmes I feel a certain obligation to keep on to the end.  But I’m now down to the last five pages of the report.

Chapter 5 is headed “The Case for Open Arms”, which sounded a lot as if it was going to be making the case for open borders –  that libertarian idyll, not adopted anywhere, in which anyone who wants to can come, in any numbers.   Because the Initiative seems torn between the practical  (simply defending current policy –  which, liberal as it is, is not remotely “open borders”), and the idealistic  (let them come, let them come, in whatever numbers they choose, a policy that they know will never be adopted), the rhetoric and arguments often also aren’t that consistent in tone.

They start by making a fair point

To the original tribes that inhabited New Zealand, European settlers would have seemed more foreign than today’s migrants are to modern New Zealanders.

Different religion, different technologies, different governing institutions, and immensely richer and more productive.    As the Maori did, apparently, so should we, for in the next sentence we are asked

Can New Zealand keep on accepting people who want to make this country their home?

Which seems to have rather lost sight of the hugely expensive wars, and mass (subsidised) migration, that were required to secure the European position in New Zealand.  It was a power grab.   I’m not sure it is a precedent I’d be wanting to invoke.   And, as I keep pointing out, it isn’t as if there are cultures that are (a) immensely more economically productive than the existing New Zealand culture/institutions, and (b) people from those (largely non-existent) countries/cultures clamouring to come to New Zealand.  Recall that paper I mentioned last week suggesting that if there are economic gains from increased diversity, they mostly arise when people come to your country from richer countries.

I’d be inclined to simply dismiss much of this as content-free rhetoric, but so much of the case for large scale non-citizen immigration policy seems to be made at that level.  It certainly doesn’t seem to engage with the actual specifics of New Zealand’s economic underperformance, despite our fairly good institutions and talented skilled people.

The next piece of rhetoric is that “we are all immigrants anyway” line, as if it offers any insights on the current policy choices.

No matter how you slice it, few New Zealanders can trace their lineage to many generations before counting someone foreign-born. We are part of the New World. And we are a nation of migrants.

I presume the aggregate numbers are right, but my ancestors came in the 1850s and 1860s.  It might be a different relationship with “New Zealand” than some Maori may have, but it is also very different than that of people who have come in the last five or ten years.  This is “our place”, and it is a matter for the voters of New Zealand to decide whether, and to what extent, we continue to take lots more immigrants.  And there is nothing historically inevitable about it.  Thus  the observation that “we are part of the New World” is true enough, but meaningless for these purposes.  Australia and Canada also have pretty liberal immigration policies – although even Canada is bit less open than we are.  But the United States takes only about as third as many legal migrants (per capita) as we do.   And the countries of colonial settlement in Latin America are not now known for their extensive immigration inflows.  Perhaps the less said about South Africa – once often grouped with New Zealand, Australia, and Canada –  the better.    Newfoundland, once independent, was one of the first British colonies of settlement: these days, something less than 2 per cent of the population is foreign-born.  It is a choice.

The rhetoric then gets stranger still –  indeed, they invoke the Golden Rule (“do unto others as you would have them do unto you”).

It doesn’t often get brought up in debate but the golden rule applies well to immigration.  Treating immigrants the same way we would like New Zealand emigrants to be treated overseas is fair and sensible. Many New Zealanders benefit from travelling overseas to live and work. Some end up staying but many return, and there is value to New Zealand from both.

Which is a really strange argument to run when New Zealand has among the more open approaches to immigration of any country in the world.  We all know how difficult it can be for New Zealanders to get migration access to, say, the United Kingdom.   The number of permanent resident foreigners in China –  now a middle income country –  is staggeringly small.  And even relative to Australia –  where we have loosely reciprocal arrangements involving the ability of citizens of each country to live and work in the other –  we treat Auatralians moving here far more generously than they treat the (many more) New Zealanders moving there.    And OECD data cited by people like the Productivity Commission tell us that we have more short-term foreign workers living here than any other OECD country.

More generally, it has never occurrred to me that I should have pretty free immigration access to any country I choose.  There are plenty of fine countries out there, but I’ve never assumed I should have a right to live in them.  So how is this argument remotely relevant to discussions of immigration policy in New Zealand?   We could choose to be even more liberal than we are, or we can wind back immigration access quite a bit, and we would still be no less open than most other advanced countries –  and much more open than most middle income and poorer countries.

