When the head of the economics department of New Zealand’s leading university takes to the op-ed pages of New Zealand’s most widely-circulated newspaper, readers might reasonably suppose that what the author has to say will be authoritative and well-worth reading for anyone interested in the issues upon which the author is opining.
Last Thursday, Professor Ananish Chaudhuri, head of the economics department at the University of Auckland, had a piece in the Herald headed Immigrants are a gain, not a drain .
Chaudhuri’s own background isn’t in the economics of immigration, nor is he an expert in issues around productivity, economic geography, or New Zealand’s economic history of sustained underperformance. He is, as the article notes, professor of experimental economics. I’ve only heard him speak once, and found his work fascinating. You can check out his list of publications here. He seems to be highly-regarded in his own specialist areas, and as an immigrant himself one might safely conclude he has been a net (economic) gain to New Zealand.
I’m not holding against him the fact that he isn’t an academic specialist in the economics of immigration and in New Zealand’s economic history and performance. Few people (arguably none) are. Ideas should stand on their merits, not on the CVs of those holding them. But lay readers, attracted by the title “head of economics department, University of Auckland”, might have assumed a degree of specialist expertise that doesn’t seem to be there.
Chaudhuri’s op-ed has three main strands, before concluding with an astonishing assertion.
He begins with a bit of a rant against Donald Trump and somehow manages to wrap in, as part of a single phenomenon, the recent decision to deport some Indian students whose applications for student visas – many no doubt hoping to use that as a stepping stone to residence – were based on demonstrably, and admitted, false information. They (signed statements which) lied. One might, or might not, have some sympathy with them as individuals, but whatever one thinks about the appropriate levels of immigration to New Zealand (a) people are more likely to have confidence in it when the rules, whatever they are, are enforced, and (b) there are few defenders of the rort the student visa system had become over the last few years, often aided and encouraged by a government keen to maintain a story about the success of the export education industry. We could sell more of almost anything if there were points towards a residence offered as well. That is how export subsidies work. They were a bad idea in the 1970s, and they are a bad idea now.
But what of the substance?
His first question is “are immigrants a drain on the economy”. His answer to that question is no, and to do so he relies exclusively on the BERL estimate of the differential impact on (a portion of) government finances of natives and immigrants. Nigel Latta made a TV documentary on immigration last year that relied wholly on the same study – and if that was questionable (and I questioned it here) at least he wasn’t an economist.
As even the authors of the BERL study noted
2. The study concentrates on fiscal rather than economic impacts. Due to this the study is limited to estimating the direct monetary impacts on the government’s operating budget.
Fiscal impacts can be interesting, if done well, but they don’t tell us – can’t tell us, aren’t designed to tell us – whether natives are made better off, worse off, or left largely unchanged – by the sort of level/composition of non-citizen immigration we’ve had.
As it is, the BERL study covered only some parts of the government’s finances, and the bits they omitted – not through bias, but because they are hard – would be likely to change materially even the fiscal assessment, as would a full intergenerational approach to the issue (again, BERL was not paid to do something state of the art). For anyone who wants to look at some of the problems with the fiscal estimates, I wrote about some of them in one of my posts responding to the New Zealand Initiative’s recent immigration paper. As I noted, even if the average migrant is a net fiscal gain – which is plausible – it is very unlikely that all classes of migrants are.
In short, Chaudhuri offered readers nothing shedding light on whether New Zealanders’ living standards, or the productivity of the New Zealand economy, have been improved by our immigration programme.
Chaudhuri’s second question is “do immigrants displace native workers”. Actually, on this point he went further than I would have, noting “yes to an extent”. But after only a handful of words on immigration effects, he devotes the rest of that section of his article to discussing some interesting material on other forces that might (globally) be “driving blue-collar wages downwards”. That may very well all be true, and even important, but what we were promised was an economic analysis of immigration (presumably focused on New Zealand), and it just isn’t there.
His third question is “do immigrants fail to assimilate”. In his view “arguments about assimilation are usually a cover for aversion to ethnic diversity, so it is difficult to provide a cogent counter-argument”. In other words, “back in your box racists”. He seems unaware of, or uninterested in, literature on trust, national identity, social cohesion or any of the range of conflicting evidence on the implications of different types of diversity. Perhaps he could walk down the road and have a chat with AUT academic Bart Frijns, whose work I wrote about here last year. Issues around assimilation aren’t my focus, but there are reasonable debates to be had.
As he gets towards the end of his column, Chaudhuri offers quite a balanced perspective.
There is no doubt that while immigration increases the size of the national pie, it does create winners and losers. For workers suffering from stagnating wages, the sense of displacement and disillusionment is real.
So even on Chaudhuri’s assessment, it isn’t all a rosy story. All else equal, some natives are being made worse off. But apparently it doesn’t really matter, because the learned professor knows that….
…the bottom-line is clear: The net gain to society from immigration outweighs the losses and, therefore, there must be ways of providing a safety net for displaced workers in a way that makes all of us better off.
But no shred of evidence – global, let alone anything specific to New Zealand – was offered in the entire column to show that there are overall gains. One might guess that he is relying on some general international academic pro-immigration consensus, but he shows no sign of having engaged with the specifics of the New Zealand experience, past and present, at all. (And, for what it is worth, he also offers no specifics on these redistributive measures that might help ensure that even the “losers” actually end up made better off. That isn’t surprising, as I’m not aware of any advanced economy where such measures have been put in place.)
Chaudhuri then wraps up with an astonishing claim
In the meantime and leaving cultural arguments aside, those who suggest immigrants are a net drain on society in economic terms are purveying “alternative facts” that should not be part of informed discussion.
Wow, so no debate should be entered into because the learned professor has decreed – not even argued, or demonstrated, but just decreed – that the economic case is closed. Economies benefit, New Zealand’s economy benefits, and any suggest to the contrary is right up there with Trumpian claims about numbers in the Inauguration parade. I disagree with the people at the New Zealand Initiative on immigration, but they weren’t that dogmatic – and were pretty open about the lack of New Zealand specific empirical studies on the overall contribution of immigration policy to New Zealand’s economic and productivity performance. For them, the conclusion that New Zealanders’ benefit was a judgement – probably held strongly, but an informed judgement nonetheless. It wasn’t revealed truth, into which no subsequent debate could be tolerated
When the 27 prominent New Zealanders came out the other day with their open letter on free speech, I didn’t pay much attention. I was generally sympathetic, but in my observation the issue of attempts to close down debate (on all manner of topics) seem to be becoming a serious issue in the US (especially in academe) but not, at present, in New Zealand. If one takes him at his word, Chaudhuri seems keen on having New Zealand catch up down that slippery slope. I hope I shouldn’t take him at his word, and he is more open to debate – specific debate, concentrated on New Zealand’s experience, and New Zealand’s programme – than his op-ed suggested. Perhaps the Herald could offer him another column, in which this time he could get specific about the nature of the evidence he believes – as head of the economics department of our leading university – makes it such an open and shut case that New Zealanders as a whole are reaping economic rewards with our huge decades-long grand immigration experiment?