The Initiative then devotes half a page to what we might call non-GDP benefits from “diversity”.  I’ve made the point before that we don’t need lots of immigration to enjoy Danish butter, French wine, Iranian dates, British books, American i-phones or movies, or Bangladesh or Vietnam-made clothes.  We just don’t.  There are some products that are probably sold here only because immigrant communities are here, but if the rest of us had a taste for those products, New Zealanders could import and distribute them too.   I’m not going to quibble with the taste for ethnic food New Zealanders have developed –  especially as even the Initiative concedes that chefs (one of the more common skilled migrants categories) aren’t exactly “critical economic enablers” (MBIE’s description of our immigration programme).  And perhaps the number of foreign-born players in the All Blacks is a gain to New Zealand, at least for some.  Of their other sports stories, I don’t begrudge Lydia Ko her success, but in what way is it a gain to (native) New Zealanders?  And at least one of the other star cases they cite –  Scott Dixon – was born overseas to New Zealand parents who returned to New Zealand when Dixon was very young.  Two of my kids were also born abroad and came back very young –  but whatever they might one day achieve, I won’t be ascribing that to our immigration programme.

But about this point, they change tack again, with a sub-section headed “A Radical Idea”.

And what is their “radical idea”?

Often forgotten in the immigration debate is a consideration of the migrant as a human being. To borrow a phrase from the feminist movement, the strongest case for a liberal immigration regime is the radical notion that migrants are people.

I’m not sure who ever doubted it.  The Initiative don’t tell us. Rather there is the implied superior tone “only we care about the people”.

No one ever doubted (or at least not that I’m aware of) that immigration usually benefits the immigrant.  After all, they make a voluntary choice to move, and presumably do so because they think doing so will benefit themselves and their descendants.  The hundreds of thousands of New Zealanders who have moved to Australia made that sort of assessment.  (Of course, it doesn’t always work out as planned  –  100 years ago or more Latin America used to offer much higher living standards than Spain or Italy, and migrants flocked to South America.  They might, with hindsight, have been better to have stayed.   For that matter, GDP per capita in New Zealand is now less than that in the UK.)

And I’m also quite comfortable with the proposition that immigration is more effective than foreign aid as a way of raising living standards of people in poor countries.  Since, foreign aid is almost totally useless in that regard, it isn’t much of a comparison.  Immigration can help people in poor countries in two main ways.  The first is transplanting people into richer countries in which their skills can earn more than they would at home.  And the second is remittances –  migrants sending money back to families at home.    The Initiative seems quite keen on remittance flows (a big issue in some small countries).  I’m not.  They help individual families in the short-run, but they also tend to overvalue real exchange rates in recipient countries, and make it harder for those countries to develop themselves, including developing internationally competitive industries.

The Initiative quote one libertarian economist as saying

“Immigration is the greatest anti-poverty programme ever devised”.

I think that is a distinctly questionable claim.   In the short-term, and for relatively small numbers of people, it is probably the quickest such way.

In fact, that greatest anti-poverty programme ever devised is (a) for governments to stop doing stupid and evil stuff (one could think of the self-destruction of Chinese living standards for much of the 20th century), or the current Yemen war, and (b) developing market-friendly institutions and cultures that enable prosperity to take hold for the many, not just the lucky few.  It isn’t easy, it isn’t quick.  But it works.  If the pro-immigration advocates want to argue that these countries/cultures can’t do it for themselves, it is like some sort of 19th century case for enlightened imperialism/colonalism.  I lived and worked in two such countries for a while.  There is little real doubt that British control and administration did raise living standards, and improve prospects for future economic development, in Zambia.    It wasn’t a perfect regime by any means, but the story was often told that in the early 1960s GDP per capita in Zambia was around (or ahead) of that in South Korea or Taiwan.  But most Zambians chose independence, and never showed any signs of regretting that choice, even through 20 pretty disastrous years from the 1970s to the 1990s.    Very little about the prosperity of a society as a whole is down to luck, most of it is down to choices (conscious and unconscious) about how to organise society, what to value, what is taboo and so on.

Decades ago, while he was at the Reserve Bank, Don Brash used to get frustrated at various church leaders’ comments on economics, many of which seemed to reduce to (sometimes quite explicitly) “the rich are rich because the poor are poor”.  We ended up setting up a dialogue with a group from some of the churches to at least better understand where each other were coming from.   I’m not sure it ever achieved much, but it came to mind recently in thinking about immigration.  From pro-immigration people we often hear the suggestion that the relative wealth of our society and the relative poverty of, say, India is down to good luck.  It was a line run in The Economist just the other day

Americans and Europeans are not more deserving of high incomes than Ethiopians or Haitians.

But no one “deserves” a high income.  Rather societies develop in ways which enable many of their citizens/residents to generate high incomes.   European societies have achieved that to a remarkable extent over the last few hundred years, joined so far by a relatively small number of countries from other cultures.  It is a precious achievement, that needs to be nurtured and safeguarded (and no doubt evangelised too).   There is no suggestion that it is somehow genetic –  other cultures held the technological (and material living standards) lead in earlier millenia.  Does nature play a role?  Well, no doubt.  It seems unlikely that Saudi Arabia, Kuwait and Oman would have their current living standards without the good fortune of abundant oil.  Navigable rivers, animals that can be domesticated, and so on all helped in the past.  But Haiti’s problems aren’t rooted in natural resources, but in Haitian society.  The comparisons are particularly obvious in those pairs of countries that started not long ago with very similar backgrounds: China (no better than middle income) and Taiwan, or North and South Korea.  Again, a common line is that individuals are “lucky” to be born in New Zealand rather than (say) China.  But luck doesn’t come into it.  People are born into a culture and society, and fostered and nurtured in the values, institutions of that society.  That is how successful societies maintain themselves.  Sadly, it is how unsuccessful societies (at least judged in material terms) replicate themselves.   There is little random, or “lucky”, about it.

As they come to the conclusion of the chapter, the Initiative observes

If one accepts the notion that birth circumstance should not impose limitations on where people are  allowed to live, then the burden of proof should fall on those arguing against immigration to show a detrimental effect.

That is a very big “if”.  Very few people ever have.  Very few do today.  Humans are born within societies –  small, but vital, ones like families, but also neighbourhoods, religious communities, cities, nations and so on.  Often people can leave, but in view few cases is there any automatic right to join.   Some of the boundaries are quintessentially natural and others somewhat arbitrary.  My kids aren’t your kids and vice versa.  Each face advantages and disadvantages in their particular birth and upbringing.  But except in rare circumstances your kids can’t become mine, or mine yours.  In older or more primitive communities much the same limitations applied to tribal or village groupings.  No one thought that outsiders had an automatic right to make themselves part of that established grouping.  Boundaries of countries are perhaps somewhat arbitrary, but even if at times they are drawn in somewhat arbitrary places –  which isn’t the case for New Zealand –  groups of people within those borders tend to develop (or have had for centuries) a sense of a common identity, shared interests, and a willingness to undertake mutual support and protection.  We might choose to invite people in, but it is a choice.  We recognise that, for the most part, being born in New Zealand gives you the right to be here and move about here, and being born somewhere else does not give you that right.

In that world –  the real world –  where people do think that birth circumstances can, and should, influence where one can choose to live, when governments are thinking of running large scale immigration programmes, the burden of proof should really be on our governments (and those who advocate) such programmes to show that natives will be better off if the outsiders come in.  “Better off” doesn’t just have to mean in “economic” terms. It might be something as simple as responding to the compassion of natives, in the face of a natural or political disaster elsewhere.     But for an economics-focused programme, as the New Zealand immigration programme has been for decades, the case made is that natives are made better off by large-scale non-citizen immigration.   Sadly, in their report, the Initiative made little effort to show that, asa  group, we are indeed made better off or even that, if there are such gains, they are maximised at around the sort of current scale and composition of inflows.  If they really believe the story –  as distinct from just the ideology of something like “open borders” – applies to New Zealand here and now surely that is a missed opportunity?





43 thoughts on “New Zealand Initiative on immigration: Part 9 The case for open arms

  1. The problem with arguing against new migrants falls over because this is not an intergenerational issue. Migrants are only one generation. The next generation are native kiwis. Therefore you are only ever arguing against migrants for a 50 year timeframe before they die off and your argument becomes somewhat redundant.


    • “Migrants are only one generation. The next generation are native kiwis”

      That means that ethnic identity is one generation thick. That was John Campbells argument against Peter Brown: “but you know many [of that number] will have been born here”. It immediately undermines any identity NZr’s might have had.The test would be to see if a Europesn NZr would be accepted as “one of us” by *the wider population* in a “source country”?


  2. I don’t think so. The economic question, put in those terms, is are we and our descendants made better off by bringing in lots more people (including their descendants). In some places, for some cultures, the answer might well be yes. In many places it might all be bit of a wash. For some – i argue it is so in NZ, but would be in Tasmania or Montana or Wales, the answer might well be no. In fact, natives might be made worse off.

    Liked by 2 people

    • Unfortunately for your baseless assumption is the proof of the voting statistics and public polling suggests otherwise. Every indication is that the majority of natives are better off. If that was not case then a poll driven government like John Keys National government would have blocked those immigration numbers from rising to a record 71,000 with 14% increases in international student numbers year on year and 40,000 work visas issued over 12 months and Net loss of New Zealanders from -40,000 annually to a small net gain. Real migrant arrivals has been static at 15,000 a year for the last 15 years.

      Chefs would not top our skilled migrant category if it was not driven by local native industry demanded by the record 3.5 million tourists.arrivals.


      • People vote for govts that do all sorts of damaging or crazy stuff. To cite just one example you often refer to, the view shafts in Akld, which restrict housing development and help keep house prices more ruinously high than they otherwise would be. Import protection was a similar example for several decades.

        People have been told by the main parties for decades that immigration is “a good thing”, and it is hard to get to the bottom of whether or not that is so economically, even if one is motivated to ask the questions.


  3. ADHB costs for translation services went from just under $2m in 2005/06 to more than $6m in 2012/13. I don’t have the figures for last year, but I understand this is a growing unfunded cost within a number of DHBs. And then there is the additional budget ($28m in 2016) for ESOL tuition in primary schools. The other interesting trend is the number of NZ born new entrants who come from non-English speaking homes. Super-diversity has some actual direct costs which don’t seem to have been quantified/considered all that well… again, I suspect, because no one wants to appear unwelcoming.

    Liked by 3 people

    • Just watched a bit on TV1 about a young Tongan who was given a liver transplant at a very young age, at Starship.
      Now that has happened the family have to move to NZ because he now needs ongoing health care for the rest of his life along I might add with everything else that a person growing from a year or so old until he either dies or moves to another country. So how will that help our productivity and why should the taxpayer of NZ be lumped with those costs?

      apart from the humanitarium side of this current and future NZer’s are disadvantaged because their earned money is being handed generously to an immigrant.

      Now if we said Ok here is or aid budget and it comes out of that then fine.


    • People from the Cook Islands, Niue, and Tokelau held New Zealand citizenship and therefore had unrestricted rights of entry and settlement in New Zealand. People from other Pacific nations, particularly Samoa, Tonga, and Fiji, entered New Zealand in a range of ways, including temporary permits, quota schemes and family reunification policies.


    • Thanks Brendon – I was just about to link to that (altho note that Latham is wrong/misleading on one point – per capita, we and probably Canada have larger immigration programmes than Australia).

      And of course the scepticism is not just from robust voices on the left. Judith Sloan remains as sceptical as ever of the economic gains to Australians from large scale immigration – she who led the Aus PC’s immigration inquiry in 2006, and was (at ACT’s instigation) on our 2025 Taskforce where she was instrumental in the Taskforce reaching a conclusion that there probably were no per capita gains to natives from immigration.

      It would be good to see our Labour Party following Latham’s lead……..


      • I was at a Labour Party housing thing a few weeks ago and asked Phil Twyford about immigration. He said they were planning to tighten it as they were very aware of the pressures it was causing

        Also Andrew Little said in his stand up when the election was called that immigration had to be good for NZ not just the migrants.

        What happens though when/if they come to power is another thing. They will be facing the same lobbying that Woodhouse is now. Although I would hope as a party with its roots in the Labour movement not small business they may have different mindset.

        Liked by 3 people

      • I can imagine them tweaking things at the margin, but I’m curious whether they will end up promising more than that. The broad direction of immigration policy over 30 years is as much Labour’s as National’s, and that could be difficult to walk back from, even if they did come to believe there was little evidence NZers as a whole were being made better off.

        Liked by 2 people

      • Michael, you have got it wrong. Australia’s migrant percentage is at 27% of the population. ours is at 25%. Australia factually has had a larger migrant population per capita in order to have a higher percentage of migrants.

        You tend to rely on our NZ statistics which include international students, foreign workers, and returning New Zealanders. Australian statistics do not label international students or foreign workers or returning Australians as migrants. We do for some strange warped reason.


      • No, I haven’t got it wrong. The foreign born population share includes all immigration over perhaps 60 or more years. Australia had higher immigration rates than we did post-war and even in the 80s. We have a higher rate now – and here I am focused not on the PLT numbers but on our residence approvals programme, and their policy target as well. The gap will close a little following to modest cut to the residence approvals target last year.

        As I keep saying, the residence approvals target is the centrepiece of our medium-term immigration policy, and is where most attention should focus.


  4. “….it is a matter for the voters of New Zealand to decide whether, and to what extent, we continue to take lots more immigrants”. Roll on the election and ‘the’ policy area where political parties differ….

    Liked by 1 person

    • The argument then gets back down to how many

      1. International students that grew 14% from last year to 125,000 that the Institutions should take in. Put in a cap? Restrict the GDP growth to $5 billion?

      2. Foreign worker Visas issued totalled 40,000 in the last 12 months. Stop earthquake construction work in Christchurch, Kaikoura and Wellington. Stop any further apartment dwellings. Tell council to stop building consent approvals? Stop intercity rail constructions as it needs too many foregn waorkers?

      3. Tell kiwis they need to leave NZ to the tune of 40,000 a year as they did in previous years or tell those coming back they are not allowed in?

      These are all within the definition of immigrants. Actual migrant arrivals have been static now for the last 15 years at 15k a year and Woodhouse has also squeezed that number down to 10k next year. Not going to make too much difference is it?


      • On your three points:

        1. no i wouldn’t stop student inflows, but I would remove the right to work while studying, and probably remove the provision that provides residency points for qualifications from NZ educational institutions.

        2. recall that migrants add more to demand than to supply in the short-term. thus cutting back migrant numbers – whether temporary work visas or residence approvals – would ease the overall pressure on resources. existing labour would move from sectors driven by growing population to other sectors.

        3. the movements of NZers are not a matter of immigration policy at all. It is good in some ways fewer NZers are leaving. it would be better if it were for the right long-term reasons (gaps in productivity between NZ and AUs were closing).

        The govt’s policy change – cutting the residence approvals target slightly – won’t make much difference, both because it is very small, and because in the short-term actual approvals aren’t tightly managed to the target. But it will be modestly helpful.

        Liked by 1 person

      • Michael it would be handy (and you may have already done this) to have some table or graphs for the various migrant categories -net movement of NZ citizens, Non-NZ citizen permanent resident movements and then the totals for the different visa categories -working, student….

        If we could see how these numbers have shifted over the last few decades then that might make it clearer what our options are.

        There are several arguments for reducing immigration which politicians might favour.

        Michael, you make a good case for reducing immigration using a general/ macroeconomic argument.

        Mark Latham makes an argument around immigration, housing affordability and urban form -which I could see being appealing to NZ’s Labour party.

        I think another argument could be made -that less kiwis are going to migrate to Australia in the future because the mining boom is over. To me this shift looks permanent for at least the next 5-10 years. So we should reduce immigration coming to NZ and concentrate our efforts on assisting this group of kiwis to productively address whatever labour requirements NZ has. A kind of ‘when the facts I change my mind approach’.

        As Mark Latham says it is a nonsense argument to say we need a high immigration programme (which causes housing demand stress) to come to NZ to build houses to fix the housing crisis. We would be better off allowing NZ workers to switch to the construction sector using traditional supply and demand mechanisms -increasing wages, better conditions, industry training…..

        Liked by 1 person

      • Its not going to make any difference to Net immigration numbers. Michael keeps getting lost in the governments residency targets but a target is just that, only a target. Only a number. As I have pointed out time and time again the actual migrant arrivals is only 15,000 a year. That number has not changed for the last 15 to 20 years. The same with the government’s migrant target. That has not changed in the last 30 years. What is driving those record migrant numbers are, foreign workers and foreign students and Yes existing foreign workers and existing international students get to apply for residency visas and yes they are granted residency visas but they are already counted in the Net migration numbers. so a change in their visa from student visa to migrant visa makes absolutely zero difference to the actual physical numbers.

        The reason we keep granting so many residency visas is because the churn rate is high. A young graduate mostly will stay only for 2 to 3 years to get work experience and they are off on higher wages and much better promotion prospects elsewhere. Because of our small size we do not offer great career prospects. Its the same with foreign skilled workers. They keep leaving. All the immigration target is for is just to replenish departing kiwis and departing new migrants. Its a high churn rate.


    • The largest driver of the recent record net migration of 71,000 is driven by the record numbers of tourists. This year the target is 4 million after crossing the 3.5 million record last year. Next target is 7 million after that. Businesses are already screaming for staff but unfortunately the type of work in this service sector are Chefs, waiters, prostitutes, waiters, cleaners and baggage handlers. Kiwis on a dole would not be bothered to work in these areas. So where are all these robots and where is the labour going to come from to service all these tourists?


  5. I wonder how much NZI are thinking of refugees. As I have a completely different view to taking in refugees vis a vis immigration generally. That is I do think as a rich country we have a moral obligation to help those fleeing persecution. Yes it will cost us but that is our responsibility to our fellow human beings. I think our current quota is nothing short of embarrassing.

    Low skilled economic migrants who end up displacing our own vulnerable people – not so much.

    I struggle to see how the NZI would either. Is it because they don’t know anyone who is suffering with low wage precarious work? Or could it be that – beyond appalling – argument the migrants become our nannies and cleaners?


    • There is certainly a strong case for being generous to refugees fleeing persecution from oppressive regimes in their countries of origin. But what about the other people in those countries who are also being oppressed but for whatever reason cannot escape? Do we not owe them a duty of care as well? The logical humanitarian approach would be to extract every potential refugee from their country of origin or – even more controversially – to intervene to change the conditions where they live.


    • NZI are quite receptive to refugees, and have been active in touting the Canadian model in which community groups can commit to support refugees beyond the official quota.

      Personally, I tend to think the value for money is much much greater supporting refugees in the region, with a view to them returning to their own country when the conflict is over (and I’d happily have NZ spend quite a bit more on that).

      Re the low-skilled, as I noted the other day in my labour market post, there is a real tension in the NZI view. They want, on the one hand, to argue that the wage effects of low skilled migration are very small, but also to argue that low-skilled migration is a complement to other (immigrant and native labour) including all those domestic roles. Since that channel must mostly work by cheapening that labour (and those services) they can’t have it both ways. I’m not sure how they respond to this apparent tension/contradiction.

      The more I read their report, the stronger the impression that their fundamental difference is that they want to view everything thru an individualist lens, with very little sense that societies/communities are pretty fundamental to the way humans exist, interact, prosper etc. You and I aren’t smarter than our peers in Zambia, but the overall society – rules, taboos, expectations etc – is much more conducive to prosperity here than that in say Zambia.

      Liked by 2 people

  6. I’ve enjoyed the series on the NZI immigration report, Michael.

    One issue which I haven’t seen raised to any degree in the New Zealand debates, and which you haven’t mentioned the NZI addressing, is the impact of immigration on New Zealand residents’ outcomes, in an environment of diminishing returns, where the fixed factor (say, New Zealand land) is partly foreign owned.

    In this situation, a rise in migrant labour reduces domestic wages and raises land rents. The consequent wage fall allows the profitable extension of production at the margin. In a New Zealand where land is all domestically owned, there is a small triangle of welfare gain and a large rectangle of income redistribution from domestic workers to domestic landowners. This is the simplest George Borjas model of gains to migration. The result is a Kaldorian Pareto improvement where land-owning winners could potentially compensate the wage earning losers and still be (marginally) better off.Or, another way of putting it, big redistribution, small efficiency gain.

    The instant some of the fixed factor is foreign owned, some of the income redistribution resulting from a lower domestic wage bill accrues to foreign owners of that factor. Arithmetically, it takes only a very small percentage share of foreign ownership of the redistributed national income rectangle to eliminate the small triangle of welfare gain and hence kill off any Pareto improvement to New Zealanders. We don’t really know for sure how much of New Zealand’s fixed factors foreigners own, but it is likely significant (perhaps about 10 percent of New Zealand’s farmland is foreign owned, for example). It is probably growing rapidly, making migration an increasingly questionable proposition in terms of New Zealanders’ economic gain, at least from the perspective of this sort of model. This model also suggests another reason why the public policy focus on GDP per capita is the incorrect ruler to run.

    As an aside, this is not a new idea in New Zealand. I pointed this all out, to completely no effect, to the (now defunct) Department of Labour in an NZIER report on the economics of immigration in about 1996.


    • Thanks Simon. NZI don’t mention fixed factors at all – something I’ve noted briefly in the course of this series. I don’t think I realised that quite such a large proportion of the farmland is foreign-owned (altho of course that proportion would have been lower when immigration policy was liberalised again, so most of the gains to landholders may well have been captured by the then NZ owners).

      I’ve been meaning to run an occasional series on some of the older NZ papers on immigration, incl your one which I have on file.


    • It does not matter who owns the land. When a foreigner buys land, they bring in valuable foreign currency reserves. When you add up the export GDP, you should include the sale of land in the export mix. It is an important source of foreign currency which is ignored by economists. Foreigners over time either become kiwis or their children will so it does not matter who buys that land. Its only a piece of paper. Ultimately the crown retains ownership of all land.

      Under the Doctrine of Eminent Domain.

      The crown retains the Allodial Estate or absolute ownership of all land to which the ownership rights of individual citizens are subservient. This Allodial Estate is expressed by the Crowns power to resume privately owned land under the Doctrine of Eminent Domain.
      The Crown sometimes exercises this right under the Public Works Act where privately owned land is taken for public uses.


  7. Thanks Michael. I have enjoyed reading your critique of the report. I appreciated your comment relating to how the prosperity of a nation is not down to luck, but rather due to a “culture” that enables such prosperity. Having spent considerable time in South East Asia, I’m always amazed at how Singapore, Malaysia and Indonesia organise themselves. Malaysia and Indonesia with their vast natural resources should be much more wealthier than Singapore but that clearly isn’t so. Singapore also has a quite large immigration program (though much smaller than NZ in regards to granting citizenship) but this is to offset their incredibly low TFR c.f. NZ.


  8. Is there an issue I’m missing about the distinction between temporary and permanent immigrants? When I worked in PNG there was surprisingly little animus to Europeans despite our conspicuous wealth because the natives knew we would leave eventually. Meanwhile there was (and is) plenty of trouble between PNG settlers and PNG original landowners. In PNG the Papuans and Islanders have learned that once Highlanders move in they will not move out.
    The Christchurch rebuild needed construction workers in a hurry – it made sense to import the skills needed but do they all need an automatic path to citizenship? And including their family members?
    My friends arrived in NZ in the ’60s and their UK passport was swapped for a NZ passport; when I arrived it was 3 years to citizenship and that changed to 5 years. Why not 15 years (as per friends in Guernsey) or 5 years of earning more than an average income (which I heard on the radio was the way Australia is handling New Zealanders).
    Citizenship of any country has a value; some Caribbean countries sale of citizenship is a major factor of government income. We seem to be selling ourselves cheap.

    Liked by 1 person

    • Interesting angle. I spent a couple of years in PNG, and often recount the stories about newspaper columns from political figures railing against young foreign bureaucrats who were allegedly “running the country” (we of course all saw ourselves as disinterested technocrats advising local ministers/senior managers).

      But I’m sure there is something in what you say. there is probably also something about sheer numbers. if, say, 10% of the population was foreign born then even if they all got citizenship after 3 years I doubt there would be much concern or any material animus.

      Personally, I think there is something to be said for say 15 years residence as a requirement for citizenship – including, for example, as a requirement to stand for Parliament.


      • I remember those Newspaper articles and I think they are as representative of PNG public opinion as the equivalent articles in the NZ Herald praising ‘Super-Diversity’ represent NZ public opinion.
        What did occur in PNG was a deserved criticism of some expats as being complete plonkers. The PNG adage about expats as being “missionaries, misfits and madmen” is true. Some were so mad that even the polite Papua New Guineans mentioned it.
        I had little experience of expats in the Public service; most lived in and rarely left the Australian compound near Hanubada which was commonly called “Fort shit scared”.


      • My post was wallowing in nostalgia for PNG – weird. Re-remembering I think it was “Missionaries, Mercenaries and Misfits” with no Madmen. Judging by your Christianity and your working in the Public service I’m confident you were not the mercenary – keeping a blog like this you must have a touch of misfit but I’d bet on Missionary being your best description.
        I made a fortune in PNG just programming for Steamships Trading and had a good life. It was embarrassing earning ten times the salary of locals for much the same work. But I’ve made more money as an accidental property investor than I ever made in PNG – first selling my house in London (2003) when I came to NZ and now owning two properties in Birkdale for the last decade. Of course if your arguments about immigration and building land restrictions win acceptance then my wealth will halve.


      • from memory, i was getting paid about three times there what i was getting here when i took up the secondment, so I always thought there was an element of all 3 Ms to it.


  9. Your quote from the report: “Treating immigrants the same way we would like New Zealand emigrants to be treated overseas is fair and sensible.”. That could be a useful slogan at the next general election. Better but similar rights to visitors and work visas and to citizenship.


  10. Good analysis as usual. It seems as if the New Zealand Initiative typically starts with the conclusion they want and adds on thick layers of talking points, actual detailed empirical studies in the NZ context are basically non-existent.


  11. “From pro-immigration people we often hear the suggestion that the relative wealth of our society and the relative poverty of, say, India is down to good luck. It was a line run in The Economist just the other day:

    ‘Americans and Europeans are not more deserving of high incomes than Ethiopians or Haitians.’

    But no one “deserves” a high income. Rather societies develop in ways which enable many of their citizens/residents to generate high incomes……

    ….But luck doesn’t come into it. People are born into a culture and society, and fostered and nurtured in the values, institutions of that society. That is how successful societies maintain themselves. Sadly, it is how unsuccessful societies (at least judged in material terms) replicate themselves. There is little random, or “lucky”, about it.”

    I worry you’re equivocating with the word “luck”. It is random and pure luck where a person is born. It’s not random that a child born in NZ will do better than a child born in Tanzania for the reasons you describe. Important distinction.

    I know you think we should ignore the benefits to migrants when creating policy. Is there a post where you defend this? If not, could you please give a sketch of how you’d defend such a claim? It’s clearly a moral claim, which is integral to your posts even when discussing “only” economic costs and benefits. I struggling to think of a coherent moral theory (consequentialism, contract theory, deontological theories, …) that would say policy should ignore the costs and benefits to people outside our country.

    I also worry any consistent moral theory would not support (my paraphrase of) your following claim:
    “When evaluating a policy we should consider the costs and benefits to the children of current natives. But we should not consider the costs and benefits to the children of recent migrants, but only the costs/benefits they bring to current natives and their children.”


    • Re the use of “luck”, yes I toyed with that possible distinction as I wrote the post. I’m not convinced there really is one – after all, it isn’t random or luck which country I was born in. I’m a product of my parents, and they too were children of NZers. Of course, i’d happily accept this thought experiment: if it were possible to choose which country to be born in, I (and probably a large number of other people) would prefer NZ (or most of W Europe or NOrth America) to, say, most of Africa. But it isn’t choice, and the resulting outcome isn’t luck – except perhaps in the loosest most colloquial sense.

      On the larger point, I don’t think there is a single post I’ve done making the explicit case for NZ policy to be made in the interests of NZers (not ignoring possible gains to foreigners, but treating them as a separate class of gain, and one less important than – and not simply additive to – any gains/losses to NZers). That is probably a gap. I’m not a philosopher, but I think it is only partly right to suggest that it is a moral claim. There are aspects of that – partly arguing by parallel with the family (if I adopt steps that impoverish my family but benefit the wider world, in many cases – but not all – I’d be severely frowned on, and – in my view – rightly so).

      The other dimension is simply a governance issue. Policymakers should, in my view, respond to the interests and preferences of those who elect them – in this case, NZ citizens and permanent residents – and when they choose not to, there is very little check on whose interests they are actually serving. Same goes, for example, for company managers and directors – there are often wider social benefits to what a well-managed company does (consumer surplus and all that) but the better check on managers/directors is to focus on what they are doing for those who elected them. Here, it is largely a limitation of knowledge etc type of argument.

      On your final para, I should probably be a little more cautious in my wording. Children of immigrants become NZ citizens, and thus part of this polity, but in making decisions today about whether to admit the parents, I don’t think we have any obligation to put much weight in the possible future offspring of those potential immigrants, and should think most about what the decision to admit or not does (good and ill) for us and our children.

      I should also add that I’ve never suggested that NZ policymakers should make policy solely in the narrow economic interests of NZers. If NZers wish to be very charitable and, say, bring in a million Syrian refugees, it would be a legitimate choice for a NZ govt to make – respond to the preferences/values of NZers. My contribution to the immigration debate has mostly been in the context of the official bipartisan approach to current NZ immigration policy which sells the large scale programme as working in the (relatively narrow) economic interests of NZers – hence the dubious MBIE phrase, immigration is a “critical economic enabler”. My take on the NZ policy, here and now, is that it is not doing that, and may be at some economic cost to NZers. In other places, or other times, immigration may well be a win-win.

      But I will reflect some more and see if I can put together a specific post on the issue. Thanks again for the comments.


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